Xro - xero

[Shore]

What would be more insightful is to know what the breakdown of the churn rate is of business closing up shop versus moving off to another accounting solution because one of those options is impossible to do much about.

[winner69]

Quick number Nort America for H1

Opening number customers 18,000

Customer defections 4,600

New customers 8,600

Customers Sep14 22,000

That's how I see it anyway .... unless my logic and understanding of churn rates is ****. Please correct me if wrong

But Rod's men says its expected to have such a high rate of defections

[winner69]

43% increase in the net loss. Impressive stuff, and definitely becoming of a company valued at $2+ billion.

PE is coming down as a result

[jonu]

I suspect intitutional buyers will react and start to accumulate tomorrow as the report was released latish in the day. Today's late sellers would have been traders who got spooked. Strong support for $17 area at close of trade

[Shore]

In an odd sort of way, perhaps Intuit peddling QBO so hard will in fact accelerate the adoption of cloud accounting in the conservative US market much quicker than if Xero were trying to force the issue on their own.

DISC - glass is half full.

[lubos]

I don't think it works like that... please read winners69 post 5651 so you understand the logic a bit better

You are right. The annual churn rate in North America is 40.2%

1 - (1 -0.042)^12 = 40.2%

[mikeybycrikey]

Quick number Nort America for Q1

Opening number customers 18,000
Customer defections 2,300
New customers 6,300
Customers Sep14 22,000

That's how I see it anyway .... unless my logic and understanding of churn rates is ****. Please correct me if wrong

But Rod's men says its expected to have such a high rate of defections

I'd put it as defections of 4,600 and new customers of 8,600. I think. I'm pretty sure those figures you quoted (18,000/22,000) were for H1 rather than Q1.

[Chaowee88]

Give me 180million I bet I can burn less cash than Xero in 6 months. I'm confident my net loss would be less than 20M. It will only go towards my lavish lifestyle.

[Casino]

In an odd sort of way, perhaps Intuit peddling QBO so hard will in fact accelerate the adoption of cloud accounting in the conservative US market much quicker than if Xero were trying to force the issue on their own.

DISC - glass is half full.

I think you're right. Cloud to cloud conversions are easier than migrating from desktop. The slow uptake is basically nothing but a trap for Intuit. So if Intuit reports weak numbers tonight, it's good for Xero. Strong Intuit numbers are great for Xero!

[apac]

The results look pretty good to me. The speed it gains new customers does not matter as much as how many customers they will have long term, and how much money they will make long term. It looks like they can continue to gain customers at a reasonable rate. People just need to be more patient I guess. Perhaps we can compare US to when the company first started, and in a few short years, we'll see Xero become unstoppable in US. I'm looking forward to the day Xero reaches the next milestone of 500k customers, then 750k, 1m, 1.5m, 2m and beyond.

DISC no position in XRO, just really like the company.

[winner69]

I'd put it as defections of 4,600 and new customers of 8,600. I think. I'm pretty sure those figures you quoted (18,000/22,000) were for H1 rather than Q1.

You are so correct - half year numbers

A bit like taking one step back before taking 2 steps forward

Like Dan Carter - as long as the try is converted it be OK

[RGR367]

.....................So if Intuit reports weak numbers tonight, it's good for Xero. Strong Intuit numbers are great for Xero!

Surely you cannot have both ways so kindly elaborate. Thank you in advance.

[Casino]

Surely you cannot have both ways so kindly elaborate. Thank you in advance.

Best way to explain it is in the words of Rod Drury: 'It will take Intuit a long time to catch up. (http://www.digitalfirst.com/2014/11/11/xero-wont-take-us-hurry/) Xero is developing at a faster cadence than Intuit and the gap in features will increase, not decrease because Intuit is such a big ship to turn around.' (http://www.digitalfirst.com/2014/11/11/xero-wont-take-us-hurry/) And like it says in the interim report today: 'Xero’s exceptional growth in New Zealand, Australia and the United Kingdom continues to extend its leadership in cloud accounting,...'

Intuit may have added 60k QBO subscribers over last three months alone, which is triple of Xero's total in North America but that would only prove one thing. Cloud accounting is synonymous with Xero. To say otherwise is like imagining the internet without AOL. Like Time Warner confronted with a new era, we may see a merger of Xero and Exxon to become the world's biggest oil small business cloud accounting conglomerate. Exxon Xero, EXXXero or Xerexxon? About the name I'm not so sure but you heard it here first!

[twotic]

If 95.8% of the customers at the start of the month are still customers at the end of the month, then the total remaining at the end of 12 months is 95.8%^12 = 59.8% (which is the same as lubos posted)

That is true, but you are of course making the incorrect assumption that XRO is not adding any new customers.

[BFG]

Changing subject...

What does everyone think about the Business Dashboard?

[twotic]

Incorrect, sir. I was merely trying to calculate the proportion of customers who do not last 12 months. Nothing to do with new customers.

Just to be clear, nothing I said was incorrect. What you calculated was the annual retention rate, extrapolated from the monthly churn rate - that I agree with. It was your inference (in relation to XRO) that I am not comfortable with.

"If 95.8% of the customers at the start of the month are still customers at the end of the month, then the total remaining at the end of 12 months is 95.8%^12 = 59.8%"

Your above statement is only true IF you assume no new customers - do you agree with that?

[twotic]

I'd put it as defections of 4,600 and new customers of 8,600. I think. I'm pretty sure those figures you quoted (18,000/22,000) were for H1 rather than Q1.

I don't have access to some of my historical data, but just to clarify, 18,000 to 22,000 is for the 6 months to Sep 30 2014 right?

If so, assuming a constant net growth rate in customers over time, and an average monthly churn rate (as per recent announcement), I get 4940 defections and 8940 new customers.

Out of interest what formula are you using to get your numbers (Winner & Mikey)?

[twotic]

You are right. The annual churn rate in North America is 40.2%

1 - (1 -0.042)^12 = 40.2%


not even close........ please read post 5651 & 5654.
winner please help this poor soul out.

Snapiti, my understanding is the post you refer to is correct - why do you believe him/her to be wrong?

[Shore]

Business Dashboard looks great. They're lining up their Xerocon's well. Biz Dash will be the centerpiece of Xerocon UK, and US Payroll the talking point of Xerocon USA mid year. Should be an exciting first 6 months for the company.

[twotic]

Again, your statement is only true IF you assume no new customers. Therefore, in the context of Xero, your statement is not accurate.

"If 95.8% of the customers at the start of the month are still customers at the end of the month, then the total remaining at the end of 12 months is 95.8%^12 = 59.8%"

[Shore]

6494.
..........

[twotic]

LOL. Mate, learn2comprehend.

That my friend is an interesting insight into your character. Our conversation is done, good day to you.

[mikeybycrikey]

Again, your statement is only true IF you assume no new customers. Therefore, in the context of Xero, your statement is not accurate.

"If 95.8% of the customers at the start of the month are still customers at the end of the month, then the total remaining at the end of 12 months is 95.8%^12 = 59.8%"

Give it a rest. It's a "hypothetical situation", clearing indicated by the IF at the start of the sentence. I don't think you're adding anything here by labouring this point. I'd say it's not an inaccurate statement, just that the obvious effect of new customers might be left as an exercise to the reader.

However, considering that Xero only really had a net gain of 4000 customers in the US over the last six months, which should be a big growth market for them, I would consider 4000 new customers much closer to 0 new customers than I would like. It's basically no new customers. It's 50% annual growth when I wouldn't be surprised if the UK grows 200% this year.

And, 4.2% monthly churn (which might be described as 40% annual churn but you don't seem to like that) doesn't sound good at all, especially compared to the 1% churn in NZ, AU and UK.

[Santiago]

Just on those churn rates, which are very low for NZ, Aust and UK. I wonder what percentage of those customers that do leave Xero leave because they're going out of business (the failure rate of SMEs being reasonably significant I would imagine) and how many leave due to dissatisfaction with the product or a preference for another service. Making some pretty simple assumptions, it does seem like the retention rates are impressive in those markets. Here's hoping the U.S. trends that way too...

[twotic]

And, 4.2% monthly churn (which might be described as 40% annual churn but you don't seem to like that) doesn't sound good at all, especially compared to the 1% churn in NZ, AU and UK.

Mikey, I don't have no problem with saying the annual churn rate as 40.2%, I never suggested or stated I do (it is after all a correct measure).

My post was largely in response to what I had read on this thread, where many people were clearly confused about what churn rates are, how to convert a monthly rate to an annual rate, and more importantly what these numbers actually mean. As you must surely appreciate, many on this thread had posted incorrect information. My interpretation is that these threads are for sharing information and/or learning. If info posted is wrong or unclear then typically neither will be achieved.

That being the case, I'm still interested in the way you calculated new customers vs costumers lost for the period as there is a bit of discrepancy between my calculations and yours and winners.

[silu]

Just heard a Xero ad on the WTF with Marc Maron podcast one of the most popular podcasts in the world.
discl. do not hold

[Casino]

Just on those churn rates, which are very low for NZ, Aust and UK. I wonder what percentage of those customers that do leave Xero leave because they're going out of business (the failure rate of SMEs being reasonably significant I would imagine) and how many leave due to dissatisfaction with the product or a preference for another service. Making some pretty simple assumptions, it does seem like the retention rates are impressive in those markets. Here's hoping the U.S. trends that way too...

Here is what Rod Drury had to say about a year ago in regards to churn: (https://www.xero.com/blog/2013/04/march-2013-operating-update/)

@Graeme 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.
It’s very interesting to look at customers now as our numbers have become significant. As a pure-play SaaS accounting vendor our Customers, Revenue and therefore ARPU are clear to see. In MYOB’s recent update they did not disclose online customers or revenue. Intuit continues to obfuscate their QBO count and revenue in their reporting.
We challenge them to come clean with their numbers. It’s important for the industry to know where the customers are and who’s strategy and platform are working as their industry makes their investments.


Well, Intuit numbers are out as for every quarter... (http://investors.intuit.com/files/doc_financials/2015/1Q/Q1FY15-Fact-Sheet-FINAL_v001_h60fo7.pdf)

QBO subscribers are at 739k up by 56k (slightly down from previous two quarters, 43% up y-o-y). That's only twice as many compared to the leading cloud accounting provider Xero.
Of those, 103k are non-US subscribers. Less than five times of Xero's US customers.
Revenue for this quarter came in 50m higher than analysts estimated. Xero reported 50m revenue for the past 6months.

This is clearly a big ship that can't be turned around.

In other news, Bain is planning a 2.6B IPO for MYOB. I checked the calendar and it's not April 1.

[Xirr]

http://sixteenventures.com/saas-churn-rate

Acceptable Churn RateIn line with my experience and as I cited in my Sandhill.com article, Bessemer Venture Partners (http://www.bvp.com/cloud) says an acceptable churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue.

1% monthly churn is 12-12.5% annual churn. 4% monthly churn is ~39% annual churn.

[Xirr]

So, xero's churn rates are both significantly higher than the acceptable range?

yeah but i'd take it with a grain of salt - xero make a good point that their churn is equal to the death rate of young businesses which makes sense. Xero are also growing revenue by 80% and thats no mean feat (revenue would be growing by even more with less churn).

The US churn would worry me - but I guess thats the reason they acted quickly to excise the tumour.

The only thing that bothers me, and this is consistent with all listed tech companies on the nzx, is the way they provide misleading news and outputs - eg why give monthly churn rather than annual churn if not because monthly churn looks very very small and to the uninformed punter would seem inconsequential.

[Xirr]

I dont know all too much about churn but intuitively I would expect that any SAAS company with a lot of small businesses as clients would have a higher than usual churn, as young companies typically die off at around 15% - 20% per year (in the US at least).

