Xro - xero

[JamesST]

So:

for $33.35 I would get something so limited it could not cope with the my personal finances

for $56.35 I would get something that does not do multi-currency?

so I would need to spend $73.60 (I can not reclaim the GST) EVERY MONTH to do the accounts for one company?

Is it worth even signing up for the free trial?

Best Wishes
Paper Tiger

I'm a customer. $50 a month is nothing when it gives you real time visibility on company position.
$50 is chicken feed for most companies. 1 hour's work from one junior employee. And it saves many hours each month.

[blobbles]

I bought sub $1 and certainly didn't expect the SP to be where it is today. I personally wouldn't buy at today's price however I'm not selling despite now being poorly diversified. You'd think that if I wasn't willing to buy at this price I should sell. I do think that the price is too high on fundamentals but I also believe it will be much higher in the long term.
I'm treating it as I do my own company. I wouldn't sell now just because someone offers me a high price based on today's revenue - because I have a vision of where the company will be. I feel the same way with Xero.
I don't care if the SP drops significantly in the short term. Perhaps some recent buyers may have an unrealistic time-frame on how quickly customers will grow in the US and get cold feet if it takes a little longer. In fact a drop would allow me to buy some more of the company.
I'm patient. I've enjoyed being a shareholder and customer for about 6 years and have been impressed with their excellent execution. 6 years of exceeding my expectations builds a lot of trust. I feel like my investment is much less risky than it was 6 years ago even taking in to account its vastly different value.
The UK took a long time to build momentum but they seem to have reached a tipping point. The US is further behind but they have the benefit of a much more mature product, experience and bigger team this time around.
I'm pumped. Bring on the next 6 years.

I admire your fortitude James!

But I would also advise you to diversify a bit as it sounds like you haven't already. At the very least, recover say your original investment (or double your original investment potentially), completely de-risking yourself and put the money in the bank. That way if the SP goes up hugely again you will still be involved, but if it drops and you are still confident, you can buy in again at a lower price for a lot more shares, or decide to do something else with your "de-risked" funds if it drops for a good reason.

I wanted to get in at $1 on its IPO but at the time didn't have the funds... woe is me! Ha haa, but I got in later at $2.40-$2.75 and was out between $5 and $8.50 quite happily for life and risk reasons :)

Say you bought 10k shares @ $1. If you sold 1k shares now you would have over 3 times your original investment which would be literally money in the bank, not money at risk. You could then still enjoy the upside of 9k of shares if the price got to $50 ($450k) knowing that you have made triple your money on your original investment and only missed out on $15k of paper profits. You could then take 25k of the 35k, and if you like the company and still are OK with risk, invest it in something like PEB, which could end up "doing a XRO". At current prices you could own 18k shares of another potentially high growth company while still having the 10k of your original XRO investment banked. That would be much more sound financially than having all your money tied up in one potentially huge, but potentially an overhyped bubble company. :) :)

[In4a$]

I topped up with another 1000 today @ $35.10 confident itll be over $40 by xmas

[Copper]

I topped up with another 1000 today @ $35.10 confident itll be over $40 by xmas

Haven't been on this site lately but it is a bit like Hyde Park corner.If you like the Company you may know it may be a punt at times. If you don't believe then depart.In the early days accountants were negative but that seemed to be evolutionary and now the detractors can't concede defeat.Anyone may win but Thiel aside the world seems to find this attractive.If they give Intuit a run for their money only more money will flow their way.In the meantime enjoy the ride....

[In4a$]

Been a lot of negativity on this forum lately. I think the price will hold up. There will be a lot of investors that have cashed up, retained their original investment and reinvested some of the profits back into XRO like me, so under no pressure to sell. However I will cash up again prior to xmas and wait and see how its going Jan/Feb before I buy again. My original investment is now in SML, RYM so I do see XRO as a bit risky. Also there will be other XRO investors who have held onto their stock and sitting on 200% + profits so they have a lot of margin in the share price to gamble with so wont be under pressure to sell. I reckon it will float around the $40 mark untill the next quarterly results published. XRO is a great product and its even better to use if you are dealing with a customer/supplier that has XRO also so there will be a lot of users "selling" this product to their customers/suppliers. Great for XRO

[Toasty]

Xero will be changing their pricing structure from December 9th. Doesn't look like too much of a change to me but seems to be some dissenters on the blog article from Xero.

http://blog.xero.com/2013/11/new-subscription-plans/#more-38786

The main problem seems to be that people think their clients are going to be bumped up into a higher category plan but I am not sure why this would be.

Also they have imposed a 1000 line reconciliation limit, invoices and bills. Seems like a lot and I can't see what the limit used to be if there was one.

Be interesting to see how the market interprets this.

[Toulouse - Luzern]

Just noticed 70,000 go through at 3600 at 10.58am NZT SP

Currently 3599 ...

[Harvey Specter]

Also they have imposed a 1000 line reconciliation limit, invoices and bills. Seems like a lot and I can't see what the limit used to be if there was one.Except for the small plan (no change) there was no limit.

Edit: apparently 1000 was always a behind the scenes limit.

The main push back appears to be from Australia as if you use payroll, you are effectively pushed into the top plan from what I can see - previously they got the benefit of XRO purchasing a company and integrating it for free.

NZ businesses there are no real changes. Note that NZ has to use an external provider for payroll so that cost was already there.

[Copper]

Xero will be changing their pricing structure from December 9th. Doesn't look like too much of a change to me but seems to be some dissenters on the blog article from Xero.

http://blog.xero.com/2013/11/new-subscription-plans/#more-38786

The main problem seems to be that people think their clients are going to be bumped up into a higher category plan but I am not sure why this would be.

Also they have imposed a 1000 line reconciliation limit, invoices and bills. Seems like a lot and I can't see what the limit used to be if there was one.

Be interesting to see how the market interprets this.

Grief"...they whinge more than the posters here.Typical.Want everything to remain the same forever.Any enhancements are expected free.None probably have shares. Too risky.The price might go up....

[In4a$]

Grief"...they whinge more than the posters here.Typical.Want everything to remain the same forever.Any enhancements are expected free.None probably have shares. Too risky.The price might go up....
Yes, nothings perfect, changes always need to be made, updated ( expecept my misses of course )

[Toasty]

Grief"...they whinge more than the posters here.Typical.Want everything to remain the same forever.Any enhancements are expected free.None probably have shares. Too risky.The price might go up....

Interestingly, as Rod responds to complaints there have been a couple of apologies. Given that people signed up for the service 7 years ago with no fee changes and now have so much more functionality it is a little surprising that the complaints are so vehement. However this is a small subset of customers on the blog. I am going to look at the customer forums and see if there is any angst there.

I don't really see this as a big issue but a price change is always emotional.

[Shore]

Interestingly the major changes appear around the US pricing: http://www.xero.com/us/updated-pricing/ , which in turns makes me wonder whether they really are seeing an accelerated pickup there and are having to quickly realign their pricing strategy to better capture revenue.

[Longhaul]

Would be really interesting to know how this will affect the revenue collected from existing customer base (and thus extrapolate to revenue growth). Does anyone have more insight on this?

[luigi]

In the blog they state that 90% of customers will now be paying $1 more per month (or same). Based on their 30 September 2013 customer numbers of 211,300 this could imply they have 21,130 payroll customers. They currently lump their US customers in with their Global category (8% of total). If we assume all payroll customers are in Australia (total Aus customers=79,100), this would mean 27% of them are using Xero for payroll (or 22% of combined Aus/USA/Global).

For employee numbers of 10/20/50/100, price is now $60/$70/$80/$90 so if they were previously on the $64 large plan, this could mean an average $10 extra per month. $10 AU = $11.30 NZ * 12months * 21,130 customers = $2.87 million additional revenue per year.

For customers not on the smallest plan, the price is now $1/month more. Hard to guess proportions for this and the small plan is now ~$4 cheaper in NZ, AU and UK ($10 less in US).

Biggest game changer will be US uptake of payroll where maximum price has now gone from $39/month to $180/month (and $90/month for 50 employees in between)

[luigi]

If we said of the non-payroll customers, 34% where on smallest plan and took and average $5/month discount, the remaining 66% get a $1/month increase, then they lose $323k revenue from smalls and gain $1.5m from the rest = $1.2m net or a total gain of $4m including the above $2.87m gain from payroll.

I note Chris Ridd has clarified in the blog comments that for the 'Silver Partners' and above, the price change won't hit till July 2014.

[winner69]

Here's the chance to get the inside info
http://bs.businessspectator.com.au/technologyspectator-xero-webcast/

Even casino might join in

[skid]

Grief"...they whinge more than the posters here.Typical.Want everything to remain the same forever.Any enhancements are expected free.None probably have shares. Too risky.The price might go up....

Gee Copper-your a bit hard on some posters--take a deep breath-youve only been on this forum since July-your gonna give yourself a heart attack--Cant blame some for being cautious on a share that has gone parabolic like this one.
It may still have a ways to go ,but it could have overshot the mark a bit --no one really knows at this stage.

[Copper]

Gee Copper-your a bit hard on some posters--take a deep breath-youve only been on this forum since July-your gonna give yourself a heart attack--Cant blame some for being cautious on a share that has gone parabolic like this one.
It may still have a ways to go ,but it could have overshot the mark a bit --no one really knows at this stage.

Sorry Skid. I meant the bloggers on Xeros website and nothing really to do with the posters here.Bad grammar on my part.The accountants having to spend a lot of time explaining a one dollar increase was to me a little sad.One poster did say that it was only a small group of them that probably were concerned all the time.
Posters here on the whole are a great lot.Some a little scared by the whole thing but thats understandable.
Kind regards.....

[vorno]

Latest: https://www.nzx.com/files/attachments/185187.pdf

[Toulouse - Luzern]

Looking at the last half hour trades and the low volume trades ie not cost effective for retail traders:

Is there a bot at work here?

Opinions please.

Thanks and rgds

[goldfish]

If it looks like a bot and buys like a bot...its a bot.

[Toulouse - Luzern]

Thanks goldfish.

Given it seemed to pitch in and get busy after the spike to 3669 and has been busy since my next question is:

Is it seen by ST members as limiting the SP to about 3600 - 3610?

Opinions please.

Thanks and regards

[vorno]

If it looks like a bot and buys like a bot...its a bot.

I don't suppose there's a thread with all the abbreviated words/explanations somewhere? :)

[Harvey Specter]

I don't suppose there's a thread with all the abbreviated words/explanations somewhere? :)Not sure.

A Bot is automated trading system, normally identified by small trades. Done by institutions and hedge funds to manipulate the shareprice or facilitate the buy/sell of a large parcel without moving the shareprice to much.

[goldfish]

Thanks goldfish.

Given it seemed to pitch in and get busy after the spike to 3669 and has been busy since my next question is:

Is it seen by ST members as limiting the SP to about 3600 - 3610?

Opinions please.

Thanks and regards

It depends on its parameters. But yes generally used to buy or sell amounts without affecting the price, if thats what the user wants.

[TimmyTP]

I don't suppose there's a thread with all the abbreviated words/explanations somewhere? :)
Why of course, and it's one of my favourites: http://lmgtfy.com/?q=abbreviation+bot

[Copper]

Thanks goldfish.Given it seemed to pitch in and get busy after the spike to 3669 and has been busy since my next question is:Is it seen by ST members as limiting the SP to about 3600 - 3610?Opinions please.Thanks and regardsGiven only two trades at 1.26.16 up to $36.69 my view is it is a broker or other trader putting in a buy order without a limit when there were only two small sellers and getting landed with some at $36.69. Probably a cock up for want of a better term.The loads of other small trades appear to be fund managers balancing holdings .Very quiet time so good for paper work.some may have a different view.

[vorno]

Why of course, and it's one of my favourites: http://lmgtfy.com/?q=abbreviation+bot

haha... well done.

bot, like many abbreviations can mean a lot of different things - which is why I wondered if a specific thread existed for 'stock-related' abbreviations. I will however, do my own research now.

[Copper]

Why of course, and it's one of my favourites: http://lmgtfy.com/?q=abbreviation+bot

That's damn good......

[SirPrize]

amazon has just rolled out Desktops in the cloud. browser based solutions? No longer required except for people with slow connections, third world countries and SME's who are broke...

Third world countries have better and much cheaper internet than New Zealand. :)

[SirPrize]

Hey guys, thought I'd share this tool with you. It's pretty damn interesting... http://www.wolframalpha.com/input/?i=xro

[Nigel]

Hey guys, thought I'd share this tool with you. It's pretty damn interesting... http://www.wolframalpha.com/input/?i=xro

Wow - some pretty hefty projections there! I don't follow XRO closely anymore but those numbers seem pretty optimistic!

I note today's news story about reviewing the changes they made to their plans due to client backlash.
http://www.stuff.co.nz/business/industries/9413065/Xero-retreats-on-contract-changes

Not great that they announced changes without fully understanding the implications for these clients, but full marks for responding to the feedback and looking after their customers. How is this seen by others?

[Toasty]

The blog article about the price change change in the Xero website is classic. Lots of people saying thanks for listening but there is now a fresh batch of clients complaining about the change to the change. You can't please everyone apparently.

http://blog.xero.com/2013/11/australia-listening/

[Nigel]

The blog article about the price change change in the Xero website is classic. Lots of people saying thanks for listening but there is now a fresh batch of clients complaining about the change to the change. You can't please everyone apparently.

http://blog.xero.com/2013/11/australia-listening/

The negative comments are about the general price increases I think, rather than the amendment re payroll, no?

I relate to the guy who said the only reason he can't do bronze is that he has a few too many reconciliations each month. I'm involved with a company that doesn't need all the bells and whistles, but miss out on Bronze (and have to now pay twice the price to get the next package) just because we have a handful of extra statement lines each month. Maybe Xero will listen to this one too and bump up the number of reconciliations (20 really is a ridiculously small number per month).

[Harvey Specter]

The negative comments are about the general price increases I think, rather than the amendment re payroll, no?

I relate to the guy who said the only reason he can't do bronze is that he has a few too many reconciliations each month. I'm involved with a company that doesn't need all the bells and whistles, but miss out on Bronze (and have to now pay twice the price to get the next package) just because we have a handful of extra statement lines each month. Maybe Xero will listen to this one too and bump up the number of reconciliations (20 really is a ridiculously small number per month).Have you considered their cashbook product (only avaliable through accountants) or do you need the ability to invoice?

[Casino]

Maybe Xero will listen to this one too and bump up the number of reconciliations (20 really is a ridiculously small number per month).

Have a look at comment #7 by Vincent Guzman: http://boxfreeit.com.au/2013/11/14/xero-price-rise-sparks-backlash-from-users-and-partners/

This is from their recent annual report:


In New Zealand almost all accountants offer Xero and the focus
for the next year will be on increasing customers per practice and
upgrading customers to higher-value plans.

http://www.xero.com/media/379150/xero_limited_2013_annual_report.pdf

I wouldn't hold my breath for an entry level package that can do what you couldn't do with pen and paper.

[Toulouse - Luzern]

No posts today on XRO so a quick observation.

A few days ago there was steady trading in XRO at 3300.

And a rise to 3600 in due course and steady trading at the new 3600 level.

Today the steady trading at 3600 continues ...

Interesting

[Nigel]

No posts today on XRO...

No posts again today even with a financial update released! Where's all the discussion gone?!

[luigi]

No surprises in the interim report - all material information for the 30 Sept results was released in the previous updates on hitting $30m revenue and customer numbers. Maybe some tidbits in the details but at the pace Xero moves, the exciting stuff (customer numbers & revenues) are already out of date.

[Copper]

No surprises in the interim report - all material information for the 30 Sept results was released in the previous updates on hitting $30m revenue and customer numbers. Maybe some tidbits in the details but at the pace Xero moves, the exciting stuff (customer numbers & revenues) are already out of date.

To an investor seeing that announcement he would flip his lid. It's about as positive as you can give this market .Admittedly we may have seen the figures before but all brokers analyst figures and Herald reports are based on historical stuff.It's what the public and the overseas guys have brought to their attention that matters.That's the unknown to us .This reported ...,out of date in the Asian Wall Street journal for instance may ring a bell. This world is based on the assumption,don't assume anything...... Kind regards....

[Casino]

Here are the highlights in case you don't have much time to read the full report:

Xero Limited (XRO) has emerged as the online accounting leader in New Zealand, Australia and
the United Kingdom and the number one challenger in the United States.

This gives the company confidence to invest substantially in the US market and new product development.

Xero continues to deliver features and innovation at a pace faster than the incumbents

In the past year incumbent competitors have delivered competing online accounting products or
major new versions. Xero believes these offerings demonstrate how difficult it is ... No other new entrant has had comparable resources to create the breadth of platform
that Xero has already delivered.

12. EVENTS AFTER THE BALANCE DATE
On 14 October 2013, Xero Limited raised $180 million of new capital at the price of $18.15 per share by issuing 9.92 million ordinary shares.
There were no other significant events after balance date.

