Xro - xero

[Casino]

I notice Xero is double the price of quickbooks online in Australia (Xero $29 $49 $64 QBO $15 $25 $35)
Considering how price sensitive small businesses are, it will be interesting to see if QBO is gaining sales here.

I think the high price is key to their success. I'm not an expert and I might be missing something (tell me if I do) but the only two situations I can see myself using Xero are:

1. Accountant pushes me on Xero because it's good for them. Note that close to 40% of above prices end up with the accountant if they don't pass on the 25% discount that they get.
2. I falsely perceive Xero as a premium product because of premium prices. Some customers complain about that because they didn't realise how many features Xero lacked.

Otherwise, I would always choose a competitor no matter whether I come from shoeboxes/excel or I believe software can help grow my business. A company like DIL for example should have started with Jcurve and slowly transitioned to Netsuite.

On a funnier note, Drury tweeting index is going strong with some amusing innuendos: https://twitter.com/roddrury/status/408066620490141696/photo/1

[Casino]

Meanwhile, Intuit keeps shopping:

http://www.forbes.com/sites/hollieslade/2013/12/04/intuit-snaps-up-docstoc-to-expand-small-business-ecosystem-empire/

[JamesST]

2. I falsely perceive Xero as a premium product because of premium prices. Some customers complain about that because they didn't realise how many features Xero lacked.


From my perspective as a business owner all the prices are peanuts. Just having features is not necessarily the deciding factor. Sure it needs to have the features my business needs. It mainly comes down to how much time we save, how intuitive the software is, ease of getting the right reports from the data to make decisions, availability of the system, speed etc.
Something seemingly as trivial as a slick bank reconciliation feature can save hours of data entry time and also means that the reports are always up to date.
All the prices of all the Vendors are in the same ballpark. All within a fraction of one hour of a junior employee salary per month.

I also doubt that the pricing will be a race to the bottom with all the new competition. At one extreme, Wave accounting is already at the bottom but I wouldn't consider that for my business. I want to be the customer and demanding a level of service.
Accounting software is the lifeblood of a small business if used correctly.

I'd like to think that I'm not unique in my thinking. Most business owners surely think the same way or they wouldn't be around for very long.

I think the discount structure for accountants would be partly offset by reduced support costs. It must massively reduce the support burden on Xero having well trained accountants taking first level support.

[Casino]

From my perspective as a business owner all the prices are peanuts.

Not all small businesses are created equal and for many excel is just fine. In fact, excel beats the crap out of Xero's $29 small plan (limited to 5 invoices and 20 bank transactions per month). If you would order burgers and chips for the same amount of money, you'd get more napkins needed for doing your accounts/invoices and you would save time not having to do it online. Let's be honest, the small plan (only $9 in the US) serves a different purpose.
Now compare the $29 plan from Xero to the $35 plan from Intuit (unlimited transactions&invoices/10 employees/quotes/inventory/purchase orders/control over user access/etc): http://www.intuit.com.au/quickbooks-online/small-business-accounting-software-compare.jsp



Just having features is not necessarily the deciding factor. Sure it needs to have the features my business needs. It mainly comes down to how much time we save, how intuitive the software is, ease of getting the right reports from the data to make decisions, availability of the system, speed etc.
Something seemingly as trivial as a slick bank reconciliation feature can save hours of data entry time and also means that the reports are always up to date.
All the prices of all the Vendors are in the same ballpark. All within a fraction of one hour of a junior employee salary per month.

Xero has a very good bank feed offering in NZ and increasingly so in Australia. If excel was good enough until now, then your business can't be that reliant on real-time banking information. If volume of transactions and speed of reconciliations are an issue, then I wouldn't go for a system that limits me to 1000 bank transactions/invoices a month in case my business outgrows the system.



I also doubt that the pricing will be a race to the bottom with all the new competition. At one extreme, Wave accounting is already at the bottom but I wouldn't consider that for my business. I want to be the customer and demanding a level of service.
Accounting software is the lifeblood of a small business if used correctly. One of the reasons why I follow Xero and Intuit is that I'm really excited to see the extend to which cloud solutions will help small businesses to compete against the big guys. They will increasingly have the tools to do so.


I'd like to think that I'm not unique in my thinking. Most business owners surely think the same way or they wouldn't be around for very long. Speaking of which, how do you know that Xero won't be in receivership in a few years? Is that not a concern at all? Overall I agree with you but over 500 000 businesses (mostly in north America) prefer Wave. That's 30x more than the number one challenger to Intuit has in the US. For many particularly micro-businesses, costs come first.


I think the discount structure for accountants would be partly offset by reduced support costs. It must massively reduce the support burden on Xero having well trained accountants taking first level support.

At the moment, this is true although Xero has no phone support. Will the customer experience remain the same if they have millions of customers? Will Xero survive if they don't? As it is, Xero is not future-proof.

[JamesST]

Xero is not future-proof.
At least Xero works now. Check out the QBOnline twitter feed. Awash with complaints about yet another outage. QBOnline are known for outages. Struggling to get the basics right...

[Santiago]

I've been following this thread for a while now and I have to say, Casino, thanks- I think we've got it. Xero is going down. It's software is rubbish, the service crap, the business plan a joke. The 100% growth in customer numbers is purely evidence that humans are sheep and like shiny things that look pretty. Some of us have been in since the beginning. We could cut and paste links to negative comments on blogs about Xero, or positive ones. I've found the glowing reports from their customers outweigh the complaints- however that's purely an unscientific observation of a long-term investor who's followed the company since they listed.

Honestly, I think what we have here is the classic NZ tall poppy syndrome. These guys have a global vision, and the balls to execute. How many other NZ companies have really done that? Maybe only Fonterra. Why are we a middle income rather than high income country? Because we don't go global. We stay out in the garden shed messing around with number-8 wire. There's a wave of companies following Xero, inspired by the trail they're blazing out there. Will any succeed? Who knows. They're high risk investments. Extremely high risk. We know it (though thanks for reminding us every 10 minutes 24/7). I would say, however, that Xero is already successful. They've made some people rich, they've injected some real juice into the NZX, they've brought exposure to NZ more than anyone else lately, and they've motivated a whole raft of similar NZ-based companies to emulate their success to date. Added to that, while I'm no accountant, it would appear they've made life more interesting for them.

So if they crash and burn, as a company, they will have been successful no matter what. As an investment- only stick your money here if you can handle it. I'm in because I look at the people behind it, their track record, their product, and I reckon it's worth the high risk. In terms of the strength of Xero as an investment- all your observations to date have been contradicted by customer number growth. International investors who are driving the SP right now don't care about PE (which you're freaking out about)- look at Amazon in the US, for example. They don't care (too much) about losses. They care about potential, which is expressed almost wholly in customer number growth. Play this stock like a traditional NZ equity and you'll get it wrong.

I'm waiting for the next customer number release. The SP will move pretty fast one way or the other.

[Loneranger]

Good stuff Santiago. I am totally with you on this one.

[Copper]

Yes Santiago,good post .This is a share site not an accountants convention. That should be left to the Xero blog..The shareholders have their own views and take their own risks.

[Casino]

I can nod off most things you said to a point. Everything gets reversed if an unreasonable bubble is created. Like James said, uptime is paramount. Maybe that can help to reach tipping point in the US. Xero has more to win than to loose in the next quarter i think.

[Casino]

Thank you! unfortunately retail investors too often buy at the worst time and are left standing in the rain. i really like peb but its safer and better for everyone if investments are balanced.

[Santiago]

Mate, you seem to have changed your tone from Xero basher to defender of the poor and helpless retail investor. Appreciate your concern.

[JamesST]

when investing its about moving your money where the returns are....


Agreed. But pretty hard to know where the returns will be. Personally I don't like to move around too much.
Don't have the time to research everything.

[Casino]

Mate, you seem to have changed your tone from Xero basher to defender of the poor and helpless retail investor. Appreciate your concern.

The robin hood of the inexperienced and greedy! just to balance my one-sided thoughts, xero investors might be interested in following the moves of ncr. I would not be surprised by an alliance or interest in taking over xero.

[Santiago]

US payroll feature rolling out today in a number of States. Big release for the US business.

http://blog.xero.com/2013/12/us-payroll-launch/#comments

[Copper]

Have any of our chartist posters an idea where we are possibly heading after recent fall and current reversal...

[Copper]

Many tks Surfersteve.A very thoughtful answer.

[Copper]

Many tks Surfersteve.A very thoughtful answer.

By the way.Given your answer which came out of left field for me ,do you have the odd favorite that I can keep an eye on.If you have some professional security problem ,then I fully understand..Many tks again ..Copper

[Minerbarejet]

Interesting post for me. This is the first reference to Findata that I have seen. Being a longtime shareholder via henley,broker technology and ingenium its nice to see something happening, eh Fraser

[Copper]

Again many tks Surfersteve..That last post was very interesting in itself.Am no geek or accountant just an investor, but was an interesting new world to me.Will look at Findata.
Regards
Copper

[JamesST]

US seems to be going well.

New platinum partner in the US ( more than 500 businesses I think ) 100% Xero

http://www.hpccpa.com/services/xero-setup-conversion

Obviously have enough features for many in US market.

No platinum partners in Australia yet so shows the size of the US market and partners.
Looking forward to customer numbers update.

[Santiago]

I've been holding Rod's tweets up to the mirror, reading them backwards, switching letters out for numbers, trying to find the hidden message on the customer numbers... Will be fascinating to see the next update. Anyone have any views on what the minimum percentage growth the market will be looking for? I'd say trending towards 80% p.a. globally is about par. Of course, the US numbers need to be a significant part of that, and probably over 100% p.a. on their own.

[JamesST]

I've been holding Rod's tweets up to the mirror, reading them backwards, switching letters out for numbers, trying to find the hidden message on the customer numbers... Will be fascinating to see the next update. Anyone have any views on what the minimum percentage growth the market will be looking for? I'd say trending towards 80% p.a. globally is about par. Of course, the US numbers need to be a significant part of that, and probably over 100% p.a. on their own.
I think the market will be expecting 80% in line with guidance. But god knows what the market really thinks.
I'm not too worried about combined global growth. ie. Not too concerned if combined growth is temporarily down due to NZ being a large component and growth dropping off there due to market size. As long as the other markets are coming in behind with big % growth.
Apparently December is a big month for changing accounting software in the US. Customer number updates were given late Jan/early Feb in the last 2 years.
I have a spreadsheet that compares Rod's tweets per day to customer number announcements, interpolated customer sign ups per day between announcements and share price. Some very interesting correlations in there. I hadn't thought of switching letters for numbers - that's a good idea. Working on it.

[Harvey Specter]

Apparently December is a big month for changing accounting software in the US. Wouldn't it be January. Standard year end in US is December so you use your old system till then, then change to new system from January. The only exception to this maybe those without a system who want to use the bank upload and quick coding to do the prior years accounts (but they could still do this in Jan for the previous year)

[JamesST]

Wouldn't it be January. Standard year end in US is December so you use your old system till then, then change to new system from January. The only exception to this maybe those without a system who want to use the bank upload and quick coding to do the prior years accounts (but they could still do this in Jan for the previous year)

Yeah I have no idea. Was purely going from a quote by Stuart Mcleod at Xero
"In addition to developing efficiency improvements, we aimed to time the release in December, as the month is widely viewed as the optimal time of year to upgrade systems, which usually entails migrating from legacy desktop systems to cloud-based solutions."

[Harvey Specter]

Yeah I have no idea. Was purely going from a quote by Stuart Mcleod at Xero
"In addition to developing efficiency improvements, we aimed to time the release in December, as the month is widely viewed as the optimal time of year to upgrade systems, which usually entails migrating from legacy desktop systems to cloud-based solutions."That could work - release in December for Jan conversions. THey have just released payroll for some US states which will be an important decision for those wanting to roll out in the new year.

