Xro - xero

[Longhaul]

Any reason you chose you get back in now?

I noticed a lot of volume crossing around the $16 mark. Over the last wee while it found good support at $16. Half year results out tomorrow too. If there's a sniff of traction in the US, I think this will jump up.

DYOR!

*forgot to say, I've also been tracking daily volume weighted average price. Personally I think it's a really useful indicator.

[longy]

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?

Yes... 9.6% But...... my break even is $23 so still got a bit more to go. Hopefully walk away with some profit at some stage.

From the recent news re cash burn has reduced a little. I think we have focused on US a bit too much... apart from that Xero seems to do OK. I don't have in depth analysis like some poster here so a bit of gut feeling here and there. Beside this... I have used MACD and Bollinger bands for clues. Of course those not always accurate but it seems have helped me to some extend lately.

Please DOYR eh!

[skid]

I noticed their last commercial was aimed at London(might have been a bit of a stretch to call it the financial capital of the world over New York)but maybe they have shifted their emphasis?
This one certainly has the capability for volatility one way and the other. Looks like your research is paying off so far

[skid]

I noticed their last commercial was aimed at London(might have been a bit of a stretch to call it the financial capital of the world over New York)but maybe they have shifted their emphasis?
This one certainly has the capability for volatility one way and the other. Looks like your research is paying off so far

[mikeybycrikey]

Yes... 9.6% But...... my break even is $23 so still got a bit more to go. Hopefully walk away with some profit at some stage.

Thanks for your info. I was just thinking that it's interesting to see a sizeable jump in the SP right before their half year announcement. I'm already in but keep being tempted to buy more (but always remind myself that this is a risky company that have set themselves a very ambitious goal to take over the world).

Are people betting on good subscription numbers tomorrow? Are there a few little birdies talking the numbers to their mates? Are buyers basing their expectations on the cashflow figures released last week (which were a little better than my expectations)?

[winner69]

Thanks for your info. I was just thinking that it's interesting to see a sizeable jump in the SP right before their half year announcement. I'm already in but keep being tempted to buy more (but always remind myself that this is a risky company that have set themselves a very ambitious goal to take over the world).

Are people betting on good subscription numbers tomorrow? Are there a few little birdies talking the numbers to their mates? Are buyers basing their expectations on the cashflow figures released last week (which were a little better than my expectations)?

I think it's just the world is a happy place at the moment as the S&P gets close to its high again.

Investors are in 'risk off' mode and XRO is the barometer of that in NZ

[Beagle]

Last time XRO broke through a couple of key technical indicators they announced a major capital raising. Will history repeat?

And you made a tidy profit IIRC. Broken through the 100 day MA. Getting back on for another brief ride ?

[longy]

I don't think they would need to raise capital just yet. With current cash on hand over 200mil that should keep them going for a little more. But it is Rod... he has managed to pull in investors good so far.

[Beagle]

Eight and a half years and we get lots of talk about growth but ever increasing losses. Anyone have any idea how many years before they make a profit or does making a profit not ever matter ?
Disc: Still not convinced and not holding. (I guess I must be a dinosaur thinking making a profit actually matters anymore).

[Bilbo]

Eight and a half years and we get lots of talk about growth but ever increasing losses. Anyone have any idea how many years before they make a profit or does making a profit not ever matter ?
Disc: Still not convinced and not holding. (I guess I must be a dinosaur thinking making a profit actually matters anymore).

Today's loss is insignificant compared to tomorrows profit. They will reap what they have sown so long as they keep increasing (or hold stable) the average lifetime value of customers and decreasing (or hold stable) the cost of acquiring new customers. At least that is the playbook they are playing too, and I for one am a believer. Just like we had to have faith in Steve Hanson's grand plan and it all worked out, I have the same faith in Rod's grand vision. Disc, long time holder for various reasons and still very happy.

[SockPuppet]

Eight and a half years and we get lots of talk about growth but ever increasing losses. Anyone have any idea how many years before they make a profit or does making a profit not ever matter ?
Disc: Still not convinced and not holding. (I guess I must be a dinosaur thinking making a profit actually matters anymore).

I totally appreciate this point of view even though I am long (18 months AVG $19.00). It is a long time to go with uninterrupted (and increasing) losses. While not new to tech companies, most are in that situation because their marketable product is yet to see the market. It is a rather odd situation to see the valuation of a company rise even on the day that those losses increase further.

For me the sentiment is based purely on seeding a highly competitive market, and strangling the competition out of it with increasing investment in infrastructure and marketing.

Not a new concept. Amazon spring to mind having took a bit over 20 years to turn their first profit. (and a measly $0.19 per share at that). What were they doing in all that time? Murdering bookstores and other brick and morter retailers. Followed by other online retailers. Followed by other data hosting providers. Followed by other digital book sellers. In the case of the latter, they end up with a market share like this:

7708

But Xero is no Amazon. Drury is no Bezos. I just think the strategy is very similar and I think it *can* work in highly competitive markets. I also think the fact that these ever increasing losses are almost always accompanied by revenue and customer increases says a lot.

This is an interesting read if you care: http://ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-profits-and-why-it-works

[longy]

I am doubting my ability to digest what being said in the Performance high light. Beside the net loss is at 44.3 mil (I think the market already factor this in the SP)... Are there any other negatives re this report?

[Ginger_steps_]

Xero is building a platform and support to service millions of customers, while remaining 2 steps ahead of the competition as far as functionality, usability and future application goes. They do not want to turn a profit yet because they building functionality we arent even aware of yet, which will attract many more customers in years to come - the increasing expenses are not just servicing customers, its developers going berserk. You dont 'disrupt' the accounting industry by slightly improving it and putting the processes in the cloud - you disrupt the industry by blowing peoples minds - just what xero is slowly achieving! I feel like bashing my head against a brick wall every time profitability is questioned - did they forecast profits? No, will they be profitable next year? No. Will they ever be profitable? 4SHO. When, you ask? Shut up.

[Mat J]

Xero is building a platform and support to service millions of customers, while remaining 2 steps ahead of the competition as far as functionality, usability and future application goes. They do not want to turn a profit yet because they building functionality we arent even aware of yet, which will attract many more customers in years to come - the increasing expenses are not just servicing customers, its developers going berserk. You dont 'disrupt' the accounting industry by slightly improving it and putting the processes in the cloud - you disrupt the industry by blowing peoples minds - just what xero is slowly achieving! I feel like bashing my head against a brick wall every time profitability is questioned - did they forecast profits? No, will they be profitable next year? No. Will they ever be profitable? 4SHO. When, you ask? Shut up.

+1http://www.sharetrader.co.nz/images/icons/icon14.png

[Longhaul]

Eight and a half years and we get lots of talk about growth but ever increasing losses. Anyone have any idea how many years before they make a profit or does making a profit not ever matter ?

I guess the only thing that matters is what the market decides.

[RGR367]

.................I feel like bashing my head against a brick wall every time profitability is questioned - did they forecast profits? No, will they be profitable next year? No. Will they ever be profitable? 4SHO. When, you ask? Shut up.

Thread gingerly there Ginger_steps as "profit"(sic) is for others the way to really gauge a company. But profit you ask? Profit is when those that I bought from $14 slightly less than 3 months ago will now be sold more than $18. Not much but still a very good profit :t_up:

[Ginger_steps_]

Thread gingerly there Ginger_steps as "profit"(sic) is for others the way to really gauge a company. But profit you ask? Profit is when those that I bought from $14 slightly less than 3 months ago will now be sold more than $18. Not much but still a very good profit :t_up:

If they are gauging Xero by profitability then they need a new gauge as the current one wont be useful for a few years yet. Well done for picking the bottom RGR! I took the chance to snap up another 1000 @ $13.90 - greedy when others are fearful i guess! How do the haters like them profitable apples!?

[ShareFodder]

I think the half year results are encouraging. I would have liked to see stronger results from the US but I think their US growth is ramping up albeit from a small base.

[Stranger_Danger]

I feel like bashing my head against a brick wall every time profitability is questioned - did they forecast profits? No, will they be profitable next year? No. Will they ever be profitable? 4SHO. When, you ask? Shut up.

In my experience, if the answer is "shut up" then it was normally a pretty good question.

[Ginger_steps_]

In my experience, if the answer is "shut up" then it was normally a pretty good question. In my experience, if the same question is asked repeatedly, and the explanation has already been given - you are surrounded by idiots.

[winner69]

All still on track and strategy playing out nicely

[Leftfield]

All still on track and strategy playing out nicely

Market seems to agree with you…..back over $19.00 today.

[SockPuppet]

I am doubting my ability to digest what being said in the Performance high light. Beside the net loss is at 44.3 mil (I think the market already factor this in the SP)... Are there any other negatives re this report?

Not to me in this report. In fact the customer and revenue growth was a bit on the high side of my expectations.

Then you have them issue a price hike in NZ and Aus last month. And now news of their intense employment drive starting to cool down (http://www.stuff.co.nz/business/73706960/hiring-slowdown-at-xero-always-part-of-the-plan-says-rod-drury). I can see why sentiment is up. (to the tune of 10% in two days)

It will be interesting to see how the employment situation develops.

[Longhaul]

When Xero becomes profitable, will they be able to offset any past losses against that?

(Sorry, I'm not an accountant so not even sure the question makes sense).

[Jay]

When Xero becomes profitable, will they be able to offset any past losses against that?

(Sorry, I'm not an accountant so not even sure the question makes sense).

It would appear so according to the IRD:
"Carrying losses forward to future tax years
For a company to be able to carry forward a loss to a future tax year it must meet the shareholder continuity test. The shareholder continuity test will generally be met if there is a group of shareholders whose combined voting interest in the company during the “continuity period” is 49% or more.
The “continuity period” is the period from the beginning of the tax year in which the loss was incurred until the end of the tax year in which it offset. If a company suffers tax losses for several years in a row it will have to calculate its shareholder continuity for each year separately"

[Snow Leopard]

It would appear so according to the IRD:
"Carrying losses forward to future tax years
For a company to be able to carry forward a loss to a future tax year it must meet the shareholder continuity test. The shareholder continuity test will generally be met if there is a group of shareholders whose combined voting interest in the company during the “continuity period” is 49% or more.
The “continuity period” is the period from the beginning of the tax year in which the loss was incurred until the end of the tax year in which it offset. If a company suffers tax losses for several years in a row it will have to calculate its shareholder continuity for each year separately"

Just note that the text you quote implies continuity from loss made to profit offset claim.

So I presume that if you make make losses for say 10 years before your first profit you will be needing to show that 49% of those who held eleven years ago still hold (and I am not going to guess whether/how all those capital raising on the way affect the outcome).

Best Wishes
Paper Tiger

[Beagle]

And broken through the 200 day MA as well. A few other key buy signals fired as well. While not so much on the NZX the volume on the ASX has picked up in the last few days. There is absolutely no discussion of it on Hot Copper so its not being hyped up over there.

So yeah, back in for a trade, however long it may last.

But as a long term investment, it still sucks. I would want to see the word "contained" changed to "reduce" (re cash burn) before getting excited. The company MUST start spelling out what its path to profitability looks like, and how long it expects to get there. If its good enough for other companies to manage this, XRO can too. Otherwise, we are all just funding Drury's fabulous lifestyle.

Agree with what you've said. Many investors find Amazon's lack of meaningful profitability objectionable too. It crossed my mind to have a go but its cuts against everything I believe in regarding investing in real companies that make real money. Call me an old cynic but "talk is cheap" and they do plenty.

[Longhaul]

It would appear so according to the IRD:


Thanks. So somewhere in the region of $200m to date.