[Copper]

Here are the highlights in case you don't have much time to read the full report:

Xero Limited (XRO) has emerged as the online accounting leader in New Zealand, Australia and
the United Kingdom and the number one challenger in the United States.

This gives the company confidence to invest substantially in the US market and new product development.

Xero continues to deliver features and innovation at a pace faster than the incumbents

In the past year incumbent competitors have delivered competing online accounting products or
major new versions. Xero believes these offerings demonstrate how difficult it is ... No other new entrant has had comparable resources to create the breadth of platform
that Xero has already delivered.

12. EVENTS AFTER THE BALANCE DATE
On 14 October 2013, Xero Limited raised $180 million of new capital at the price of $18.15 per share by issuing 9.92 million ordinary shares.
There were no other significant events after balance .

That's black and white.Extremely well put .Congrats .... Copper.

[Casino]

Thanks, always here to help. Anybody care to share their thoughts on recent trading volumes?

[vorno]

Thanks, always here to help. Anybody care to share their thoughts on recent trading volumes?

Tomorrow, by 11 5% rise me thinks!

[Copper]

Typical NZ media headlines."Xero punished".what a load of garbage .The price had dropped 30 cents before the news the article was based on.It moves 30 cents between trades on an average day....

[Casino]

Typical NZ media headlines."Xero punished".what a load of garbage .The price had dropped 30 cents before the news the article was based on.It moves 30 cents between trades on an average day....

the headline is stupid especially if you look at where it closed in Australia.

[pierre]

the headline is stupid especially if you look at where it closed in Australia.

Surely you're asking a bit much of a NZ journo expecting them to do a bit of checking like that before they write their story?

[Longhaul]

Apologies if this has been discussed earlier in the thread, but what are the chances of a NASDAQ listing in 2014, or 2015? If that were to happen, what are the possible implications for the SP?

[Casino]

Surely you're asking a bit much of a NZ journo expecting them to do a bit of checking like that before they write their story?

Drury is lucky that they're not doing their job. Headline should have been: Xero misleads markets ... again

[Shore]

Care to clarify that allegation Casino?

[Harvey Specter]

Drury is lucky that they're not doing their job. Headline should have been: Xero misleads markets ... againMisleads. Do elaborate

[vorno]

Tomorrow, by 11 5% rise me thinks!

...and there I was, thinking that announcement would be considered good news!

[oldmate]

Apologies if this has been discussed earlier in the thread, but what are the chances of a NASDAQ listing in 2014, or 2015? If that were to happen, what are the possible implications for the SP?

I am thinking they would go gangbusters but as with today how can you tell.

[Toulouse - Luzern]

Never say die when there are 33 minutes to go

Remember Adelaide 36ers Vs NZ Breakers

NZB have the ball with 12 seconds to go and leading

Adelaide 36ers steal the ball and win

[Latama]

I am thinking they would go gangbusters but as with today how can you tell.

You'd hope the NASDAQ would have a positive effect. Will be interesting to see if the afternoon provides anything interesting, all hope is not yet lost!

[Casino]

Misleads. Do elaborate

the number one challenger in the United States.

Really? With less than 16000 customers in the US? Maybe that's a fair statement if you consider QBO, freshbooks, kashoo and all the other together as the incumbent.

Xero continues to deliver features and innovation at a pace faster than the incumbents.

The incumbents often have those features already and they have been tested. Look at how long it took them to deliver purchase orders and how much love they're getting for it:

http://blog.xero.com/2013/11/purchase-orders/

If you need an accounting-only solution, Xero is not a great offer.

No other new entrant has had comparable resources to create the breadth of platform that Xero has already delivered.

While you have to bolt on even the most basic accounting features to Xero and pay a lot for third-party add-ons, you can get an excellent integrated solution from Jcurve if you need more than accouting:

http://www.jcurvesolutions.com/Products/JCurve-PRO

For loss-making Xero to have 230 million in the bank is good. But Intuit's 1 billion dollar net profit per year should qualify as comparable resource. And there are of course MYOB, Reckon, Saasu, Jcurve Netsuite, Kashoo and many others. So it's very hard to see how they are ahead of the pack.

12. EVENTS AFTER THE BALANCE DATE
On 14 October 2013, Xero Limited raised $180 million of new capital at the price of $18.15 per share by issuing 9.92 million ordinary shares.
There were no other significant events after balance date.

Some would consider changes the price structure that hint at poor uptake in the US and have disgruntled many in Australia a significant event.

[Beagle]

Subscriber only content on NBR this morning. Headline: Analyst slaps sell rating on XRO
Anyone here a subscriber and preapred to cut and paste the content ?
Also has anyone talked about the Forsyth Barr valuation of just on $20 on this thread before or is everyone overlooking that, perhaps somewhat convieniently ?

[Harvey Specter]

Also has anyone talked about the Forsyth Barr valuation of just on $20 on this thread before or is everyone overlooking that, perhaps somewhat convieniently ?Its been raised. Not everyone hear has blinkers.

[Casino]

Some thoughts on what need to come together so your company deserves to be in the 10x revenue club:

http://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club/

Does Xero tick #1, #2, #3, #4, #8, #9 and the points mentioned at the bottom of the page? Keep in mind, we're not in the 10x club, we're already in the >60x club.

[SirPrize]

Subscriber only content on NBR this morning. Headline: Analyst slaps sell rating on XRO
Anyone here a subscriber and preapred to cut and paste the content ?
Also has anyone talked about the Forsyth Barr valuation of just on $20 on this thread before or is everyone overlooking that, perhaps somewhat convieniently ?


Analyst slaps ‘sell’ rating on Xero, but sees two intriguing trends


The two major NZ brokerages covering Xero are maintaining their polar opposite ratings following yesterday’s result.
The cloud accounting software company’s half-year net loss widened to $17.1 million, or 14 cents per share, in the six months ended Sept 30, from $7 million, or 7 cents, a year earlier.
The company had already reported an 89% annual gain in paying customers to 211,300 (in an Oct 4 NXZ filing) and a 84% gain in first-half sales to $30.3 million. It says it expects annual revenue to exceed 80% growth and bigger operating losses in the second half of the year.
Little wrong, but not $5b worth of right
Forsyth Barr downgraded Xero from hold to sell last week, almost wholly on valuation.
“While Xero is doing little wrong, we believe its share price is not offering investors good value at current levels,” analyst Andrew Harvey-Green says.
After the half-year loss reported yesterday (after market close), Mr Harvey-Green has reiterated the sell rating but trims Xero’s 12-month price-target by 30c to $22.00 (Xero shares [NZX:XRO (https://nzx.com/markets/NZSX/securities/XRO)] closed yesterday at $35.66 for a $4.57 billion market cap).
First NZ Capital has not issued a note since Xero’s results announcement but analyst James Schofield told NBR ONLINE this morning his rating remains buy, with a $45.70 price target.
Xero is seen on track to meet First NZ’s expectation of $35.7 million full-year adjusted loss.
ForBarr sees a full-year ebitda loss of $34.3 million (a $6 million increase from its previous estimate) and a full year net-loss of $40.4 million.
While the two brokerages' estimates are not that far apart, ForBarr says investors aren’t being adequately compensated for risk, while First NZ has modelled seven shareprice scenarios based on different outcomes in the key US market and sees an overall probability of success (http://www.nbr.co.nz/article/xero-can-win-ck-148433).
A Nasdaq listing down the line is also seen boosting Xero’s value.
Two intriguing trends
While ForBarr is put off by Xero’s $4.5 billion, Mr Harvey-Green sees two intriguing trends.
One is that the company – which has hitherto relied on social media, media exposure, word-of-mouth and lobbying accountants to win customers – has launched its first traditional advertising in Australia. The marketing is aimed at winning small business customers, Mr Harvey-Green says (where a recent decision to raise pricing sparked a backlash (http://www.nbr.co.nz/article/xero-price-increases-draw-flak-some-customers-ck-148575) and was quickly reversed). He’s watching to see if the approach spreads to other markets.
Two, while costs spiralled in Australia and the US, where Xero is pushing hard for market share, in New Zealand revenue grew $1.7 millon while operating costs fell $0.5 million. The net effect was operating costs per customer fell from $93/customer in the first-half of 2013 to $70/customer in the first half of 2014, while ebitda margin lifted from 34% to 49%.
“This result provides an indication of the operating leverage inherent in the Xero business model once it stops investing for growth,” Mr Harvey Green says.

[Shore]

Dismayed by the journalism in this country. Every article leads with "Loss-making Xero", "Losses widen" etc. It's as if they've forgotten why it is Xero is making a loss : because they are pursuing a growth strategy. They could have ejected for safety a long time ago and be content with NZ & Australia and build a respectable business confined to this region... but they've declared from the outset they wanted to build a global business and they were serious about doing that, and if you're serious about it then you have to spend money. The management of Xero have been there and done that and know what it takes to execute and succeed... yet the articles are pumped ad nauseum with the "NEWS" that Xero's losses have grown.. as if this was completely unexpected and investors should be running for cover???? Do any of these journalists follow the Xero story? Do they understand what is going on or are they just after the best headling-grabbing page views they can get?

When Xero dual listed on the ASX it was like a lung transplant.. TBH the sooner the NASDAQ comes the better so it can truly break free of some the small-minded reporting & exposure that's been going on for years in this country.

[Copper]

Dismayed by the journalism in this country. Every article leads with "Loss-making Xero", "Losses widen" etc. It's as if they've forgotten why it is Xero is making a loss : because they are pursuing a growth strategy. They could have ejected for safety a long time ago and be content with NZ & Australia and build a respectable business confined to this region... but they've declared from the outset they wanted to build a global business and they were serious about doing that, and if you're serious about it then you have to spend money. The management of Xero have been there and done that and know what it takes to execute and succeed... yet the articles are pumped ad nauseum with the "NEWS" that Xero's losses have grown.. as if this was completely unexpected and investors should be running for cover???? Do any of these journalists follow the Xero story? Do they understand what is going on or are they just after the best headling-grabbing page views they can get?

When Xero dual listed on the ASX it was like a lung transplant.. TBH the sooner the NASDAQ comes the better so it can truly break free of some the small-minded reporting & exposure that's been going on for years in this country.

Well said totally agree.Brian Gaynor is one of the few who write articles that are good.He was an analyst in a broking office and understands what it's about.

[Toasty]

Dismayed by the journalism in this country. Every article leads with "Loss-making Xero", "Losses widen" etc. It's as if they've forgotten why it is Xero is making a loss : because they are pursuing a growth strategy. They could have ejected for safety a long time ago and be content with NZ & Australia and build a respectable business confined to this region... but they've declared from the outset they wanted to build a global business and they were serious about doing that, and if you're serious about it then you have to spend money. The management of Xero have been there and done that and know what it takes to execute and succeed... yet the articles are pumped ad nauseum with the "NEWS" that Xero's losses have grown.. as if this was completely unexpected and investors should be running for cover???? Do any of these journalists follow the Xero story? Do they understand what is going on or are they just after the best headling-grabbing page views they can get?

When Xero dual listed on the ASX it was like a lung transplant.. TBH the sooner the NASDAQ comes the better so it can truly break free of some the small-minded reporting & exposure that's been going on for years in this country.

Geez. Stop ramping the stock. Apparently its fashionable to just focus on the negatives. No place for positive news here. We like our news dismal, it sells better.

[couta1]

Down she goes

[Casino]

Apparently its fashionable to just focus on the negatives. No place for positive news here.

If there were any positive news of substance that would justify the current valuation we would have heard it from Drury. You also have to listen to what is not said especially when eccentrics run the show.

[Toasty]

If there were any positive news of substance that would justify the current valuation we would have heard it from Drury. You also have to listen to what is not said especially when eccentrics run the show.

Its actually irrelevant what Rod says. When he is positive he just gets accused of ramping the stock and talking up his own brand. When he keeps quiet its apparently because there is no justification for the value of the stock. When he says that they don't watch the stock value on a day to day basis its because Xero isn't concerned about shareholder value........

[SirPrize]

So is it the net loss after tax (+144%) that is causing her to go down or what?

[Harvey Specter]

So is it the net loss after tax (+144%) that is causing her to go down or what?An analyst put a sell rating on it - see nbr article posted above.

Note taht the last capital raising was at $18 (cant remember exactly) so alot of blue sky has been factored in above what the big boys paid less than a month ago.

[catchbag]

Emotion hitting early in the day,especially after Aust opened. I would next expect a lift this afternoon. Wouldn't be surprised if back into mid $35.

[luigi]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11160130

Haven't seen any comment on Xero looking for a NZ managing director. Seems to be good news that Rod will have more time freed up for US/Global operations.

[SirPrize]

And some good news...

Xero accounting app ‏@Xero (https://twitter.com/Xero)2h (https://twitter.com/Xero/status/403311869143683072)
Excited to win client software product of the year at the British Accountancy Awards 2013 #baa2013 (https://twitter.com/search?q=%23baa2013&src=hash)! ^OG pic.twitter.com/kWaw909BlN (http://t.co/kWaw909BlN)

[Casino]

And some good news...

Xero accounting app ‏@Xero (https://twitter.com/Xero)2h (https://twitter.com/Xero/status/403311869143683072)
Excited to win client software product of the year at the British Accountancy Awards 2013 #baa2013 (https://twitter.com/search?q=%23baa2013&src=hash)! ^OG pic.twitter.com/kWaw909BlN (http://t.co/kWaw909BlN)

Respectable achievement that can only be good for brand awareness. I see your award as well as billboards in Australia, and I raise you a super bowl ad:

http://abcnews.go.com/Sports/wireStory/intuit-chooses-finalists-super-bowl-ad-contest-20846110

[SirPrize]

Respectable achievement that can only be good for brand awareness. I see your award as well as billboards in Australia, and I raise you a super bowl ad:

http://abcnews.go.com/Sports/wireStory/intuit-chooses-finalists-super-bowl-ad-contest-20846110

Nice one!

Especially considering Xero is creeping in on the horizon hot; what a great timing to throw in a Superbowl ad for its luckiest client in order to help maintain their no.1 position.

What's interesting to me in this article is that 0.3% of their 5M customer base entered an opportunity of a lifetime - which I'm having a hard time to justify.

Casino could you please share your thoughts on why only 0.3% of their clientèle entered?

[Casino]

Nice one!

Especially considering Xero is creeping in on the horizon hot; what a great timing to throw in a Superbowl ad for its luckiest client in order to help maintain their no.1 position.

What's interesting to me in this article is that 0.3% of their 5M customer base entered an opportunity of a lifetime - which I'm having a hard time to justify.

Casino could you please share your thoughts on why only 0.3% of their clientèle entered?

I don't know why only 15000 of Intuit's small businesses thought that they have what it takes to produce a super bowl ad. I don't know why Xero deserves a valuation that is 25% of Intuit's when they don't even have that many total customers in the US. I don't know why Rod Drury suggests to the market that others didn't have similar resources to Xero. Here is what I know:

1. Intuit has made a lot of strategic acquisitions that will make entering the US market even harder.

http://online.wsj.com/article/PR-CO-20131120-908442.html?dsk=y

Xero cannot provide those benefits to US customers. They can't even provide core accounting functionality or even the promise that they will be around for as long as your business will be. What exactly is their competitive advantage? Are they going to develop those tools themselves? Why don't they roll out quotes, inventory and a fix for purchase orders first? Maybe they could acquire a few companies too? With their 230 million they could have bought half of Demandforce.com. Not much cash left then to ramp up staff up to 1200, is there?

2. Intuit has opened their API for free. This gives app developers access to more than 20 times as many business as Xero can:

http://online.wsj.com/article/PR-CO-20131119-905655.html?dsk=y

apps.com just went online somewhat coinciding with drop of GEO.

This can be a chance or seriously ruin it for Xero add-ons.

Either way, Xero is not a stock for Kiwi mums and dads.

[Shore]

I don't know why Rod Drury suggests to the market that others didn't have similar resources to Xero.

You are deliberately fudging over what was said. The report clearly stated no other new entrant​ had the same resources. Can you name another new entrant with $230m in the bank?

[Casino]

You are deliberately fudging over what was said. The report clearly stated no other new entrant​ had the same resources. Can you name another new entrant with $230m in the bank?

That's cherry picking. You could likewise say QBO is a new entrant to Australia. Netsuite is a new entrant to the small business market. Cloud accounting is new therefore all cloud accounting platforms are new entrants by definition including MYOB live accounts etc. It is not an acceptable statement to present yourself as the number one challenger when your competitors are way ahead of you. Also you need to give the market the most relevant information not the least relevant information, which is how you compare to the incumbent.

[SirPrize]

It makes perfect sense for Xero to fail in the US and for Intuit to take over the world with all the info you've provided thus far.

Yet 'for reasons unknown' Xero is a growing force to be reckoned with and will eventually take a good % of the US market >> only because they changed the look of their software ever so slightly >> (let's face it same **** different brand - example Windows vs OSX vs Linux)

Do you want to know why tho? Because things are much stranger than one can possibly imagine let alone understand or calculate as a whole. Ain't no equation to tie it all together my man.

