Privately-owned software firm MYOB has reported a surge in the number of new customers buying subscriptions to its online services, as the rise of cloud computing shakes up the sector

MYOB transition to all-digital world

September 16, 2013 – 4:00PM

Clancy Yeates

Privately-owned software firm MYOB has reported a surge in the number of new customers buying subscriptions to its online services, as the rise of cloud computing shakes up the sector. MYOB, now owned by Bain Capital, made its name in the 1990s selling accounting software packages for small businesses to install on desktop computers. But in recent years it has faced growing competition from new rivals such as ASX-listed Xero providing similar services over the web.After reporting a 7.6 per cent rise in first half revenue to $115.7 million, chief executive Tim Reed said the share of new customers coming to the business via online subscriptions had surged to 42 per cent and would soon be much higher.

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‘‘I do believe the market is evolving. That 42 per cent a year ago would have been sub 10 per cent, so it is moving quite quickly,’’ he said.

‘‘I certainly expect that over the next 12 months it will go well past 50 per cent and continue to grow,’’ he said.

Mr Reed said the industry was rapidly changing due to new technology, but MYOB had made the transition to a company driven by online subscription revenue, rather than software licences.

In the latest half, earnings before interest, tax, depreciation and amortisation rose 1 per cent to $54 million.

It made a net loss of $6.3 million after tax, but the company says this figure is not a key focus because its profit statement contains a large number of non-cash items.

MYOB was listed on the ASX until January 2009, when it was taken private by Archer Capital before being sold to Bain for $1.2 billion in 2011.

Mr Reed played down the chances of it re-listing anytime soon.

He said Bain typically held onto companies it had purchased for five to seven years , and added:  ‘‘There are currently no conversations about a change in ownership.’’

While it is privately owned, MYOB last year raised $155 million from investors via a notes issue.

A significant portion of the funds were used to pay down debt and to help fund the recent NZ$136 million purchase of BankLink, which allows accountants to access their small business clients’ electronic transaction records.

It has a further $20 million to $30 million earmarked for further acquisitions or investment.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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