Xro - xero

**skid** · 27-09-2014, 10:00 AM

Originally Posted by Shore

Again, I struggle to get the obsession with the idea of failure in the US meaning Xero would 'crash and burn' as Ben Kepes insinuated. Cloud accounting is the future of the industry. With boots on the ground, cash in the bank, a listing in the works, and being the leader in NZ, UK, and Aus - Xero has positioned as the best challenger to reap the rewards of that burgeoning market. There's not really much else they can do. They've executed perfectly until now and they're doing all they can to ensure success. Yes, Xero is a tech company, but I disagree that it should be subjected to the similar criticisms and concerns leveled against other tech companies whose fundamentals are far more shaky. Compared to Twitter (who is still actually trying to find a business model), or Zynga (whose business model relies on being able to continually pull something out of the hat on a quarterly basis and operates in an environment where competition can be come from any angle, funded or otherwise), I've always believed Xero has put to bed any fear of it suddenly disappearing overnight. The fact that Ben Kepes, somebody who supposedly covers this space, would even allude to the prospect was very surprising. Xero is now a bedrock for over 350,000 businesses worldwide (a market segment that actually willing to spend money as opposed to consumers who expect stuff for free), hundreds of millions invested in its software, over 7 years to build (with 1000 staff now improving it every day), and yet Ben Kepes can't refrain from lumping Xero in with all tech stocks and making a grandiose statement that they can fall as quickly as they rise.

What would it take for them to crash and burn? I mean, Xero are going to get to 1 million and beyond regardless of what happens in the US. Competition isn't going to come from an upstart in a corner garage like other tech stocks might be at risk of. This is a different space. Competition can only arrive from the desktop incumbents who, admittedly, have finally come to the party. But their execution has proven to be dire. Intuit and MYOB and Sage are all like McDonalds. They've reluctantly put a McCafe into their operation, despite the fact that they'd just much rather be serving fries. They all be may driving on the same road now but Xero is the one actually paving the road and determining the direction. They are the ones bringing vision and innovation to the space - just look at stuff like Banking 2.0 initiative - you don't see anything like this coming out of the incumbents. They're too busy trying to work out how to explain to their aging customer base that there's gonna be no more CD's, no more boxes.

I also thought Phil Vine demonstrated his own prejudices in the piece, continually referring to the work Xero does as boring and unimaginative, and questioning why Rod wouldn't just sell up and take the cash, and then questioning if NZ can really be pulled forward by a 'bunch of geeks'. I thought it was pretty depressing indictment on NZ journalism to be honest. This isn't 1995. The internet is not a new thing. You might have expected a segment like this last century, but I would have thought we would have come a long way since then. Clearly not.

Failure in the US may not cause Xero as a company to ''crash and burn''----as long as your content with a SP of $3

**skid** · 27-09-2014, 10:01 AM

Originally Posted by Shore

Again, I struggle to get the obsession with the idea of failure in the US meaning Xero would 'crash and burn' as Ben Kepes insinuated. Cloud accounting is the future of the industry. With boots on the ground, cash in the bank, a listing in the works, and being the leader in NZ, UK, and Aus - Xero has positioned as the best challenger to reap the rewards of that burgeoning market. There's not really much else they can do. They've executed perfectly until now and they're doing all they can to ensure success. Yes, Xero is a tech company, but I disagree that it should be subjected to the similar criticisms and concerns leveled against other tech companies whose fundamentals are far more shaky. Compared to Twitter (who is still actually trying to find a business model), or Zynga (whose business model relies on being able to continually pull something out of the hat on a quarterly basis and operates in an environment where competition can be come from any angle, funded or otherwise), I've always believed Xero has put to bed any fear of it suddenly disappearing overnight. The fact that Ben Kepes, somebody who supposedly covers this space, would even allude to the prospect was very surprising. Xero is now a bedrock for over 350,000 businesses worldwide (a market segment that actually willing to spend money as opposed to consumers who expect stuff for free), hundreds of millions invested in its software, over 7 years to build (with 1000 staff now improving it every day), and yet Ben Kepes can't refrain from lumping Xero in with all tech stocks and making a grandiose statement that they can fall as quickly as they rise.

