​Cloud uptake drives MYOB profit return

Australian accounting software provider MYOB is back in the black, thanks in large part to the increasing uptake of its expanding cloud-based product offering during the financial year ending 2014.
Written by Leon Spencer, Contributor

Cloud uptake has helped drive accounting and payroll software group MYOB back into the black, with a AU$1.6 million full-year profit.

The result for the year to December 31 compares favourably to a AU$600,000 loss in 2013, while revenue lifted to AU$17.8 million from AU$15.5 million, according to the company's financial results published on Thursday.

The group said its revenue was driven by rapid adoption of its cloud solutions, acquisitions, and strong growth in client numbers.

MYOB chief executive officer Tim Reed said the profit return follows a period of transformation for the company, which saw it invest heavily in research and development, much of which was aimed at substantially broadening its cloud-based software offering.

"The transformation delivered in the MYOB business in under three years is an outstanding achievement," said Reed. "I am immensely proud of what has been accomplished in a short period.

"We continue to expand our cloud solutions across all areas of our business, with 67 percent of new MYOB SME clients choosing our innovative cloud solution in Q4 2014," he said.

MYOB, which in 2012 launched AccountRight Live -- the cloud-enabled version of its flagship product -- revealed that it had spent AU$42 million in research and development focused on the markets in Australia and New Zealand, in a bid to drive innovation across all business segments.

MYOB also indicated that it had invested more than AU$100 million in R&D for the Australian and New Zealand markets alone over the past three years.

Reed and the company maintain that MYOB claims a broad enough market scope in the local accounting landscape to be safe from the market share clutches of SME-focused cloud accounting rival Xero, which entered the Australian market in 2011.

Reed is confident, though, that MYOB will continue to retain market share in Australia, with the company now beginning to push out cloud-based solutions for larger clients.

In January, the company moved to attack the mid market with a new cloud-based enterprise resource planning offering dubbed MYOB Advanced, in a bid to extend the company's total product portfolio.

"These innovative new products and product enhancements strengthen our position as the only provider in Australia and New Zealand that caters to micro and small through to medium and larger-sized enterprises," said Reed in a statement. "In the last month, we launched MYOB Advanced, our first cloud offering for the mid-range market, and are poised to take our first cloud product for accountants to market in the next few months."

Already, MYOB is seeing the revenue benefits of using its expanding online offering to shift away from its legacy perpetual licence model towards a recurring revenue model, fed by subscriptions to its cloud solutions.

The company reported that 67 percent of new MYOB registrations were cloud subscriptions in the quarter ending December, compared to just 48 percent for the same quarter the prior year.

Responding to industry speculation that MYOB, which is owned in a majority stake by Bain Capital, could float publicly again, Reed said that he would not provide forward-looking statements on the matter, despite reports that the company's IPO prospectus is expected by the end of next month.

MYOB's return to profit comes as Xero secures a total of NZ$147.2 million in additional funding from new investor Accel Partners, and existing investor Matrix Capital Management. According to the company, the funds will be used to fuel its growth in the United States and the United Kingdom.

Editorial standards