Slide 1: Results Presentation: Six months ended 30 June 2016
For personal use only Results Presentation For the six months ended 30 June 2016 To be read in conjunction with Appendix 4D and Accounts LAWYER PLUMBER ACCOUNTANT BUTCHER BUILDER
Slide 2: The Reckon Story
The Reckon Story Our mission is to bring millions of businesses and For personal use only professionals closer together with our software to create a brave new, connected economy... It’s been quite a ride already: 600,000+ businesses around the world have 2. Document Management used Reckon software,
Slide 3: The Agenda
For personal use only The Agenda 1. CEO update 2. Financial update 3. Outlook 4. Q & A 3
Slide 4: 1. CEO update
1. CEO update For personal use only Clive Rabie RECKON CEO 4
Slide 5: On track for guidance
On track for guidance Successfully delivering on FY16 projections provided at the end of the 2015 financial year. For personal use only Revenue EBITDA Development Spend FY16 $116 - 120m FY16 $34 - 36m FY16 $23 - 25m guidance guidance guidance Exchange rate impact 1.1m 48% 53% 49% of guidance of guid
Slide 6: Some key revenue highlights
Some key revenue highlights For personal use only 7% growth 4% growth Q1 revenue Q2 revenue Group revenue of $57m, up 6% from Strong new customer growth across $54m in H1 FY15. all divisions. Strong volume growth, particularly in Subscription revenue growth of 16% online products. to $36.3m. Interna
Slide 7: Our momentum is growing
Our momentum is growing All areas across the business are performing well, and looking strong into the future. For personal use only Practice and Document Management • Strong organic growth across both businesses. Q1 Q2 H1 FY16 SUBSCRIPTION • Ramped up geographic expansion for Document Management. R
Slide 8: Three core areas of our business
Three core areas of our business We have a strongly diversified business across three key markets, with exciting synergies between them. For personal use only Business Document Management Practice Management We provide accounting software to SME’s Our document management software is used Market lead
Slide 9: Business highlights
Business highlights For personal use only Over 36k online users (+18% annualised growth) Online user growth 17% online revenue growth over H1 FY15 (30% of USERS revenue is now cloud) 40k 35k Launched Payroll for Reckon One into AU market in April 2016 which resulted in user growth +15% 30k month-on-
Slide 10: Document Management highlights
Document Management highlights For personal use only 3k new paying customers added in H1 FY16, an Increase in paying customers annualised underlying growth rate of 15%. Virtual Cabinet and SmartVault online portals SEATS are currently used by 560k+ users to share 50k documents. 45k Cross selling int
Slide 11: Practice Management highlights
Practice Management highlights For personal use only 4k paying customers added across the Reckon APS Reckon APS seat growth suite (+9% annualised growth). Highest number of new large clients in many years. Expansion of an already impressive customer list. +19.5% CAGR 86k 90k Strong nQueue growth in
Slide 12: 2. Financial update
2. Financial update For personal use only Chris Hagglund RECKON CFO 12
Slide 13: Financial performance
Financial performance Results For personal use only H1 FY16 GUIDANCE* GROWTH • Revenue vs guidance impacted by Fx and lower Content business revenue (low profit impact). REVENUE 57.0m 59.0m -3% • Investment in sales and marketing primarily in the Reckon OPERATING EXPENSES (38.5m) (41.5m) -7% One (AN
Slide 14: Financial performance
Financial performance Results For personal use only H1 FY16 H1 FY15 GROWTH • Strong subscription revenue growth. REVENUE 57.0m 54.0m 6% • Underlying business showed solid profit growth. OPERATING EXPENSES (38.5m) (33.8m) 14% • Investment in sales and marketing primarily in the Reckon One (ANZ and UK
Slide 15: Financial performance: Revenue by business
Financial performance Revenue by business Revenue type For personal use only H1 FY16 H1 FY15 GROWTH 100% 100% Content revenue PRACTICE MANAGEMENT 30.6m 29.4m 4% 19% 21% Other revenue 17% DOCUMENT MANAGEMENT 7.3m 5.0m 45% 21% Subscription revenue BUSINESS 19.1m 19.5m -2% TOTAL 57.0m 54.0m 6% 64% 58%
Slide 16: Business financials
Business financials Subscription business with strong online growth. For personal use only Revenue Financial performance • Revenue of $19.1m, down 2% from $19.5m in H1 FY15. H1 FY16 H1 FY15 GROWTH • Transition to subscription substantially completed (mainly in Q1) SUBSCRIPTION 13.5m 11.6m 17% • Subs
Slide 17: Document Management financials
