Xro - xero

[mikeybycrikey]

Sounds a lot like VML, eh Baa?

[Jantar]

EPS
-$0.542


NTA
$2.061



At the current rate XRO will be insolvent in less than 4 years. Unless there is a plan for making substantial profits within that time then this is no more than junk stock.

[winner69]

The days are long, the decades are short.

[Hawkeye]

http://www.nbr.co.nz/article/apple-enlists-nzs-vend-and-xero-worldwide-business-app-promo-ck-p-173782

[JamesST]

[TABLE]

At the current rate XRO will be insolvent in less than 4 years. Unless there is a plan for making substantial profits within that time then this is no more than junk stock.

Making profits is not a requirement to pass the solvency test.

[Jantar]

Making profits is not a requirement to pass the solvency test.
But not having any tangible assets (net worth) is a sure way to fail it.

[PSE]

Making profits is not a requirement to pass the solvency test.
Right, but Jantar said they are solvent now and on their way to being insolvent in four years time unless they improve profitability or find more people to believe the story (raise capital). The story is that the way to shareholder riches is to buy your customers.
Good luck with that, and taking on the larger profitable US incumbent. Presumably they could choose to take a loss for a year or two and obliterate Xero from their market if they considered them a credible threat.

[Xirr]

Jantar, you're not giving the bears a good name by speculating Xero will be insolvent.

[mfd]

EPS
-$0.542


NTA
$2.061



At the current rate XRO will be insolvent in less than 4 years. Unless there is a plan for making substantial profits within that time then this is no more than junk stock.

They've made it pretty clear they could be profitable right now if they wanted to be, but they're spending the money they've raised to be as big as they can possibly be. What else should they be doing with the invested money than spending it on growth?

[RGR367]

But not having any tangible assets (net worth) is a sure way to fail it.

Better really define what tangible assets are and then redefining it again as net worth before you can talk about failure.

[Casino]

He is a tech geek who has a vision which is funded by his shareholders and his story is morphing from SME accounting to big data. Who can value that?

Such a move has limited potential in tiny markets that Xero operates in and carries significant risks.

[PSE]

How much is a promise they could be profitable worth, maybe nothing, maybe 2.5 billion(!!) maybe more(!!!).
Really??

[JamesST]

But not having any tangible assets (net worth) is a sure way to fail it.

I don't think many would share this view.
They have no debt, a ton of cash, publicly listed, huge market cap, future subscription revenue and shareholders with deep pockets.
Probably the least likely company in NZ to have the receivers called in.

[JamesST]

Right, but Jantar said they are solvent now and on their way to being insolvent in four years time unless they improve profitability or find more people to believe the story (raise capital).
No. He didn't mention capital raising. He said they have to reach significant profitability within 4 years or they will be insolvent.

[Jantar]

I don't think many would share this view.
They have no debt, a ton of cash, publicly listed, huge market cap, future subscription revenue and shareholders with deep pockets.
Probably the least likely company in NZ to have the receivers called in.
So they have a ton of cash etc. That is included in the NTA which they are currently burning at more than 25% per annum.
Maybe they can raise more capital, but any investor is going to want to know that they will get a return on that investment, and so far they have given no indication that that will ever happen.

[JamesST]

So they have a ton of cash etc. That is included in the NTA which they are currently burning at more than 25% per annum.
Maybe they can raise more capital, but any investor is going to want to know that they will get a return on that investment, and so far they have given no indication that that will ever happen.

Maybe they can raise more capital? Almost certainly they can raise more. They're dual listed.

[mfd]

So they have a ton of cash etc. That is included in the NTA which they are currently burning at more than 25% per annum.
Maybe they can raise more capital, but any investor is going to want to know that they will get a return on that investment, and so far they have given no indication that that will ever happen.

From the recent NZ herald live chat with Rod:

"We could slow down and do it next year. We could delay it 5 years. As this year develops we can can decide. The role of the board and I is to maximise long term value for shareholders."

"But we of course would love to get to profitability as soon as we can, but not at the expense of growth. We did our biggest hiring spurt last year, so the loss widened. This year we can slow that down and with our revenue growth the cost and revenue lines will cross over. With 1/4 of Billion of cash we have plenty of time but personally we think about that every day. Will be quite a party."

Patience is a virtue.

[RGR367]

You have to see this latest integration of Alavara (sales tax software) to just comprehend how complicated doing business in the US of A.
https://www.youtube.com/watch?v=aSPfR2Z4J4s&feature=youtu.be
But yes, it may even take them another 36 months to crack that territory but I am willing to wait :p

[Santiago]

This has become a bit of a haters' forum, which I suppose is fair enough as the Internet is wonderfully democratic. Anyway, just thought I'd post this- I've followed it for over a year now and it does tend to mirror their subscription growth. Not particularly scientific, and doesn't speak to profit/revenue/NTA etc and all those other issues that are being, rightly, debated here- but posting it for a little bit of balance...

http://www.google.com/trends/explore#q=%2Fm%2F02rsj7z&cmpt=q&tz=

[winner69]

This has become a bit of a haters' forum, which I suppose is fair enough as the Internet is wonderfully democratic. Anyway, just thought I'd post this- I've followed it for over a year now and it does tend to mirror their subscription growth. Not particularly scientific, and doesn't speak to profit/revenue/NTA etc and all those other issues that are being, rightly, debated here- but posting it for a little bit of balance...

http://www.google.com/trends/explore#q=%2Fm%2F02rsj7z&cmpt=q&tz=

Interesting. Not much interest in the US though

I am not a hater

[Santiago]

Interesting. Not much interest in the US though

I am not a hater

US growing steadily, consistent with the company's expectations. UK and Aust rocketing, consistent with management expectations that these two geographies will be the growth engine for the next few years. Seems to be along the lines of what the management says, but perhaps the analysts are expecting something different.

[Leftfield]

I found viewing the following video very helpful to understand both the complexity of the USA market, and the power of Xero's vision via partnerships with Apple and Avalara and others.

The USA has over 35,000 sales tax rules, 11,000 sales tax rates and 750,000 Buyer/Seller exemptions. If Xero can turn these complications into 'Beautiful Accounting Software' then the future may well be exciting.

Here's the link and thanks to RG367 for posting (Post # 6809)
https://www.youtube.com/watch?v=aSPfR2Z4J4s&feature=youtu.be

(Disc small holding and viewed as v speculative/risky. DYOR)

[winner69]

The market for something to believe in is infinity

[Baa_Baa]

The partnership with Alavera is very astute for the USA market, I suspect it's a result of a well referenced connection from a recent large investor. XRO don't have to build USA sales tax anymore, they've connected to the experts, and in an elegant way. Credit where it's due, nice move XRO, very clever, well done.

An investor still has no way of knowing whether $20 is a good share price though. Shame about that, XRO should pay more attention to it's investors.

[Bilbo]

The partnership with Alavera is very astute for the USA market, I suspect it's a result of a well referenced connection from a recent large investor. XRO don't have to build USA sales tax anymore, they've connected to the experts, and in an elegant way. Credit where it's due, nice move XRO, very clever, well done.

An investor still has no way of knowing whether $20 is a good share price though. Shame about that, XRO should pay more attention to it's investors.

Here is an interesting article, with interesting reference to the Apple deal
http://enterprisetimes.co.uk/xero-ups-the-ante-for-online-accounting/

Got to say I'm still in love with Xero and looks like they are executing well still. In for the long haul.

[ShareFodder]

I found viewing the following video very helpful to understand both the complexity of the USA market, and the power of Xero's vision via partnerships with Apple and Avalara and others.

The USA has over 35,000 sales tax rules, 11,000 sales tax rates and 750,000 Buyer/Seller exemptions. If Xero can turn these complications into 'Beautiful Accounting Software' then the future may well be exciting.

Here's the link and thanks to RG367 for posting (Post # 6809)
https://www.youtube.com/watch?v=aSPfR2Z4J4s&feature=youtu.be

(Disc small holding and viewed as v speculative/risky. DYOR)

Thanks. Interesting video.

It's crazy to think that 80% of business payments in the US are still done by check. It just goes to show that cloud accounting is in it's infancy. The work Xero is doing now will pay off but it will take time...

[moimoi]

Perilously close to a Death Cross on the daily chart is it not?

[Daytr]

Well its certainly looking sick...
What's the downside target from here?
Looks like around $17.50ish where it settled prior to the cap raising.
Thoughts anyone?

[tga_trader]

Is this the 'ride' back down to $15-16? Could be keen to buy again once it bottoms out and wait for the next surge.

[RGR367]

Read this blog wrap on Xerocon Denver and some comparing thoughts on Intuit vs Xero numbers http://www.sleeter.com/blog/2015/06/xerocon-denver-apple-embedded-dashboards-and-more/

[skid]

Many experienced chartists use the 30-120ma for companies that have not reached profitability--using this,the ''death cross'' has arrived.

Good to keep an eye out for confirmation it is not a fake out. ,

also the US market needs to be watched these days

[Leftfield]

Read this blog wrap on Xerocon Denver and some comparing thoughts on Intuit vs Xero numbers http://www.sleeter.com/blog/2015/06/xerocon-denver-apple-embedded-dashboards-and-more/

Good post - thanks

[Baa_Baa]

Read this blog wrap on Xerocon Denver and some comparing thoughts on Intuit vs Xero numbers http://www.sleeter.com/blog/2015/06/xerocon-denver-apple-embedded-dashboards-and-more/

Interesting article, thanks for posting. Annualised growth increasing YoY for Intuit who already have a million online customers, the "vast majority" in the USA, and YoY growth declining for XRO, with both now almost the same YoY growth, just different trajectories. Is that a concern or is the market so large in the USA that XRO can realistically catch up, or even just capture sufficient share that comparisons with Intuit are meaningless?

[Toasty]

Interesting article, thanks for posting. Annualised growth increasing YoY for Intuit who already have a million online customers, the "vast majority" in the USA, and YoY growth declining for XRO, with both now almost the same YoY growth, just different trajectories. Is that a concern or is the market so large in the USA that XRO can realistically catch up, or even just capture sufficient share that comparisons with Intuit are meaningless?

I've always been of the opinion that they don't have to "beat" Intuit. They just need to establish themselves as a viable alternative. A few percent of every market in the world translates to a pretty big win. There aren't many if any players in any industry who have 100% dominance. There is always a competitor. A bit simplistic possibly but...

[Harvey Specter]

I've always been of the opinion that they don't have to "beat" Intuit. Exactly - Pepsi, Burger King, Samsung, etc.

Agree they dont have to be number 1 but they do have to establish themselves as the best alternative. I think that is their game plan, especially regarding getting in front of the media and pretending they are going for number 1 spot as the natural reaction to that is , "no, you're number 2" - to which Xero says thank you.

[longy]

I think Rod said a while back that he was not interested in the 90% that is on some sort of software atm but he is digging in other 10% in States. The ultimate remaining question is when the profit coming? But again it is still a growth company so.... They done a lot of hiring recently so expenditure should not blow out in coming months.

I have my truck ready for the next dip.... :)

[RGR367]

And here's another blog on using the Xero Platform (no longer just an accounting software) that will help a Goal for women in business. Imagine its effect in the very near future for this NZ bred stock :) http://lauriemccabe.com/2015/06/15/smb-spotlight-empowering-a-billion-women-by-2020-teams-up-with-xero/

[Ginger_steps_]

And here's another blog on using the Xero Platform (no longer just an accounting software) that will help a Goal for women in business. Imagine its effect in the very near future for this NZ bred stock :) http://lauriemccabe.com/2015/06/15/smb-spotlight-empowering-a-billion-women-by-2020-teams-up-with-xero/ I love this approach. Thinking outside the box - thats our Xero!

