Reckon (RKN) H1 2025 earnings summary

Executive summary

• Achieved strong first half with $33M revenue (up 16%), $14M EBITDA (up 21%), and $4.2M NPAT (up 35%) for HY25, driven by organic growth and the acquisition of Cashflow Manager.

• Business Group's cloud-based product Reckon One delivered a 26% revenue increase; Legal Group subscription revenue grew 18% year-over-year.

• Acquisition and integration of Cashflow Manager in January 2025 added 20,000 SME clients and contributed positively to results.

• Declared a fully franked annual dividend of 2.5 cents per share, to be paid in September 2025.

• Maintains a clean balance sheet with $4.8M net debt and a $25M bank facility as of 30 June 2025.

Financial highlights

• Revenue increased 16% year-over-year to $33M; EBITDA up 21% to $14.1M; NPAT up 35% to $4.2M.

• Operating cash flow after development costs improved to $6.2M from $4.3M in HY24.

• Subscription revenue comprises 94% of Business/SME segment and 95% of Legal segment.

• Net debt increased to $4.8M from $2.9M at December 2024, reflecting the acquisition.

• Dividend payout of 2.5 cents per share, fully franked.

Outlook and guidance

• Ongoing investment in cloud product development and scaling, with a focus on transitioning clients to Reckon One.

• Board anticipates paying one fully franked dividend annually following the half year.

• Solid backlog and pipeline for Legal Group expected to support continued growth in 2HY25.

• Management expects continued stable cash flows and ongoing investment in high-growth opportunities, especially in cloud and legal segments.

• Plans to support and upgrade Cashflow Manager clients to Reckon One over coming years.