What would it take for them to crash and burn? I mean, Xero are going to get to 1 million and beyond regardless of what happens in the US. Competition isn't going to come from an upstart in a corner garage like other tech stocks might be at risk of. This is a different space. Competition can only arrive from the desktop incumbents who, admittedly, have finally come to the party. But their execution has proven to be dire. Intuit and MYOB and Sage are all like McDonalds. They've reluctantly put a McCafe into their operation, despite the fact that they'd just much rather be serving fries. They all be may driving on the same road now but Xero is the one actually paving the road and determining the direction. They are the ones bringing vision and innovation to the space - just look at stuff like Banking 2.0 initiative - you don't see anything like this coming out of the incumbents. They're too busy trying to work out how to explain to their aging customer base that there's gonna be no more CD's, no more boxes.

I also thought Phil Vine demonstrated his own prejudices in the piece, continually referring to the work Xero does as boring and unimaginative, and questioning why Rod wouldn't just sell up and take the cash, and then questioning if NZ can really be pulled forward by a 'bunch of geeks'. I thought it was pretty depressing indictment on NZ journalism to be honest. This isn't 1995. The internet is not a new thing. You might have expected a segment like this last century, but I would have thought we would have come a long way since then. Clearly not.

Failure in the US may not cause Xero as a company to ''crash and burn''----as long as your content with a SP of $3

**couta1** · 27-09-2014, 12:30 PM

Originally Posted by skid

Failure in the US may not cause Xero as a company to ''crash and burn''----as long as your content with a SP of $3

That sounds a bit far fetched skid if they get their million customers from whereever why would the company not be worth at least its current value?

**blackcap** · 27-09-2014, 01:18 PM

Originally Posted by couta1

That sounds a bit far fetched skid if they get their million customers from whereever why would the company not be worth at least its current value?

No.

Couta1, a lot of the share price you see now has "phenomenal growth in the USA" already factored into it. If this does not happen the share price will be savagely re-rated.

**youngatheart** · 27-09-2014, 01:24 PM

Sorry that this is slightly off topic but am looking forward to this coming here soon. Broker disruptor

**skid** · 27-09-2014, 05:35 PM

I keep reading on here how Xero is light years ahead of the competition,but Ive just read 3 articles comparing them to the other majors,and it just does'nt seem to be the case--seems more what you need it for is the important thing as they all have their plus and minuses

example

http://digitalfirst.com/2014/03/05/x...econd-opinion/

**kiwi_on_OE** · 29-09-2014, 12:31 AM

Here are my estimates for customer numbers, I expect them to be pretty close to the actuals: -
Xero (NZ) 31/3 102k, 30/9 118k
Xero (Aus) 31/3 109k, 30/9 157k
Xero (UK) 31/3 47k, 30/9 60k
Xero (US) 31/3 18k, 30/9 21k
Xero (Int) 31/3 8k, 30/9 11k
Xero (Tot) 31/3 284k, 30/9 367k
MYOB (online) 30/9 100k
Intuit (US online) 31/3 560k, 30/6 599k, 30/9 ?
Intuit (Int online) 31/3 64k, 30/6 84k, 30/9 ?
Intuit (Tot online) 31/3 624k, 30/6 683k, 30/9 715k (Intuit forecast)

Thought I'd throw in numbers for MYOB that luigi posted a few days ago, and also Intuit numbers for comparative purposes. It looks like the US has been pretty poor for Xero, it's their worst performing area, and where expectations are highest. On the other hand their percentage growth is comparable to Intuit in the US.

Xero are forecasting 80% revenue growth for the FY. If I translate that back to customer growth then they expect to get to over 500k users. NZ is plodding along, Aus has had their mid-calendar year peak. US has a start of calendar year peak, but it would seem a stretch to me for them to get to 500k from where they are now. Downward revision in their next release?

**Casino** · 29-09-2014, 09:04 AM