- Staff doubled, revenue doubled but loss doubled
- $78 million cash on hand
- 62% revenue from outside New Zealand
Cloud accounting company Xero last week announced it had doubled its customers in the year to 31 March with 157,000 business customers internationally. Operating revenue doubled to NZ$39 million and annualised monthly committed revenue to NZ$51.5 million, the company said in a statement to the New Zealand Stock Exchange.
Xero said it would post a full-year loss of just under $15 million which it said was due to “substantial investments” needed to sustain its ambition of 1 million customers.
“This phase of the business is about building out our products, proving our operating models and rapidly growing capacity,” CEO Rod Drury wrote on the company blog.
Revenue generated outside of New Zealand increased by 11 percent to 62 percent. The biggest performer by growth in the year to 31 March was Australia which added 35,000 customers (up 219 percent to 51,000). Customers in New Zealand and the UK doubled to 73,000 and 22,000 respectively.
Xero rolled US results into its “rest of world” category, which grew by 175 percent to 11,000. The company signalled its commitment to cracking the tough US market by boosting staff from 19 to 43 in three cities.
Xero reported it had established “the foundations of an accountant channel” in the US which suggested that its ability to replicate strong growth in that market was some way off. Accounting partners were a crucial part of Xero’s sales strategy in Australia and New Zealand where they brought in 60 percent of sales.
Xero’s growth in Australia improved dramatically once it acquired Australasian payroll provider Paycycle. US payroll wouldn’t arrive until 2014, the NZX report said. A tax platform for the Australian market was also due in 2014.
The US numbers would be separated from the global tally “when the numbers are meaningful”, Drury wrote in comments on the blog.
Xero had been “happy taking it a bit slower” in the UK while it added additional bank feeds and UK specific features and waited for more “signs in the market”, Drury added.
Total staff numbers increased to 382 from 194 in the past year.
Xero’s ecosystems continued to expand. Its partner network of accountants and bookkeepers rose to 6,000. The number of cloud programs connecting to Xero (called add-on solutions) climbed to 200.
Xero had proven the opportunity in cloud software, its strategy and its execution ability, the report said.
“Xero is now investing in its global sales capability and feels confident in achieving its objective of gaining a million paying customers,” the report said.
Image credit: Xero