In its half year 2015 financial results released today, revenue growth doubled from 3% in 2014 to 6% for the half-year 2015 - up to $54 million from $51.1 over the same period in 2014.
Reckon strategic director Daniel Rabie is buoyed by Reckon’s performance in its Australian-New Zealand home market, with “extremely positive trends” in the market for its products – particularly take-up of its Reckon One cloud accounting solution – and sees a “huge opportunity” for growth in international markets, particularly the US and UK.
But, while competition has heated up in the Australian-NZ market over the last couple of years, Rabie told iTWire that increased competition from the likes of Xero and MYOB has increased the size of the market and has been a “positive” for the market overall.
Raby says transition to the cloud from the desktop by many clients is still in its early days, and there’s plenty of growth in the future with a lot of existing desktop users that still need to move to the cloud.
“We know who those users are and we are talking to them regularly, which is one of our competitive advantages. Over the next couple of years we will be able to move our existing customers and new customers over to our cloud products.”
Rabie says the continuous investment in development of its primary cloud accounting solution – Reckon 1 – with good uptake in the last couple of months, is well justified.
“So, while we see international as a massive opportunity for these products, here in Australia - NZ it’s a big market where there is room for a couple of players and we’re proving we are taking a decent sized marketshare in that space.”
Daniel Rabie’s comments echo those of Group CEO Clive Rabie who says today’s results not only come from continued success in Australia and New Zealand, but particularly from “outstanding performance in the company’s international markets.”
“We are now reaping the benefits of moving to a subscription revenue model. The continued growth of our online business and powerful international expansion has contributed to our performance.
“Our suite continues to provide one of the most comprehensive range of products for small business and professional firms,” Clive Rabie said.
Today’s half yearly result shows that Reckon’s international revenue now represents 19% of group revenue and the company says the division is poised to become a “much more substantial part of the group in future.”
Daniel Rabie says there are now over 30,000 online (cloud) users of its flagship Reckon One accounting platform and Reckon Accounts hosted solution, all subscription clients.
“That’s about a 30% year on year growth, which is strong, and those 30,000-plus clients are all subscription clients.”
Reckon says it now has 300,000 “active customers” who have bought an upgrade of its product over the past couple of years.
“So if they are using one of our Reckon accounts products they can upgrade now to the newest version. This is the first year when we have pushed everyone to a subscription model, but its unrealistic in year one for all our ‘active customers’ to move to a subscription.
“But those that have upgraded over the last couple of years are enjoying our product and when it’s time for them to upgrade again that’s when we hope to move them to a subscription model, hopefully to use one of our cloud products.”
On expansion in the international market, Rabie says Virtual Cabinet – a cloud-based document management system – has already launched in the US market (2 months ago) after a successful launch in the UK where the company currently has around 2,000 accounting partners.
The flagship Reckon One cloud accounting platform is to be launched in the UK market before the end of this year, with a launch in the US market still some way off, possibly sometime next year.
“So we already have an infrastructure there (US market) and we already have cashflow which we can use to invest in these markets (US & UK) so it’s a good platform for growth,” Rabie notes.
And, according to Reckon’s statement on its financial results today, demand in the International Group has been strong “with a good backlog of orders in place for delivery in the second half.”
Reckon lists key highlights of its 2015 half year financials as:
• Subscription revenue grew 8%, mainly as a result of volume growth from both new customers and cross selling additional modules into the existing customer base
• Subscription revenue now represents 91% of practice management revenue
• The ReckonDocs content business has again performed strongly with revenue growth of 10%
• Cloud revenue has grown 44% and represents 30% of core product revenue
• Incremental units sold of the new version of ReckonOne released in June this year are almost three times higher than new units sold in the first five months of the year. This early indication of success with Reckon One has encouraged us to continue our high level of investment in that product
• Subscription revenue is up 42%on 2014 and now representing 71% of core product revenue in this division.