[Daytr]

After being pretty bearish this stock when it was trading $25+ I have been watching its fall pretty closely looking for when I thought might be a good opportunity to buy in. Today I bit the bullet and bought in at $17 (AUD). I was targeting perhaps a little lower & maybe that will happen, however imo its now looking like a lot better value than it was when trading 40%ish higher.

[Toasty]

After being pretty bearish this stock when it was trading $25+ I have been watching its fall pretty closely looking for when I thought might be a good opportunity to buy in. Today I bit the bullet and bought in at $17 (AUD). I was targeting perhaps a little lower & maybe that will happen, however imo its now looking like a lot better value than it was when trading 40%ish higher.

I'm a little surprised that you got in given the tone of your posts. I hope it does well for you. There are a lot of articles and blogs out of the US painting an interesting picture over there. I have big hopes for this company which too be honest have already come true given that I was in at 90 cents.

I really do think that Xero has a shot at becoming a really big player and not just in the accounting space but in the larger financial and business arena. I am a bit of a fan boy though.

[theace]

After being pretty bearish this stock when it was trading $25+ I have been watching its fall pretty closely looking for when I thought might be a good opportunity to buy in. Today I bit the bullet and bought in at $17 (AUD). I was targeting perhaps a little lower & maybe that will happen, however imo its now looking like a lot better value than it was when trading 40%ish higher.

Curious as to buying on the ASX over NZX?

[Daytr]

Its just because I trade CFDs & they only offer stocks traded on the ASX.
I typically only trade the Aussie & international markets & NZ companies aren't available unless they are large enough to be duel listed.

[Daytr]

Toasty, all I have mostly been saying is that I thought it was overvalued or I didn't see much value in it when the SP was trading at $25 as quite a bit of the near term potential had been priced in. I also think Rod has constantly over hyped things. Now that the stock has lost circa 40% in Australian terms which is how I have bought in its looking a lot more attractive.
Seems to have finally found some support at the A$16.50 equivalent level so somewhere around NZD18 I assume.
Have we found a bottom?

[winner69]

Words of wisdom from Rod

@roddrury: As a software geek, where you're rewarded for logic, you soon learn capital markets you can't control, always raise enough $ for your plan

[Daytr]

Might need it if the Greeks turn the global economy to feta...

[Hawkeye]

http://www.nbr.co.nz/article/xero-partners-dropbox-myob-outer-ck-p-174871

[winner69]

Came across this 40% rule the other day
http://avc.com/2015/02/the-40-rule/


XRO growing at 80% and loss is 60% of revenues gives 20% on this formula

At 80% growth losses ideally should be 40% of revenues ......if the plan is tonreachbsome form of sustainable earnings sometime

Formula must be rubbish eh

[RGR367]

Came across this 40% rule the other day
http://avc.com/2015/02/the-40-rule/


XRO growing at 80% and loss is 60% of revenues gives 20% on this formula

At 80% growth losses ideally should be 40% of revenues ......if the plan is tonreachbsome form of sustainable earnings sometime

Formula must be rubbish eh

Maybe XRO is being dismissed because it IPO'ed even before getting to Phase 7 of the so called T2D3 approach. Which makes it an even more interesting study. GL to us all!

[mikeybycrikey]

Came across this 40% rule the other day
http://avc.com/2015/02/the-40-rule/


XRO growing at 80% and loss is 60% of revenues gives 20% on this formula

At 80% growth losses ideally should be 40% of revenues ......if the plan is tonreachbsome form of sustainable earnings sometime

Formula must be rubbish eh

Interesting post. The 40% does seem a little arbitrary but it sounds like an interesting way of gauging the cost of growth.

My take on it would be that Xero are struggling to get the growth they would like to be getting in the US market.

According to your formula, they are spending as if they are getting 100% growth but only getting 80%. The US market is lagging way behind what I would expect in cost-to-acquire-customer and other SaaS metric and I think that if they were performing as I would like in the US then this metric would be right on target.

[robbo24]

Wow XRO is really getting fwned lately.

I'm starting to watch XRO now :D

[couta1]

Wow XRO is really getting fwned lately.

I'm starting to watch XRO now :D Yeah I was just thinking last night it looks about time to buy back in.

[robbo24]

Yeah I was just thinking last night it looks about time to buy back in.

What makes you say that?

[couta1]

What makes you say that? Thanks for pm robbo I was thinking along a similar vein and noticed some of those indicators you mentioned myself.

[Hawkeye]

Thanks for pm robbo I was thinking along a similar vein and noticed some of those indicators you mentioned myself.

Care to share with the rest of us? or PM me?
(But I barely comment on here so it may not be read in a while)

[Daytr]

XRO's SP is like a lot of stocks & is being driven by macro events at the moment.
Positive outcome on the macro front, XRO should bounce back or at least settle.
Continued negative macro outlook, or worse & shares including XRO could go a lot lower than anyone anticipates.

[Hawkeye]

Tell me about it, something must have influenced it today, dropping initially to likely be up at close

[Hawkeye]

Or I could say something like the above and have it drop again....

[robbo24]

From my PM to couta1 yesterday:


I'm a little bit weary of XRO just because of global PANIC MODE ACTIVATED.

However, one thing I keep an eye on is the prospect of a good old XRO bounce.

Here's the very simple indicators I am watching (http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=nz%3Axro&time=8&startdate=1%2F4%2F1999&enddate=2%2F23%2F2015&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=4&maval=50%2C100%2C200&uf=8&lf=32&lf2=256&lf3=2&type=4&style=320&size=4&x=56&y=17&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15):

(1) Mid-long term the SMA 50 is crossing down below the SMA 200. Not good, a strong dose of the DEATH CROSS.

(2) Short term, the slow stochastic seems fairly reliable. When you see the blue line take a nose dive, hit the deck and start heading back up then you really start watching closely. When the blue line crosses up above the red line then historically it goes up for a while. Not huge pickings but a quick shareprice increase never hurt anyone.

(3) In support of this theory, RSI seems to bottom out around 20 and Williams %R seems to cross above -90 on the bounce at roughly the same time.

That XRO depth looks juicy for yesterday's buyers :D

[robbo24]

Oh god, don't talk him into buying it again.

Also, why do you post PMs? Isn't that a total no no???

I didn't encourage buying - just saying what I was looking at.

And are you trying to tell me I can't post something I authored myself? (or something that someone authored to me, if that was the case, for that matter)

Pull the other one NewGuy :D

[robbo24]

Couta - as one of the people that urged you to sell out recently in the low $20s, please don't be fooled into buying back in again. Seriously.

Put it in summerset. At least you know you'll make money. :cool:

This is encouraging someone to buy shares.

[robbo24]

Yes, I am encouarging him to put the money in a company whose growth prospects are beyond any reasonable doubt. Xero, conversely, is more likely to fail than succeed at this point (IMH0).

Thus, one is a recommendation that is 99% safe, and the other closer to 10%.

totally different, but nice try mate.

I didn't realise you were an Authorised Financial Adviser. Please post your disclosure statement (http://legislation.govt.nz/act/public/2008/0091/latest/DLM1584659.html).


Section 10 When person gives financial advice (http://legislation.govt.nz/act/public/2008/0091/latest/DLM1584645.html)

(1) A person (A) gives financial advice if A makes a recommendation or gives an opinion in relation to acquiring or disposing of (including refraining from acquiring or disposing of) a financial product.

(2) Whether or not advice is financial advice for the purposes of this Act is not affected by how the advice is given or communicated.

(3) However, a person does not give financial advice for the purposes of this Act merely by—
(a) providing information (for example, the cost or terms and conditions of a financial product); or
(b) making a recommendation or giving an opinion relating to a class of financial products; or
(c) making a recommendation or giving an opinion about the procedure for acquiring or disposing of a financial product; or
(d) transmitting the financial advice of another person (unless A gives A’s own financial advice in doing so or holds out the transmitted financial advice as A’s own financial advice); or
(e) recommending that a person consult a financial adviser.

[robbo24]

Don't try to get all lawyer-y smart with me. I've survived hours of cross exam by people far smarter than you, and this is just boring.

It's too late, I already did and you lost.

[warthog]

yeah, amazing. I can see why you are so successful and spend an inordinate amount of your life on here spouting absolute rubbish. Most successful lawyers I know are far too busy for that. Shame.

Bye

Why the tantrum? Seemed a fair question.

If you are recommending investments then you should do so in a way consistent with the relevant legislation.

Note that people sensitive to such obligations, "successful lawyers" included, go to minimal lengths to make it clear that they are NOT providing advice or recommending investments, and ask that others do their own research, etc.

[winner69]

Moosie

@roddrury
As a leader it's important to set the right example and dress appropriately at all times

[axe]

Moosie

@roddrury
As a leader it's important to set the right example and dress appropriately at all times


OMG that jumper has caused a 4% lift in the SP so far today.

[LAC]

OMG that jumper has caused a 4% lift in the SP so far today.

Hahahaha that's just sad

[blackcap]

Rod is not giving a subtle hint that XRO are going to take over Canada is he? :)

[artemis]

Maybe he's trying to attract Moosie onto his team.

[Snoopy]

If you are recommending investments then you should do so in a way consistent with the relevant legislation.

Note that people sensitive to such obligations, "successful lawyers" included, go to minimal lengths to make it clear that they are NOT providing advice or recommending investments, and ask that others do their own research, etc.

One might argue that the value of any investment is equal to the discounted sum of future cashflows. Since Xero has no positive cashflows, nor any plans to have any, there is a legitimate argument that Xero is not an investment at all. So maybe to be fair, this thread should be moved from the 'NZX' to the 'Off market' section of the forum?

SNOOPY

[winner69]

One might argue that the value of any investment is equal to the discounted sum of future cashflows. Since Xero has no positive cashflows, nor any plans to have any, there is a legitimate argument that Xero is not an investment at all. So maybe to be fair, this thread should be moved from the 'NZX' to the 'Off market' section of the forum?

SNOOPY

Snoops - you need to get up to speed with modern financial thinking

These days DCFs are calculated on 10 (or 15) year cash flows plus a Terminal Value = 50% of GD where GD is the value attributed for gaining domination globally assuming no more investment needed (GD is usually a very big number)

On that basis XRO, even with 10 to 15 years of negative cash flows, is valued at $50-$60

(Note - the more sophisticate practioners do apply a discount of say 20% to allow for the possible / likely entry of a new disruptive technology that would make XRO irrelevant)

[Longhaul]

Read an interesting sentence in a recent blog post (https://www.xero.com/blog/2015/06/500000-subscribers-500000-dreams/) by Rod (must have been around the 6 June):

"We’re now building our business to chase a billion of revenue, which seems frighteningly achievable."

While he still states they are focusing on the milestone of 1 million subscribers, I was wondering how many would be needed to crack 1 billion in revenue? Anyone care to hazard a guess?

Disc. not a holder these days

[mikeybycrikey]

While he still states they are focusing on the milestone of 1 million subscribers, I was wondering how many would be needed to crack 1 billion in revenue? Anyone care to hazard a guess?

Disc. not a holder these days

ARPU is about $350 per year, so you're looking at about 3 million subscribers.

[Harvey Specter]

ARPU is about $350 per year, so you're looking at about 3 million subscribers.With Payroll, that ARPU could increase though. Really depends on the split between the fully functioning plans and the cashbook.

