Sabby Gill was appointed CEO in October 2022. He took over a thriving business and is hoping to leverage his extensive leadership experience. He has previously held roles at Sage, Epicor and Thomas International, where he was CEO for two years. If Dext is a name you are unfamiliar with, it is because the firm rebranded from ReceiptBank in February 2021. Receipt Bank was founded in 2010, and Hg bought a majority stake in the business for £12.6 million in April 2021.
So who are Dext?
“We’re the leading provider of pre-accounting automation for accountants and bookkeepers. We have relationships with 11,000 accountants globally and more than 1 million end users, mainly within the SME sector. We have 430 employees and a presence in Australia, New Zealand, France, the USA and Canada.”
Looking through the company website, there is a mention of offices in South Africa and Bulgaria. Do they still exist?
“In Bulgaria, we have a development centre. It has 170 employees there. It’s mainly where our AI, machine learning, extraction technology, and infrastructure engineering sit. South Africa was an office we had from a direct perspective, we still have relationships, but it’s very much run out of the UK.”
What about revenues and growth?
“We are proud to be one of the market leaders in our space and have revenues of over £50 million that put us in the top 1% Club. Those are companies that have been through start-up, scale-up and onto their growth trajectory of becoming a Unicorn. We are proud of our double digit growth considering the current macroeconomics and plans to continue and exceed that trajectory over the coming years.”
On Dext
Why did you join Dext?
“Mainly because of the opportunity. I was already very familiar with the accounting world when I was the Managing Director for Sage in UK & Ireland. I built some really good strong relationships within the wider ecosystem. When I was there, Sage had acquired one of our competitors at that moment in time, Autoentry.
“It’s just the sheer size of the opportunity and working with a company like Hg. They already own The Access Group and IRIS Software. They understand the market, the portfolio, and FinTech. Having a private equity that is as big and as respected as Hg was also a big draw to the role.”
What is your vision and strategy for Dext?
“We are what I refer to as the preeminent solution for business in that pre-accounting space. Everything we do is very much in pre-accounting: extraction, receipt capture, taking all that information and putting it through to a general ledger. We have over 25 upstream accounting systems that we can integrate, whether pre-accounting, accounting software or even payroll software. We can extract the information and then feed that into whatever system you want.
“For me, it’s just a case of continuing on that journey, looking at organic and inorganic growth. We are probably the only independent. When you look at Hubdoc, that’s with Xero, Autoentry is with Sage, and Receipt Capture is with QuickBooks. They all have their solutions, but we’re still growing. Our largest install base are currently sitting with those top three players; even though they all have their own incumbents, we are more functionally rich and it is the ONLY thing we do, people continue to come to us, even though they can get some of these solutions I referenced from those other providers for free.
“Strategy is all about protecting the core. A large majority of our revenue still comes from Prepare. We’ve done acquisitions around Commerce and Precision. It is important we protect our core and continue to enhance and building out that product and I am excited about the roadmap we have planned for 2023. It is already a great product, now it will be even greater.
We haven’t attempted to go into more international markets. When you look at the existing markets we’re already in, we already have a large opportunity where we play today, and we’ll continue that focus that I mentioned earlier.
On target market
What is the target market? The inference is that it is SMEs.
“We can operate in the entire accounting ecosystem, we are very much concentrating and targeting the SME market space. We’ve elected purposely not to go up to enterprise or large enterprise. It’s a totally different Go To Market and requires a different sales strategy and is outside our current model, that would require a change, one that we are open to potentially at some stage in the future, but today we feel we have more than enough opportunity within the SME sector.
“We have explored the option of, do we want to go into Enterprise? Do we want to go further up the enterprise stack? There’s still enough opportunity for us (without that). A recent report said that over the next two or three years, it’s going to be close to another 340,000 SMEs created. That is a huge opportunity in an area that we already dominate and lead.
“We all know, anytime there’s a financial crisis, it’s the SMEs, and the SMEs that end up being the people that bring it all back. 99% of the entire UK business population tends to be the backbone of the SMBs.”
Acquisitions
You mentioned HG, The Access Group and IRIS Software are highly acquisitive. Are we going to see the same appetite from Dext? What kinds of acquisitions will you target?
“We’ll do acquisitions, absolutely, where it makes sense. We haven’t got a timeline. We haven’t got a number that we want to do. But we’re always on the lookout for anything that helps build out what I would refer to as our strategic roadmap.
“I don’t want to go too far removed from our core. Our core business is around data extraction and what we do and prepare that data. Also, the important thing is about the personas to whom we sell. What you don’t want to end up doing is acquiring something, and you open up a brand new segment that you weren’t already in because you lose the synergies.”
The inference is that Gill has a laser focus for that. That focus will mean acquisitions will be around tech tuck-ins rather than market tuck-ins.
The future
Gill shared that until HMRC deferred MTD, the company was geared for that expansion. Instead, Dext had to pivot. It deferred MTD’s marketing plans for a few months as the requirements haven’t changed. Now Dext is pivoting around the requirement that small businesses have a solution that captures information and stores digital records. It will allow them to increase efficiency, and when MTD finally comes in, it is easy to switch on.
What will a good 2023 look like with hindsight?
“A good year will have been – we’ve enabled a large number of our client base to take advantage of the equivalent of a solopreneur application. Our ability to onboard more organisations for when MTD does come in 2026.
