MYOB boosts online subs as earnings flatline for 2018

Revenue was up 7 percent year on year as the number of subscribers jumped by 57 percent to 628,000.
Written by Chris Duckett, Contributor

Accounting software firm MYOB has reported flat underlining earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$189.6 million for its 2018 fiscal year, compared to AU$189.9 posted a year prior, while revenue grew 7 percent to AU$445 million.

The company said it grew its online subscriber base by 57 percent to 628,000 by December 31, leaving MYOB in a position where it is now claiming to have bested its competitors in Australian and New Zealand, and is on target to hit 1 million online subscribers by the end of 2020.

Overall, recurring revenue now accounts for 97 percent of its total revenue.

MYOB CEO Tim Reed labelled the results as solid, and said he was delighted with the progress the company has made to bring its tooling together under the MYOB Platform moniker.

"We've accelerated the delivery of compliance, corporate compliance, and document management modules, all of which are expected to be in market in 2019," Reed said.

"In addition, Practice Management has advanced and is now under development. The feedback we have received from clients trialing our beta products has been overwhelmingly positive, and further reinforces our investment decision."

The company said it invested 19 percent of its revenue into research and development (R&D) for the full year, with similar levels to be maintained for 2019, before the number falls to under 16 percent of revenue by 2022.

At the end of the year, MYOB recommended that its shareholders accept the reduced offer to purchase from the private equity firm KKR for AU$3.40 a share.

KKR & Co in October made the Australian accounting software firm an offer to take control of the rest of the company at AU$3.70 per share, which would see the equity firm part with AU$1.75 billion, before upping its bid to AU$3.77 in November.

When announcing its intention to acquire MYOB, KKR upped its stake to 19.9 percent, after purchasing just under 104 million shares from Bain Capital for AU$3.15 per share -- approximately AU$327 million. Bain Capital now has a 6.1 percent interest stake in MYOB.

MYOB said one of the arrangements agreed to was a "go shop" clause that allowed it to seek superior offers until February 22, and should it receive one, KKR agreed that it would sell its holding or vote in favour of the new offer. According to the terms of the scheme, superior was defined as being 5 percent higher than KKR's cash bid and had to be an offer for the entirety of the accounting software firm.

On Thursday, MYOB said it expects to be able to update the market tomorrow when the period ends. Should the KKR proposal proceed, a shareholder meeting to back the purchase would be held in mid to late April.

In May last year, MYOB pulled out of its intended AU$180 million acquisition of Reckon's Accountants Group, citing the amount of time the regulatory process was taking as its reason.

The Australian Competition and Consumer Commission (ACCC) in late March highlighted concerns over the proposed acquisition, fearing MYOB might gain a market monopoly if it were to proceed.

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