[Hawkeye]

http://www.nbr.co.nz/article/pushpay-touted-faster-growth-xero-cs-p-175668

Probably not the right thread but oh well. I like the comment at the bottom.

(Also not on the right thread, but about a year ago someone created a poll on how many stocks people were holding shares in at that time, can we re-run that poll preferably along side the old one and see if there is any significant change in the answers? I know my answer is different)

[RGR367]

http://www.nbr.co.nz/article/pushpay-touted-faster-growth-xero-cs-p-175668

Probably not the right thread but oh well. I like the comment at the bottom. .......

That comment of XRO being illiquid at its infancy? Really? I don't seem to remember that though.

[Harvey Specter]

http://www.nbr.co.nz/article/pushpay-touted-faster-growth-xero-cs-p-175668

I like the comment at the bottom.Looks like someone got caught with their pants (moose costume) down.

[winner69]

Xero ASM not as exciting as previous ones it seems

FY16 revenues >$200m ......+65% plus a bit. Wonder how much from forex?

[RGR367]

Xero ASM not as exciting as previous ones it seems

FY16 revenues >$200m ......+65% plus a bit. Wonder how much from forex?

Yeah, the food came in slowly too. They probably just want you to drink as there were more drinks than food. Slimmer crowd too or the venue just got bigger :mad ;:

[RGR367]

But is the addition of another 40K subscribers since 3rd June a positive or a negative one? Actually 40K subs in 10 weeks.

[artemis]

But is the addition of another 40K subscribers since 3rd June a positive or a negative one? Actually 40K subs in 10 weeks.

Victoria said 50,000 in 10 weeks - 40,000 since 3 June though - and those all in New Zealand.

[zijiji]

But is the addition of another 40K subscribers since 3rd June a positive or a negative one? Actually 40K subs in 10 weeks.

That works out to be just over 800 a day - but the "540,000+" subscribers could be, for example, 548,000 but rounding down gives them a bit more scope to play with in the future..

I think the rise of 8% in 7 weeks is pretty good.. I would say the ball is starting to gather momentum.. Hopefully the US is contributing a fair share to these new subscribers!

[artemis]

That works out to be just over 800 a day - but the "540,000+" subscribers could be, for example, 548,000 but rounding down gives them a bit more scope to play with in the future..I think the rise of 8% in 7 weeks is pretty good.. I would say the ball is starting to gather momentum.. Hopefully the US is contributing a fair share to these new subscribers!

See page 23 of the CEO presentation. The 40k or 50k subscribers is NZ only. Victoria Crone - runs the NZ operation - is spectacularly successful.

[Baa_Baa]

Omg, is the story better than the truth? It was and is all about USA, how's that going?

[winner69]

See page 23 of the CEO presentation. The 40k or 50k subscribers is NZ only. Victoria Crone - runs the NZ operation - is spectacularly successful.

New Zealand - End of March 138,000 / today 150,000+

That seems like only 12,000 + a few in 4 months in NZ

Interesting no 'as at today' numbers from elsewhere

[winner69]

Omg, is the story better than the truth? It was and is all about USA, how's that going?

Getting very excited about US I understand

[Baa_Baa]

Getting very excited about US I
understand

Give us numbers, we can decide whether to be excited.

[RGR367]

Give us numbers, we can decide whether to be excited.

I wouldn't although Russ mentioned that those 35K US subs were in the last 8 months alone. Unless I heard it wrong again as I did not take down notes. I'm pretty sure I heard that the 40K was added since 3rd June thus making the 540K subs total.

[kiwi_on_OE]

I had hoped there would be some more details in the presentation about how things are going. Maybe they have done a video of the presentation and will post that so I can hear any extra details that were said, but aren't in the powerpoint.

A couple of points I found interesting. 1) They said 150k currently for NZ, but all the other country numbers were as of 31 Mar. 2) The 540k current seems right to me, but makes me think the 500k they announced 3 Jun was released a few weeks after they reached that milestone (475k @ 31 Mar, 540k 22 Jul suggests to me 500k mid May, not early Jun).

540k matches my guesses, 231k Aus, 94k UK, 43k US, 21k Intl. Good percentage growth in US. But overall their percentage growth is similar to or lower than Intuit, which isn't good.

[Longhaul]

Maybe they have done a video of the presentation and will post that so I can hear any extra details that were said, but aren't in the powerpoint.


From Xero's blog: A video of the presentation highlights will feature on the Xero blog in the morning on Thursday 23 July 2015 (NZT).

[Santiago]

It was:

- +65k since 31 March (475-540)
- "+50k in the last 10 weeks" according to Rod ("Australia is on fire")
- NZ from 138k - 150k since 31 March
- half of the U.S. number has signed up in the last 8 months
- the only target mentioned was $200m this f/y, which is surely under-promising as their run rate was $159m starting the year and with fx changes they must surely almost be there by now.

Chatting afterwards it seems the UK is the most immediately exciting. The U.S. is challenging but they seem positive now they have the people and strategy right.

[Daytr]

Couldn't the same be said about Arrium Snoop? ;-)


One might argue that the value of any investment is equal to the discounted sum of future cashflows. Since Xero has no positive cashflows, nor any plans to have any, there is a legitimate argument that Xero is not an investment at all. So maybe to be fair, this thread should be moved from the 'NZX' to the 'Off market' section of the forum?

SNOOPY

[winner69]

Santiago - the $200m plus comparison is $121m last year - up 65%

[Snoopy]

Snoopy wrote:
"One might argue that the value of any investment is equal to the discounted sum of future cashflows. Since Xero has no positive cashflows, nor any plans to have any, there is a legitimate argument that Xero is not an investment at all. So maybe to be fair, this thread should be moved from the 'NZX' to the 'Off market' section of the forum?"


Couldn't the same be said about Arrium Snoop? ;-)

Arrium is more or less the complete opposite of Xero. Arrium is a mature/declining business. Xero is an unprofitable start up. Arrium is entirely focussed on improving cashflows: restructuring to save cash (and ultimately bank cash), selling surplus assets to raise cash and all under the watchful eye of experienced bankers. Xero has no bankers to be accountable to, a policy of spending cash and then spending more cash.

Xero is in the planting stage: spending money to seed new technology for future growth. Arrium is in the harvesting stage: Lots of money spent, now digging up the rewards. In fact so much money has been spent at Arrium that they are now in a position where they are making losses, yet still generating cash to retire debt, so good is the cashflow. Arrium is a classic Ben Graham investment where you can buy assets on market at a substantial discount to book value. For Xero you have to pay a substantial premium to book value.

The strong positive cashflow available from Arrium is IMO, the reason that Arrium is an investment while Xero, without even a plan to have positive cashflow, is not.

SNOOPY

[artemis]

New Zealand - End of March 138,000 / today 150,000+. That seems like only 12,000 + a few in 4 months in NZ.
Interesting no 'as at today' numbers from elsewhere

Hmmm, Ms Crone showed 2 slides with NZ numbers. The first showed NZ subscribers at 100,000, and she then showed the slide of 150,000 as of 'today' - 22 July- and said numbers had just tipped over the 150,000 level. Hence the update, for the NZ audience of shareholders.

I didn't notice the date on the first slide (100,000) but she definitely said 50,000 new NZ subscribers in the past 10 weeks.

[mikeybycrikey]

Hmmm, Ms Crone showed 2 slides with NZ numbers. The first showed NZ subscribers at 100,000, and she then showed the slide of 150,000 as of 'today' - 22 July- and said numbers had just tipped over the 150,000 level. Hence the update, for the NZ audience of shareholders.

I didn't notice the date on the first slide (100,000) but she definitely said 50,000 new NZ subscribers in the past 10 weeks.

I'm pretty sure the slide of NZ subscribers said 138,000 before increasing to 150+. That would tie in the with FY15 figures that were released.

Also, the 50,000 new subscribers relates to total subscribers. It was shown on the slide showing that they were now at 540k, and gained 50k in the first 4 years, and then gained 50k in the last 10 weeks.

NZ isn't growing much any more so it doesn't make sense for 50k in growth to be coming from NZ.

The slides are available here https://www.nzx.com/files/attachments/217158.pdf

[Ginger_steps_]

Good percentage growth in US. But overall their percentage growth is similar to or lower than Intuit, which isn't good.

I beg to differ. Off a small base of subscribers compared to intuits millions + their massive marketing budget - I would say Xero's growth percentages are excellent! Xero do very little advertising from what I understand (per media article) - if word of mouth/organic growth are driving this puppy then watch out - the next year or two could go ballistic.
Furthermore, Xero are literally pouring cash into product development a couple of years in advance of release, while building massive international partners - they aren't going to be a "cloud accounting system" shortly - they will be a one stop "cloud business solution". While Intuit are far ahead in customer numbers at this point, they are playing catchups re prodcut development - bigtime. Xero haven't made a dent yet in Intuits customer base YET but i expect they will be migrating soon enough - en masse.

[winner69]

Hmmm, Ms Crone showed 2 slides with NZ numbers. The first showed NZ subscribers at 100,000, and she then showed the slide of 150,000 as of 'today' - 22 July- and said numbers had just tipped over the 150,000 level. Hence the update, for the NZ audience of shareholders.

I didn't notice the date on the first slide (100,000) but she definitely said 50,000 new NZ subscribers in the past 10 weeks.

If 50,000 new subscribers in NZ in the past 10 weeks is true then somebody is telling porkies

Either the 138,000 reported at March reports is wrong or the 150,000 as 'of today' is wrong

If both are correct than only 12,000+new subscribers from March year end to 'today' (4 months)

[winner69]

Rod said - "I wish we'd kept all the money we raised in US dollars, but that wasn't our treasury policy," he said, reflecting on a 25 percent fall in the New Zealand dollar exchange rate against the US dollar in the last year, during which the company raised a total of $147.2 million from two US private equity investment funds.

[RGR367]

No update from Chris when he fronted for the Australian market. And since it's really going well on that part of the world, I think they're reserving something big for the Melbourne Xerocon. Even their customer retention period of 93 months (check it yourself) is better than the overall Group. It's really looking nice I say.

[kiwi_on_OE]

Just switching a few of your sentences around: -


While Intuit are far ahead in customer numbers at this point, they are playing catchups re prodcut development - bigtime.

then watch out - the next year or two could go ballistic.

Has anyone seen/found video of AGM. It was promised on the blog for Thu morning but I can't see it.

[Ginger_steps_]

Just switching a few of your sentences around: -
I dont quite follow, are you implying I should have quoted your entire post?

[kiwi_on_OE]

I dont quite follow, are you implying I should have quoted your entire post?

Sorry I'll try to clarify. I was just turning your comments around to be a positive statement about Intuit rather than Xero. Intuit are far ahead in customer numbers, playing catchup on product development, and when they do that, watch out they could go ballistic.

I've checked my figures for Intuit, I had their forecast growth wrong, so Xero are outgrowing them.

Xero v Intuit - Xero winning in ANZ, Intuit winning in US. Perhaps UK will be a good battle ground to follow, as I'm guessing they may be reasonably evenly matched there.

[artemis]

A truckload of Xero online advertising popping up at the moment.

[Stranger_Danger]

A truckload of Xero online advertising popping up at the moment.

Oh dear. Certain you're qualified to understand and predict the long term economics of technology firms?

[gv1]

Oh dear. Certain you're qualified to understand and predict the long term economics of technology firms?
Thanks SD, haven't heard from you for long. would love to hear from you on other stocks as well.

[Ginger_steps_]

[QUOTE=kiwi_on_OE;582935]Sorry I'll try to clarify. I was just turning your comments around to be a positive statement about Intuit rather than Xero. Intuit are far ahead in customer numbers, playing catchup on product development, and when they do that, watch out they could go ballistic.

