Reckon Limited is an unusual survivor on the ASX: a homegrown accounting-software house selling small-business ledgers since 1987, and one of the last locally listed pure-plays in a category dominated by Xero, MYOB and Intuit. It is also, unusually for this end of the market, profitable.

Reckon lifted revenue, earnings and profit in the year to December 2025, pays a fully franked dividend and trades on a single-digit earnings multiple. That keeps it on value-oriented watchlists even as the share price drifts toward the bottom of its 12-month range.

Latest announcement or development

The most recent price-sensitive filing on Reckon's ASX record is the preliminary final report of 10 February 2026, lodged with results commentary and an investor presentation. Everything since has been administrative: the annual report on 31 March, directors' interest notices, the notice of meeting in April, results of the annual general meeting on 20 May, and a change in substantial holding on 11 June.

None carried a price-sensitive flag. Shareholders re-elected founder Greg Wilkinson and voted on the remuneration report. No trading halt, capital raising or guidance revision appears in the record.

Recent financial and operational performance

For the twelve months to 31 December 2025 Reckon reported revenue of A$62.4 million, up 15 per cent, EBITDA of A$26.1 million, up 29 per cent, and net profit after tax of A$7.0 million, close to double the prior year. Operating cash flow net of development spend rose to A$8.7 million.

The Business Group, the Australian and New Zealand small-business arm, contributed A$48.6 million, including A$6.1 million from Cashflow Manager, acquired in January 2025 for A$8.75 million. Excluding that, organic revenue edged from A$41.8 million to A$42.5 million, so the growth headline owes much to the purchase. Cloud subscription revenue grew 8 per cent to A$27.6 million and Reckon One lifted 27 per cent to A$8.9 million, on margins near 52 per cent. The US-based Legal Group, nQ Zebraworks, lifted subscription revenue 15 per cent to A$13.2 million and tripled divisional EBITDA to A$3.3 million.

Business model and principal assets

Subscription income now accounts for roughly 95 per cent of group revenue, a structural shift away from the desktop licences Reckon sold for most of its existence. Two groups remain after a decade of pruning. Document management was demerged as GetBusy in 2017, and the Accountants Practice Management Group, then about 30 per cent of revenue, was sold to the United Kingdom's Access Group for A$100 million cash, completing on 1 August 2022.

What is left is a cash-generative ANZ small-business franchise serving over 100,000 users, plus a niche legal-technology arm whose document workflow software is used by twelve of the world's twenty largest law firms.

Growth opportunities

Two engines matter. In the Legal Group, Billing Workflows is the newer product: annual recurring revenue roughly doubled to A$1.4 million off a small base, against a stable A$12.3 million from Document Workflows, and management estimates a serviceable market of 77,000 attorneys in the US and UK. Reckon also released its first client-facing AI tool inside DataQ AI.

In the Business Group, the priority is converting the legacy desktop base onto Reckon One, a migration management frames as a 2026 to 2027 exercise. The board also continues to assess corporate transactions, which historically has meant both bolt-ons and divestments.

Balance sheet, funding and cash flow

Reckon runs a thin balance sheet. Net debt closed FY25 at A$5.4 million, up from A$2.9 million after the Cashflow Manager purchase, with year-end cash of only A$0.9 million and gearing near 25 per cent of equity.

Cash from operations was A$23.8 million, but A$15.4 million was capitalised as product development, up from A$14.4 million. That gap explains why headline EBITDA and the cash genuinely available to shareholders diverge so sharply. The fully franked 2.5-cent dividend absorbed A$2.8 million; buyback activity was negligible at A$107,000. Gearing is modest, but there is little buffer for a sizeable acquisition without new debt or equity.

Principal risks

Reckon's own annual report is candid about the pressure points. Execution risk on Reckon One comes first: delays or cost overruns would leave the company carrying development expense without the subscription uplift. Legacy decline is second, the older desktop products descending from Intuit code and facing integration limits.

Competition is the structural issue. Xero, MYOB and Intuit are far larger, spend more on product and distribution, and set the price expectations of Australian accountants. The report also lists information-security exposure through third parties, dependence on AWS and Azure, and the uncertain effect of artificial intelligence. Churn in the legacy base settles the argument, and it is not disclosed in a form outsiders can track.

Outlook

Management expects the Business Group to perform much as it did in 2025 while the Reckon One migration accelerates, with the Legal Group's billing product carrying growth offshore. The next test is the half-year result for the six months to June 2026, historically released in August.

The market is pricing Reckon as though its legacy base erodes faster than the cloud products can replace it. Whether that scepticism is warranted is an empirical question the next two results will start to answer.