MYOB sees untapped potential for New Zealand growth

BUSINESSDESK: MYOB, the payment solutions software firm that competes with Xero, wants to build on its dominant New Zealand market position, and sees prospects for growth from an as-yet untapped market as it shifts its customers to cloud-based applications.

Chief executive Tim Reed told BusinessDesk trading has been strong for the local unit, which holds between 60% and 70% of the New Zealand accounting market, and there is scope to extend its reach.

The accounting and payroll software firm has "north of 170,000" customers, but with some 450,000 businesses in New Zealand, there are "large opportunities for us," he said.

"A number of businesses have a preference to work with a single supplier, and like to have integrated solutions from a single vendor." 

The company has just embarked on a joint initiative with Westpac Banking to offer free websites to local businesses for the next year in a bid to lift the nation's online presence and provide new distribution channels for small and medium-sized enterprises.

At the same time, MYOB is in the process of migrating payroll customers on to its LiveAccounts application, which enables firms to access all of the companies' services in the cloud that have previously been limited to desktop.

"We can simply turn the cloud on," he said.

Mt Reed is upbeat about the prospects for New Zealand, saying "there are lots of green shoots". That is in the face of a global economy where Europe's sovereign debt woes threaten to stall the recovery from the 2008 financial crisis.

The New Zealand unit boosted revenue 13% to $34.3 million in the 2010 calendar year, reporting a bottom line loss of $2.7 million, according to its latest financial statements lodged with the Companies Office.

The bulk of the loss came from $3.3 million in interest payments that year.

Last year, US private equity firm Bain Capital bought a majority stake in MYOB for a reported $A1.2 billion from buyout firms Archer Capital and HarbourVest Partners. MYOB management retained their shareholding in the company.

Xero had annual operating revenue of $19.3 million last year, more than double the year-earlier period.