Ah ok i see.

RE: Posted by artemis http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=583730#post583730)
"A truckload of Xero online advertising popping up at the moment."


Yes I have noticed this too - they are advertising all through the most downloaded business podcasts on iTunes - Havent heard anything from Intuit in that space - lets hope Xero's momentum keeps building!

[Baa_Baa]

Quarterly report to 30 June. http://www.asx.com.au/asxpdf/20150731/pdf/43073s14z733tq.pdf

[winner69]

Quarterly report to 30 June. http://www.asx.com.au/asxpdf/20150731/pdf/43073s14z733tq.pdf

Pretty good eh BaaBaa

Looking at the rolling 4 quarter revenues line it is still growing at ~15% which is pretty good

Cash burn up a fraction on previous quarter

Committed to keeping this years cash burn to last years level. That's good

Believe the story

[Baa_Baa]

Pretty good eh BaaBaa

Looking at the rolling 4 quarter revenues line it is still growing at ~15% which is pretty good

Cash burn up a fraction on previous quarter

Committed to keeping this years cash burn to last years level. That's good

Believe the story

Receipts growth at 72%, if maintained, squeaks in above Rod's new target of $200m. Gotta make those targets. Notice no references to market share/growth this time, wonder how that's going. At the current burn rate, offset by revenues plus healthy cash balance, there's no need to even think about profit anytime soon, or even later, but we know that.

[Casino]

Averaging a cash burn of about $7 million per month.

28.5/3=?


Consider yourselves warned! :cool:

Xero has an impressive track record of raising hundreds of millions from investors. That's where a lot its value lies.

[Baa_Baa]

Averaging a cash burn of about $7 million per month. Meanwhile, revenue growth is falling even in times of a favourable exchange rate correction.

Impressive.

Consider yourselves warned! :cool:

NG, Rod was on record recently lamenting that they revenue in NZD, it's their Treasury policy or something like that.

[twotic]

Apologies in advance if I am wrong, but wasn't rod talking about the cash they hold (from the various cash raises)? They hold in NZD which is a bugger cause they spend a huge chunk of it in the US, so would have been way better off holding it in USD (if they could).

[Xerof]

Yep, most americans are unaware that there are currencies other than the USD:D

Xero will definitely invoice USA customers in USD, Ozzies in AUD, and Kiwi's in NZD, etc etc. But, they account in NZD and as any prudent company would do, they will have a Treasury hedge policy to adhere to.

Rod would have been lamenting the fact their hedging policy has caused them to hedge their (net) revenues back into NZD........too early:(

[Xerof]

Sorry, by hedge, I mean repatriating the physical via spot market. In my experience, there aren't too many exporters who use options as their primary tool for currency management, usually because of poor working capital buffers, which are mostly only available in the local currency. Might be different for Xero, as they have plenty of cash, but anyway I was merely proffering a possible reason for Rod to be so glum. If they were totally unhedged, he'd be doing side-drifts around the Havelock North round-about

[Harvey Specter]

Surely a hedge would be structured as an option, which they would have the right not to execute? Ergo, they should still be able to benefit from the FX correction?More likely to use forward exchange contracts, not options. In which case, might have locked in a fixed rate months into the future. I've seen policies along the lines of 100% cover for 6m revenue, 50% for 1 year, 25% for 18 months.

Alternatively, they could operate a cash sweep, whereby all forex is swept into a NZD account overnight.

[Baa_Baa]

NG, Rod was on record recently lamenting that they revenue in NZD, it's their Treasury policy or something like that.

Oops, selective memory. Here's the actual quotes ...

"Drury told BusinessDesk that the drop in the New Zealand dollar was not a major factor in the $200 million turnover forecast because the company earned revenue in a variety of currencies, with $74.2 million of the company's annualised committed monthly revenue of $159.3 million generated in Australia and $39.5 million in New Zealand. That compares with North American monthly revenues of $12.5 million. The UK market, where the company is also making a concerted push, accounts for $25.9 million a month on current customer numbers.
"I wish we'd kept all the money we raised in US dollars, but that wasn't our treasury policy," he said, reflecting on a 25 percent fall in the New Zealand dollar exchange rate against the US dollar in the last year, during which the company raised a total of $147.2 million from two US private equity investment funds."

And the whole article http://www.nbr.co.nz/article/xero-double-turnover-200m-year-says-drury-b-175942

[Xerof]

Re Baa's post : Aah yeah, well thats sort of what I thought had happened - not just his monthly revenues, but that lump of capital too.

NG, optionality carries a monetary cost, so not all wish to pay up front for the privilege of leaving some potential out there. When risk is coming at you every minute of the day, most prefer to cover and move on. Boards like that approach too.

[Harvey Specter]

For an accounting firm, their treasury team certainly looks pretty incompetent.Why do you say that. They shouldn't be speculating on currency so theirs seems fine.

[axe]

Are they forex experts or are they beautiful accounting software experts?

In hindsight it probably would have been a smart move to keep the USD that was earmarked for spending in the US as USD. Hindsight is a wonderful thing.

In the long run it really doesn't matter as long as they pull off the plan.
In 10 years from now there will probably be a shiny page in the annual report which shows a 1c USD/NZD movement will equate to +/- $1 million earnings.

DISC do not hold

[Daytr]

Isn't the fact that haven't kept a pool of funds in USD just poor management.
Its no excuse blaming treasury policy! Who implements & signs of on policy? The management team and board!
If they were going be spending USDs, they should have set aside USDs as otherwise they have created an FX exposure.
If it had gone against them so be it. However it was quite apparent the NZD was going to weaken, but that's even really besides the point.
I suppose one day in infinitum when they start making USD profits it will be the opposite problem.
By that stage the NZD will no doubt be strong again, after a quick trip to 50c.

[Beagle]

Thanks baa.

For an accounting firm, their treasury team certainly looks pretty incompetent.

I guess Rod the messiah runs that, too.

Yes...when you run what is allegedly claimed to be the world's most beautiful accounting system the faithful will tell you that common sense treasury and forex management is immaterial. Cash burn keeps going up...no sign of that being reversed anytime soon is there !! Can anyone tell any of us if or when this company will actually make a profit ? Does rod even know or does he even care with what's he's paid by the company ?

[Casino]

Sorry casino, was working with the net figure of 22

You're right, I stand corrected.

[Harvey Specter]

For anyone wanting a high level valuation of Xero from someone who understands SAAS:

http://samstewartnz.com/xero-saas-case-study-financial-and-valuation-analysis/

7504

[Harvey Specter]

Just looking at the customer numbers chart, it looks like it has already passed the point of inflection. If so, I think ultimate numbers will be far less than projected in that article.Look at the graph with the regional breakdown in it and you can see that the NZ numbers are a major influence in the total line slope. UK and US is where it matters and I dont think you can say they are past the point of inflection there. That is where it matters and it is too early to tell whether the big investment is paying off (quite frankly, the US CAC numbers look terrible, especially when you factor in the high churn, so they need a major pay off there).

[Santiago]

I think its pretty clear that the states is failing. And, given the relatively short life of SMEs, they can't afford to be losing momentum this quickly. I foresee a financial trainwreck here.

I believe you've been foreseeing that (and no doubt hoping like hell for it) for some time.

The one part that stood out for me was: Xero’s return on sales and marketing expenses, after cost to serve, increased to 4.3x i.e. for every dollar of sales and marketing expense Xero creates $4.30 in lifetime customer value.

You can see why they persist with the growth over profits strategy, though of course as the report notes, there are many uncertainties...

[mikeybycrikey]

Thanks for posting that Harvey. An interesting read.

I especially liked this quote:


It is a relfection of the size of the opportunity that despite listing 8 years ago and having over 540,000 customers worldwide there is still considerable uncertainty surrounding Xero’s potential.

I find it interesting that Xero have now passed 500k customers, and are still growing quickly in all markets (although that growth is slowing, maybe only 60% this year). The question for me has always been when the growth will tail off rather than where profit will come from and this analysis does a good job of distilling that.

[Toasty]

http://www.stuff.co.nz/business/industries/70844351/xero-chief-operating-officer-ross-jenkins-to-leave-firm

Pretty big news I should think although he is not as prominent as Rod obviously. Having Russ Fujioka as CEO will hopefully minimise any impact from this but I am sure NewGuy has some thoughts on the subject.

[Baa_Baa]

For anyone wanting a high level valuation of Xero from someone who understands SAAS:

http://samstewartnz.com/xero-saas-case-study-financial-and-valuation-analysis/

7504

Thanks for posting that analysis Harvey. Am I reading it correctly that the SP valuation scenarios are projections for the SP in 2025?

7515

[Harvey Specter]

Thanks for posting that analysis Harvey. Am I reading it correctly that the SP valuation scenarios are projections for the SP in 2025?

7515I would have to check but I assume he has discounted those 2025 scenarios back to a price today.

On a different note:

XeroCon Melbourne is about to start. There is normally an upswing in the shareprice every time the Ozzies attend the lovefest.

[Daytr]

I think its starting to look like pretty good value around here. This is the sort of level I mentioned six months or so ago.
So after quite a bit of patience I have dipped my toe in the water.
I really would like to see that cash burn rate at least stabilize but really I want to see it reducing.
Seems like the UK may be more of an immediate prize than the US & I would be happy too see them make inroads their.
At least they only have one level of Government taxes and jurisdictions to cater for whereas in the US every state is different.

[Daytr]

Why's that New Guy?


You are one crazy mofo, mate. Very best of luck.

[Leftfield]

Today from XRO "Xero Limited (NZX/ASX: XRO) today announces achieving more than 400,000
paying subscribers across Australia and New Zealand on its small business
cloud accounting software.

Within the next week, Xero expects to reach the significant milestone of
250,000 subscribers in Australia, and recently announced 150,000 subscribers
in New Zealand. This latest announcement demonstrates the continued momentum
Xero has in these markets, as small businesses choose Xero as their preferred
cloud accounting platform over competitor products.

Xero also recently announced it has over 540,000 subscribers globally."

540k globally now less 475k 3-4 weeks ago at AGM = 65,000 per month (roughly). Not bad.

[winner69]

Today from XRO "Xero Limited (NZX/ASX: XRO) today announces achieving more than 400,000
paying subscribers across Australia and New Zealand on its small business
cloud accounting software.

Within the next week, Xero expects to reach the significant milestone of
250,000 subscribers in Australia, and recently announced 150,000 subscribers
in New Zealand. This latest announcement demonstrates the continued momentum
Xero has in these markets, as small businesses choose Xero as their preferred
cloud accounting platform over competitor products.

Xero also recently announced it has over 540,000 subscribers globally."

540k globally now less 475k 3-4 weeks ago at AGM = 65,000 per month (roughly). Not bad.

That's nearly 800,000 annual rate - see them over a million customers by year end then?

[Leftfield]

That's nearly 800,000 annual rate - see them over a million customers by year end then?

Good chance IMO.

[Santiago]

Today from XRO "Xero Limited (NZX/ASX: XRO) today announces achieving more than 400,000
paying subscribers across Australia and New Zealand on its small business
cloud accounting software.

Within the next week, Xero expects to reach the significant milestone of
250,000 subscribers in Australia, and recently announced 150,000 subscribers
in New Zealand. This latest announcement demonstrates the continued momentum
Xero has in these markets, as small businesses choose Xero as their preferred
cloud accounting platform over competitor products.

Xero also recently announced it has over 540,000 subscribers globally."

