SOURCE: Xero

Xero

April 05, 2013 09:00 ET

Xero Executing to Plan

SAN FRANCISCO, CA--(Marketwired - Apr 5, 2013) - (Note: All Currency Is in United States Dollars and Results Are Unaudited)

Xero continues to deliver on its high growth strategy, doubling full year revenue through March 31, 2013 to U.S. $32.0m. With Monthly Committed Revenue growing to $3.6m and a recurring revenue model the company commences the 2014 financial year strongly with $43m in annualized subscriptions.

The loss for the second half of the year through March 31, 2013 is anticipated to be similar to that reported for the first half resulting in a full year loss less than $12.5m, up from $6.6m last year.

Key metrics

  • Operating Revenue doubled from $16m to $32m.
  • Annualized Monthly Committed Revenue (MCR) is $43m, up from $21m at March 31, 2012.
  • Staff increased from 194 to 382 in the past year.
  • Paying customers are at 157,000 at March 31, 2013, up from 78,000 at the same date last year, or +101% growth.
  • Cash on hand exceeds $65m.

Commentary
Xero continues to attract global talent adding 188 new jobs in the 2013 financial year to provide additional product development and operating capability, and expanded sales footprint in offshore markets.

A vibrant small business ecosystem has evolved around Xero as it matures into a business platform with over 200 add-on solutions and over 6000 accountants, bookkeepers and trainers working with their customers on Xero.

In addition to continuous improvements and broadening of the core Xero feature set, new longer-term strategic development projects are progressing well. Expected in calendar 2014 is delivery of US Payroll and Australian Tax features, which will further enhance Xero's position in those markets.

Over the period Xero continued its significant investment in building professional accountant tools connecting advisors seamlessly to their small business customers. This combined advisor and small business strategy and architecture has disrupted the accountant-side software market in New Zealand and Australia and has been a significant contributor to growth.

"Small businesses all over the U.S. are moving to cloud accounting at an increasing rate," said Jamie Sutherland, Xero U.S. president of operations. "Xero's mobile-centric, anytime approach makes accounting easy for small businesses by giving them better visibility into their finances no matter where they are."

Regional customer breakdown

Paying customers   At March 31, 2013   At March 31, 2012   Year on year change
             
New Zealand   73,000   47,000   +55%
             
Australia   51,000   16,000   +219%
             
United Kingdom   22,000   11,000   +100%
             
United States/Global   11,000   4,000   +175%
             
Total   157,000   78,000   +101%

Regional activity
In New Zealand most accountants offer Xero and the focus is on increasing customers per practice. Xero is steadily replacing incumbent providers and also seeing strong take-up of its accountant-side software.

Australia has experienced the greatest regional growth during the period and in March overtook New Zealand as the largest regional contributor to revenue. This has followed substantial investment in the Australian team, which has grown from 27 to 71 over the year. A new Australian HQ was opened in Melbourne in December.

In the United Kingdom, tripling the team to 27 over the course of the year also contributed to sustained growth. About a third of the UK's top 100 accounting firms are now Xero partners.

Xero has established a beachhead in the U.S. market. Product localizations are complete and the foundations of an accountant channel are established. Growth has exceeded that experienced in other markets in their early stages. The U.S. team grew from 19 to 29 in the first 3 months of calendar 2013 with teams in San Francisco, Los Angeles, and Atlanta. A further 14 staff begin employment in April. 

Partnerships have been a key in expediting this growth in the U.S. market. Not only has Xero made consistent inroads with small accounting firms and solo practices, they have been successful with larger accounting firms as demonstrated by a recent partnership with the largest private accounting firm in California. Armanino LLP has come on board and will be transitioning all of their small business outsourcing to the Xero platform.

"We evaluated the small business accounting alternatives and Xero was a clear winner for our outsource solutions division," said W. Todd Peterson, director and practice leader of Armanino's financial management outsourced solutions. "With Xero's anytime, anywhere accessibility, we can work with clients more efficiently and give them better visibility and control with their finances."

Outlook
Xero anticipated the substantial opportunity brought forth as small businesses moved to the cloud. It takes a significant investment and many years to build a broad and global small business financial platform. Xero has proven the opportunity, its strategy and its execution ability. The incumbents continue to struggle with the complex transition of their businesses to the cloud model. Xero is now investing in its global sales capability and feels confident in achieving its objective of gaining a million customers.

About Xero
Xero is beautiful, easy to use online accounting software for small businesses and their advisors. The company has over 150,000 paying customers in more than 100 countries around the world. Recently Xero garnered a five-star review for Software As Service from CPA Practice Advisor. Xero's U.S. team is based in San Francisco. Xero is hosted with Rackspace in Chicago. See http://www.xero.com

Contact Information

  • For more information contact:
    Jamie Sutherland
    Xero President of U.S. Operations
    Email Contact
    (415) 806-1107

    Kristin Farrell
    For Xero PR
    Email Contact
    (415) 963-4174 ex. 10