With another range of cloud-based office management products launched over the past six months, accounting tech company Reckon (ASX: RKN) continues to secure new business customers to their platform, driving its profitability with an integrated payments solution set to further enhance its all-inclusive business services.
Since transitioning its accounting software to a cloud-based solution that has been specifically designed for small businesses, Reckon has been rapidly increasing its users to now have 114,000 on their platform, a 12% annual increase.
Positioned as the low-cost alternative to accounting tech giants Xero and MYOB, Reckon has been particularly popular throughout the pandemic, courtesy of their affordable subscription model. Despite being a lower-cost alternative, the platform retains all key reporting functions while its cloud-based capabilities allows access from multiple devices, giving it user-friendly functionality for business owners that are constantly on-the-go.
All of this contributed to the $73.1 million of revenue generated for the year ended 31 December 2021 which delivered $7.9m in net profit after tax, a 7.8% increase on the previous year.
“We have continued to make progress in our transition from a stable on premise technology company to a cloud first technology company that remains profitable and cashflow positive,” said Reckon Group CEO, Sam Allert.
“The Company’s investment into cloud product development increased and has led to the further enhancements of our existing product suite and the launch of a number of new cloud products. This will allow us to continue our high customer retention and assist us in creating larger markets to sell new products and drive revenue.”
Included in those new products will be an Integrated Payments Solution which Reckon is working on with its majority shareholder Novatti Group (ASX: NOV), a digital payments specialist.
Given that Novatti holds a suite of financial service licenses which includes Merchant Acquiring Licences from Visa and Mastercard, the integrated payments solution would likely enable Reckon business customers to accept digital payments while syncing with the existing Reckon account. This is one of the biggest issues for small business owners which need to open separate banking accounts to accept credit card and mobile payments with just 20 institutions licenced to do so in Australia, of which Novatti is one.
By doing so with Novatti, the functionality of having all business services within one platform would be particularly attractive to its 114,000 cloud users.
“While continuing on that transition journey, we again achieved strong results with revenue and profit both increasing,” added Allert.
“Board and management are excited for the future in all business divisions. We have more cloud products in the market and will leverage our amazing team, client bases, and partners to continue year-on-year growth.”
On top of its rising profits which includes a fully franked final dividend of $0.02 per share declared – taking total fully franked dividends for CY2021 to $0.05 – Reckon has further strengthened its balance sheet with the demolition of debt.
Despite spending $20m on product development, the tech company aggressively reduced its net debt by 52% from existing cash flow and the sale of its document tech division Reckon Docs to slash debt from $30.7m to $14.7m.
In the months ahead, Reckon is set to launch a new mobile invoicing app which will allow its users to instantly generate invoices from their smart device, as well as the rollout of a new business ledger product that will improve bookkeeping efficiency.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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