Cloud subscriptions move beyond one quarter of all MYOB customers

First half financial results for MYOB have pointed to a successful start in its switch from boxed software seller to cloud accounting provider.
Written by Chris Duckett, Contributor on

Over one quarter of MYOB's 528,000 paying customers are now cloud users, the accounting software company said in its first-half financial results.

Cloud subscriptions for the company now totalled 142,000 as of the end of June 2015, an increase of 65 percent from this time last year, with MYOB saying it now has 150,000 subscriptions as of August.

In its first set of results since returning to the ASX in May, MYOB posted pro forma earnings before interest, taxes, depreciation, and amoritisation (EBITDA) of AU$72 million, an increase of 14 percent from the first half of last year, while statutory EBITDA fell from AU$55 million last year, to AU$47 million. After tax, the company posted a AU$65 million loss, a AU$36 million decrease year-on-year. Differences between the pro forma and statutory figures were a result of completing its IPO, the company said.

Revenue for MYOB came in at AU$160 million, up 8 percent, with the company stating its average revenue per small and medium enterprise had increased 5 percent to AU$371.

Looking ahead, MYOB said it is on target to meet its forecast of AU$323 million in revenue for the full year, and posting AU$150 million in pro forma EBITDA.

"I am delighted that not only have we delivered on expectations, we have exceeded them," MYOB CEO Tim Reed said in a statement. "We have invested over $115 million in research and development in the past three years and the R&D strategy we are executing on is proving extremely successful.

"We are investing 13 to 16 percent of our revenue to drive innovation in the cloud. For instance, we plan to take the very popular BankLink product to the cloud in the future so that accountants can leverage the same functionality they love with all the benefits of working online."

Earlier this month, the company announced it was closing in on a deal with New Zealand's BNZ, and in May, announced that it had acquired New Zealand based Ace Payroll in a NZ$14 million transaction.

"Ace Payroll is a profitable business that will be immediately accretive to MYOB's earnings," MYOB said at the time.

Although MYOB has returned to the ASX, the majority shareholder in the company remains private equity firm, Bain Capital, which continues to control 58 percent of the business.

"They're not going to maintain it forever. Bain are a private equity firm, and private equity firms work with management to improve the business, and then they eventually sell," Reed told ZDNet in July.

"So they will sell, but their shares are locked down for at least another 12 months."

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