Hard Selling Software Won't Keep Up The Pace

Sydney Morning Herald

Saturday August 12, 2000

Katrina Nicholas

Accounting software provider MYOB expects to beat financial forecasts for this calender year with increased spending by small business due to the GST translating to better-than-expected sales during June.

MYOB said it shipped more than 90,000 software packages to retailers and resellers a ``massive increase in demand" which bolstered revenue and profitability.

But increased investment in customer service, teamed with an expected reduction in unit sales from June, was ``likely to significantly reduce profitability in the second half of the year".

In the past year, MYOB has expanded customer service staff by 166 per cent.

The company yesterday gave no indication by how much it expected results to improve, but in June shareholders were told revenue would expand more than 125 per cent in 2000 compared with the nine months to the end of 1999. In that period MYOB posted a $6.13 million net profit on revenue of $41.9 million.

In its prospectus, dated May last year, MYOB forecast revenue of $74.1 million for 2000 and a net profit of $13.9 million.

MYOB chief executive Mr Craig Winkler said yesterday the ``magnitude of June caught us a bit by surprise". MYOB had expected to ship around 125,000 units for the year.

``So to see 90,000 in June alone lets people know that the month was a bit of a wild card."

While post-GST spending on accounting software would mean increased sales for July and August, Mr Winkler said sales figures were not likely to rival June.

He also said that according to anecdotal evidence, MYOB was still the number one provider of accounting software to small business.

Last month research from Inform Database Research Services said rival Reckon, which holds the Australasian licence for Quicken accounting software, shipped 26,000 units of its financial software in June, while MYOB shipped just 22,000 units.

Shares in MYOB yesterday closed up 2c at $4.33, but are 21 per cent off its adjusted high in June of $5.49.

The company is expected to report results for the June half late this month.

FACT FILE

MYOB's profits will be hurt by increased spending on customer service and slowing sales after June.

In June, MYOB shipped over 90,000 software packages, significantly more than the 22,000 units estimated last month by Inform Database Research Services.