[mikeybycrikey]

Just note that the text you quote implies continuity from loss made to profit offset claim.

So I presume that if you make make losses for say 10 years before your first profit you will be needing to show that 49% of those who held eleven years ago still hold (and I am not going to guess whether/how all those capital raising on the way affect the outcome).

Best Wishes
Paper Tiger

Not really. Because the losses are growing so quickly only the last three or four years of losses really matter. Revenue has grown about 10x in the last four years and I expect losses have grown even quicker.

[blu3]

A few other key buy signals fired as well [...] So yeah, back in for a trade, however long it may last.


If that's ok, would you mind expanding a little bit on what made you get into this trade and your entry/exit strategy?


I'm asking this because I've just finished reading “The New Trading For a Living” book and everything made kinda sense until the trading system part which seemed to contradict some of what was previously said.

Anyways, as an exercise I've been looking at XRO's weekly and daily charts to determine if the current SP rise was the start of a bullish trend worth buying into, and my notes so far are as below.

Edit: I will be referring to ASX:XRO, sorry for the confusion.


/ Weekly chart

Good points:
- SP crossed above EMA 25 -> bullish
- EMA 25 just turned up -> bullish
- MACD 12/26 lines crossed above signal line -> bulls are dominating
- MACD histogram going up -> bulls growing stronger
- DMI+ crossed above DMI- -> bullish
- volume 2x bigger than 14-week average -> confirms the trend

Not as good points:
- EMA 25 below EMA 100 -> death cross!
- SP just hit EMA 100 -> resistance?
- RSI getting oversold -> bearish but to ignore if this is an actual trend


/ Daily chart

Pretty much the same results as above, but this time with an EMA 50/200:
- SP crossed above EMA 50 and EMA 200 -> bullish
- EMA 50 just turned up -> bullish
- EMA 50 below EMA 200 -> death cross!
- last SP closed lower than its high -> possible exhaustion of the bulls with a pullback to come?


So I'm a bit confused. I understand that it's acceptable to not have all the signals turning green to get in but, for example, I thought that a death cross would be a definitive no to buy in a bullish trend? In fact I'm not even sure if we can consider being currently in a trend or still in a trading range. I'd somehow be tempted to go for the latter if a support level at around 12.5 and a resistance at around 18.5 make sense. As such, buying now while using such large MAs (50/200) means aiming at picking the early stage of a major trend that yet has to be confirmed, and hoping that the SP won't be pulled back in the trading range? Is it the high volume that makes the bullish trend the most likely outcome?


PS: apologies if this kind post of mine doesn't have its place on this thread—maybe I should create a separate one to gather my TA wonderings?

[blu3]

This seems to go against your usual “making money slowly” strategy—women can be such flip-floppers! :)

[Leftfield]

Now well clear of the $13.00 lows and IMO looking like $20 is the new upper resistance level with a range between $16.00 and $20.00 likely until more news??

[ShareFodder]

Closing in rapidly on $20. Just noticed they've added invoice reminder emails recently. Global search is on the way too....

The danger is loving the the stock when you really should just love the product.

[trader_jackson]

Closing in rapidly on $20. Just noticed they've added invoice reminder emails recently. Global search is on the way too....

The danger is loving the the stock when you really should just love the product.

If you love the product, you'll love the stock.

I'm not holding anymore, but at $17 back in early-mid 2013 I felt I had to own xero, not because I did DCF's and listen to forsyths + the markets valuations (which were in the single digits...) but because I loved the company atmosphere (I went there on a trip) and I thought there product was great... at $42 early 2014 (I think) I decided I'd had enough and sold out my small holding :t_up: Good luck to all the holders.

[RGR367]

If you love the product, you'll love the stock.

I'm not holding anymore, but at $17 back in early-mid 2013 I felt I had to own xero, not because I did DCF's and listen to forsyths + the markets valuations (which were in the single digits...) but because I loved the company atmosphere (I went there on a trip) and I thought there product was great... at $42 early 2014 (I think) I decided I'd had enough and sold out my small holding :t_up: Good luck to all the holders.

Loving the stock eversince and it looks like it will be rollercoasting its way to a high level again until they IPO in the USA right after the next annual report. Hoping so :cool:

[Baa_Baa]

Now you know who's been selling you those XRO shares recently. Good to see the bosses making the most of the punters exuberance, I guess they don't expect the SP to hold up here or go much higher? http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11551681

[LAC]

I feel a lot better getting out of this knowing Drury has been selling....

[Toasty]

I am pretty sure that Rod committed virtually all proceeds of the Aftermail sail to Xero and to date has only recovered about $9 million of the $20 mill odd invested. He has only sold a million shares. I don't have any real problem with him taking some money out. I reckon that probably takes him just ahead of where he was before this all started, not including the $430 million odd of shares left in Xero.

Not sure about Craig Winkler or Sam Morgan....

[ShareFodder]

Everyone needs some extra $$$ for Xmas.

[LAC]

Everyone needs some extra $$$ for Xmas.
Ditto, can it to buy Ecoya gifts:)

[winner69]

Ditto, can it to buy Ecoya gifts:)

Rod says he loves the scented candles and the missus loves the creams and potion - so much so I buy the company

[Xerof]

He probably had some house alterations to pay for - seems to be quite common amongst CEO's of high growth companies :p

[Baa_Baa]

He probably had some house alterations to pay for - seems to be quite common amongst CEO's of high growth companies :p

That's a heck of a lot of money to take out and a lot of shares to put back in to the public float. The sell down seems carefully planned, well orchestrated, unannounced, complicit, but is it well timed - of course it is, insiders will always know the best time to take profits? A few of the heavy's decided now's a good time to cash in. Why?

[Bilbo]

That's a heck of a lot of money to take out and a lot of shares to put back in to the public float. The sell down seems carefully planned, well orchestrated, unannounced, complicit, but is it well timed - of course it is, insiders will always know the best time to take profits? A few of the heavy's decided now's a good time to cash in. Why?

I assume they only have a limited window of time they can trade shares as insiders - haven't got time to look up the rules, but most likely can't trade in the months leading up to result announcements etc. I suspect there was a trading window and they decided to take it. From what I can tell most (if not all) traded off market.

[christheinvestor]

From what I can tell most (if not all) traded off market.

If that's correct, it begs the question, who bought the shares? If they were off-market transactions then the relatively large share parcels must have been purchased by, at most, just a few individuals.

[iceman]

I suggest shareholders and users of Xero read Jenny Ruth´s Weekend Review in the NBR this weekend, as well as Rodney Hide´s column from early November.
Xero and Rod Drury have some serious answering to do rather than run and hide.

[Ginger_steps_]

Can you paraphrase for us cheapos please Iceman?

[iceman]

Can you paraphrase for us cheapos please Iceman?

In very few words, a business woman had her company's financial records handed to IRD by Xero. When she asked them about it, they lied to her and denied it. They did not ask IRD to produce a warrant.
Her crime ? Her husband (not involved in her business) was being investigated by IRD. Xero and Drury have avoided answering questions from NBR. This is a bad look for Xero

Then NBR reports results of a poll today saying 78% of people polled thought a court order should be produced before information is handed over to officials and 84% say they should be advised when their information is handed over.

[dobby41]

What people think for a poll and what the law is are 2 different things.
But I thought a court order was required.
Was it Westpac who got a smack for that recently with the police?

[Toasty]

http://www.whaleoil.co.nz/2015/12/nzs-vw-questions-over-xero-remain-unanswered/

There is a response from Rod to this article on the Whale Oil Blog. I must admit that I haven't really followed this with any real interest. I'm glad that Rod hasn't made too much of an attempt to answer every desperate question thrown his way. That would indicate trouble to me. I would like to think that they are confident in their stance and this would be backed by legal advice taken at the time.

[RGR367]

Not much to it and as long as the sp does not dip to $14, I should not concern myself with it :)

[iceman]

Not much to it and as long as the sp does not dip to $14, I should not concern myself with it :)

Are you kidding ? I don't think many of Xero's customers will be concerned whether SP is $10, $14 or $20. But I suggest most of them will want their financial data kept private. Not handed over willy nilly and them then being lied to about it

Discl. Not holding but a concerned customer

[mikeybycrikey]

This looked like an interesting story until I saw that both Rodney Hide and Whale oil are involved in pushing it. Both will quite happily mold a story to suit their own interests.

I hadn't known until now that Rodney was writing for NBR but I had read some of his Herald articles in the past. I would read these articles for a laugh to see what crazy uncle Rodney was writing about this week but not for any factual content. And don't get me started on Whale Oil.

I accept that Rod Drury has a financial interest in making this story go away so his credibility is a little questionable too but given past history I would trust him over Rodney Hide and Whale Oil any day.

I'm willing to be proven wrong here as the story does look dodgy on the face of it but I'm not a lawyer so have no idea about the legal requirements.

[Harvey Specter]

Xero have stuff up-ed'. They should have just said they are reviewing their proceedures and going forward, they will not release information unless required too. Simple and short.

In the case in question, three may have been some confusion as to whether they were required to by law - given the guy is a multi bankrupt, most of his money probably is hidden in his wife's name but for some reason, the law doesn't quite extend to opening up her books to.

The info was release to the Offical Assignee, not a scammer so they should have been able to deal with it much better.

[Ginger_steps_]

In very few words, a business woman had her company's financial records handed to IRD by Xero. When she asked them about it, they lied to her and denied it. They did not ask IRD to produce a warrant.
Her crime ? Her husband (not involved in her business) was being investigated by IRD. Xero and Drury have avoided answering questions from NBR. This is a bad look for Xero

Then NBR reports results of a poll today saying 78% of people polled thought a court order should be produced before information is handed over to officials and 84% say they should be advised when their information is handed over.
thank you!

[blackcap]

"open letter" to Rod Drury as found on Whaleoil site:

Dear Rod

I am your customer and have been for a long time.



I admire you for taking an idea and turning it into a large corporation. Now I am watching aghast as you surrender your values and integrity to preserve a corporate image. Instead of standing up for the little guy, you are sticking it to them. You stand with the State, not the citizen.

You promised both contractually and in many, many media statements to protect my privacy . Then, without telling me, you handed out my personal financial information to a State agency. And when I approached your company, after my suspicions were raised, your company simply lied to me.

Once I had established your company had released my private and personal financial information, you then stonewalled me. You never returned my calls or answered my simple, reasonable questions. It seems you are now so big you don’t have to care about a single customer. You have resorted to bully-boy tactics.


All I ever wanted to know was:

1. Why did your company hand my personal financial information out?
2. What exactly did your company hand out?
3. Why did your company not tell me my information was to be handed out?
4. Why wasn’t I told the truth when I made an inquiry about the safety of my information?
5. Why are you now ignoring me and trying to bully me to silence?

With this letter I give you my authority to tell Whaleoil readers the answers to these reasonable questions. Tell me — and them — exactly what statutory obligations overcame all your privacy assurances made over many years in public and the corporate policy you say your company proudly champions.

To be precise: What is the statutory obligation that forced your company to hand out my private and personal information held on my behalf by your company without telling me?

As you well know, I have asked for these simple questions to be answered many times over the last four months. You have continually refused to answer them. Your attitude toward me speaks volumes of the collapse of your and your company’s ethics. I am saddened and disappointed.
Kristina Buxton
Your Customer.

[GTM 3442]

In light of the current fascination with the misappropriation of personal information, I would be really interested to hear what Xero have to say. I would also be interested to hear from the "state agency".

I suspect that once we have the views of the complainant, Xero, and the "state agency" out in the open, we will be able to make an informed assessment. I rather think that in this case a refusal to comment will be as good as a comment.