[swandri]

4% monthly churn ≠ 40% annual churn.




Month
New customers
Leaving customers
Churn


Jan
100
4
4%


Feb
100
4
4%


Mar
100
4
4%


Apr
100
4
4%


May
100
4
4%


Jun
100
4
4%


Jul
100
4
4%


Aug
100
4
4%


Sep
100
4
4%


Oct
100
4
4%


Nov
100
4
4%


Dec
100
4
4%



1200
48
4%

[twotic]

swandri (http://www.sharetrader.co.nz/member.php?13472-swandri),

At the risk of getting scolded again for making sure everyone is on the same page re these churn rates.

From the XRO report:

"Customer churn is the number of customers who leave Xero in a month as a percentage of the total customers at the start of that month."

In your calculation you are only calculating (and then summing) the number of customers lost as a percentage of new customers each month - what about the "total customers at the start of that month"

You will find you get quite a different answer if you calculate customers lost based on the total customers at the start of each month.

[Xirr]

Did you guys do maths at school??

yeah guys - churn is a measure of how many people left that were customers at the start of the period - it defeats the purpose by adding new customers to the calculation (and by doing so you are starting to compare apples to oranges). The point is to measure loyalty/stickiness of existing customers.

Other people have already illustrated the calculations but using the USA 4% monthly churn - a reasonable approximation of annual churn might be 100% - (96% x 96% x 96% x 96% x 96% x 96% x 96% x 96% x 96% x 96% x 96% x 96%) = ~39%

Cheers

[winner69]

p.s. if you want to calculate future customers taking account of existing customers, new customers AND churn, you need to ideally use a component cohort model...

That'll stuff them up, but I don't think they teach such stuff in maths at school these days. Probably need to go to uni eh.

[winner69]

I don't have access to some of my historical data, but just to clarify, 18,000 to 22,000 is for the 6 months to Sep 30 2014 right?

If so, assuming a constant net growth rate in customers over time, and an average monthly churn rate (as per recent announcement), I get 4940 defections and 8940 new customers.

Out of interest what formula are you using to get your numbers (Winner & Mikey)?

My original calcs more mental arithmetic and rather simplistic. I apologise for that

Using your assumptions I get close to your numbers.

Lets forget the maths and just agree in round terms in North America for every two customers Xero sign up one existing customer defects (and that's painting a slightly rosier picture than the numbers suggest)

[BFG]

*SIGHS*

Really guys, this day in age?

http://bit.ly/1zIDsnW

[winner69]

*SIGHS*

Really guys, this day in age?

http://bit.ly/1zIDsnW


SIGHS

So which of many do you reckon we should use

I see the Xero way not picked up Google

[twotic]

My original calcs more mental arithmetic and rather simplistic. I apologise for that

Using your assumptions I get close to your numbers.

Lets forget the maths and just agree in round terms in North America for every two customers Xero sign up one existing customer defects (and that's painting a slightly rosier picture than the numbers suggest)

Cheers mate, yeah the States is an interesting one, but if you apply some logic to that one you can see how churn improves as geographical markets become more mature. It's a shame we don't have historical data on churn for NZ, OZ, and the UK, it would be interesting to see how they compared in the early stages of growth, my guess is they may have been quite similar to the US (probably not quite so high due to differences in business culture and market environment). Churn will certainly come down in the US though, give it a couple of years and I would say it will be well under 3%.

[BFG]

SIGHS

So which of many do you reckon we should use

I see the Xero way not picked up Google

I'm pretty sure we're all big boys here and can make BIG DECISIONS all by ourselves! :D ;)

[Casino]

Cheers mate, yeah the States is an interesting one, but if you apply some logic to that one you can see how churn improves as geographical markets become more mature. It's a shame we don't have historical data on churn for NZ, OZ, and the UK, it would be interesting to see how they compared in the early stages of growth, my guess is they may have been quite similar to the US (probably not quite so high due to differences in business culture and market environment). Churn will certainly come down in the US though, give it a couple of years and I would say it will be well under 3%.

It may even drop in the short-term. My suspicion is that the H&R Block deal didn't go down well costing them a few partners over the last few months. May also be the reason why Karpas got the boot. But that's a one-off and out of the way now. Churn will always sit a bit higher in the US because of direct business but I see that as a positive.

[Xerof]

Churn will certainly come down in the US though, give it a couple of years and I would say it will be well under 3%.

Brave assertion - the churn has INCREASED 2014 over 2013.

I don't/haven't owned any of these other than very early on, and haven't taken too much interest other than to watch the rising price in complete disbelief, but it seems to me that this churn rate statistic might have been the catalyst for the price collapse from the $45 heady days, but only those with an understanding of the underlying consequences were able to take advantage of the idiotic prices and get out.

Seems the dawn of realisation is only just hitting the mainstream?

[winner69]

It may even drop in the short-term. My suspicion is that the H&R Block deal didn't go down well costing them a few partners over the last few months. May also be the reason why Karpas got the boot. But that's a one-off and out of the way now. Churn will always sit a bit higher in the US because of direct business but I see that as a positive.

But 5000 odd defections in the last half is a staggering number.

Assume there is some 'stickability' and customers don't just give it away after a few months that 5,000 needs to put in the context of say the number of customers thy had a year ago .....seems mass desertion to me

[Casino]

But 5000 odd defections in the last half is a staggering number.

Assume there is some 'stickability' and customers don't just give it away after a few months that 5,000 needs to put in the context of say the number of customers thy had a year ago .....seems mass desertion to me

It is. So is the number of negative comments the H&R deal drew on the Sleeter blog:

http://www.sleeter.com/blog/2014/05/xero-and-hr-block/

I'm baffled by the outrage. Accountants in the US seem extremely insecure and react allergic to any change. Lesson learned.

I agree with you in that cloud customers are sticky but perhaps not as sticky as Xero makes it out to be. You could argue that this works both ways. If Intuit can get Xero partners on the new QBOA, lots of existing customers will be in jeopardy. Xero may in turn be able to flip some of the 739000 QBO customers somehow.

[Harvey Specter]

But 5000 odd defections in the last half is a staggering number.

Assume there is some 'stickability' and customers don't just give it away after a few months that 5,000 needs to put in the context of say the number of customers thy had a year ago .....seems mass desertion to meThe stickyness would increase over time. If you have been using it 3 months, not such a big deal, if you've been using it for 3 years, then more sticky. I think this is one reason the churn will decrease. As a very high % of customers are new (of total US customers), so the product isn't that sticky yet.

[Bilbo]

The stickyness would increase over time. If you have been using it 3 months, not such a big deal, if you've been using it for 3 years, then more sticky. I think this is one reason the churn will decrease. As a very high % of customers are new (of total US customers), so the product isn't that sticky yet.

Exactly. It would be useful if XRO broke down the churn by length of time since the customer signed up. That would show a clearer picture and allow comparison across geographies. With any product you will have tire kickers who try it out for a few months and then drop it. With the base number in the US being lower, and the growth rate higher than NZ/Aus, those that drop out in the first few months will have a greater impact on overall churn %. Losing customers in the first few months is expected, losing long term customers would be a worry.

[Harvey Specter]

Exactly. It would be useful if XRO broke down the churn by length of time since the customer signed up. Alternativle, a graph showing churn for the various markets as customer numbers increase.

You would expect it to reduce over time to its long run average. Based on NZ/Aus, this looks to be about 1%.

[twotic]

Bilbo and Harvey, you guys are bang on the money - that point appears to have been lost on some people. For that reason alone, churn will improve over time (and is why it has done so in other regions). Casino's point/hunch re the H&R Block deal (if correct) would have had a significant impact as well, and would help to explain the small increase in churn in the US over the last 12 months.

[BFG]

Bilbo and Harvey, you guys are bang on the money - that point appears to have been lost on some people. For that reason alone, churn will improve over time (and is why it has done so in other regions). Casino's point/hunch re the H&R Block deal (if correct) would have had a significant impact as well, and would help to explain the small increase in churn in the US over the last 12 months.
You would think with the mass amounts of data going through Xero they'd be able to do this eh? I'm sure Drury would take it on board as a better way to visualise what on first glance looks pretty horrendous!

[Harvey Specter]

You would think with the mass amounts of data going through Xero they'd be able to do this eh? I'm sure Drury would take it on board as a better way to visualise what on first glance looks pretty horrendous!I am sure they do know it and they made a comment that churn was at similar levels for other markets.

remember this is only the first time they have published these stats

[BFG]

I am sure they do know it and they made a comment that churn was at similar levels for other markets.

remember this is only the first time they have published these stats

Agreed. I just think it would look better in a squiggly line chart with a forecasted downward trend compared to how NZ and Aus markets tracked earlier in life.

I do love my squiggly lines :D

[Casino]

Agreed. I just think it would look better in a squiggly line chart with a forecasted downward trend compared to how NZ and Aus markets tracked earlier in life.

I do love my squiggly lines :D

Remember that Xero runs on Netsuite, not Xero. Perhaps Netsuite can't do all those things Xero can let alone do it beautifully?

[jonu]

The "dark" traders seem to be battling away at around 1700 mark. Reasonable volume going through on no visible depth. Has been going on now for 2 and a bit days and has held. If the old adage of a rise after 3 days selling holds good I think this arvo or tomorrow could see the upswing.

[arc]

The instant churn rate,
100- (100*(0.96 ^12))

But only if you use 96% for each month as the "average" of the figure, a moving average might be more realistic and account for possible seasonal differences.... end of year dissolving companies etc.

[winner69]

The instant churn rate,
100- (100*(0.96 ^12))

But only if you use 96% for each month as the "average" of the figure, a moving average might be more realistic and account for possible seasonal differences.... end of year dissolving companies etc.

For whats it worth Xero said the 4.2% is ...The percentage provided is the average of the monthly churn for the twelve months to 30 September for each year.

Sort of says some months are lower and some months are higher

[jonu]

Glad we got that churn thing sorted! Meanwhile Chris Liddell putting his money where his seat is at $17.01

[Casino]

Sage is making a push for Oz:

http://www.digitalfirst.com/2014/11/24/sage-one-preview-new-kid-block/

Not sure what my first thoughts are. Oz is a very crowded place. At least when it comes to cloud accounting. MYOB, Xero and Saasu have the most to loose. Yet, whoever goes to ground first will become a takeover candidate. Has Sage set its eyes on Xero the way Intuit did? Is Sage preparing for war with Intuit? Is Sage after MYOB after missing out in 2011? Three birds with one stone?

Fascinating to watch!

[lubos]

Has Sage set its eyes on Xero the way Intuit did? Is Sage preparing for war with Intuit? Is Sage after MYOB after missing out in 2011? Three birds with one stone?

Sage is coming to defend Handisoft.

Handisoft (owned by Sage) makes practice management software which is used by up to 10,000 accounting practices in Australia. Their market share is taking a hit as many accountants are switching to Xero's free practice management suite. So in order to stop this exodus, Sage is going to push their cloud accounting software which will tightly integrate with software thousands of accountants still use (and pay for) to run their accounting practices.

So in other words, while Intuit came to Australia mostly to stick it up to Xero, Sage is coming to save their 10-20 million dollar business they already have in Australia so expect them to take this more seriously.

Australian market with cloud accounting is pretty crowded. Customer acquisition costs will likely go up for everyone involved.

[skid]

Either DB is going bonkers or there is some major action going on for XRO shares

[skid]

Boy,that was some major volume that went through at the closeing minutes

[blackcap]

Boy,that was some major volume that went through at the closeing minutes

Check out the volume on MRP and GNE as well as SPK... major volume all round for whatever reason.

[Harvey Specter]

Isn't the global index changes effective today?

[BFG]

MSCI index change up as discussed a few weeks ago people.

