full year financial announcement and strategic update due soon, wondering if growth has plateaued... (In NZ) of course UK & OZ hopefully have some way to go
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full year financial announcement and strategic update due soon, wondering if growth has plateaued... (In NZ) of course UK & OZ hopefully have some way to go
$8.5m loss, (which no doubt is what the uneducated press will focus on!)
$12,874,000 expenses translates to a breakeven at around 32500 customers (based on average revenue of $33 per user)
This should still should be obtained within the next 12 months... (although costs should increase as they push into the US and they should make use of the cash that they have)
no official update on customer numbers unfortunately, so no new news really...(I estimate that this will be somewhere between 18,500 and 20,000)
How is it uneducated to focus on a $8.5 million dollar loss?
Affection for the product aside, I must admit there are days I "don't understand" this story in much the same way I "didn't understand" the dot com boom.
Uneducated was probably a poor choice of words...
But,
Whats the point of going to war with lots of ammo if you are not going to use it?
Through all this expenditure Xero have more than doubled their customer base in the last year, if they do that again over the next year they will break even... From there they are self-funded and all growth will be profit.
If Xero want to be THE online accounting solution, this is the way to go.
There are low funded solutions out there above breakeven, but a myopic focus is going to means that they are never going to be world beaters...
I was hearing constant radio ads for Xero during the key selling period - I sense that a lot of ammo was used.
I agree with Xero's decision to be aggressive but not *too* aggressive and to keep plenty of cash on hand.
They have done an A grade job when it comes to getting listed just before the crash then raising a large wad at the first sign of better conditions, catching Craig Winkler on the rebound to give extra credibility. Superb work.
It would be arrogant to assume money will always be easy to raise - it will be easier to sell Xero to an accountant with 20 million in the bank than it would have been at near zero.
I actually think they're by and large running things right and doing good things. I just think the stock is wildly overpriced and better opportunities will be there to buy it after breakeven.
Well said stranger, points noted..
Belg - do you think it should be valuing Xero higher, or lower?
Higher imho, one only has to look at the history of Sky T V , it took years of business with a low s p but once the bean counters sniffed that it was close to break even and could churn out real cash the instos all piled in, fair weather friends et al, its all about the "valley of death" and how long that lasts!!
The 42 Below IPO in 2003 issued 31 million shares at $0.50 ($15.5 million). The owners had prior to the float issued the foundation shares at cents per share (issue price of $0.50 translated to a $60.5 million capitalisation - at the time, 42 Below had negative earnings and no near term prospects of breakeven. The ultimate sale to Bacardi at $0.77 saw the IPO holder earn about a 15% annual rate of return on their capital - in no way compensation for the risks they undertook.
Xero IPO'ed in May 2007 issuing shares at $1.00 (raising $15 million) with an implied company capitalisation of $55 million. Again the foundation owners have been royally compensated for their efforts in founding the company - the company was founded with 1.5million shares, expanded to just over 1.7million in March 2007 and then boosted up to 40million shares by dividing existing shares 23.2:1 just before the IPO.
So, the founders contributed, apparently, about $2.8milllion to control 40million of the 55million issued shares. The public contributed $15million to control 15million shares.
In 2006 Drury and partners sold Aftermail to US software company Quest Software for US$14.7 million up front plus a performance-based consideration of up to US$30 million over three years. There were 5 partners in Aftermail - lets say Rod made at least US$8million. He already had whatever he made from selling Glazier Systems to Provenco in the dot com boom.
Guy Haddleton is also a very wealthy investor - founder of Adaytum and sold to Canadian software company Cognos for $160 million in 2002.
Sam Morgan - nuff said.
Craig Winkler - nuff said.
Why do these rich guys need your money, at $1 per share, to build a company that they have paid cents per share to found?
Maybe they simply want to do you a tremendous favour in giving you a small piece of what will prove to be a fabulous opportunity for only $1 per share. Their skills and experience more than compensate for the difference of cents per share some of the founders paid and the $1 you must pay. If you believe this ... then there is another stock you should own ... BurgerFuel!
-18% This month...
Pretty big swing after the annual results came out. ouch
Rod almost sounds like Mel Gibson talking about MYOB releasing their "online" product:
"We’re excited MYOB is finally hitting the market, their marketing campaign has already been fantastic for us.
We’ve been looking forward to this for a while and surprised its taken them so long.
We’ve had a very experienced team working on Xero for over 3 years now, building the foundations and all the support systems. We’re now 90+ strong and passionate about what we’re doing. We love writing and deploying software and making life easier for small businesses and accountants.
MYOB’s model has been to outsource development to an offshore 3rd party. While we’ve been hiring, they’re reducing their local teams and offshoring, slashing their costs and ramping up maintenance revenue, presumably for their Private Equity owners to break up and sell the company – which is what PE plays are all about.
Software is hard. I’m not sure many have seen a live version of the new MYOB product yet but when/if it does come out I’m sure there’ll be lots of good comparisons. Accounting applications are big, with a broad minimum feature set and take time. We’ve managed to develop a world class product factory that is shipping quality software regularly. You need to get a lot of things right to do that and maintain that.
Given we are three years ahead, their feature set will be thin and their values are different to ours – we’d expect them to have to lead on price. But we’re very confident that we are providing a lot of value.
MYOB’s last online product Business Basic Online got no traction, meanwhile we’re going very well.
We may sound a bit harsh on MYOB but I have to tell you, that their lack of innovation has slowed down small business productivity for many years. They were a good company back in their day but when I had to use it for my own businesses I was shocked by how hard doing the books was. I’ve done the late nights trying to get my reports right in MYOB. So this is personal and we are incredibly focused on this and will compete very hard.
We have a clear vision of what we’re doing, and we’re only just getting started.
I’m sure MYOB is more worried about us than we are about them. As we release final accounts on Xero and can replace Accountants Office (for free) and they have to upgrade servers and database licenses ($10’s of thousands) in their next big upgrade they’ll really know what competing on price is.
So far it’s 17,000+ to nil. Bring it on."
- Quoted from Braveheart / Stolen from Xero's blog