Until then, I am more than happy to indulge in the wildest speculation. And to read between what I think are the lines. . .

[Harvey Specter]

As well as improving their policy on data, I would also have a policy not to respond to WhaleOil website. This issue should have stayed on NBR. using WhailOil means it will be forgotten.

[GTM 3442]

The Xero Privacy policy - excerpt:


"Xero only discloses Your Personal Information in limited circumstances

Xero will only disclose the personal information You have provided to us to entities outside the Xero group of companies if it is necessary and appropriate to facilitate the purpose for which Your personal information was collected pursuant to this Policy, including the provision of the Service.

Xero will not otherwise disclose Your personal information to a third party unless You have provided Your express consent. However, You should be aware that Xero may be required to disclose Your personal information without Your consent in order to comply with any court orders, subpoenas, or other legal process or investigation including by tax authorities, if such disclosure is required by law. Where possible and appropriate, we will notify You if we are required by law to disclose Your personal information."

I suspect that "...other legal process ..." is broader than many of us would like. And broader than some of us fully understand.

[skid]

What about the ''we will notify you''bit

[artemis]

As well as improving their policy on data, I would also have a policy not to respond to WhaleOil website. This issue should have stayed on NBR. using WhailOil means it will be forgotten.

Whaleoil has a few more readers than NBR. And has a lot of reach. I recall the PaknSave boycott by WO readers after they withdrew site advertising based on a complaint that PnS was supporting a right wing blog. The PnS decision was reversed PDQ.

[artemis]

What about the ''we will notify you''bit

Xero said they were specifically instructed not to notify in that case. There are many questions to be answered be the 'state agency' as well as Xero.

[iceman]

Xero said they were specifically instructed not to notify in that case. There are many questions to be answered be the 'state agency' as well as Xero.

Instructed by who ? Surely this should have required a court order or subpoenas ! Xero is not coming away fro m this smelling of roses. Just like Westpac stuffed up badly with regard to Nicki Hager when other Companies (BNZ, AIR from memory) requested court orders that were not forthcoming so they never released any info.

[skid]

Xero said they were specifically instructed not to notify in that case. There are many questions to be answered be the 'state agency' as well as Xero.

So ''we will notify you'' unless someone asks us not to (but come buy our great accounting service)--this is starting to sound like Google

Having said that--I think the IRD is above the privacy laws--I think they can give your information to any one they please---Even the Internal revenue service(USA) if you deal with a US firm.

[Harvey Specter]

Whaleoil has a few more readers than NBR. And has a lot of reach.But it doesn't have a good reputation.



Having said that--I think the IRD is above the privacy laws--I think they can give your information to any one they please---Even the Internal revenue service(USA) if you deal with a US firm.Not 'anyone' but they do have information sharing agreements with other tax offices. I think they have greater collection powers than the police, but they dont have the right to pass that info onto the police unless the police have the correct paperwork. Its the old 'Al Capone went to jail for tax evasion, not being a criminal' thing.

[skid]

But it doesn't have a good reputation.

Not 'anyone' but they do have information sharing agreements with other tax offices. I think they have greater collection powers than the police, but they dont have the right to pass that info onto the police unless the police have the correct paperwork. Its the old 'Al Capone went to jail for tax evasion, not being a criminal' thing.

yes,I got a bit carried away with the ''anyone''--your right.

There has been a few things come up now that are disconcerting--there was that issue of them not giving you back your own information if you left(if I remember correctly)

We are certainly entering an age of potential dangers involving privacy with the large tech firms(like face book and google)

[Baa_Baa]

So ''we will notify you'' unless someone asks us not to (but come buy our great accounting service)--this is starting to sound like Google

Having said that--I think the IRD is above the privacy laws--I think they can give your information to any one they please---Even the Internal revenue service(USA) if you deal with a US firm.

It's less about IRD giving information, that's all legislated anyway, more that it's about IRD has powers to 'get' information from pretty much anyone. It hasn't been said that IRD are the requester in this case.

Xero's privacy policy I think is pretty clear and it doesn't look on face value that they contravened that policy in the case being discussed.

[GTM 3442]

So ''we will notify you'' unless someone asks us not to (but come buy our great accounting service)--this is starting to sound like Google

More like a strange Kiwi hybrid of Franz Kafka and Orwells 1984.

[GTM 3442]

Instructed by who ? Surely this should have required a court order or subpoenas ! Xero is not coming away fro m this smelling of roses. Just like Westpac stuffed up badly with regard to Nicki Hager when other Companies (BNZ, AIR from memory) requested court orders that were not forthcoming so they never released any info.

Whether a Court Order is required depends on who's doing the asking, and the legislation that they're asking under. And New Zealand Government agencies have a tendency to push at the envelope regarding their questions.

[blackcap]

I see Rod has waded into the debate on Whaleoil. Interesting, seems he is a whaleoil reader.

http://www.whaleoil.co.nz/2015/12/victoria-crone-xeros-bludging/

[winner69]

Withdraws advertising

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11559030

[winner69]

That Victoria gets around

Appointed director of Contact

Possible Mayoral candidate

And GM Xero NZ

[RGR367]

Withdraws advertising

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11559030

Xero advertised on WhaleOil? Oh well, Xero must be desperate then.

[GTM 3442]

Ah. Henderson and the Official Assignee. All clear now.

[artemis]

Xero advertised on WhaleOil? Oh well, Xero must be desperate then.

There's a lot of eyeballs on Whaleoil.

[Zaphod]

Xero advertised on WhaleOil? Oh well, Xero must be desperate then.

As long as it brings in additional customers, it doesn't really matter IMO.

[RGR367]

And another on-cloud report once more on David and Goliath http://fortune.com/2015/12/23/xero-intuit-cloud-accounting/

[Raz]

Was looking up GlassDoor website re comments by US employees..all seemed a rather interesting trend on comments re management in the US..wonder if it is having a negative effect on client uptake in the US. Register and draw you own conclusions.

[Baa_Baa]

A sobering and timely reminder against a backdrop of cooling markets, or ... what would they know anyway? http://www.stuff.co.nz/technology/digital-living/75974123/tech-faces-hour-of-reckoning This unicorn ticks all the risk boxes. Rod and co sure picked a good time to take profits.

[winner69]

Used to be a time when punters get all excited about XRO quarterly cash flow statements. Lack of such excitement a sign XRO is now boring and losing its mojo?

Another quarter of $20m cash burn, about the same as Sept quarter - on cash flow basis the $4.4m increased cash from revenues from theSeptember quarter all gone on salaries.

Does seem that its going to be a long long grind towards this $1 billion annual turnover. Cash from Customers only went up $4.4m from the September quarter taking the rolling 4 quarters total to $176m. Annual growth 70% but this rate is definitely showing signs of decay.

One day maybe - cash flow positive but not while continue investing for growth.

Don't forget - Xerocons coming soon - boost to share price.

[mikeybycrikey]

Used to be a time when punters get all excited about XRO quarterly cash flow statements. Lack of such excitement a sign XRO is now boring and losing its mojo?

At the AGM, they said that they expected subscription revenue for year ending 31 March 2016 would be $200m (at June 2015 fx rates). At the rate they are going I think they will struggle to get this. And (off the top of my head), I think that using June 2015 fx rate make the picture look worse, not better.

I think that they need to bring in at least $58.8m in subscription revenue to meet that.

It would be an embarrassing failure if they don't reach that headline figure.

[RGR367]

At the AGM, they said that they expected subscription revenue for year ending 31 March 2016 would be $200m (at June 2015 fx rates). At the rate they are going I think they will struggle to get this. And (off the top of my head), I think that using June 2015 fx rate make the picture look worse, not better.

I think that they need to bring in at least $58.8m in subscription revenue to meet that.

It would be an embarrassing failure if they don't reach that headline figure.

Doubt it not for they will get there easily and surely. That's what my gut-o-meter felt after listening to the CFO on the NBR Radio. You may want to interpret differently of course.

Disc - still buying on dips :cool:

[Dentie]

At the AGM, they said that they expected subscription revenue for year ending 31 March 2016 would be $200m (at June 2015 fx rates). At the rate they are going I think they will struggle to get this. And (off the top of my head), I think that using June 2015 fx rate make the picture look worse, not better.

I think that they need to bring in at least $58.8m in subscription revenue to meet that.

It would be an embarrassing failure if they don't reach that headline figure.

The Board either agree with you Mikey...or they are extremely confident ....

There was a large NEW advertising billboard erected on Friday night in Lower Hutt with an advert by Xero which included in big letters..."First 3 month's FREE".

Hey Winner - does that mean they now go and reduce their annual budget cash flow forecast by 25%? Do you think that will affect their next earnings forecast announcement? Or, do you think they will increase their new customer forecast by 25% to make up the shortfall?

Ohhhh boy!

[winner69]

At the AGM, they said that they expected subscription revenue for year ending 31 March 2016 would be $200m (at June 2015 fx rates). At the rate they are going I think they will struggle to get this. And (off the top of my head), I think that using June 2015 fx rate make the picture look worse, not better.

I think that they need to bring in at least $58.8m in subscription revenue to meet that.

It would be an embarrassing failure if they don't reach that headline figure.

They'll do it mickey - maybe with a bit too spare (even with growth slowing)

Is this $1 billion annual revenues one day just a pipedream?

Believe the story

[skid]

The Board either agree with you Mikey...or they are extremely confident ....

There was a large NEW advertising billboard erected on Friday night in Lower Hutt with an advert by Xero which included in big letters..."First 3 month's FREE".

Hey Winner - does that mean they now go and reduce their annual budget cash flow forecast by 25%? Do you think that will affect their next earnings forecast announcement? Or, do you think they will increase their new customer forecast by 25% to make up the shortfall?

Ohhhh boy!

My guess is that it would be a good thing as an accounting system is not one of those things that you use and discard,for the most part.

I hav'nt been to North America in the last few years ,but last time ,no one had heard of them. I wonder if thats changed? Suppose it would be a far more expensive campaign over there,in terms of ads and recognition.

[winner69]

XRO share price generally gets a boost after a Xerocon

Rod all kitted up for the London

@roddrury: Suitcase looks like an IceBreaker outlet. Unless someone coming from Chathams, claiming longest trip to #xerocon https://t.co/ETFkCtmxeF

[Valuegrowth]

We saw massive sell off in tech stocks in NASDAQ on Friday. Some exceptions were defensive names like AT&T, Verizon and Tyson Foods (TSN). TSN jumped by more than 10% hitting all time high. LinkedIn tanked as much as 46.5 percent to a more than three-year low of $102.89.


Can we see some after shock affect on other tech stocks which include Xero?

[skid]

I wouldnt be at all surprised.
With a drop that big it will surly be leaving investors wondering if it will continue, and it is a target market for Xero.

[winner69]

XRO share price generally gets a boost after a Xerocon

Rod all kitted up for the London

@roddrury: Suitcase looks like an IceBreaker outlet. Unless someone coming from Chathams, claiming longest trip to #xerocon https://t.co/ETFkCtmxeF

Reuters - LinkedIn Corp (LNKD.N) dropped 43.6 percent to $108.38 after a weak sales forecast which did not analyst expectations

Just as well Xero don't come out with any sales forecasts - just vague statements and visionary targets

[winner69]

Wish Xero wouldn't use that word Xerocon

[kiwi_on_OE]

Thought we might have had an update on the number of users. I think 300k in Aus, but I guess that wouldn't be of interest in UK. But not much growth elsewhere I reckon.

[Raz]

Good day to sell Xero shares

[sb9]

What a turnaround, after being up to $15 in the morning session its now down 20c to $13.20.

