MYOB thanks SME segment for AU$60.7m FY17 profit

Accounting firm cum online business solutions group MYOB has small to medium-sized enterprises to thank for its AU$60.7 million full-year profit.
Written by Asha Barbaschow, Contributor

For the 2017 fiscal year, accounting software firm MYOB has reported AU$60.7 million in after-tax profit, a 16.3 percent increase over its 2016 figure.

Revenue for the 12 months to December 31, 2017 was AU$416.5 million, while underlying earnings before interest, taxation, depreciation, and amortisation (EBITDA) totalled AU$190 million.

MYOB ended the year with 399,000 online subscribers and 618,000 small to medium-sized enterprises (SMEs) on its books. The SME paying subscriber increase was due to a jump in online subscriptions, MYOB said, which grew from 225,000 to 304,000 during the period.

With subscribers growing 60 percent over the 12-month period, MYOB CEO Tim Reed is expecting to reach 1 million across Australia and New Zealand by 2020.

"We strongly believe in our Connected Practice vision and as we invest to build out the MYOB Platform, it is pleasing to see more and more accountants and advisers embrace this change and using our online tools," Reed told shareholders on Friday. "The rewards of automation and accurate data feeds are significant and generate greater efficiencies and savings for our SMEs and advisers."

During FY17, MYOB consolidated its go-to market teams from its SME Solutions and Practice Solutions divisions into a new Clients and Partners division, responsible for the delivery of the company's Connected Practice vision.

SME Clients and Partners experienced a 10.5 percent year-on-year increase in revenue to AU$257.6 million, while its Clients and Partners Practice segment reported revenue of AU$85.8 million.

Enterprise Solutions segment accounted for AU$64.6 million of total revenue.

MYOB launched a number of products and connected services to SME clients in 2017, including automated bills processing through the use of artificial intelligence in partnership with Officeworks and an MYOB Invoices mobile app for iOS and Android devices. It also added two factor authentication to its platform.

During the 2017 financial year, MYOB also announced two multimillion-dollar acquisitions, which the company said on Friday aligns with its Connected Practice vision and expansion strategy.

MYOB scooped up payment solutions provider Paycorp for AU$48 million a year ago. At the time, the company said Paycorp would add automated payment capabilities to MYOB's product suite.

Following the integration into MYOB, the newly formed Payment Solutions segment contributed revenue of AU$6.3 million in the nine months to December 2017.

In November, MYOB also announced its intention to acquire the assets of fellow ASX-listed Reckon's Accountant Group for AU$180 million. Review by the competition regulators in Australia and New Zealand on the acquisition is underway, MYOB said on Friday, with a decision expected in Q2 2018.

The Paycorp and Reckon acquisitions followed the company in August acquiring Hei Matau Holdings 2000, the shareholder of the Greentree group of companies, for NZ$28.5 million.

Looking forward, the company expects to focus on creating a payments ecosystem this year, with new payment types to be integrated with the payments gateway, including BPAY, Amex, and POLi. It will also launch PayDirect Online in New Zealand.

MYOB will also launch a new face-to-face payments solution for retail and hospitality clients, as well as enhanced phone and online payments functions.

For the 2016 financial year, MYOB posted 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 EBITDA for the year was AU$164 million.

SME Solutions was again the company's highest performing segment, reporting revenue of AU$233 million, representing 63 percent of overall revenue for the company.


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