540k globally now less 475k 3-4 weeks ago at AGM = 65,000 per month (roughly). Not bad.

AGM noted numbers from end March, not from 3-4 weeks ago.

[Daytr]

It has the same speculative value as it did before I agree, but however the price for that speculation has dropped considerably from mid 20s to $16.
Market cap is now a little over $2Bln, was before around $3.5Bln.
It is a lottery ticket in some respects but they are growing and I think the current valuation is about right ish.
I was also saying the same when it was valued in the mid 20s by the way.
Looks like customer growth is around 200-250k per annum, but I am more confident about their UK strategy than the US one & I can easily see them getting something like 500k customers in the UK.


beause there is no meaningful new information to suggest that this will ever be a success. Thus, while the price may be lower, the prospects are no better than before.

[Nasi Goreng]

Sorry for not having the numbers at hand.

Can anyone tell me how many times revenue they are currently priced at... and how many customers would they need to acquire to get to a respectable number like 3 x earnings.

From memory it's around 15 x at the moment and got credit from a U.S. Broker for being the most expensive stock in the world lol.

It's crazy expensive and if you believe the story there is some upside... but why not go for some other speculative stocks that have more chance of making it like Tesla, Netflix, Alibaba, Twitter, there are loads of options.

[Nasi Goreng]

Ok so currently around 17 x revenue. If they grow by 80% in F16 and 17, they will be around 5.5 x revenue.

I feel it's going to take 2 really good years to get to the point where current SP seems fair value. If they grow faster then I can see the SP rocketing.

[Daytr]

I have been pretty critical of Rod Drury, however one thing he is right on and there are plenty but you can't value this stock on straight revenue multiples, its obviously about the growth potential. And at $3.5Bln I thought that potential was fully valued, at $2Bln not so much & starting to look far more reasonable. I would suggest the way they are going they should be starting to make money in the next 12-18 months & after that further growth should start pulling in quite considerable surplus cash. Once the market gets a whiff of that I think we will see the SP bounce back strongly. As mentioned I like what they are doing in the UK and with a population of 60M throw in Ireland which is another NZ sized market.
Anyway, proof will be in the pudding obviously.

[RGR367]

................... As mentioned I like what they are doing in the UK and with a population of 60M throw in Ireland which is another NZ sized market.
Anyway, proof will be in the pudding obviously.

Xero Sales Lead - Rest of the World Johnny MacAvoy replied in a blog that the interest they're getting from accountants/bookkeepers/business owners in other markets is not any different to what they seen in their named markets. So what do you know/heard/seen about their UK approach that would be different or something that got you liking it?

[Daytr]

I have seen various company reports talking up their ambition in the UK. But really it comes down to my own view that the UK market is closer aligned to the Aussie & NZ markets than the US is. Particularly as they have a similar system of government so only really one layer of taxes, whereas the US every State is basically a different market. The US as I have said before has been very slow to take up Cloud and I think their small business is quite backward or Mom & pop compared to the other three markets. basically I see the UK as easier.

In saying all that, the main driver for me is the SP is now far more reasonable having dropped by around 35%.
So I just see it as far better value.
In saying that, they need to reign in costs & I would employ a cost accountant to go through and trip any fat.
Its fine saying its a growth strategy and I get that, but you should also be lean.
The board would be a good start, its far too big for a company this size.

[Toasty]

http://www.zdnet.com/article/xero-to-bridge-the-gap-between-small-businesses-and-banks/

This is the kind of stuff that makes it interesting to be a Xero shareholder.

[Ginger_steps_]

So, ive seen multiple comparisons between Xero and QuickBooks, but none between Xero and Sage - anyone have any knowledge in the area? From the outside Sage looks like a pretty well oiled engine.

[kiwi_on_OE]

So, ive seen multiple comparisons between Xero and QuickBooks, but none between Xero and Sage - anyone have any knowledge in the area? From the outside Sage looks like a pretty well oiled engine.

Can't help with product comparisons between Sage and Xero. Sage history seems to be similar to Intuit, coming from an installed app background, moving to SaaS. Xero had more users in UK (83k 3/15) than Sage did 'online' in the UK (64k 3/15). Quickbooks sponsoring Aston Villa for two years in Premier League and should announce customer numbers in the next week or so. Might be a good even scrap here for the next few years. They'll all end up blowing lots of money.

[LAC]

Sage is pretty big in South Africa and Rod did mention in the AGM about having customers in South Africa. Currency will be an issue there but def has the population and growth there.

[Ginger_steps_]

Can't help with product comparisons between Sage and Xero. Sage history seems to be similar to Intuit, coming from an installed app background, moving to SaaS. Xero had more users in UK (83k 3/15) than Sage did 'online' in the UK (64k 3/15). Quickbooks sponsoring Aston Villa for two years in Premier League and should announce customer numbers in the next week or so. Might be a good even scrap here for the next few years. They'll all end up blowing lots of money. haha thanks kiwi, i look forward to the fight!

[Nasi Goreng]

Looks like new lows are on their way. If it doesn't bounce off $15, I think it could test $12 :scared:

[Baa_Baa]

Looks like new lows are on their way. If it doesn't bounce off $15, I think it could test $12 :scared:

Looks like a technical breakdown yesterday/today of the shallow rising trend line support from the low Oct21 at $15. I agree, next technical support below $15 is $12 on my chart.

But it just takes one stupendously good news story and Boom! Usually Xercon sets a rocket under the SP, not sure what was different this time.

[winner69]

Still think that a word like Xerocon has bad connotations

[bigbruce]

This stock is still well overvalued at $12. I wouldn't be surprised to see it hit single digits by the end of the year.


yes agree
FBU sp hovers around $8.00, profit around 630mil, boring old npx sp 4.30 profit 60+mil
xro sp 16.00, profit? turnover under $200mpa You can see why Warren Buffett stays well clear of internet stocks. We all love a good "story", but Im not hooked

[Santiago]

yes agree
FBU sp hovers around $8.00, profit around 630mil, boring old npx sp 4.30 profit 60+mil
xro sp 16.00, profit? turnover under $200mpa You can see why Warren Buffett stays well clear of internet stocks. We all love a good "story", but Im not hooked

Ahhh I think you might want to refer to market cap rather than SP my friend. Your point is still valid in this case, but SP means little if not linked back to what the company is actually worth as determined by the market.

[Santiago]

Actually, I think its deadly accurate!

I'm fascinated that you can be so derogatory of XRO on this thread and such a true believer on the PEB thread. I can understand your doubts with XRO (strong governance and leadership, fast growing, global reach, tested product etc) , but how can you then turn around and be so convinced that PEB (weak leadership, board out to lunch, bugger all sales, no uptake etc) has a future?

[RGR367]

I am equally concerned about PEB. The difference is that PEB's IP is miles ahead of XERO. Xero's product can and will be copied and improved upon by others. PEB's IP, conversely, is locked down and very hard to copy.

I also think that Rod is a very dangerous man to be in charge of this company, particularly given his inability to translate growth into profit. And, I am also acutely aware of how difficult it is to crack the states. Oh, and the loss of so many senior staff this year is a very bad sign.

But rest assured; PEB scares the crap out of me. I have quite a bit invested there, so am praying for a miracle...

Understood your position as you probably got no emo involvement (i.e., money invested or traded on XRO) but rest assured too that we're still nibbling at XRO now at its low sp. Hope for your sake that PEB manages to get at least $15 in 2.5 years time. GL to us all.

[Santiago]

I am equally concerned about PEB. The difference is that PEB's IP is miles ahead of XERO. Xero's product can and will be copied and improved upon by others. PEB's IP, conversely, is locked down and very hard to copy.

I also think that Rod is a very dangerous man to be in charge of this company, particularly given his inability to translate growth into profit. And, I am also acutely aware of how difficult it is to crack the states. Oh, and the loss of so many senior staff this year is a very bad sign.

But rest assured; PEB scares the crap out of me. I have quite a bit invested there, so am praying for a miracle...

Well I'm glad (I suppose, but maybe not...) that you're scared!

I would argue that Xero has a brand that would be harder to copy than PEB's IP (a number of companies are working in the biomarker space), and that PEB's leadership is dangerous in its naivety. Anyhow, I hope they both succeed, but having gone to the Xero AGM this year I would back that group of people to succeed any day (and I would also say their product is already a success- the only argument is around scale into the future).

[couta1]

Actually I like Xro and PEB and hope they both become obscenely successful.

[couta1]

But hopefully you sold out of xero around the $22 mark a few months back during that rebound!?!
Yep I did and overall my tally for Xro is in the blue, unfortunately I can't say the same about Peb at this point in time.

[sb9]

Looks like it might test sub $15 today.

Disc: Do not hold or held.

[Beagle]

Looking ugly. Reality Bites ? (This company has made huge losses for nearly nine years and there's not even the slightest hint when they might ever actually make a profit).

[couta1]

Looking ugly. Reality Bites ? (This company has made huge losses for nearly nine years and there's not even the slightest hint when they might ever actually make a profit).
To be honest Roger I don't think the price decline has anything to do with reality biting, more just a normal type correction for this stock after that big capital injection a while back. My gut feel tells me this company will do well at the end of the day and I must say i like the vision and audacity that Xro exhibits in the face of numerous obstacles.

[Bobcat.]

Double bottom?

https://www.anzsecurities.co.nz/directtrade/dynamic/superchart.aspx?sc=xro&eg=au

Click on "Draw"

[Beagle]

To be honest Roger I don't think the price decline has anything to do with reality biting, more just a normal type correction for this stock after that big capital injection a while back. My gut feel tells me this company will do well at the end of the day and I must say i like the vision and audacity that Xro exhibits in the face of numerous obstacles.

I don't know mate. It was $45 about 18 months ago so now just a little over one third of where it was at the peak of the hype. The thing that would concern me if I was a holder is that as the company grows so does its losses.
Where's the light at the end of the tunnel with losses ?

[Onion]

Double bottom?

https://www.anzsecurities.co.nz/directtrade/dynamic/superchart.aspx?sc=xro&eg=au

Click on "Draw"

One bottom -- but with a big crack! ;)

[Dentie]

Actually, I think its deadly accurate!

ha ha ha...nice one NG!!

I'm certainly no Warren Buffet (can just spell his name!!) but I got harassed off this thread many, many months ago (especially Turmeric - btw, where is he?) because I dared to say the SP was ridiculously over cooked etc etc and the business seemed more of a dream than a reality. The SP then was about what it is now and on its way to $42.

My thoughts haven't changed either. Given Rod & Co were going to saturate the US market into submission....ummmm, what's happened there? PEB seems to be facing the same issues in the US market. So who is the common denominator here? No doubt why PEB are looking into Asia now - less headwinds and less bloodymindedness.

[Harvey Specter]

Intuit results are out - The company said "small business momentum continues to build," with the addition of 110,000 QuickBooks Online subscribers during the quarter for a total of 1.075 million."

QuickBooks total paying customers grew 7 percent for the year, accelerating from last year."

I assume this includes Quickbooks online as well so most of that growth is just from their existing customer base.

[Casino]

"

QuickBooks total paying customers grew 7 percent for the year, accelerating from last year."

I assume this includes Quickbooks online as well so most of that growth is just from their existing customer base.