[BIRMANBOY]

Ah yes that old Stock market axiom....buy high sell low...although to be pro-active could be lower so spin that wheel baby...:)
Good day to sell Xero shares

[Longhaul]

Read somewhere that it's common for SaaS companies to be valued around 10 x annual recurring revenue which would put XRO SP at NZ$15.

Maybe we are seeing a lowering of this 10 x multiplier, or just a larger holder selling down/out?

[Raz]

Look at the time I commented, you would be selling high:-)

[RGR367]

Read somewhere that it's common for SaaS companies to be valued around 10 x annual recurring revenue which would put XRO SP at NZ$15.

Maybe we are seeing a lowering of this 10 x multiplier, or just a larger holder selling down/out?

If XRO is still a start-up then maybe we would be valuing it as this blog is saying http://www.bothsidesofthetable.com/2016/02/14/what-most-people-dont-understand-about-how-startup-companies-are-valued/#.VsElO-qToi5.twitter

[BIRMANBOY]

Yes..if you had the lifecycle of a Zika mosquito.:p
Look at the time I commented, you would be selling high:-)

[Longhaul]

If XRO is still a start-up then maybe we would be valuing it as this blog is saying http://www.bothsidesofthetable.com/2016/02/14/what-most-people-dont-understand-about-how-startup-companies-are-valued/#.VsElO-qToi5.twitter

Fantastic link, thanks a lot.

At the (very) recent Xerocon in London Rod Drury referred to the difficulty of raising capital and how they knew it was coming some time ago. He said it was good for Xero as they still had $200M in the bank.

[Harvey Specter]

Read somewhere that it's common for SaaS companies to be valued around 10 x annual recurring revenue which would put XRO SP at NZ$15.

Maybe we are seeing a lowering of this 10 x multiplier, or just a larger holder selling down/out?IN the US, multiples are trending down to around 5x forward ARR. Xero growth still higher than those so should have a slight premium but in general SaaS companies have been hammered.

[winner69]

Rod a bit puzzled about the gist of this article

@roddrury: Other than innovative accounting for cloud numbers I'm struggling ...

https://www.charteredaccountantsanz.com/en/Site-Content/Business-Trends-Insights/Acuity/February-2016/MYOB.aspx#.VtJKXpEaySN


Relentless innovation

[Santiago]

https://www.xero.com/blog/2016/03/xero-asia-roadshow-hits-singapore-today/

I wondered when this might happen. Xero opening (finally) their first Asian office. First gold partner signed up in Singapore. SP has languished, announcements have dried up, they've just got on with the business. Next half year update will be fascinating...

[Dentie]

https://www.xero.com/blog/2016/03/xero-asia-roadshow-hits-singapore-today/

I wondered when this might happen. Xero opening (finally) their first Asian office.

Yes, seems like they may have learnt the same lesson as PEB (& many others I suspect)....a fledgling little Kiwi mob taking on the "potentially lucrative" US market sounds great in theory but also potentially disastrous in practice.

An elephant can't be eaten in a couple of gulps....but that market (& its regulations) makes sure each spoonful you do get - costs you eye watering amounts (in USD!!). If it wasn't for the equity provided by the likes of Thiel and Morgan etc, this baby would have been trying to breathe underwater ages ago.

Hindsight is great I know, but they should have grown organically closer to home first, then built from there. Let's hope it is not too late.

[ShareFodder]

pricing increases in Australia: https://www.xero.com/blog/2016/03/plan-price-changes-in-australia/

[Longhaul]

Pretty quiet here, just like XRO share price...

Noticed there has been pretty good volume the last four days but very little movement in share price. Feels like the calm before a storm.

Anyone else have any thoughts about this?

[winner69]

Pretty quiet here, just like XRO share price...

Noticed there has been pretty good volume the last four days but very little movement in share price. Feels like the calm before a storm.

Anyone else have any thoughts about this?

The days are long, but the decades are short.'

[Santiago]

Pretty quiet here, just like XRO share price...

Noticed there has been pretty good volume the last four days but very little movement in share price. Feels like the calm before a storm.

Anyone else have any thoughts about this?

The SP action hasn't matched the activity in the company- sold out xerocon in UK, well attended roadshow across Australia, new Singapore outpost, loads of product updates, price rises in Aust and NZ that will have a significant impact on revenue (if they don't result in people peeling off to competitors), and the CEO tweeting (if anyone believes him) that the company is in great shape. Maybe the performance and value of the company is catching up, and perhaps even over-taking, the SP. This is always a good place to check interest, and seems to reasonably reliably mirror subscriber growth:

https://www.google.co.nz/trends/explore#q=%2Fm%2F02rsj7z

Results in May will be super interesting: is the UK taking off? Is the US setting the base for a take-off? Have the price increases scared away customers (you'd have to assume the NZ one was a trial run for the Aussie one, and therefore must have been successful enough). Personally, as a holder of XRO, I'm happier when Xero is out of the news.

[mikeybycrikey]

The SP action hasn't matched the activity in the company- sold out xerocon in UK, well attended roadshow across Australia, new Singapore outpost, loads of product updates, price rises in Aust and NZ that will have a significant impact on revenue (if they don't result in people peeling off to competitors), and the CEO tweeting (if anyone believes him) that the company is in great shape. Maybe the performance and value of the company is catching up, and perhaps even over-taking, the SP. This is always a good place to check interest, and seems to reasonably reliably mirror subscriber growth:

https://www.google.co.nz/trends/explore#q=%2Fm%2F02rsj7z

Results in May will be super interesting: is the UK taking off? Is the US setting the base for a take-off? Have the price increases scared away customers (you'd have to assume the NZ one was a trial run for the Aussie one, and therefore must have been successful enough). Personally, as a holder of XRO, I'm happier when Xero is out of the news.

I would have to agree with what you're saying here. Lots of interesting announcements over the past few weeks, at Xerocon UK and elsewhere.

When the SP was at $40, I thought the market was pricing in at least 5 years of future growth which was pretty optimistic. Now, as the growth story is starting to pay off, the growth premium has significantly reduced. FY results could be interesting as you say.

Because of slowing growth I'm less confident than I was six months ago but I'm still confident that they might crack 1 million subscribers by the end of the year. Then things really could be interesting.

[Baa_Baa]

... This is always a good place to check interest, and seems to reasonably reliably mirror subscriber growth:

https://www.google.co.nz/trends/explore#q=%2Fm%2F02rsj7z


Are you sure it's a reliable subscriber growth indicator? The searches overwhelmingly originate from NZ.

[Leftfield]

Thanks for posting Google Trends info. Nice to check progress v Intuit. The gap is closing and Xero's strength in markets other than USA could see it pass Intuit IMHO, however I note this is a very rough guide of 'progress'. DYOR. Disc happy holder.

https://www.google.co.nz/trends/explore#q=%2Fm%2F02rsj7z%2C%20%2Fm%2F04fdd3&cmpt=q&tz=Etc%2FGMT-13

[Bilbo]

Thanks for posting Google Trends info. Nice to check progress v Intuit. The gap is closing and Xero's strength in markets other than USA could see it pass Intuit IMHO, however I note this is a very rough guide of 'progress'. DYOR. Disc happy holder.

https://www.google.co.nz/trends/explore#q=%2Fm%2F02rsj7z%2C%20%2Fm%2F04fdd3&cmpt=q&tz=Etc%2FGMT-13

You really need to throw "quickbooks" and sage (and other related search terms) in there to get the true picture. Quickbooks still way more popular as a search term.
https://www.google.co.nz/trends/explore#q=quickbooks%2C%20quickbooks%20online%2C%2 0%2Fm%2F02rsj7z&cmpt=q&tz=Etc%2FGMT-13

Also, compare Xero to Quickbooks online in the US - https://www.google.co.nz/trends/explore#cmpt=q&q=quickbooks+online,+/m/02rsj7z&geo=US

The picture looks better if you compare the two worldwide:
https://www.google.co.nz/trends/explore#cmpt=q&geo&q=quickbooks+online,+/m/02rsj7z

[ShareFodder]

I find the shape of the Intuit google trends to be interesting. Always seems to peak around Jan/Feb which I assume is related to tax deadlines. I wonder if it's influenced by people seeking support for their desktop or cloud products rather than interest in subscribing...

[Bilbo]

You really need to throw "quickbooks" and sage (and other related search terms) in there to get the true picture. Quickbooks still way more popular as a search term.
https://www.google.co.nz/trends/explore#q=quickbooks%2C%20quickbooks%20online%2C%2 0%2Fm%2F02rsj7z&cmpt=q&tz=Etc%2FGMT-13

Also, compare Xero to Quickbooks online in the US - https://www.google.co.nz/trends/explore#cmpt=q&q=quickbooks+online,+/m/02rsj7z&geo=US

The picture looks better if you compare the two worldwide:
https://www.google.co.nz/trends/explore#cmpt=q&geo&q=quickbooks+online,+/m/02rsj7z

This one for the UK comparing Xero and Sage is interesting:
https://www.google.co.nz/trends/explore#geo=GB&cmpt=q&q=Xero,+/m/030hnb

I would not rely on the accuracy of this tool for making investment decisions though.

[Lewylewylewy]

Take those trends from Google with a massive pinch of salt - the results are obfuscated to stump SEO grinders.

[Santiago]

This one for the UK comparing Xero and Sage is interesting:
https://www.google.co.nz/trends/explore#geo=GB&cmpt=q&q=Xero,+/m/030hnb

I would not rely on the accuracy of this tool for making investment decisions though.

agree- just contextual information to be added to everything else you might want to know before making a decision

[Longhaul]

Well, double the volume of previous days and VWAP of nearly $15.50. Someone seems to be keen to accumulate.

[When the bass drops]

Share price hasn't really gone anywhere for over 4 months now.

[Ginger_steps_]

Surprised there has been no mention of the new Xero "Tax Touch" app from holders or the company itself. Check out the video - this could generate a fair whack of new revenue - sole proprietors being the target market. https://www.xero.com/us/taxtouch/

[RGR367]

Surprised there has been no mention of the new Xero "Tax Touch" app from holders or the company itself. Check out the video - this could generate a fair whack of new revenue - sole proprietors being the target market. https://www.xero.com/us/taxtouch/

In a way that's good and just like the real world talk about it. But most of the company top brass have promoted it already on their own little way. Just check their Twitter accounts and the "talks" had been circulating around. Also, Ben Kepes who is not really a fan of XRO has already said this TaxTouch is "It's kind of like accounting meets Tinder". Check the NBR article for those that can for the full sort of glowing review. ,

[Harvey Specter]

Surprised there has been no mention of the new Xero "Tax Touch" app from holders or the company itself. Check out the video - this could generate a fair whack of new revenue - sole proprietors being the target market. https://www.xero.com/us/taxtouch/Its $60 a year (discounted to $30 for first year) so not a money spinner but in volumes could be good and some will eventually upgrade. Will also get the name out there more.

Only a US product so no promotion in NZ.

[RGR367]

and still ad nauseum about that USA market and listing..........http://www.afr.com/brand/boss/rod-drurys-xero-board-right-people-right-time-and-there-to-be-heeded-20160121-gmaz9h

[RGR367]

And what about this about the "Empire" http://www.fool.com/investing/general/2016/02/01/3-reasons-intuit-stock-could-fall.aspx
and the rebuttal or addition to it http://www.quickbooks-blog.com/2016/02/3-reasons-intuit-stock-could-fall.html

Shall we all say now that XRO is slowly eating its way to the top or having a piece of the USA accounting pie?

[Baa_Baa]

7933 :confused:

[Dentie]

7933 :confused:

Well if you can't beat 'em...jump into bed with them.