In my opinion, Xero has successfully embedded itself in the culture of their clients / accounting / whatever. That's where Intuit failed and that's why there is a Xero at this price.

Hence the 0.3% interests in getting a free superbowl ad from Intuit.

[Copper]

Casino.... You appear from all your posts that you are a little agin Xero for many reasons....I may have missed a post somewhere but are you a holder of Xero shares..?

[SirPrize]

From twitter, about an hour ago.

Rod Drury ‏@roddrury (https://twitter.com/roddrury)1h (https://twitter.com/roddrury/status/403634780824039424)
Great to see tone of feedback from @Xero (https://twitter.com/Xero) loss yesterday maturing as more understand model of investing up front for growth. Lots to do tho

[Casino]

Casino.... You appear from all your posts that you are a little agin Xero for many reasons....I may have missed a post somewhere but are you a holder of Xero shares..?

Disc - I don't hold and I won't hold. No affiliations or exposure to competitors either. Please don't suggest that people shouldn't chime in if they are not invested. Provide counterarguments, if you disagree.

[fiasco]

It makes perfect sense for Xero to fail in the US and for Intuit to take over the world with all the info you've provided thus far.

Yet 'for reasons unknown' Xero is a growing force to be reckoned with and will eventually take a good % of the US market >> only because they changed the look of their software ever so slightly >> (let's face it same **** different brand - example Windows vs OSX vs Linux)

Do you want to know why tho? Because things are much stranger than one can possibly imagine let alone understand or calculate as a whole. Ain't no equation to tie it all together my man.

In my opinion, Xero has successfully embedded itself in the culture of their clients / accounting / whatever. That's where Intuit failed and that's why there is a Xero at this price.

Hence the 0.3% interests in getting a free superbowl ad from Intuit.

An interesting point. Reminds me of this journal I read, which I actually used in my thesis. You can certainly see where Xero is within this. I use to be a holder, but sold my portion sometime ago, but that doesn't stop the pure interest I have in them or any cloud offering.

Read at your on will, and I do apologise in advance if this bores some :)

http://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CCgQFjAA&url=http%3A%2F%2Ffaculty.haas.berkeley.edu%2Fshapi ro%2Fwars.pdf&ei=cryOUu3DEe-ViAe32oGYCg&usg=AFQjCNGQXg0Ce5PvmetgrkJU9oiQbMg5qg&sig2=dwpxKtXNC99obWrxUa2eig&bvm=bv.56988011,d.dGI

[Copper]

Disc - I don't hold and I won't hold. No affiliations or exposure to competitors either. Please don't suggest that people shouldn't chime in if they are not invested. Provide counterarguments, if you disagree.

Thanks for that. Was just wondering.With Xero I don't think anyone has a clue where this will all end. Hopefully for the best. As you know we have one broker at price value of $44 and another at $20 .It's not for the faint hearted and any for and agin commentary gives a dimension to the overall confusion.Keep it up.
Regards...

[Casino]

An interesting point. Reminds me of this journal I read, which I actually used in my thesis. You can certainly see where Xero is within this. I use to be a holder, but sold my portion sometime ago, but that doesn't stop the pure interest I have in them or any cloud offering.

Read at your on will, and I do apologise in advance if this bores some :)

http://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CCgQFjAA&url=http%3A%2F%2Ffaculty.haas.berkeley.edu%2Fshapi ro%2Fwars.pdf&ei=cryOUu3DEe-ViAe32oGYCg&usg=AFQjCNGQXg0Ce5PvmetgrkJU9oiQbMg5qg&sig2=dwpxKtXNC99obWrxUa2eig&bvm=bv.56988011,d.dGI

Thanks for sharing. It's funny how three people can look at the same thing and three completely different things: 1. There are those that think that Xero has already won. 2. Those that are looking forward to an interesting battle. 3. And people like me that wonder about the terms of surrender.

Intuit reported results yesterday: http://online.wsj.com/article/PR-CO-20131121-910897.html?dsk=y

In the past their cloud accounting focus was on the US but they are looking at overseas markets now. Without trying, they achieved 80% growth outside the US. It will be interesting to see how their growth will accelerate with the new QBO, which was just released.

[Casino]

Thanks for that. Was just wondering.With Xero I don't think anyone has a clue where this will all end. Hopefully for the best. As you know we have one broker at price value of $44 and another at $20 .It's not for the faint hearted and any for and agin commentary gives a dimension to the overall confusion.Keep it up.
Regards...

Stocks are inherently riskier than many other investments with many factors being beyond your control. Any stock can go either way and the best management can fail. But if people loose their money with this bet, then it will be in part because of announcements and media releases that are irresponsible. I really hope that somebody will ask them a few tough questions during the analyst call including customer numbers in the US, cash flow guidance, acquisitions, churn rate and potential cap raisings.

[SirPrize]

Intuit reported results yesterday: http://online.wsj.com/article/PR-CO-20131121-910897.html?dsk=y


Casino - thanks for this.

[SirPrize]

Why Xero is referred to as the apple of accounting - and more importantly why Intuit isn't.

Design? Apple? What? http://www.youtube.com/watch?v=3q6ULOT9Q4M

Now let's have a look Intuit.

http://apps.intuit.com (http://apps.intuit.com/)

What UI/UX / digital designer / web designer is to be held accountable for the design, layout and interactivity of this site? I wouldn't even buy it for $10 dollars from templatemonster.com. A company who is worth USD20B and has over 8000 employees came up with this? Take a moment and absorb the layout and design of this site. USD20B company. Over 8000 employees. This is far from the global design and user experience standard - especially for such a big company. It screams amateur on a number of different levels: for example - hover over effect on the picture was a bad idea all together; surely if it's on the front page and you want someone to know something interesting - why hide it? It's as if they made the site but then said oh ****, we got interesting stuff to put on there - but lets not change the layout because that would take heaps of time so let us instead improvise and make the best out of a bad situation. Boom. Done.

https://appcenter.intuit.com/home/myapps

Was down for me at the time for 10 minutes. Intuit App Centre - just text no logo. "We'll be back soon" ..... "© 2011 Intuit Inc." :) Yellow post it taken directly from shutterstock.com. The whole thing ... a low res image.

http://www.intuit.com/ > redirected to this: http://global.intuit.com/row/index.jsp?Country=New+Zealand > why doesn't this look anything like their main site? It looks like one of those things that pops up behind your main browser as you're searching for your 'Dutch girls should be punished for having big boobs' fix.

To those who think design is subjective:

So why does Apple and all the other successful companies pour millions and millions into design?

In my line of work and in this case the design has to be right on a number of different levels such as the following: composition (balance, whitespace, hierarchy, colour, depth, simplicity) as well as typography.

Xero knew how important design is - hence the 'beautiful accounting software' tag line.

If the above links are Intuit's core design skills - then Xero has already won.

Customer experience is everything - and on a screen - design plays the main role.

http://www.youtube.com/watch?v=FF-tKLISfPE

[Casino]

Casino - thanks for this.
No worries, I think people with an interest in Xero should follow Intuit very closely. Some people have fueled the perception that intuit lacks maneuverability or that Xero may be a takeover candidate for them. The last twelve months paint a completely different picture, I think.

[Casino]

If the above links are Intuit's core design skills - then Xero has already won.

Customer experience is everything - and on a screen - design plays the main role.

http://www.youtube.com/watch?v=FF-tKLISfPE

https://accounting.quickbooks.com/redir/testdrive

[Cricketfan]

To those who think design is subjective:

So why does Apple and all the other successful companies pour millions and millions into design?

In my line of work and in this case the design has to be right on a number of different levels such as the following: composition (balance, whitespace, hierarchy, colour, depth, simplicity) as well as typography.

Xero knew how important design is - hence the 'beautiful accounting software' tag line.

If the above links are Intuit's core design skills - then Xero has already won.

Customer experience is everything - and on a screen - design plays the main role.

http://www.youtube.com/watch?v=FF-tKLISfPE

If you're talking every day consumer products, then design might be a major factor. Accounting software? I would expect functionality to be the major factor. Who would've thought eBay and Facebook with their ugly user interfaces would do well? My eyes certainly hate it when I use them, but they do the job better than their competitors so I use them. Now if Xero and Intuit are on par in terms of functionality and cost, then yeah Xero may have the edge in that case due to the cosmetic stuff. But will it win purely on design?

[Lorne Ranger]

https://accounting.quickbooks.com/redir/testdrive

Thanks for the link, which seems to back up the argument that quickbooks is design impaired. What a shambles. Its the first time I have seen the layout, so you might get used to it, but on first viewing there is little logical layout, its a collection of disjointed styles and scales, and the activity list on the right hand side!!!!.... what were they thinking? Makes me wonder if this is designed for tablet more than computer screens? Looks like the layout was designed by a bored accountant on acid.

I agree that for many the style and culture of Xero is half the appeal, bit of pleasant styling while youre doing a pretty menial task. Not easy to impress while doing accounting, let alone inspire, but Xero seems to be pulling it off, and their marketing is only getting better. Good on them for valuing the aesthetic, always a risky approach.

Casino you have argued against Xero on everything else, but on style you may have to bite the bullet :cool:

[SirPrize]

https://accounting.quickbooks.com/redir/testdrive

My man! Nice linkage going on here.

Funky and really out there.

Far from the company's profile and guidelines. If you'd take away the quickbooks logo and replace with the 'wordpress' logo - people would think this is a template for an admin dashboard for wordpress as it looks like a perfect replica. Examples of these dashboards can be found on themeforest.net. Just find it too much in your face.

[Casino]

My man! Nice linkage going on here.

Funky and really out there.

Far from the company's profile and guidelines. If you'd take away the quickbooks logo and replace with the 'wordpress' logo - people would think this is a template for an admin dashboard for wordpress as it looks like a perfect replica. Examples of these dashboards can be found on themeforest.net. Just find it too much in your face.

You seem to have a good eye for designs. Could you imagine starting a t-shirt selling business? I reckon people would like your designs and you could sell at least 30-40 t-shirts a day. Who would you use for your accounting?

[SirPrize]

If you're talking every day consumer products, then design might be a major factor. Accounting software? I would expect functionality to be the major factor. Who would've thought eBay and Facebook with their ugly user interfaces would do well? My eyes certainly hate it when I use them, but they do the job better than their competitors so I use them. Now if Xero and Intuit are on par in terms of functionality and cost, then yeah Xero may have the edge in that case due to the cosmetic stuff. But will it win purely on design?

Absolutely. When you talk about design of a website or an app you're talking about the usability factor, user experience, which in my line of work is referred to as User Interface / User Experience - note how those two a linked together. Much like space and time.

How are the functions presented? By design. Two software can be doing exactly the same thing yet be so different - design can make one easy to use and design can also make one over complicated to use. Have a look at that preview of quickbooks and on another window go to xero's demo. One is totally off course and one is pretty much spot on.

You might think ebay is ugly, but it's actually designed with perfection for what its suppose to do. In my opinion ebay nailed the design. Try and design a site to do what ebay does.

Facebook was first. Most of your friends are on it. Google+ is much better and offers a lot more, but there's a main reason why you won't switch to google+ from facebook - all your friends are still on facebook.

[SirPrize]

And that's a wrap everybody.

[Casino]

Facebook was first. Most of your friends are on it. Google+ is much better and offers a lot more, but there's a main reason why you won't switch to google+ from facebook - all your friends are still on facebook.

Print what you just said and put it aside for the time being.

[SirPrize]

I found the designer who was in charge of designing online quickbooks: http://i.imgur.com/d9J4fbq.gif

Below are some templates that anyone can buy from themeforest that look identical to quickbooks. These templates for wordpress dashboard - a cms site that lets you populate theme-sites and check info with ease.

$20 http://themeforest.net/item/flatlab-bootstrap-3-responsive-admin-template/full_screen_preview/5902687
$18 http://themeforest.net/item/webarch-responsive-admin-dashboard-template/full_screen_preview/6157416
$20 http://www.keenthemes.com/preview/index.php?theme=metronic_admin&page=index.html
$18 http://themeforest.net/item/metro-lab-responsive-metro-dashboard-template/full_screen_preview/5359122

There's at least 50 others.

[SirPrize]

You seem to have a good eye for designs. Could you imagine starting a t-shirt selling business? I reckon people would like your designs and you could sell at least 30-40 t-shirts a day. Who would you use for your accounting?

Haha.

I'd use a fine fellow called Casino!

Because I'd trust my finance and decisions with a guy who named himself after a facility which houses gambling activities. All this so I could sleep good at night. http://i.imgur.com/pbtWHv6.gif

[SirPrize]

Print what you just said and put it aside for the time being.

... And so... ?

[Casino]

Haha.

I'd use a fine fellow called Casino!

Because I'd trust my finance and decisions with a guy who named himself after a facility which houses gambling activities. All this so I could sleep good at night. http://i.imgur.com/pbtWHv6.gif

Cheers but what software would you use?

[winner69]

Where the war will be won

Even has pictures

http://www.nbr.co.nz/opinion/behind-scenes-xeros-us-beachhead-CK

[Shore]

I note there's an investor briefing tomorrow. Is this just a rundown of the half year results or will they update on current customer numbers? Would be great to know what's been happening in that department since the capital raise.

[SirPrize]

Cheers but what software would you use?

The business which you described sounds like more pain than it's actually worth.

If I did run a lucrative business I'd hire accountants. In the interview process I'd do my best to make sure two things; that they are trustable and that they keep up with emerging products / technology.

Every accountant out there, should try Xero. Why haven't they? It's a tool for their job. It's new, fresh and has a much more dedicated team to its clients than Intuit. Xero has proven that it thinks forward and engages with its clients on very many levels. It's also very reliable with a customer support to match.

Whereas Intuit is a dinosaur, you can tell that all they've been doing for the past ten years was climbing up the wrong tree, banking money, not thinking ahead and most importantly - not evolving their business for their clients. Think about it this way. If intuit did everything what it should have done - there wouldn't be a Xero at this price or even a Xero at all. So one thing leads to the next and now they are facing the consequences.

What's worse for Intuit, is that there's a comet named Xero heading it's way. Out with the old in with the new I say.

The answer to your question: Xero

[Casino]

The answer to your question: Xero

That's a shame because Xero couldn't handle such a business. It's limited to roughly 1000 bank transactions per month.

[Casino]

I note there's an investor briefing tomorrow. Is this just a rundown of the half year results or will they update on current customer numbers? Would be great to know what's been happening in that department since the capital raise.

Is it tomorrow?

http://www.xero.com/nz/about/investors/

or is it next week?

http://events.xero.com/nz/events/405-xero-analyst-briefing

[Shore]

Conference call tomorrow.. follow up with in the flesh presentations next week.

[SirPrize]

That's a shame because Xero couldn't handle such a business. It's limited to roughly 1000 bank transactions per month.

Transaction limit of 1000 p/mth: This is really a non issue (IMHO). As a gold partner firm with over 200 Xero clients we do not have one affected client. Limits look bad, but ask your Xero account manager to tell you if any clients will actually be affected.

[SirPrize]

Is there a way we can tune into this call?

[Shore]

Yes you can - instructions are given I think a bit closer to the time on NZX website?

[SirPrize]

Transaction limit of 1000 p/mth: This is really a non issue (IMHO). As a gold partner firm with over 200 Xero clients we do not have one affected client. Limits look bad, but ask your Xero account manager to tell you if any clients will actually be affected.

Nicole Elvy
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54446)
Hi I have a client that has over 1000 transactions in a month. Xero is obviously no longer going to work for them. I am correct in saying they have 3 weeks to find an alternative? They also use Unleashed which will makes it even harder to find a solution.


Nicole Elvy
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54447)
Hi there
I see there are lots of blogs on employees and plans. I can’t see this information any where. Does the number of employees not effect NZ subscribers?


Richard Wood (https://plus.google.com/111749774055616868363/about) (XERO)
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54448)
@Nicole no, the 1000 is a soft limit for guidance. Regarding employees and plans, those are discussions about plans with Payroll, which we don’t have in New Zealand.

[Casino]

Conference call tomorrow.. follow up with in the flesh presentations next week.

Thanks - It would be very interesting to know the latest US figures and also the churn rate in Australia.

[Shore]

Absolutely. With QBO's quarterly growth grinding to a halt it's a great opportunity for Xero to do some headline grabbing and capitalize.

[Casino]

Nicole Elvy
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54446)
Hi I have a client that has over 1000 transactions in a month. Xero is obviously no longer going to work for them. I am correct in saying they have 3 weeks to find an alternative? They also use Unleashed which will makes it even harder to find a solution.


Nicole Elvy
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54447)
Hi there
I see there are lots of blogs on employees and plans. I can’t see this information any where. Does the number of employees not effect NZ subscribers?


Richard Wood (https://plus.google.com/111749774055616868363/about) (XERO)
13 November 2013 # (http://blog.xero.com/2013/11/new-subscription-plans/#comment-54448)
@Nicole no, the 1000 is a soft limit for guidance. Regarding employees and plans, those are discussions about plans with Payroll, which we don’t have in New Zealand.



