In short: LHC Capital (High Conviction Fund): the clearest "AI as an upsell, not a threat" data point in the compilation. Record first-half profit, revenue and ARR "for the 17th consecutive year," with ARR +17% to $598 million, revenue +11%, PBT +9% and zero customer churn; management reaffirmed 18-20% full-year profit growth. The new AI product, Plus, "sits above the company's enterprise software and allows customers to interact with data across finance, payroll, human resources, asset management" — and crucially "the usefulness of Plus increases as customers adopt more TechnologyOne products." Evidence it is working: "most early Plus transactions have included the purchase of additional TechnologyOne modules or the replacement of third-party systems," one university bought "the entire education software suite under a ten-year agreement," and the company is "charging customers for AI consumption," with early usage "materially greater than the company initially anticipated."
TechnologyOne sells administrative software — finance, payroll, HR, asset management — to Australian and British councils, universities and government agencies. It has now reported record recurring revenue for seventeen consecutive years, with no customers leaving at all last period.
The reason LHC Capital highlights it is what its new AI product reveals. "Plus" sits on top of the existing software and lets staff ask questions across every system at once. Crucially, it only works well if a customer has put more of its data into TechnologyOne — so the AI product sells more of the underlying software rather than replacing it. Most early Plus deals came bundled with extra modules or the removal of a rival's system, and one university bought the entire suite on a ten-year contract simply to give Plus more to work with.
On top of that, customers pay for AI usage separately, creating a new recurring revenue stream above the subscription — and early usage has run well ahead of what management expected.
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