Reckon reports a strong financial 2022
ASX-listed Reckon has reported a strong financial and operational performance for the 12-month period ended 31 December 2022 (FY2022).
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) from continuing operations was $18 million, a 5% uplift on a normalised basis on the PcP. The rise in EBITDA follows increases in the previous years, demonstrating the group’s consistent growth trajectory with revenue expansion supported by targeted R&D investment. Net Profit After Tax (NPAT) was down 1% due to increased depreciation and amortisation related to the additional investment in R&D and in FY2021 the tax expense was reduced due to the utilisation of tax losses not previously brought to account.
The key operational highlight for 2022 was the sale of the Accountants Group division to the Access Group for $100 million of cash. The all-cash nature of the transaction was a testament the attractiveness of the business with the proceeds funding the payment of a partially franked special dividend of $0.57, taking total dividends paid during the period to $0.60.
Concurrently, the groups remaining two divisions – Small Business (accounting and payroll solutions for SMEs) and Legal (practice management and workflow for law firms) – delivered sound annual growth rates.
Along with strong momentum in ARR and total revenues, both divisions also benefited from Reckon’s continuing focus on R&D investment which has resulted in ongoing upgrades and added functionality to meet expanding demand from users in cloud-based products.
Further investments during 2022 were made to upgrade the product suite across cloud and mobile, with improved core functionality and increased compatibility with client systems.
Cash from the sale of the Practice Management division as well as the strong financial and operational performance contributed to a material reduction in net debt, with another $11.9 million of debt repaid, reducing outstanding net debt to just $2.8 million, down from $14.7 million in FY2021 and $30.7 million in FY2020.
Commenting on the results, Reckon Group CEO Sam Allert (pictured), said, “This full-year result caps off a particularly strong 12-month period where Reckon cemented its position as a leading, innovative technology company that has the capability to deliver outstanding returns for shareholders, fund its growth through ongoing R&D spend and strengthen its balance sheet with a material reduction in net debt.
“The sale of the Accountants Group was of course a key achievement for Reckon and our efforts are now firmly focused on aggressively scaling up the operations of the Business Group Accounting and Payroll division and Practice Management legal services division, both of which traded well in 2022 and have excellent future prospects. With more than 400,000 Australian workers now paid through Reckon software and a major market opportunity for its practice management software in the US legal sector, the Company has laid its foundation for long-term growth with a subscription-based revenue model. Reckon is well-positioned to hit its next round of growth targets, underpinned by effective R&D investment and prudent capital management.”
