SME segment boosts MYOB's six-month profit to AU$28.3m

​Accounting software company MYOB has reported AU$28.3 million in after-tax profit, with the small-to-medium enterprise segment accounting for 62 percent of the company's total six-month revenue.
Written by Asha Barbaschow, Contributor

Australian accounting software firm MYOB has reported after-tax profit of AU$28.3 million for the first six months of the 2017 financial year, representing a 13 percent year-on-year increase.

Underlying earnings before interest, taxation, depreciation, and amortisation (EBITDA) was up 9 percent over the same period last year at AU$89.6 million, while revenue for the six months to June 30, 2017 was up 14 percent to AU$204 million.

The Australian Securities Exchange (ASX)-listed company told shareholders on Thursday that recurring revenue accounted for 96 percent of the total, driven by the small-to-medium enterprise (SME) segment, which grew 13 percent on the year prior.

SME paying users increased by 5 percent to 601,000, underpinned by strong online additions, the company claimed, with the sector accounting for 62 percent of total revenue at AU$126.4 million.

Practice Solutions revenue came in at AU$43.5, Enterprise Solutions revenue increased by 38 percent to AU$30.6 million, Group revenue totalled AU$1.3 million, and revenue from the Payment Solutions segment was AU$2.3 million.

FY17 is the first year the Payment Solutions segment has been active, after MYOB scooped up Paycorp in February for a cost of AU$48 million.

As part of the acquisition expected to add automated payment capabilities to MYOB's product suite, MYOB also took on Paycorp's customer base of 6,500, which spans the banking, insurance, telecommunications, utilities, and government sectors.

MYOB CEO Tim Reed said the company's results is indicative of its customer-focused strategy delivering positive outcomes for the business.

"Our commitment to the Connected Practice Strategy continues to position us as a leader in the industry, enabling digital transformation amongst SMEs and advisers, which remain central to our vision," he said in a statement.

"Our focused investment in the MYOB platform remains a key driver of our success, as we continue to develop products and services that leverage artificial intelligence and machine learning."

In February, Reed said AI, machine learning, data and the Internet of Things (IoT), and people and the future of work were going to be the biggest breakthroughs in the Australia and New Zealand accounting world this year.

At the time, he said AU$60 million would be spent on research and development (R&D) as a result.

Speaking with ZDNet in March, Reed noted again that the IoT had the potential to redefine the role of the accountant.

"I am absolutely convinced that is the future we are looking to," he said at the time.

For the remaining six months of the financial year, Reed expects R&D investment to be at the upper end of the 13-16 percent revenue range. He is also eyeing off "targeted acquisitions" and new investment opportunities that tie into MYOB's core business.

For the 2016 financial year, MYOB posted AU$54 million in after-tax profit, up substantially from 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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