Reckon squeezed out a tiny full-year profit after a rollercoaster 18 months
Veteran accounting software maker Reckon has posted a 1 per cent increase in its full-year profit, and though total revenue fell over 2018 by 16 per cent, its shares got a 6 per cent boost to 70c this morning.
Reckon (ASX:RKN) has been on a rollercoaster ride over the past year, something CEO Sam Allert alluded to in his results announcement this morning, saying it had been a “significantly disruptive” period.
“Despite this, Reckon has showed extraordinary resilience, and continued to develop new products and initiatives throughout this period, that will provide future revenue growth opportunities,” he said.
“As we have said previously, we remain positive that future growth will be achieved in all divisions. The products and initiatives are largely market ready, and so now it simply comes down to sales and marketing execution.”
The emotional ride began in November 2017, when RKN shares rocketed to $1.61 as it announced a $180 million sale of its accountants practice management division to billion-dollar rival MYOB.
But by March that deal was beginning to look shaky, with the Australian Competition and Consumer Commission outlining concerns that MYOB would take a monopoly on practice software suitable for medium-to-large accounting firms.
The death knell came in May, when MYOB decided the regulatory delays were unacceptable and so dropped the deal.
Mr Allert told Stockhead in August that it had been a “challenging, uncertain, disruptive” period for the company.
At the time, Reckon was still looking to handball the accountant practice management business and appointed Investec to liaise with the “several parties” interested in acquiring the division.
“We’ve very happy to run that division going forward, but rather than allow our team to get too distracted by any offers we’ve got Investec handling all that so our team can focus on what they do best,” Mr Allert said at the time.
It was unclear as to whether Reckon is still fielding offers for the business, which it describes as “entrenched as the product of choice amongst the major accounting firms”. Stockhead has contacted Reckon for comment.
The company’s financials for 2017 had to be restated in the 2018 report to include the aforementioned division, as it had been classified in the 2017 annual report as discontinued operations due to the proposed sale to MYOB.
That meant 2017 revenue was actually $90.3 million, and so 2018’s revenue of $75.4 million was a 16 per cent drop.
Profit rose marginally from $7.6m to $7.7m.