Who knows, maybe Intuit is considering a strategic acquisition......Rod & Co will have the lipstick and best pyjama's on soon!

[Everwood]

7933 :confused:Nice find! Do you know when this connection happen?

[Baa_Baa]

Nice find! Do you know when this connection happen?

Very recently, what does it mean?

[Everwood]

Very recently, what does it mean?

I have no idea, it could be purely innocent LinkedIn connection or it could mean that Xero is in talks with Intuit. The job description made me curious “Group Head, Strategic Partnership at Intuit”

I don’t remember the timeframe, but it was probably about 2 or 3 years ago a photo was posted with Rod Drury and CEO of Intuit next to each other or it was someone else high up in Intuit. Some people speculated back then that Intuit could be buying Xero.

[Harvey Specter]

Baa Baa - Xero is also working with MYOB in relation to the IRD transformation project. I am pretty sure there is no talks of a merger there either. They have lots of common add-ins so I wouldn't read anything into it.

[RGR367]

The Top is really getting heavy for XRO http://www.computerworld.co.nz/article/595810/xero-brings-ibm-veteran-board-double-c-level-hire/

[winner69]

Rod excited as per this tweet

@roddrury: After 9 years we might be an overnight success any year now .....
http://findthemoat.com/2016/03/18/xero-valuation/

[RGR367]

Rod excited as per this tweet

@roddrury: After 9 years we might be an overnight success any year now .....
http://findthemoat.com/2016/03/18/xero-valuation/

We all just have to agree about the writer mentioning the "very high switching costs" of an accounting customer to a competitor (e.g., Intuit to Xero). And that would explain in part why XRO is really finding it hard prying Intuit users to use them instead. But having said that, I feel that their TaxTouch mobile app is a really a game changer now for freelancers.

[RGR367]

........... But having said that, I feel that their TaxTouch mobile app is a really a game changer now for freelancers.

Rely on your gut feel :t_up: as here comes now the first applaud for TaxTouch http://www.businesswire.com/news/home/20160401005479/en/U.S.-Bank-Wells-Fargo-BCSG-Xero-Win

[kiwi_on_OE]

Time for Xero to announce their customer numbers for the FY. My guesses: -

NZ - 180k, up from 163k six months ago and 138k a year ago
Au - 330k, up from 262k and 203k
UK - 140k, up from 102k and 83k
US - 60k, up from 47k and 35k

With Intl 20k+, gives a total of 730k, up from 593k and 475k.

Forecasts for next year? NZ holding growth back now, but must be hoping for 50%, so maybe 1100k by 3/17. Compares to Quickbooks estimate of 2m by 6/17.

[winner69]

Rod retweeted this so obviously has some empathy with the thoughts

Lots of profanities .......and no mention of profit

@austinhill: Comparison notes from lunch with another CEO - I showed him this pic from the @gapingvoid & we both had a laugh https://t.co/J1DLXtJwVN

[RGR367]

How XRO's "financial web" is now shaping up in Australia http://www.afr.com/technology/xeros-rich-data-heralds-a-new-world-for-banks-20160403-gnx0sm?&utm_source=social&utm_medium=twitter&utm_campaign=nc&eid=socialn:twi-14omn0055-optim-nnn:nonpaid-27062014-social_traffic-all-organicpost-nnn-afr-o&campaign_code=nocode&promote_channel=social_twitter

[winner69]

@garyturner: Total UK subscribers on @Xero has now overtaken Sage 50, the UK's #1 desktop accounting s/w product for 30+ years. https://t.co/8WomsXCiil

[kiwi_on_OE]

@garyturner: Total UK subscribers on @Xero has now overtaken Sage 50, the UK's #1 desktop accounting s/w product for 30+ years. https://t.co/8WomsXCiil

Interesting, depending on exactly what that statement means. Xero previously had more UK users than Sage (83k vs 64k 3/15), so shouldn't be that. Sage had 173k global users at 30 Sep 15, and if they repeated percentage growth of prev half (115k to 173k) would now have 260k users. So total Sage users, seems more likely, but which number, surely not 260k? But Xero can't think/imply/state/know that Sage still only have 173k users?

Anyway, I'll interpret it to mean Xero now have more than 173k users in the UK. Still more than my guess of 140k, and indicates they have over 750k users in total.

If anyone bought shares on the basis that they interpreted that tweet to mean 260k users, and that was not the case, I wonder if they would have grounds to complain?

I also wonder if this prompted the 6% price increase of Xero today? I can't see any announcement on NZX, should NZX comment about the release of price sensitive data not being done through the exchange?

[winner69]

If gary is pleased as punch then it must be big news and a real achivement

Rod retweeted that tweet so must be true, whatever it really is

[mikeybycrikey]

Interesting, depending on exactly what that statement means. Xero previously had more UK users than Sage (83k vs 64k 3/15), so shouldn't be that. Sage had 173k global users at 30 Sep 15, and if they repeated percentage growth of prev half (115k to 173k) would now have 260k users. So total Sage users, seems more likely, but which number, surely not 260k? But Xero can't think/imply/state/know that Sage still only have 173k users?

Anyway, I'll interpret it to mean Xero now have more than 173k users in the UK. Still more than my guess of 140k, and indicates they have over 750k users in total.

If anyone bought shares on the basis that they interpreted that tweet to mean 260k users, and that was not the case, I wonder if they would have grounds to complain?

I also wonder if this prompted the 6% price increase of Xero today? I can't see any announcement on NZX, should NZX comment about the release of price sensitive data not being done through the exchange?

I've just read through a whole lot of Sage documents and can't get any idea of what the Sage 50 user numbers are. He does seem to be referring specifically to "Sage 50", which is just one of several products they have got. Sage One had 173,000 users (seems to be global, with 100k in UK/Ireland).

And those numbers were from Sept 2015 so should have grown more.

I'd be very surprised if Xero UK subscriptions were 173k. I'm picking 132k for UK subscriptions. (A couple of very rough calculations based on Sage UK's 100k users and growth got me to 133k users. Who knows though. Maybe they are both running neck and neck?)

One worry about Xero is that growth is going to just stop. I would like to see some evidence that growth is being sustained. Your estimate from a couple of days ago of 730k global users (and actually my estimate too) would be 54% annual subscriber growth and instead I'd like to see it over 60%.

[kiwi_on_OE]

I've just read through a whole lot of Sage documents and can't get any idea of what the Sage 50 user numbers are. He does seem to be referring specifically to "Sage 50", which is just one of several products they have got. Sage One had 173,000 users (seems to be global, with 100k in UK/Ireland).

And those numbers were from Sept 2015 so should have grown more.

I'd be very surprised if Xero UK subscriptions were 173k. I'm picking 132k for UK subscriptions. (A couple of very rough calculations based on Sage UK's 100k users and growth got me to 133k users. Who knows though. Maybe they are both running neck and neck?)

One worry about Xero is that growth is going to just stop. I would like to see some evidence that growth is being sustained. Your estimate from a couple of days ago of 730k global users (and actually my estimate too) would be 54% annual subscriber growth and instead I'd like to see it over 60%.

Ah yes, I didn't notice the reference to Sage 50. Like you I couldn't find anything. I seem to recall that someone at Xero put out a comment a year or two ago that was accurate but somewhat meaningless. Something about Xero v MYOB numbers, and I think they may have also done it wrg Quickbooks. So they have a history of this sort of thing.

I think annual growth will be 60+% everywhere except NZ. Current FY, NZ comparatively small enough that it won't unduly detract from growth elsewhere? Perhaps not current year, maybe the following year?

[Longhaul]

SaaS companies been on the rise for a while now since a big fall in Dec/Jan. https://www.bvp.com/strategy/cloud-computing/index

XRO seems to be making a serious move this week after a few weeks consolidating. I think they are generating some good noise in UK and US markets but keen to see some updated numbers soon.

(Disc - holding.)

[gbogo]

this form the AFR yesterday.

"...If more individual banking customers push to share their banking data to get a better deal, the platform might add to calls for banks to have to provide open-data APIs, an issue under consideration by the Productivity Commission after a referral by Treasurer Scott Morrison last month.

For the banks, access to better data is not going to come free. It would seem that Xero and other technology companies that control data might change the underlying economics of the financial services industry.

Xero, which reported a loss in the six months to September, refused to discuss how earnings from the financial web operate, but it is understood the company is earning small fees from NAB and other members of the web, with amounts depending on particular relationships.

Styles says the entire financial services industry understands when a customer chooses to share their data that has significant value. "There is an investment Xero has made to make sure that is possible and we also have to maintain that," he says.

"We have always said we would monetise our API ecosystem. This is absolutely part of that. We have made a significant investment and where customer value is delivered we want to recover that cost.""

full story: http://www.afr.com/technology/xeros-rich-data-heralds-a-new-world-for-banks-20160403-gnx0sm

[gbogo]

I heard from a NZ XRO customer that they raised the prices again, for the second time in a few months. Can anyone confirm?

[RGR367]

New York Times on almost side by side plugging of Intuit with Xero http://mobile.nytimes.com/2016/04/11/technology/intuit-sheds-its-pc-roots-and-rises-as-a-cloud-software-company.html?_r=3&referer=

[winner69]

Rod don't like the NBR

@roddrury: Oh yay. Another click bait NBR article. Has there ever been a company doing so well in NZ subject to such ****ty reporting?

Xero cans revealing quarterly reports

Mind you if true i for one a bit disappointed (red flag)

[Everwood]

Rod don't like the NBR

@roddrury: Oh yay. Another click bait NBR article. Has there ever been a company doing so well in NZ subject to such ****ty reporting?

Xero cans revealing quarterly reports

Mind you if true i for one a bit disappointed (red flag)

This is old news, Xero announced this to the markets on 18th of March
https://www.nzx.com/companies/XRO/announcements/279467


The NBR are about a month behind the times.

[winner69]

This is old news, Xero announced this to the markets on 18th of March
https://www.nzx.com/companies/XRO/announcements/279467


The NBR are about a month behind the times.

Took them that long to ask whether Rod wanted to be less transparent

[zijiji]

Not sure about the rest of the world but XERO are raising prices in the UK by around 10% starting 4th July 2016... Should help to increase revenue.


On a side note, I believe XERO have applied for exemption of filing quarterly cashflow statements (although I can't recall where I read it) for their ASX listing - does anyone know if that means they won't publish those figures at all each quarter going forward?

[zijiji]

On a side note, I believe XERO have applied for exemption of filing quarterly cashflow statements (although I can't recall where I read it) for their ASX listing - does anyone know if that means they won't publish those figures at all each quarter going forward?

Sorry, found the answer when looking at something else.. From one of their Market Release entitled "CHANGE IN ASX LISTING CATEGORY" dated 18th March 2016.

It says:

Xero is no longer required to release Quarterly Cash Flow Reports (Appendix 4C). Xero’s Annual Report (due to be released on 12 May 2016, NZT) will contain a Statement of Cash Flows for the year ending 31 March 2016, and Xero’s Interim Report (due to be released in November 2016) will contain a Statement of Cash Flows for the six months ending 30 September 2016.

[Snow Leopard]

Not sure about the rest of the world but XERO are raising prices in the UK by around 10% starting 4th July 2016... Should help to increase revenue....

Intuit advertising Quick Books Cloud offering with 40% introductory discount aggressively in UK at present

Best Wishes
Paper Tiger

[Harvey Specter]

Intuit advertising Quick Books Cloud offering with 40% introductory discount aggressively in UK at present

Best Wishes
Paper TigerBusiness owners should see through this. Cost of product is about $50 a month, and if the product is good, you will be using it for the next 5+ years. Better to go with the better product that the cheapest. Intuit will capture a portion of the market but they are the ones likely to churn/die quicker.

