Slide 1: Results Presentation
Results Presentation For the twelve months ended 31 December 2017 To be read in conjunction with Appendix 4E and Accounts LAWYER PLUMBER ACCOUNTANT BUTCHER BUILDER
Slide 2: The Reckon Story
The Reckon Story Our mission is to bring millions of businesses and professionals closer together with our software to create a brave new, connected economy... It’s been quite a ride already: 800,000+ registered businesses around the 2. Practice Management - Legal world have used Reckon software, 70
Slide 3: The Agenda
The Agenda 1. CEO update 2. Business update 3. Financial update 4. Outlook 5. Q & A 3
Slide 4: 1. CEO update
1. CEO update Clive Rabie RECKON CEO 4
Slide 5: 2017 focus: Unlock shareholder value
2017 focus Unlock shareholder value • Document management division de-merged in August 2017 • Practice Management - Accountants division to be sold to MYOB for $180M, subject to ACCC/NZCC approval • Intention is to paydown some debt and then to pay a special partially franked dividend if the ACCC/NZ
Slide 6: 2017 focus
2017 focus Reinvestment Improve quality of for future growth revenue • Product development • Increase in cloud customers to 47K • Sales and marketing • Cloud user growth 20% • 75% of total revenue is subscription • 6% subscription growth in 2017 (constant currency) 6
Slide 7: Results summary
Results summary Revenue EBITDA Development Spend (Excluding transaction costs) $90.3 million $33.2 million $17.2 million 1% underlying growth* 1% underlying growth* 19% underlying cashflow improvement Delivered on guidance *Note: at constant currency 7
Slide 8: Subscription revenue growth continues
Subscription revenue growth continues FY17 FY16 Revenue $M $M GROWTH SUBSCRIPTION REVENUE 67.9 64.0 6% UPFRONT AND SERVICE REVENUE 10.9 12.6 -14% OTHER RECURRING REVENUE 4.2 5.3 -23% LOAN INCOME 0.7 0.1 1,000% CONTENT REVENUE 6.6 7.5 -11% ORGANIC GROWTH (at constant currency) 90.3 89.5 1% BUSINESS S
Slide 9: Core areas of the continuing business
Core areas of the continuing business Business Division Practice Management - Legal Division A focus on small business solutions. Over Many of the worlds leading legal firms use our 800,000+ businesses having used our legal products. software, and we have a partner network of over 6,000+. 9
Slide 10: Practice Management - Legal highlights
Practice Management - Legal highlights Repositioned the division from Cost Recovery Expanding scan opportunity to new markets such provider to detailed WorkFlows expert in three key as: HealthCare and Accounting. areas: • Cost Recovery Early stage transition from upfront purchase model • Print Manag
Slide 11: 2. Business update
2. Business update Sam Allert ACCOUNTANT & BUSINESS GROUP MD 11
Slide 12: Business highlights
Business highlights Over 47k cloud users (20% annualised user growth). Online user growth 18% cloud revenue growth over FY17. USERS 50k 36% of revenue is now cloud. 47K 45k Countries operational: 40k 35k 30k 25k 20k AU NZ UK 15k 10k 5k 0 2011 2012 2013 2014 2015 2016 2017 12
Slide 13: Customer Migration to the Cloud
Customer Migration to the Cloud Focus on the growth opportunity to transition our non-paying desktop clients to the Cloud 80,000 Entry level business products – ideal for Reckon One 250,000 Feature rich business versions – ideal for Reckon Accounts Hosted 13
Slide 14: Building our Strategic Partnerships
Building our Strategic Partnerships A Focus on Strategic Partnerships for Reckon One cross sell – HIA, Aus Mums, IPA & IFA UK National building membership Australia’s #1 community for mums in One of Australia’s major organisation business. professional accounting bodies with more than 35,000 members
Slide 15: Growing into Niche Markets
Growing into Niche Markets Niche Market – Franchises - VIP, Delivery Mates, Tupperware Franchisor – Home & commercial Delivery Mates solution is a premier Tupperware corporation is a cleaning + garden maintenance provider of delivery drivers multinational direct sales company 850 ANZ Franchisees 300
Slide 16: Focus on Education
Focus on Education A Big Focus on Education – through partnerships with Open Colleges and Tafe, as well our Reckon Training Academy, Reckon One certifications and Reckon Community. Reckon Academy currently has 6650 Australia’s leading national online Up to 15,000 students annually active participants
Slide 17: New Solutions to meet client needs
New Solutions to meet client needs New Products & Services into our Existing Client Base – Reckon Loans and Reckon Aus Docs complimenting our software offering Product Focus Technology Upgrade New Partnerships Client portal – easier client New provisioning and payment portal New partnerships extend o
Slide 18: 3. Financial update
3. Financial update Chris Hagglund RECKON CFO 18
Slide 19: Financial performance
Financial performance Revenue FY17 FY16 GROWTH at constant currency: $M $M % CONTINUING BUSINESS 48.9 49.1 DISCONTINUED 41.4 40.4 90.3 89.5 1% BUSINESS SOLD / DE-MERGED - 6.8 CURRENCY - 1.4 90.3 97.7 EBITDA FY17 FY16 GROWTH at constant currency: $M $M % CONTINUING BUSINESS 15.9 16.9 DISCONTINUED 17.
Slide 20: Continuing business compared to guidance
Continuing business compared to guidance Revenue ACTUAL GUIDANCE $M $M BUSINESS DIVISION 35.9 36 LEGAL PRACTICE MANAGEMENT DIVISION 13.0 13 48.9 49 ACTUAL GUIDANCE $M $M EBITDA 15.9 15 ACTUAL GUIDANCE $M $M Development spend 8.3 8 20
Slide 21: Business financials
Business financials Subscription business with strong online growth. Revenue FY17 FY16 Financial performance at constant currency: $M $M GROWTH • Revenue SUBSCRIPTION 27.2 25.4 7% • Volume growth 2% • ARPU impacted by faster growing Reckon One. LOAN INCOME 0.7 0.1 1,000% • Subscription now 87% of av
Slide 22: Practice Management-Legal financials
Practice Management-Legal financials Impressive customer base with strong opportunity to grow scan market. Revenue FY17 FY16 Financial highlights $M $M GROWTH • Revenue SUBSCRIPTION 8.9 9.2 -3% • Strong scan growth, but weaker cost recovery renewals. UPFRONT AND SERVICE 4.1 4.4 -7% • High upfront /
Slide 23: Cashflow highlights; Development spend
Cashflow highlights 25 Development spend 22.8 FY17 FY16 20 19.6 18.3 $M $M 16.8 17.2 14.9 OPERATING CASHFLOW 9.7 7.5 (net of development spend) 15 12.4 12.1 RECKON LOANS (1.6) (0.6) A$m 10.7 DE-MERGER COSTS (1.7) - 10 SMARTVAULT ACQUISITION - (5.8) DESKTOP SUPER SALE - 1.3 5 DIVIDENDS PAID (3.4) (3.
Slide 24: 4. Outlook
4. Outlook 24
Slide 25: Re-focus group on business and legal divisions
Re-focus group on business and legal divisions Improve quality of revenue Execute business plans for both divisions Target cloud growth Grow ancillary revenue Expand scan market (including outside the legal industry) Right size business 25
Slide 26: Guidance for 2018
Guidance for 2018 Revenue EBITDA Development Spend $48 - $49 $15 - $16 $8 - $9 million million million 26
Slide 27: 5. Q & A
5. Q & A 27
Slide 28: Resources
Resources Website About us Investors Media reckon.com reckon.com/au/about-us reckon.com/au/investors reckon.com/au/media 28