Why is the Reckon (ASX:RKN) share price on the rise today?

The Reckon share price is marching higher today, up 4% in afternoon trading. We look at the company's latest financial results.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published February 16, 2021 3:29 pm AEDT

The Reckon Limited (ASX: RKN) share price is marching higher today, up 4.19% in afternoon trading.

The accounting software provider's shares are rising following the release of the company's results for the first half of the 2021 financial year (H1 FY21).

feet of investor like warren buffett walking up chalk-drawn steps — Image source: Getty Images

What did Reckon report?

In this morning's ASX release, Reckon reported net profit after taxes (NPAT) of $9.7 million. That's an increase of 19.8% from H1 FY20.

Earnings before income, tax, depreciation and amortisation (EBITDA) came in at $30.6 million, an increase of 6.6% from the previous corresponding period. Revenue of $75.6 million increased by 0.3%. The company reported its recurring revenue stream is strong, with 85% of revenue now subscription based.

Reckon reduced its debt over the half year to $31.8 million, down $5.8 million, or 15%.

The accounting software provider will pay a 2 US cent final dividend, providing a 6% dividend yield.

Commenting on the results, Reckon's CEO Sam Allert said:

The strong execution of our plan during 2020, which includes a continued focus on investing in cloud-based product development to satisfy client demand, means Reckon is increasingly well placed for growth.

Despite the uncertainty created by the pandemic, Reckon performed well across key financial metrics and in particular continued its positive cloud-based user growth trajectory…

Expanding on the company's growth outlook, Allert added:

We have a clear growth plan for 2021, which includes more mobile apps for our small business client base, and cloud modules for our APS and Elite Accountant client base, whilst leveraging the power of Reckon One to enhance the back office and payroll function for accounting firms and small businesses alike. This strategy compliments our US cloud Practice Management roadmap and provides strong synergies and cross sell opportunities across our global business.

Reckon share price snapshot

It's been a good 12 months for Reckon shareholders, with shares up 29%. And that's despite the plunge in the Reckon share price during the wider COVID-fuelled market selloff last year, which saw shares tumble more than 47% into late March.

Year-to-date the Reckon share price is up 13%. That compares to a gain of 3% on the All Ordinaries Index (ASX: XAO).

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