Xro - xero

[winner69]

HY result out on 3 Nov. Customer numbers will be of particular interest to me. I reckon 850k, on track for 1m by FY end.

But I'm not too confident about where the growth is coming from. I'm worried about it being from UK, Aus and international, with not much from NZ or US.

I wonder what the market will be expecting, I'm guessing they're hoping for good US growth. What happens to the share price if that US growth is poor? I think international might have good growth, but not optimistic that the market will views that as an alternative to US growth. Although, perhaps they can argue international has greater scope than US.

Almost right kiwi

I reckon 854k with full year at 999k

How much they lose with a million customers I wonder?

Based on a morbid fascination of 'growth rate decay' in high growth businesses and Xero seemed a good real life dataset to work with. Total built up from different rates for each geography

[forest]

An observation I made comparing XRO's book value per share at the end of 2015 financial year it was $2.56 and end of 2016 it was $2.05 or a drop of about 25%.

Product design and development expense 2016 - $ 69,664.000 versus 2015 - $45,532.000 an increase of 53%

Is it something to worry about that after about 8 years of development of its software product design and development expenses are still rising by 53% and the book value drops by 25% in financial year 2016. It is my understanding if past software was more durable, amortisation would be less and the book value per share would not drop by an material 25%.

I realise there are many other factors having an influence on the book value per share but an 53% rise in software product design and development expenses seems substantial and a mayor hurdle to eventual profits.

What do the accountants and IT share traders on this site think?

[Baa_Baa]

"Forest imho there are two major factors in play with XRO, first is whether their double-down bet on the USA pays off with humungous subscribers, and second is re-inventing their 'product' around big data insights and then harder still, monetising that. Both require enormous investment.

[mikeybycrikey]

How they lose with a million customers I wonder?

I don't think the question is whether they lose with a million customers but whether they are worth their current market cap.

I'm pretty sure they're worth the market cap only if growth carries on well past a million customers. And they're making good progress in that direction.

[Leftfield]

Interesting changes afoot. Both Andy Lark and Russ Fujioka to go, so it would seem there are some concerns with performance.

To leverage growing management capability in each of Xero’s operating geographies, the company is implementing a flatter organisational structure with Country Managers reporting directly to the Chief Executive Officer. The function of the Chief Marketing and Revenue Officer will be replaced by a Chief Marketing Officer who will focus on global brand and marketing communications. The recent addition of the Chief People Officer and Chief Accounting Officer roles have enabled Chief Financial Officer, Sankar Narayan to broaden his focus to drive operational outcomes and revenue globally.To lead Xero Americas through the next phase of growth, Keri Gohman, a seasoned executive from the U.S. financial services industry, will join the company in December as President of the Americas. Formerly an Executive Vice President and General Manager of Capital One Small Business, Banking division, Keri has an extensive track record of driving results in the small business sector and leading regional teams. Keri will be based out of Xero’s Denver office, where future U.S. operational investments will be focussed, supporting Xero’s hubs in San Francisco, New York, Austin, and Seattle.

[Stranger_Danger]

Interesting changes afoot. Both Andy Lark and Russ Fujioka to go, so it would seem there are some concerns with performance.

To leverage growing management capability in each of Xero’s operating geographies, the company is implementing a flatter organisational structure with Country Managers reporting directly to the Chief Executive Officer. The function of the Chief Marketing and Revenue Officer will be replaced by a Chief Marketing Officer who will focus on global brand and marketing communications. The recent addition of the Chief People Officer and Chief Accounting Officer roles have enabled Chief Financial Officer, Sankar Narayan to broaden his focus to drive operational outcomes and revenue globally.To lead Xero Americas through the next phase of growth, Keri Gohman, a seasoned executive from the U.S. financial services industry, will join the company in December as President of the Americas. Formerly an Executive Vice President and General Manager of Capital One Small Business, Banking division, Keri has an extensive track record of driving results in the small business sector and leading regional teams. Keri will be based out of Xero’s Denver office, where future U.S. operational investments will be focussed, supporting Xero’s hubs in San Francisco, New York, Austin, and Seattle.

Yup, interesting. Those two were central to the US strategy. Still, good managements figure out when things aren't working and change them, and the CEO has never been afraid to make changes - look right back to day one and you'll see several hires that didn't work out moving on quickly. Hey, it beats the head in the sand strategy that several recent market failures seemed to believe in....

[Peitro]

If US can get 80%+ growth for the next two years, the graph will really start to hockey stick. 80% is a big ask.

I'm not sure when looking at value in the share price, if the question is "How much they lose with a million customers I wonder?", it is the 2 million customer questions that I'm interested in... If and when

[Baa_Baa]

Interesting changes afoot. Both Andy Lark and Russ Fujioka to go, so it would seem there are some concerns with performance.

[snip]

That's the end of USA Sales/GotoMarket Version2 Reboot. Onto V3 now. Must be a heck of a tough nut to crack.

[unhuman]

I realise there are many other factors having an influence on the book value per share but an 53% rise in software product design and development expenses seems substantial and a mayor hurdle to eventual profits.

What do the accountants and IT share traders on this site think?

In Rod Durys own words at Xerocon South, Xero were such an early disrupter that they are now at risk of being disrupted themselves.

They had to rewrite much of their core product in order to work with the AWS machine learning they are looking at implementing.

[winner69]

If US can get 80%+ growth for the next two years, the graph will really start to hockey stick. 80% is a big ask.

I'm not sure when looking at value in the share price, if the question is "How much they lose with a million customers I wonder?", it is the 2 million customer questions that I'm interested in... If and when

In US 80% growth (over next 2 years) off such a 'low base' won't cut the mustard methinks

At that rate they wouldn't even be matching the number of new customers in NZ