Xro - xero

[blah]

Anyone else suspecting it may actually be different this time and that XRO has reached the bottom of its loss levels and can only go up from here???

DISC - Wondering if I have gone bonkers... Not holding XRO; holding SNK and DIL

I think Xero's losses will continue in the near future as they continue to pursue growth. It will be more reassuring to investors and to-be investors when their losses don't double everytime their revenue does. I don't own Xero, but have been watching it for ages. I've been a bit envious of how well it has performed, but at the same time I don't think I want to touch it given Xero is highly speculative, and nobody knows how Xero can counter its competitive threats that are looming in the background at the moment. I'm just wary that Xero could very easily be the next Rakon.

Unless Xero starts to make profits, or when it achieves a dominant market position in key markets without making profits, I think I will continue to watch with envy.

Disc - don't hold Xero. Hold DIL, PEB, SNK, SUM, and slowly acquiring SEA

[Toasty]

There is another article in the NBR suggesting that Forsyth Barr has bumped (up?) Xero's price and something about Woodward taking the axe to Diligent. Its behind the great paywall. Don't suppose anyone has eyes on it? I would get a subscription but I didn't get where I am today by paying money for things....

[Toasty]

Forsyth Barr XRO target price bumped from $12.50 to $14.30

Woodward has increased DIL's target price from $5.09 to $6.02 but re rated from reduce to sell.

Thanks Turmeric. Thats a big concession from a well known brokerage. Maybe they are just jumping on the band wagon. It would be interesting to read their research and see how they justified it. I love XRO but even I realise its a punt. Purely a world domination play...

[CJ]

Lunacy. The question is no longer, "How much money is enough?" but, "How much debt is enough to upgrade a SP further?".

XRO has no debt. It has cash in the bank and has a track record of being able to raise more cash as needed to execute their plan. It is currently on track but given that track is hockey stick growth, shouldn't be an indication that they will stay on track. US numbers are the key as it is the only market with scale.

I assume you were refering to loses.

[Toasty]

Always worries me when an "industry expert" posts an optimistic target price. No sooner than Forsyth Barr suggest $14.30 and XRO is $13.40 and falling....sigh

[Arbroath]

I'd say a fair price is currently about $5. I don't doubt the potential and it may turn out alright but the current valuation is a joke. $1.5bln might be justified if everything goes well for the next 3-5 years but not now.

Good luck to holders because you are "pricing it for perfection" as they say Stateside.

[whatsup]

I'd say a fair price is currently about $5. I don't doubt the potential and it may turn out alright but the current valuation is a joke. $1.5bln might be justified if everything goes well for the next 3-5 years but not now.

Good luck to holders because you are "pricing it for perfection" as they say Stateside.

The next cap raising is the direction to XRO's future and a scary prospect is that with the loss's getting bigger each year does not mean that there will ever be a profit, My Q is how many subscribers will they need before they show a profit and of those what % are high value customers IMHO there are a very big % of customers that do not cover XRO's costs.?

[whatsup]

Yes, I agree. I can perfectly understand a valuation of around $8.50-$9.00 a share, based on price/sales of 25 or so, rather than the 39 it is at the moment. It is hard to get a feel for Xero because they don't disclose churn and a couple of other useful metrics like other SaaS companies do.

Price/Sales for established SaaS companies tend to be under 10, but of course, Xero is growing heartily and is young.

I do acknowledge that they have a strategy, a CEO who has a track record, a board who has endorsed the vision, and strategic investors who back that vision. So I'm not arguing its a bad company!

The "kickup" in share price is the reaction that if the "push" into the U S was successful it would lead to a possible takeover by a US based company.

[whatsup]

drury has specifically said his company is not for sale though, and i doubt he will ever entertain a thought of one when he has global domination at his feet...

yeh right !!

[CJ]

Another interesting article on SaaS businesses and different metrics. I haven't looked at how XRO compares:

http://pandodaily.com/2013/05/21/mem...prise-company/