See page 5
http://investors.intuit.com/files/doc_financials/2015/Fact_Sheet_and_Guidance_8_19_15_v2.pdf

[RGR367]

And a view about the Intuit report http://www.mercurynews.com/business/ci_28675627/intuit-misses-earnings-will-sell-its-quicken-unit

[Casino]

420 million down the drain http://www.bloomberg.com/news/articles/2012-04-27/intuit-to-acquire-demandforce-for-423-5-million

[skid]

To be honest Roger I don't think the price decline has anything to do with reality biting, more just a normal type correction for this stock after that big capital injection a while back. My gut feel tells me this company will do well at the end of the day and I must say i like the vision and audacity that Xro exhibits in the face of numerous obstacles.

your gut feeling is a dangerous thing indeed coutts!:)
you were smart to get out Should have perhaps payed more head to the charts for SUM though....

But tough times for everyone atm

[couta1]

your gut feeling is a dangerous thing indeed coutts!:)
you were smart to get out Should have perhaps payed more head to the charts for SUM though....

But tough times for everyone atm Charts wouldn't have told you anything about Sum's results unless you had inside information ( Norah walks silently by) :cool:. PS - Gut feeling can be dangerous but if I hadn't have ignored it at certain times I would be a lot better off now.

[skid]

the fact remains..if you had paid attention to the charts(definite uptrend at the time)you would have done well...I reckon gut feeling is a good STARTING point .with the help of charts and research.My gut feeling is that atm has reached a bit of a turning point..but its only that ,and without more research I would never do anything but watch with interest (chart is still acceptable imo)That death cross on the Dow could be a worry though...
sorry to stray..back to atm

[Hawkeye]

Weeeeeeeeee

[LAC]

Weeeeeeeeee

On the rollercoaster

[Daytr]

Global equity markets obviously aren't helping and US equity futures are getting smashed again. Chinese market was down 10% again today at one stage, now down 7.5%! We are having a bit of a meltdown so a dangerous time to be long a volatile stock like this.
I stopped myself out over 15% ago and obviously glad I did.
So I don't think entry point has much to do with XRO right now, but global markets.
This is feeling a little like 2008ish to me, but I obviously hope not and its just a sharp correction.

[skid]

Phew. I hear ya, man. PEB has sunk my portfolio.

coutts and NG--you owe it to yourselves to at least have a look at KWs post #64 on the Black Monday thread(a link to one of the all time gurus on ST)

All the best

[Beagle]

Its just taken out its 200 WEEK moving average - which was the support for it all through Nov-Feb. No obvious support level for it from here on it.
7548

Other than Rod talking his game up there is no support...no earnings, no near term prospect of earnings, no dividends and with the markets taking a huge reality check it gets harder to float promises and stories especially after nearly a decade of ever increasing losses. But wait there's more !!...Holders can look forward to the next "earnings" announcement which is apparently coming in October where no doubt Rod will proudly announce that sales and losses have doubled yet again after doubling last year, so losses will be circa four times what they used to be...surely all the proof that the business model works that any realistic investor needs :lol:

[kiwi_on_OE]

Other than Rod talking his game up there ...
I agree with that, and doing it misleadingly. Stuff article today, http://www.stuff.co.nz/business/71394432/rod-drury-holds-steady-as-xero-shares-dive-below-15
""We are still outgrowing Intuit outside the US and Canada...." Teeling [Xero global strategy head] said."

By my maths Xero's ex-US growth was ~60% over last year, Intuit's ex-US growth was ~135%, but Xero beat them on actual numbers (308k->~490k v 84k->198k). Those numbers may be US only, but I doubt that the Canadian numbers would change them much.

Or was he talking revenue? Whatever the metric, it was misleading/sloppy. Save the BS for the sales presentations!

[gregrday]

Intuit laying off staff... 399 is a reasonable chunk of 8200. Probably part of the strategy to focus on the online market. I'm thinking if you own Xero, you should probably own Intuit, thats pretty much the market!

http://techcrunch.com/2015/08/25/more-layoffs-for-intuit-as-company-continues-realignment/

cheers
Greg

[gbogo]

my chart says back to $5 from here. i know, i know.. i jobbed this stock numerous times on the way up and got caught wrongly in the last rally to $25. i still think it's a great idea / business / product. but it could go all the way to $5 - be shunned by everyone and their dog and then head back up again.. just sayin'...

[RGR367]

That creaking and groaning sound you can hear? Its the sound of the Intuit ship slowly turning around. How much time does XRO have left before its facing the right direction, and the engines are on maximum forward thrust?

(actually, I could answer my own question, because according to the market and the share price - XRO is already out of time)

And I could also say that's the sound of the competition denting Intuit's brand of invincibility.

[Leftfield]

And I could also say that's the sound of the competition denting Intuit's brand of invincibility.

Agree, the Jury is still out and it is too early to write XRO off.

[Harvey Specter]

Agree, the Jury is still out and it is too early to write XRO off.QBO is growing customers quickly but it is at the expense of its desktop product. Add to that the fact that lots of small businesses dont currently using accounting software so there is plenty of room for them both in the market. My view is XRO will be a success. Whether the valuation is correct is a different question.

And this just popped up on Twitter:

7558
https://twitter.com/Xero/status/636386934198247424

[PSE]

Other than Rod talking his game up there is no support...no earnings, no near term prospect of earnings, no dividends and with the markets taking a huge reality check it gets harder to float promises and stories especially after nearly a decade of ever increasing losses. But wait there's more !!...
Yes and good on you for warning people consistently Roger.
The market finally seems to realise that growing losses is not a business strategy.
Companies should be valued on their proven prospects not on hot air from the management. Making a profit is a company's reason for living and its oxygen - the longer Xero holds its breath the more rescusitation it will need from shareholders. If it never learned to breathe it never should have lived.

[Leftfield]

QBO is growing customers quickly but it is at the expense of its desktop product. Add to that the fact that lots of small businesses dont currently using accounting software so there is plenty of room for them both in the market. My view is XRO will be a success. Whether the valuation is correct is a different question.

And this just popped up on Twitter:

7558
https://twitter.com/Xero/status/636386934198247424

Thanks for sharing Harvey. Posting higher paid subscriber growth than Intuit last FY is v interesting. A possible additional strength is that XRO is well represented in several key markets (NZ, AUS and UK), while Intuit is more biased to USA. It certainly is a David and Goliath battle - and it is early days.

[kiwi_on_OE]

Intuit's 143k paying subscriber growth in the last FY, is net, and combines online and desktop. Their online went from nearly 700k to nearly 1.1m, while desktop dropped from over 1.1m to under 900k.

So not exactly a like-for-like comparison, not apples v oranges, more like all citrus fruit v oranges.

[Leftfield]

Intuit's 143k paying subscriber growth in the last FY, is net, and combines online and desktop. Their online went from nearly 700k to nearly 1.1m, while desktop dropped from over 1.1m to under 900k.

So not exactly a like-for-like comparison, not apples v oranges, more like all citrus fruit v oranges.

Thanks Kiwi on OE - (Hope citrus fruit is not a lemon!) It would be nice to be able to compare more accurately. XRO's paying subscribers at 13 Aug = 540k so approx half that of Intuit. However, appears Inuit losing desktop to gain cloud? Also that XRO maybe growing faster now? Time will tell.

[Joshuatree]

Speaking of Clowns "What do you call a Clowns divorce? A custardy battle:)

[Harvey Specter]

Lets just compare Cloud accounting customers - after all, that's what XRO claims to be, "the world's leading cloud accounting programme" not the world's leading accounting software provider. So Intuit added 110,000 in ONE QUARTER while XRO added 191,000 in the WHOLE YEAR. Gotta love those spin doctors eh!I disagree slightly. XRO has always said there are millions of businesses that aren't serviced by any software and that is their main opportunity, not poaching off existing suppliers. As such, it is the net growth that is important as the upgrade path from QB to QBO is expected. If you are a new business, which software would you choose - the numbers say XRO (if looking globally, QBO if US)

Re 'leading provider', my guess is the lawyers choose that word very carefully as it doesn't really mean anything - doesn't mean most customers, best product, or most features. It kind of implies all of those but non of those so they cant be sued. Unlike spark/vodafone who argue over who has the best coverage.

[Baa_Baa]

A couple of very interesting articles from Chris Keall in todays NBR, sadly for non-subscribers both are paywalled.

The gist of it is Forbar analyst Blair Galpin has XRO on bearish underperform 12-month SP $18.05, and persistent thorn in Rod's side Woodward Partners Nick Lewis downgrading 12-month SP from $18.22 to $12.50 but suggesting pulling out of the US market could "support a $25-ish" SP.

Subscribe to NBR for the full articles, and make of it what you will.

[Baa_Baa]

So might be interesting to see what Reuters analysts think as well ... http://www.reuters.com/finance/stocks/analyst?symbol=XRO.NZ

Buy - 0
Outperform - 0
Hold - 1
Underperform - 3
Sell - 1

EPS declining Mar 15 -40, Mar 16 -59 and flat into Mar 17 -58.

The darling of the NZ Tech sector is up against it with their big punt on the USA. This could take years to unfold, or unwind as it may be.

[Santiago]

Interesting snippet from a recent Xero Blog post:
"We have 6,000 customers in Hong Kong right now, but with the addition of bank feeds and some Gold and Platinum Partners we can truly be a player in the region."

I was surprised with that number- seems to be significant enough to suggest that the product has enough appeal for the company to have scope to expand that market too in the future.

[Leftfield]

Interesting snippet from a recent Xero Blog post:
"We have 6,000 customers in Hong Kong right now, but with the addition of bank feeds and some Gold and Platinum Partners we can truly be a player in the region."

I was surprised with that number- seems to be significant enough to suggest that the product has enough appeal for the company to have scope to expand that market too in the future.

They mentioned such possibilities at the Wellington AGM. XRO are securing world wide appeal - even tho not marketing in many countries. South Africa was another one mentioned as I recall. I wonder if there are thoughts off (say) Spanish versions?

[Daytr]

The trading prior to the large CR in Feb under investigation by FMA.
And so it should be. I don't believe in coincidences !

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11509757

[trader_jackson]

Yes it was a huge huge "coincidence" as well... will be interesting to see what the investigation yields. I am glad for now that I am no longer involved in XRO

(Disclosure: Brought at $17, sold at $42, 6 months later)

[longy]

Yes it was a huge huge "coincidence" as well... will be interesting to see what the investigation yields. I am glad for now that I am no longer involved in XRO

(Disclosure: Brought at $17, sold at $42, 6 months later)

Good for you. I only wish I knew what I know now. But the best thing I did was cut the losses and jump out a few weeks ago. I am sitting on the side at the moment and still a believer in its story.

[trader_jackson]

Good for you. I only wish I knew what I know now. But the best thing I did was cut the losses and jump out a few weeks ago. I am sitting on the side at the moment and still a believer in its story.

I am still a believer in the long term story, PEB and XRO will most likely be NZX10 in a decade or two time, but PEB is enough risk in the tech/risky sector for the moment. Good luck to holders.

[Beagle]

The trading prior to the large CR in Feb under investigation by FMA.
And so it should be. I don't believe in coincidences !

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11509757

Huh - What a surprise that their own internal investigation found nothing untoward. Good to see the FMA doing something about this and it would be even better to see people being prosecuted for insider trading.

[Everwood]

Could someone please give me an overview on this article especially this part "Some more on the possible timing of a Nasdaq listing, and why it's so important." which appears below the headline http://www.nbr.co.nz/opinion/when-xero-shot-40-multiples-were-probably-bit-high-drury.