Likewise, standard balance date in NZ is March so expect April to be bigger and Australia is June so expect July to be bigger. Have never tested this theory though.

[JamesST]

2nd OBOnline outage in 1 week today.
They're obviously having some real problems under the hood.
Good opportunity for Xero.

[JamesST]

Just a couple posts (the first 5) from the following link regarding the outage where a poster asks "is quickbooks online down right now?" - https://community.intuit.com/questions/797455-is-quickbooks-online-down-right-now

"Sure seems slow and choppy."

"I don't know why I still use QBO this is happening more and more often"

"KNOCK KNOCK - IS ANYONE THERE!?!?!?!????? QBO ARE YOU GOING TO OFFICIALLY RESPOND TO ALL OF US THAT ARE STILL NOT WORKING?"

"I have been trying all morning to log in but can not. The message says the server is down."

"Yeah, I haven't been able to login and it has been happening like this for a few days. Hopefully they get this fixed asap..."

And also:



"I manage four companies on qb online, I have also lost money and productivity today. I will be exploring other options but I am not going back to QB desktop."


"I think they should credit all of us a month's billing at minimum! "


"Try Xero. Good luck getting a credit when we can't even get a reply."


"Could not initialize class com.intuit.qbo.i18n.SalsaBeanFactory" ummm salsabeans


"Glad that I am not the only one throwing around the X word ;) "


"already cleared my history. when can I expect QBO to be up and running? Should I just go home. I need to know if it will be up in the next 15 minutes. it is now 1:27 pm pacific time"


"I was planning on moving to Xero after the first of the year...guess I will start today. "


"Thanks for the link the Xero. "


"Keep it up quickbooks. Your own forum is being used to advertise your competitors because you can't figure out how to keep a cloud based booking solution operational more than a month at a time without it going down... yet again."


"There had better be some concessions to your users."


"I know what happens now. Instead of just being down all day you are going to come back up just in time for my boss to NOT send me home and I get to try to fit the last 6 hours of my missed work into the next two hours of my day."

[bobxia]

Haven't seen Casino for a while. Wasn't he here 24/7 before. Quite interested about his reaction to QBO...

[Shore]

He's probably stuck dealing with his screwed accounting system that's endlessly down!

[Casino]

Still here, guys. Thought it would be better to keep negative comments at a minimum. QBO's problems are likely to persist until migration to new QBO and new data centers is complete. Gives Xero a great window of opportunity to roll out features and capitalize on burnt social capital.

[gv1]

Looks like its going towards 4

[JamesST]

This QBO outage is still going... Check out twitter.
This is serious. Are they responding to competition too fast and not getting the foundations right? I can't imagine not being able to generate invoices for a couple of days or process payroll.
Hopefully this doesn't put people off the cloud entirely and switch back to desktop.
As a Xero shareholder I had a bit of schadenfreude at first but now a little bit worried as it highlights a potential risk a bit more.
As a provider of a cloud solution it makes me feel a little bit sick. Don't wish this on anybody.

[Toasty]

technology works and fails all the time ....

I think about this a lot when I am flying...

[clip]

The desktop its self will disappear and be virtual as in the case of VMware


You will still need a desktop/laptop/thin client/terminal/tablet to access those resources on the cloud anyway, so not necessarily, although there MAY be a shift to more laptops/tablets as a result.
However, as long as there are computer games, the desktop will never die :)

[Harvey Specter]

Yahoo mail has also been down for 2 days apparently. Just shows the big boys dont always get it right.

[Cricketfan]

Yahoo mail has also been down for 2 days apparently. Just shows the big boys dont always get it right.

Only for Xtra users. The main Yahoo mail site has never been affected like that (that I recall).

Edit: Whoops, apparently it wasn't just Xtra users. However my Yahoo mail wasn't affected.

[catchbag]

Is it just me, or doe's there appear to be some strange sell's this afternoon.... 6 here,16 there,all often well below asking price?

[Casino]

You sure you are not Rod in disguise ;) That is in effect what he has been saying for some time.....

Watch me tweet in 5 minutes!

https://twitter.com/roddrury

[Casino]

i for one like running multi threaded software on a powerful desktop ....

if the software DLL is loaded instantly off the cloud to handle my local data that is safe on my home or local business cloud then thats fine... but i want that DLL code segment running instricted on a dedicated core.

Yes people will use cloud computing solutions that run in a standard browser like there are people who eat KFC and BK becuase its simple and cheap..

But dont expect me to stop using the MOST POWERFUL SOFTWARE i can lay my hands on.....

And that mean it is not running in some BRAIN DEAD Browser with HTML and Java script!!!!!!

I will use multi threaded machine code assembled from a high speed compiler every time over that browser Junk ....

What if you didn't have to choose?

Read Graeme's comment: http://boxfreeit.com.au/2013/12/09/business-still-react-with-ignorance-and-fear-to-the-cloud-survey/#comment-47053

[zs_cecil]

i for one like running multi threaded software on a powerful desktop ....

if the software DLL is loaded instantly off the cloud to handle my local data that is safe on my home or local business cloud then thats fine... but i want that DLL code segment running instricted on a dedicated core.

Yes people will use cloud computing solutions that run in a standard browser like there are people who eat KFC and BK becuase it tastes good and is cheap..

But dont expect me to stop using the MOST POWERFUL SOFTWARE i can lay my hands on.....

And that mean it is not running in some BRAIN DEAD Browser with HTML and Java script!!!!!! That for the public .... God bless them.

I will use multi threaded machine code assembled from a high speed compiler every time over that browser Junk ....

Having said that ... Buy those browser junk solutions.... the poor public has no choice what they are going to be given for breaki, lunch and dinner... for a while anyway .... :)

HTML and Javascript are just the languages used by web browser to render/display whatever data retrieved from the server. The server, which sits in a large scale data centre will definitely have far more capabilities then any single local machine to process anything. I think your perception on machine power and speed is kind of misleading.

The main performance bottle neck for the web applications I personally think is on the speed of the data transportation between the server and your web browser.

The security issue is another thing we can always argue. Whether you are willing to put your data into a public space is up to your own choice though.

Even you run your software on your own computer, you are still not totally secured because your computer is connecting to the network. And you don't know if the computer producer has put any security back door in their device. You have to trust them if you use the computer. So, you still have no choice. :scared:

Anyway, this is back to the argument of "Web App vs Desktop Software" again.

[Copper]

Love it Cecil and Steve and wish I was so switched on but is the Share Price going up???

[zs_cecil]

Love it Cecil and Steve and wish I was so switched on but is the Share Price going up???

I want to know that too Copper. :)

[David Hardman]

Not saying these guys are a threat to Xero in anyway what so ever but these guys play in a same space as Xero

http://www.jcurve.com.au/

The Jcurve business is being backed into ASX:STE. Deal gets completed this week.

[Toasty]

Not saying these guys are a threat to Xero in anyway what so ever but these guys play in a same space as Xero

http://www.jcurve.com.au/

The Jcurve business is being backed into ASX:STE. Deal gets completed this week.

From a small business perspective it actually looks like quite interesting software. Here is a dated article that suggests it may be more of a threat to Quicken and MYOB, always nice to hear. Things may have changed but that was just a quick search. http://boxfreeit.com.au/2011/10/31/opinion-how-jcurves-entry-will-affect-the-cloud-accounting-market/

[Copper]

Apparently tis the season to give away XRO shares. (tralalalala, la la la la)

Are you buying STE...see what the odd mention does to punters on this site...tks David..

[zs_cecil]

Nope, I dont buy "the next XRO/PBE/AAPL" because they are not first movers nor can they live up to expectations.

Sometimes the second movers are doing much better especially in their own market region. I vaguely remember I read some business theories explaining second mover advantages when I was a student in Uni.

http://insight.kellogg.northwestern.edu/article/the_second_mover_advantage
(http://insight.kellogg.northwestern.edu/article/the_second_mover_advantage)

Sometimes, I feel that it may be a little hard to identify if companies like Xero are belonging to first movers or the second. The account software market have already been mature when Xero was found. But it is first few company to redefine the market through their innovation on the product and business model.

[Snow Leopard]

One of the the problems, from my perspective, of tailored internet advertising is that you get stalked round the websites once some algorithm pigeon holes you.

So my persona is apparently one where I am an American QuickBooks user.

Now's the prefect time to switch to Xero (http://www.xero.com/us/switch/?utm_source=Google&utm_medium=Display&utm_content=Erica_728x90&utm_campaign=SwitchUS)

Further targeted adverts refine this persona to one who flies business class, is considering replacing my small Honda motorbike with a Bentley Flying Spur and is trying to get into Australia illegally by boat from Indonesia.

Best Wishes
Paper Tiger

[Stranger_Danger]

One of the the problems, from my perspective, of tailored internet advertising is that you get stalked round the websites once some algorithm pigeon holes you.

So my persona is apparently one where I am an American QuickBooks user.

Now's the prefect time to switch to Xero (http://www.xero.com/us/switch/?utm_source=Google&utm_medium=Display&utm_content=Erica_728x90&utm_campaign=SwitchUS)

Further targeted adverts refine this persona to one who flies business class, is considering replacing my small Honda motorbike with a Bentley Flying Spur and is trying to get into Australia illegally by boat from Indonesia.

Best Wishes
Paper Tiger

Yep, I'm getting that one too, as well as being offered new gym equipment, tips on gold mining stocks and, bizarrely, some christian cult the end of the world is nigh type of newsletter.

[Casino]

Oh and I really like the fact that she got advised to stop using QBs and switch to Excel instead - solid low blow there ;)

Nice touch. If you like Intuit bashing, then you will love Mike Block's blog:

http://www.quickbooks-blog.com/

[Stranger_Danger]

Nice touch. If you like Intuit bashing, then you will love Mike Block's blog:

http://www.quickbooks-blog.com/

I read a few entries until I got to http://www.quickbooks-blog.com/2013/12/cpas-raped-by-intuit.html

Ummmm....ok!

[Santiago]

Reading this, and some other US commentary, and having lived in the SF Bay Area, I really am fascinated to see what the next customer number report will look like. If Xero takes off in the US, it is going to be huge. Some SF buddies of mine are already talking about it as a "winner". The recent review which described it as "the Apple of accounting software" got good coverage. Americans love winners (as opposed to NZers- we tend to treat them with suspicion) if it starts rolling it'll be self-perpetuating. I'm seeing Xero banner ads on US websites. The next customer report is a total unknown- anything is possible.

I'm giving it a year though. It they can grow, hold and sustain, then it gets really interesting. Biggest risk- now they're playing in the big league, if they can't keep improving and rolling out the updates and new features these guys expect, then they'll quickly become as maligned as Intuit. Winning US customers is one thing, holding them is entirely different, and I still haven't seen enough to 100% convince me that they know how to hang on to customers. They'll need to strike a balance between marketing and loyalty- the guys that come over to Xero in the US will expect a level of service commensurate to the hype...

So, shareholders- our future is in the hands of Xero's code writers, and customer service team. Hope they have a nice Xmas.

[Dentie]

Nice touch. If you like Intuit bashing, then you will love Mike Block's blog:

http://www.quickbooks-blog.com/

Interesting Casino. I suppose when you want customers as fast as Xero does, anything goes when talking about your opposition ... here's an example from this link: http://www.quickbooks-blog.com/2013/12/cpas-raped-by-intuit.html

As a real QuickBooks insider for 12 years (see BestQuickBooksCPA.com (http://bestquickbookscpa.com/)), I know that Intuit occasionally does some seemingly dumb things, but it now seems to be doing something incredibly dumb.
CPAs are now being raped by the new Intuit Practice Manager (my apologies to all women, starting with my sister (a CPA), wife and daughter.