Nothing to see here, move along! :)

[dingoNZ]

MSCI changes, was expected.

[longy]

What about listing on US stock exchange? Has it got anything to do with the big volume???

[BFG]

What about listing on US stock exchange? Has it got anything to do with the big volume???
Come on guys, seriously, you all sound like rookies comung up with speculation when the answer is right in front of you!

MSCI INDEX CHANGE UP!!!!

[robbo24]

Come on guys, seriously, you all sound like rookies comung up with speculation when the answer is right in front of you!

MSCI INDEX CHANGE UP!!!!

This is hilarious. Short memories plus inability to read = this thread.

[Baa_Baa]

"Just a reminder that we'll be shutting down Xero Personal on 30 November 2014 (https://community.xero.com/personal/discussion/2620058/)"

:t_down::mad ;:

[robbo24]

"Just a reminder that we'll be shutting down Xero Personal on 30 November 2014 (https://community.xero.com/personal/discussion/2620058/)"

:t_down::mad ;:

Oh no how will we cope

[Casino]

Sage is coming to defend Handisoft.

Handisoft (owned by Sage) makes practice management software which is used by up to 10,000 accounting practices in Australia. Their market share is taking a hit as many accountants are switching to Xero's free practice management suite. So in order to stop this exodus, Sage is going to push their cloud accounting software which will tightly integrate with software thousands of accountants still use (and pay for) to run their accounting practices.

So in other words, while Intuit came to Australia mostly to stick it up to Xero, Sage is coming to save their 10-20 million dollar business they already have in Australia so expect them to take this more seriously.

Australian market with cloud accounting is pretty crowded. Customer acquisition costs will likely go up for everyone involved.

Interesting theory! I find it very hard to research Sage and couldn't even confirm the move or the supposedly 88k cloud customers. Anyway, I hope for them to have competitive practice managment and accounting software. They'll need it.

[Hawkeye]

http://www.digitalfirst.com/2014/11/11/xero-wont-take-us-hurry/?utm_source=Outbrain&utm_medium=cpc&utm_campaign=OutbrainWidget

[klid]

http://www.digitalfirst.com/2014/11/11/xero-wont-take-us-hurry/?utm_source=Outbrain&utm_medium=cpc&utm_campaign=OutbrainWidget

Haha yeah I was reading comthing completely unrelated on CNN (NFL players in St Louis) and saw a link to that, was about to post.

[Baa_Baa]

Not much on the chart, if anything, that gives confidence between yesterday close $16.35 and $15.90.

6555

[Santiago]

Some interesting insider buying by US based board members at around the $17 mark. Always inspires confidence, something that's for sure been lacking recently as the SP continues its slow decline.

[Santiago]

... And, just looked at their careers page. Payroll customer care positions available for US, UK and NZ. Start of 2015 looking pretty busy for the company.

[RGR367]

... And, just looked at their careers page. Payroll customer care positions available for US, UK and NZ. Start of 2015 looking pretty busy for the company.

Here's a link for all of us who are sort of evangelists too for XRO :) And compare the explanations with all the complaints on QBO with @QBCARES today for those who are on Twitter too. http://www.sleeter.com/blog/2014/12/build-cloud-accounting-firm/

[gv1]

Looks like something going on with this stock. Asx had a spike as well.
Large vol?

[robbo24]

Looks like something going on with this stock. Asx had a spike as well.
Large vol?

The BOT BUYER might have come back - just looking at some of those trades...

:D:D:D:D:D

[Harvey Specter]

Looks like something going on with this stock. Asx had a spike as well.
Large vol?Spike? Its up less than 1%

[BFG]

The BOT BUYER might have come back - just looking at some of those trades...

:D:D:D:D:D

Bot boy loves XRO. MAs starting to flatten out. May be time to reconsider an entry...

[Baa_Baa]

Ummm ... well umm, OK I give up. :scared:
Maybe you can see something positive?

6563

[BFG]

What happened to your money flow Baa? Looks like it committed suicide!

[longy]

Baa Baa... Which software did you use to produce those graphs? Re graph I think the first 15 mins of the opening tomorrow should give an indication where the SP is going to go. But if I have to pick one then I think it should jump a little.

[Baa_Baa]

What happened to your money flow Baa? Looks like it committed suicide!

http://www.incrediblecharts.com/indicators/twiggs_money_flow.php ... Twiggs Money Flow takes volume into account and on that day there was very high volume - from a moving average of 280k volume spiked to 5.8m on Nov 25th. That single volume event effectively renders the indicator useless however, I find it exceptionally useful most of the time, especially for short term trend breaks.

[Baa_Baa]

Baa Baa... Which software did you use to produce those graphs? Re graph I think the first 15 mins of the opening tomorrow should give an indication where the SP is going to go. But if I have to pick one then I think it should jump a little.

Hey Longy, you'll find a free download here http://www.incrediblecharts.com/free-charting_software/free_download.php (Windows version only - [I use mine in a Parallels VM on Mac]). It will pick up free Yahoo daily data, though not until 10am the following day. For my purposes delayed daily data is fine. It's a good charting platform. I'm not sure if they have a live NZX feed for subscribers to access intra-day data.

Fridays spike close at $16.50 marked an otherwise down day, I don't think it's indicative of the mood. Currently the Bid is $16.25 Ask $16.55 ... so yes, it will be an interesting open.
6565

[BFG]

http://www.incrediblecharts.com/indicators/twiggs_money_flow.php ... Twiggs Money Flow takes volume into account and on that day there was very high volume - from a moving average of 280k volume spiked to 5.8m on Nov 25th. That single volume event effectively renders the indicator useless however, I find it exceptionally useful most of the time, especially for short term trend breaks.

MSCI rebalance day. Got ya ;)

[Toasty]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11369324

Bit of a Xero fan article in the herald this morning. Always nice to see. Lots of commentary around the possibilities that Xero has opened up. I would like to believe the Apple comparison, but we shall see....

[couta1]

Someone likes Xro and has been averaging down from $21.61 to a low of $15.84 to hold nearly 7 million shares currently:cool:

[BFG]

Why hello there FIDELITY!!! :D :D :D

[Santiago]

In case anyone's interested...

http://www.thestreet.com/video/12976420/xero-ceo-rod-drury-discusses-monchilla-acquisition-us-strategy.html

[longy]

Is it meant to add some comfort knowing Fidelity is interested in XRO??? I think so.

[gv1]

Spike? Its up less than 1%

But someone was buying.....

[couta1]

Is it meant to add some comfort knowing Fidelity is interested in XRO??? I think so.
Have a read of the article in the Herald today, Drury very bullish about Fidelity buying a 5.4% stake in the company as one of the worlds most sophisticated investors, he said other international funds also buying in currently. Well I'm looking forward to 2015 and beyond so have pulled down my average buy price to $22.80 from $42 in anticipation(No i didnt do it after reading this article but last friday) :cool:

[BFG]

Have a read of the article in the Herald today, Drury very bullish about Fidelity buying a 5.4% stake in the company as one of the worlds most sophisticated investors, he said other international funds also buying in currently. Well I'm looking forward to 2015 and beyond so have pulled down my average buy price to $22.80 from $42 in anticipation(No i didnt do it after reading this article but last friday) :cool:

Thats the best news I've heard in quite a while Couta! Good man for keeping the faith. A very real chance of making a good profit now. Im glad for ya :)

[couta1]

Thats the best news I've heard in quite a while Couta! Good man for keeping the faith. A very real chance of making a good profit now. Im glad for ya :)
Cheers mate, im of the belief that a few on here have written Xro off way too prematurely:cool:

[Casino]

Have a read of the article in the Herald today, Drury very bullish about Fidelity buying a 5.4% stake in the company as one of the worlds most sophisticated investors, he said other international funds also buying in currently. Well I'm looking forward to 2015 and beyond so have pulled down my average buy price to $22.80 from $42 in anticipation(No i didnt do it after reading this article but last friday) :cool:


Your strategy could work. I think Xero has more to win than to loose in this and the next quarter. The market might get excited to see a bump in US numbers, which may be nothing but a cosmetic effect from the Monchilla acquisition. Next quarter we'll see US tax season and a quoting facility kick in. Let's hope that it will help them do well. If it does go up, you could consider using a trailing stop-loss to protect your gains. Fingers crossed...

[Harvey Specter]

Remember that year end in the US is December so second half sales should always increase more than first half sales. You would have to be pretty pissed with your current software to change mid year.

[artemis]

400,000 customers announced.

[Bilbo]

400,000 customers announced.

They announced 250,000 customers at end of Jan 2014, so in 10 months they have added 150,000 which is 60%. By my calculations, assuming the same rate of new customers over the next 2 months, implies an annual increase of 72% for the 12 months to end Jan 2015. Not sure how this stacks up with estimates. Good to see some spin from Rod along the lines of the US being back on track, but no figures to back that up.

[robbo24]

They announced 250,000 customers at end of Jan 2014, so in 10 months they have added 150,000 which is 60%. By my calculations, assuming the same rate of new customers over the next 2 months, implies an annual increase of 72% for the 12 months to end Jan 2015. Not sure how this stacks up with estimates. Good to see some spin from Rod along the lines of the US being back on track, but no figures to back that up.

"Back on track in the US."

:D:D:D:D:D:D:D:D:D

[Santiago]

They announced 250,000 customers at end of Jan 2014, so in 10 months they have added 150,000 which is 60%. By my calculations, assuming the same rate of new customers over the next 2 months, implies an annual increase of 72% for the 12 months to end Jan 2015. Not sure how this stacks up with estimates. Good to see some spin from Rod along the lines of the US being back on track, but no figures to back that up.

Bearing in mind you'd expect higher growth in Jan-March as it is the time of the year when many of their potential customers would change platforms in NZ, UK and the US. So maybe we're still looking at their anticipated 80% growth rate. Next year's reporting will be fascinating, particularly seeing the numbers broken down.

[whatsup]

400,000 customers announced.

Beejesus In times past this ann would have put a rocket under the S P , today 1% increase, my how have times changed, maybe it will be better after lunch when Aussie opens!

[brend]

Its no longer the NZX darling.

[robbo24]

Have a read of the article in the Herald today, Drury very bullish about Fidelity buying a 5.4% stake in the company as one of the worlds most sophisticated investors, he said other international funds also buying in currently. Well I'm looking forward to 2015 and beyond so have pulled down my average buy price to $22.80 from $42 in anticipation(No i didnt do it after reading this article but last friday) :cool:

It's a risky business buying into a downtrend.

It's a risky business averaging down.

It's pretty darn risky to average down amidst a downtrend.

:D:D:D:D:D:D:D:D:D:D

[RTM]

" Millions of small businesses now connect in the Cloud on Xero "

This is also impressive as well..... Is this because each "Customer" has multiple clients using Xero ? I guess it would only be 5 clients per customer to be 2 Mil. ?

[dingoNZ]

Fantastic news for XRO, 400k reported now, 250k in Feb and 12 months prior to that 125k. Heading toward 80% subs growth again.

[Bilbo]

It's a risky business buying into a downtrend.

It's a risky business averaging down.

It's pretty darn risky to average down amidst a downtrend.

:D:D:D:D:D:D:D:D:D:D


Agreed, but it can pay off too. I averaged down on DIL a year ago at $3.30 and that has brought my holding back into black when it would be underwater if I had not.

[RTM]

Agreed, but it can pay off too. I averaged down on DIL a year ago at $3.30 and that has brought my holding back into black when it would be underwater if I had not.

And I did same with Apple with its last big dive and was well rewarded. Need to have a lot of confidence in the company. Or advisors who are confident. Maybe both !

[couta1]

It's a risky business buying into a downtrend.

It's a risky business averaging down.

It's pretty darn risky to average down amidst a downtrend.