Document Management financials Customer growth continues to accelerate. Global market opportunity is enormous. For personal use only Revenue Financial performance • Revenue of $7.3m, up 45% from $5m in H1 FY15. H1 FY16 H1 FY15 GROWTH SUBSCRIPTION 5.9 3.5 70% • Subscription now 81% of revenue (69% in
Slide 18: Practice Management financials
Practice Management financials Highest number of new large clients added in many years, to an already impressive customer base. For personal use only Revenue Financial highlights • Revenue of $30.6m, up 4% from $29.4m in H1 FY15. H1 FY16 H1 FY15 GROWTH SUBSCRIPTION 16.8 16.3 3% • Strong Q2 FY16 grow
Slide 19: Practice Management reporting disclosure
Practice Management reporting disclosure A move towards a more meaningful reporting framework. For personal use only New revenue disclosure • Following feedback we are planning to simplify the reporting in H1 FY16 H1 FY15 GROWTH our Content business by removing the pass through ASIC fees REVENUE - R
Slide 20: Cashflow highlights
Cashflow highlights Development spend 25 25% For personal use only H1 FY16 H1 FY15 OPERATING CASHFLOW 17.9m 20.7m 20 19.6 20% TAX PAYMENTS (2.5m) (0.5m) 18.3 16.8 14.9 OPERATING CASHFLOW AFTER TAX 15.4m 20.2m 15 15% % of revenue 12.4 12.1 DEVELOPMENT SPEND (11.8m) (9.6m) 11.8 A$m SMARTVAULT ACQUISIT
Slide 21: 3. Outlook
For personal use only 3. Outlook 21
Slide 22: Strategic investments
Strategic investments We have successfully timed entries into product categories and territories throughout our history. For personal use only Docs + Billback + nQueue merger Elite + Desktop Super SyncDirect Shelco + NZ APS Distributor Virtual Cabinet SmartVault 2003 2004 2005 2006 2007 2008 2009 20
Slide 23: Reckon One growth opportunity: customer feedback
Reckon One growth opportunity Strong, rapidly growing customer feedback. For personal use only Customer feedback 10/10 10/10 10/10 “Great conversion from Xero, “Love it! So easy to use. Perfect for “Very easy to use, I much prefer good customer service and my very small business!” it in comparison t
Slide 24: Reckon One growth opportunity
Reckon One growth opportunity For personal use only We’re only getting started Momentum is growing stronger Only 10% in the cloud of 5.2 million SME’s United Kingdom Only 20% in the cloud of 2.06 million SME’s 15% June month-on-month growth Australia 9% month-on-month Only 35% in the cloud of 470,00
Slide 25: Reckon One growth opportunity
Reckon One growth opportunity Key strategy Simplified complexity & scalability For personal use only • Delivering on our strategic focus to bring low cost, premium • Our simplified approach is working, and rewarding customers online accounting software to the market to disrupt high margin with value
Slide 26: Document Management growth opportunity
Document Management growth opportunity Strong growth in our professional Document Management product is proving that this is an enormous market. For personal use only Huge opportunity ahead, especially given our first mover advantage. Online accounting Professional document management Innovators Ear
Slide 27: Document Management growth opportunity
Document Management growth opportunity Velocity of our customer and user base acquisition continues to rapidly increase. For personal use only Our recent SmartVault acquisition is already providing positive synergies. Paying customer growth momentum Users sharing documents in the portal 600k SEATS 5
Slide 28: Practice Management strength
Practice Management strength We continue to add to our already impressive customer base at the fastest pace in years. For personal use only Leading accounting and legal firms across the world are using Reckon products. 28
Slide 29: Guidance
Guidance Reckon reaffirms 12 month FY16 EBITDA guidance. For personal use only Revenue • Revised guidance $99 - $101m. • Reduced for: -- Removal of ASIC fee $14m. No profit impact. -- Fx, Desktop Super business sold and lower Content revenue in H1 FY16 (total $3m). Low profit impact. EBITDA • On tra
Slide 30: A future-focused growth company, built on a strong and stable business
A future-focused growth company, built on a strong and stable business. For personal use only Growing Proving Enormous We’re Momentum success Opportunity ready Revenue and customer We’re executing on our A leading product range, We’ve made the right volume continues strategy and showing expanding te
Slide 31: 4. Q & A
For personal use only 4. Q & A 31
Slide 32: Resources
Resources For personal use only Website About us Investors Media reckon.com reckon.com/au/about-us reckon.com/au/investors reckon.com/au/media Watch our new Reckon One video here: reckon.com/au/one 32