I wonder how Rod would react if the same sort of emotionally based b..sh.t was written about Xero? Well, in fact we know - look how defensive he gets when anything remotely negative is written about Xero.

We all know how wonderfully sublime Xero's product is in every respect, I mean...wow golly gee...it's an innovation based winner. Just the bees knees blah, blah, blah ...yeah we got it!!

Being a Kiwi based company, I would like Xero to rise to the top of the accounting world based on the abilities of the product...not by trying to kick the opposition at every opportunity. If it is that good, the sheer increase in customer numbers will provide testimony and make it happen. As another analogy, look how the All Blacks (& NZ) get upset when the need for the pre-test haka is questioned.

Enjoy your day all!

[Casino]

Interesting Casino. I suppose when you want customers as fast as Xero does, anything goes when talking about your opposition

Doubt he smears Intuit on behalf of Xero. It's obvious where he stands but he lauds Intuit when they change course and he is critical of Xero whenever he thinks it's due. And then, he has this other website where Quickbooks is the best thing since sliced bread:

http://www.blocktax.com/buyquickbooks.php

Not sure what the full story is but he is clearly an insider and there is usually something to what he says.

[Casino]

I still haven't seen enough to 100% convince me that they know how to hang on to customers.

I think customer lock-in is very good and will be even less of an issue once core accounting is in place. What I wonder is whether businesses that go bust will keep their subscriptions? It's an important issue if you look at the small business landscape in the US:

Some 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers.

http://economics.about.com/od/smallbigbusiness/a/us_business.htm

Looking at those numbers above, I would have estimated that there are around 5-7 million proper small businesses in the US (Quickbooks has around 5 million US customers). Supposedly, there are 29 million small businesses and I stumbled across some interesting numbers:

2. On average, a quarter of new small businesses stay open for 15 years or more, a third manage 10 years, a half get to five years and seven out of 10 last just two years.
3. Just over half of small businesses are based in homes.
5. Out of 28 million small businesses in America, 22 million are self-employed businesses with no additional payroll or employees.
11. Non-employers have average revenues of $44,000.
14. 1.4 million non-employer businesses are corporations, 1.6 million are partnerships and 19.4 million are sole proprietorships.

http://www.ibtimes.com/14-things-you-need-know-about-americas-28-million-small-businesses-1469314

Could it be that the low-end of the market is the most relevant for growth? If yes, what are the implications on sustainable competitive advantage/margins/predictability of cash flows? Maybe the market is bigger than we think IF people continue paying after the businesses closes.

[Harvey Specter]

2. On average, a quarter of new small businesses stay open for 15 years or more, a third manage 10 years, a half get to five years and seven out of 10 last just two years.So out of 100 businesses, 50 get to 5 years but 70 last just 2 years.

Which should be very good for Xero since out of 100 business, there is somehow 120 potential customers.

[Casino]

So out of 100 businesses, 50 get to 5 years but 70 last just 2 years.

Which should be very good for Xero since out of 100 business, there is somehow 120 potential customers.

I was wondering about that or at least there should be a lag of some sort.

[Santiago]

Hope XRO aren't using the same counting methodology...

[Hawkeye]

Got to remember they are targeting SME's so as the companies grow, like Xero themselves, they have to move away from the Xero software and get something different, something applicable to the scale of their company.
So maybe if you change the sentence, 70 get to 2 years, and and 50 get to 5 years, meaning 50 fast paced companies growing fast, like Xero, get out between 1-5 years and 50 of the still successful but slower growing companies remain.

[Casino]

the number of total marriages can be higher than half the population.


You are talking about Xero's churn rate are you not? (and I agree it is very important) If so this information is reported occasionally by Xero - this from Rod Drury April this year:

"churn is around a percent a month. All our numbers are net of churn. Our churn rate is less than the death rate of businesses and we of course monitor churn closely. We don’t see people going anywhere else and the main reasons for leaving ‘not ready for accounting’ or ‘out of business’.

The reason our churn numbers are low are

1. We are conservative about counting customers. We only count them when we have billing details and by then our customers are pretty committed.

2. Accounting software is sticky. So customers are hard won but when we have them they tend to stay if you treat them well.

You could argue that businesses with online accounting are more likely to survive on our numbers. That would be a useful study."

And I have no trouble believing that. But cloud accounting hasn't been around for very long to know how death rate plays into this. It will also keep changing the more direct businesses Xero gets.

[Casino]

So with all that being said the "churn rate" is the key which for Xero is roughly 1% per month and Xero's customer numbers are net of churn.

For now it is and it is the justification to aggressively fund growth.

[Stranger_Danger]

And another. This one is considered "group platinum" by the looks with over 1000 clients on Xero!

http://www.xero.com/us/partners/partner-program-table/

We’ve got some great news to round out the year here in Australia – leading firm Crowe Horwath has reached Platinum status by getting their 1,000th client on Xero. Photo from the day (from left to right): Gavin Fernandes – Key Accounts Manager, Xero, Greg Emsley – CIO, Crowe Howarth and me, Chris Ridd – Managing Director, Xero AU.

Here’s the media release we put out this morning:

Crowe Horwath achieves Xero’s Platinum Partner status Leading accounting firm Crowe Horwath is the first partner in Australia to achieve Xero’s Platinum Partner status, which is awarded to a group practice with more than 1,000 clients using Xero. Crowe Horwath CIO, Greg Emsley, said the firm has enjoyed a constructive relationship with Xero over the past several years and now have over 1,000 clients using Xero’s services. “Our clients have reported benefits ranging from cost savings with no software to install, improved business efficiencies and better financial management”. “Crowe Horwath is committed to helping SMEs grow and as a leading accounting and financial services firm, partnering with Xero has enabled us to provide our clients with advice from real-time data feeds and the many add-ons which help further streamline processes for businesses” he said. Xero Australia Managing Director, Chris Ridd, said online accounting software creates value for partners and a competitive advantage for accountants, bookkeepers and financial advisors. “Xero is proud to recognise Crowe Horwath as the first Xero Platinum Partner in Australia. “The next generation of leading organisations are those who adapt to take advantage of easy-to-use, collaborative applications, and who embrace innovation through cloud computing” he said. Crowe Horwath is also a Platinum Partner with Xero in New Zealand.

Yeah, but go and look at Crowe Horwath's share price - hitting an all time low today.

From reading the announcements, problems include weak revenue with the core compliance/consulting businesses, and, NZ in particular (much goodwill written off), with the NZ market being the earliest and biggest Xero adopter.

So, cloud accounting. Good for Crowe Horwath? Or bad? Or are their problems company specific?

I don't know the answer.

[Toasty]

Yeah, but go and look at Crowe Horwath's share price - hitting an all time low today.

From reading the announcements, problems include weak revenue with the core compliance/consulting businesses, and, NZ in particular (much goodwill written off), with the NZ market being the earliest and biggest Xero adopter.

So, cloud accounting. Good for Crowe Horwath? Or bad? Or are their problems company specific?

I don't know the answer.

I have personal dealings with Crowe Horwath and if those are any indication then it is probably company specific. They mostly seem to be a loose amalgamation of acquired practices who are still largely following their own internal rules and plans. If anything, taking on Xero would appear to be a demand of their client base and possibly an attempt to embrace some of the change moving through the wider industry where greater emphasis is placed on getting closer to the client and understanding what they are trying to achieve. They are pretty much the standard accountancy practice that explains where you went wrong last year and try to do better next year before handing you a large invoice and leaving you to it. No real attempt to supply added value services and only really initiate anything left field at the clients request. Just my view....

[Casino]

The company is focussed on strengthening employee engagement, eliminating business distractions and bedding down current, longer term benefit projects including cloud accounting and a comprehensive SMSF administration service.

http://www.asx.com.au/asxpdf/20131212/pdf/42lkphxp7nptdw.pdf

Their problems may be home-made but remember that we are still in a very difficult environment. With strong growth things could look different.

[JamesST]

Will Thiel's Xero Bet Yield Next Microsoft? - https://t.co/eBLWmBSqNl

[Casino]

QBO had another outage today: http://blog.qbo.intuit.com/

[Longhaul]

QBO had another outage today: http://blog.qbo.intuit.com/

Honestly, who the heck writes rubbish like this for their customers in this day and age? "Root cause analysis"?

If your QuickBooks Online is experiencing slowness or an outage, you can check this page.
Our plan is this:


Provide an initial blog update acknowledging slowness or an outage, so you know we are aware.
Provide an update with an estimate for how long we expect the outage to take, if we have an estimate to share.
Provide an update when the slowness or outage is done.
Provide an update IF we have a relevant additional information to share after we do our root cause analysis.

[Longhaul]

Rod on National Radio this morning.

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/2580682/big-year-interview-rod-drury

[Casino]

Rod on National Radio this morning.

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/2580682/big-year-interview-rod-drury

Thanks for posting this great interview! Amongst the points that I noted were:

1. Thiel and VCs see potential for Xero to become a 50 billion dollar company = $390 per share.
2. Xero is not for sale but has money for acquisitions.
3. Xero will never have to go back to markets to raise money.

[Longhaul]

Thanks for posting this great interview! Amongst the points that I noted were:

1. Thiel and VCs see potential for Xero to become a 50 billion dollar company = $390 per share.
2. Xero is not for sale but has money for acquisitions.
3. Xero will never have to go back to markets to raise money.

Yes, something else that I've heard before and was also mentioned today was the potential for SME's to measure their performance/efficiency against benchmarks provided by Xero's huge amount of data. (Something they would need to pay for of course).

[Santiago]

Oh I was thinking the same thing... Great to see, though. An exciting company, whatever you think of them.

[Toasty]

Good interview. Going beyond accounting. Still risky yes yes, we know but great to be part of it.

[Casino]

Your tune seems to have changed dramatically Casino, you put some money in Xero now?

No and I won't (at least not at infancy stage of cloud accounting). I just see it as a different proposition now. My earlier understanding was focused on the idea that Xero wants to steal business from Quickbooks Desktop. We were told that if you buy Xero for close to $40, it might be worth over $70 in 5 years, which I think offers a far too small reward for the extreme risk.
What Drury and Thiel seem to have in mind goes beyond that with accounting as beachhead for something greater. I am not really clear on how and where this is headed but for it to work out you have to assume a few things:

1. Winner takes all scenario that see the vast majority of businesses and their books online (without it being a hosted solution).
2. That winner being Xero and not a competitor
3. No margin erosion
4. Cloud accounting/Xero changing the future of small business and hugely improving their chances of growth/survival
5. Small businesses will not outgrow Xero


Time will tell if these guys were great visionaries or simply megalomaniacs.

[Casino]

Yes, something else that I've heard before and was also mentioned today was the potential for SME's to measure their performance/efficiency against benchmarks provided by Xero's huge amount of data. (Something they would need to pay for of course).

This is something I am really curious about too because they could also sell that data to others similar to what Facebook does. Intuit has already invested in that area:

http://techcrunch.com/2013/10/23/intuit-acquires-level-analytics-a-consulting-firm-with-a-specialty-in-data-analytics/

[Casino]

Do you want to come to the net AGM Casino as my +1? (I'm serious). For one, the topics alluded to above have been touched on at previous AGMs and I imagine may well be one of the focus points of the next AGM. It would also give you the chance to ask the questions you want to of Drury and /or the rest of the Xero team and maybe clear up a couple of the things you are unsure of. Let me know mate ;)

Cheers for the offer! I appreciate it and it would be an interesting discussion to follow. The next AGM may be a bit too soon to see what the future will look like and who will come out on top. I think a lot of Xero's success/failure will come down to luck. Something that helped Intuit back in the days was the attention it received from Microsoft trying to defeat it. We may see a similar phenomenon when Intuit runs the superbowl ad and a big part of the US may wake up to Xero. We may see the opposite and QBO will pull away in the race. You just don't know what will happen.