A lot of small businesses need more than 1000 transactions or would like to grow to that point. Do you think Xero uses Xero for Xero?

[Harvey Specter]

A lot of small businesses need more than 1000 transactions or would like to grow to that point. Do you think Xero uses Xero for Xero?XRO is not an SME.

They have given the guidance of 1,000 so new customers can consider whether Xero is appropriate or whether they need to go the next step up. If you business has increased to over 1,000, they have said it is a soft limit so unless that growth is exponential, then they wouldn't cut you off. I assume they would give you time to transition if they did say you have grown to fast.

1,000 lines is a lot. It is more like to effect those with lots of foreign currency where the bank also charges a fee on each, effectively doubling the number of transactions.

They also plan to expand this in future. They will probably use that change to move people onto a premium plan.

[Casino]

Absolutely. With QBO's quarterly growth grinding to a halt it's a great opportunity for Xero to do some headline grabbing and capitalize.

What are you talking about? Non-US subscribers are 80% up in one quarter!!!!

http://investors.intuit.com/files/doc_financials/2014/1Q/Q1FY14%20FINAL%20Fact%20Sheet.pdf

For the US, you have to compare Q1F14 with Q1F13 not Q4F13. If you do that, you see an acceleration in growth. And all that with the old QBO. New QBO will come into effect now.

[SirPrize]

A lot of small businesses need more than 1000 transactions or would like to grow to that point. Do you think Xero uses Xero for Xero?

A lot of? That's debatable; give us a % of how many small businesses in NZ need more than 1000 transaction. Wouldn't those businesses be classified as medium as opposed to small? Even so, if I went to Xero and said hey I have 1200-1500 transaction per month - can I not use your software? Do you really think they would say "Oh sorry... max 1000 transaction - why don't you try Intuit?"

Xero is for small businesses. Says so on their front page. Also if what you say is true Xero would have major issues with their clients concerning the 1000 transaction p/m - all of which would be commented on on their blog. From what I see on that blogpost. Out of the 185 comments there's about 7-10 regarding the 1000 transactions.

What does Xero use for Xero Casino? Intuit?

[Casino]

XRO is not an SME.

They have given the guidance of 1,000 so new customers can consider whether Xero is appropriate or whether they need to go the next step up. If you business has increased to over 1,000, they have said it is a soft limit so unless that growth is exponential, then they wouldn't cut you off. I assume they would give you time to transition if they did say you have grown to fast.

1,000 lines is a lot. It is more like to effect those with lots of foreign currency where the bank also charges a fee on each, effectively doubling the number of transactions.

They also plan to expand this in future. They will probably use that change to move people onto a premium plan.

The 1000 transaction limit applies to all plans. For a lot of businesses 1000 transactions is more than enough, for many it won't be. If you anticipate strong growth for your small business and/or foresee the need for ERP wouldn't you be better off with Jcurve Netsuite?

[Casino]

A lot of? That's debatable; give us a % of how many small businesses in NZ need more than 1000 transaction. Wouldn't those businesses be classified as medium as opposed to small? Even so, if I went to Xero and said hey I have 1200-1500 transaction per month - can I not use your software? Do you really think they would say "Oh sorry... max 1000 transaction - why don't you try Intuit?"

Xero is for small businesses. Says so on their front page. Also if what you say is true Xero would have major issues with their clients concerning the 1000 transaction p/m - all of which would be commented on on their blog. From what I see on that blogpost. Out of the 185 comments there's about 7-10 regarding the 1000 transactions.

What does Xero use for Xero Casino? Intuit?

Netsuite from what Ican tell

http://www.stuff.co.nz/business/8963938/Xero-unruffled-by-unlikely-challenger-SAP

Netsuite is now a de facto competitor, which would make me nervous:

http://boxfreeit.com.au/2013/11/04/netsuite-to-take-on-xero-small-business-australia/

[Casino]

Also, the number of transaction isn't a good indicator for how big a business is.

[SirPrize]

Very interesting links as per usual Mr Casino. Thank you.

[Harvey Specter]

Also, the number of transaction isn't a good indicator for how big a business is.What is the definition of a SME? I dont think there is an accepted one. I had a look (google) a while ago and found one NZ govt site used 5 or less staff to define SME. One Canadian site used a weird test such that billion dollar companies qualified as a SME but smaller business did not.

Xero has defined it as one with less than 1,000 transactions. I also think with their Australian plans, they have an upper limit of staff which will also be an effective limit.

If you are bigger, use something else. Xero has never said they apply to everyone and the fact they use another product is evidence of this.

[Harvey Specter]

One thing that does concern me with Xero is they are targeting 1m customers (initially). Intuit has less than 6m across their whole suite (I think I read this weekend).

Therefore Xero is looking to capture huge market share or it is hoping to attract a lot of new business from those using Excel/shoebox.

[Toasty]

One thing that does concern me with Xero is they are targeting 1m customers (initially). Intuit has less than 6m across their whole suite (I think I read this weekend).

Therefore Xero is looking to capture huge market share or it is hoping to attract a lot of new business from those using Excel/shoebox.

One of the key things that was mentioned a while ago was that quite a large percentage of Xero customers were new to accounting software. So exactly that Excel/showbox style client. There are figures somewhere but I am not sure where.

[Casino]

What is the definition of a SME? I dont think there is an accepted one. I had a look (google) a while ago and found one NZ govt site used 5 or less staff to define SME. One Canadian site used a weird test such that billion dollar companies qualified as a SME but smaller business did not.

Xero has defined it as one with less than 1,000 transactions. I also think with their Australian plans, they have an upper limit of staff which will also be an effective limit.

If you are bigger, use something else. Xero has never said they apply to everyone and the fact they use another product is evidence of this.

I would go by number of employees: 0-50, maybe 100.

2$ shop, lot of transactions --> small business
cafe, lot of transactions --> small business
trade me shop, lot of transactions --> small business
SirPrize's t-shirt business, lot of transactions --> small business
app selling store, lot of transactions --> small business
etc

[Casino]

One of the key things that was mentioned a while ago was that quite a large percentage of Xero customers were new to accounting software. So exactly that Excel/showbox style client. There are figures somewhere but I am not sure where.


this is the most realistic market for Xero, I would say. To go after those, you have to compete on price. But Xero says they are about value and wants to target the segment between QBO/MYOB and Netsuite: http://blog.xero.com/2012/07/the-apportunity/

But that space is becoming very narrow now with QBO opening its API and Netsuite looking below.

[Harvey Specter]

cafe, lot of transactions --> small businessI know for this at least, and probably some of the others that they only have "2" sales per day. There is the overnight credit card settlement and then the daily cash banking. So that leaves over 900 expense transactions per month.


I would go by number of employees: 0-50, maybe 100.Is staff the right metric, what about turn over, assets value? I dont know the answer.

[SirPrize]

SirPrize's t-shirt business, lot of transactions --> small business


That is hilarious. Thank you for including me. LOL :)

[Casino]

I know for this at least, and probably some of the others that they only have "2" sales per day. There is the overnight credit card settlement and then the daily cash banking. So that leaves over 900 expense transactions per month.

Is staff the right metric, what about turn over, assets value? I dont know the answer.

Another good way could be to define it by how much a business can/has to spend on accounting: 0-$3000 pa

[Casino]

That is hilarious. Thank you for including me. LOL :)

I was actually going to ask you for a custom job. Could you print me a t-shirt with Joseph Kennedy on it? How much would it cost?

[SirPrize]

I would go by number of employees: 0-50, maybe 100.

2$ shop, lot of transactions --> small business
cafe, lot of transactions --> small business
trade me shop, lot of transactions --> small business
SirPrize's t-shirt business, lot of transactions --> small business
app selling store, lot of transactions --> small business
etc

In New Zealand, a SME has 19 or fewer employees.

ref: http://en.wikipedia.org/wiki/Small_and_medium_enterprises

[SirPrize]

I was actually going to ask you for a custom job. Could you print me a t-shirt with Joseph Kennedy on it? How much would it cost?

Not interested.

[Hawkeye]

https://www.nzx.com/companies/XRO/announcements/244290

[Toasty]

Investor presentation is out but to my mind there is nothing there that we didn't already know.

What I do like though is the change in the number of partner channels ( Accountants, book keepers) especially in Australia and USA/ROW areas. Theoretically this should translate into significant customer numbers as customers come though those channels organically or practices roll their client base over wholesale.

[Shore]

Nothing anywhere about conference call that i can see?

[Harvey Specter]

Investor presentation is out but to my mind there is nothing there that we didn't already know.Slide 5 is interesting. Opex costs % of revenue. Already below 100% and looking good compared to the (deliberately?) choosen comparables.

They do get their flags mixed up on pg 20 and 21!!!! Someone should be fired for that.

And more enthusiatic than Percy - incredibly well positioned - p41

[Casino]

It's very difficult to analyse without the commentary and powerpoint animations.

Slide 15 points to cutting US premium 10 plan from $70 to $39. I still don't understand why the markets did not react to that when it was released. Even if it is a neutral for future cash flows, shouldn't we have seen higher trading volumes in response?

It is worthwhile to look at last year's presentation and compare what was added, changed or omitted:

http://www.xero.com/media/173054/xero_analyst_briefing.pdf, particularly compare slide 29 (new) to slide 18 (old)

[Toasty]

It's very difficult to analyse without the commentary and powerpoint animations.

Slide 15 points to cutting US premium 10 plan from $70 to $39. I still don't understand why the markets did not react to that when it was released. Even if it is a neutral for future cash flows, shouldn't we have seen higher trading volumes in response?

It is worthwhile to look at last year's presentation and compare what was added, changed or omitted:

http://www.xero.com/media/173054/xero_analyst_briefing.pdf, particularly compare slide 29 (new) to slide 18 (old)

How do you get the cut from $70 to $39. Is it mentioned somewhere else? I read it as the $70 plan being the most popular. I assume that means the most uptake?

[Casino]

How do you get the cut from $70 to $39. Is it mentioned somewhere else? I read it as the $70 plan being the most popular. I assume that means the most uptake?

http://www.xero.com/us/updated-pricing/

[Toasty]

http://www.xero.com/us/updated-pricing/

Classic. Well that seems pretty clear. Cheers.

I do see that its just a years special offer....at the moment anyway

[Casino]

Classic. Well that seems pretty clear. Cheers.

I do see that its just a years special offer....at the moment anyway

Yes they can increase prices whenever it suits them and stab you in the back like in Australia, which is a good reason not to move to the cloud.

[Casino]

Slide 17 deserves some attention and could explain why accountants love Xero. I knew that they get a good cut but is it really that much?

https://www.nzx.com/files/attachments/185835.pdf

[Shore]

Xero looks after its partners - it's part of the reason why they are where they are.

[blackcap]

Just read that report/presentation. What a load of waffle if you ask me. (though to be fair to XRO, many company presentations are)

[Casino]

Xero looks after its partners - it's part of the reason why they are where they are.

In summary, you give a good chunk of your business to accountants - to force your products on unwary clients - so you can get less than $0.7 revenue for every $1 that you put in - to make investors believe that your business is worth more than 4 billion dollars? Definitely not a bubble then.

[Toasty]

Xero looks after its partners - it's part of the reason why they are where they are.

Also, most partners (at least the ones I deal with) pass on at least a portion of the discount to their clients. This makes it cheaper for clients to access the software as part of a suite of solutions through their accountant. Typical would be Unleashed Inventory connected to Xero with a partner CRM laid on top.

A whole bunch of solutions for a reasonable monthly cost. Beats having to use some cut down ERP or a bunch of disparate desktop packages with no effective API.

I am sure you can find something wrong with this Casino but its working well for our clients. More time on the business not in the business as the saying goes.

[Casino]

I am sure you can find something wrong with this Casino but its working well for our clients. More time on the business not in the business as the saying goes.

There is a lot I find wrong with it. The US margins must be tiny then because price there are so much lower?

[Harvey Specter]

Slide 17 deserves some attention and could explain why accountants love Xero. I knew that they get a good cut but is it really that much?

https://www.nzx.com/files/attachments/185835.pdf


Xero looks after its partners - it's part of the reason why they are where they are.Remember that accountants also have access to the cheap cashbook range which would bring down the average cost per use. A lot of rental properties etc would be on that plan in NZ. It is the first step from shoebox/spreadsheet as it doesn't allow invoicing.

I personally signed up as an accountant so that I could get the cashbook product ($10+GST) for my two small investment companies. The cashbook product links in well with PocketRent (rentals) and Sharesight (shares).

[Casino]

Just read that report/presentation. What a load of waffle if you ask me. (though to be fair to XRO, many company presentations are)

I wish there was a transcript to see if any of the analysts called them on their bs. NZX should make webcasts or transcripts mandatory.

[SirPrize]

So just to clarify - there's no conference that we are able to tune into?

[Casino]

So just to clarify - there's no conference that we are able to tune into?

No but there is another good barometer. Drury usually tweets at least six times per day. Today: 0

https://twitter.com/roddrury

[SirPrize]

Haha. What's the reading on the barometer?

[Shore]

Or another barometer is that Xero is adding just as many customers per month as QBO is.. and QBO has been operating longer and has the benefit of a well known brand and giant company behind it... or did you skip that slide Casino?

[blackcap]

Seems the investor presentation has done wonders for the share price today. But in all seriousness, I do think at current pricing there are lofty expectations to achieve and if they do not achieve 100% + growth it could be a problem. If they do however it will support the share price at these levels.

[Casino]

Or another barometer is that Xero is adding just as many customers per month as QBO is.. and QBO has been operating longer and has the benefit of a well known brand and giant company behind it... or did you skip that slide Casino?

I skipped a lot of slides, which I found misrepresentative. This chart will definitely be an interesting one to revisit in 6-12 months. First of all, let's look at intuit. What do they do?

http://investors.intuit.com/files/doc_financials/2014/1Q/Q1FY14%20FINAL%20Fact%20Sheet.pdf

1. SMB (2 billion revenue)
2. Consumer tax (1.7 billion revenue)
3. ProTax (400 million revenue)

Xero doesn't do #2 and #3. So how much of #1 can we attribute to Intuits 20 billion dollar market cap if we had to carve it out? Let's make it 10 billion. SMB is fractured into Desktop (1.2 billion) and subscribers (800 million). Let's be generous and assign the subscriber side a market cap of 7 billion.

Xero reckons both are adding the same amount of customer every month. How can Xero have a value of >4 billion if they make accelerating losses, have less cash in the bank, grow slower outside the US, fewer subscribers and many many other things going against them?

[apac]

Again, I have no doubt Xero will succeed after looking at the investor presentation. Don't need to disclose my reasons, cause I'm sure there's counter arguments. Let's call it faith!

The share price today is just a tiny negligible drop in the long run. I'm betting my money on it :D

[Shore]

How can Xero have a value of >4 billion

Umm.. because the market says it is? It's not a question of "should Xero be worth 4 billion".. it's a fact. People.. some of them very smart.. see that the future of accounting lies with Xero.. not MYOB, or Sage.. or Intuit.


I skipped a lot of slides, which I found misrepresentative

I can understand - facts have an annoying tendency to reveal reality. Intuit are a legacy software company from another era who have been struggling with years to execute a cloud accounting offering and have, for all intents and purposes, failed miserably. With their brand, resources and clout they should have hit a home run but they were too scared to eat into their desktop revenue and instead put up a half-assed attempt. That was 10 years ago. Even after all this time they've clearly demonstrated they don't get it... their API is a dog, their downtime is chronic, and only after seeing Xero's success have they tried to emulate the partner channel methodology and copy it. Legacy desktop software is dead. Dead as a door nail.

[Casino]

The only counter argument that I can think of is that Microsoft could be interested in them. They phased out MS Money a while ago. Cloud accounting could be something they might be interested in. But that would be a lot of money for few customers in the wrong markets or a program that they could develop themselves. Ben Kepes dismisses that option:

http://diversity.net.nz/the-xero-share-price-one-pundits-analysis/2013/03/27/ (http://www.nbr.co.nz/article/xeros-share-price-one-pundits-analysis-ck-137900)

[Casino]

How come NZX doesn't show a volume for yesterday? We had over 8 million by trading end and an additional 10 million worth that changed hands in after hours trading. No transcript. No media commenting on a 7.5% drop of one of NZ's biggest companies. CEO isn't tweeting for a change. Great times for retail investors.

[Copper]

How come NZX doesn't show a volume for yesterday? We had over 8 million by trading end and an additional 10 million worth that changed hands in after hours trading. No transcript. No media commenting on a 7.5% drop of one of NZ's biggest companies. CEO isn't tweeting for a change. Great times for retail investors.

Havent followed thru but is this all to do with the rebalancing of the MSCI index that has played havoc with some shares including the greatest days trading on the NZX as I see in the news....

[SirPrize]

http://pubacct.org.au/xero-barriers/

And here's Rod talking about improvements that could be made on linkedin.

http://blog.xero.com/2013/11/fix-linkedin/

What. A. Champ.

