MYOB set to buy Aussie payments solutions provider for $48M

MYOB set to buy Aussie payments solutions provider for $48M

Paycorp to come under the MYOB banner

MYOB CEO, Tim Reed

MYOB CEO, Tim Reed

Accounting software company, MYOB (ASX:MYO), has entered into a sale and purchase agreement to acquire payment solutions company, Paycorp for “a total consideration” of $48 million.

This deal follows MYOB’s acquisition of Kiwi ERP software vendor, Greentree
, for $NZ28.5 million, in August last year.

In a statement on thee ASX, the company said the acquisition will be funded from its existing cash reserves and is expected to be complete by 1 April, 2017.

It also mentioned that the acquisition is in line with its corporate strategy of providing “innovative solutions” to clients and follows the launch of its PayDirect Mobile and PayDirect Online solutions, with monthly MYOB PayDirect Mobile transactions growing by 64 per cent in 2016 and PayDirect Online launching mid-year.

MYOB CEO, Tim Reed, said this deal with Paycorp will bring the company “significant growth opportunity” in the payment service industry.

“We know from our clients that cash flow is consistently the number one pain point for small business operators and we are delighted that we can bring together a solution that enables our clients to reduce administration time and costs and improve cash flow through the automation of payment services for their businesses.

“Through this acquisition, we will be the first to market with an integrated payment and accounting solution to our clients, which will create a new revenue stream for MYOB while staying true to our vision of helping businesses succeed,” he said.

Paycorp CEO, John Caliguri, said adding Paycorp into MYOB’s accounting software flows enables businesses to automate payment services, which, in turn, creates efficiencies in cash flow, reduces administration time, and costs for clients.

“We are excited to join forces with MYOB, a market leader in providing online solutions to businesses across A/NZ. This is the opportunity we’ve been looking for to deliver fully integrated payment solutions to many more clients across Australasia, and thereby help it improve its cashflow,” he said.

The acquisition is also expected to strengthen margins for existing MYOB connected services by allowing MYOB to have direct commercial, contractual and operational relationships with the acquirers and payment processors.

In addition, MYOB said that with an existing client base of about 1.2 million SMBs, MYOB is “well positioned” to address this “attractive market opportunity” and deliver new revenue streams for the company.

Most recently, the Melbourne’s Global Speech Networks (GSN), struck a deal to deploy Genesys' omnichannel customer experience and data centre solutions as part of a contact centre systems overhaul for accounting software company, MYOB.

The new project is aimed at helping MYOB position itself to meet customer experience and contact centre needs as they evolve.

MYOB has also released its results for the 2016 financial year, with $54 million in NPAT. This is a marked increase from its $42.2 million loss that it reported the same time last year. Revenue for its 12-month period was $370.4 million, up 13 per cent YoY, and its statutory EBITDA for the time frame was reported to be $164 million.

A breakdown of its business into three key segments saw its SME Solutions division record a 14 per cent YoY increase in revenue of $233 million; its Practice Solutions division record $86 million in revenue for the period (marking 23 per cent of MYOB's total revenue for the year); and its Enterprise Solutions division bringing in $52 million in revenue for the full year (up 26 per cent from the same time last year).

Reed added that the company expects “double digit revenue growth” for the 2017 year, and EBITDA margins to remain in the 45 per cent to 50 per cent range.

He mentioned that industry shifts such as IoT and mobile, people, advisory, and machine learning and AI will drive further changes in the accounting space.

"We remain cognisant of this evolution, and believe the combined future impact of these changes will lead to small business owners increasingly relying upon a trusted adviser to complete all remaining human tasks.

"I am excited about the future and the opportunity that lies ahead for further growth and continued success for our clients and our business. We have in place a clear strategy and plan of what we need to do,” he added.

MYOB's share price was $3.82 at the time of publication.

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Tags acquisitionMYOBPaymentsPaycorp

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