:D:D:D:D:D:D:D:D:D:D Its going to get to $22.80 long before $42 and as soon as it does i lose a 45k paper loss, well worth the risk for return:cool:

[robbo24]

Its going to get to $22.80 long before $42 and as soon as it does i lose a 45k paper loss, well worth the risk for return:cool:

That's all well and good but you're presuming it's going to go up :D :D :D :D :D :D :D

If it gets to $7 then your gruts will be ripped into 1000 pieces scattered around your office.

[Casino]

" Millions of small businesses now connect in the Cloud on Xero "

This is also impressive as well..... Is this because each "Customer" has multiple clients using Xero ? I guess it would only be 5 clients per customer to be 2 Mil. ?

Xero customers connect to millions of businesses in the cloud (invoices, POs, etc).

[couta1]

That's all well and good but you're presuming it's going to go up :D :D :D :D :D :D :D

If it gets to $7 then your gruts will be ripped into 1000 pieces scattered around your office. Okay your not a believer we get that.

[Harvey Specter]

" Millions of small businesses now connect in the Cloud on Xero "

This is also impressive as well..... Is this because each "Customer" has multiple clients using Xero ? I guess it would only be 5 clients per customer to be 2 Mil. ?Each business is one customer so they have 400k small businesses. They may have multiple staff working on each.

They may be talking the add-on software but I dont know how that would equate. EDIT: my guess is when they send out invoices from Xero in pdf format, those invoices can also be viewed online (with statements) and payment can be made on line too. So each customer of xeros customers is in that number (kind of like claiming you know Kevin Bacon because of seven degrees of separation)

[RTM]

Xero customers connect to millions of businesses in the cloud (invoices, POs, etc).

Thanks...yes that helps and I can see how that will more readily be millions.
Appreciated.

[robbo24]

Okay your not a believer we get that.

Actually, I am :D :D :D

[Casino]

Thanks...yes that helps and I can see how that will more readily be millions.
Appreciated.

I think it is quite evident they want the market to see the 'big data' not just the operational side.

[baller18]

Don't know why a lot of members still don't get a lot of the respected memebrs or experienced members with their track record have told everyone to never buy into a downtrend! Wait till the tide turns! Yeh you might now make as much, but you definitely won't lose out as much!!!!!
Especially with the current global markets, growth stocks are out of flavor, I'm sure everyone can see that, most growth stocks are in strong downtrends, whereas the dividend paying or blue chip stocks have been ever slowly steadily increasing day by day... and it isn't going to change anytime soon!!!

[couta1]

Shame the latest announcement coincided with a big down day on the NZX:cool: PS-Baller the Americans are a fickle bunch so can change quicker than you might imagine,you only have to look at their automotive market to see that.

[Casino]

Shame the latest announcement coincided with a big down day on the NZX:cool: PS-Baller the Americans are a fickle bunch so can change quicker than you might imagine,you only have to look at their automotive market to see that.

The announcement may not be as good as you think.

[Casino]

Don't know why a lot of members still don't get a lot of the respected memebrs or experienced members with their track record have told everyone to never buy into a downtrend! Wait till the tide turns! Yeh you might now make as much, but you definitely won't lose out as much!!!!!

Best way to limit losses are stop-losses. It's not a cyclical stock and waiting for the end of a downtrend for a bottle rocket could be tricky. In Xero's case it may actually be a recipe for disaster. What if the market reacts positively to Xero's performance for the wrong reasons?

There was some insider buying recently and US tax season may surprise. May give Couta a chance to exit without loss.
After that there is a chance that Xero will loose loyal partners in home markets to QBOA.

[couta1]

That's the plan Casino and I appreciate your opinion because you present a balanced viewpoint:cool:

[Casino]

That's the plan Casino and I appreciate your opinion because you present a balanced viewpoint:cool:

It is high risk play above everything. You need to be on your toes whichever direction it goes. But as much as we are inclined to think that it must go up a lot or fold, stocks can go sideways too. Just look at ZNGA.

[mikeybycrikey]

The announcement may not be as good as you think.

Yeah I was thinking the announcement wasn't that good, although it's hard to judge the annual sales patterns for Xero when they only announce sales figures about 6 times per year.

It looks like they sell a lot more in Jan-Apr than at other times of the year and it also looks like sales depend on when the tax year falls in various countries.

The last figures they announced were for 30 Sept which was 371,000. That gives 7.8% growth in 71 days which projects to 47% annual growth. Not impressed by that but it's hard to draw a trend from a short period of time that may not be indicative of the full year.

[Harvey Specter]

it would be good if they gave regular quarterly numbers. That way we could model seasonally adjusted growth as some quarters should be better than others. I would expect the December quarter to be the worst (actually the 3 months to the end of November to be the worst) due to where year ends fall.

[pierre]

Yeah I was thinking the announcement wasn't that good, although it's hard to judge the annual sales patterns for Xero when they only announce sales figures about 6 times per year.

It looks like they sell a lot more in Jan-Apr than at other times of the year and it also looks like sales depend on when the tax year falls in various countries.

The last figures they announced were for 30 Sept which was 371,000. That gives 7.8% growth in 71 days which projects to 47% annual growth. Not impressed by that but it's hard to draw a trend from a short period of time that may not be indicative of the full year.

400k customers is an impressive milestone that's worth shouting about regardless of the timing, growth rates etc. Let's not get sucked in the negative sentiment and congratulate a NZ company that's making amazing progress towards a target that none of us would have dreamt possible a few years back.

I guess your viewpoint on XRO will be influenced by the level of your entry point into the stock - mine was at $6.20 and I was nervous then. I bought as a long term holder so my profit is still on paper - as are the losses for those who bought above $16. If you bought as a speculator then unfortunately you're going to have to learn the value of patience.

[lastmoa]

400k customers is an impressive milestone that's worth shouting about regardless of the timing, growth rates etc. Let's not get sucked in the negative sentiment and congratulate a NZ company that's making amazing progress towards a target that none of us would have dreamt possible a few years back.

I guess your viewpoint on XRO will be influenced by the level of your entry point into the stock - mine was at $6.20 and I was nervous then. I bought as a long term holder so my profit is still on paper - as are the losses for those who bought above $16. If you bought as a speculator then unfortunately you're going to have to learn the value of patience.

Well said, Pierre. They will be halfway to their 1million goal sometime late 2015.

[RGR367]

I guess your viewpoint on XRO will be influenced by the level of your entry point into the stock - mine was at $6.20 and I was nervous then. I bought as a long term holder so my profit is still on paper - as are the losses for those who bought above $16. If you bought as a speculator then unfortunately you're going to have to learn the value of patience.

Well said Pierre. I got sucked in big time when it was at its very low 0.74 - 0.96 and unlucky not to have sold everything I had when it was at its zenith. Having tasted the joy of what you can gain with this stock, I don't even worry now whether less thatn 80% gain on customers is a bad thing. Come for the ride guys as this stock will really go places. With its IPO looming and that Fedelity Fund buying, how can you lose? :D:t_up:

[RTM]

Well said, Pierre. They will be halfway to their 1million goal sometime late 2015.

Yes...but (when?) will they be profitable ? Details details....I know.

[mikeybycrikey]

Yes...but (when?) will they be profitable ? Details details....I know.

I doubt they will are planning to be profitable before they hit 1 million customers. After that, I think it's likely. So I'd be saying that their first profit should be FY2017, although it could even be H1 2017.

That's still 2½ years away (with 1 million customers happening within two years from today). A lot can happen in that time.

Most of their money at the moment is going on acquiring customers, at some point income should exceed that. Although maybe they will take the Amazon route and plough any potential profit into further growth.

[Onion]

the Amazon route and plough any potential profit into further growth

A strategy that for Amazon has no end in sight.

[Shore]

A strategy that for Amazon has no end in sight.

I don't think anyone would argue that it's been to Amazon's detriment.

[pierre]

Yes...but (when?) will they be profitable ? Details details....I know.

Just think of SKT - unprofitable for years while they invested in accumulating customers. When the tipping point is reached the dollars will absolutely roll in.
But when - who knows? It just requires confidence that they're on the right path and that when they reach the tipping point it will be in the right direction. I'm backing Rod to get there.

[Shore]

Possible insight into how USA is tracking? 90% growth rate scribbled down here:

http://static.ow.ly/docs/Xero%20Update%202014-12-10_2NJD.pdf

[arc]

I think Pierre's move was well timed. I see xro settling to between $9 $11 for some time.

[Casino]

it would be good if they gave regular quarterly numbers. That way we could model seasonally adjusted growth as some quarters should be better than others. I would expect the December quarter to be the worst (actually the 3 months to the end of November to be the worst) due to where year ends fall.

I don't have it in a spreadsheet but if I remember correctly, they averaged 10k new customers per month same time last year. It was their weakest period and this year it's up to 12.5k. This year most of the growth came from Australia and August/September period was particularly strong with 18k new customers per month.

[winner69]

Share price about what it was 18 months ago (June 2013)

Nothing untoward has happened in that time - Xero relentlessly marching on to its first million customers and developing new things along the way. All going to plan

Just shows that $15/$16 is about fair value I reckon and if people are using a 15% discount rate in the DCFs then 15% a year increase in the shareprice can be excpected. Maybe $20 in 2017 still fair value

[BFG]

Charts ain't looking too healthy again. Retest of $15.00 looks ready to go ahead tomorrow.

Merry Xmas for shorters eh?

[mikeybycrikey]

Share price about what it was 18 months ago (June 2013)

Nothing untoward has happened in that time - Xero relentlessly marching on to its first million customers and developing new things along the way. All going to plan

Just shows that $15/$16 is about fair value I reckon and if people are using a 15% discount rate in the DCFs then 15% a year increase in the shareprice can be excpected. Maybe $20 in 2017 still fair value

I'm not entirely convinced about that. I don't think it has found its floor yet.

I was optimistic a couple of weeks ago and have been considering accumulating a few more XRO but I don't think it has finished dropping. If you look at a graph of the share price, it has been dropping pretty much constantly since March when it was $44 and hasn't really shown any convincing signs of stopping just yet.

[skid]

Dropping over 1% on a day that the DOW has bounced big time ,certainly supports your view MBC.--It certainly has'nt given much reason for optimism yet--Its one ugly chart atm

[BFG]

Dropping over 1% on a day that the DOW has bounced big time ,certainly supports your view MBC.--It certainly has'nt given much reason for optimism yet--Its one ugly chart atm

Just one big fat UGG.

First signs of a bottom will be consolidation with 50/100/200 day MAs all converging with an uptrending OBV and levelling of MACD.

The trend is your friend :)

[skid]

Not for those that are holding:scared:

[BFG]

Not for those that are holding:scared:

It will be again one day :)

[Baa_Baa]

If you flip a chart, sometimes it's helpful - to figure out what you'd do, relative to your situation. The upside down closing price log chart shows a very strong trend of increasing angle, i.e. one side is in control and their strength is growing. In this situation you might be thinking:

inverted
6612


1. dust off the dry powder, it could break-up through that horizontal resistance, and bolt.
and
2. finger on the trigger, it could break-down at resistance, and fold.


So now just reverse your logic and see how it works for the rightside up chart.

normal (or reality, whichever you prefer)
6613


1. dust off the dry powder, it could break-up at support and bolt!
and
2. finger on the trigger, it could break-down through that horizontal resistance, and fold.

:cool:

Part of my point is to have a plan either way, the other thing is that a fresh perspective can be illuminating, at times. There is no doubt that $15 is an important price point, just have a plan either way - up or down.