“Legislation changes are happening in France around eInvoicing, and eInvoicing has been introduced into Australia. We’re looking at the partnership relationships with Xero and QuickBooks and starting to engage with others. There are certain markets that some of our partners have a need or requirement for an extraction tool, we are there to help and support them in those particular cases.
“North America is a huge opportunity for us. We have a big presence in Canada, extending that with the QuickBooks relationship into North America. Gaining traction and just organically growing. For me, achieving the same growth rates as we’ve in the current macroeconomic recession.”
On product
What is on the product roadmap for 2023?
“The product roadmap continues to build out all the functionality we need around our three products.
“Prepare is designed to make bookkeeping profitable through automation and getting clients to do the work. It’s all about item submission, data extraction counters, workflows, software integrations and many more capabilities and requirements from SMEs.
“Precision was delivered with Xavier Analytics, which we acquired in June 2020. Precision pinpoints errors and makes them easy to fix and provides health scores to gamified bookkeeping for clients and staff, it is a great tool to assist Accountants to closely track and monitor the jobs to be done as well as giving very useful data insights into the clients’ business.
“The final and probably most exciting piece is around Commerce. SMEs that have sales data, data from multiple eCommerce and point of sale platforms like Etsy, eBay, Shopify and Amazon. More and more people are going into eCommerce. The ability to take all of that data digitally and being able to mine and use that within your accounting ecosystem is crucial.
“Precision and Commerce are big opportunities for us to upsell and cross-sell into our existing install base. We very much left those businesses on their own to incubate them within Dext, and for them to continue their product roadmaps and bring them closer to each other. In 2023 we are at that point where we will be able to bring those into a more closer aligned value proposition for our clients.”
Priorities
What are your main priorities now you have settled into the role?
“We have three products, Prepare, Precision and Commerce. In that case, one thing is making sure that we continue enhancing our internal transformations, common billing systems, common invoicing, and all of those transformation programs that allow us to be more efficient, and effective in servicing our clients and partners.
“We’re making huge headway, but I want to continue to do everything we can to simplify the business internally and externally. Making sure that we’ve got all of the product roadmaps built out. Making sure we continue to understand where there is opportunity, build out innovation and continue to enhance and bring value.
“Ultimately, any job of the CEO is three things. It’s risk mitigation, opportunity optimization, and just making sure that every single employee has everything they need, either from a resource, tools, system, processes and manpower to get the job done. That’s where I spend 100% of my time, is those three things, just making sure that the organisation has everything that it needs to win”
On challenges
What are your challenges?
“Is there going to be a recession? Is it a long recession? How’s that going to affect SMBs? We’ve been a fairly recession-proof business up to now because the only certain things you can be certain of are death and taxes. We deal with taxes. There’s always going to be a need for bookkeepers or accountants. There’s always going to be a need for taxes or VAT and a need for reporting.
“For us, it will be a case of legislation; if legislation changes are talked about but not necessarily put in. You think about what HMRC did, and delaying that, kicking the can down the road for another two years that will potentially cause areas of concern, not only for us because we’re building certain structures or software that won’t come to fruition at that moment in time.
“We’re very conscious of that, hence the reason we were able to pivot quite quickly to a solopreneur application for a small business. Rather than worrying about building a solution that was specifically built for MTD. Less concern, more a worry.”
What do you want Dext to be famous for?
“I want to be famous for having the preeminent data capture and record-keeping solution in the pre-accounting space for business.”
When Sabby answered, he hesitated over the word business, and we probed deeper. It seems he consciously omitted the word small.
“I say that because at some stage, if Xero go upscale, and they start going enterprise or QuickBooks and anybody else, we can go on that journey, right? We’re not excluding ourselves from Enterprise. We have that ability. We’ve got the functionality. We just haven’t built out the integrations.
“We have an open, friendly API, and there are probably people already using that now out there in that area. I’m not saying that we would never go down that area. But it’s just going to be a case of let’s make sure we tackle and focus on the opportunity in front of us before we distract ourselves.
“If you try and go Enterprise, it’s a completely different animal with the marketing and how you go about selling. The sales motion is completely different. You have got to be able to cater for that type of engagement. That’s not us today, but it doesn’t say it won’t be in the future. And that’s the reason why I hesitated to use the word business rather than small business.”
The book question
What was the latest book you read, and what was your take out for business?
“It’s Aligning Strategy and Sales. Amazon (Aus, UK, US) It’s really about driving effective selling and having different models.
“You’ve probably heard about the Four Fits canvas. Identify the market, then you identify the product, then you go via the channel, and then you worry about pricing. You almost need to do it in that particular order.
“Quite a lot of people make this mistake. You’ve got a great product, ‘Oh, let’s go and sell it into every English-speaking geography’. The first thing you have to work out is whether those English-speaking geographies have the same pain point you have a product for. One it may have tackled in the US, it doesn’t mean it will work in the UK.
“You’ve got to assess the market first, then worry about product fit. Once you’ve got the right product, you then worry about the route to market. Do I go direct or go channel? Do I put in a sales organisation, then worry about the pricing?
“You shouldn’t worry about the pricing at the very start because the market will always tell you the parameters and some of the price points. Physically, how you price and package is almost the last thing to worry about. You have to worry about the other three before you worry about the fourth, and then it’s just a continuous loop.”
