Claims majority of accountants in New Zealand.
Cloud accounting software company Xero would win over half the accountants in Australia within two years, Xero CEO Rod Drury told BoxFreeIT at the first Australian users conference on the weekend.
Xero claimed that more than half the accountants in New Zealand were using its software since its launch four years ago, a market where rival MYOB once claimed majority market share in the accounting industry.
MYOB was still the most widely used software by accountants and businesses in Australia. MYOB has launched its own cloud-accounting program, LiveAccounts, though its feature set was limited compared to its desktop software.
Xero’s Australian sales had passed New Zealand sales for the first time in July, Drury said. A quarter of its customers were added in the past three months and 80 percent of customers were signed up by their accountants.
Xero had processed over $44 billion in transactions since its launch. “We show this number to banks and they fall off their chair,” Drury said. “We are a serious fintech provider.”
Xero had 45,000 paying businesses and 180,000 users which Drury compared to an estimated 60,000 US companies and 200,000 users on QuickBooks Online, a competitor (that is not available in Australia).
The revenue generated per employee was $120,000 compared to $145,000 at rival MYOB in 2008, before it was bought by a private equity group.
Using the accounting industry as the sales channel had helped limit the company’s support costs as customers would call their accountant first before Xero’s support desk. “If we take the call it’s a cost to us but if you take the call it’s a consulting opportunity,” Drury said.
Drury told BoxFreeIT that there was a lot of enthusiasm in Australia and the company had found several brand ambassadors among accountants to promote its software.
“People can sense the next big thing and they are proud to be involved from the start,” Drury said.
Xero was following a similar approach in the US where it had feted the top 10 influencers in the Quickbooks community, sold by another rival, Intuit. Xero had flown the 10 accountants to New Zealand to “help them to do due diligience for the Intuit community”, Drury said.
Xero acquired payroll company Paycycle and launched an iPhone app immediately before the conference. The roadmap included “XYZ” annual accounts reporting and online lodgement of tax forms through a third-party developer, LodgeIT.
The vendor had invested $30 million in building its platform and had $16 million in cash reserves due to a capital raising. It was releasing software updates every four to six weeks.
“I don’t think anyone is putting out software as fast as us. To build an accounting system that is all things to all businesses is a massive investment,” Drury said.
Xero paid for Sholto Macpherson’s travel and accommodation costs from Sydney to Melbourne.