I also think this chart shows that waiting for MACD's and 50/200 trendlines to confirm, or even give confidence of a trend, especially a reversal from down to up (the staircase to the elevator), would probably leave a lot of value on the table with a stock like XRO, as the price bolts up like it did in the previous run-up. I agree though that it's prudent to look for some confirmation, though I'd use faster indicators, like Willams%R, MoneyFlow, RSI maybe, and a tighter MA's looking for the price to cross it, like a 14 or 21 EMA for instance.

In any event, it's been a while since we've seen some action on XRO.

[winner69]

Interesting perspective there baabaa

Your top chart ..... I wouldn't be selling that stock as the uptrend looks pretty good eh

[Baa_Baa]

Interesting perspective there baabaa

Your top chart ..... I wouldn't be selling that stock as the uptrend looks pretty good eh

Exactly. So in real time ...

[couta1]

another top executive jumps ship.... nice spin in the announcement...... but it is was it is Rod
He's not being replaced though so not really an issue IMO.

[Schrodinger]

A bit of cleaning house from XRO. Something had to give.

It looks like they are not happy and are taking action.

Not sure if this is correlated but I prefer to see lots of Rod in the media as it gives me confidence that things are good. When he disappears there must be some serious butt kicking going on behind the scenes.

I am having trouble getting the latest exec team. Anyone know the link so I can take a look?

[Frostwind]

How can I short sell this stock? It's going below $10

[couta1]

How can I short sell this stock? It's going below $10
Bit of a Frosty post from a serious downramper.

[Frostwind]

Nah I'm serious, is there anyway I can short sell this stock? Do you know of any means?

[mikeybycrikey]

What does a chief revenue officer even do?

Personally I'm not really a big fan of C-level titles but it seems to be a requirement for modern companies.

[couta1]

What does a chief revenue officer even do?

Personally I'm not really a big fan of C-level titles but it seems to be a requirement for modern companies.
Just a fancy title for someone who keeps an eye on how many beans have been gained and working out ways to obtain more beans, any clown with a reasonable business head can do the job:cool:

[blackcap]

Nah I'm serious, is there anyway I can short sell this stock? Do you know of any means?


I did manage a short a while back with IG markets (DFD platform operators) but then they did not allow shorting on XRO. YOu could try and find a "put" option somewhere in the Aussie market, or Citi Group may offer warrants on it if you ask nicely as XRO are also listed in Australia. Otherwise find a long term holder and ask if you can "borrow" their stock (for a price off course) and then you sell and pay them back later in stock. Maybe Couta1 could help you out in this regard :)

[mikeybycrikey]

Just a fancy title for someone who keeps an eye on how many beans have been gained and working out ways to obtain more beans, any clown with a reasonable business head can do the job:cool:

So, halfway between a CFO and a CMO then. Doesn't seem like a great loss to me.

Would be be interesting to know the inside story of this though. How close to the truth is the spin?

[couta1]

Was that 15k shares or 15k dollar value if the latter you didn't have much faith in the company anyways Snaps.

[couta1]

I take a lot of confidence out of a very savvy and sophisticated outfit like Fidelity buying near 7 million shares in a downtrend over several months, these boys aren't here just to eat their weetbix and they would have done extensive research before entering as would have Peter Thiel and probably know things that we on here are completely unaware of.

[winner69]

Peter Dunne was NZ's Chief Revenue Officer for a few years (ie Revenue Minister)

[dodgy]

Peter Dunne was NZ's Chief Revenue Officer for a few years (ie Revenue Minister)

Good Lord , that would kill any conversation.

[winner69]

Good Lord , that would kill any conversation.

Just wanted to give people an idea what Chief Revenue Officers did

[Casino]

So, halfway between a CFO and a CMO then. Doesn't seem like a great loss to me.

Would be be interesting to know the inside story of this though. How close to the truth is the spin?

He wasn't poached by a competitor, quite the opposite. Leaving from Google to Xero then TradeMe doesn't scream being indispensable either. Perhaps it's an issue with remuneration (think stock options). My take is that they're putting brakes on spending.

After reading this article (http://www.computerworld.co.nz/article/562756/xero-nz-smbs-world-leading-cloud-computing/) I can see how Xero can do well next year and maintain >60% growth rates. At this moment in time, I think the valuation is fine but I see OHE as further down the road at half the price.

[dodgy]

Just wanted to give people an idea what Chief Revenue Officers did

On the basis of that I am still none the wiser. Ha. Ha.

[skid]

I take a lot of confidence out of a very savvy and sophisticated outfit like Fidelity buying near 7 million shares in a downtrend over several months, these boys aren't here just to eat their weetbix and they would have done extensive research before entering as would have Peter Thiel and probably know things that we on here are completely unaware of.

Buying into this downtrend does not sound very savvy and sophisticated to me --dont care who they are--unless they have inside information. If thats the case they should be buying now, not in the past downtrend.--Cant imagine why anyone sitting on the sidelines would consider jumping in until a confirmed uptrend has been established.

[skid]

He wasn't poached by a competitor, quite the opposite. Leaving from Google to Xero then TradeMe doesn't scream being indispensable either. Perhaps it's an issue with remuneration (think stock options). My take is that they're putting brakes on spending.

After reading this article (http://www.computerworld.co.nz/article/562756/xero-nz-smbs-world-leading-cloud-computing/) I can see how Xero can do well next year and maintain >60% growth rates. At this moment in time, I think the valuation is fine but I see OHE as further down the road at half the price.

IN NZ-but what about USA where it really counts

[couta1]

Buying into this downtrend does not sound very savvy and sophisticated to me --dont care who they are--unless they have inside information. If thats the case they should be buying now, not in the past downtrend.--Cant imagine why anyone sitting on the sidelines would consider jumping in until a confirmed uptrend has been established.
Well they know their s--t and are well respected with a proven track record, perhaps they have a longer term view than the end of their nose and you never know maybe they do have insider knowledge, my guess is a lot of the people selling now are small players that bought when the share price was in the single digits but those shares will dry up eventually forcing buyers to pay more if they want an entry:cool:

[lubos]

Well they know their s--t and are well respected with a proven track record

What's your view on Clarium Capital, a hedge fund Peter Thiel launched? Clarium lost more than 90 percent of $7 billion in assets in just three years between 2008-2011.

[couta1]

What's your view on Clarium Capital, a hedge fund Peter Thiel launched? Clarium lost more than 90 percent of $7 billion in assets in just three years between 2008-2011.
Clarium lost it all by betting against the US dollar and inflation although in 2008 where they lost a huge sum they actually only finished 4.5% down for the year compared to around 20% for most other fund managers. Unfortunately even though they started doing well a lot of investors had already pulled their money leaving them with a much reduced investment pool. I'm actually more impressed with Fidelity buying in than Thiel due to the kudos they hold in the investment world.

[winner69]

Clarium lost it all by betting against the US dollar and inflation although in 2008 where they lost a huge sum they actually only finished 4.5% down for the year compared to around 20% for most other fund managers. Unfortunately even though they started doing well a lot of investors had already pulled their money leaving them with a much reduced investment pool. I'm actually more impressed with Fidelity buying in than Thiel due to the kudos they hold in the investment world.

What about 2009 and 2010?

[couta1]

[QUOTE=winner69;523218]What about 2009 and 2010?[/QUOTE Down 25% in 2009 and 23% in 2010.

[BFG]

Buying into this downtrend does not sound very savvy and sophisticated to me --dont care who they are--unless they have inside information. If thats the case they should be buying now, not in the past downtrend.--Cant imagine why anyone sitting on the sidelines would consider jumping in until a confirmed uptrend has been established.

I dare you to try and buy 7M+ Xero sgares while in an uptrend without spiking the price at least $10 minimum ;)

[couta1]

I dare you to try and buy 7M+ Xero sgares while in an uptrend without spiking the price at least $10 minimum ;)
Love it BFG digging below the surface to find a gold nugget.

[moimoi]

I dare you to try and buy 7M+ Xero sgares while in an uptrend without spiking the price at least $10 minimum ;)

Hey Moosie...Give it a go will ya.... ;-) ;-)

[BFG]

Hey Moosie...Give it a go will ya.... ;-) ;-)

You going to underwrite me? I'll phone up ANZ next week and see how they feel about lending $105M to a Canadian woodland creature who works in a dungeon archiving stuff for a living.

Yup, can see that one going down well! :)

[blackcap]

Xro is in a downtrend, a huge downtrend, and I would not be buying unless i saw data that confirmed they were on track. The announcement today, spin aside, gives me no confidence looking forward. As for insto's buying, well generally insto's know no better than the general punter if empirical evidence is anything to go by. The Dow/S&P were up by 2 odd percent and still no movement here... One wonders.

[BFG]

Would anyone else who watches bubbles care to comment on where the trend started? Some would the Thiel buy @ $18.70, others @ $15, some when Xero HQ went wild with $10 being broken and even more @ $5.00!

My theory is that all bubbles retrace, to a slightly greater or lessor degree, to their pre-bubble price point. Problem with Xero is determining that price point!

Don't believe me? Look up a few recent bubble stocks like MNW.AX or TON.AX. Or just look up the entite Dotcom Bubble!

TIA :)

[blackcap]

Would anyone else who watches bubbles care to comment on where the trend started? Some would the Thiel buy @ $18.70, others @ $15, some when Xero HQ went wild with $10 being broken and even more @ $5.00!

My theory is that all bubbles retrace, to a slightly greater or lessor degree, to their pre-bubble price point. Problem with Xero is determining that price point!

Don't believe me? Look up a few recent bubble stocks like MNW.AX or TON.AX. Or just look up the entite Dotcom Bubble!

TIA :)

If I were to hazard a wild guess, I would say $5. If you say the point Thiel bought ($18.70) then the $40 odd would not really constitute a bubble. They there is still the question as to whether XRO is/was a bubble stock. Time and free cash flows will tell.

[winner69]

I'd say March 2013 at around $8

That's the impression I get from a long term chart (log scale)

Extension of underlying trend from share price now about $15 or there abouts

[BFG]

They there is still the question as to whether XRO is/was a bubble stock.

In the short-term, yes. If Xero can pull it off and get massive numbers then long-term, no.

A good example is Amazon and Pets.com. During 1999-2000 both assumed massive valuations and bot fell drastically. However, Amazon continued to execute and now commands a share price MULTIPLE times of the Dotcom highs. Pets.com never executed and imploded, never to be ssen again.

That is what I think of short-term vs terminal bubbles :)

[skid]

Well they know their s--t and are well respected with a proven track record, perhaps they have a longer term view than the end of their nose and you never know maybe they do have insider knowledge, my guess is a lot of the people selling now are small players that bought when the share price was in the single digits but those shares will dry up eventually forcing buyers to pay more if they want an entry:cool:

When and if that happens then the SP action will change and eventually start an uptrend--That is where the smart money will enter-you lose a bit of the ''gamblers gains'' in the initial stages but buy into a far safer share.

With all due respect to their ''proven track record'' in general--their track record for XRO is not to flash.

Ask yourself ,if you had sold when the downtrend started,could you afford to have to buy in at even another $5 now if things turn for the better?

I realize its not easy to lock in losses,but it all just a frame of mind--If you can keep those losses manageable and buy in latter at a lower SP often times you are better off--Its not easy though-I watched it happen with my PPP shares (but learned) and managed to keep that from happening by getting out and back in a few times with PEB--It wasnt intentional day trading like some--it was more staying alive.

[Baa_Baa]

The longer term Log closing price chart may offer some insights, though it cannot predict with any certainty. This may be where some of the suggested numbers come from that have been put forward on this thread. Firstly just draw in the typical support lines, then draw a Fib retrace and pull down the starting point until some sort of alignment with the major supports occur.

