Xro - xero

[CJ]

Yes I wonder what the plan is?

I have no fear that they wont be able to raise more cash, so that s not an issue. Its just how do they choose to do it. A SPP so small investors can take part or limit it only to big investors like they did last time with a placement to VC firms. Will the founds take an opportunity to cash out a small chunk again.

Personally it was disappointing they didn't do a SPP last time for small shareholders to top up on as they had done that following previous capital raisings.

[Everwood]

They announced on 30^th August they now have 200,000 customers. Xero has now added another 11,300 customers in 31 days. Customer acquisition is slowly getting faster.

[Shore]

Yeah I just ran the math on that too and it seems the pace has picked up there somewhat.

[Shore]

Well I heard somewhere they were adding customers in the order of circa 250 per day.. but those new numbers suggest over 350 per day.

[Lorne Ranger]

Certainly the absolute increase in customers YoY is increasing. The growth in customer numbers is slowing somewhat though; over the last 4 half year reports YoY customer growth has been 117%, 118%, 101% and now 89% in this last report. Still pretty damn fantastic though.

I'd be a little weary about extrapolating anything from two adjacent monthly data points. I think you get a better sense of the big picture looking at data over a longer time frame...

Thats one way to look at it, and fair enough. But I think in context, that the NZ market is starting to saturate a little, I wouldn't worry about slowing growth. the keys for me are a doubling of UK, Australia alight, and v encouraging ROW growth. I think its a timing issue that sees a tiny dip in growth rate, but with such impressive revenue growth, and key markets showing the right signals of take-up, it's all smiles in this household.

Rod for PM!

Ranger

[Lorne Ranger]

should be good for the next ten years, after that fibre will change the many markets and other high speed access making high end products easy to deliver on the cloud.. then the games changes again...

I would suggest there is more to having a successful company than just having a fast connection. You still need to have a leading product, brand awareness, client loyalty, good customer service, reliability etc etc. But if you think speed alone makes a difference to how people monitor thier accounts then who am I to argue. It will make video a lot more viable I know that much, but short of having a video guide to help you do the book keeping, Im not sure yet how UFB can help this product more than broadband can. And Broadband doesn't seem to be holding back customers so far.

Or were you being satirical?

[MAC]

The main reason why I have not invested in XRO has been simply that I’ve not had good long distance vision of the fundamentals, there are a lot, and a very wide range, of possible forward profitability scenarios. I’ve tended to err on the side of caution and to not invest in stocks unless I can confidently perform thorough FA on high probability outcomes and assess both risk and quantify reward.

This article is interesting, as the author clearly has similar difficulties in valuing XRO and perhaps articulates well why some people choose, unnecessarily, to run the stock down just because they don’t understand how to achieve a sense of it’s worth.

http://www.scoop.co.nz/stories/BU131...-valuation.htm

[lastmoa]

The main reason why I have not invested in XRO has been simply that I’ve not had good long distance vision of the fundamentals, there are a lot, and a very wide range, of possible forward profitability scenarios. I’ve tended to err on the side of caution and to not invest in stocks unless I can confidently perform thorough FA on high probability outcomes and assess both risk and quantify reward.

This article is interesting, as the author clearly has similar difficulties in valuing XRO and perhaps articulates well why some people choose, unnecessarily, to run the stock down just because they don’t understand how to achieve a sense of it’s worth.

http://www.scoop.co.nz/stories/BU131...-valuation.htm

Great find Mac. Very good balanced research article. Worth saving the pdf and going back through the scenarios. Don't know if I would compare it as closely to Salesforce.com but still ....

[MAC]

wow, fascinating article MAC. can still be a 5-10 bagger at these levels even now, unbelievable! it truly might turn out to be the Apple of NZ!

The Clare Capital valuation range of $5.60 through $30.91 is extraordinary. The scenario 3 valuation of $17.16 based on a 1.06M customer outturn would propose that XRO is presently fully valued.

I do hope for holders that XRO ultimately reaches 3M customers and $30.91 under that scenario, but with the present SP at circa $19, there seems a lot more risk than balanced upside reward would offer and if the market, at any point, decides that customer growth may plateau low, or not grow to multimillion levels, it may suddenly be a long way down, potentially to $5.60.

Still, if you are a trader rather than an investor this is the stock for you, have a planned exit and hold until the technical's fire sell, ....., imagine all that tax on XRO profits.

I don't see a place for XRO in my investment portfolio, I've decided that I do equate uncertainty in forecasting with risk, and there are better risk/reward propositions in the NZX that fit my tolerance better.

That's not to say that XRO won't become the apple of NZ, we just can't predict with any confidence.

Disc: Don't Hold

[Schrodinger]

The Clare Capital valuation range of $5.60 through $30.91 is extraordinary. The scenario 3 valuation of $17.16 based on a 1.06M customer outturn would propose that XRO is presently fully valued.

I do hope for holders that XRO ultimately reaches 3M customers and $30.91 under that scenario, but with the present SP at circa $19, there seems a lot more risk than balanced upside reward would offer and if the market, at any point, decides that customer growth may plateau low, or not grow to multimillion levels, it may suddenly be a long way down, potentially to $5.60.

Still, if you are a trader rather than an investor this is the stock for you, have a planned exit and hold until the technical's fire sell, ....., imagine all that tax on XRO profits.

I don't see a place for XRO in my investment portfolio, I've decided that I do equate uncertainty in forecasting with risk, and there are better risk/reward propositions in the NZX that fit my tolerance better.

That's not to say that XRO won't become the apple of NZ, we just can't predict with any confidence.

Disc: Don't Hold

Good analysis. At present I agree it is fully valued for the next year but this will change if they continue to add subs.