MYOB strengthens industry leadership position

21 February 2019

MYOB strengthens industry leadership position, delivering 57% increase in new online subscribers in 2018

MYOB today released its financial results for the full year ending 31 December 2018, reporting 229,000 new online subscribers, or a 57% increase, in the 12 months to reach a total of 628,000 online subscribers, strengthening its leadership position and remaining on track to reach 1 million online subscribers by 2020.

MYOB reported a solid set of financial results, that were delivered during the first year of its accelerated investment strategy, with revenue up 7% to $445 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) remaining stable at $190 million. MYOB’s preferred measure of after-tax profit, NPATA1, was $104 million, 2% higher than the prior year, with associated NPATA earnings per share of 17.6 cents, 4% higher than the prior year.

The accelerated delivery of the MYOB Platform – a single, integrated and efficient online platform – is well on track and has seen significant progress made in 2018 across compliance (client accounting and tax), corporate compliance and document management modules, all of which are expected to be in market in 2019. In addition, the practice management module is now under development and ahead of schedule.

By fast tracking this program of work, MYOB will deliver significant efficiencies and savings for SMEs and Advisers. Importantly, MYOB’s platform delivery underpins its bold vision for the accounting industry, and sets it apart from its peers as a clear differentiator.

The customer lifetime value of MYOB’s SME base continues to strengthen as online subscriptions rise, and improvements in customer retention levels and average revenue per paying user (ARPU) continue. MYOB achieved a record increase in customer retention to 83% in 2018, led by online subscriber growth.

MYOB CEO, Tim Reed said about the full year results: “I am excited with the progress we’re making as a business. In 2018 we continued to deliver a solid set of financial results and progressed a number of bold initiatives through our accelerated investment strategy. The benefits are already being realised, with encouraging feedback from our partners and SME customers.”

“This is an important time for MYOB, as we double down and focus on completing the MYOB Platform, which we believe will create significant efficiencies for our SMEs and their advisers and position the company and our clients for future growth,” he said.

Enterprise Solutions and Payment Solutions were the fastest growing segments for MYOB in 2018.

“MYOB Advanced continues its strong growth, leveraging its first mover advantage in cloud ERP and integrated payroll while in the Payments segment, the recently announced partnership with Mastercard creates significant opportunity for growth for MYOB and its clients,” said Mr Reed.

“The new strategic partnership with Mastercard extends MYOB’s payments services to offer an integrated solution for SMEs to pay suppliers and employees directly within MYOB‘s software; opening up $200 billion of payment transactions.

“The year ahead will be an exciting one for MYOB as we progress our accelerated investment strategy and continue to deliver on our promise to ‘simplify success’ for all our customers and partners.”

Dividend

Under the scheme implementation agreement currently in place with KKR, MYOB cannot declare and pay any dividend without KKR’s prior written consent. On the basis of this restriction, the MYOB Board has not declared a final dividend for the financial year ended 31 December 2018. If the proposed scheme of arrangement with KKR does not proceed, the MYOB Board will consider whether or not it will declare a special dividend at that time.

2019 Outlook

The FY19 guidance has been updated, with organic revenue growth expected to be 6 to 8 percent; R&D investment to be approximately 20% of revenue and underlying EBITDA margin expected to be greater than 38%.

Scheme of Arrangement with KKR

The go-shop process concludes at 11.59pm AEST tonight (Thursday 21 February). MYOB will separately provide the market with an update on the outcome post the ‘go-shop’ period, expected to be on Friday 22 February 2019.

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