[JamesST]

Yes, I believe churn is a key metric we need to know from intuit to do real analysis on how Xero and QBO are competing. User growth doesn't tell the whole story.

[RGR367]

700K for XRO? Or is it really slowing........ https://www.linkedin.com/pulse/7-xero-k-where-art-thou-matt-paff

[mikeybycrikey]

700K for XRO? Or is it really slowing........ https://www.linkedin.com/pulse/7-xero-k-where-art-thou-matt-paff

I saw that the other day and didn't really think it was a big deal. Xero have stopped predictably announcing every milestone, and arguably 700k isn't even a major milestone.

In fact, reading through that article, the evidence for 600k customers on 5/11/2015 is an investor day presentation released on that day that says that Xero is an "ecosystem with over 600,000 subscribers today". They actually had 593,000 on 30/9/2015 so likely had 600k users by about 15/10/2015, twenty days earlier than the author believes.

I'm expecting about 730k users by end of FY16 (i.e. 31/3/2016, 5 weeks ago). Given growth I wouldn't be surprised if they are getting close to 750k by now. I would be extremely surprised if they haven't reached 700k yet.

Remember the good old days when Xero would announce subscriber numbers the day after the end of the financial year?

[Longhaul]

Xero have stopped predictably announcing every milestone, and arguably 700k isn't even a major milestone.


Hmmm I wonder if they aren't that keen to give too much away to Intuit? Perhaps Intuit could deduce US growth if Xero announces total subs.

Well I guess we shall see soon. I also expect 750k+ subscribers.

The other interesting thing to watch (hopefully) is how Xero monetises that subscriber base on top of monthly subscription charges.

edit: just read this "On Xero, Mrs Kinnaird said expectations of revenue of $214million from Australian and UK subscriptions was "key'' for full-year 2016. "The US market remains important but subscription growth in absolute terms will be small,'' she said."

http://www.odt.co.nz/news/business/381691/expectations-solid-growth

[kiwi_on_OE]

Just returned from day one of Accountex in London, back tmrw for Gary Turner's presentation (a few hours after annual results announced?). Observations: -

Quickbooks, Sage and Xero had the biggest spaces, Sage the biggest.
Quickbooks space looked the busiest, seemed to be lots of staff talking to lots of accountants.
Quickbooks sponsoring the takeaway bags.
Sage probably a big sponsor as had two page article early in the conference guide book.
I went to one presentation (50 people) and they asked about cloud accounting usage, several said Xero, one or two or three said Quickbooks and Sage.

Overall, it seems that at a minimum Xero are at least competing with the other two.

[OldGuy]

and the loss widens even more. Ouch.

[Santiago]

and the loss widens even more. Ouch.

Well, that's one of the many numbers in the report, taken out of context. Perhaps a more balanced summary would include the other numbers- subscriber growth taking off outside of A/NZ, ACMR over $250m, cash burn slowing etc etc. In that context, it's probably worth spending the money they already have sitting in the bank now to engineer success- and they appear to be delivering. Worth taking more than a one-dimensional look at this company- remember it's not a utility or a bank.

[OldGuy]

Please remind me: When were they planning to be profitable, and do these results show them being on track to achieve that?

[Leftfield]

Cash on hand reduced by $85 mill in the year. At this rate, 2 yrs till more cash raising needed?

However in 2 yrs subscribers likely to be over 1 mill. Interesting times ahead.

[OldGuy]

If they can't close the gap between revenues and costs in the next year or two, I can't see this EVER being profitable. Been saying this for years, and not surprised to see it come true.

[mikeybycrikey]

The comments about the widening loss might be interesting, if the size of the loss was unexpected.

Still no indication of when they are going to be profitable, but they are saying that "Xero is managing the business to cash flow break-even within its current cash balance".

They currently have $184 million so with the current cash burn of $90m in FY2016, I'd expect them to be cashflow neutral within 3 years, I guess. With capitalising expenses I'd expect profit to be slightly sooner than that.

Or maybe I'm being too optimistic. Australian growth seems to have leveled off more than I expected.

[OldGuy]

The american subscriber numbers say it all. Only 62,000. How many tens of millions have they spent chasing those??

[Leftfield]

The american subscriber numbers say it all. Only 62,000. How many tens of millions have they spent chasing those??

Still early days in USA. XRO notes that "Major US banking integrations (are planned/extected) in coming months" This is a big one. Until the banks allow integration of their statements to XRO clients reconciliations, then progress will be slow. Integration with banks is a MAJOR benefit for XRO clients. In the UK XRO was one of the first to provide such integration and now is mkt leader.

Currently both USA and UK customers growing at over 50%. Thats pretty dam good.

[Longhaul]

Currently both USA and UK customers growing at over 50%. Thats pretty dam good.

77% and 60% respectively by my figures.

Actually it would be really interesting to compare the growth charts of US and UK to NZ and AUS in their early years....

Maybe when I have some time I will give it a go.

*Anyone know if we can tune into the investor presentation?

[OldGuy]

wow, talk about head in the sand. What is the cost of acquiring these antipodean customers relative to potential earnings?

Also, high growth rates are very easy to achieve from a small base. I think the absolute numbers are more important in terms of likely profitability going forward.

Happy not to be holding this one.

[Leftfield]

77% and 60% respectively by my figures.

Actually it would be really interesting to compare the growth charts of US and UK to NZ and AUS in their early years....

Maybe when I have some time I will give it a go.

*Anyone know if we can tune into the investor presentation?

Investor presentation available via NZX. This image shows how the USA is tracking and shows slow USA acceptance of Cloud computing and bank statement integration benefits (Crikey they still use cheques over there!)8031

[OldGuy]

is that velocity chart expressed in absolute terms (i.e. number of subscribers)? If so, they should just quit the states RIGHT NOW.

[Beagle]

As the company grows, what is it now 9 years ?, so do the losses. Its the same year in year out so please forgive me if I've posted this before. I am amazed that people still believe in the business model.

If a business is growing at some point there should be a sign that losses diminish and it turns profitable as the company obtains critical mass with the resulting efficiencies. As it grows there is no real sign that normal efficiencies are materialising so it would appear nobody can reliably say if or when this will occur either from within or outside the company. Highly speculative with very high risk. I will continue to avoid until they can prove their business case is profitable. Despite company claims I think shareholders can brace themselves for yet another capital raise in the next year or two.

[RGR367]

You either like it or not but still looking good as far as my acceptance of the report is concern. And why quit US of A when it's tracking very similar to almost all the other markets.

[Santiago]

essentially, the LTV per customer is increasing, churn is decreasing, and CAC is also decreasing- why would they not want to invest heavily in customer acquisition now, especially as they compete with others in a business where once they have a customer signed up, it's very difficult for them to move? In my view, that's why cash burn at present is not the key issue (given they have the money in the bank and will do for at least 2-3 years more). Not spending to acquire customers, as the other metrics improve, would be criminal. Once again, I think you have to use different criteria when reading the results of a SaaS company in this situation (or indeed any subscription based company). Fair enough for not holding and I get the risk involved, but I do take exception to people who criticise without presenting the full picture- seems like a chip on the shoulder rather than intelligent analysis.

[OldGuy]

Excuse me? The barrier to exit from Xero is almost non-existent. You get a neat little CSV file that you can import into any one of their competitors product....

Roger: I think you and I are from a different planet, where value is tied to current or imminent profitability...

[OldGuy]

You either like it or not but still looking good as far as my acceptance of the report is concern. And why quit US of A when it's tracking very similar to almost all the other markets.

See, this is the problem. The cost of acquiring each US customer is so incredibly high that such comparisons are absolutely meaningless.

[Beagle]

Excuse me? The barrier to exit from Xero is almost non-existent. You get a neat little CSV file that you can import into any one of their competitors product....

Roger: I think you and I are from a different planet, where value is tied to current or imminent profitability...

Yes newguy, opps sorry oldguy, I seem to recall we've tried to bring people down to planet earth on this thread once or twice before LOL.

[mfd]

When they're in a position that the lifetime income of a customer is greater than the cost of acquiring them, it'd be a real waste for them not to burn all available cash in their compounding machine. Profit will naturally spit out later, the longer we wait the bigger the profit

[Cricketfan]

The Herald's headline on the main page is a bit misleading: "Xero posts 67pc jump in revenue, reaches breakeven"

But when you click on the article the headline is "Xero has enough cash to reach breakeven, posts 67pc jump in revenue"

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11638028

[Santiago]

Excuse me? The barrier to exit from Xero is almost non-existent. You get a neat little CSV file that you can import into any one of their competitors product....

Roger: I think you and I are from a different planet, where value is tied to current or imminent profitability...

potentially change accountant/advisor, learn new system, re-load data etc- that's why churn is low and getting lower as markets develop.

[lastmoa]

essentially, the LTV per customer is increasing, churn is decreasing, and CAC is also decreasing- why would they not want to invest heavily in customer acquisition now, especially as they compete with others in a business where once they have a customer signed up, it's very difficult for them to move? In my view, that's why cash burn at present is not the key issue (given they have the money in the bank and will do for at least 2-3 years more). Not spending to acquire customers, as the other metrics improve, would be criminal. Once again, I think you have to use different criteria when reading the results of a SaaS company in this situation (or indeed any subscription based company). Fair enough for not holding and I get the risk involved, but I do take exception to people who criticise without presenting the full picture- seems like a chip on the shoulder rather than intelligent analysis.

Well said, Santiago.

[mikeybycrikey]

Here's my take on the result. On balance I'd say it's very slightly worse than I expected but better in some areas and worse in others.

Good news:
- gross margin increasing significantly from 70% to 76% (why?)
- cash spend stable YoY and expecting to decrease next year
- growth in expenses clearly slowing (only 53% higher the FY15!)
- churn and lifetime value creeping up (but without breakdown we don't know how back US churn is)
- guidance given that they plan to "reach cash-flow break even within current cash balance". This provides the first concrete (yet vague) indication of when they might reach sustainability and profitability.

Bad news:
- Australian growth slower than my expectations. I was expecting 60% and got 53.5%. US growth also not great but probably acceptable. (How often is 77% growth described as "not great"?)
- less information about markets in annual report. Previously each major market was shown separately (NZ, AU, UK, North Am, RoW), now it's just AU+NZ and international. What are they trying to hide?
- would be good to see sales and marketing expenses decreasing a bit more. It is basically keeping pace with subscriber growth while all other expenses are being controlled. But where do new subscribers come from if there isn't slaes and marketing spend?

Overall, I think if they had reached 730k subscribers I would have been happy. Future growth has always been by worry about this company and I feel like the past couple of years that it hasn't quite been meeting my expectations... but it's coming close. This stock is still a risky play, even after 10 years.

Looking to the future, I'd like to see 2 million total subscribers in three years from now. Unfortunately, I'm thinking that 1.5 million is more likely and when I look at the current markets, I do wonder where they will come from, especially if North American growth doesn't pick up further.

[mikeybycrikey]

You either like it or not but still looking good as far as my acceptance of the report is concern. And why quit US of A when it's tracking very similar to almost all the other markets.

Why quit the USA? Because the costs to acquire customers there are significantly higher than in other markets. But the rewards if they do get customers is significantly higher.

I don't think they should quit there just yet but it makes sense to consider it at some point in the future if they can't compete there. We're not there yet though.

[Nasi Goreng]

I have purposefully not really kept in touch with the Xero story for at least a year but today I did have a look at their investor briefing and I just read comments by Mikeybycrikey which I tend to agree with.

