TechnologyOne (ASX: TNE) Wins $54.7M Legal Battle: Is the 34% Dip Now a Buying Opportunity?

TechnologyOne (ASX: TNE) has finally put one of Australia’s longest-running employment disputes behind it. The Federal Court threw out a former manager’s A$54.7 million claim late last week, clearing the Brisbane-based software company completely. For investors, this removes a legal cloud that has hung over the stock since 2016.  But with shares trading around A$28.35, does this win make TNE a buy right now?

The timing matters. TechnologyOne shares have dropped roughly 34 per cent from their June 2025 peak of A$42.88, hit by profit-taking after FY25 results and weakness across the tech sector. With the legal mess now sorted, investors must decide whether the stock offers good value today or if patience will pay off.

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From Record Payout to Complete Vindication

This saga began in May 2016 when TechnologyOne fired Behnam Roohizadegan, its Victorian State Manager, who was earning close to A$1 million per year. Roohizadegan claimed he was sacked for making bullying complaints against senior staff. What followed was a legal battle that dragged on for nearly ten years.
In October 2020, the court sided with Roohizadegan and ordered TechnologyOne to pay him A$5.2 million, then a record for this type of case. The judge was highly critical of how the company handled things. But TechnologyOne appealed, and in August 2021, the Full Federal Court threw out that ruling and ordered a fresh trial.

The retrial delivered a completely different result. After 27 days of evidence, Justice McElwaine ruled that TechnologyOne did nothing wrong. The Court found that founder Adrian Di Marco fired Roohizadegan for legitimate performance reasons, not because he made complaints. Every single claim was dismissed.

Following the verdict, Di Marco called for changes to workplace laws, pointing out the case cost “10 years and A$10 million-plus to defend.” This highlights the significant legal risks Australian companies face under current employment legislation.

TechnologyOne Delivers 16th Straight Year of Record Profits

Setting aside the legal drama, TechnologyOne’s business remains rock solid. FY25 results showed profit before tax of A$181.5 million, up 19 per cent, marking an incredible 16th consecutive year of record profits. What this tells us is that CEO Edward Chung, who took the helm in 2017, continues to execute a high-growth strategy that has successfully pivoted the company into a SaaS-first powerhouse.

Annual recurring revenue hit A$554.6 million, growing 18 per cent year-on-year. The balance sheet is fortress-like, with A$319.6 million in net cash and zero debt. This financial strength gives management flexibility for growth investments and bolt-on acquisitions without needing to tap shareholders.

The UK expansion is gaining real momentum, with ARR jumping 49 per cent to A$51.8 million. This suggests the international growth thesis is playing out ahead of schedule. Under Chung’s leadership, the company is now targeting A$1 billion in ARR by FY30, having already smashed through the A$500 million mark 18 months early.

The Investor’s Takeaway

The court win is unambiguously positive. A $54.7 million payout would have dented the balance sheet and possibly hurt the company’s standing with government and education clients, its core customer base.

But valuation is the sticking point. At 65 to 70 times trailing earnings, TechnologyOne is priced for perfection. Yes, the business is high quality with 99 per cent customer retention. But at these multiples, any stumble will be punished hard.

We believe the legal victory is already baked into the share price. For long-term growth investors, TechnologyOne remains one of the best software companies on the ASX. Current shareholders should hold, but new investors may want to wait for a pullback towards the $25 level before jumping in.