I think the best person in NZ to quiz would be Ben Kepes: http://www.forbes.com/sites/benkepes/
We need to get him on this forum :)

[Casino]

I'd be interested in learning a little more about what XRO wants to do/hopes to do in this space regarding using the massive data base that they have collected on the inputs/outputs of the SMEs that use their software and how they might be able to use this for benchmarking businesses and analyzing productivity and efficiency of said SMEs.

I do a little bit of work measuring hospital productivity and efficiency in NZ using Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA) and suspect their is potential to do a lot of cutting edge work in this space if businesses opt in to have their data incorporated in analysis and in return are provided with some idea of their relative performance (efficiency and productivity) compared to other SMEs in their sector. Could be all very interesting and hugely beneficial to the economy as well as individual SMEs.

I also imagine NZ would likely be used as a case study for this (as has been done by XRO in several other areas) which again could be extremely beneficial for our economy!

The potential is massive, I think. The data of small businesses must be worth a lot compared to the crap Facebook collects. What I am waiting to see is whether and how they will connect businesses. Imagine tracking of business inventories and purchases to suggest vendors or pool orders with other businesses. There is a lot that can make small business as a whole function like big business and transform the economy.

[Southern_Belle]

Interesting personal finance software product
http://www.odt.co.nz/news/business/286266/pocketsmith-picks-xero-customers

[Casino]

Anybody shorting Xero? I felt really tempted to bet against Xero but I'm not so sure anymore. The reason being that I completely overestimated the competitors. Best to break it up by region:

ANZ
Looks like Rod Drury was right in saying that MYOB is turning out to be an absolute disaster for Bain Capital. Vultures are circling with Xero in a strong lead
http://www.google.com/trends/explore#q=xero%2C%20myob%2C%20saasu%2C%20quickbook s%20online&geo=AU&cmpt=q

and likely to keep it:
http://cloudaccountingbuzz.wordpress.com/2013/12/17/2013-the-cloud-in-review/

After July we should know whether QBO, Jcurve and Gem Accounts can establish themselves as serious threats to sustained exponential growth. All the other ones seem a bit helpless at this stage.

UK
The fact that Sage came extremely close to buying MYOB is telling. Kashflow, FreeAgent, Wave are stalling and it's still early days for QBO:

http://www.google.com/trends/explore#q=kashflow%20%2B%20freeagent%20%2B%20sage% 20one%2C%20xero%20-shoes%2C%20sage%20one%2C%20quickbooks%20online&geo=GB&cmpt=q

The last paragraph of this article is interesting:
http://diginomica.com/2013/11/26/xeros-year-report-firing-cylinders/

US
I am shocked by how small the internet footprint of freshbooks, kashoo and wave is compared to Xero:
http://www.google.com/trends/explore#q=wave%20accounting%20%2B%20freshbooks%20% 2B%20kashoo%2C%20xero%20-shoes%2C%20%2Fm%2F04cs7bh%2C%20kashoo&geo=US&cmpt=q

Note that Freshbooks claims to have 5 million users vs 15000 Xero subscribers!!! Wave claimed 500k users a while ago. Now, they say they track only 200k bank accounts.

Intuit is way ahead and on a good track but there should be enough burnt social capital/accountant partners to maintain Xero's US growth. A lot will depend on how well Xero does in January and February:
http://www.google.com/trends/explore#q=xero%20-shoes%2C%20quickbooks%2C%20quickbooks%20online&geo=US&cmpt=q

It will be harder to play catch-up after March when migration of harmony is complete/ecosphere has swollen. Wave has also a few good things in the making that should make them a more serious option (particularly for home businesses).

ROW
Depends on where you look. QBO does better in Canada. Xero is stronger in Singapore. In India it's tight.

I can't escape the conclusion that Xero isn't just one of many cloud accounting programs. It's one of two main contenders that are in a head-to-head race:
http://www.google.com/trends/explore#q=quickbooks%20online%2C%20xero%20-shoes&cmpt=q

Whatever you make of the shareprice, tulips alone don't cut it as an explanation - I realized at last.

[Casino]

Has the story changed?
Nope
Is growth pettering out?
No. in fact its probably really ramping up now.
Do you really want to bet against Drury, Thiel et al. and have unlimited pockets?
Yerrrr...

Think you'd be much, much better going long than short here.

I would never short just out of principle. A month ago, I would have bought a put with a $10 strike that expires two years from now in a heartbeat. I am glad I didn't have the 'option' to because I was only looking at the product from a customer/client perspective without taking a few other factors into account.

[artemis]

Also worth checking out comparison of XRO and Intuit on WolframAlpha.com. A bit of XRO info missing from the calcs but still useful. Expected return v volatility graph is interesting.

Input XRO, Intuit in the search box.

[winner69]

No doubt Rod could even make this wish come true

http://tomfishburne.com/2013/12/holiday-animation.html

[Santiago]

Any bets on the next materially significant news from XRO? I'm thinking the number of market releases will slow down in 2014. Customer numbers for the recently concluded quarter before the end of Jan would be my next pick. Big SP movement possible either way...

[Santiago]

There is a chance those numbers could jump way beyond those estimates. The US is such a large market anything could happen. What were the adoption rates early on in Australia? If it follows the same curve, and if I recall correctly, Australia was over 100% at the beginning of the curve. On the other hand, there is a chance adoption will be much slower for whatever reason. What I'd love to know is what Peter Thiel and co based their investment on - ie, what would be par for them. Rod's been mentioning 90%. I reckon, despite his exuberant style, with his experience he is more in the under-promise and over-deliver camp.

[Santiago]

I think you're right. I got in just after the initial float. Hard to pay $33 for something you paid 80c for. I've been tempted to sell so many times, but never have. Now I reckon I'll never be able to go through with selling them. I know for a fact though that if I buy in again the price will tank immediately.

[Valuegrowth]

XERO is one of the star performers in the global stock markets. Recently when my daughter did research on this company for her accountancy subject in School it was trading around NZD 18 and she said it has a potential. I should have listened to her and should have parked all my money there. It went up immediately after my daughter’s comment and traded around NZD 35.

In global markets analysts and other market players will follow current popular stocks, index and other stocks while neglecting some out of favour stocks with more than ten bagger characteristics. These are life time opportunities and only few can identity these types of hidden gems before others. Even now if we can do some home work we should be able to identify more than ten bagger stocks from all types of markets such as developed, emerging and frontier markets .I have seen these types of stocks in few stock markets. I like to follow these types of stocks. So we can forget market volatility, charts and other factors while having good sleep.

Remember 10 years back above stock was trading around NZD 1 and it has become more than 30 baggers now. If we want to outperform market, index and all other instruments at least we should have one more than 20 baggers in our basket. Even now there may be stocks with more than 30 baggers characteristics in global markets.
Investing in correct stocks could lead to making fortune. Have a great 2014.

When stocks make new high they can go up further. Similarly when stocks make new low they can go down further.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[skid]

Parking all your money in one stock (other than in hindsight)certainly merits the disclaimer at the end of your post! :)

[kiwi_on_OE]

No doubt customer numbers are next up. At this time last year (7 February) Xero had 135,000 customers, so going on the 80-90% growth YoY rate we should easily have ~240,000 customers right now. Expect this number to be between 270K-300K by announcement time imho (more if the USA is going better than to plan, which it appears to wit all the massive f***-ups by the competition!).

I reckon the NZ numbers will be about 90k (85k 3mths ago), and I wouldn't be surprised if they've lost customers since their pricing changes, but we probably won't get told about that. Aus 90k (80k 3mths ago), I suspect pricing changes have had an impact there too. UK 33k (30k 3mths ago). ROW 22k (16k 3mths ago). That's good percentage growth in the US, but I think they will want more than that in coming months. So only 220-230k customers. Jan should be a big month in the US, fingers crossed. If they don't double customers this month in the US would that be regarded as a failure?

[Santiago]

I reckon the NZ numbers will be about 90k (85k 3mths ago), and I wouldn't be surprised if they've lost customers since their pricing changes, but we probably won't get told about that. Aus 90k (80k 3mths ago), I suspect pricing changes have had an impact there too. UK 33k (30k 3mths ago). ROW 22k (16k 3mths ago). That's good percentage growth in the US, but I think they will want more than that in coming months. So only 220-230k customers. Jan should be a big month in the US, fingers crossed. If they don't double customers this month in the US would that be regarded as a failure?

Interesting predictions. Your numbers, annualized, would be around 50% growth- far below what the market would be expecting. I reckon they'll definitely want more in the US. A 6k increase in 3 months after Xerocon, the roadshow and the release of payroll (even though this was in December) would be modest. While the focus is the US, I think Australia is equally interesting as they have used a standard (non-internet) ad campaign there last quarter (ie ads in bus stops and the like) in order to reach a wider base. If that has only generated 10k customers, you'd have to think they'd be disappointed.

[Casino]

Interesting predictions. Your numbers, annualized, would be around 50% growth- far below what the market would be expecting. I reckon they'll definitely want more in the US. A 6k increase in 3 months after Xerocon, the roadshow and the release of payroll (even though this was in December) would be modest. While the focus is the US, I think Australia is equally interesting as they have used a standard (non-internet) ad campaign there last quarter (ie ads in bus stops and the like) in order to reach a wider base. If that has only generated 10k customers, you'd have to think they'd be disappointed.

No idea what the market expects but if I remember correctly they added 13k in Sep. I would expect 45k over the last three months and would consider everything over 55k a great success.

[Longhaul]

No idea what the market expects but if I remember correctly they added 13k in Sep. I would expect 45k over the last three months and would consider everything over 55k a great success.

I would hope they have 260k+ customers. The partner channels in UK and US should really start to ramp up customer numbers.

[Casino]

I would hope they have 260k+ customers. The partner channels in UK and US should really start to ramp up customer numbers.

December is a really slow month for most relevant markets. Looking for revenue growth and increased proportion of direct business are also important. Jan/Feb are probably better suited for US partners to switch/sign-up their clients.

[Hawkeye]

Where are we due to get a numbers update? April?

[Casino]

http://www.forbes.com/sites/quickerbettertech/2014/01/06/why-your-company-may-dump-quickbooks-this-year/

[Santiago]

No idea what the market expects but if I remember correctly they added 13k in Sep. I would expect 45k over the last three months and would consider everything over 55k a great success.

You're right, who knows what the market expects- whoever bought in at over $40 is probably expecting/hoping for a lot more than others. If I were "the market" I would look at it the following way.

They had 211300 customers at the end of the last quarter.

The CEO has estimated 90% growth or thereabouts. I recall that was revenue growth, but let's use that same number for customers. When he made that estimate, no doubt he was already talking to the guys who participated in the recent capital raising. While we know Rod's a smart guy, he's probably also smarter than we give him credit for. He would have known that with overseas cash likely to roll in to XRO, underestimating a bit is important (100% growth against a 90% estimate looks a lot better than 100% against a 120% estimate if you're a shareholder). Anyone who has followed AAPL will know that grossly underestimating does nothing for expectation management either.

90% growth would be around 190170 new customers over the year, or 47500 per quarter. So, we have essentially been given guidance for around 260k customers for the end of the quarter.

If we assume he was underestimating a bit, I would add 10% to that, or around 53000 new customers- around 265000.

While as Casino points out, December is a quieter month, I would estimate somewhere between those 2 figures would be the expectation, with anything under a miss and anything over a great success as Casino notes.

In other words, Casino I think you're on the money.

What the market will do, though, is anyone's guess. I don't think the SP will stand still whatever happens. There's a whole lot of froth that will bubble one way or another if the number comes in around 45000-55000. Under or over and I reckon it's pretty obvious what'll happen.

If you hold XRO, probably worth having a plan in mind before this one comes out. Mine- I'm holding no matter what.