To me (and by my statement above, I am no expert here), it still looks like a very huge uphill battle to crack the US. Growth is very slow there which was always the market that they had to crack to achieve their objectives and lofty shareholder expectations.

I think your call for 1.5 to 2 million customers in 3 years would be a fair expectation but to achieve that, it looks like at least 50% of those customers would need to come from the US which would mean exponential growth which we have not yet seen.

I'm not sure how they do this... Maybe Rod Drury needs to get on CNBC's mad money show lol.

[gbogo]

love the company and the model. agree that SaaS opportunity requires aggressive growth plans even when it might feel uncomfortable. heard from a couple of users that they increased prices again recently. would they consider moving away? no - the nominal amount is still small and the cost to move is high. that's all great. what i don't like is the price action. it broke down out of a channel, ran up to kiss the underside of the channel yesterday and dropped like a stone. re-test the of the post-$40 lows coming up and possibly under $10. i know most of you don't believe in technical analysis but those of you that do, i'll try to post a pic later. for me that means, i sold out at a small loss, again and will hope to buy back lower when some kind of a sold base has been made and sentiment is more pessimistic.

[Harvey Specter]

76% gross margin shows the unit economics are there. at about 7x AMCR which is abit high compared to market (about 4-5x I think after recent SaaS drop) but there growth is current better than average so no to far out.

Again they say they have plenty of cash on had but they have raised cash after saying that in the past. The difference is the reference to breakeven, though they have said that in the past as well. Will they raise more cash and use the putting the foot on the accelerator line again?

[artemis]

This small audio from today has Mr Drury indicating that Xero is managing / reducing cash burn because the markets are not so keen on a pure growth story at the moment but looking for a profit in the not too distant future. That makes sense and is smart as they recognise that year after year of losses, despite growth in revenue etc, drags down the perception of the company. Once Xero breaks even it should be able to show a profit while still pumping $$ into growth.

http://www.radionz.co.nz/national/programmes/businessnews/audio/201800452/xero-makes-full-year-loss-with-spending-on-global-expansion

[ShareFodder]

Initially I was a bit disappointed with the raw subscriber numbers but the more I think about it, I think the results aren't too bad at all. Most metrics are heading in the right direction.

Xero finished the day flat in AUS which I think is a good sign considering the miss on subscriber numbers. I tend to think the stock will drift upwards from here with a few bumps on the way towards break even.

[Baa_Baa]

76% gross margin shows the unit economics are there. at about 7x AMCR which is abit high compared to market (about 4-5x I think after recent SaaS drop) but there growth is current better than average so no to far out.

Again they say they have plenty of cash on had but they have raised cash after saying that in the past. The difference is the reference to breakeven, though they have said that in the past as well. Will they raise more cash and use the putting the foot on the accelerator line again?

After doubling down on 9 years of solid growth (forgoing the opportunity to provide a sustainable return to shareholders), in order to secure the US market which appears to be many years away if at all, do you think that the growth in subscribers in that all important US market (less churn) is sufficient to justify the 7xACMR market cap and corresponding SP?

It's not really about surviving the next 2-3 years on cash and revenue, but more about whether XRO nails the US market which they seems hell bent on doing but at 60k or so subscribers for all the investment it seems a long way off.

Anyway, I still can't see any rationale for the current share price that makes any sense.

[mondograss]

The thing with the US market is that at a banking technology level it's fragmented as hell, particularly for the SME's. NZ and Aus are way ahead of the US in this regard and have been for a long time. As someone above pointed out, in the US they still use cheques, and a lot of cash. That makes it really tough for a company like Xero to make inroads because they are very dependent on the electronic transaction mindset and their integration with the banks. Once they get the big banks integrated they'll start to see some real movement but it's going to be hard graft. Ultimately though, once the US wakes up to the notion of a cashless society they'll see exponential take up, but they've got to be well positioned for it to happen or they'll get crushed.

[Baa_Baa]

The thing with the US market is that at a banking technology level it's fragmented as hell, particularly for the SME's. NZ and Aus are way ahead of the US in this regard and have been for a long time. As someone above pointed out, in the US they still use cheques, and a lot of cash. That makes it really tough for a company like Xero to make inroads because they are very dependent on the electronic transaction mindset and their integration with the banks. Once they get the big banks integrated they'll start to see some real movement but it's going to be hard graft. Ultimately though, once the US wakes up to the notion of a cashless society they'll see exponential take up, but they've got to be well positioned for it to happen or they'll get crushed.

Exactly, building API's for the few NZ and Aus banks will seem simple compared to the USA .. from Wiki there are 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014

Maybe they'll find a SaaS provider who has already built API's to the USA banking sector, and partner with them, like they did for Tax which is also massively fragmented. Would be interesting to know how Zero are tackling this banking integration challenge.

[OldGuy]

I'm willing to wager almost anything that Xero won't crack the US in any meaningful way for the reasons outlined above. I guess all holders see it differently?

[mondograss]

Exactly, building API's for the few NZ and Aus banks will seem simple compared to the USA .. from Wiki there are 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014

Maybe they'll find a SaaS provider who has already built API's to the USA banking sector, and partner with them, like they did for Tax which is also massively fragmented. Would be interesting to know how Zero are tackling this banking integration challenge.

From the report it sounds like they're engaging directly with the banks to do the integration, or at least with the big players. But yes it would definitely make sense to find a partner who's already done the heavy lifting. Maybe someone like CSC who do a lot of banking\payments work, or their offshoot CeleritiFinTech.
http://www.csc.com/newsroom/press_releases/136521-csc_position_paper_helps_banks_navigate_and_benefi t_from_digital_transformation_in_the_enterprise

[mikeybycrikey]

Exactly, building API's for the few NZ and Aus banks will seem simple compared to the USA .. from Wiki there are 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014

Maybe they'll find a SaaS provider who has already built API's to the USA banking sector, and partner with them, like they did for Tax which is also massively fragmented. Would be interesting to know how Zero are tackling this banking integration challenge.

They already use Yodlee (https://www.xero.com/blog/2010/01/xero-and-yodlee/) which provides this service for them globally. I'm guessing that it doesn't provide everything that they want because otherwise they wouldn't be trying to expand their own range of bank feeds.

edit: Here is a blog post from four years ago with more detail on Yodlee and bank feeds https://www.xero.com/blog/2012/10/six-years-of-bank-feeds/

[Santiago]

Just read the presentation for a second time. I'm not expert on SaaS companies, as some of you may be, but I've always thought (and posted here) that the results when based on an online subscription model need to be read differently to the results of other types of company. That's why I take a dim view of people who only note cash burn, without providing the context (what the company is buying with that cash burn). In that sense, and reading them again, I reckon the key metric to watch is LTV (life time value)- LTV per customer has grown from $1700 to $2100 and total LTV of all current customers has gone from $823m to $1.5b (based on current LTV- remember this is improving so that 1.5b of value currently held in existing customers is likely to increase, along with any increase resulting from additional customers). That's an 83% increase in value that the company can reasonably expect to extract on current numbers from their investment. The subscription model accrues 100% of acquisition cost in the current year and delivers the value of that investment in future ones, which I think tends to distract some on this thread who don't understand the bigger picture. As such, on a second reading I'm seeing a very good result- an 83% growth in "stored value" while the value per customer is also improving, and new customers are being added.

Added to that, the SP has not budged for some time now. Anyone buying now is getting a lot more value per share than they were a year ago. I have held for some time, but I reckon that these numbers make Xero a pretty compelling investment at current price, that has been significantly de-risked in that total LTV is around 75% of the company's market cap (not including cash on hand) and all metrics are improving. Still risky in the sense that the US investment has question marks around it, but at the same time in terms of the total group that play is not dragging the rest of the metric improvement backwards by any means.

So, while there's been a truck load of debate, a lot of it pretty one-sided and one-dimensional, my question is- is Xero now a good buy and hold investment, or is it still too risky?

Interested in others' views. Mine is as follows: I wouldn't recommend it to my mother, but I would to someone who has got a reasonable time horizon.

[Leftfield]

Just read the presentation for a second time. I'm not expert on SaaS companies, as some of you may be, but I've always thought (and posted here) that the results when based on an online subscription model need to be read differently to the results of other types of company. That's why I take a dim view of people who only note cash burn, without providing the context (what the company is buying with that cash burn). In that sense, and reading them again, I reckon the key metric to watch is LTV (life time value)- LTV per customer has grown from $1700 to $2100 and total LTV of all current customers has gone from $823m to $1.5b (based on current LTV- remember this is improving so that 1.5b of value currently held in existing customers is likely to increase, along with any increase resulting from additional customers). That's an 83% increase in value that the company can reasonably expect to extract on current numbers from their investment. The subscription model accrues 100% of acquisition cost in the current year and delivers the value of that investment in future ones, which I think tends to distract some on this thread who don't understand the bigger picture. As such, on a second reading I'm seeing a very good result- an 83% growth in "stored value" while the value per customer is also improving, and new customers are being added.

.

Market seems to agree with you today Santiago. I think your point re growth of LTV is good. Disc.I'm holding a small parcel and content.

[Longhaul]

Nicely put Santiago. If you're comfortable with the risk then it's worth it in my opinion. Can't think of any other nz companies with quite the same potential over the next 5 years.

A lot of comments on here try to compare apples with oranges which isn't all that useful. Familiarity with SaaS metrics is a must in order to understand what game Xero is in.

Of course there is a chance they will not meet their expectations, but they have a pretty good platform to do it from now. Each to their own huh.

[mondograss]

I actually do hold a decent parcel of these and think they have a good future, so I'm happy to hold long-term and see how they go.

[mikeybycrikey]

Interesting article about First NZ Capital's expectations for Xero: http://www.scoop.co.nz/stories/BU1605/S00424/xero-to-reach-profitability-in-three-years.htm

They are expecting 1.32 million users in 2 years (I guess they mean end of FY2018). This is a significantly slowing of growth to only 35% per annum, although this mostly matches my estimate too.

[winner69]

Like a proud dad tweeting the success of his kids

@roddrury: Cool metric just noticed. @Xero has received $473m in total funding and delivered (to March 16) $472m total revenue. That’s pretty cool.

[Beagle]

Interesting article about First NZ Capital's expectations for Xero: http://www.scoop.co.nz/stories/BU1605/S00424/xero-to-reach-profitability-in-three-years.htm

They are expecting 1.32 million users in 2 years (I guess they mean end of FY2018). This is a significantly slowing of growth to only 35% per annum, although this mostly matches my estimate too.

I liked this bit from article...something investors might like to keep in mind with the size of their allocation to this company, if any, emphasis added.

Xero has remained "an extremely high-risk investment" because of competition from incumbents such as Intuit, Sage and MYOB, internet security, execution, managing growth and geographical spread, key man risk, especially around founder and chief executive Rod Drury, service pricing and the risk of short-term stock price volatility, Schofield said.

[Santiago]

Surely the first time in a while XRO has fallen back to page 5 on Sharetrader...

http://www.stuff.co.nz/business/industries/80833317/wells-fargo-joins-xeros-financial-web

More positive news from the US...

[longy]

Xero signs up Wells Fargo, a sign of 'good progress' in the US

http://www.stuff.co.nz/business/industries/80833317/wells-fargo-joins-xeros-financial-web

I don't know about you fellas but news like this can't be bad...

[Longhaul]

Yes a good sign, success is pivotal on getting good relationships with the banks over there. Seems they are a few years behind the rest of the world.