[Casino]

Havent followed thru but is this all to do with the rebalancing of the MSCI index that has played havoc with some shares including the greatest days trading on the NZX as I see in the news....

I'm really not that impressed with the NZX. To see that big investors sell a big parcel after being briefed could be a vital piece of information that people need access to. A lot of things need to change if you want the public to invest in shares instead of the real estate market. Of course the deck will always be stacked against retail investors but at least make an effort to provide everyone with the same information. Investors need to be more demanding and not invest unless companies provide a webcast/transcript of analyst calls. Look at all the smack talk in annual reports, which is no comparison to how 10-k forms are done in the US. Xero was really excited when Intuit explicitly mentioned them in theirs but it's a formal requirement:

http://www.nbr.co.nz/opinion/xeros-us-assault-analyst-raises-small-red-flag-CK

[Casino]

What. A. Champ.

Print this and staple it to the Facebook/Google+ comparison that you made the other day. We will revisit it in due time.

But yes, Rod is tweeting again and has advice for everyone:

'Mr Drury shared some valuable insights about the perfect pitch, which "is a story about yourself", and he stressed the similarity to having good relationships in the bedroom - a comment which had the audience in stitches.'
http://newsle.com/article/0/105168260/

I upgrade my rating from 'strong sell' to 'sell'...


After fixing LinkedIn he cold consider addressing grievances of his own clients:

http://blog.xero.com/2008/12/create-basic-quotes/comment-page-3/#comment-56779
http://blog.xero.com/2013/10/skinny-support/comment-page-1/#comment-56870
http://blog.xero.com/2013/11/australia-listening/comment-page-2/#comment-56838
http://blog.xero.com/2013/11/purchase-orders/#comment-56301

[Longhaul]

I upgrade my rating from 'strong sell' to 'sell'...

Have you ever owned Xero or have you ever considered buying Xero? If not, why do you comment so much on a stock that you aren't interested in?

[Casino]

Have you ever owned Xero or have you ever considered buying Xero? If not, why do you comment so much on a stock that you aren't interested in?


I am very interested in Xero on many levels! I will not invest in it but it is super informative and exciting to follow.
What is the appeal?

1. David vs Goliath
2. Effect of technology on business
3. Personality of CEOs
4. Hype/mass psychology
5. Failure of journalism
6. Economic and social consequences of success or failure
etc

Highly fascinating and relevant to all of us - even the ones not invested.

[Danzx]

I am very interested in Xero on many levels! I will not invest in it but it is super informative and exciting to follow.
What is the appeal?

1. David vs Goliath
2. Effect of technology on business
3. Personality of CEOs
4. Hype/mass psychology
5. Failure of journalism
6. Economic and social consequences of success or



7. Failure of share-brokers to give the correct advice at any stage.

[SirPrize]

Print this and staple it to the Facebook/Google+ comparison that you made the other day. We will revisit it in due time.


Oh ok. Can't wait.

Time-frame? Hopefully in this lifetime. :)

[gv1]

I am very interested in Xero on many levels! I will not invest in it but it is super informative and exciting to follow.
What is the appeal?

1. David vs Goliath
2. Effect of technology on business
3. Personality of CEOs
4. Hype/mass psychology
5. Failure of journalism
6. Economic and social consequences of success or failure
etc

Highly fascinating and relevant to all of us - even the ones not invested.
Must be a competitor

[Casino]

Must be a competitor

which one?

Intuit, Saasu, MYOB, Kashoo, gem accounting, netsuite, wave, freshbooks, clearbooks, sage, reckon one - just to name some of the bigger ones.

[Casino]

Oh ok. Can't wait.

Time-frame? Hopefully in this lifetime. :)

Good question. Really good question. Here's how I see it. Retail investors are oblivious to how overpriced this stock is compared to something like salesforce, which isn't exactly safe either. They will keep buying but not selling unless there is panic. I don't see panic happen in the immediate short-term as long as NASDAQ and QE provide support. Without NASDAQ, XRO wouldn't be 3% up today...

Still, the next three quarterly results could trigger volume selling if my projections are correct.

Xero Dec13 - There might already be hints of increased Australian competition but they could be hard to spot. Exit if it is apparent (to you).
Intuit Jan14 - Definitely keep an eye out on Intuit's January quarter. Exit if Intuit adds another 80% outside the US, particularly if they mention good uptake in Australia.
Xero Mar14 - Watch for poor US uptake in March quarter. Xero might fudge US customer numbers or have a lot of them on the 9$ plan. Look at revenue and how much cash they have burnt. If they have burnt a lot of cash, they will justify it with imminent profitability. Don't believe it and exit.
Intuit April14 - Look for Intuit's US numbers. They should add ~50000 US customers in that quarter. If it is more, exit Xero.
Xero Jun14 - Best quarter for US customer growth. Xero better do really well in the US and Australia.
Intuit July14 - Intuit's growth should accelerate a lot in this quarter.
Xero Sep14 - Look at how much you hate yourself for not listening to me.

Other things to consider
-I don't see UK growth play a big role in 2014 but if Xero does well there, it might compensate for dents in Australia.
-Xero going on a shopping spree. They may integrate various add-ons to complete core functionality. Hard to predict what effect it will have. Depends a lot on timing.
-Accountants getting a bad reputation for referring clients to Xero. I would expect business owners that go for the cloud to be very savvy. They clue up very quickly to what is going and there will be consequences for accountants who didn't give them the best advice. You know you're in trouble when people want their old system back:

http://boxfreeit.com.au/2013/10/18/five-reasons-to-move-from-xero-to-myob/

[Lorne Ranger]

I am very interested in Xero on many levels! I will not invest in it but it is super informative and exciting to follow.
What is the appeal?

1. David vs Goliath
2. Effect of technology on business
3. Personality of CEOs
4. Hype/mass psychology
5. Failure of journalism
6. Economic and social consequences of success or failure
etc

Highly fascinating and relevant to all of us - even the ones not invested.

Ugh! Thought I'd pop back into this thread to catch up on some reasoned debate, but see this cephalopod still has his tentacles wrapped around it. Sigh.... Anyone this emphatic that they are right about a share can only be treated with skepticism and disdain. Like a guy who turns up at a party with dog turd on his shoe and insists on showing everyone.

Must be more to it than some benevolent attempt at saving us poor dumb investors from losing our dosh. Was he burned by a similar stock in the past? Did his only mate tell him to invest in Xero when it was $1 and has been laughing at his decision not to ever since? Is he hacked off Drury has a restraining order out with his name on it? Who knows.

Whatever the reason, its shallow, predictable and boring as hell. All for reasoned opinion but this guy reeks of a oppositional plant. Too bad you cant modify the site to block having to read certain posts. Without it this thread is choking.

Take care everyone.

[Hawkeye]

I cant believe Intuit pay you to write this dribble Casino, hope it pays well.
Unfortunately you started writing on the other threads too late, and everyone on here knows your game.

I do have xero shares, but even if i didn't, I would hope they do well because no one likes a biased smartypants.
Sorry team but this dude has been ticking me off for weeks.

"Accountants getting a bad reputation for referring clients to Xero." maybe in your head fella, but everyone I have spoken to that uses xero say things like : LOVE IT! Best thing out there! oh and dont hate their accountants for referring them.

[Casino]

Looks like we need two threads for every stock. Kindly consider that I have perceived some of the debate here as equally unbearable. All of the points that I have raised can easily be clarified by the management. Nobody is going to get hurt by transparency. Until then we have to agree to disagree. Do your own research. Don't blame me either way.

[Casino]

I thought it was too good to be true.

Simply shift the debate to the competitive advantages of Xero, if you can't stand what I say. I'm not an expert and it should be easy to correct me. I know, I know, you'll say that you can't be bothered to... Fine, let's leave it at that. I see too many deliberate distortions to not be confident in my analysis.

[Toasty]

-Accountants getting a bad reputation for referring clients to Xero. I would expect business owners that go for the cloud to be very savvy. They clue up very quickly to what is going and there will be consequences for accountants who didn't give them the best advice. You know you're in trouble when people want their old system back:

http://boxfreeit.com.au/2013/10/18/five-reasons-to-move-from-xero-to-myob/

You slam Xero for supposedly hyping their product but when a MYOB Accountants practice write an article about reasons why people might move back to MYOB it proves that Xero is in trouble.

Ah crap, I commented. Grrrr.

Its not that we can't stand what you say. Its the way its said.

[Bilbo]

Simply shift the debate to the competitive advantages of Xero, if you can't stand what I say. I'm not an expert and it should be easy to correct me. I know, I know, you'll say that you can't be bothered to... Fine, let's leave it at that. I see too many deliberate distortions to not be confident in my analysis.

OK Casino, I have read enough of your biased commentary and will take it with a grain of salt unless you can provide some details on your background and experience which makes you such an expert on this stock. What interest do you have in Xero competitors? Is there more than one person posting under your login (you posted last night at 12.19am and again this morning at 7.35am - and your frequency of posting is way too high for someone without a vested interest in this stock). Where are you based - NZ or Aus?

What qualifies you as an "expert" in Xero and investment in general?

[Casino]

You slam Xero for supposedly hyping their product but when a MYOB Accountants practice write an article about reasons why people might move back to MYOB it proves that Xero is in trouble.

Ah crap, I commented. Grrrr.

Its not that we can't stand what you say. Its the way its said.

Okay, maybe it's a bit strong at times. I don't have a very fond opinion of Drury, which I need to balance when writing.

Is churn an issue? I honestly don't know. The number is likely low but it could herald problems if it is not zero. Why not raise it with the management? Why is tweeting a video of an exploding whale a priority when there have been so many developments since September that the CEO could comment on?

For now, I'll follow the smack talk not knowing who to believe:

http://boxfreeit.com.au/2013/11/25/can-intuit-crack-the-australian-market/

Put it this way, if Xero can continue to grow as fast they did despite cloud solutions released by MYOB, Intuit, Reckon one, then my analysis is wrong and Xero in good shape. Next 12-18 months will tell.

[Casino]

OK Casino, I have read enough of your biased commentary and will take it with a grain of salt unless you can provide some details on your background and experience which makes you such an expert on this stock. What interest do you have in Xero competitors? Is there more than one person posting under your login (you posted last night at 12.19am and again this morning at 7.35am - and your frequency of posting is way too high for someone without a vested interest in this stock). Where are you based - NZ or Aus?

What qualifies you as an "expert" in Xero and investment in general?

I stated clearly that I'm not an expert and you should take most things in internet forums with a grain of salt. Do your own research.

[Harvey Specter]

Why is tweeting a video of an exploding whale a priority when there have been so many developments since September that the CEO could comment on? Sam Morgan also tweeted it to be fair.

Also he cant comment on most things Xero unless it is already in the public domain due to NZX requirements.

[Toasty]

Okay, maybe it's a bit strong at times. I don't have a very fond opinion of Drury, which I need to balance when writing.

Is churn an issue? I honestly don't know. The number is likely low but it could herald problems if it is not zero. Why not raise it with the management? Why is tweeting a video of an exploding whale a priority when there have been so many developments since September that the CEO could comment on?

For now, I'll follow the smack talk not knowing who to believe:

http://boxfreeit.com.au/2013/11/25/can-intuit-crack-the-australian-market/

Put it this way, if Xero can continue to grow as fast they did despite cloud solutions released by MYOB, Intuit, Reckon one, then my analysis is wrong and Xero in good shape. Next 12-18 months will tell.

So what's your beef with Drury? Is it personal or is it just he doesn't do business the way you would like him to?

[Bilbo]

I stated clearly that I'm not an expert and you should take most things in internet forums with a grain of salt. Do your own research.

Yes agreed, but please answer the rest of my question.

What is your background, experience etc to justify your comments and views. What industry do you work in? Is there more than one person posting under your account and are you acting on behalf of another company?

[Copper]

Yes agreed, but please answer the rest of my question.

What is your background, experience etc to justify your comments and views. What industry do you work in? Is there more than one person posting under your account and are you acting on behalf of another company?

Similar question of mine the other day.Have just read immediate postings after a while away and all I can say Casino...Post your comments on the Xero blog site and see the reaction...

[Shore]

All the while I thought Casino was either a bitter investor who missed the boat on getting shares or a desperate attempt at hurting Xero's brand and driving down the SP from behind competitor walls.


I don't have a very fond opinion of Drury, which I need to balance when writing.

It would appear the truth is far less interesting.

[Bilbo]

Okay, maybe it's a bit strong at times. I don't have a very fond opinion of Drury, which I need to balance when writing.

And why is that? Do you know him personally? Have you previously worked with him? Maybe you worked at Xero in the early days and had a falling out with Rod? Do elaborate please.

[SirPrize]

Interesting article from 2012.

http://www.nbr.co.nz/opinion/xero-worth-cool-billion-ck

"ForBarr's latest note - issued after yesterday's big run up to $7.70 - has a hold rating on Xero and a 12-month target price of $6.32."

Damn - were your co-workers at FarBarr wrong or what Casino? :)

[Copper]

Interesting article from 2012.
bbbhttp://www.nbr.co.nz/opinion/xero-worth-cool-billion-ck

"ForBarr's latest note - issued after yesterday's big run up to $7.70 - has a hold rating on Xero and a 12-month target price of $6.32."

Damn - were your co-workers at FarBarr wrong or what Casino? :)

Good post ,brings back memories.I think it's the same analyst who had it at $20 the other day.Also I see Harvey Specter There commenting at a great rate....Well done.

[Toulouse - Luzern]

Thanks Winner69

Excellent article.

(I drafted the above recently, but did not post it.)

Comments.

IMHO on the evidence to date one may conclude (and DYOR):

* Rod Drury is an exceptional CEO
* Xero understand Ecommerce and IT Marketing
* Xero are effective IT project and marketing managers ...
* Xero are using social media / marketing effectively
* Scalability is a web/ cloud / IT phenomena
* IT functionality costs $
* Xero is very good at capital raising
* There appear to be strong investors and holders in place
* Xero fully understand stakeholder management

However as is always the case DYOR - I do not know what the future holds for this stock SP...

[Casino]

And why is that? Do you know him personally? Have you previously worked with him? Maybe you worked at Xero in the early days and had a falling out with Rod? Do elaborate please.

I understand the hostilities but I don't appreciate it. You may feel that investors are vigilant and demanding enough. Let's agree to disagree. In my opinion, a crash/correction is not imminent. People can verify/falsify as things develop.

My issues with Xero/Drury aren't personal. I'm sure that he is a great friend/family member to many. It is his management style that does not resonate with me. Others may love him for the exact same reasons. My dislikes are:

1. Cherry picking and distortions of information

Examples: 'Proclaiming Xero the number one challenger in the US in a financial statement'. 'Fudging over new QBO release, fudging over new QBO API in investor briefing'. 'Pointing out lower number of QBO add-ons/ecosphere'

2. Lack of transparency

Examples: US growth, impact if Australian backlash on growth

3. Media relations

Examples: 'says he doesn't follow share price although he his obliged to by NZX rules', 'says NASDAQ listing makes no sense until revenue is 100 million - revenue >80 million US dollars in previous financial year is a requirement not a sentiment'. 'says Xero is not for sale - easy way of complying with obligation to prevent false markets and at the same time not'. downplays the threat of intuit. tweets too much.

Again, people may like him for the exact same reasons. Do your own research.

[Toasty]

I understand the hostilities but I don't appreciate it. You may feel that investors are vigilant and demanding enough. Let's agree to disagree. In my opinion, a crash/correction is not imminent. People can verify/falsify as things develop.

My issues with Xero/Drury aren't personal. I'm sure that he is a great friend/family member to many. It is his management style that does not resonate with me. Others may love him for the exact same reasons. My dislikes are:

1. Cherry picking and distortions of information

Examples: 'Proclaiming Xero the number one challenger in the US in a financial statement'. 'Fudging over new QBO release, fudging over new QBO API in investor briefing'. 'Pointing out lower number of QBO add-ons/ecosphere'

2. Lack of transparency

Examples: US growth, impact if Australian backlash on growth

3. Media relations

Examples: 'says he doesn't follow share price although he his obliged to by NZX rules', 'says NASDAQ listing makes no sense until revenue is 100 million - revenue >80 million US dollars in previous financial year is a requirement not a sentiment'. 'says Xero is not for sale - easy way of complying with obligation to prevent false markets and at the same time not'. downplays the threat of intuit. tweets too much.

Again, people may like him for the exact same reasons. Do your own research.

I can't see any hostility in Bilbos enquiry. That's the trouble with a written format. Easy to misconstrue tone.

So if Rod became more of a withdrawn uncommunicative leader, backed down from confronting Intuit, freaked out publically everytime the SP moved, outlined the fallback plan for the event that they are not successful in any of their markets, made Xero available for sale at a bargain basement price and stopped using current technology then you would be happy?

"People can verify/falsify as things develop." and what does this mean?

[Theracay]

"People can verify/falsify as things develop." and what does this mean?