[Schrodinger]

Not expecting a lot of capital gains for this stock this year. A lot of the next years growth is factored in IMO.

However if they beat or fail market expectations then this will move a lot.

[Santiago]

They did last Feb, and in 2011 in Jan, though they weren't quarterly updates as such, rather specific announcements around milestones.

[Santiago]

Nope, but I suppose there's an expectation that they will update the market regularly as this has been their practice. I would have thought that a quarter of a million customers on the books would be worth an update, but equally, they may now have decided to slow down on market releases. We'll find out soon enough...

[Valuegrowth]

It is time to analyse risks and returns on Xero. It is not too late to buy and it is not too late to sell stocks depend on the situation, future earnings, growth and great value.

Intermediate Trend is our friend.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[Valuegrowth]

I am thinking about doing some home work on this wonderful company. We should identify wonderful businesses before others. I will pay attention to competitors, future earnings, their prospects including their market share in the future and risk factors etc. We may have few hidden companies like XERO in the past in New Zealand.

Please see following link

http://www.nbr.co.nz/article/xeros-overseas-rivals-rate-upstart-start-ups-chances-weekend-review-dw-132681

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked site.

[Everwood]

Interesting blog posting by Bronte Capital.
http://brontecapital.blogspot.co.nz/2014/01/xero-and-precious-petals-of-new-zealand.html

[In4a$]

Interesting blog posting by Bronte Capital.
http://brontecapital.blogspot.co.nz/2014/01/xero-and-precious-petals-of-new-zealand.html
Good post Everwood, restores my confidence in holding onto XRO

[gv1]

Good post Everwood, restores my confidence in holding onto XRO

Thanks,same here.

[Casino]

The market cap of Intuit is 21 billion. Sage is a further 6 billion. Add in MYOB (which is now private) and you get a global market cap for the sector well north of 30 billion.

But the near-monopoly cloud player should be able to capture more value than this because they also displace the servers and computer support needed for an "in-the-box" solution. My guess is that fifteen years from now there will be a totally dominant cloud accounting software company with a value north of $50 billion.


​Is this how the the $50 billion figure came about?

[Casino]

I found this to be the most interesting part of the article:

About this time three separate New Zealand fund managers contacted me (a known Antipodean short-seller) and suggested I short-sell Xero.

Does anyone know how much stock lending goes on NZX, particularly Xero? We have this information for Intuit

http://www.forbes.com/sites/dividendchannel/2013/12/11/intuit-stock-sees-short-interest-fall-17-3/

but not here

http://www.stuff.co.nz/business/opinion-analysis/7728499/Shortage-of-information-on-short-selling

[baller18]

Another little run today?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11182682

[Santiago]

Takes me backs a few months when this share was jumping around like crazy. Makes you realize that there's still plenty of interest and volatility in this one yet- if today and yesterday are based on one Aussie fund manager's blog post, as soon as more company info hits the market something's going to happen...

[gv1]

Yeah mate for sure. Was a quite month or two but the new year seems to have brought a bit of life to the SP.

I'd be a bit nervous if I was that guy who shorted XRO back when it was $34.50. Stock looks like it is getting some momentum and I wouldn't be surprised at all if it heads towards $50 this year!
I was thinking the same mate, where its going to stop this time. When its potential are enormous.

[In4a$]

I was guessing a climb to $45 this year based on everything I've been reading, I like Tumerics $50 though, would make a nice gain for me and many others I bet.

[Shore]

$50 wouldn't suck.

[Shore]

XRO seems to go through runs of panic buying. Whenever it starts to show a bit of upward trend it looks like there's all those buyers waiting in the wings that were hoping to catch it on the downside suddenly rushing to the till.

[gv1]

Yeah maybe - but my point was not so much who or what was on the sell side - rather that it appeared as though there was only one person willing to sell up to $36.50 and hence that it might gap up there pretty quick!

EDIT: Just looked at the SP - $36.50 it is ;) All those 200 blocks got eaten up pretty quick huh! All by one big buyer by the looks??

yeah, in the road to $300...

[Shore]

Wow - you timed this run nicely moosie

[Shore]

I have a question. I think by memory that customers numbers are plastered up on monitors within Xero HQ etc.. so staff can track the pace and watch how the business is performing. I presume it is perfectly okay for employees to buy up stock in Xero based on what they see inside HQ... considering that customer numbers are basically the main metric that investors have to go on with this company?

[Santiago]

Are you suggesting... someone's buying up because they know something we don't know?

[Shore]

I could be wrong, but I remember seeing it in some old footage. Given how commercially sensitive that information has become they may have stopped doing it...

[Santiago]

Anyone live at the bottom of Taranaki St in Wellington? Get out your binoculars. Bit hard for me to do it from here...

[Shore]

@Santiago - that's why I was curious. I don't know the rules around employees being able to buy/sell stocks.. but if they could see live customer numbers, that's quite powerful information!

[Santiago]

@Santiago - that's why I was curious. I don't know the rules around employees being able to buy/sell stocks.. but if they could see live customer numbers, that's quite powerful information!

Absolutely. Not sure what the rules are in NZ around this, but you'd have to think that if you were an employee, and you knew the number, and you were allowed to trade... Doesn't seem fair, though, does it? If the company's holding materially important info, they should release it.

[gv1]

Hah! You can say that again. Before XRO received international exposure (sub $10) I used to think I had a pretty good grasp on when to sell on the short term spikes (got it bang on about 3 times from memory). Since then I have been wrong, as have you if my memory serves me right with your last foray into a XRO trade from the $20 to $26 odd range post the capital raising announcement.

What I think is worth considering (and was a strategy I used very successfully with PEB) is to continue to trade XRO on momentum, announcements and the like, but really consider holding a percentage of the profits in XRO shares. Hindsight is 20 - 20 of course but if memory serves me right you would be holding a tidy parcel of XRO shares which instead you sold at $7 and $26 ish and presumable some more soon at $38 or so.

Thoughts?

I believe I roughly double my original holding of PEB using this method. Seemed relatively risk free but maybe I just got lucky!
Maybe mate, but I bought xero at $19 sold in twenties, bought again in $30's. If I left it would have doubled my investment. That's why I haven't sold my PEB even though I bought at 70c. cheers

[Santiago]

That's my point, Trading XRO has been great to date (as has been PEB) but the ones who have made the real money are the ones who have been long the whole time!

Very well said.

[gv1]

Cool! DIL is certainly an interesting prospect (some good discussion going on over on that thread). I'm with you on that one though, wait to see the next quarterly, but more importantly the restatement. My gut says there is going to be something unexpected to some out of the restatement! SNK... I have to say I'm not likening it! Maybe a speculative play based on short term revenue growth (or takeover or some other event), but I'm not convinced they will be able to turn a good enough profit long term.

Other than XRO I'm a big fan of ATM, PEB, & SUM for this year (all four off to pretty good starts to the year as well up 22%, 5%, 7% and 9% respectively!!) Good luck for the year of investments (and trades! :) )

Oh and the other thing I think its worth mentioning (no surprise I'm in the early stages of reading "The Intelligent Investor") is thinking about a time frame for when this bull market is going to end. P/E ratios pretty high right now, record indices highs all over the show, and one can't help but feel the time for the serious gains may be quickly running out. As a result I am keeping a very close eye on the macro situation and have been steadily decreasing my equity exposure since late last year, hence why my favoured stocks are all growth stocks as I see the potential for them to return me some nice capital gains over the next 3, 6 12 months!

Now back to XRO - time for the OZs to jump in and Asia :) will we see $40 today?

I think the same, except for PEB, sum, xero , little investment in FBU, skt, tel( div )I have cashed up. I don't know where to park them as I feel market is very very hot. Thinking of growth stock but bit nervous.

[gv1]

You sound like you are in a similar position to me.

I highly recommend you read Ben Graham's the Intelligent Investor. It might help you to figure out what kind of investor you are/want to be and what % of your wealth you want to hold in stocks right now.

One theme that I have taken form this book so far is, it is not about the returns you get over this year or the next it is all about making consistent returns over the long term, like a 20-30 year horizon. One of the keys to making consistent returns is mitigating the losses!

Remember if you can average 10% annual returns over 30 years you can turn $100,000 into $1.7m, 11% = $2.3m, 12% = $3m, 15%=$6.6m (you can see how quickly it goes up with small increments in your annual return). Pretty difficult to maintain those kind of gains if you haven't increased your % of cash as the bull market runs out of steam though!!

Hopefully we have all done pretty well over the last 5 years or so (hard not to if you've held XRO) but the gains can disappear pretty fast if we get too greedy. I like to look at my annual returns with and without XRO just to keep things in perspective a bit as well!

Good luck with figuring out where to put your $ :)
Thanks Turmeric, I have a copy but haven't gone past few pages. Will make an effort, with little ones to take care as well.

[Schrodinger]

Cool! DIL is certainly an interesting prospect (some good discussion going on over on that thread). I'm with you on that one though, wait to see the next quarterly, but more importantly the restatement. My gut says there is going to be something unexpected to some out of the restatement! SNK... I have to say I'm not likening it! Maybe a speculative play based on short term revenue growth (or takeover or some other event), but I'm not convinced they will be able to turn a good enough profit long term.

Other than XRO I'm a big fan of ATM, PEB, & SUM for this year (all four off to pretty good starts to the year as well up 22%, 5%, 7% and 9% respectively!!) Good luck for the year of investments (and trades! :) )

Oh and the other thing I think its worth mentioning (no surprise I'm in the early stages of reading "The Intelligent Investor") is thinking about a time frame for when this bull market is going to end. P/E ratios pretty high right now, record indices highs all over the show, and one can't help but feel the time for the serious gains may be quickly running out. As a result I am keeping a very close eye on the macro situation and have been steadily decreasing my equity exposure since late last year, hence why my favoured stocks are all growth stocks as I see the potential for them to return me some nice capital gains over the next 3, 6 12 months!

Now back to XRO - time for the OZs to jump in and Asia :) will we see $40 today?

Chapters 8 & 20..

[In4a$]

Another big, bright blue candle on even higher volume today We're going for another run tomorrow and I dont think $40 is going to be much of a speed bump!

disc - holding on for dear life!

Hope youre right Moosie, my son in law sold his this morning, I am holding on in nervous anticipation it will stay above $40 once it gets there.

[Copper]

Not that I know of, although with more info on the US situation and customer numbers in general coming soon, and a NASDAQ listing or at least more clarity on that presumably just around the corner, I suspect we will have several analysts (both at home and abroad) coming out with some serious research and price targets hopefully early in this year.

It's actually pretty ridiculas isn't it that many of our "premier" brokering houses in NZ haven't actually done any serious research on NZ's 3rd? biggest listed company!? (sorry can't recall exactly where XRO sits on the list right now).

Broking firms research is usually based on historical data otherwise they are guessing in the current nana state environment and would be subject to being sued if all went wrong.Bring on the. Old days when your gut instinct ruled...regards.

[Copper]

I agree but my point really is that are many NZ brokers who haven't done this research. Or am I wrong? Which NZ brokering houses have done quality research on XRO? I can't think of many...

Or am I missing your point and are you saying that there is not enough historical data on XRO to do quality research on it?

The only research I can recall is a couple of bits by Forbar and one by First NZCapital. both totally opposed in their assumptions.You also have to bear in mind that if you have funds under management my understanding is that any buying or selling has to be supported by research .I think it comes into the "too hard" category.I remember on this site was a reference where the analysts had a computer program that talked to them at 3 pm and Xero was not one of the stocks as it never went the way it was meant to......I think it's new territory and brokers would be a little wary of saying too much on something they really do not fully understand as it relates to market sentiment.....That's my general view ....regards....