[Harvey Specter]

Could someone please give me an overview on this article especially this part "Some more on the possible timing of a Nasdaq listing, and why it's so important." which appears below the headline http://www.nbr.co.nz/opinion/when-xero-shot-40-multiples-were-probably-bit-high-drury.The section on listing:


His other benchmarks before a US listing are:


[*=1]Passing $US100 million in revenue — which was a tick before our currency slid back. Xero has already said its revenue will increase from $120 million to $200 million in its current financial year, so it should sail past that one - again);
[*=1]Hiring a world-class CFO. Again, tick. After various top-level false starts, Sankar Narayan is due to start in the role shortly); and
[*=1]The sharemarket improving and becoming more receptive to growth stocks — far from a tick at this point. Mr Drury says the middle of next year will be the earliest that market conditions are likely to favour a US listing.

And he reiterated a US IPO is something Xero still very much wants to do.

[Harvey Specter]

Could someone please give me an overview on this article especially this part "Some more on the possible timing of a Nasdaq listing, and why it's so important." which appears below the headline http://www.nbr.co.nz/opinion/when-xero-shot-40-multiples-were-probably-bit-high-drury.The section on listing:


His other benchmarks before a US listing are:


[*=1]Passing $US100 million in revenue — which was a tick before our currency slid back. Xero has already said its revenue will increase from $120 million to $200 million in its current financial year, so it should sail past that one - again);
[*=1]Hiring a world-class CFO. Again, tick. After various top-level false starts, Sankar Narayan is due to start in the role shortly); and
[*=1]The sharemarket improving and becoming more receptive to growth stocks — far from a tick at this point. Mr Drury says the middle of next year will be the earliest that market conditions are likely to favour a US listing.

And he reiterated a US IPO is something Xero still very much wants to do.

"We love being listed and being listed in new markets really helps with PR and marketing because people talk about you [but] we’ve got plenty of capital so there’s no urgency to do it.
“We don’t need to raise money with an IPO. We have enough cash to get through to break even. But if we choose to, we could put the accelerator down further. Because if we did do an IPO we’d probably have to raise another $300 million or so."

[Everwood]

The section on listing:

Thank you for that Harvey.

[duncan22]

Interesting to see the search volume diffences of QuickBoosk Online vs Xero in the US: http://www.google.com/trends/explore#q=QuickBooks%20Online%2C%20xero&geo=US&cmpt=q&tz=Etc%2FGMT-10

Unfair comparison on Quickbooks side as their potential or current online customers would likely search for just Quickbooks as well which is not included above, plus investors would search for xero which would add non relevant search volume.

[JamesST]

It is pretty amazing the momentum that Xero is getting. Especially when you change from US to worldwide.


Interesting to see the search volume diffences of QuickBoosk Online vs Xero in the US: http://www.google.com/trends/explore#q=QuickBooks%20Online%2C%20xero&geo=US&cmpt=q&tz=Etc%2FGMT-10

Unfair comparison on Quickbooks side as their potential or current online customers would likely search for just Quickbooks as well which is not included above, plus investors would search for xero which would add non relevant search volume.

[Leftfield]

Interesting to see the search volume diffences of QuickBoosk Online vs Xero in the US: http://www.google.com/trends/explore#q=QuickBooks%20Online%2C%20xero&geo=US&cmpt=q&tz=Etc%2FGMT-10

Unfair comparison on Quickbooks side as their potential or current online customers would likely search for just Quickbooks as well which is not included above, plus investors would search for xero which would add non relevant search volume.

When I searched Xero v Intuit in the Google Trends I found Xero is now surpassing Intuit for the first time. V Interesting.

[duncan22]

It is pretty amazing the momentum that Xero is getting. Especially when you change from US to worldwide.

For me that data shows the opposite, Quickbooks Online growing far faster than Xero now...


When I searched Xero v Intuit in the Google Trends I found Xero is now surpassing Intuit for the first time. V Interesting.

Xero vs Intuit isn't a fair comparison I don't think. Xeros product is Xero, Intuits product is Quickbooks/Quickbooks Online.

[Nasi Goreng]

The opportunity cost of being a xero shareholder is huge. If investors had of chosen a real growth company like Facebook say 12 months ago, you would have seen share price appreciation and a favourable forex rate. Going forward, FB has so much potential and will probably double in value and eventually pay dividends. I'm not so sure about Xero, I think that single digits are a very real possibility in the next year making a capital raise / IPO a very challenging prospect.

[JamesST]

The opportunity cost is tiny compared to the actual loss in value? I don't think many shareholders would be too concerned about the opportunity cost.

But I agree that anyone who invested in any stock that's gone down over the last year needs their head checked. It would have made much more sense to invest in companies that ended up increasing significantly in value. I'm not sure why people continue to do this?


The opportunity cost of being a xero shareholder is huge. If investors had of chosen a real growth company like Facebook say 12 months ago, you would have seen share price appreciation and a favourable forex rate. Going forward, FB has so much potential and will probably double in value and eventually pay dividends. I'm not so sure about Xero, I think that single digits are a very real possibility in the next year making a capital raise / IPO a very challenging prospect.

[Baa_Baa]

The opportunity cost is tiny compared to the actual loss in value? I don't think many shareholders would be too concerned about the opportunity cost.

But I agree that anyone who invested in any stock that's gone down over the last year needs their head checked. It would have made much more sense to invest in companies that ended up increasing significantly in value. I'm not sure why people continue to do this?

I agree, XRO is a buy and hold nightmare. I've only identified 3 trades since Jan 2012 using my trusty weekly chart and 14EMA (for strong trending stocks). The range $11.75 - $12.70 looks like short term support. This chart illustrates two things for me ... 1. how sentiment has driven the share price despite incalculable underlying value, and 2. the cost of 'believing the story' is immense with no certainty going all-in on the USA market.
7600

[Baa_Baa]

As an aside, if you take out the two week spikes of week ending 20 and 27 Feb (which is now under investigation by the FMA), and overlaid the price performance since then as a continuation from week end 13Feb, then the share price now would be about $5 - $6. Some would consider that fair value and worth the risk of being all-in on the USA market.

[NZSilver]

I've thought about xro a bit, but never bought in. I started using their software 4 months ago when I began farming, they offered a free trial so I took it up and decided to stay - so I have never had any experience with other software. The buisness is simple so I only require the minimal transaction setup and are not by any stretch pushing xro to its full functionality. It's nice and simple to use but someone showed me myob for 10 mins one day and it looked very similar - I thought I could easily use that. I really just liked supporting the NZ company. However I haven't been game enough to invest even as price drops. From what I have seen, and there seems to be plenty of competition so I'm not sure it will really take over the world... It just didn't seem that special. Happy to be proven wrong though.

[kiwi_on_OE]

Interesting to see the search volume diffences of QuickBoosk Online vs Xero in the US: http://www.google.com/trends/explore#q=QuickBooks%20Online%2C%20xero&geo=US&cmpt=q&tz=Etc%2FGMT-10

Unfair comparison on Quickbooks side as their potential or current online customers would likely search for just Quickbooks as well which is not included above, plus investors would search for xero which would add non relevant search volume.

You need to refine your search. Have a look under the related search tab for xero and you'll see that alot of the searches are probably looking for xero shoes.

[JamesST]

You can select "Xero - software company" as a search term. Doesn't change much.


You need to refine your search. Have a look under the related search tab for xero and you'll see that alot of the searches are probably looking for xero shoes.

[Lewylewylewy]

What I'd like to see from Xero is a run on the numbers showing how they can turn a profit and grow, be it now, 2 years time, 5 or 10 years time.

Once they're big, how much ROI am I going to start seeing pa?

[Nasi Goreng]

What I'd like to see from Xero is a run on the numbers showing how they can turn a profit and grow, be it now, 2 years time, 5 or 10 years time.

Once they're big, how much ROI am I going to start seeing pa?

Xero's strategy is to get world domination. Evil Knievel didn't hit the brakes while going up the ramp and I don't think Xero will either. Like Knievel, we will either see a perfectly executed strategy and Rod will salute the world like a hero or they will crash and burn. I'm happy to watch from the sidelines, it is quite exciting.

[Harvey Specter]

NIce shre price increase by Xero yesterday - anyone know why?

NIce announcement from Xero today - even closer integration with Shopify - the largest e-commernce platform for small business in the world.

[RGR367]

Sort of denying it then, but here it is, an article about their GOAL.

http://paulwallbank.com/2015/09/23/xero-and-the-us-cloud-accounting-challenge/

[Santiago]

https://www.xero.com/blog/2015/09/pricing-plan-changes-for-new-zealand/

No doubt this will generate howls of outrage, but will no doubt be welcomed by shareholders (as long as it doesn't lead to increased churn). You'd have to hope they have done their market research before dropping this (especially after essentially increasing the cost for those with payroll).

[Harvey Specter]

https://www.xero.com/blog/2015/09/pricing-plan-changes-for-new-zealand/

No doubt this will generate howls of outrage, but will no doubt be welcomed by shareholders (as long as it doesn't lead to increased churn). You'd have to hope they have done their market research before dropping this (especially after essentially increasing the cost for those with payroll).It is still cheap for what it provides (in my view - an extra $60 a year isn't going to break the bank, given the improvements will save any business owner more than 1 hour a year) but on the other hand, it is in a competitive market so you need to compare the price to its competitors. Expect a bit of churn but existing users are locked in in the sense is it really worth changing suppliers for a few dollars. New sign ups a different issue.

[Santiago]

It is still cheap for what it provides (in my view - an extra $60 a year isn't going to break the bank, given the improvements will save any business owner more than 1 hour a year) but on the other hand, it is in a competitive market so you need to compare the price to its competitors. Expect a bit of churn but existing users are locked in in the sense is it really worth changing suppliers for a few dollars. New sign ups a different issue.

150,000 NZ customers x $60 increase a year = $9m in extra revenue. Not insignificant.

[Santiago]

150,000 NZ customers x $60 increase a year = $9m in extra revenue. Not insignificant.

just to clarify- that's based on a scenario where every customer was on the standard plan, which won't be the case.

Will be interesting to see the half-year update next month. Any predictions? If I recall correctly, at the AGM they said they had gained 50,000 new customers in 10 weeks. That was end July and they were on around 540,000. Based on that information, 575,000-590,000 seems like a par score. The most interesting part will be the breakdown. I expect most analysts will be looking at the US numbers. I'll be more interested at this stage on how the UK is tracking.

[mikeybycrikey]

150,000 NZ customers x $60 increase a year = $9m in extra revenue. Not insignificant.

It's a bit more complicated than that. Starter and standard pricing are up by 10% but premium is coming down in price because payroll is being "unbundled" from October.

Looks like it'll be $10 p/m to get payroll for 1 employee and $1 p/m per additional employee.... so not only are you paying more, but you're getting less for it.

[RGR367]

Xero UK now has 100K Customers ..............http://diginomica.com/2015/09/29/digibyte-xero-crosses-100k-customer-threshold/?utm_campaign=coschedule&utm_source=twitter&utm_medium=diginomica&utm_content=digibyte:%20Xero%20UK%20crosses%20100k %20customer%20threshold#.VguPlfmqqko

[Longhaul]

Xero UK now has 100K Customers ..............http://diginomica.com/2015/09/29/digibyte-xero-crosses-100k-customer-threshold/?utm_campaign=coschedule&utm_source=twitter&utm_medium=diginomica&utm_content=digibyte:%20Xero%20UK%20crosses%20100k %20customer%20threshold#.VguPlfmqqko

I had a quick dig around at the UK numbers. It seems they are growing at a similar pace to what they were two years ago. 2800 - 3000 new customers per month. I would expect acquisition to pick up speed, but it looks steady. Anyone else have any thoughts about this?

[Baa_Baa]

Encouraging numbers but really, it's all about the USA now. How's that going?