Doing that finds that one has to go back to Aug 29 2012 at $4.32 close to find any synchronicity. Uncanny as it may be, the Fibonacci golden ratio 61.8% aligns near perfectly with the big breakout Oct 13 2013 and the pause/rebound where the big money bought in mid Aug 2014 (that's more likely the bubble part - or as I like to think of it as the USA story - though now completely sold off). It also aligns near perfectly with a simple horizontal/rising support line.

When the golden ratio of 61.8% breaks down, typically there's not much mainstream support for Fibonacci ratios, but you will find some who like the 72% (closing price) - especially forex looking for a trend reversal, and even 78.6% ... so let's look at them briefly. We could talk about Elliotwaves but that's another story.

Uncannily again, the price now at $15ish is near perfect around the 72% retrace, and aligns near perfectly with another simple horizontal support line. You'd think this would be solid support, but the price is in a terrible prolonged downtrend and money flow is anemic. Some might even get out the magnifying glass and figure that the current closing price is already down from the Oct 21 and Oct 30 closing prices (gulp).

So I'd say the Fibs have worked rather well so far, assuming the $4.32 starting point (they also found the 38.2% pretty well). Should we be surprised then that the 78.6% retrace also coincides with a horizontal support around $13? Possibly not.

Using Fibonacci below 78.6% though may be clutching at straws, so I'd suggest just drawing in the obvious horizontal supports.

Summing all that up:

A closing price breakdown may have already occurred around $15.63 (72% retrace), though that is to be confirmed. The obvious support lines below here are around $10.90, $6.85 and at $4.32 being the 100% retrace. The downside capital risks from here, to those supports are $15.63 to $10.90 = 30%, then $10.90 to $6.85 = 37%, and $6.85 to $4.32 = 37%.

Disc: still not in, but obviously watching closely for re-entry.

[BFG]

Nice post Baa. That 21/30 day MA is pretty telling of price trend eh?

[Baa_Baa]

Nice post Baa. That 21/30 day MA is pretty telling of price trend eh?

Hey thanks BFG, if you're looking for an MA checkout my post #5032, the 14EMA on the Weekly chart, using an arithmetic scale, is illuminating. Here's an updated chart:

[Baa_Baa]

Was that 15k shares or 15k dollar value if the latter you didn't have much faith in the company anyways Snaps.

This caught my eye. I think it is a cheap shot and worthy of an apology.

At the 'I wanna be rich - stocks and options trading course', once upon a long time ago, which had very little material effect other than to fleece my $ for a 'dumb and dumber' intro to charting and an annual subscription to a charting package and data which were no better than what one can obtain freely (sorry, bit of a rant there), the instructor impressed upon us a most important perspective, perhaps the most important perspective when taking into account one's own circumstances.

It's not and never is or will be about volume invested, of dollars or shares or options, because everyone's situation is different. It's only about % invested and returned, % of holdings, % diversity, % at risk, % at growth, or % upside, or % downside. The % view brings relativity with it. So for example, if one makes say a nice % on any instrument while managing a 5k, or 50k, or 500k portfolio in my book is equal to the fund manager making the same % on a 5m, or 50m, or 500m portfolio.

Volume of $ invested does not equate to commitment, only % does. One might also consider that faith in a company may have no bearing whatsoever on whether, or when, one chooses to invest or disinvest.

Just saying.
BAA

[couta1]

Baa Baa with all due respect you are very wrong, my post had nothing to do with a cheap shot and for the record I have a lot of respect for Snapiti both as a forum member and as someone who has worked hard in life to achieve a substantial level of wealth. I was simply wanting to clarify whether Snapiti was holding 15k dollar value which would be a spit in a bathtub based on a percentage of his portfolio or 15k shares which would be a substantial percentage as if i have faith in a given company I'm more than happy to load it up like I have with retirement stock and actually Xro now makes up over 10% of my portfolio total which is substantial given its current downtrend but that's a calculated risk to pull my average buy in price down considerably.

[Baa_Baa]

@couta1 & snapiti, seems I owe you both an apology, sincerely sorry ... as I dismount my high horse.

BAA

[Crystal Ball]

@couta1 & snapiti, seems I owe you both an apology, sincerely sorry ... as I dismount my high horse.

BAA
Might be best just to stick with the sheep eh baa baa ?

[skid]

jeez just taking a look at Fidelity kiwisaver funds record..... all their fund performances are at the bottom or close too.....

http://www.interest.co.nz/kiwisaver/performance-ranking

Oh Dear--Couts is going to find that disturbing

[skid]

I dont blame Rod for wanting to promote the co....but Jeez..that was like a glorified advert--market seems to like it though..

I see they are sponsoring 60min

I wonder if a similar strategy in the States would be a benefit or to much "cash burn''

[couta1]

Oh Dear--Couts is going to find that disturbing
Couts is sitting at Sydney airport on the way to South Africa thinking of ways to promote Kathmandu to the locals having bought a parcel the other week, where are you Rod when I need you:eek2:

[skid]

Have a good Christmas Couts--Hopefully by the time you read this that long trip will be behind you!

We'll be watching for a surge in the Kathmandu SP:)

[The Grinch]

Sure its nothing new to the dedicated but found this to be an interesting read: http://www.digitalfirst.com/2014/11/11/xero-wont-take-us-hurry/?utm_source=Outbrain&utm_medium=cpc&utm_campaign=OutbrainWidget

Particularly the commentary at the end.

TG

[webllinks]

I think the last comment by Richard on December 19 is more enlightening than the whole article.

[BFG]

Suggest Xero holders put this on repeat for oh, say all of 2015 ;)

https://www.youtube.com/watch?v=rioYOoFqyAo

[winner69]

Just finished reading The New New Thing by Michael Lewis. I think Rod Drury is using it as his playbook (in particular, the Healtheon experience). Good read. Interesting comparisons to current "new new things".

Michael Lewis should do a book on Rod

[gv1]

Anyone have excess to Australian, there is an article on Xero. I have stopped the subs.

[dingoNZ]

Anyone have excess to Australian, there is an article on Xero. I have stopped the subs.

XERO chief and founder Rod Drury is looking forward to the mooted $2.5 billion float of accounting software rival MYOB, amid claims the traditional players are rapidly reining in Xero’s first-mover advantage in the “cloud” computing market.
Amid claim and counterclaim about who is signing up the most small-business clients, Mr Drury insisted that, as a listed entity, Xero always offered the most transparent numbers.
“We are quite looking forward to the IPO, the real numbers are going to come out,’’ he said. “Even with MYOB — which is helped by its massive brand — we are far ahead of them in the cloud.’’
He predicted the MYOB offering would be a “hard sell”, given the funds were not earmarked for growth, but would allow private equity owners to sell down.
Belying the industry’s once gentle reputation, Xero, MYOB, Sage and US giant Intuit are engaged in a cross-border tussle for the hearts and wallets of small business and — crucially — their accountant advisers.
Xero’s ethos is that — unlike its rivals — it’s not flogging a reworked version of a legacy desktop product.
Xero spent $250 million developing and marketing its suite of “beautiful” cloud products, which allow users to access real-time *financial data anywhere, with an automatic feed to bank accounts.
“We were born in the cloud from day one,’’ Australian CEO Chris Ridd said.
Initially, investors backed the NZ-based Xero on its quest to grow client numbers from a starting point of zero, to one million. To date Xero has signed up 400,000 paying customers, compared with 370,000 as at the September 2014 half-year and 211,000 in September 2013.
The trouble is, winning over and retaining cost-conscious *businesses required large licks of marketing dollars and a maiden profit was still years away.
While dominant in its NZ market, in Australia Xero has a 5 per cent share of a market still dominated by the private equity-owned, homegrown MYOB.
In the US, Xero claims to be a “credible number two’’ in a market 90 per cent dominated by Intuit’s Quickbooks.
The locally listed Reckon, which historically distributed *Intuit’s Quickbooks, now competes with its Reckon One cloud product.
Having peaked at $42 a share in March last year, Xero shares now trade close to their October 2014 low of $14. Despite this *reality check, four out of the five NZ-based brokers covering the stock ascribe a “sell” call.
“Recent trading updates from desktop incumbents reveal they are growing at least as fast as Xero in the cloud,’’ wrote NZ broker Craigs Investment Partners in a recent report.
In the US, the firm says, Intuit’s cloud customer growth was 29 times Xero’s in the six months to September, while Sage reported “slightly faster’’ growth than Xero in Britain.
In Australia, MYOB’s growth was on par with Xero, which claims 150,000 customers.
Mr Drury counters that Intuit spends $1.2bn a year on marketing and had the benefit of five million desktop customers to convert. “We started with a clean slate. Intuit has thrown the sink at us,’’ he said.
In Britain, Intuit’s customer base of 20,000 compares with Xero’s 60,000. But he accepted Xero’s US progress was hampered by the appointment of the “wrong” CEO.
In September, North American CEO Peter Karpas was replaced by the company’s CFO, Ross Jenkins.
Reckon chief Clive Rabie believes Xero will struggle to justify its own heavy capital expenditure.
“They spend a hell of a lot of money,’’ he said.
“If you throw enough money at the market you will get some traction. Some time they are going to have to get return and they will have to keep prices high as a result.’’
Mr Rabie said while Xero has done a good job at marketing, it won’t find the land-grab as easy as all that. “Intuit isn’t going to sit around and watch,’’ he said and added that Reckon itself preferred to compete in niche areas rather than head-on.
Mr Drury, who co-founded Xero with accountant Hamish Edwards in a humble flat in Wellington eight years ago, said Xero consistently reported “clean” numbers over its two-year listed life, including average revenue per customer.
“What’s interesting about Xero is we funded it as a public company from day one. It’s all played out in public,’’ he said.
“It’s quite amazing the fug that gets created around what we are doing. Our approach has been very clear and transparent.’’
As for the pesky P word — profit — Mr Drury saids Xero could be break-even within two years if it slowed growth. “But that’s not our current plan.
“In New Zealand and Australia we are covering costs. We are not adding any new staff in Australia yet we are doing 100 per cent growth.’’
“We have plenty of access to capital and we are planning to grow a very significant business. You can see from the numbers it’s working pretty bloody well.’’
Craigs Investment Partners forecasts a $NZ58m ($56m) current-year loss and a similar result in 2015-16.
Fellow broker First NZ Capital tips a $NZ65m loss in 2014-15, widening to a $NZ80m deficit the year after.
Xero’s Australian boss, Chris Ridd, said Xero was not content to be a bit player in a climate in which the aim of the game was to convert sometimes reluctant small businesses to cloud technologies. A former Microsoft executive, Mr Ridd said that as with his old *employer there was a distinct lack of innovation in the sector.
“True software development is an art form,’’ he said. “The incumbents have been asleep at the wheel. MYOB has only just decided cloud should be the way and adopted a hybrid *approach.’’
Mr Ridd said while some small business users remain cloud-reluctant because of security concerns, he maintained that cloud was safer than an on-premise server or a laptop strewn on the back seat of the office car. He cited a Queensland bookkeeper client whose office was flooded: “She could do the payroll from a friend’s PC while her server at work got completely trashed.’’
Along the way, their accountants were liberated from humdrum box ticking and could focus on value-added business advice. “Compliance is dead money, they can’t charge for it,’’ he said.
While Xero claims to be winning a high proportion of new clients from MYOB, 40 per cent of small business customers have no accounting software at all.
Or if they do, it’s called a shoebox.

[gv1]

[QUOTE=dingoNZ;525442]XERO chief and founder Rod Drury is looking forward to the mooted $2.5 billion float of accounting software rival MYOB, amid claims the traditional players are rapidly reining in Xero’s first-mover advantage in the “cloud” computing market.


Thanks mate. Great infor.

