How did MYO perform in FY2018?

MYOB Group Limited (ASX: MYO), a company from the Information Technology sector and a provider of desktop and cloud business management software solutions to businesses and accounting practices in Australia and New Zealand, has announced full FY2018 results for the period ended 31 December 2018.

By the end of the FY2018 on 31 December 2018, the company generated revenue worth $445 million which was up by 7% year on year. The underlying EBITDA remained flat during the period. However, the statutory EBITDA was slightly down by 1% to $181 million.  The NPATA increased by 2% year on year to $104 million. The online subscribers also got increased by 57% to 628,000 on FY2017. 

The presentation also covered the company’s focus on driving growth and creating long-term value for its shareholders. For this, the company tries to accelerate growth in existing markets by growing online subscribers and increasing lifetime value. They also work to increase TAM (Total Addressable Market) through Payments and SME Lending or by increasing share and TAM through enterprise for penetrating an already opened new market. They also look for strategic acquisition opportunities to strengthen the core and new TAM.

The five years investment plan of the company from FY2018 to FY2022 for the future growth has been to invest approximately $50 million for accelerating MYOB Platform to win new accounting practices, leading to a corresponding increase in SME referrals. There will be another investment of $30 million for sales and marketing to increase the number of referrals from the adviser base.

During the period, the SME paying subscription increased by 10% to 641k. The Churn rate was down by 12% during the period. The SME Average revenue per paying user (ARPU) increased by 8% as compared to the previous corresponding period. In total, the lifetime value of the SME base grew by 30% in the last two years.

The company also introduced new features in the market. At present, they are working on more modules which are under development phase. The company also invested $30 million for accelerating the Sales & Marketing to drive growth in the number of online subscribers. It included the creation of brand awareness in the market in Australia and New Zealand, increasing the acquisition of new direct sales through a strong brand and quality, cost-effective leads and also increasing the size and skill level of partner sales.

The company also reported a continuous growth in the SME Paying User trends as of November 2018, retention and ARPU trends remained strong during the period. There was also strong growth in online connected services. The company also entered into a partnership with Mastercard. Thus, expanded the payment solution for the total addressable market.

The company reported strong financial results in FY2018 which was in line with the FY2018 guidance with increased profit after tax. The company made a net profit of $63.785 million. There was a slight decrease in the net asset of the company as a result of an increase in the total current liabilities. The total shareholders’ equity was worth $820.997 million. By the end of the period, MYO had net cash and cash equivalent worth $34.914 million.

In FY2019, the company has targeted its organic revenue growth in between 6% to 8%, R&D expenses is expected to be around 20%, underlying EBITDA to be above 38% and free cash flow more than $100 million.

In the last six months, the stock has generated a positive return of 11.8%. By the closure of the trading session on 21 February 2019, the closing price of the stock was A$3.380, down by 0.88%. The company has a market capitalization of A$2.01 billion with approximately 590.8 million outstanding shares and PE ratio of 35.340x.


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