Reckon Grows Revenue but Net Profit Falls 25.7% in FY2024

Financial Performance Overview

Reckon Limited has released its Preliminary Final Report for the financial year ended 31 December 2024, revealing a nuanced performance. The company recorded revenue of $54.1 million, a slight increase of 1.3% compared to the previous year’s $53.4 million. EBITDA also edged up by 2.5% to $20.2 million, signaling operational resilience.

However, net profit attributable to members fell sharply by 25.7% to $3.6 million, down from $4.9 million in 2023. This decline reflects increased expenses and a less favourable profit margin, despite the revenue growth. The 2023 net profit had benefited from a $0.7 million research and development grant, which was not repeated in 2024.

Dividend and Balance Sheet Highlights

Reckon maintained its dividend policy, paying a fully franked dividend of 2.5 cents per share in September 2024, consistent with the prior year. The company’s net tangible assets per share remained negative at 12.6 cents, virtually unchanged from 12.7 cents negative in 2023, reflecting ongoing investment in intangible assets and development costs.

The balance sheet shows a working capital deficiency, with current liabilities exceeding current assets by $6 million, partly due to lease accounting standards. Nevertheless, Reckon holds $20 million in unused bank facilities, and cash flow from operations remains positive, supporting the directors’ confidence in the company’s going concern status.

Segment and Geographic Performance

The Business Group segment, which includes Reckon’s accounting software products, generated $41.8 million in revenue and $21.3 million in EBITDA, while the Practice Management Legal Group contributed $12.3 million in revenue but recorded an EBITDA loss of $5.5 million. The company’s revenue is primarily derived from Australia, with notable contributions from the United States and New Zealand.

Strategic Acquisition to Drive Growth

Looking ahead, Reckon announced the acquisition of the Cashflow Manager and OKKE businesses from Money Management Group Pty Ltd and its UK subsidiary, effective 1 January 2025. The $8.75 million deal, funded through existing bank facilities, is expected to be earnings accretive, contributing approximately $6 million in revenue, $3 million in EBITDA, and $1 million in net profit after tax in FY2025.

Cashflow Manager’s desktop accounting software and OKKE’s SaaS product will complement Reckon’s existing offerings, with plans to migrate OKKE users to Reckon One, enhancing the company’s cloud software portfolio. The acquisition underscores Reckon’s commitment to expanding its footprint in the accounting software market and leveraging synergies across its product suite.

Outlook and Considerations

While the decline in net profit may raise some concerns, the company’s strategic moves and stable dividend policy suggest a focus on long-term value creation. The ongoing audit process is expected to conclude without modifications, providing further assurance to investors. Market watchers will be keen to see how Reckon integrates its new acquisitions and whether it can translate revenue growth into improved profitability in the coming year.