[janner]

.I think it's new territory and brokers would be a little wary of saying too much on something they really do not fully understand as it relates to market sentiment.....That's my general view ....regards....

Agree it is " new territory ".. Agree that Brokers would be wary.. With good reason.

Those that have funds that they are able to risk.. This " could " be a very good one.. ( Young like moosie )..

Enjoy the Good Life moosie :-))

For me.. Nah !!.. I will stick to the RULES.. They have been good to me so far :-))

DYOR ...

[Copper]

If that really is the case then the NZ brokering houses need to hire some people ASAP that know what they are doing in this (and related) sectors. Otherwise, as per the Bronte Capital blog post these brokering houses are going to be in more an more trouble!!

Agree but what do you do.If we hire Moosie and Balance and Hancocks will we be better off and would they join a broking house and be able to state their case. The management wouldn't understand what they had written let alone publishing it.In the area of Xero we are in new territory and unfortunately we have to do our own research,which I would predict is"throw a dart and hope you are right".....I am not helping ,am I.???

[Bilbo]

I must admit I haven't read the Forbar stuff but I thought the FNZC report was pretty good. I don't see any reason why the major brokering houses can't all put together something of similar quality. After all Xero is now one of NZ's biggest listed companies and could quite easily be the biggest some time soon....

I generally disregard most of what the brokerage houses put out as they are usually too late to the party for me (late coverage of XRO being a prime example). I watch carefully what the good fund managers are doing (e.g Milford, ACC, NZ Super Fund, Piefunds, Harbour etc) and use that as the start for my research. Milford in particular seem to get it, with early investments in XRO and DIL along with early stage investments in companies like Vend.

Just my 2c worth and bear in mind I'm a growth and early stage investor not a trader, so have a different view than many on this site.

[Harvey Specter]

Cheers Bilbo, interesting thoughts. How early did Milford get in? Also what is the best way to track what the fund managers such as those you mention are investing in? Do their websites have all that kind of info?

Cheersin the last capital raising:

http://www.sharechat.co.nz/article/33d6b8f1/gaynor-s-milford-kicks-16mln-into-xero-s-180-mln-capital-raising.html

[Harvey Specter]

Cheers Harvey, yeah I knew they participated in the recent capital raising, it was just that when Bilbo said "early" I figured they might have initiated a holding before then.Either way they have done well getting in!for Milford, that is "late" considering they are known to invest pre IPO. A cynic would say they were just buying the index in this situation.

[Copper]

for Milford, that is "late" considering they are known to invest pre IPO. A cynic would say they were just buying the index in this situation.

Its interesting that with all the chat above on this site that Bryan Gaynor started in a broking firm.He was good there too. We need a few more like him.IMHO?

[Harvey Specter]

Its interesting that with all the chat above on this site that Bryan Gaynor started in a broking firm.He was good there too. We need a few more like him.IMHO?I assume those that are good realise there is more money in it if they go out on their own.

[Bilbo]

in the last capital raising:

http://www.sharechat.co.nz/article/33d6b8f1/gaynor-s-milford-kicks-16mln-into-xero-s-180-mln-capital-raising.html

Hmm, sorry I thought they had invested in XRO earlier as well, but can't find any reference to it.

[Bilbo]

Cheers Bilbo, interesting thoughts. How early did Milford get in? Also what is the best way to track what the fund managers such as those you mention are investing in? Do their websites have all that kind of info?

Cheers

Tumeric, most fund managers provide monthly updates on their websites. I always read the Milford one, along with many others as they often give a good commentary on how they see the coming months going. The Piefunds newsletter is always a good read too. I also read monthly updates from the likes of Magellan and Platinum (https://www.platinum.com.au) in Australia. Also search for SSH notices from ACC etc to see where they have invested.

Would be interesting to hear from other reader about other fund updates they read.

[Bilbo]

Cheers Bilbo, interesting thoughts. How early did Milford get in? Also what is the best way to track what the fund managers such as those you mention are investing in? Do their websites have all that kind of info?

Cheers

To prove my point that Milford get it, read this article on the Milford Blog dated April 2011 picking 6 growth companies http://milfordasset.com/six-firms-with-potential-to-fire-up-the-nzx/

If my quick calcs are correct, the 6 shares they identify are up 545%. If you had invested 10K in each share at the time, your 60K would be worth 327K.

[Bilbo]

Looks like you might be right if I am reading this correctly: "A number Milford's funds, including Trans-Tasman Fund, Dynamic Fund, Active Growth Fund and Active Growth KiwiSaver Fund, contributed $16 million at $18.15 a share in Xero's placement this week, having invested in the company on and off over the past few years. Xero sold 9.92 million shares to build a $230 million war-chest as it looks to break into the US market."

Yes, as at April 2012 they had 0.8% of the Active Growth Fund in Xero. see http://milfordasset.com/wp-content/files_mf/1384983720activegrowthfundupdateapril2012.pdf

Prior to that the holding was probably too small in % terms to make it onto their list of holding for the newsletter.

[Schrodinger]

Chapter 8: The Investor and Market Fluctuations
Chapter 20: Margin of Safety

The Jason Zweig commentary is good for these chapters.

[Schrodinger]

Yeah Milford in particular has a good eye for stuff with a strong track record (*cough Moa.. being the exception).

There are some good forward thinking NZ investment banks who have backed recent listings such as GeoOp, SLI etc which should received credit. Not sure if they offer a brokerage service on the side.. (Cameron & Partners)

[catchbag]

Any thoughts on WYN this week?

[Hawkeye]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11183873

[Shore]

Price is certainly jumping all over the place this morning. Looks like there's plenty of trepidation the closer it creeps towards $40.

[Valuegrowth]

We can see very interesting discussions here. Thank you. As I said before when stocks break all time high they can go higher and higher. Recently it hit new high.However we have to keep in mind on risk management as well.

During last year there was good demand for online based companies globally.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[Shore]

@Moosie - if it breaks $40, do you think there's a chance it may make a run to NZ First Capital's target price?

[Hawkeye]

http://www.bloomberg.com/news/2014-01-08/glenview-s-robbins-tops-hedge-fund-ranking-with-bet-on-obamacare.html

Is this it?

Mentions Xero about half way down.(just a one liner)

[Valuegrowth]

Very interesting. Thanks.

[Shore]

He may have assumed $5b was a USD figure and converted it to NZD?

EDIT - doing the math on that only gets to NZD$6b - so not sure where that journalist is getting his numbers from.

[Shore]

Big last minute BUY just come in I see

[In4a$]

It didnt go over the $40 as I thought it might but my sell at $39.45 means I made a months pay in 5 days with XRO and DIL
:t_up:

[Shore]

wow... so so close

[In4a$]

Much better result than those G.F.C years 2008/2009 when everything was going backwards, I made a few mistakes back then.!!

[Stranger_Danger]

Much better result than those G.F.C years 2008/2009 when everything was going backwards, I made a few mistakes back then.!!

The GFC was great. Nothing better than buying fairly solid companies for a P/E of 4 then holding them for years and years with them still not too overvalued.

Far better than chasing things on a price/sales of a kajillion.

[In4a$]

Was a good time to invest, but a hard time to make weekly / monthly profits

[couta1]

It didnt go over the $40 as I thought it might but my sell at $39.45 means I made a months pay in 5 days with XRO and DIL
:t_up:
Well done you,im gonna have a crack at this one if it drops below $35 again,buy 5k shares and see what happens,bought at 16 and out at 18 a while back balls too small i guess not my cup of tea as a long term hold at these prices,wish i had have held onto those 13k shares i bought at 16, would have had some serious coin selling those at around 40 but a lot of you have more nerve than me so good on you all

[catchbag]

Happy Monday morning all. Let's see how things trend today.

[Harvey Specter]

Happy Monday morning all. Let's see how things trend today.Will be interesting to see if it gets through $40. A lot of resistance there and the buy side is looking very thin.

[Harvey Specter]

Ooooooooohhhhh so close ;)Surprised it held its Friday close given the Oz closing price. Didn't last long. Will be interesting to see if any buyers emerge later today.

[gv1]

Doesn't look like its going to break through 4...but never know.

[Harvey Specter]

After being in the red all day, it is having another attempt at $40 - up 3c for the day and just 2c from $40.

NOt bad for a day when a lot of the focus has been on SLI, PEB and to a lesser extent WYN.

[Toasty]

Just hit $40!!

I get a real kick out the big 4000 sitting on my DB page!!!

[Toasty]

and its gone :)

Someone raining on my parade by selling at 3999. Who does that sort of thing?

[Casino]

I wonder if the recent run had to do with the recruitment of Amy Vetter?

[Harvey Specter]

A good day in the US overnight should see this cross $40

[Casino]

Possible, she is no doubt a very good pick up for Xero. http://www.accountingtoday.com/accounting-technology/news/Xero-Hires-Vetter-to-Head-Global-Education69245-1.html?tech I'm not sure historically recruitments have had much of a significant material impact on XRO's SP though. I stand to be corrected though if someone has a better memory for these things than me. I would argue we are still largely seeing the same trends as the few years in the SP + a nice boost from that Bronte Capital blog post.

I'm with Harvey - very good rebound in US markets over night - NASDAQ up 1.5% so if yesterday(where the NASDAQ was down about 1.5%) can see XRO holding steady on pretty reasonable volume then I think we close above $40 today! Maybe even push a new high?

News: Xero has hired CPA and accounting technology veteran Amy Vetter to the newly created position of global vice president of education, where she will lead the company’s efforts on internal and external training.
My Take: OK so it’s easy to look at something like this and make assumptions on why she left and all of that. Really with any fairly high profile move it’s always the knee-jerk reaction to wonder what went wrong. In this case, I don’t think it was an issue of not getting what she wanted from Intacct so much as the opportunity to do different things with another brand trying hard to connect with the CPA profession.
People know Amy, she seems to have a very solid reputation with whatever brand she has represented, but I believe that she’s a CPA first and has a unique insight into technology to help serve the profession.
And, in conversations with her, I believe her when she says that training and educating are big motivators for her. I think she did a fair amount of educating over at Intacct for sure, a large part of her job was connecting with the CPA channel in that way, not just straight selling a product because – let’s be honest – CPAs don’t like being sold to. They know they need to learn about where technology is going and how it can help their practice and their clients.
As for Xero, they are doing all they can to create buzz around themselves and to be a recognized brand for CPAs to know and trust. Then of course there’s that thing about crushing QuickBooks but all of these goals require time, persistence and the right people to execute your message.
All of this will take time Someone like Vetter, who already has the connections in the CPA community and the trust, can go a long way not only in spreading the message and helping Xero become at least more thought about when it comes to accounting technology, but also aiding internal staff on how they need to be reaching out to the profession as well.
I don’t profess to know exactly what this new job is or will be all about – I think Vetter would even admit that as well, but at its core Xero needs someone like Vetter just as Intacct did in the unique position they created for her.

http://www.accountingtoday.com/accounting-technology/news/the-tech-take-1-13-1469256-1.html

[Toasty]

I feel that I should be disturbed by Xero appointing someone from Chorus as NZ Managing Director

https://www.nzx.com/companies/XRO/announcements/246072

[Harvey Specter]

Up 1% today with a bit of support above $40.

[Santiago]

Today's appointment announcement says "over 90000 customers in NZ". They recorded 85500 to the end of September. Anyone want to take a punt and read the tea leaves on this? Over 90k could mean anything, but surely if it was over 100k they'd say that instead. So I take it as meaning they're growing in NZ probably around the same 40-50% rate as reported in Sept to take a punt. The other interesting takeaway from the announcement is the mention of a new wave of services to be rolled out and trialled in NZ. Exciting stuff.

[Santiago]

Was that a new high I just saw for a brief moment ;) Congrats everyone!!

They've finally blown through 40. Will we ever see it again? Espero que no. Sigamos.