A get out of jail free card which makes him right even though he's wrong. :D

I'm sure what he means is new developments can continue to confirm/disconfirm previous forecasts and nothing is for certain.

[Casino]

"People can verify/falsify as things develop." and what does this mean?

We should differentiate between two points raised by sceptics: 1. People will adopt Xero but the valuation is too high for what it is. No upside left that wasn't already priced in. 2. People won't adopt Xero in the US and growth in Australia will slow.

#1 is about arguing rational points in an irrational market. I don't see a sharp correction happening unless the entire tech sector comes down. Too complex to predict timing of that.
#2 there will be no bottom if US expansion fails and the stock will crash no matter what the market does.

We won't know about success in the US for quite some time. But if you pay close attention to the race in Australia where Xero stands a much better chance, you may be able to predict how things will play out in the US.

[Dentie]

Hey Casino, a quick review of this thread (way back along ...) provides evidence that I was rowing the same boat as you are now (and my views are just as strong as they were then). I haven't bothered to keep posting because you get attacked for having an alternative view to the "believers" (probably happens in all threads). Mate, I wouldn't bother to try and keep justifying why you hold the views you do. Apparently you are not allowed to have a view if you are not a holder of shares. For what it's worth, I am in total agreement with you.

I get what Rod & Co are trying to do .... get market share (customers) before worrying about profitability but, for me it is simple. They made a loss of $14m on revenues of $39m (despite all the yoy increases in customers etc etc) and these losses are expected to continue for a while yet. They can only fund their growth through equity (thanks mainly to Peter Thiel & Co) because they have no numbers to support debt. There is obviously no dividends either. The only tangible asset is the cash put in by the aforementioned. If the current share price is therefore based on what might (or might not) happen in the future, then is the share price going to double once it does all happen? Either way, it doesn't stack up for me. A SP based on promise of what might happen - on a product that is getting diluted by the day (I use MYOB Live Accounts and am very satisfied with what it does) - is a worry quite frankly.

There you are Casino - you are not alone - its just like minded people can't see the use of keeping on posting here. Right, I'm off back to the trenches....

I still think it could end in tears ....

[Dentie]

DISC: Dentie was posting roughly the same comments back when the SP was $7.

ha ha ha .... at least I'm consistent with my comments Mr T.

The big thing is, my view is the same now with what it was back then (still overvalued in my view). But that's cool, really, different holders (or non-holders like me) have different views - hence why there is trading & investing opportunities right across the exchange.

How many XRO holders click that "Buy" button without just a wee bit of "am I going to get out before .....???"

[Leftfield]

How many XRO holders click that "Buy" button without just a wee bit of "am I going to get out before .....???"

Interesting that the top 6 in the stock picking comp picked both PEB and XRO this year..... however will they pick XRO again next year!??
XRO may be a nice stock if you've been in from (say) $7.00 but would you purchase now at current prices?

[Toasty]

Hey Casino, a quick review of this thread (way back along ...) provides evidence that I was rowing the same boat as you are now (and my views are just as strong as they were then). I haven't bothered to keep posting because you get attacked for having an alternative view to the "believers" (probably happens in all threads). Mate, I wouldn't bother to try and keep justifying why you hold the views you do. Apparently you are not allowed to have a view if you are not a holder of shares. For what it's worth, I am in total agreement with you.

I get what Rod & Co are trying to do .... get market share (customers) before worrying about profitability but, for me it is simple. They made a loss of $14m on revenues of $39m (despite all the yoy increases in customers etc etc) and these losses are expected to continue for a while yet. They can only fund their growth through equity (thanks mainly to Peter Thiel & Co) because they have no numbers to support debt. There is obviously no dividends either. The only tangible asset is the cash put in by the aforementioned. If the current share price is therefore based on what might (or might not) happen in the future, then is the share price going to double once it does all happen? Either way, it doesn't stack up for me. A SP based on promise of what might happen - on a product that is getting diluted by the day (I use MYOB Live Accounts and am very satisfied with what it does) - is a worry quite frankly.

There you are Casino - you are not alone - its just like minded people can't see the use of keeping on posting here. Right, I'm off back to the trenches....

I still think it could end in tears ....

Personally my problem is not with the message it is with the tone of the message. It comes off as an attack rather than an opinion. Add that to the comments about misinformation and misleading shareholders and it just looks like he has an axe to grind. But then in post 3909 for instance you get what looks like a well reasoned comment without any vitriol.

No problem with arguments against as long as they are constructive and not just out and out attacks.

I am a big believer but I acknowledge that a lot could go wrong or just not happen. Such is life.

[Shore]

So it seems the next big announcement will be the quarter-mill. Based on 211,000 at Sep 30, and with a big increase in exposure and profile from the capital raise, any wagers they'll hit this mark before the New Year?

[Theracay]

Hey Casino, a quick review of this thread (way back along ...) provides evidence that I was rowing the same boat as you are now (and my views are just as strong as they were then). I haven't bothered to keep posting because you get attacked for having an alternative view to the "believers" (probably happens in all threads). Mate, I wouldn't bother to try and keep justifying why you hold the views you do. Apparently you are not allowed to have a view if you are not a holder of shares. For what it's worth, I am in total agreement with you.

I get what Rod & Co are trying to do .... get market share (customers) before worrying about profitability but, for me it is simple. They made a loss of $14m on revenues of $39m (despite all the yoy increases in customers etc etc) and these losses are expected to continue for a while yet. They can only fund their growth through equity (thanks mainly to Peter Thiel & Co) because they have no numbers to support debt. There is obviously no dividends either. The only tangible asset is the cash put in by the aforementioned. If the current share price is therefore based on what might (or might not) happen in the future, then is the share price going to double once it does all happen? Either way, it doesn't stack up for me. A SP based on promise of what might happen - on a product that is getting diluted by the day (I use MYOB Live Accounts and am very satisfied with what it does) - is a worry quite frankly.

There you are Casino - you are not alone - its just like minded people can't see the use of keeping on posting here. Right, I'm off back to the trenches....

I still think it could end in tears ....

What you're saying reminds me a bit of this One.tel video I saw a while back. It's from an accounting perspective though and may be a bit simplistic for the experts here.:)

This is the first episode.
http://www.youtube.com/watch?v=plzRWztR66Y

I surely don't claim to know more about the stockmarket than most people here.

There are indeed a lot of differences between the two companies but thought it may be worth a watch for anyone worried about the company operating on zero profit with rapid expansion.

[Dentie]

Personally my problem is not with the message it is with the tone of the message. It comes off as an attack rather than an opinion. Add that to the comments about misinformation and misleading shareholders and it just looks like he has an axe to grind. But then in post 3909 for instance you get what looks like a well reasoned comment without any vitriol.

No problem with arguments against as long as they are constructive and not just out and out attacks.

I am a big believer but I acknowledge that a lot could go wrong or just not happen. Such is life.

Fair enough Toasty

[Dentie]

What you're saying reminds me a bit of this One.tel video I saw a while back. It's from an accounting perspective though and may be a bit simplistic for the experts here.:)

This is the first episode.
http://www.youtube.com/watch?v=plzRWztR66Y

I surely don't claim to know more about the stockmarket than most people here.

There are indeed a lot of differences between the two companies but thought it may be worth a watch for anyone worried about the company operating on zero profit with rapid expansion.

Another thing that plays on my mind, is the percentage of shares that are available for trading. Compared to other companies, there are only a limited number - with the rest held mainly by the big boys inside. This obviously creates a depth of competition among traders/investors - which naturally forces the price up quicker than normal.

Maybe I'm wrong here, but that's my view.

[Casino]

Hey Casino, a quick review of this thread (way back along ...) provides evidence that I was rowing the same boat as you are now (and my views are just as strong as they were then). I haven't bothered to keep posting because you get attacked for having an alternative view to the "believers" (probably happens in all threads). Mate, I wouldn't bother to try and keep justifying why you hold the views you do. Apparently you are not allowed to have a view if you are not a holder of shares. For what it's worth, I am in total agreement with you.

I get what Rod & Co are trying to do .... get market share (customers) before worrying about profitability but, for me it is simple. They made a loss of $14m on revenues of $39m (despite all the yoy increases in customers etc etc) and these losses are expected to continue for a while yet. They can only fund their growth through equity (thanks mainly to Peter Thiel & Co) because they have no numbers to support debt. There is obviously no dividends either. The only tangible asset is the cash put in by the aforementioned. If the current share price is therefore based on what might (or might not) happen in the future, then is the share price going to double once it does all happen? Either way, it doesn't stack up for me. A SP based on promise of what might happen - on a product that is getting diluted by the day (I use MYOB Live Accounts and am very satisfied with what it does) - is a worry quite frankly.

There you are Casino - you are not alone - its just like minded people can't see the use of keeping on posting here. Right, I'm off back to the trenches....

I still think it could end in tears ....


Appreciated. Whatever is behind the share price explosion will also drive the fall if growth is halted. I guess nobody has their life savings invested in this.

[oldmate]

ha ha ha .... at least I'm consistent with my comments Mr T.

The big thing is, my view is the same now with what it was back then (still overvalued in my view). But that's cool, really, different holders (or non-holders like me) have different views - hence why there is trading & investing opportunities right across the exchange.

How many XRO holders click that "Buy" button without just a wee bit of "am I going to get out before .....???"

Dentie you could say the same about any stock, that is the market and all purchases in the market are a bet, that is life. It has been said before on this forum the price goes up when there is more buyers than seller and goes down when there is more sellers than buyers. I bought in at around $7 so yes have made profit and of course want it to increase as per any rational investor. If they went down significantly, I along with all investor would feel a bit of shirty. Is that abnormal?

[Dentie]

Dentie you could say the same about any stock, that is the market and all purchases in the market are a bet, that is life. It has been said before on this forum the price goes up when there is more buyers than seller and goes down when there is more sellers than buyers. I bought in at around $7 so yes have made profit and of course want it to increase as per any rational investor. If they went down significantly, I along with all investor would feel a bit of shirty. Is that abnormal?

Nothing abnormal at all with your last sentence Oldmate, but I don't necessarily agree with your first sentence. Not all purchases in the share market "are a bet" as such (like as in a gamble on the pokies etc), especially if you are an Investor. If you are a Trader it probably can be seen as gamble because you are not investing in the fundamentals of the business, you are simply betting on the short term movements of the SP. A lot of share buyers do a lot of research etc because they are investing in the business and becoming a part owner in that business. So, they are absolutely wanting to get a return on their investment....normally in ongoing income (dividends) or capital gain (sustainable SP increase over time). For dividends you need a healthy NPAT and for capital gain you need a sustainable business with increasing equity. If either of those are missing over time, there are problems. At the moment, I don't see either in XRO, which is the reason why I can't reconcile the current Share Price....to me, there is nothing tangible backing it. It is way ahead of itself - based on what might happen sometime in the future. This is not a criticism of the product btw, just how I see the SP compared to the current business performance.

[Casino]

The thing that has always confused me with your comments re XRO Dentie is that you have a very sizeable position in PEB. Correct me if I am wrong but PEB neither has a healthy NPAT nor increasing equity so your comments re XRO and your own investment decisions appear to be inconsistent.

For all intents and purposes I see PEB in much the same ballpark as XRO (except PEB have yet to demonstrate they can sell their product). What this says to me is your comments re XRO are a bit confused. Maybe you feel like you understand where PEB says it's going and therefore feel comfortable investing in a loss making company under certain circumstances, but can't get your head around XRO's direction and therefore think it is "overvalued"??

Surely the fact that much more experienced and successful investors than you or I are investing sizeable $s in XRO at prices well above the levels you said XRO was "overvalued" at, must be making you re-think your stance on XRO?? Not to mention the fact that XRO is now up at least 500% since you started with these kind of comments (probably more like 1500% as I suspect you have felt this way since $2.5 or so??), and that they have consistently executed to plan, delivered significant (80%+) increases in YoY revenue and customer numbers (for 5 years now), have developed the best cloud accounting product in the world, continue to improve it, and by many are regarded as a company that are going to be the leader in cloud accounting for SMEs globally and are actually changing the landscape of how SMEs do their business.

So I ask you what would be the turning point for you with XRO? It's clearly not profits or product sales because if those were your investment criteria you would not be in PEB, so what would XRO have to do to get the support of Dentie? ;)

DISC: Have a relatively sizeable position in PEB as well (thanks to profits from XRO :)

There is some truth to what you say. I hold PEB but because it is so overpriced now, I have started reducing my position. There are still some major differences.

1. PEB trades at a 4x multiple 4-5 years out (super crazy). XRO trades at a 30x multiple ~3 years out (beyond super crazy).

2. Cxbladder outperforms solutions by competition. Xero has big holes and flaws in its product and is up against more and stronger competitors.

3. Cxbladder has value as takeover candidate to big corporations. Xero's software or existing customers aren't of much value.

4. Costs of US expansion is clear for PEB but not for XRO.

[Casino]

5. And don't get me started on the CEOs

[Dentie]

The thing that has always confused me with your comments re XRO Dentie is that you have a very sizeable position in PEB. Correct me if I am wrong but PEB neither has a healthy NPAT nor increasing equity so your comments re XRO and your own investment decisions appear to be inconsistent.

For all intents and purposes I see PEB in much the same ballpark as XRO (except PEB have yet to demonstrate they can sell their product). What this says to me is your comments re XRO are a bit confused. Maybe you feel like you understand where PEB says it's going and therefore feel comfortable investing in a loss making company under certain circumstances, but can't get your head around XRO's direction and therefore think it is "overvalued"??

Surely the fact that much more experienced and successful investors than you or I are investing sizeable $s in XRO at prices well above the levels you said XRO was "overvalued" at, must be making you re-think your stance on XRO?? Not to mention the fact that XRO is now up at least 500% since you started with these kind of comments (probably more like 1500% as I suspect you have felt this way since $2.5 or so??), and that they have consistently executed to plan, delivered significant (80%+) increases in YoY revenue and customer numbers (for 5 years now), have developed the best cloud accounting product in the world, continue to improve it, and by many are regarded as a company that are going to be the leader in cloud accounting for SMEs globally and are actually changing the landscape of how SMEs do their business.

So I ask you what would be the turning point for you with XRO? It's clearly not profits or product sales because if those were your investment criteria you would not be in PEB, so what would XRO have to do to get the support of Dentie? ;)

DISC: Have a relatively sizeable position in PEB as well (thanks to profits from XRO :)

In no particular order Mr T ...


I understand Accountants receive a kickback for each new customer (happy to be proved wrong here though). Would the customer growth numbers be the same if this incentive wasn't there? Or, would the strength of the product sell itself if the incentive wasn't there?
I do not believe they have a product which they can put a moat around. As I said, I use MYOB's version and it serves me well, it is well priced and it gives me the option of having it on my desktop - and/or putting it in the cloud. I can make it available to my Accountant if I wish (remotely) - or not.
Interim report lauds YOY customer increases of 143% - 79k ...(OZ), 100% - 30k ... (UK), 140% - 16k (US) and 49% - 85k (NZ). Great to see increasing customers but the US not yet rampaging. Also, with the low comparable NZ increase with highest customer base, does that mean they are reaching saturation in NZ?
Also lauds 84% jump in operating revenue ($30m). You'd at least want to see this, (but still only seems to be about $142 per customer)
Also lauds 144% jump in losses ($17m). I don't think this is a good increasing number to laud. It is growing about 71% quicker than the operating revenue.
A negative EPS is growing at 100%pa
I don't put PEB and XRO in the same ballpark....


Apart from completely different products, XRO is selling their one product furiously (with the aid of kickbacks to their referrers) and is increasing their trading loss. They do not have a moat to protect it from their competitors, who all have deep pockets - funded by their trading operations. XRO is lucky enough to have a few handpicked rich shareholders to fund the initial growth.

PEB on the other hand have a suite of products which all have patents etc in place - and thus a nice moat... from their prospective competitors. They have done all the hard developmental work and are now starting to commercialise the first of their products. Unlike XRO, they are funded by a lot of shareholders - who consistently are happy to subscribe to the capital raisings. I have no worries whatsoever that they will be able to sell their product - and I'm sure all fellow shareholders will agree with me there. In fact, I believe there has been a sales wave building over these past few months which will soon come crashing onto the beaches.
Unlike XRO's, I believe PEB's current SP is a lot more closer to reality - and this is about to rise as the sales revenue starts pouring in. The pricing model will ensure a healthy trading profit margin as well. Let's see whether PEB makes a loss of $17m on $30m revenue....

All I'm trying to say is, taking the above into account (hey, nice pun!) - in my view, the share price is way ahead of itself. It is not consistent with its trading activity. I have read here that punters are just pricing in what is going to happen in the future. So, if what may happen was actually happening now, then maybe $35 per share is a fair price. BUT.... at this moment there is just large losses (& more predicted) and no NTA (except for Thiel & co's cash) so for that reason I cannot reconcile the SP with where things are currently at.