I had a quick dig around at the UK numbers. It seems they are growing at a similar pace to what they were two years ago. 2800 - 3000 new customers per month. I would expect acquisition to pick up speed, but it looks steady. Anyone else have any thoughts about this?

[Leftfield]

Encouraging numbers but really, it's all about the USA now. How's that going?

I disagree….. XRO's strength is its International mix of Markets. Sure USA is important, but XRO's has the benefit of 'not having all it's eggs in one basket."

This is what diginomica said of the 100,000 UK customers, "This is a psychologically important number. It signifies clear blue water between Xero and all of its competitors like Clear Books, FreeAgent, Kashflow (now owned by IRIS), Intuit and a myriad of others. It also puts enormous pressure on Sage to respond without incurring the wrath of its financial masters."

(Disc - hold XRO but consider it a risky stock DYOR)

[kiwi_on_OE]

Will be interesting to see the half-year update next month. Any predictions? If I recall correctly, at the AGM they said they had gained 50,000 new customers in 10 weeks. That was end July and they were on around 540,000. Based on that information, 575,000-590,000 seems like a par score. The most interesting part will be the breakdown. I expect most analysts will be looking at the US numbers. I'll be more interested at this stage on how the UK is tracking.

What we already know.
NZ 150k late Jul
Aus 250k mid Aug
UK 100k 30 Sep
US 35k 31 Mar
Int 16k 31 Mar
Total 475k 31 Mar, 540k late Jul

I don't think there is much growth in NZ these days (maybe 160k), and they're past the annual Jul peak for Aus (maybe 260k). US 45-50k, and international 20-25k, so a total around 590k, or 115k in the half. Would they have announced they had 600k at the same time as the UK 100k if they had passed that mark?

Last years revenue of 121m needs to grow 66% to meet 200m target. Customer numbers don't need to grow that much because of pricing changes and lagged impact of having previous customers for full year. 50% growth would be a bit more than 710k. 115k in the first half would require 120k in the second half to get to 710k, and compares with 104k in the second half of last FY. Seems plausible to me.

[mikeybycrikey]

I'm wondering if there is more Xero news incoming in the next few days. Share price is up 10% in 2 days.

A couple of years ago I would've thought nothing of it because it was a very volatile stock. SP has calmed down a lot since then and a 10% rise has got me wondering if something is up.

[winner69]

I'm wondering if there is more Xero news incoming in the next few days. Share price is up 10% in 2 days.

A couple of years ago I would've thought nothing of it because it was a very volatile stock. SP has calmed down a lot since then and a 10% rise has got me wondering if something is up.

just a 'risk off' environment - everybody happy again

[jzha346]

Amateur charting skills, but Xero could be breaking out on no news, MACD turned positive and its touched/slightly over 50ma.

Imagine what news could do at this point!

7656

[RGR367]

Small news about it would be that it was voted as the Software Provider (platform) for the Year by the UK Bookkeepers and there's a good review too of its payroll by the Sleeter Report.
http://www.sleeter.com/blog/2015/10/xero-payroll-comes-of-age/?utm_campaign=coschedule&utm_source=twitter&utm_medium=sleetergroup&utm_content=Xero%20Payroll%20Comes%20of%20Age

But no hurry, just keep getting them at the cheapest price you can afford :) Definitely, I am.

[Santiago]

Amateur charting skills, but Xero could be breaking out on no news, MACD turned positive and its touched/slightly over 50ma.

Imagine what news could do at this point!

7656

Might just be punters buying into the half year update. Buying the rumour, and then probably selling the news.

[Ginger_steps_]

But no hurry, just keep getting them at the cheapest price you can afford :) Definitely, I am.

Topped up by 50% @ 13.90 :t_up:

[jzha346]

Might just be punters buying into the half year update. Buying the rumour, and then probably selling the news.

It could be that, or a leaky ship again =)

lots of upside if that is the case.

[lastmoa]

Ramifications for Xero. Cloud storage and right for access to data by govts.

http://www.bloomberg.com/news/articles/2015-10-08/the-98-6-billion-e-mail

[gbogo]

Board Meeting in SF this week. run of the mill, I imagine and no impact on share price.

[Valuegrowth]

After my bear call for XERO when it was trading over NZ$20, I didn’t follow it much.Its share price is down over 60% since peaking at over $40 in early 2014. Now we are seeing something different. Can we expect profitable period again? Can it be one of the Australia and New Zealand Stock Exchange’s best technology companies?

[Hawkeye]

http://www.nbr.co.nz/opinion/scammers-gain-access-xero-customers-accounts

[gv1]

I had exact encounter with trademe, it looked very genuine and I logged in...but it didn't take me into my account, straight away I knew I was scammed... I quickly changed my password through normal channels and advised Trademe. I was getting scam mail for few years and kept forwarding the details to trademe. As soon as trademe shut down one website, another sprang up but looks like they have it under control.

[skid]

Those pesky ad links ,although they dont usually destroy things,can be a real pain--Ive even had that on this site where each time i move to a different thread I get an ad---I finally had to set things up so my computer blocked links unless it got permission.
ive gotten in the habit of googling any thing that looks like a promotion (last was a I phone 6 for $1 only for Kiwis ---turned out you had to agree to terms and cond (that harmless little box)which basically agreed to trails of a product that then charged your CC --forever)-----Those free trails are poison

[skid]

http://www.nbr.co.nz/opinion/scammers-gain-access-xero-customers-accounts

A high tech IT co.,like XRO sending out emails in error?

[RGR367]

I say that this is a neutral comparison of QBO versus XRO now. Read it and feel who will eventually comes up on top especially for the USA market. http://www.sleeter.com/blog/2015/10/quickbooks-online-vs-xero/?utm_campaign=coschedule&utm_source=twitter&utm_medium=sleetergroup&utm_content=QuickBooks%20Online%20vs.%20Xero

[Bilbo]

Quarterly cashflow report out this morning but no comment here. Early weekend for everyone eh?
https://www.nzx.com/files/attachments/223748.pdf

By my rough calculations, the quarter on quarter receipt growth was 19%. Looks like a good improvement in growth rate from the previous 3 quarters, but is roughly the same rate as the Sept quarter in 2014. Haven't spend much time analyzing it though. Any comments from those that watch Xero more closely than me?

[longy]

Quarterly cashflow report out this morning but no comment here. Early weekend for everyone eh?
https://www.nzx.com/files/attachments/223748.pdf

By my rough calculations, the quarter on quarter receipt growth was 19%. Looks like a good improvement in growth rate from the previous 3 quarters, but is roughly the same rate as the Sept quarter in 2014. Haven't spend much time analyzing it though. Any comments from those that watch Xero more closely than me?

LOL. I wold not know where to start. IT seems to me cash burn is slowing down. Correct?

[banter]

Quarterly cashflow report out this morning but no comment here. Early weekend for everyone eh?
https://www.nzx.com/files/attachments/223748.pdf

By my rough calculations, the quarter on quarter receipt growth was 19%. Looks like a good improvement in growth rate from the previous 3 quarters, but is roughly the same rate as the Sept quarter in 2014. Haven't spend much time analyzing it though. Any comments from those that watch Xero more closely than me?

So here are some speculations of operating cashflow over the next eight quarters.

Have included the previous 6 quarters for comparison.
Assumptions:
Growth in income slows
Growth in expenses slows too, to 2% per quarter (complete guess but expenses FELL last quarter).

By my reckoning XRO could be cashflow positive next quarter, and worth its 2b MCAP in two years.
All going well.

Not my thing, but could be worth a punt now.




Op CF
Inc

Exp
CF
Annualised CF

Inc %ch

Exp %ch



Mar-14

20
26
- 6
- 22




Jun-14
24
32
- 8
- 33
16%
23%


Sep-14
28
37
- 10
- 38
19%
18%


Dec-14
33
41
- 9
- 34
16%
9%


Mar-15
36
48
- 12
- 49
10%
17%


Jun-15
41
58
- 17
- 68
14%
20%


Sep-15
48
55
- 6
- 25
19%
-5%


Dec-15
55
56
- 0
- 1
15%
2%


Mar-16
63
57
6
26
14%
2%


Jun-16
71
58
14
54
13%
2%


Sep-16
80
59
21
84
12%
2%


Dec-16
89
60
29
114
11%
2%


Mar-17
98
61
36
145
10%
2%


Jun-17
106
63
44
175
9%
2%


Sep-17
115
64
51
204

8%
2%

[Baa_Baa]

These two fundies say Sell and Sell with their succinct reasoning ... go to about 1:45mins into the video. https://youtu.be/TBLAkJli-5Q What would they know anyway?!

[winner69]

banner - why do you leave the spend on IP etc out of your calculations?

Just curious

[Longhaul]

Hmmm, so Zero could easily be cash flow positive now if they pulled back on their marketing expenses. But that's not what they are focusing on, particularly given they have over 200 million in reserve. Good customer receipts growth but they really need to show they are getting traction in the US with that massive spend. Next couple of quarters will be really interesting.

[banter]

banner - why do you leave the spend on IP etc out of your calculations?

Just curious
It was just a quick and dirty review of the company's operating CF. Wouldn't be a problem to add investment spend.
In fact..


Op CF
Inc
Exp
CF
Inv
CF-Inv
Ann
Inc
Exp


Mar-14
20
26
- 6
14
- 20
- 78.40




Jun-14
24
32
- 8
14
- 22
- 89.20
16%
23%


Sep-14
28
37
- 10
14
- 24
- 94.24
19%
18%


Dec-14
33
41
- 9
14
- 23
- 90.00
16%
9%


Mar-15
36
48
- 12
14
- 26
- 104.80
10%
17%


Jun-15
41
58
- 17
14
- 31
- 124.00
14%
20%


Sep-15
48
55
- 6
14
- 20
- 81.20
19%
-5%


Dec-15
55
56
- 0
14
- 14
- 56.64
15%
2%


Mar-16
63
57
6
14
- 8
- 30.05
14%
2%


Jun-16
71
58
14
14
- 0
- 1.72
13%
2%


Sep-16
80
59
21
14
7
27.92
12%
2%


Dec-16
89
60
29
14
15
58.39
11%
2%


Mar-17
98
61
36
14
22
89.09
10%
2%


Jun-17
106
63
44
14
30
119.33
9%
2%


Sep-17
115
64
51
14
37
148.38
8%
2%


Dec-17
123
65
58
14
44
175.46
7%
2%


Mar-18
130
66
64
14
50
199.77
6%
2%


Jun-18
137
68
69
14
55
220.53
5%
2%


Sep-18
142
69
73
14
59
237.01
4%
2%


Dec-18
147
71
76
14
62
248.57
3%
2%


Mar-19
151
72
79
14
65
260.52
3%
2%


Jun-19
156
73
82
14
68
272.90
3%
2%


Sep-19
160
75
85
14
71
285.70
3%
2%



Note: Don't follow and not a shareholder. This was just an exercise to see how things might work out for a successful growth company.

[unhuman]

LOL. I wold not know where to start. IT seems to me cash burn is slowing down. Correct?

We offer Xero to clients through work as a subscriber. They are putting their fees up come 1 Dec 2015 plus they have changed from offering the first month free to having the first two months at 50%. Same discount, just deseprate for that cash flow.

[longy]

Any one buying at this level?

I have just reentered a few days ago after taken a hit after I got out last month... Hopefully it jumps a bit from here!!!

[mikeybycrikey]

You seem to have picked a good time to get back in. Looks like you've picked up a 10% gain already.

Any reason you chose you get back in now?