​MYOB reverses loss to report full-year profit of AU$54m

The accounting software company has reported AU$54 million in after-tax profit on revenue of AU$370.4 million.
Written by Asha Barbaschow, Contributor

MYOB has released its results for the 2016 financial year, reporting AU$54 million in after tax profit, up substantially over its FY2015 loss of AU$42.2 million.

Revenue for the 12-month period was AU$370.4 million, representing a 13 percent increase over the same period a year prior. Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) for the year was AU$164 million.

For the purpose of revenue reporting, MYOB divides its business operations into three segments: SME Solutions, Practice Solutions, and Enterprise Solutions.

SME Solutions, which boasts a customer base of 1.2 million SMEs, experienced a 14 percent year-over-year increase in revenue, coming in at AU$233 million, representing 63 percent of overall revenue for the company.

Practice Solutions, which provides software to over 40,000 accountants, posted AU$86 million in revenue for the 12-month period, claiming 23 percent of MYOB's total revenue for the year.

The company's Enterprise Solutions segment, which provides enterprise software including enterprise resource planning (ERP) and HRM software to over 7,000 medium and large businesses, recorded AU$52 million in revenue for the full year, up 26 percent from the same period a year prior.

At the end of the 12-month period, MYOB reported 585,000 SME paying subscribers and 249,000 online subscribers.

MYOB also spent AU$56 million on R&D, a large percentage of which was spent on its MYOB Platform, the company said.

FY2016 was the company's first full year of public ownership, after it landed on the Australian Securities Exchange for the second time in May 2015.

Looking forward, MYOB CEO Tim Reed said the company is well aware of the changing technology landscape, pointing to four key industry shifts he believes will drive change in the accounting world: The Internet of Things (IoT) and mobile; machine learning and artificial intelligence (AI); people; and advisory.

In particular, the increasing uptake of IoT technology and mobile usage will mean that transactions are increasingly captured electronically as they occur, Reed explained. Similarly, he believes people will augment technology through the services they provide to ensure seamless delivery to clients.

"As technology continues to rapidly evolve, we will continue to focus and challenge ourselves in how this change will transform the future of accounting and affect day-to-day life for businesses," Reed told shareholders.

"We remain cognisant of this evolution, and believe the combined future impact of these changes will lead to small business owners increasingly relying upon a trusted adviser to complete all remaining human tasks.

"I am excited about the future and the opportunity that lies ahead for further growth and continued success for our clients and our business. We have in place a clear strategy and plan of what we need to do."

Earlier this month, the company unveiled MYOB Advanced People, a cloud-based payroll solution for bigger businesses that allows for payroll information to flow between functions, reduces duplication of effort and manual data entry, and provides real-time business insights for the Australian and New Zealand mid-market.

Built on the same platform as MYOB's Advanced Business, as a unified solution Advanced People offers the ability to consolidate systems and processes into a single platform, Reed explained.

Advanced People is also part of MYOB's strategy to automate the workforce. Reed told ZDNet that AI has a huge role to play in all the components of the new product.

"The concept of narrow AI is that computers just think better than people do, and the further and further on any business process that you push down that thought of automation, of being able to see trends, see things, and then actually proactively ask questions, the more benefit it is," he said.

In May, MYOB opened the doors to its Innovation Hub in Richmond, Victoria, which the company said currently has 217 product developers working out of it.

MYOB bolstered its ERP offering in August, acquiring Hei Matau Holdings 2000, the shareholder of the Greentree group of companies, for NZ$28.5 million.

The acquisition was funded from the company's existing cash reserves, with MYOB having already paid NZ$25.1 million on completion and the remainder due this year and in 2018 based on satisfying "certain" conditions.

Also announced on Thursday was the acquisition of payment solutions provider Paycorp. For a cost of AU$48 million, MYOB will wholly acquire Paycorp and its 6,500 clients, which it said includes many Australian banks.

For the six months ending June 30, 2016, MYOB recovered from its net loss experienced during the same period the year prior, posting AU$26 million in net profit after tax on revenue of AU$178 million.

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