Xro - xero

[winner69]

Interesting in the disclosures to that article in the herald milford don't own XRO shares

So the guru fund manager is truly active...prepared to not include a nzx50 stock in their portfolios instead of just hugging the index....good to see

[Stranger_Danger]

Just a thought. 4 out of 5 small businesses fail in the first 2 years. Doesn't bode well for continuity of the customer base.

That is the thing that most worries me about XRO. There is never any mention by the company of churn, nor any sign of it in their figures.

On the other hand, you see regular posts on their support forum, and elsewhere, from customers wanting "read only" access to their data after they cease using the service, and not being able to do so without continuing to pay.

We all know lots of businesses come and go. So, are they still paying under duress to access their data, or have they lost access to their data, or something else? What sort of numbers are we talking and where can we see this in the figures?

It isn't a massive issue whilst they're growing so fast, but would be nice to have some numbers.

[Huskeez]

That is the thing that most worries me about XRO. There is never any mention by the company of churn, nor any sign of it in their figures.On the other hand, you see regular posts on their support forum, and elsewhere, from customers wanting "read only" access to their data after they cease using the service, and not being able to do so without continuing to pay.We all know lots of businesses come and go. So, are they still paying under duress to access their data, or have they lost access to their data, or something else? What sort of numbers are we talking and where can we see this in the figures?It isn't a massive issue whilst they're growing so fast, but would be nice to have some numbers.

They are praying interest rates go up

[Stranger_Danger]

Whilst the smiley suggests a tongue in cheek comment, that is something I hadn't pondered. The amount of cash they're now holding means the interest - even at low rates - will offset a decent amount of their loss.

[Huskeez]

Whilst the smiley suggests a tongue in cheek comment, that is something I hadn't pondered. The amount of cash they're now holding means the interest - even at low rates - will offset a decent amount of their loss.

Other companys that fit the criteria eg Twitter, which is worth an estimated $10b

[winner69]

Whilst the smiley suggests a tongue in cheek comment, that is something I hadn't pondered. The amount of cash they're now holding means the interest - even at low rates - will offset a decent amount of their loss.

Now they listed on ASX you get to see quarterly cash flows and how much interest they get

https://www.nzx.com/files/attachments/170137.pdf

[BIRMANBOY]

Always interesting to see these growth stocks and how they develop. My partner sells/trains Quickbooks and tells me many new and existing business are wanting and moving to Xero. My comments are as follows...beware of growth stocks that stop growing because there is NO loyalty amongst shareholders. This means could be very volatile and if it stutters could cause a massive selling down and big losses for those slow on the trigger. Also at some point one might think that perhaps the company would become interested in actually making a profit instead of losing money. I know the model is expand and build market share and customer base but problem underlying is how much of the new growth and market building would be lost if the company priced products so they were making not losing money. Cloud based product is growing and lots of potential competition.

[CJ]

Agree. If they stopped their growth drive, they could be a successful small NZ accounting software provider making a good profit - but who wants to invest in a 25-50m company.

[CJ]

I would have liked to see more in the US as this is the key market. Australia looks promising but I think most of that had already been signalled??

[maddog]

My quick analysis suggests the results are mixed.

The Australian customer numbers are very strong.The New Zealand growth rate is slowing in percentage terms though steady in real terms - perhaps just starting to shown the first signs of saturation? The UK performance is poor considering the length of time Xero has been in that market and it is too early to tell anything about the USA.

There is the interesting comment that Australia has overtaken New Zealand as the largest regional contributor to revenue - despite there being 73,000 customers in NZ compared to 51,000 in Australia. This can be partially explained by pricing differences between the markets but the most likely explanation is that a much higher proportion of the NZ customers are on the much cheaper ledger service.

In hindsight, Xero should have gone into Australia in 2008 instead of the UK. At the time I thought this was a strategic error and I think this has proven to be the case. The UK is a much bigger market that Xero has been in much longer, and it now has 22,000 customers compared to 61,000 in Australia.

The New Zealand market is declining in relative importance as its growth rate shows the first signs of tailing off. And if growth in NZ is coming largely from ledger customers it is poor growth. That is a worrying sign.

Xero's long-term success clearly depends on what happens in the USA market. Will it grow strongly like Australia or be a disappointment like the UK? The SP seems to be based on the presumption that it will be like Australia, but it is too early too tell what will happen.