Xro - xero

[winner69]

Preso today says cash $171m

That implies cash out (hate the word burn as it suggestive of just throwing it on the fire never to be seen again) of $21m this quarter following the $17m in the first quarter. First half $38m in total

No argument ... accelerating here anyway

[winner69]

Xero posts steady revenue growth
http://www.stuff.co.nz/business/indu...revenue-growth

Analysts remain troubled by Xero's sales trajectories outside its engine rooms in Australia and New Zealand, despite the company reporting steady overall growth in its half-yearly update.


The Wellington online accounting firm reported that its global work force had topped 1000 and said expatriate Kiwi Andy Lark would join the company next month as its chief marketing officer.

Xero said its subscription revenue grew 85 per cent to reach $52 million during the six months to the end of September, and it confirmed its July guidance that it expected about an 80 per cent annual increase in sales in the year to March, before taking into account any movements in the dollar.

It has yet to release its audited interim results but said it expected its loss to be about $25m.

Xero shares were down 0.8 per cent at $21 in mid-afternoon trading.

Woodward Partners analyst Nick Lewis said a "fantastic" 115 per cent jump in Xero's Australian revenue to $23.9m for the half-year was stronger than he had expected.

He said that was offset by a lower than expected doubling of its sales in the "conservative" British market, which contributed $8m to its interim revenue.

Xero's sales in New Zealand, where its business is more mature, rose 42 per cent to $15.1m.

Xero's interim revenue in North America grew 131 per cent to $3m, year on year, but its 22,000 customers there still accounted for less than 6 per cent of its total sales.

Forsyth Barr was concerned the update showed Xero had added only 4000 customers in North America during the six-month period.
Analyst Blair Galpin said that was "slow progress", which overshadowed its strong growth in Australia.

Forsyth Barr upped its forecast of Xero's annual loss to $50m, cut its target share price by $1.25 to $20.50 and reduced its stock rating to "underperform".

Galpin noted that investors who participated in a $180m capital raising last year would be free to trade the 9.9 million shares they acquired in a week's time.

Many of the shares held in escrow were owned by United States investors, and Xero would need to show them how it would gain traction in that market, he said.

Lewis said Xero was not gathering steam in the US. "This is a disappointment for everybody, I'm sure."
He said Xero had consumed $40m of cash during the six-month period and that as the company was still hiring, a day of reckoning was approaching.

"Our prediction is they will want to raise more capital in about a year's time," he said.

"But absent of a 'US growth story' it will be really hard to pull off a Nasdaq listing. So they have got 12 months to sort the US out."

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Xero said Lark, as its global chief marketing officer, would help its drive into the US.

It is still recruiting to replace former PayPal vice-president Peter Karpas, who left Xero last month after seven months in charge of its US operations.

Lark is a former vice-president of marketing at computer-maker Dell and more recently chief marketing officer of the Commonwealth Bank in Australia, which he left last November after two-years.

One of the most active members of the Kiwi expat tech community, Lark describes himself on his website, The Daily Lark, as a "prolific writer, blogger and speaker on marketing, technology and Web 2.0".

He is on the board of Christchurch software maker SLI Systems, Mighty River Power and Wellington information technology services firm Fronde, which has a possible NZX listing on the backburner.

Xero spokeswoman Janna Wilkinson said Lark would continue to reside in Sydney but would travel to all Xero's major markets.

[Santiago]

The problem is that the price per subscription will continue to go down with increased competition. 5 years from now (in the USA) it will be as low as $9 per month plan or less. Even with a small percentage of the market it will not be sustainable under the pressure of increased marketing costs and development.

It's a mathematical certainty that Xero will either merge or experience a "myspace" type exodus to the market leader.

Explain this "mathematical certainty". Myspace and Facebook are free. People migrated as one was better than the other in terms of quality and features. If you're a small business, paying $30 or $9 a month is a pretty minimal difference- quality and features will be the determining factor. Sure, some will go with the cheapest in terms of upfront cost, but many will go with quality. Tell me it's a mathematical certainty that Apple will lose the smartphone market to Nokia... Oops, actually, they already won that battle, even though they sell their phones for way over twice the price... Apples and oranges.

[winner69]

Their total customer numbers look like they are beyond the best case 'Scenario 4' from Claire Capitals Oct 2013 valuation report.

Beyond meaning doing better than scenario 4? Or is scenario 4 a bridge too far, ie beyond them?

I reckon 480k to 500k customers in fy15 which puts it between scenarios 2 and 3, closer to 2 than 3?

Which puts Clare valuation at $7 to $15 (more shares since they did that report)

Suppose we need to go back to that extrapolation chart later in the report ....at least that has XRO shareprice at $80 to $200+ in 2017

http://clarecapital.co.nz/cc-content...s-20131003.pdf

[Harvey Specter]

Theils backs businesses where 80% of the DCF value is beyond 2024. I don't think Clare capital is accounting for this. Also no value is given to the value of the data they hold, or expansion into other areas.

I haven't read 0 to 1 yet but did listen to the class he took at Sam Altmans Stanford Course this week. An interesting watch if you are interested in what Theil looks for.

Edit: Link to the video meantioned: http://startupclass.samaltman.com/courses/lec05/ (50m)

[Toasty]

"He said that was offset by a lower than expected doubling of its sales in the "conservative" British market, which contributed $8m to its interim revenue."

I see what they are saying here but it kind of reads like sour grapes when you complain about a doubling of your sales.

[tzbang]

Beyond meaning doing better than scenario 4? Or is scenario 4 a bridge too far, ie beyond them?

I mean beyond as in better.. I thought Clare Capital put customer numbers at 326,250 in scenario 4 for 2014 but they're already at 371,000 or am I totally missing something?

[Hawkeye]

I mean beyond as in better.. I thought Clare Capital put customer numbers at 326,250 in scenario 4 for 2014 but they're already at 371,000 or am I totally missing something?

Ooooo, I didn't read it properly... maybe you are right, and they are ahead?

[Harvey Specter]

I mean beyond as in better.. I thought Clare Capital put customer numbers at 326,250 in scenario 4 for 2014 but they're already at 371,000 or am I totally missing something?

We are 1/2 way through 2015. 2014 ends on 31 March 2014 and 2015 ends on 31 March 2015.

I'm optimistic they will hit scenario 3 and that the model does not reflect true long term value of US growth which is slower than analysts want.

[skid]

Explain this "mathematical certainty". Myspace and Facebook are free. People migrated as one was better than the other in terms of quality and features. If you're a small business, paying $30 or $9 a month is a pretty minimal difference- quality and features will be the determining factor. Sure, some will go with the cheapest in terms of upfront cost, but many will go with quality. Tell me it's a mathematical certainty that Apple will lose the smartphone market to Nokia... Oops, actually, they already won that battle, even though they sell their phones for way over twice the price... Apples and oranges.

Its a mathematical certainty Apple will lose the smartphone market to SAMSUNG---pick on someone your own size

ok maybe its not a mathematical certainty,but how can you compete with the crowd you buy your parts from/ Apple sues Samsung==Samsung raises the price of their parts.

Ok ..back to Xero----This info has not come at a good time---See US stock market

The wild card for this (and other) growth stocks seems to be on the marketing side of things--The product is good-(except that ownership of data thing is a bit of a worry) but how well is it promoted.
Promoting the product(marketing)is an art form --they need to excel at that.
Hell,if they can convince people to spend more for a liter of water,than petrol,in a country like NZ,they surely can convince people to use Xero anywhere.
A brilliant marketing guru would would (is?)be worth his/her weight in gold