Why Reckon’s (ASX:RKN) results were well received with a 15% share price gain this morning

Nick Sundich Nick Sundich, August 15, 2023

Reckon (ASX:RKN) gained the most of any company releasing results on Tuesday, with a 15% share price gain. This was in spite of revenues from the accounting and legal software business only growing 4%, while its profit rose 16%, which was primarily due to a lower effective tax rate as a result of higher R&D spend.


What are the Best stocks to invest in right now?

Check our buy/sell stock tips

3 reasons why Reckon’s results were well received

We think there were three reasons why Reckon’s results were well received. Firstly, the company slashed its net debt from $2.8m to $0.3m, a reduction of 90%. Secondly, Reckon paid a dividend of 2.5c per share. At yesterday’s 52c closing price, this represents an impressive yield of 4.8%. While it is only 4.3% at today’s share price (59c as at 11am), it is still an impressive yield for a technology stock.

Third, although the quantity of revenue wasn’t growing that strong, the quality certainly did. The company’s Business Group saw a 6% lift in cloud revenues even in spite of the decline in user numbers after discontinuing a free payroll app. And Legal Group subscription group rose 19% to $5.3m. This entity now serves 497 clients with 8 of the 25 largest law firms in the US and 5 of the top 7 in Canada.


What now?

Keep in mind that Reckon uses the calendar year and so this is only the half-yearly result. So we will see this growth reflected in its full year results, which will be due in February. The company is arguably better positioned in the US market than Xero, where that tech giant is relatively under penetrated.

Shareholders are set for some good times ahead, although there are several risks including industry competition and investor sentiment towards tech stocks taking a turn for the worse once again.



Stocks Down Under Concierge is here to help you pick winning stocks!

The team at Stocks Down Under have been in the markets since the mid-90s and we have gone through many ups and downs. We have written about every sector!

Our Concierge BUY and SELL service picks the best stocks on ASX. We won’t just tell you what to buy – we give you a buy range, price target and stop loss level in order to maximise total returns. And we will only recommend very high conviction stocks where substantial due diligence has been conducted.

Our performance is well ahead of the ASX200 and All Ords.

You can try out Concierge … for FREE.




There’s no credit card needed – the trial expires automatically.



Blog Categories

Recent Posts

share buybacks

Share buybacks: Are they a good sign or a waste of money?

Share buybacks are a controversial topic amongst investors. Some say it is a waste of money, others will welcome it…

AFT Pharmaceuticals

AFT Pharmaceuticals (ASX:AFP): A gem of a dual-listed healthcare company

AFT Pharmaceuticals (ASX:AFP) may not spring to mind as the best company to have come out of New Zealand. Many…

Can Tabcorp’s nеw boss improve the stock’s dwindling odds?

Tabcorp (ASX: TAH) has had a dog of a year, with its share price dropping roughly 40% in the last…