Accounting software provider MYOB today released its 2014 interim results, posting an EBITDA of $70 million on $140 million revenue.
The company’s NPAT was -$5.6 million down 11% on the previous half.
But earnings aside, there’s a battle emerging between cloud-based accounting software providers operating in Australia including MYOB, Xero and Intuit. The three are racing to secure big chunks of cloud-based market share.
Xero, the newest member of the online accounting threesome, appears to be the one driving the other veteran companies to iterate their products and make a run for the cloud and it isn’t afraid to poke the bears.
“It’s game on with Intuit in the US,” Xero CEO Rod Drury said adding they’re using “all the tricks to keep us out which is quite fun.”
Xero has invested about $250 million developing its product and announced earlier this year it is making a play for the US small business market – flagging a potential IPO on the NASDAQ next year.
In the mean time Intuit has upped its presence in Australia- where almost half of Xero’s customer base is located – dumping its distributor Reckon and setting up an Australian operation.
The Australian small business market is substantial with an estimated 70% of SMEs using an accountancy software package, which according to IBISworld is valued at more than $1 billion.
In an investor presentation, MYOB CEO Tim Reed noted the company is seeing momentum behind mobile and cloud offerings and is making some big investments to refresh its products.
In the past three years the company has spent over $100 million on R&D, hired more than 100 employees in the past 12 months to take its head count to 1146 and increased its operating cost base by 11% – suggesting the veteran accounting software company is gearing up for a fight over Australia’s small to medium business market which both Xero and Intuit have openly stated they’re coming for.
But it clearly thinks it’s winning. It surveyed 1,000 people asking which brand of bookkeeping or accounting software is used in the business and came up with this pie chart.
MYOB has about 1.2 million active users of which less than 90,000 are in the cloud. Xero has 334,000 users globally – all of which operate in the cloud – and at the end of July 2014 Intuit had about 683,000 QuickBooks Online subscribers of which 84,000 were located outside the US.
Intuit last week reported a loss of $39 million as of July 31 citing increased expenses incurred as it updates its QuickBooks cloud-based offering.
“We’re fully committed to winning in the cloud,” president and chief executive Brad Smith said. “The benefits are clear: online experiences are better for customers, expand the total addressable market, and generate more predictable, recurring revenue streams.”
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