[Toasty]

I like the "business to Government connected services". More integration with IRD? Easier filing of returns , GST, FBT etc.

Maybe Xero will become Treasury?

[winner69]

They've finally blown through 40. Will we ever see it again? Espero que no. Sigamos.

Jeez mate ....don't give the likes of snoopy heart attacks ..... I thought you meant PGW for a moment or two

[Santiago]

Jeez mate ....don't give the likes of snoopy heart attacks ..... I thought you meant PGW for a moment or two

...they are at 42c. But sorry for any unintended confusion.

[tunsbro]

....In saying all that, the US is the key so one or two thousand customers in NZ either way will mean squat compared to the US results!
Do we have an expected due date for US results?

[Toasty]

Forty Two!

[Hawkeye]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11186866&ref=rss

[In4a$]

Forty Two!
Yeap, XRO is now every Hitch Hikers Guide to the answer of the universe. Way the price is going XRO will soon be the centre of the universe anyway.
Disc: Hold having bought back in at 39.90

[Bilbo]

Haha, exactly what I thought when I first read as well. I have no doubt XRO know what they are doing when they recruit though. Hopefully others might be able to shed some light on Victoria Crone as the new New Zealand Managing Director.

I'd expect it to negatively impact the Chorus share price but maybe it is at rock bottom already :) and I think it is positive news for XRO. I believe Victoria Crone is one of the the main drivers of the Gigatown promotion which for my 2c worth has been a great bit of marketing. Maybe her leaving signals that cost cutting at CNU will be the end of Gigatown and other initiative she was involved in? Thoughts anyone.

[Casino]

I'd expect it to negatively impact the Chorus share price but maybe it is at rock bottom already :) and I think it is positive news for XRO. I believe Victoria Crone is one of the the main drivers of the Gigatown promotion which for my 2c worth has been a great bit of marketing. Maybe her leaving signals that cost cutting at CNU will be the end of Gigatown and other initiative she was involved in? Thoughts anyone.

Going by today's gains the markets seems to think that she can squeeze 300 million more out of the NZ market than the next best candidate. That's half the market cap of Chorus!!!

[Stranger_Danger]

Casino - Just give up thinking about it, like I did at least 6 months ago. It just hurts your head!

[Hawkeye]

I think First NZ Capital were spot on with the market note they released a few months ago, lets hope ForrBarr are watching and adjust the target price accordingly.

[Everwood]

I was listening to Andrew Patterson on Duncan Garner Drive today and he said that Xero could be at $50 in no time.

[couta1]

And there you have it people, the catalyst for another run to $45+ tomorrow. You heard it here first!
Tempting to jump in and buy 5k shares and see what happens but hard to get the head around paying $42 a share and probably get a retraction after I buy them and if the up coming numbers ain't as good as market expectations could be waiting a long time to get any profit,hmmm tough decisions, would not be long term hold

[Toasty]

Tempting to jump in and buy 5k shares and see what happens but hard to get the head around paying $42 a share and probably get a retraction after I buy them and if the up coming numbers ain't as good as market expectations could be waiting a long time to get any profit,hmmm tough decisions, would not be long term hold

Everytime I think its gone as far as its going to go it takes off again.

I think its obvious that they are more than just providing accounting software for SMEs. The strategy would appear to be a lot deeper than that if you listen to the talk about connecting businesses directly to businesses. There is the mention of interacting directly with Govt agencies and I believe that we are talking here about providing a platform for entire business networks and the banking like support structures underneath them.

To me it would seem that they are aiming at making Xero or a future successor the default structure for a lot of the transaction flow on the net. Imagine if it had the same kind of penetration that MS Windows systems had or have in the computing community.

Or I may have had to many mints in the office today and had a headrush....

[Whipmoney]

Lol after seeing Google paying $3.2 billion to buy out 'Nest' a producer of internet (the internet of things) connected thermostats and smoke alarms, it got me wondering if a company like Xero would ever get itself on their radar. You see Google is isn't just in the business of search and tech. It's in the business of information, big data and control over the internet.

I would speculate that there's some value (to google) in all that information that Xero mops up from small businesses and hell its not like Google couldn't afford it with their $50 billion cash on hand..

Maybe this could be a way to have their finger on the pulse of many of the small businesses in the world.. Maybe that's why the likes of Peter Thiel etc are in there as they see its more than just a SaaS accounting package for SME's...?

Just a random thought drifting through the night.

[Harvey Specter]

I would speculate that there's some value (to google) in all that information that Xero mops up from small businesses and hell its not like Google couldn't afford it with their $50 billion cash on hand.. XRO have made reference to big data so I assume they are thinking about it and I assume Peter Theil is as well. YOu only have to look at Wave to see how they earn money - Xero has a much longer history (eg. Insurance companies could ask for anonomised data on companies spending over $10k per year over 5 years on insurance and/or get Xero to contact those companies to see if they want a better deal). Much like Facebook, that data can probably be broken down in region, business type, size, turnover, employees, profitability, leverage, etc.

[couta1]

I'm watchingUOTE=moosie_900;455002]XRO using the upper bollinger band as a buy point again, with a break of two significant numbers yesterday ($40 and $41.50). imho we got another day or two of straight up. Watch how fast that big seller at $42.50 falls whip; if he goes quickly, time for a buy ;)[/QUOTE]
Im watching that boy with the 10k shares,cheers Moosie

[couta1]

Couta are you talking $5k of shares or 5k shares? If it's the later you really do have ballz of steel and I think you should consult your wife ;)
5k sharesTumeric,balls of steel but nerves may get a bit frazzled,wife okay as long as i dont touch Summerset

[Harvey Specter]

5k shares$200k just to "see what happens"!!!

No bubble here people, move along.

[Casino]

XRO have made reference to big data so I assume they are thinking about it and I assume Peter Theil is as well. YOu only have to look at Wave to see how they earn money - Xero has a much longer history (eg. Insurance companies could ask for anonomised data on companies spending over $10k per year over 5 years on insurance and/or get Xero to contact those companies to see if they want a better deal). Much like Facebook, that data can probably be broken down in region, business type, size, turnover, employees, profitability, leverage, etc.

The data is worth a lot, no doubt about that. But who owns it? The client, the accountant or Xero? Has anyone read the T&Cs? Lots of privacy issues and trade secrets to consider. Anyway, I am sure it can be done in a way that benefits clients and Xero.

1. Why don't banks do it? They have access to much of the same data and they can kill Xero by turning bankfeeds off.
2. Add-ons can also aggregate a lot of that information via API. Intuit's Demandforce works a little bit that way to connect QBO users locally.

[Casino]

Casino - Just give up thinking about it, like I did at least 6 months ago. It just hurts your head!

:) Good to see that it's not just me then!

[Harvey Specter]

1. Why don't banks do it? The difference is that the data is organised in Xero - rather than just an amount and date and other bank account, they have the name of the other party (and possibly their info to), what the expense, revenue was, how long it was outstanding, etc.

Privacy is the big one and they will have to tread carefully. Comment re Googles Nest purchase is some will be getting rid of them as they dont want the data in Googles hands.

[Whipmoney]

The data is worth a lot, no doubt about that. But who owns it? The client, the accountant or Xero? Has anyone read the T&Cs? Lots of privacy issues and trade secrets to consider. Anyway, I am sure it can be done in a way that benefits clients and Xero.

1. Why don't banks do it? They have access to much of the same data and they can kill Xero by turning bankfeeds off.
2. Add-ons can also aggregate a lot of that information via API. Intuit's Demandforce works a little bit that way to connect QBO users locally.

Because Xero use a dynamic SaaS platform which was built post 2000 whereas most banks use archaic systems (with a patchwork of bolt-ons) dating back to the 1990s or earlier. I would speculate that Bank Charters also have stricter privacy requirements than those imposed by Privacy Act 1993 on general businesses.

[couta1]

I am a little shocked, but I wish you all the best!
Don't worry I won't be buying if it looks like its retraction time,cheers

[Casino]

The difference is that the data is organised in Xero - rather than just an amount and date and other bank account, they have the name of the other party (and possibly their info to), what the expense, revenue was, how long it was outstanding, etc.

Privacy is the big one and they will have to tread carefully. Comment re Googles Nest purchase is some will be getting rid of them as they dont want the data in Googles hands.


I guess the data is more digested in Xero. There seems to be even a trend that getting a loan is conditional to showing your books:

http://www.forbes.com/sites/alexknapp/2013/12/04/kabbage-now-uses-square-data-to-provide-business-funding/

But volunteering your privacy is one thing, somebody else's another.

[Harvey Specter]

I guess the data is more digested in Xero. There seems to be even a trend that getting a loan is conditional to showing your books:

http://www.forbes.com/sites/alexknapp/2013/12/04/kabbage-now-uses-square-data-to-provide-business-funding/

But volunteering your privacy is one thing, somebody else's another.I was refering to Xero to Xero transactions. There are over 90,000 business in NZ now so many using it must be supplying or buying from other users. You can even connect to other Xero users so invoices are entered (but not approved) automatically.

[couta1]

Decided against it Couta?
Waiting still

[Santiago]

Waiting still

Wife still sleeping?

[couta1]

$42.50 gone, $42.75 next...
Got 3k at 42.5 rest on at 42.60 heart pounding fast with this order

[tunsbro]

42.750 seller's gone.

[couta1]

$42.75 gone. No worries couta, we have a day or two of rallying left yet. Take a valium, go sleep for 8 hours and wake up with an extra 6-8% of capital ;)
Cheers Moosie,DB too slow at getting remainder of my order on will have to buy at 43 now may leave it at that,now what kind of wine do you like?

[couta1]

Wife still sleeping?
Wife long gone to work where I should be but market too exciting at moment so big catch in order

[couta1]

I hate wine, only good for cooking! I pretty much only drink on my bday and holodays now. no need to buy me anything, my advice is free ;)
You can suck on a bottle of maple syrup while going for a ride in the Jag

[clip]

Kinky couta - i'd be careful moosie! :P

[gv1]

I hate wine, only good for cooking! I pretty much only drink on my bday and holodays now. no need to buy me anything, my advice is free ;)
That's nice..

[gv1]

I don't know my charts but there looks to me to be a pretty big gap up to $45

Which chart do you use turmeric.

[gv1]

Cheers mate. Hope it does because ASX closed strongly yesterday.

[Casino]

I was refering to Xero to Xero transactions. There are over 90,000 business in NZ now so many using it must be supplying or buying from other users. You can even connect to other Xero users so invoices are entered (but not approved) automatically.

I'm waiting to see how they will create such network effects. That is the only way to create a substantial barrier to entry. I would not be surprised to see an acquisition this year towards that direction.

[goldfish]

Have we peaked at 43 for the moment? i sold small amount i picked up the other day, was waiting to see if more money flowed in after lunch but doesnt look like it...love trading this stock :)

[Shore]

It's amazing the little runs this stock can go on on the back of a blog post or a rather incidental hire. Just imagine the delirium when they officially declare their intention to list in the USA!?!

[goldfish]

Im looking forward to seeing there first lot of numbers from the us...could give the sp a huge boost

[Casino]

Im looking forward to seeing there first lot of numbers from the us...could give the sp a huge boost

Another boost may also come if John Hempton from Bronte Capital blogs that Xero could one day have twice the combined size of Exxon and BP if it acquired NZO?

[Toasty]

Yowza!! Never seen a dip like that before!!

That's really strange.

[Harvey Specter]

Yowza!! Never seen a dip like that before!!Did it just drop to $38?!?!?!?

Some one hit the sell button and went stop hunting? Recovered very quickly as the buyers just seem to be jumping in, not disclosing their positions.

[Toasty]

Speeding ticket issued and response out!

Nothing to see here...

