Xro - xero

[peat]

I assume you haven't bought any then.

his analysis suggests they are overvalued in the current mkt by 37%

[gregrday]

I did buy some but have since sold them, based on the analysis I did. Which beats my normal practice of seeing if I like the sound of the name, or "they can't go down any more" telecom type purchases. So I'm pretty happy with the decision. I'll be watching Xero closely over the next 6 months, to see how they're tracking. But the numbers I did were reasonably optimistic, so I couldn't really find any margin of safety at all. Happy to revisit if anyone disagrees with anything...

cheers
Greg

[Stranger_Danger]

http://www.nbr.co.nz/article/myob-sh...ng-xero-127909

Optimist view : MYOB's product will be bad, but the fact they're doing SaaS validates Xero. Good for Xero.

Pessimist view : MYOB's product will be good or good enough, pricing cheaper, cheaper to market to existing client base. Xero ends up having to reduce pricing. Bad for Xero.

I don't have a strong view either way, but MYOB don't have a good track record at producing software that makes you go "wow".

[CJ]

It seems as if MYOB is only going for new customers, and not trying to transition existing clients over (they are targeting small excel users). Until they offer a full product for more than a 1-3 person business, xero has nothing to worry about.

Once they lock in existing users however, that eats into a lot of Xero's target market.

[CJ]

Has anyone looked into http://www.actionstep.com/ . Just saw it mentioned in the NBR article comments. Looks like it provides a wider product range than Xero.

[Stranger_Danger]

I suspect a vast majority of Xero's customers are 1-3 employee businesses.

Off their own figures, something like half their clients hadn't previously had a computerised accounting system (other than Excel or similar).

[Xeroxyz]

Looked at ActionSteps. Talked to the CEO Ted Jordan. Seems to be a VERY switched on outfit but is not competing in the same market as XERO at all. Targeting companies of 10 - 300 employees. Cost $60 per month PER USER. Not an accounting centric system. IN NZ there are 477,000 businesses. 90% (430,000) employ less than 5 people - this is XERO's target market. Its like comparing apples with combine harvesters. XERO is at about break even in NZ now with 22000 users. I am a bookkeeper - MYOB Approved and XERO Certified - and have many clients on both systems. I have tried MYOBs Live Accounts released last night. Its not really a patch on XERO - yet. XERO is really light years ahead of them at this stage. Still you don't need the best product to succeed - MYOB has already proven that. IMO they have been flogging a very second rate product for a decade or more without making any effort it improve it because they make all their money from the help desk. I have noticed a significant improvement since they went private equity though. It will be very interesting to see who wins - hopefully the best software will and you know who that is...

[gregrday]

Hi guys, 'final' post on Xero based on some feedback I had, up at http://gregnz.wordpress.com.
Discusses the $1.12 share price I forecast, and the reasoning and some evidence around some of the important numbers (Operating margin and marginal sales/capital ratio), with implications.

let me know what you think.
cheers
Greg

[gregrday]

Hey guys

just revisted Xero valuation, and worked out I stuffed up the terminal value calculation, missing out around 200,000,000 from the bottom line. Which means, revised share price from $1.12 to $3.55. A beginners mistake, so humblest apologies... check out the new writeup (and more apologies) at gregnz.wordpress.com.


cheers
Greg

[percy]

Hey guys

just revisted Xero valuation, and worked out I stuffed up the terminal value calculation, missing out around 200,000,000 from the bottom line. Which means, revised share price from $1.12 to $3.55. A beginners mistake, so humblest apologies... check out the new writeup (and more apologies) at gregnz.wordpress.com.


cheers
Greg

Greg Love your posts.Am enjoying your learning proccess.At least you are giving it a go and trying to work out value.I just find it hard to believe the numbers have grown so quickly,and the good comments from users. I brought a few for the wife as a spec and have been pleasantly surprised.Look forward to your next valuation.