Reckon Group reported its full-year earnings to 31 December 2018, delivering a steady profit that demonstrates the company's resilience in a year shaped by disruptive and transformative changes.
Underlying NPAT was up by 3%, while cash flow has continually improved to enable a debt reduction of $6 million – up 500% from the previous year's $1 million. Overall, total group revenue closed at $75.4 million and adjusted EBITDA stood at $30.6 million.
Flagship cloud accounting software, Reckon One, continues to gain traction and resonate with its modular design and affordability.
Reckon's drive to progressively accelerate customer migration to Reckon One has resulted in an 8% increase in cloud revenue for the Business Group, which now represents 45% of the division's available revenue. Total cloud subscribers are now at 54,000.
The Accountants Group has remained healthy amid disruption and a period of uncertainty surrounding the MYOB deal.
Subscription revenue is 98% of available software revenue, and the division continues to perform with costs carefully managed during the sale process, allowing the practice management division to achieve marginal EBITDA growth despite a revenue reduction.
Reckon received an even clearer understanding of the value of its APS practice management offering throughout the sale process, and continues to build on these strengths to the benefit of customers. The APS suite remains entrenched as the software of choice for major accounting firms in Australia, including seven of the top 10.
2018 was also a record year for the Reckon Loans connected services platform (powered by Prospa), which experienced continued growth to reach a loan milestone of $18 million in December.
This success is attributed to the upward trend of businesses increasingly turning to alternative non-bank lenders to gain access to critical finance.
Positioned for future growth
Reckon continued its investment in growth throughout the year with a development spend of $14.3 million. This made up 19% of total group revenue, consistent with the revenue split in FY17.
Investments centred on expanding the company's product range, reinforcing Reckon's ability to deliver top quality and relevant technology that caters to the demands of small businesses and the largest accounting and legal firms in the world.
Reckon also unlocked new revenue streams by tapping new markets across health, medical, education and franchise sectors.
The company signed several strategic agreements in 2018, including the acquisition of Better Clinics, a cloud-based practice management software for health, medical and fitness professionals; and an integration partnership with online automation tool Zapier, designed to improve small business productivity.
Reckon continues to work with three of the big four accounting firms. Seven of the top 10 and many of Australia's leading top 100 firms, as well as the world's leading legal companies, use the company's practice management software.