As for getting my support for XRO? They will have to do nothing mate, because they will have no interest in whether I support them or not. It is not the type of company I would invest in anyway so the profits I hopefully will get from PEB won't be going anywhere near XRO. I am hoping they will support my retirement!

Of course, I could be all wrong here Mr T, but am sure time will tell. :t_up:

[Harvey Specter]

There is some truth to what you say. I hold PEB but because it is so overpriced now, I have started reducing my position. There are still some major differences.

1. PEB trades at a 4x multiple 4-5 years out (super crazy). XRO trades at a 30x multiple ~3 years out (beyond super crazy).

2. Cxbladder outperforms solutions by competition. Xero has big holes and flaws in its product and is up against more and stronger competitors.

3. Cxbladder has value as takeover candidate to big corporations. Xero's software or existing customers aren't of much value.

4. Costs of US expansion is clear for PEB but not for XRO.Thats a reasonably fair summary. Luckily you didn't have a 5th difference about the CEO :ohmy:

I do disagree with 3 though. The software does have value to a purchaser as they could roll it out to their existing customers. This time has probably passed for Intuit since it has developed its own product but it would be of value to any competitor with only a legacy desktop solution who could roll it out to their existing customers as an upgrade, with the only work required being a conversion tool, or someone who doesn't currently have a SME product (eg. Microsoft could add it to its stable - it has a product for big business but none for small business). Their high price kind of ruins this though.

[Casino]

Thats a reasonably fair summary. Luckily you didn't have a 5th difference about the CEO :ohmy:

I do disagree with 3 though. The software does have value to a purchaser as they could roll it out to their existing customers. This time has probably passed for Intuit since it has developed its own product but it would be of value to any competitor with only a legacy desktop solution who could roll it out to their existing customers as an upgrade, with the only work required being a conversion tool, or someone who doesn't currently have a SME product (eg. Microsoft could add it to its stable - it has a product for big business but none for small business). Their high price kind of ruins this though.


Microsoft would be a good fit IT-wise and they might also hold a grudge against Intuit for beating them many many years ago. For 10 billion? No chance. Drury himself says it costs 200 million to do it yourself and then you could get it right from the start. Xero has the worst of both worlds. Young inexperienced business with old software core. Intuit has 30 years experience and fresh software.

[Harvey Specter]

Microsoft would be a good fit IT-wise and they might also hold a grudge against Intuit for beating them many many years ago. For 10 billion? No chance. Drury himself says it costs 200 million to do it yourself and then you could get it right from the start. Xero has the worst of both worlds. Young inexperienced business with old software core. Intuit has 30 years experience and fresh software.It would cost Microsoft at least $500m (still a drop in the ocean to them) to develop the same and probably 3 years. They would be acquiring the saved time in getting to market.

[Shore]

Still makes me laugh when people think they can throw money at something and hope to expect the same result... as if money were the one and only barrier to entry. Look at the countless pretenders who have tried to take out TradeMe in NZ.. not just small-timers.. but cashed up individuals have thrown millions at it and large media outlets have tried too.

Microsoft have thrown everything they've got into Bing (and before that, others), and they've done nothing to put a dent in Google's armour. What makes anyone think Microsoft could throw $500m and get a team to build a Xero competitor and expect to be leading the market in a few years? Microsoft didn't even know how to protect their browser share and now Chrome is the most widely used browser by a long, long margin. The difference is not money.. it's vision & execution. Some people just get it... others, well, they see it happen and then try to play catch up but by then it's often too late.

I personally believe in the vision & execution of the Xero board. They know who to hire and they know the culture they have to cultivate. What some of you guys are proposing is to have a dinosaur PC company throw money at a bunch of engineers and drum up a cloud accounting software product and expect the market to do the rest...? Not gonna happen boys.

[Harvey Specter]

Still makes me laugh when people think they can throw money at something and hope to expect the same result..That was kind of my point saying that it would cost them atleast $500m to build something similar to what Xero has done for $200 and even then it may not be as good and Xero would have improved more in the mean time.

[oldmate]

Nothing abnormal at all with your last sentence Oldmate, but I don't necessarily agree with your first sentence. Not all purchases in the share market "are a bet" as such (like as in a gamble on the pokies etc), especially if you are an Investor. If you are a Trader it probably can be seen as gamble because you are not investing in the fundamentals of the business, you are simply betting on the short term movements of the SP. A lot of share buyers do a lot of research etc because they are investing in the business and becoming a part owner in that business. So, they are absolutely wanting to get a return on their investment....normally in ongoing income (dividends) or capital gain (sustainable SP increase over time). For dividends you need a healthy NPAT and for capital gain you need a sustainable business with increasing equity. If either of those are missing over time, there are problems. At the moment, I don't see either in XRO, which is the reason why I can't reconcile the current Share Price....to me, there is nothing tangible backing it. It is way ahead of itself - based on what might happen sometime in the future. This is not a criticism of the product btw, just how I see the SP compared to the current business performance.

With due respect Dentie it is still a gamble, just because you read the annual report and done a google search etc it doesnt give you all the info an investor may require. Yes it will get you closer to the line but no share purchase is guaranteed. Of course I do research as well with the info at hand this will dilute not diminish risk.

[Casino]

Still makes me laugh when people think they can throw money at something and hope to expect the same result... as if money were the one and only barrier to entry. Look at the countless pretenders who have tried to take out TradeMe in NZ.. not just small-timers.. but cashed up individuals have thrown millions at it and large media outlets have tried too.

Microsoft have thrown everything they've got into Bing (and before that, others), and they've done nothing to put a dent in Google's armour. What makes anyone think Microsoft could throw $500m and get a team to build a Xero competitor and expect to be leading the market in a few years? Microsoft didn't even know how to protect their browser share and now Chrome is the most widely used browser by a long, long margin. The difference is not money.. it's vision & execution. Some people just get it... others, well, they see it happen and then try to play catch up but by then it's often too late.

I personally believe in the vision & execution of the Xero board. They know who to hire and they know the culture they have to cultivate. What some of you guys are proposing is to have a dinosaur PC company throw money at a bunch of engineers and drum up a cloud accounting software product and expect the market to do the rest...? Not gonna happen boys.

I agree and that's why I don't think that Microsoft would succeed in cloud accounting. My original point was that Xero is not a good takeover candidate not even for Microsoft, which are in my opinion the most likely to consider it.

I know you don't want to hear it but Xero has demonstrated that they don't understand the needs of many businesses:

1. can't do quotes
2. no supplier's product code in purchase orders
3. can't do invoices with negative quantities
4. can't do prices with more than two digits
5. no inventory
etc

https://community.xero.com/business/discussion/3456974

Companies that have worked with businesses for decades take these things into account from the start. If these problems cost them too much market share, they may have to do a complete overhaul.


@turmeric
No I don't know Drury and haven't met him in person. I'm sure he is a nice guy. But when David Darling says something, it doesn't take me two minutes on Google to learn that it wasn't the entire truth.

[skid]

With due respect Dentie it is still a gamble, just because you read the annual report and done a google search etc it doesnt give you all the info an investor may require. Yes it will get you closer to the line but no share purchase is guaranteed. Of course I do research as well with the info at hand this will dilute not diminish risk.

Everything is a gamble--Ive read some shocking stories about the safety of the money in your bank acc.--I suppose its a matter of degrees.
I do believe the share price has gotten to a level that statistically the odds are not nearly as good as before.(and if the SP goes to $50 with no new info. it will be statistically even more dangerous for those thinking of jumping in)
They may have the potential to go lots farther but there is not much of a safety net if things start to go wrong.
Its much more of a gamble than some other co. that have a strong asset base(Ryman etc.) so steady nerves are required for the future.

[blackcap]

Well I shall put my money where my mouth is. Have just gone short on XRO.

[JamesST]

I know you don't want to hear it but Xero has demonstrated that they don't understand the needs of many businesses:

Not having certain features yet doesn't mean they don't understand the needs of businesses. Xero are quite open about the fact that they know they don't have all the core accounting features developed yet. None of the online Vendors do at this stage. QBOnline doesn't have multi-currency for instance which I'd wager requires more of a system overhaul to develop than quotes.
They have to trade off between developing new features quickly and designing them really well. It is very hard to change the interface on people if you throw out a poorly designed feature just to quickly satisfy a requirement of some customers.
Xero received a 5-star review from CPA Practice Advisor and receive a lot of customer love so I don't think your comment is accurate.

[Casino]

Not having certain features yet doesn't mean they don't understand the needs of businesses. Xero are quite open about the fact that they know they don't have all the core accounting features developed yet. None of the online Vendors do at this stage. QBOnline doesn't have multi-currency for instance which I'd wager requires more of a system overhaul to develop than quotes.
They have to trade off between developing new features quickly and designing them really well. It is very hard to change the interface on people if you throw out a poorly designed feature just to quickly satisfy a requirement of some customers.
Xero received a 5-star review from CPA Practice Advisor and receive a lot of customer love so I don't think your comment is accurate.

wrong, simply wrong.

1. all the other programs can do accounting. MYOB can, QBO can - Xero can't (beyond what fish'n chips shops need). Xero's point of differentiation are gimmicks.
2. Some features must be added and can (either by development or acquisition). Other issues like the fractions require you to go deep under the hood. They screwed it up at the beginning: https://community.xero.com/business/discussion/51751/
3. QBO has multi-currency and Xero's claims that it does not is just another of many distortions. The US version doesn't have it because small American businesses don't need to deal with foreign currencies.

[Casino]

Well I shall put my money where my mouth is. Have just gone short on XRO.

I am not aware of put options so I assume you are referring to proper short selling. Can you please confirm?

If so, I'm not sure if it's worth the risk:

1. You put yourself at the mercy of market manipulations. Look at today's volume!!!
2. You put yourself at the mercy of market frothiness, which isn't going to end unless QE stops.
3. You put yourself at the mercy of Xero's honesty and ethical standards.
4. They have too much cash to collapse to a penny stock and with all the fees, your returns are really capped.

If there was a fairly priced put option for NZX50, maybe - but don't short.

[Copper]

I am not aware of put options so I assume you are referring to proper short selling. Can you please confirm?

If so, I'm not sure if it's worth the risk:

1. You put yourself at the mercy of market manipulations. Look at today's volume!!!
2. You put yourself at the mercy of market frothiness, which isn't going to end unless QE stops.
3. You put yourself at the mercy of Xero's honesty and ethical standards.
4. They have too much cash to collapse to a peHnny stock and with all the fees, your returns are really capped.

If there was a fairly priced put option for NZX50, maybe - but don't short.

That's a different tack....I even think I like your answer after all the recent stuff.I am not an accountant and when I get all the things that Xero can and cannot do it takes me away of thinking about the share and whether it's going up or down.At the present time when you see the momentum in this stock and weigh up the risks overall you take your chance in moderation.(like grog).When we all get taken out at $50 we can look back and see what's happened.I can assure you we won't be thinking whether there are five of fifty five accounts to consider or whether we can account for farthings in the till,it will be a market matter.
It will be an interesting year or two.

[Casino]

That's a different tack....

I think it is fairly consistent with

1. what I have said all along and that people should come to the casino if they want to gamble
2. the suspicion that I work for a competitor

So, whose money is going to take the stock over 50$? The same guy we recommended interest rate insurance to? Does a healthy profit make our lives substantially better when it wipes billions of our neighbours' accounts or drains capital from investments that deserve it? Are we better off if we reinforce the perception that stocks eventually fail you and that property is where it's at thus driving more debt.

I'm not an accountant either but enjoyed educating myself about trends in this industry. I think I will enjoy following it for the next 1-2 years, which will be indeed very interesting. We are in unchartered territory. Nobody knows what will happen if QE ends, nobody knows what will happen if QE continues. I see the odd good stock but I'm not going to participate until we go into and come out of the next downturn. In the meantime, Xero promises all ingredients needed for a good book.

[blackcap]

I am not aware of put options so I assume you are referring to proper short selling. Can you please confirm?

If so, I'm not sure if it's worth the risk:

1. You put yourself at the mercy of market manipulations. Look at today's volume!!!
2. You put yourself at the mercy of market frothiness, which isn't going to end unless QE stops.
3. You put yourself at the mercy of Xero's honesty and ethical standards.
4. They have too much cash to collapse to a penny stock and with all the fees, your returns are really capped.

If there was a fairly priced put option for NZX50, maybe - but don't short.

You are correct in your analysis of my position. It is a naked short. However I have enough margin to last me some time and the position is small enough not to really matter. But am looking for put option possibilities that I have not found as yet that appeal.

[Casino]

You are correct in your analysis of my position. It is a naked short. However I have enough margin to last me some time and the position is small enough not to really matter. But am looking for put option possibilities that I have not found as yet that appeal.

Looking at the share price makes me want to pull my hair out as it is. Not sure if I could handle loosing money if they climbed higher.

There are a million companies that are designed to make their money on investors, not customers. But Xero stands out in overvaluation (hence your bet stands a good chance) and comedic value. Read the comment from Mike Block (a staunch Xero groupie):

http://blog.xero.com/2013/11/fix-linkedin/comment-page-1/#comment-57544

[Harvey Specter]

Couple of interesting tweets today. Rod saying (some? Independent?) BP are moving to XRO. Federated farmers or was it My farms saying they are working on farm customising for XRO which would be a big market for NZ.

[Casino]

Federated farmers or was it My farms saying they are working on farm customising for XRO which would be a big market for NZ.

Make sure you carry a 'Not here to sell swaps' sign when you knock on their door. Is this very lucrative for Xero or should we file this under Xero comedy?

[Casino]

Federated farmers or was it My farms saying they are working on farm customising for XRO which would be a big market for NZ.

Make sure you carry a 'Not here to sell swaps' sign when you knock on their door. Is this very lucrative for Xero or should we file this under Xero comedy?

[oldmate]

Just wanted to know if there is any companies that participate in buying xero long/short. I read something here before but now can't find the company name.

[blackcap]

Just wanted to know if there is any companies that participate in buying xero long/short. I read something here before but now can't find the company name.

What do you mean oldmate? Most share brokers can facilitate the trade of shares in most listed companies.
If you are looking to short you need to ask your broker if they do that. Some do offer this facility some don't. It is not a common practise in NZ as it is in other jurisdictions.
You could also try CFD's, although not technically shares they generally track the share price. The also allow you to go short.
Hope this helps.

[SirPrize]

Interesting article on nzherald featuring Rod Drury: Building a billionaire http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11165202

[Casino]

I did a bit more reading over the weekend and softened my stance towards the management. After looking at the situation in a more chronologic fashion, I can see how people can arrive at conclusions that are so different than mine.

[jonu]

I did a bit more reading over the weekend and softened my stance towards the management. After looking at the situation in a more chronologic fashion, I can see how people can arrive at conclusions that are so different than mine.

That's very gracious of you Casino:)

[Harvey Specter]

I did a bit more reading over the weekend and softened my stance towards the management. After looking at the situation in a more chronologic fashion, I can see how people can arrive at conclusions that are so different than mine.
I assume you still think they are wrong though :D

[blueswan]

Most CFD provider/ white label platform dont allow shorting this as well even on the ASX one.


What do you mean oldmate? Most share brokers can facilitate the trade of shares in most listed companies.
If you are looking to short you need to ask your broker if they do that. Some do offer this facility some don't. It is not a common practise in NZ as it is in other jurisdictions.
You could also try CFD's, although not technically shares they generally track the share price. The also allow you to go short.
Hope this helps.

[Casino]

I assume you still think they are wrong though :D

More than ever! It's just a temporary pardon. Initially, I didn't realise how reluctant Intuit was to fracture its developer community into desktop and cloud developers. They had to be cautious because they didn't want to burn more social capital. Because of that Intuit tried to transition from desktop to cloud without any compromises for anyone, which proved very difficult. Ultimately the arrival of Xero forced many changes, which gives some weight to Xero's claim of being the number one challenger. I was very unhappy about that because of comparably low customer numbers in the US and a few other things.

[JamesST]

wrong, simply wrong.

1. all the other programs can do accounting. MYOB can, QBO can - Xero can't (beyond what fish'n chips shops need). Xero's point of differentiation are gimmicks.
2. Some features must be added and can (either by development or acquisition). Other issues like the fractions require you to go deep under the hood. They screwed it up at the beginning: https://community.xero.com/business/discussion/51751/
3. QBO has multi-currency and Xero's claims that it does not is just another of many distortions. The US version doesn't have it because small American businesses don't need to deal with foreign currencies.

Quite Incorrect.

Xero can be (and is) used for much more than fish and chip shops. I use it in a company that manufactures and exports complex hardware in multiple currencies with millions in revenue.
Neither MYOB liveaccounts nor QBOnline have all the features of their desktop counterparts. Purely a function of the developer time that has gone in to the products. They will eventually I'm sure but they don't currently.

QB Online (US) does not yet have multi-currency. The desktop version does so it is incorrect to say that the US market doesn't need it. It is just a higher priority in the international editions and they have to prioritise developer resource to the features that are most important in each market.
Xero (and others) have forced Intuit to move faster and come out with a nice new interface that the market has come to expect. This must put them in a world of pain as they now have more versions and a migration to manage.
My feeling is that new feature development will need to slow down until this migration is complete.

