Xro - xero

[winner69]

My guess is their US growth since Mar is only 10%, and even less in NZ. But it may be possible that in absolute numbers the US growth has been more than NZ. If correct, no wonder they're making some changes.

I'm looking forward to the percentage growth rates from South Africa and parts of Asia if they release them.

Kiwi

I think we both underestimated growth in Australia.

Increased number of subscribers in 1/2 year (from March)

NZ up 26k (previous 1/2 up 23k)
OZ up 68k. (50k)
Uk up 31k (31k)
NA up 15k (15k)
Rest up 5k (5k)

So more new subscribers in NZ than NA

NA still a bit slack eh (but the opportunity)

[Raz]

Kiwi

I think we both underestimated growth in Australia.

Increased number of subscribers in 1/2 year (from March)

NZ up 26k (previous 1/2 up 23k)
OZ up 68k. (50k)
Uk up 31k (31k)
NA up 15k (15k)
Rest up 5k (5k)

So more new subscribers in NZ than NA

NA still a bit slack eh (but the opportunity)

NA a bit slack... it is bad in anyones language..take a look at glass door and get a feel for the dysfunction over there..its an opportunity certainly although time dependent in a market with its own inherent limitations.. time is of the essence and they have fumbling time away to date and not got it right..they better get it right with the latest restructure or it will be opportunity lost.

[Snoopy]

Still a ridiculous argument. You're choosing a different way of adding up to prove your point, being that Xero doesn't make a profit. Why not just say that Xero doesn't make a profit and be done with it. Investors don't care as they believe in bigger profits delayed for a few years. But to try to make your point this way is ludicrous and irrational. Xero is still a bigger net contributor.

No doubt all those founder investors in Wynyard thought the same way. Not saying that Xero will become another Wynyard. Just making the point that the valuation of Xero is all based on a promise of profit that may or may not be achieved. The bigger net contributer to the NZ economy, as of now in operating business cashflow terms, is still the girl with the lemonade stand at the end of the driveway. Nothing ludicrous or irrational in that statement of fact!

All of those millions that Thiel and co have invested... money from outside paying salaries and services like staff salaries inside?

Ah, here you may have scored a goal Santiago. Seed capital from overseas is indeed a boost to the NZ economy today. Extra capital that without Rod's vision, NZ might not see. Of course looking ahead to a prospering Xero future there will be a price to pay going forwards. Thiel will gain access to those future cashflows from Xero in proportion to his shareholding. So NZs payback required for Thiel's supportive cash will be a forever into the future profit stream trickling out of the country. But I guess if it was the vision of Thiel that gave Xero the money and time to build their market share and execute their business strategy, then this is a fair trade off.

SNOOPY

[Snoopy]

The problem with SaaS companies is that the revenue is spread over many years yet the costs of getting that revenue are expensed in the first year.

I agree with that and made just such a point in my post that started this sub-discussion.

Xero have generated something like $1.8b in future lifetime value from the customers it has today. In the old model, most of the $1.8b would have been received up front to purchase the software with a small annual maintenance fee for upgrades.

I don't agree with that. Xero will generate $1.8b (if current market capitalisation is a true value of the company) if they execute their businerss plan as expected by shareholders who have bid the share price up to current levels. The if is the important bit. But right now, as the cashflow shows, no value is being generated. In fact value is being lost. Xero is a good story. But not every SaaS story has a happy ending. Yet almost every SaaS story on the NZX has that happy ending already priced into their respective share price.

SNOOPY

[Snoopy]

I'd accept your argument, to a point, about the first dollar paid in as seed capital at the IPO.

But if the seed capital was provided at $1 per share, Rod sold shares at $20,

Selling shares that you already own is an off balance sheet transaction that has no day to day effect on Xero. My comments related to cash within the business being used to run the business. You are introducing a new element into the discussion here Stranger Danger.

Rod sold shares at $20, then the other $19 is economic value added, of some description.

That $19, is it

- as "real" as profit.

Yes

- as permanent as profit

Yes

- as taxable as profit

Not really. If you acquired shares with the intention of selling at a profit down the track then yes any gain will be taxable as part of income. Otherwise any gain would not necessarily be taxable.