[babymonster]

Cloud is picked by companies very fast. Xero has no option to move fast in a new market

[RGR367]

Cloud is picked by companies very fast. Xero has no option to move fast in a new market

They will move as long as they don't get the issues/complaints as what these Intuit users are having http://www.consumeraffairs.com/computers/intuit_quickbooks.htm Would anyone knew if XRO is inundated with so many issues too?

[zijiji]

This appeared on TechCrunch a few minutes ago: http://techcrunch.com/2015/01/14/xero-payroll/

[Harvey Specter]

This appeared on TechCrunch a few minutes ago: http://techcrunch.com/2015/01/14/xero-payroll/love the last sentence ;)

[artemis]

They will move as long as they don't get the issues/complaints as what these Intuit users are having http://www.consumeraffairs.com/computers/intuit_quickbooks.htm Would anyone knew if XRO is inundated with so many issues too?

Just had a looksee at that site and could not see any category for Xero complaints.

[artemis]

This appeared on TechCrunch a few minutes ago: http://techcrunch.com/2015/01/14/xero-payroll/

Very cool photo of the Xero building with pohutukawa in full bloom.

[babymonster]

This appeared on TechCrunch a few minutes ago: http://techcrunch.com/2015/01/14/xero-payroll/

does news like this make into nzx announcement?

[dingoNZ]

Its just a revamp of an old story isn't it?

[BFG]

does news like this make into nzx announcement?

No, it is just an overview of the company and does not contain price sensitive material.

[Baa_Baa]

They will move as long as they don't get the issues/complaints as what these Intuit users are having http://www.consumeraffairs.com/computers/intuit_quickbooks.htm Would anyone knew if XRO is inundated with so many issues too?

The link won't work if people have an 'ad blocker' running on their PC.

Turn off the ad blocker and try the link above again, or use this search for all Intuit compliants (there are a lot of them) Search http://www.consumeraffairs.com/search.html?google_cse=1&cx=partner-pub-0200629403145096%3A9541715168&cof=FORID%3A10&ie=UTF-8&q=intuit&sa=Search

Here's their review of Xero. http://www.consumeraffairs.com/business/xero.html

If you're interested in user complaints or compliments about Xero, or how the product is working for user, check out their user community https://community.xero.com/?domain=business

[skid]

Lots of volatility over in the US markets over night--big drop.

If you think its just a flash in the pan -might be a chance to buy in to XRO cheap

If you think theres more to come-then sidelines might be best

For Xro I think its especially important to keep an eye on their target market (well,the big one at least)

[Harvey Specter]

does news like this make into nzx announcement?Already well signaled with the last acquisition.

[babymonster]

just wondering how long i should hold before my patient runs out. I do hope the money in energy shares come to tech stocks.. hah...

[RGR367]

just wondering how long i should hold before my patient runs out. I do hope the money in energy shares come to tech stocks.. hah...
Worry not as for sure this stock will test your patience :)

[skid]

It could even make you a mental patience

[kanaka]

Patience is a virtue especially dealing with this stock taken with a liberal dash of optimism

[Baa_Baa]

The "nuance" of directly competing with their loyal and hard-won add-on's providers is intriguing, and potentially worrying, by providing a 'baked-in' payroll service into Xero.

I would like to hear from Rod, an update on their product strategy, as this appears to be a significant departure from their core product direction and business model -- it 'claims ownership of payroll', disenfranchises existing payroll add-on providers, and fires a shot across the bow of ALL other add-on providers - what next? Payments, job management, CRM, invoicing, reporting, inventory, etc ... ? Rod did not provide a clear response to this, at least not in context of the article below. And there is no announcement on their website.
http://www.stuff.co.nz/business/industries/65069693/xero-boosts-us-chances-with-payroll-product

I also wonder how much of a distraction it is to their army of developers, having to develop this payroll core functionality, investing over the course of ~18 months and taking on maintenance and support ad-infinitum thereafter, and at what cost financially and opportunity cost against further developing the core accounting code base and progressing XeroBigData2.0. I wonder as well about the effect on Financial Advisers and Accountants who may have little or no interest in supporting clients with payroll matters (other than the bookkeeping), though as it become core Xero functionality, accountants and advisors get drawn into supporting it.

I can only guess that pressure from US customers particularly has driven this approach, that on face value appears divergent product strategy. I haven't heard anything that suggests NZ, Aus or UK customers are demanding core payroll function directly from within Xero, and certainly not at the expense of core accounting functions.

Keen to hear peoples thoughts, and from Rod if he's feeling inclined to share.

BAA

[Toasty]

On the face of it I don't really see this as a huge problem for add on partners in general. Intuit incorporates payroll so the third party guys must have know that is was a risk that Xero would eventually develop or acquire their own. Same as the Quote providers. I guess they now need to differentiate their product by offering a superior service to Xero.

[Casino]

The "nuance" of directly competing with their loyal and hard-won add-on's providers is intriguing, and potentially worrying, by providing a 'baked-in' payroll service into Xero.

I would like to hear from Rod, an update on their product strategy, as this appears to be a significant departure from their core product direction and business model -- it 'claims ownership of payroll', disenfranchises existing payroll add-on providers, and fires a shot across the bow of ALL other add-on providers - what next? Payments, job management, CRM, invoicing, reporting, inventory, etc ... ? Rod did not provide a clear response to this, at least not in context of the article below. And there is no announcement on their website.
http://www.stuff.co.nz/business/industries/65069693/xero-boosts-us-chances-with-payroll-product

I also wonder how much of a distraction it is to their army of developers, having to develop this payroll core functionality, investing over the course of ~18 months and taking on maintenance and support ad-infinitum thereafter, and at what cost financially and opportunity cost against further developing the core accounting code base and progressing XeroBigData2.0. I wonder as well about the effect on Financial Advisers and Accountants who may have little or no interest in supporting clients with payroll matters (other than the bookkeeping), though as it become core Xero functionality, accountants and advisors get drawn into supporting it.

I can only guess that pressure from US customers particularly has driven this approach, that on face value appears divergent product strategy. I haven't heard anything that suggests NZ, Aus or UK customers are demanding core payroll function directly from within Xero, and certainly not at the expense of core accounting functions.

Keen to hear peoples thoughts, and from Rod if he's feeling inclined to share.

BAA

http://www.digitalfirst.com/2014/08/21/xero-signals-major-expansion-beyond-accounting/

[Harvey Specter]

The difference between payroll and other add ons is that most companies have staff. It will be a paid for option so will still compete against the other providers which will be more suitable for larger employers.

It will be interesting to see what the uptake in NZ is given it has lots of good add on support already which are suitable even for small businesses (owner uploads, hours, rates and they do all the heavy lifting for minimal cost).

[Baa_Baa]

@Casino, thanks for the link. What's your view?

[skid]

Lots of volatility over in the US markets over night--big drop.

If you think its just a flash in the pan -might be a chance to buy in to XRO cheap

If you think theres more to come-then sidelines might be best

For Xro I think its especially important to keep an eye on their target market (well,the big one at least)

Looks like the second option is best as outside markets have been hit again

[Casino]

@Casino, thanks for the link. What's your view?

Loyal add-on partners? Open ecosystem? That was yesterday.

http://www.digitalfirst.com/2014/08/19/xero-de-lists-intuit-owned-invitbox-marketplace/

[gbogo]

Loyal add-on partners? Open ecosystem? That was yesterday.

http://www.digitalfirst.com/2014/08/19/xero-de-lists-intuit-owned-invitbox-marketplace/

agree that open ecosystem is only good when it suits. Apple appstore is not open = very successful.
In my view, this is further evidence that XRO is a company managed by smart people.

Buy more.

[Harvey Specter]

Interesting post by a US VC on Xero's numbers: http://tomtunguz.com/xero-s-1/

As noted in the article, some of the differences are because Xro didn't start in the US

[Baa_Baa]

Well it's clearly not the end of add-on partners or an open ecosystem, but it appears to be the direction of Xero to be more selective, encourage vertical add-ons, acquire some they see as best in class, integrate functionality outside of core accounting, etc.

I don't think that diminishes my points though.

Xero trumpets, and even trademarked, "beautiful accounting software", then blindsides the developer community with a fundamental shift in product strategy, by broadening into business functions that are not accounting per se but are only associated with accounting ... that cuts the lunch of some, presents acquisition opportunities for a few, disenfranchises and threatens many, exposes Xero to new markets competition (in this case payroll), and exposes their CA's to customers that require support for services outside their capabilities.

What I'm getting at is being true to core values, particularly customer and partner values. Xero targets and is appealing to SMB's. It is proving very successful at growing customers on that basis. Their product is surrounded by add-ons that SMB's will find useful. Though by diversifying into non-core functionality, Xero becomes a different product.

With such an important focus being success in the US market, I still wonder whether it is a better strategy to stick to core-accounting, at least until they comprehensively deliver that functionality, before diversifying resources that shareholders are funding, into non-core accounting.

The other thing that springs to mind is how Xero product strategy turns on a dime.

This is unsettling for their developer community and customers. Recall how 'out of the blue' Xero announced that around 12,000 NZ seed customers of Xero Personal would no longer be supported and the product discontinued.

From a business viewpoint that was probably smart (Xero Personal was a mistake, with poor ROI, difficult market to grow, etc), but from a customers' perspective it was appalling! Ironically it also broke important Personal/Business accounting functions, like expensing personal costs automatically to business. Also ironically, Xero recommended customers to PocketSmith, an inferior product, when Xero Cashbook would have been adequate for many customers personal finance management.

There can be no confidence that Xero won't shaft it's SMB customers who choose specific add-ons that Xero now or at some time may arbitrarily decide to just 'cut off’.

From an investment viewpoint, none of these product announcements have reversed the slide in share price. I guess it all still comes down to whether Xero can sustain 80% growth, particularly in the US market.

[disc: still looking for re-entry to XRO; a disgruntled Xero Personal ex-customer; a concerned Xero Business customer that uses add-on’s]

[BFG]

Interesting post by a US VC on Xero's numbers: http://tomtunguz.com/xero-s-1/

As noted in the article, some of the differences are because Xro didn't start in the US

Nice find Harvey, good perspective from a VC standpoint with different metrics to add to the others listed historically.

[Hoop]

Nice find Harvey, good perspective from a VC standpoint with different metrics to add to the others listed historically.

Yes a good read..I actually read it on the Seeking Alpha website (http://seekingalpha.com/article/2824186-benchmarking-xeros-sminus-1-how-7-key-saas-metrics-stack-up?auth_param=mpevn:1abg3it:1c821ea1d36dc82e50a5fb 8828c9bb93&uprof=45&dr=1)..A comment after the article from a NZ Accountant was also interesting

[Zaphod]

There can be no confidence that Xero won't shaft it's SMB customers who choose specific add-ons that Xero now or at some time may arbitrarily decide to just 'cut off’.


This is the very same behaviour that Google exhibits towards their product line. Why take the risk integrating your product into the Xero ecosystem if they might arbitrarily terminate a key service, or decide to launch a competing product with far deeper and more elegant integration that an independent vendor can produce?

It's a very fine line that they are walking.

[Baa_Baa]

Interesting post by a US VC on Xero's numbers: http://tomtunguz.com/xero-s-1/

As noted in the article, some of the differences are because Xro didn't start in the US

Great insights there Harvey, thanks for the link. I was also interested to read this article by the same guy http://tomtunguz.com/consumerization-of-it-is-happening/ and by inference how this ARC decline might affect Xero over time.

Perhaps this lends a commercial clue as to why Xero are diversifying beyond "beautiful accounting software" and extending their "business solution" / "integrated solution" (depending on who's being quoted) so as to mitigate falling ARC by delivering broader value along with the ability to grow ARC.

However this quote from Xero's own Blog intrigues as it suggests the opposite (US payroll) "All existing and new Standard (https://www.xero.com/us/pricing/) and Premium (https://www.xero.com/us/pricing/) customers have access to e-file and e-pay for payroll taxes at no extra cost.

