Full year 2021 results out. Watching the market with interest today given the carnage in the US.
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Full year 2021 results out. Watching the market with interest today given the carnage in the US.
Well yes, revenue and earnings are up - its now a royal 13 cents per share, which leads to a PE of 1000! Wow! Customers keep growing (well, the customers probably as well, but I meant to point to customer numbers), but it sort of feels that growth rates are slowly dropping. Not sure I like that given that they had Covid tail wind.
Given that this is now already the second year with a positive result (i.e. they made money vs losing some) I'd expect that markets might slowly start to re-price the share according to its money making abilities. Lets see, how this will work out.
Great share, but in my view (as many other great companies) too dear at the current moment ...
I don't know XRO very well but have been interested in perhaps getting in there. However on first view this report makes for very sober reading. I can't see anything but a painful correction in share price.
Ouch! Down about 10% today.
I didn't actually think it was a particularly bad announcement although I haven't read through that carefully.
Growth has been slowing for a while and I thought that with covid that growth might have come to a complete halt.
Not that we have to post it but just like old postings, it's nice to know that XRO is still improving https://www.xero.com/blog/2021/08/pe...gn=personaltax
Looks like XRO had a bad H1 FY22.
- HY REVENUE FROM ORDINARY ACTIVITIES NZ$505.7 MILLION, UP 23%
- HY NET LOSS NZ$5.9 MILLION VERSUS PROFIT NZ$34.5 MILLION
Clare Capital thinks a great result
Some big @Xero numbers out today: annualised monthly recurring revenue (AMRR) at NZ$1.1BN (⬆️29%), 3M subscribers (⬆️23%), 87% gross margins. Congrats team - those are some serious achievements. And the share price is down 5% today. Markets are tough and expectations are sky-high
Xero noted its operating expenses, including the costs of integrating acquisitions, increased as a percentage of revenue to 83.4%
Increasing reinvestment
"Greater clarity and renewed confidence in the economic environment over the past 12 months drove
increased reinvestment into customer growth opportunities," it said.
"This included increased spend on subscriber addition initiatives andinnovative brand awareness campaigns in a number of markets."
Product design and development costs increased 51% to $166.8m, about 33% ofoperating revenue and at a similar level to the second half of the previousyear.
I used to turn up to the ASMs when they were in Wellington. Clear message every time - no plan to make a profit or pay a divvie. It's all about growth. Since in those days the SP was in single figures, yep been a wee bit of growth.
And every time Rod Drury was at the door shaking every attendees hand.
Herald today - Why analysts are sticking with Xero after its swing to a loss (paywalled)
Jarden analyst Elise Kennedy -
"''If you had market leadership in an estimated $74b but had captured only 1.1 per cent share, would you continue to invest to capture more or focus on monetising existing customers?" Kennedy wrote in a note to clients. She reiterated her buy rating, and kept her 12-month target at A$150.00.''
It would be nice if investors had this much patience with longevity biotechs and nuclear fusion.
Bill.com seems to be experiencing similar things to xero in the US.
Vicious..
Lost a 3rd of its market cap inside a month..
If AU$90 doesn't hold where to next...?
Jeez ... I am not really following them (always looked too dear) ... but yes, the downturn looks impressive.
On the other hand ... I still see (at $105) a forward PE of 275 ... and lets not get started on earnings growth ...
So - what would this share be worth if we assume a fair PE of 10 :scared: - or even say 20 hoping for a 10 % (earnings) growth pa?
Have they ever made a profit?
They made a "massive" $3.3m profit in 2020 http://research.iress.com.au/IDS/old...091850000&ppv=
I note this bit from the 2020 annual report "At the Deloitte Top 200 Awards in 2017, Rod
was named Visionary Leader of the Year.
He was named Ernst & Young New Zealand
Entrepreneur of the Year in 2013, and is a
member of the New Zealand Hi-Tech Hall
of Fame".
I think he's convinced a lot of people that technology is beautiful. Me...I have never been impressed with a company that basically never makes a profit.
I think its fundamentally wrong to give people business awards without the proof that a company is capable of consistently high profitability.
Its analogous to handing out art awards to people who throw a rubbish bins contents onto a blank canvas and the judges read something meaningful into it so that wins the award. (Yes that really happened one year with N.Z. art awards).
Sometimes I am asked as an accountant how XRO could possibly be worth the share price it is. I have never been able to give an answer so have never been an investor.
I think a time of reckoning is coming for high flying tech companies that lose money consistently. In the years after the dot.com crash at the start of this century the NASDAQ lost ~ 90% of its value. History starting to repeat ? You be the judge...
It was always going to happen wasn't it, swimming naked. Probably not NZ $13 again but who knows how low this could go this time.