Reckon is the underdog in the intensely competitive accounting software clouds wars, third behind the other two ASX-listed players Xero and MYOB.
Today the company announced a 14.1% drop in annual profit to $15.1 million, but revenue growth of 4.3% to $105.1 million.
The news sent Reckon shares down more than 8% to $1.86.
However, profit fell because of investment in the business, including building its product, Reckon One, for domestic and international markets as well as establishing a market in the US for document management.
The main game for all the players in the cloud wars — including Xero, MYOB, Intuit — is to build subscription revenue and that is what Reckon has done. Everyone wants to play disrupter in the accountancy software field. It’s now all online, off the desktop and in the cloud.
Reckon’s latest results show subscription revenue up 20% to $63.1 million. And cloud users grew 23% to 33,000.
And CEO Clive Rabie says 2016 is looking positive.
“We have concluded our journey to a subscription model and we can now focus on growing the size and quality of all our businesses,” he says. “I’m confident the unit growth achieved in the past will translate to strong revenue results this year.”
This is how subscription revenue has grown across the business units:
- 87% of Practice management revenue, up from 85% in 2014
- 72% of Business product revenue, up from 50% in 2014
- 73% of Document management revenue (74% in 2014)
Rabie says the company will continue to increase market share in Australia and overseas, building on its strong domestic market and exploiting the Reckon online products.
“We will be releasing new Reckon One functionality, making it an extremely competitive cloud accounting solution. Our modular-based software is unmatched in the market in flexibility, price and capability,” he says.
Rabie says innovation in the practice management and document management divisions as key to continued volume growth.
“We know enterprise cloud solutions can greatly improve business efficiencies for our customers,” he says.
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