MYOB acquires Paycorp, posts profit and plugs new platform

The accounting software company reports growth and eyes further acquisitions

Accounting software company MYOB has reported revenue and after tax profit increases of 13 per cent, in its full year results statement this morning.

The firm also shared details of its acquisition of payment processing solutions company Paycorp, which is set to be completed in April. MYOB said that it expected to make further acquisitions in the coming year.

Revenues increased to $370.4 million and after tax profit was $96.8 million. Proforma EBITDA increased 12 per cent year on year to $171.5 million.

MYOB experienced a 47 per cent growth in the number of online subscribers, which helped drive a seven per cent increase in the number of paying SME users, the company said.

Bridge the gap

The acquisition of Paycorp gives MYOB an “opportunity to significantly increase MYOB’s total addressable market” which was valued at more than $700 million, the company said.

It would allow MYOB to bridge the gap between accounting and payment solutions by “adding integrated and seamless payment acceptance into accounting software flows”

The automation of payment services would allow customers to reduce administration time and costs and improve cash flow, the company said.

“Through this acquisition, we will be the first to market with an integrated payment and accounting solution to our clients, which will create a new revenue stream for MYOB while staying true to our vision of helping businesses succeed,” said MYOB CEO Tim Reed.

In August, MYOB bought New Zealand ERP vendor Greentree for NZ$28.5 million in a bid to boost its reach in the enterprise market.

MYOB’s Enterprise Solutions segment delivered 14 per cent of total group revenue, and is the fastest growing segment in the portfolio. The revenue was driven by strong performance from all products including MYOB’s Advanced Business and PayGlobal offerings.

The SME solutions segment delivered 63 per cent of total group revenue, the largest contributor, with continued robust recurring revenue growth, the company said.

MYOB said there were 585,000 SME paying users, up 7 per cent year on year, including 225,000 SME online users, up 32 per cent year on year.

Connected platform

MYOB’s ongoing strategy is the concept of a ‘Connected Platform’ which aims to more closely connect SMEs with advisers and the broader accounting network, and bring together transaction processing, compliance, and advisory into a single platform.

Pivotal to strategic success were accountants, MYOB said, adding the platform had been well received by them so far. There had already been rapid uptake of new modules such as Practice Ledger, Portal and Dashboard, the company added.

A large percentage of R&D costs – totalling $56m in FY16 – had gone towards the MYOB Platform, the company said. This was set to continue and investment in the new platform and existing products would be around 16 per cent of revenue.

“As a business, we continue to grow from strength to strength and remain focused on delivering to our clients, solutions that help them to succeed,” said Reed.

“We have a clear strategy in place which is underpinned by our Connected Practice Strategy and are confident that the trajectory of our business growth will continue in 2017,” he added.

MYOB returned to the ASX in 2015 after being taken private in 2009.

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