[Harvey Specter]

I think Xero (the product) is already cheap which is seen in the ARC graph on the first blog linked. As such I dont think it will fall as companies will always pay to have no ads and to ensure their data is safe. Payroll is an add on that 80%+ of existing customers could use (ie. most would have staff, even if just themselves or holiday workers) tough some may opt for a more complete service (I dont think the NZ offering will be as complete as Payroll providers (which offer add on).

Not sure why they aren't charging more in US. They definitely are in Australia though from memory, they did do a price change that raised a few complaints (people having to go to a higher plan since they were over the employee limit for the smaller plans). https://www.xero.com/au/pricing/

[Casino]

Well it's clearly not the end of add-on partners or an open ecosystem, but it appears to be the direction of Xero to be more selective, encourage vertical add-ons, acquire some they see as best in class, integrate functionality outside of core accounting, etc.

It's a very difficult game and hard to beat Intuit at it. Just look at how much they paid for demandforce, which is not going to integrate with Xero.


I don't think that diminishes my points though.

Xero trumpets, and even trademarked, "beautiful accounting software", then blindsides the developer community with a fundamental shift in product strategy, by broadening into business functions that are not accounting per se but are only associated with accounting ... that cuts the lunch of some, presents acquisition opportunities for a few, disenfranchises and threatens many, exposes Xero to new markets competition (in this case payroll), and exposes their CA's to customers that require support for services outside their capabilities.

What I'm getting at is being true to core values, particularly customer and partner values. Xero targets and is appealing to SMB's. It is proving very successful at growing customers on that basis. Their product is surrounded by add-ons that SMB's will find useful. Though by diversifying into non-core functionality, Xero becomes a different product.

With such an important focus being success in the US market, I still wonder whether it is a better strategy to stick to core-accounting, at least until they comprehensively deliver that functionality, before diversifying resources that shareholders are funding, into non-core accounting.

Xero has always tried to differentiate itself with gimmicks at the expense of core accounting functionality. And it worked well for them. Offering payroll is not a big deal. Even Wave offers it across the US.


The other thing that springs to mind is how Xero product strategy turns on a dime.

This is unsettling for their developer community and customers. Recall how 'out of the blue' Xero announced that around 12,000 NZ seed customers of Xero Personal would no longer be supported and the product discontinued.

From a business viewpoint that was probably smart (Xero Personal was a mistake, with poor ROI, difficult market to grow, etc), but from a customers' perspective it was appalling! Ironically it also broke important Personal/Business accounting functions, like expensing personal costs automatically to business. Also ironically, Xero recommended customers to PocketSmith, an inferior product, when Xero Cashbook would have been adequate for many customers personal finance management.

Now compare that to Intuit with their purchase of mint.com in addition to their Quicken products.


There can be no confidence that Xero won't shaft it's SMB customers who choose specific add-ons that Xero now or at some time may arbitrarily decide to just 'cut off’.

They won't do that. Some add-ons may go bust though or Xero support could be crippled if owned by Intuit.



From an investment viewpoint, none of these product announcements have reversed the slide in share price. I guess it all still comes down to whether Xero can sustain 80% growth, particularly in the US market.

[disc: still looking for re-entry to XRO; a disgruntled Xero Personal ex-customer; a concerned Xero Business customer that uses add-on’s]

Why don't you look at Intuit as an alternative investment? They're firing on all cylinders.
Have you considered Wave for personal finance?
What add-ons do you use? I assume a lot of people have add-ons for quoting, which will be included in the next Xero release.

[Casino]

I think Xero (the product) is already cheap which is seen in the ARC graph on the first blog linked. As such I dont think it will fall as companies will always pay to have no ads and to ensure their data is safe. Payroll is an add on that 80%+ of existing customers could use (ie. most would have staff, even if just themselves or holiday workers) tough some may opt for a more complete service (I dont think the NZ offering will be as complete as Payroll providers (which offer add on).

Not sure why they aren't charging more in US. They definitely are in Australia though from memory, they did do a price change that raised a few complaints (people having to go to a higher plan since they were over the employee limit for the smaller plans). https://www.xero.com/au/pricing/

I think our analyst is a little bit sloppy.

1. ARPC is NZ$357 (132.3m ACMR/371k customers)
2. ARPC is an average of proper users and cashbook users. MYOB claims that half of Xero's total customers are cashbook users.

[webllinks]

What I'm getting at is being true to core values, particularly customer and partner values. Xero targets and is appealing to SMB's. It is proving very successful at growing customers on that basis. Their product is surrounded by add-ons that SMB's will find useful. Though by diversifying into non-core functionality, Xero becomes a different product.



Yeah it becomes an even more invaluable tool.

Imagine a business owner discovering Xero tomorrow for the first time and seeing that he can do: accounting, payroll, CRM, quotes, invoicing and job cost reporting - from one Dashboard all in the cloud.

If you run your own business you will know: these kind of things make your eyes tear up with joy.

Who cares if the CA's can't support it - they will need to learn and adapt if they want the business. Who cares what the add-on partners think - only the best few will survive anyway in a few years.

All that matters is the numbers: the users.

We are at the land grab phase - those with most users will have the power.

[webllinks]

This is the very same behaviour that Google exhibits towards their product line. Why take the risk integrating your product into the Xero ecosystem if they might arbitrarily terminate a key service, or decide to launch a competing product with far deeper and more elegant integration that an independent vendor can produce?

It's a very fine line that they are walking.

I don't think that is the issue. The issue is giving free leads to Intuit bought apps from their website.

Would you give free leads to your toughest competitor?

[Zaphod]

I don't think that is the issue. The issue is giving free leads to Intuit bought apps from their website.

Would you give free leads to your toughest competitor?

I certainly wouldn't ban or self-built provide inferior versions of the apps, especially if they were providing value to my customers. Xero promote their product as having an open ecosystem. A move to block addon's from companies wholly or partly owned by a competitor changes that dynamic. Ultimately walled gardens don't work; Xero needs to continue to compete head on winning hearts and minds by providing a first class extensible product that provides exception value, with a great price-point.

[webllinks]

Yeah again, Xero is not banning the integration. They are just banning the product from their website. - giving them free leads essentially. Nothing wrong with that.

If you really like the app - use it and if you really like Xero - integrate it with Xero.

These aren't walled gardens of some protectionists policies.

Regarding hearts & minds - the best way to do that is offer a product that is even more invaluable/indispensable by adding features that are business critical. They can't do more than that.

[Zaphod]

Yeah again, Xero is not banning the integration. They are just banning the product from their website. - giving them free leads essentially. Nothing wrong with that.

If you really like the app - use it and if you really like Xero - integrate it with Xero.

These aren't walled gardens of some protectionists policies.

Regarding hearts & minds - the best way to do that is offer a product that is even more invaluable/indispensable by adding features that are business critical. They can't do more than that.

Sorry, but I disagree. By listing the product on their add-on page they are promoting an independently branded complimentary product that enhances Xero’s value proposition. It just happens that this add-on company has a parent that is a competitor. So what?

In other industries such as manufacturing, there are plenty of examples of one company using components from another company that is owned by competitors (e.g. Mitsubishi Electric supplying branded electronic components to Honda) and openly promoting the fact without any issues.

Invitbox also works with a number of competitors of Intuit’s products, all of which are prominently displayed on their website, but none of these other competitors have reacted in a similar fashion, so why does Xero feel it needs implement such a protectionist policy?

But at the end of the day it’s a business decision that Xero has made and one that competitor platforms don’t seem to agree with, so be it. Given some of the rather over-the-top tweets and quotes that have come from Xero exec’s over the years, I’m not really surprised to be honest.

DISC: Xero customer & holder.

[RGR367]

Would this be another opening for XRO in the land of the brave and free (guns) for all?
Intuit changed TurboTax this year, triggering an enormous customer uproar http://www.latimes.com/business/hiltzik/la-fi-mh-intuits-catastrophic-turbotax-20150118-column.html

[Harvey Specter]

Would this be another opening for XRO in the land of the brave and free (guns) for all?
Intuit changed TurboTax this year, triggering an enormous customer uproar

http://www.latimes.com/business/hiltzik/la-fi-mh-intuits-catastrophic-turbotax-20150118-column.htmlXero hve partnership with H&R Block from memory so long term, anyone to changes to H&R block for their tax may be pushed into xero for their accounts.

[Casino]

Why so quite? Plenty to discuss:

Drury said Xero would update its customer numbers when it released its figures for the year to March and would not release quarterly figures for the three months to the end of December.
http://www.stuff.co.nz/business/industries/65069693/xero-boosts-us-chances-with-payroll-product

Today, we’re releasing Quotes (https://www.xero.com/accounting-software/quotes/) in Xero. It’s now easy to create, send and manage your quotes workflow all the way through to customer acceptance. By making it easy to create a quote, you can quickly respond to an opportunity, anytime anywhere, keeping your business moving forward.
https://www.xero.com/blog/2015/01/streamline-sales-process-quotes/

Pricing Promotion Until January, 31 2015Coinciding with this release is a pricing promotion that provides 50% off the Standard and Premium plans for six months to all new subscribers (with a promo code). So that would be $15.00 for the Standard plan and $35 for the Premium plan.
http://www.sleeter.com/blog/2015/01/xero-payroll-e-filing-and-e-pay/

[babymonster]

still holding...

[RGR367]

still holding...
still buying...

[couta1]

Still Waiting

[BFG]

Still Canadian :D

[robbo24]

Drury said Xero would update its customer numbers when it released its figures for the year to March and would not release quarterly figures for the three months to the end of December.
http://www.stuff.co.nz/business/industries/65069693/xero-boosts-us-chances-with-payroll-product

Lol... The comments section of this link... Good to see the resident glue sniffers on stuff.co.nz comment on the business section too :D

[couta1]

Lol... The comments section of this link... Good to see the resident glue sniffers on stuff.co.nz comment on the business section too :D
I especially like the comment from the Numpty called pinetree who said that IRD shoud be investigating XRO because they are expanding so much without making a profit and he assumed they were paying PAYE - Lol

[BFG]

Lol... The comments section of this link... Good to see the resident glue sniffers on stuff.co.nz comment on the business section too :D
Oh my lord, every single last comment. Shocking.

[RGR367]

Oh my lord, every single last comment. Shocking.
Maybe those critics are the 1st quarter buyers of last year XRO. And they've now realized that we might have sold them a "lemon" (sic) if the indication is on today's sp alone :p

[skid]

one things for sure--They are certainly promoting the product here in NZ (cash burn vs increased sales)--it would be interesting to know if they are promoting to the same extent over seas.


Still watching (what is happening with other peoples money):)

[kanaka]

I especially like the comment from the Numpty called pinetree who said that IRD shoud be investigating XRO because they are expanding so much without making a profit and he assumed they were paying PAYE - Lol
Probably one too many collapsed scrums

[angrytoenail]

one things for sure--They are certainly promoting the product here in NZ (cash burn vs increased sales)--it would be interesting to know if they are promoting to the same extent over seas.


Still watching (what is happening with other peoples money):)
I'm living in Melbourne now and I frequently see trams that are covered in vinyl promoting Xero.

[skid]

I'm living in Melbourne now and I frequently see trams that are covered in vinyl promoting Xero.

All we need now is the big Kahuna--the ole USA

[babymonster]

Good vol today

[kizame]

I think this stock is ready to start punching it's way back up.
Vol over the last couple of days is heavier.
Weekly chart shows it has crossed the downtrend line and has consolidated.
Daily chart shows very tight bollingers.
Stockastic at oversold with a positive divergence.
Macd ready to continue rise.
Maybe there is news soon?