[Casino]

Xero can be (and is) used for much more than fish and chip shops. I use it in a company that manufactures and exports complex hardware in multiple currencies with millions in revenue.
Neither MYOB liveaccounts nor QBOnline have all the features of their desktop counterparts. Purely a function of the developer time that has gone in to the products. They will eventually I'm sure but they don't currently.


1. Your business seems big by SMB standards but that doesn't make it necessarily complex. Is there anything that Xero does for you that QBO couldn't? Are you using add-ons? If yes, would you need all of them if you had QBO? Let's hear it from Xero:

While we don’t profess to be the accounting solution for everyone it is disappointing to hear that you have so many frustrations with the product. We specifically target Xero at small business and as such our features are certainly designed for typical small businesses which tend to have low to medium complexity.
https://community.xero.com/business/discussion/99341

2. You made another good point that speaks against Xero. Xero doesn't have the functionality of QBO, QBO doesn't have the functionality of QB Desktop. Even if QBO had full QB functionality, many businesses will never move to the cloud.

QB Online (US) does not yet have multi-currency.



The desktop version does so it is incorrect to say that the US market doesn't need it. It is just a higher priority in the international editions and they have to prioritise developer resource to the features that are most important in each market.

We don't know how popular and important that feature is to their customers. I can't think of many US businesses that need it. There can't be many and if it's a problem they'll put it in like in the global edition.



Xero (and others) have forced Intuit to move faster and come out with a nice new interface that the market has come to expect. This must put them in a world of pain as they now have more versions and a migration to manage.
My feeling is that new feature development will need to slow down until this migration is complete.

1. There is absolutely no doubt that Xero (and Wave) have forced Intuit to react. They have my respect for that. A few people in the US are cheering for Xero because they have brought a lot of good out of Intuit. If it wasn't for Xero, Intuit hadn't released QBO harmony, release of new and free api, Canadians can get QBO free for one year, etc

2. I think the competition forces Intuit to develop faster and bring more value to customers. Things will move much faster now that QBO is completely separate and independent from QB desktop. Here is a read and comments that I enjoyed: http://www.sleeter.com/blog/2013/11/quickbooks-software-integration/

3. There are a lot of reasons to assume that QBO's ecosphere will grow much faster than Xero's (way more users in the US and growing faster, already a massive community of coders around desktop products, simplified and free api). A good chunk of Xero's ecosphere is developed around holes in Xero. Then there are a few add-ons for tradies and e-commerce for which the QBO equivalents (ie jobber) seem much better. And now our hopes rest on good adoption by farmers. I'm sceptical.

4. One of Intuit's many vertical acquisitions was 'connection cloud'. There is good reason to believe that Intuit will beat everyone to end-user programming. In enjoyed this read: https://www.constellationr.com/content/analysis-intuits-acquisition-elastic-intelligence

In the end, it comes down to assessing who has first mover advantage and who has second mover advantage. I think Intuit has both.

1. Intuit will crush Xero for the same reason Facebook smokes Google+
More than 45 million customers (and partners) are associated with Intuit and they have relations with them that go back 30 years. Note that they just bought some serious brains to mine their customers:
http://venturebeat.com/2013/10/23/intuit-brings-on-big-data-big-guns-with-levelup-acquisition-exclusive/

2. Intuit will crush Xero for the same reason Google crushed Yahoo
QBO has taken a lot of 'inspiration' from Xero. Whatever Xero was doing, they are doing more of it (road shows) and doing it better. Textbook example of second mover advantage.

[JamesST]

1. Your business seems big by SMB standards but that doesn't make it necessarily complex. Is there anything that Xero does for you that QBO couldn't? Are you using add-ons? If yes, would you need all of them if you had QBO?
Probably not. Haven't evaluated QBOnline but I'm sure it would do everything I need. I've used Quickbooks and MYOB desktop and relished the opportunity to try something new when Xero came along. I haven't looked back as the customer experience has been fantastic.




We don't know how popular and important that feature is to their customers. I can't think of many US businesses that need it. There can't be many and if it's a problem they'll put it in like in the global edition.

Still a resourcing issue. There are enough comments online asking where it is that I'm sure they would just make it an option now if it was that easy.



2. I think the competition forces Intuit to develop faster and bring more value to customers. Things will move much faster now that QBO is completely separate and independent from QB desktop.

But they've got a migration to the Harmony interface to do first. They won't be able to easily roll out new features during drawn out migration. It will slow them down in the short term.



3. There are a lot of reasons to assume that QBO's ecosphere will grow much faster than Xero's (way more users in the US and growing faster, already a massive community of coders around desktop products, simplified and free api). A good chunk of Xero's ecosphere is developed around holes in Xero. Then there are a few add-ons for tradies and e-commerce for which the QBO equivalents (ie jobber) seem much better. And now our hopes rest on good adoption by farmers. I'm sceptical.

I can tell you're sceptical! I'm confident with their position. That's why I'm invested and you're presumably invested in a competitor. That's cool. Its a market.



1. Intuit will crush Xero for the same reason Facebook smokes Google+
More than 45 million customers (and partners) are associated with Intuit and they have relations with them that go back 30 years. Note that they just bought some serious brains to mine their customers:
http://venturebeat.com/2013/10/23/intuit-brings-on-big-data-big-guns-with-levelup-acquisition-exclusive/

I don't think it is a relevant comparison. Social media companies require a large ecosystem to be useful to the users. Accounting software is quite different at this stage. Although I do think that this could change if they develop more features that utilize the ecosystem. eg. making it easy to pay a supplier in the same system.
Xero have already proven they can smoke a market leader with MYOB in NZ and Australia and good progress in the UK. It will be much harder in the US because Intuit seem to be taking them seriously whereas MYOB responded poorly and too late.



2. Intuit will crush Xero for the same reason Google crushed Yahoo
QBO has taken a lot of 'inspiration' from Xero. Whatever Xero was doing, they are doing more of it (road shows) and doing it better. Textbook example of second mover advantage.

Intuit have enjoyed market dominance for a long time. I don't doubt that they will retain this position for a long time to come, but I've got my money on there being enough room for a decent sized number two.
This will hurt Intuit. QBOnline user growth will largely come from cannibalizing their desktop users. It is commendable that they've made the decision to do this. There are so many examples of companies being reluctant to do this with new business models enabled by new technologies and losing their market to startups.
Apparently a large number of Xero customers come from spreadsheets so there will be a large number of new customers with no allegiance to Intuit. I have no doubt there will also be a decent % of existing Intuit customers who relish the opportunity to finally have another option. Like I did when Xero came along.

I like your war talk with Intuit crushing Xero though. Makes investing much more fun. Game on.

[Casino]

Probably not. Haven't evaluated QBOnline but I'm sure it would do everything I need. I've used Quickbooks and MYOB desktop and relished the opportunity to try something new when Xero came along. I haven't looked back as the customer experience has been fantastic.

Thanks for the insights.



Still a resourcing issue. There are enough comments online asking where it is that I'm sure they would just make it an option now if it was that easy.


I guess some people need it and Xero could be a better choice for them. I find it hard to believe that implementation would be the issue because Harmony US and Harmony global wouldn't be independent developments,



But they've got a migration to the Harmony interface to do first. They won't be able to easily roll out new features during drawn out migration. It will slow them down in the short term.


Just for clarification, new subscribers go straight to harmony. Old QBO subscribers will slowly be migrated over the next 3-4 months but that shouldn't tie up developers.



I can tell you're sceptical! I'm confident with their position. That's why I'm invested and you're presumably invested in a competitor. That's cool. Its a market.

I'm not invested in a competitor or Facebook or twitter or salesforce. It's too reminiscent of the dotcom era for me.



I don't think it is a relevant comparison. Social media companies require a large ecosystem to be useful to the users. Accounting software is quite different at this stage. Although I do think that this could change if they develop more features that utilize the ecosystem. eg. making it easy to pay a supplier in the same system.
Xero have already proven they can smoke a market leader with MYOB in NZ and Australia and good progress in the UK. It will be much harder in the US because Intuit seem to be taking them seriously whereas MYOB responded poorly and too late.
Xero has done really well in Australia but they're still small compared to MYOB. If MYOB, Reckon and Intuit can't dampen Xero's growth in Australia, then dismiss everything everything I say. Following the Australian market is very exciting.



Intuit have enjoyed market dominance for a long time. I don't doubt that they will retain this position for a long time to come, but I've got my money on there being enough room for a decent sized number two.
This will hurt Intuit. QBOnline user growth will largely come from cannibalizing their desktop users. It is commendable that they've made the decision to do this. There are so many examples of companies being reluctant to do this with new business models enabled by new technologies and losing their market to startups.
Apparently a large number of Xero customers come from spreadsheets so there will be a large number of new customers with no allegiance to Intuit. I have no doubt there will also be a decent % of existing Intuit customers who relish the opportunity to finally have another option. Like I did when Xero came along.

I like your war talk with Intuit crushing Xero though. Makes investing much more fun. Game on.

My main questions are how long will the $230 million last? In 2010 Rod predicted break-even for 2011:

http://*************nz.blogspot.co.nz/2010/04/share-investor-interview-xeros-rod.html (No idea why this link doesn't work)

Cost of competing in the US can easily escalate at ever decreasing margins. The next 12 months will be very exciting.

[Lorne Ranger]

.... Ahem.....!

So.... interesting day then. Guessing the nature of the average Xero punter means cashing in for Xmas is more an issue for Xero than most other stocks? Surely the institutional traders must be ready to pounce on this soon once it looks like bottoming out?

[Wolf]

blackcap you must be doing alright with that short :) Nice call

[Toasty]

Man, Xero's not the only one. There isn't a share in my portfolio that doesn't have a big red arrow next to it. Even my watchlist of prospects looks like the battlefield at Agincourt after the English archers were finished (that ones for Moosie)

[Harvey Specter]

Man, Xero's not the only one. There isn't a share in my portfolio that doesn't have a big red arrow next to it. Even my watchlist of prospects looks like the battlefield at Agincourt after the English archers were finished (that ones for Moosie)My whole list of about 20 is red. Unfortunatley I hold over half. I think I will be back into negative territory for the year. If only I held on to Xero which I sold at the start of the year.

[JamesST]

Just for clarification, new subscribers go straight to harmony. Old QBO subscribers will slowly be migrated over the next 3-4 months but that shouldn't tie up developers.

My experience with migrations is that it is very difficult to make changes during the migration. Not impossible but hard. I doubt there will be any major changes to Harmony until all users are migrated across. I may be wrong though.



My main questions are how long will the $230 million last? In 2010 Rod predicted break-even for 2011:

http://*************nz.blogspot.co.nz/2010/04/share-investor-interview-xeros-rod.html (No idea why this link doesn't work)

Cost of competing in the US can easily escalate at ever decreasing margins. The next 12 months will be very exciting.

A lot has changed since that prediction. ie. capital raisings. You can't raise capital for growth and not then make a loss.
The opportunity for Xero has changed a lot since I've been invested and following it. (about 6 years)
I don't think there is a single shareholder who doesn't agree that changing the goal posts was the right thing to do.

If they spend the $230 mill and gain significant market share in doing so then they can continue to raise more cash at an ever increasing value if there is still market to grab.

If they spend the $230 mil and don't gain market share then they're low on options and I'm screwed.

I agree that the next 12 months will be very exciting. Looking forward to the next customer number update.

[Casino]

My experience with migrations is that it is very difficult to make changes during the migration. Not impossible but hard. I doubt there will be any major changes to Harmony until all users are migrated across. I may be wrong though.

I wouldn't know about this and you could be right. In Australia, harmony was released without payroll but they've just integrated it (KeyPay) recently. So dropping additional functionality via api seems possible. Then again they're not migrating Australians, I suppose.


A lot has changed since that prediction. ie. capital raisings. You can't raise capital for growth and not then make a loss.
The opportunity for Xero has changed a lot since I've been invested and following it. (about 6 years)
I don't think there is a single shareholder who doesn't agree that changing the goal posts was the right thing to do.

Agree, as long as you can be profitable should you need to.



If they spend the $230 mill and gain significant market share in doing so then they can continue to raise more cash at an ever increasing value if there is still market to grab.

If they spend the $230 mil and don't gain market share then they're low on options and I'm screwed.

I agree that the next 12 months will be very exciting. Looking forward to the next customer number update.

The last cap raising certainly didn't hurt. The next one might. How are you going to raise another 200 million if you're market cap is only 500 million? I think it's important to discuss whether $230 million will take you to profitability. It's obviously very hard to make accurate projections. I like to be conservative when a stock comes with a very very very very very very very high premium.

Last quarter, net decrease in cash was $13M. At that rate, cash runs out after ~4.5 years. I think, it may run out much sooner than that depending on how things develop.


Last quarter's big item expenses were 7M for staff, 7M for IP and 5M for marketing (I haven't checked if IP and marketing costs are always that high/lower in other quarters). Staff will be doubled over the next 18-24 months, which will send quarterly staff costs north of 15M. A lot of that money is for additional developers, which may drive up IP expenses. Given that Intuit is doing a superbowl ad and hosting big road shows across the road from where Xero do theirs, we can certainly expect that exposure in the US won't come cheap. On top of that, I would not be surprised if Xero had to buy a few add-ons to have differentiators. Intuit bought Demandforce for over 400M, so small businesses can advertise locally (http://allthingsd.com/20120427/intuit-just-bought-what-for-424-million-demandforce-thats-what/). There are a lot of things Xero could spend money on. Xero may have to pay for specialised US or Australian payroll solutions. What if Intuit lowers prices or offers QBO 12 months free like in Canada?


I hope everyone understands where any reduction in revenue growth and particularly poor uptake in the US will send this stock.

[Hawkeye]

So in Xero's next customer numbers update, where do you expect the numbers to be at Cas?

[Casino]

So in Xero's next customer numbers update, where do you expect the numbers to be at Cas?


Hard to say because they're not necessarily the quarters when accountant solutions do best. Being somewhat lenient is okay. Put it this way, take a deep breath if the numbers are remarkably good. Intuit reports soon after and if they do really well particularly in Australia, then be nervous.

If it was my money, I'd put it somewhere else right now because the risks outweigh the benefits.

[Bilbo]

So in Xero's next customer numbers update, where do you expect the numbers to be at Cas?

when is the next update due?

[Casino]

the trick is to develop a generic platform that caters for complex tax processing globally that can be customised globally for a very small cost per country...

If you cost of solution is expensive per solution then the brands will have to buy there processing from a global platform that delivers the solution to the brand which then markets the brand to the public..

its like sun glasses.. which are all manufactured from one factory ...

each designer has there own office at the factory ....

but the sun glasses are all created in the one factory ... and that factory wont be a company you the public know much about .....

sorry another post that wont make sense to anyone ..... :) :)


indeed very cryptic. Perhaps you can share your thoughts on the last 2 comments posted on the link below and extend the implications on the US market?

http://boxfreeit.com.au/2013/08/02/saasu-wins-icb-review-xero-first-for-bank-feeds/

[Casino]

when is the next update due?

Dec quarter should be reported in late January. Intuit reports Jan quarter in late February. The two quarters after that will be the exciting ones, I think.

[skid]

I think its Le Spec isnt it?

[Casino]

ok when the software instructions for any business process are available to the business public at a very low cost or no cost then the cost of developing a service is reduced.

I believe mining companies are now testing driver less trucks in aussi...

So if the software code for a bank feed or a tax modelling system is available to the business public at no cost and the statements are simple to understand the the cost of developing a business process is vastly reduced...

a bit like 3D printing a cheap plastic cup...

now most people think a tax return system or a bank feed solution is expensive to build and requires high expertise...

But this is not longer the case ...

its the platform that hosts the business process that is smart ... Not the tax return solution becuase that has simple become a set of simple statements or GUI designs ...

In other words the business process that was expensive to create ten years ago may now not be expensive and available to anyone in any country...

The cost of producing these solutions will come down to the point where large teams of programmers are not required ... they will get fired ....

Its the platform behind the solution that gets smarter ......

This then starts the ball rolling down the destructive creative path of capitalism.....

now your going to assume that such plaforms dont exist yet .....

dont think that for a moment.

Now you confused me even more. Are you referring to open API or open-source cloud accounting solutions? The comments in the link above suggests that Xero's payroll may not be adequate for users in Queensland. Intuit acquired TruPay in the US, which helps small businesses calculate compensation insurance premiums more accurately and reduce cash outflow. Are Xero's payroll solutions competitive and compliant everywhere it is offered? Can better solutions be integrated at low cost like you suggest?

[tunsbro]

Well, time to put away the party hats for a wee while, it seems.
What's our next catalyst?

[Casino]

Well, time to put away the party hats for a wee while, it seems.
What's our next catalyst?

tapering, interest rate rise, quarterly results

[gv1]

I think some people just cashing for christmas, big boys are seating on massive profits...thats a good sign for me.