[Toasty]

Check out the depth jpg I posted above - Hit $37. Looks like a bot dropped the price by $4 or so in the space of a couple of minutes on tiny volume..... Back up to $41.5 almost as fast!!

Some big money being made today. Almost $80 profit on the $37 trade if it goes back over $41. High rolling

[Harvey Specter]

Speeding ticket issued and response out!

Nothing to see here...Is that what caused the flash crash?

[Toasty]

Is that what caused the flash crash?

Doesn't actually seem to be related. NZX was concerned about the latest share price increases. Just wanted to make sure that all info had been released. Xero said yes. My screen shows we are still in a trading halt.

[Radler]

Couta has some bad timing - lets hope he doesn't check the delayed price and see $37 or $38

[Harvey Specter]

Doesn't actually seem to be related. NZX was concerned about the latest share price increases. Just wanted to make sure that all info had been released. Xero said yes. My screen shows we are still in a trading halt.It was unrelated. I just wondered if the timing coincided (ie. bot saw the announcement and dumped) but looks like it happened 9 minutes before the announcement.

[gv1]

I don't think anything can stop this horsese, as it is in a great race. some even forcasted SP to $300.

[Toasty]

I don't think anything can stop this horsese, as it is in a great race. some even forcasted SP to $300.

I think you are getting ahead of yourself. It won't be $300 till the end of next week at least...

[Bilbo]

I sold a small number of my holding today at $43 having been a long term holder from before the first SPP at 90c and resisting advice to sell for years. Very strange feeling to finally have sold some and while it is by far the largest % profit I have ever booked I feel strangely sad :( I image it's a little like the feeling I will have when my kids leave home.

I've always had trouble selling shares because I only invest in companies I love and I still see huge upside for XRO so will most likely hold the rest for the long haul. Now I need to decide where to invest the proceeds to balance my portfolio out a bit. Any thoughts? I'm thinking I could top up WYN, SLI or PEB, or could go for something that is not so hot right now but could take off, e.g BLT, WDT.

[couta1]

I didn't;'t see a big 3000k block get traded out today Couta, you still hanging in there strong?
I'm alive mate,filled whole 5k share order at 42.50,went to work and rang DB at 1ish was still up,didn't know about lowest price thank goodness,now where's the Moose?

[goldfish]

I'm alive mate,filled whole 5k share order at 42.50,went to work and rang DB at 1ish was still up,didn't know about lowest price thank goodness,now where's the Moose?
Do you have a stoploss? What is it? Do you have a exit plan at what price?
I cant imagine having a trade for 200kish id be a nervous wreck. Or as soon as it hit 4200 i would been out today and accept i got the trend wrong, but i hate to lose any money...gluck to you though.

[couta1]

Do you have a stoploss? What is it? Do you have a exit plan at what price?
I cant imagine having a trade for 200kish id be a nervous wreck. Or as soon as it hit 4200 i would been out today and accept i got the trend wrong, but i hate to lose any money...gluck to you though.
Went to work and rest of order went through at 42.50,no stop loss,won't be exiting until return profit,this train will rise again but yeah hard on the nerves and strange to see 5k shares worth 20% of your portfolio

[couta1]

$42.75 gone. No worries couta, we have a day or two of rallying left yet. Take a valium, go sleep for 8 hours and wake up with an extra 6-8% of capital ;)
Moosie took that valium but when i woke up there was a big red arrow by my bed thought i was having a nightmare may need a few more valiums to see that 6-8% gain but no worries offer still on for spin in jag when up your way but you may need to bring your own maple syrup plus a petrol voucher,cheers your hearts in the right place trying to help people make some money

[Casino]

Be careful with disclosing stop-losses. Could attract shorters that can take them out when volumes are low. Maybe that's what we saw earlier today?

[couta1]

Sorry about that Couta, it opened absolutely fine but the market just absolutely shat itself after 11am! Problem is you can never tell when the tide is going to turn unless you watch depth and trades very closely all day long (so yes, it does take nerves of steel!). I think you should take heart in the letter made in response to the NZX query, big hints in there of a very positive variety. Even if it does retrace a bit? there are still plenty of buyers out there and it won't stay down long. The train will get you to that destination, maybe just take a wee bit longer than usual ;)
Yes hints in that notice that growth is on track,not sure when next significant announcement is ? I will probably sit it out now and wait for a decent rise rather than 50c or so depending on how it goes,think ill be optimistic and put in a sell order for $45,once again thanks for your intent,helping others out of a genuine heart expecting nothing in return is what we need more of in the world:sleep:

[Shore]

I actually think we're going to get a surprise boost from the UK numbers as well - from all the noise I see coming out of the UK I think Xero has really got their skates on over there too.

[Casino]

I actually think we're going to get a surprise boost from the UK numbers as well - from all the noise I see coming out of the UK I think Xero has really got their skates on over there too.

Google trends suggests that as well. Interesting read regarding the UK:

http://diginomica.com/2014/01/13/time-reboot-accounting-profession/

[gbogo]

I understand that the spike down to $38.00 was a fat-finger error and that some / all trades done during that period were cancelled. If so, the price action this week looks much more constructive to me and suggest a move to/through $50 soon.

[winner69]

So XRO shareprice not all that volatile as XRO announcement says ....and share register really not that tightly held to increase volatility as announcement says

Interesting comments re XRO main purpose in life is managing the share price (read comments)
http://www.nbr.co.nz/article/xero-says-share-price-surge-reflects-upbeat-press-bd-150733#comments

This one if the better ones -

I found the volatility comment interesting too. Went back and calculated the vol over the last 5 years - ranges between 30% and 40% annualised and only spikes more recently to above 50% ... Still the CFO isnt exactly going to come out and say - hey we're in a bubble, our share price has climbed due to irrational exuberance...

I've said it before and I'll say it again, the most fizzy of the fizzy stocks were only ever invested in at max 15-20 x revenue (eg Facebook). Xero at 80 - 160x revenue depending on prospective/historic revenue is just stupid.

From a 90c SPP investor along for the ride

[couta1]

Does anyone have any idea when the next customer numbers update might be? Also any thought on where the share price might be at the end of this year?I'm trying to determine whether I want to be a long term holder of this stock or not,cheers

[Santiago]

Next update- by the end of the financial year, but maybe before if they decide to update the market. They have generally in the past announced number milestones every 3 or so months. Re SP at end of year... Somewhere between $10 and $100, would be my best guess. It's a high risk, anything can happen sort of gig, with plenty of upside if you're ok with the risk.

[Ginger_steps_]

Has Xero to date not lived up to any of their promises/goals?? Genuine question. From what I can see they consistently over deliver which is why I hold on for dear life!

I expect that the next milestone announcement could blow us all out of the water as Intuit seem to have really ballsed up toward the end of the 2013 which could have seen thousands of accountants and businesses take the leap to Xero for the new financial year. Also a while back (even before intuits screw ups) Drury did mention that he saw the US market as "close to tipping point". Maybe we havent heard the milestone announcement because they want to deliver news of 300k customers?

That would be nice thanks Rod!

Disc: Holding heavily.

[Schrodinger]

Price target of $47.50 plus customer numbers of 270,000+ within next three months is my forecast. if it beats those numbers you definitely want to be a long-termer ;)

The $47.50 means nothing when valueing a business like Xero. Considering the current share price has 2+ years future revenues built into it, I would avoid buying on the "expectation" that it "should' increase based on a shady valuation by an "skilled" analyst.

Obviously for the short term traders this $47.50 figure is good so they can get their 10% but in reality it is meaningless.

[winner69]

Couta - promise you won't stick to your original plan and sell out when it gets back to 43 bucks

Stick to your guns please

[couta1]

Couta - promise you won't stick to your original plan and sell out when it gets back to 43 bucks

Stick to your guns please
Yes Mr Winner Sir,you know a lot more than me on this one

[Schrodinger]

That's a great bit of free PR in a good business mag.

[couta1]

Congrats Couta - closed above your buy in price for the first time today right? You must be feeling a little more comfortable now??

Also guys I just read this and although it's old I wasn't sure if it had been posted here before:

http://www.forbes.com/sites/benkepes/2013/11/07/is-xero-looking-at-a-strategic-north-american-acquisition-to-speed-us-growth/?partner=yahootix
Yes thanks turmeric came home to a nice surprise now must remember to keep finger off sell button and keep my promise to winner:cool:

[couta1]

What's your plan with this one? Or was it advised that you don't disclose the nature of your plans? 5k of stock (as we saw the other day) can have serious impacts on the SP if traded all at once if the timing gets mucked up (note the flash $4+ dip in the share price the other day off bugger all relative volume).

Hopefully your plan does contain some consideration of a stop loss (although I hope for both our sakes it never get's triggered!). Might I also suggest you look over this thread at the numerous people who have posted here that in hindsight sold out (WAY) too early. I firmly believe this stock is a game changer and what started off for you as a quick trade could amount to something quite substantial if things go well.....
Yep as I posted a bit earlier I held 14k shares at $16 and sold at$18,imagine if I'd held, I'm going to watch things closely and go for a bit of a ride,I was too nervy to hold this stock for long before but have now seen the potential and I can just imagine if it gets to $100 I think its a bit more derisked than a few months ago because the story seems to keep proving itself,I guess its at least worth holding until the next numbers announcement

[apac]

Yep as I posted a bit earlier I held 14k shares at $16 and sold at$18,imagine if I'd held, I'm going to watch things closely and go for a bit of a ride,I was too nervy to hold this stock for long before but have now seen the potential and I can just imagine if it gets to $100 I think its a bit more derisked than a few months ago because the story seems to keep proving itself,I guess its at least worth holding until the next numbers announcement

2014 is going to be a huge year. Here's to Xero reaching $10 billion and then $100 share price. Not long to go now

[couta1]

2014 is going to be a huge year. Here's to Xero reaching $10 billion and then $100 share price. Not long to go now
APAC I like confidence,could be catchy:cool:

[couta1]

Looks like a few hit panic button first up and not only with xero

[Toasty]

Is this all response to Asian market decline? Also some pretty negative stuff in the news about US bears waiting to pounce. I am actually thinking this may be a bit of a buying opportunity. I have missed so many of late.

[couta1]

Is this all response to Asian market decline? Also some pretty negative stuff in the news about US bears waiting to pounce. I am actually thinking this may be a bit of a buying opportunity. I have missed so many of late.
Could be,I'm deep in the red myself now on this one so no money to buy anything,isn't there more news on Fed tapering coming up later this week?

[winner69]

The cheerleaders on CNBC are calling for UNTAPERING and the Fed to do even more stimulus than before

You be OK couta - just hang in there ....market confidence will return

[couta1]

The cheerleaders on CNBC are calling for UNTAPERING and the Fed to do even more stimulus than before

You be OK couta - just hang in there ....market confidence will return
Thanks winner,nice to have that encouragement,I just keep thinking of what the price might look like if the next set of numbers are good

[stoploss]

It's not irrational if the Chinese banking sector is in trouble and Chinese growth is contracting.... just sayin ;)
Just remember AAPl was circa $ 30 before the tech bubble in 2000 down to $ 10, now $ 550 and thats after the GFC.
So there will still be winners, even in a downturn :)

[gv1]

Something is coming..looks like an annonucement ?

[Toasty]

Something is coming..looks like an annonucement ?

Announcement? I can't find any mention of anything. Can you be more specific?

http://www.forbes.com/sites/tomtaulli/2014/01/26/xero-taking-aim-at-the-intuit-goliath/ Another Goliath article by Forbes. Just reading it now.

[Toasty]

Announcement? I can't find any mention of anything. Can you be more specific?

http://www.forbes.com/sites/tomtaulli/2014/01/26/xero-taking-aim-at-the-intuit-goliath/ Another Goliath article by Forbes. Just reading it now.

Update...!!!!! Not very exciting...:(