Here's some other interesting news regarding revenue multiples for SaaS companies - worth a read for Xero holders.

http://tomtunguz.com/major-saas-acquisitions-mid-2016/

[Harvey Specter]

So Demandware at 12x revenue with 43% growth. Xero is 13x revenue with over 50% growth.

[Longhaul]

So Demandware at 12x revenue with 43% growth. Xero is 13x revenue with over 50% growth.

Yeah so Salesforce paid $2.9 billion USD or roughly $4.3 billion NZD. XRO MCAP currently $2.6 billion NZD....

[RGR367]

On ASB Dashboard: MorningStar initiating coverage of the company with a HOLD valuation of $21 :eek2:

[RGR367]

On ASB Dashboard: MorningStar initiating coverage of the company with a HOLD valuation of $21 :eek2:

Not pay walled on NBR: http://www.nbr.co.nz/article/xero-turn-profitable-2020-morningstar-predicts-b-190791

[RGR367]

Pay walled but the heading says it all: http://www.nbr.co.nz/article/shares-us-giant-intuit-soar-while-xeros-languish-jr-p-191272

[RGR367]

Rod on the AGM mentioned that hitting 1M customers would be easy this year end. Shall we all hold him accountable for that statement? I definitely will.

[mikeybycrikey]

Rod on the AGM mentioned that hitting 1M customers would be easy this year end. Shall we all hold him accountable for that statement? I definitely will.

Stuff are reporting that as being a year from today, rather than the end of the financial year. http://www.stuff.co.nz/business/82240741/xero-hopes-to-have-a-million-customers-by-its-next-annual-meeting. Based on prior growth that certainly seems achievable but I think getting it by 31 March will be a stretch and probably highly unlikely.

I didn't see the video of the AGM but in a change from the past Xero don't seem to be trumpeting their current subscriber numbers, only figures from 31 March. Is that correct or have I missed something?

[RGR367]

Stuff are reporting that as being a year from today, rather than the end of the financial year. http://www.stuff.co.nz/business/82240741/xero-hopes-to-have-a-million-customers-by-its-next-annual-meeting. Based on prior growth that certainly seems achievable but I think getting it by 31 March will be a stretch and probably highly unlikely.

I didn't see the video of the AGM but in a change from the past Xero don't seem to be trumpeting their current subscriber numbers, only figures from 31 March. Is that correct or have I missed something?

He did not specifically say "financial" year end so we just have to wait too when they put up the video at the website. But yes, all mentioned about customers are at March 2016.

[RGR367]

He did not specifically say "financial" year end so we just have to wait too when they put up the video at the website. But yes, all mentioned about customers are at March 2016.

And here's what NBR has to say. Not pay walled: http://www.nbr.co.nz/article/xero-beef-product-offer-says-millionth-customer-due-year-b-191848

[RGR367]

There was a question from the Melbourne floor too about when will XRO pay dividends. Rod answered that if you want dividends, then XRO is not the company for you. So yes, dividends will be a while yet.

[mikeybycrikey]

There was a question from the Melbourne floor too about when will XRO pay dividends. Rod answered that if you want dividends, then XRO is not the company for you. So yes, dividends will be a while yet.

Well, at least it's a change from the usual questions about when they are going to start making a profit.

[Longhaul]

Is the world finally waking up to the fact that Xero has basically been building a money printing machine?

(Anyone going to take the bait?)

[Harvey Specter]

Is the world finally waking up to the fact that Xero has basically been building a money printing machine?A very impressive mony printing machine too. Unfortunately they have also build a very successful money spending machine too! :0

[Santiago]

Is the world finally waking up to the fact that Xero has basically been building a money printing machine?

(Anyone going to take the bait?)

I'll take the bait. I agree. Might be a few years before we see the money being printed being more than the money being spent, but once they go past that tipping point I think we'll see a lot of cash generated. While the cloud/Saas side of things might be sort of a new business model, the whole tech thing has been rolling for a while and despite the fact that a lot of NZ investors don't get it, Xero is following a well trodden path investing for growth while they can.

[Longhaul]

Any Forsyth Barr clients get the update today?

[winner69]

For believers the graphic shows why one keeps holding

Others maybe waiting until the share price goes 'exponential' again - but this time for much longer

From HBR.org

[kiwi_on_OE]

I'll take the bait. I agree. Might be a few years before we see the money being printed being more than the money being spent, but once they go past that tipping point I think we'll see a lot of cash generated.

My recollection from the annual report was that it looked like the cash coming in and cash going out might be in balance in around a years time.

[RGR367]

Been a slow front on this thread so might as well include something about the competion. Sage has been hit by data breach http://www.bbc.com/news/business-37076704

[mondograss]

Ooops, someone left the backdoor unlocked eh?

[Harvey Specter]

Been a slow front on this thread so might as well include something about the competion. Sage has been hit by data breach http://www.bbc.com/news/business-37076704Rod was very quick to retweet that this morning.

[winner69]

Users put an awful lot of trust / faith in these cloud based companies to keep their accounting / payroll data secure.

[RGR367]

And yeah, Xerocon in San Francisco starts tomorrow but nothing in there will add more to the sp :(

[Harvey Specter]

And yeah, Xerocon in San Francisco starts tomorrow but nothing in there will add more to the sp :(I am expecting more detail on where they are going regard AI. Whether that will attract customers, or attract accountants to sign up customers, who knows.

[Raz]

Users put an awful lot of trust / faith in these cloud based companies to keep their accounting / payroll data secure.

Good reason they have a barrier into the US market.

[emveha]

http://www.stuff.co.nz/business/industries/83826944/xero-promises-worldclass-jobs-with-no-compromises

The company is hiring, can only be a good sign right?

[Raz]

http://www.stuff.co.nz/business/industries/83826944/xero-promises-worldclass-jobs-with-no-compromises

The company is hiring, can only be a good sign right?

amusing to see will pay more than 100k and world class jobs in the same article...

[Santiago]

Anyone else following the Bollinger Bands? Last time they were this squeezed for this long was back in Feb/March 2015...

[winner69]

Anyone else following the Bollinger Bands? Last time they were this squeezed for this long was back in Feb/March 2015...

So true

Big xerocon on somewhere at the moment

Might be a trigger for a break out

Wish they wouldn't use the phrase con with xero

[Santiago]

So true

Big xerocon on somewhere at the moment

Might be a trigger for a break out

Wish they wouldn't use the phrase con with xero

In Brisbane- over 2000 attendees according to The Oracle (Rod). That's a lot of bean counters in one room. Next big reporting date is Nov half year report (April-Sept). I doubt we'll get much more news/numbers before then.

[RGR367]

So true

Big xerocon on somewhere at the moment

Might be a trigger for a break out

Wish they wouldn't use the phrase con with xero

Here you are again, another Xerocon (Brisbane this time) and you against the phrase once more. Who would you rather use the phrase, a group named Eriksson? :p

[Santiago]

Make that 2200

[winner69]

Make that 2200

Biggest party ever Rod says

And the social agenda (non con hours) is enormous apparently

[bobxia]

has anyone noticed the $13.3m buying this morning (@$20). SP has rallied after that!

[Baa_Baa]

has anyone noticed the $13.3m buying this morning (@$20). SP has rallied after that!

Buyers need sellers, in this case it looks like Peter Theil, a cornerstone investor, taking 765,171 shares off the table for $15,322,820. https://www.nzx.com/files/attachments/243236.pdf

[Harvey Specter]

Buyers need sellers, in this case it looks like Peter Theil, a cornerstone investor, taking 765,171 shares off the table for $15,322,820. https://www.nzx.com/files/attachments/243236.pdfThats not a good sign. Their last investment was at $18? so not the 10x return VC funds aim for.

Having said that, i have always questioned why VC funds would invest in listed co's as a lot of their competitive advantage is lost.

[Baa_Baa]

Thats not a good sign. Their last investment was at $18? so not the 10x return VC funds aim for.

Precisely, a very modest profit and contrary to the VC's MO.

[Santiago]

Precisely, a very modest profit and contrary to the VC's MO.

He only sold less than 10% of his holding- maybe Trump asked him for a little help

[bobxia]

I was wondering why SP had been caped at $20 in the last few weeks, because he was selling. So if he has done the selling, SP should start going north now?

[Santiago]

Whatever the share price might do today, tomorrow, or next week, this is a pretty cool pic if you think about where these guys have come from:

https://mobile.twitter.com/Chris_Ridd/status/773660490899697664/photo/1

[winner69]

Even better one santiago

Bit like a Christian Revival party these things eh - but thats the point though, getting life long followers to spread the word

@roddrury: The Trent! #Xerocon https://t.co/Xr4b1v1Eef

[Santiago]

Even better one santiago

Bit like a Christian Revival party these things eh - but thats the point though, getting life long followers to spread the word

@roddrury: The Trent! #Xerocon https://t.co/Xr4b1v1Eef

Man that does look like a born-again preacher-style gig. Whatever's good for business...

[RGR367]

Even better one santiago

Bit like a Christian Revival party these things eh - but thats the point though, getting life long followers to spread the word

@roddrury: The Trent! #Xerocon https://t.co/Xr4b1v1Eef

And you'll like the announcements too https://www.xero.com/blog/2016/09/partner-program-announcement/

[RGR367]

And the latest on the Aussie XRO front https://www.xero.com/blog/2016/09/financial-web-smashing-barriers-banks-accountants-small-business-owners/

[Raz]

And the latest on the Aussie XRO front https://www.xero.com/blog/2016/09/financial-web-smashing-barriers-banks-accountants-small-business-owners/

and this

http://www.stuff.co.nz/business/industries/84076721/xero-spins-its-web-with-precision

[winner69]

Rod up front at xerocon today

Pictures later

[Baa_Baa]

and this

http://www.stuff.co.nz/business/industries/84076721/xero-spins-its-web-with-precision

Lots of interesting and positive points in that news article, though for shareholders needing to see their investment in the USA paying off, the last few paragraphs provide food for thought.

Drury says the US will "still take a couple of years".
Xero is "very conscious of cost" because the conservative US market is not moving quickly away from desktop accounting packages and towards the cloud, he says.
Instead it is relying on partnerships with the likes of US bank Wells Fargo to raise aware of its service.
Drury said Intuit spends US$1.4 billion on marketing but he maintains it doesn't work. So why isn't Xero growing faster in the US? "Because they are a massive brand which has been there for 25 years."

[Raz]

Lots of interesting and positive points in that news article, though for shareholders needing to see their investment in the USA paying off, the last few paragraphs provide food for thought.

Drury says the US will "still take a couple of years".
Xero is "very conscious of cost" because the conservative US market is not moving quickly away from desktop accounting packages and towards the cloud, he says.
Instead it is relying on partnerships with the likes of US bank Wells Fargo to raise aware of its service.
Drury said Intuit spends US$1.4 billion on marketing but he maintains it doesn't work. So why isn't Xero growing faster in the US? "Because they are a massive brand which has been there for 25 years."

Yes I thought the ended was a real kicker:-)

[RGR367]

Yes I thought the ended was a real kicker:-)

Yeah, it could well be but XRO is also starting a "kick" of his own as per lesson #5 ending paragraph:

"He forecasts Xero will be able to drop Netsuite and use its own product to manage its accounts within two years, as its software gains the capability to cater for larger business. "My accountant will now shoot me in the head," he added.

Not as direct but Rod mentioned this last ASM. So there is still a lot of boxing yet to be done before one is declared a winner. I'm still hoping :)

[winner69]

One excited disciple

@consolid8_aus: HOLY MOLY THIS IS THE NEW ERA, STARTING WHOLE NEW RENAISSANCE @roddrury @Xero #xerocon #exciting #superexciting https://t.co/TUo4LfBvhE