- a permanent proof of value

Not really. If the share price goes either goes up or down after the share sale, the 'permanent proof of value' will be revealed at merely value at a transient point in time.

Nope, it is a fuzzy number, whatever it happens to be at that moment in time.

I see you agree with me on that last point at least.

Very real to the car dealer though, who hands over a real Ferrari in return.

Don't get me wrong, I respect tax paid profits and dividends far, far more than moonshot equity in a profitless firm. I understand your argument and partially accept it, to a point.

But I can't go that next step and argue no value has been created here.

Put it this way.

If New Zealand could create 1000 Xero's, identical in market cap and employment prospects, what do you think this would do to our stock exchange, employment market, attraction to migrants and GDP?

If New Zealand could create 1000 lemonade stands run by young girls on their street of residence, what do you think this would do to our stock exchange, employment market, attraction to migrants and GDP?

Something listed on the stock exchange is really a promise of future value. If enough people agree to bid up a share price in respect of this promise, then this is a vote of confidence in the expectation of future value. Yet our tax system works on the basis of what you actually earn each year. The IRD wouldn't send you a tax bill for $1m just because you claim that you will be a gazillionaire earning gazillions in ten years time. This isn't becasue the IRD don't have confidence in you. It's because the IRD know you can't pay your tax until those gazillions in earnings actually start rolling in. Likewise, I would argue that a stock exchange listing does not guarantee a successful business will still be there in ten years time. It also doesn't guarantee that the listed company will ever make a profit.

SNOOPY

[kiwi_on_OE]

Kiwi

I think we both underestimated growth in Australia.

Increased number of subscribers in 1/2 year (from March)

NZ up 26k (previous 1/2 up 23k)
OZ up 68k. (50k)
Uk up 31k (31k)
NA up 15k (15k)
Rest up 5k (5k)

So more new subscribers in NZ than NA

NA still a bit slack eh (but the opportunity)

My estimate for Aus was spot on, but I underestimated NZ/US, and over estimated UK/Intl.

I was curious as to why they compared the numbers with a year ago. I suppose it evens things out a bit and means that end of year peaks don't skew the numbers in one half.

Seems to be pretty continuing as normal. They still seem to be outgrowing Intuit, but not by much. Sage will be interesting when they announce their annual results at the end of Nov, as they might have comparable numbers in the UK.

[Leftfield]

Interesting times we live in......This reported via Bloomberg re the former Pay Pal founder who is also a large investor in XRO.

Venture capitalist Peter Thiel will join President-Elect Donald Trump’s transition team, a move that solidifies the Facebook Inc. board member’s power and could help Silicon Valley have a say in the next administration.

[artemis]

First Peter Thiel, now Chris Liddell.

Quite amusing that a few Xero customers threaten to move to another accounting platform. Well Rod de Lisle from Hamilton has retracted his threat to close his wife's business account. Hope he checked with her first. And that he realises the world knows he is officially a snowflake.

http://www.stuff.co.nz/business/indu...says-rod-drury

[axe]

TDS in full effect. For the bouncy conspiracy heads around NZ the TPPA was going to spell the end of the world. Trump being elected was also going to spell the end of the world.
Then Trump election effectively kills the TPPA dead in the water.

We are watching a massive case of sore loser syndrome. The Anti-trump lot accuse him a being a bully ; singers have to pull out of performing the the inauguration due to death threats.

I do not think that there will be any serious impact Xero.

PS. I do not support or like Trump.

First Peter Thiel, now Chris Liddell.

Quite amusing that a few Xero customers threaten to move to another accounting platform. Well Rod de Lisle from Hamilton has retracted his threat to close his wife's business account. Hope he checked with her first. And that he realises the world knows he is officially a snowflake.

http://www.stuff.co.nz/business/indu...says-rod-drury

[mikeybycrikey]

First Peter Thiel, now Chris Liddell.

Quite amusing that a few Xero customers threaten to move to another accounting platform. Well Rod de Lisle from Hamilton has retracted his threat to close his wife's business account. Hope he checked with her first. And that he realises the world knows he is officially a snowflake.

http://www.stuff.co.nz/business/indu...says-rod-drury

What does "officially a snowflake" even mean? Some weird new Trump-y insult?