The 18 per cent rise in the share price of accounting software company Xero on Wednesday makes it a bigger company than tech favourite SEEK and delivered a windfall gain of $96 million to Rich 200 member Craig Winkler.
Xero has enjoyed phenomenal growth on the ASX since its debut on November 8, 2012. In the year since, its share price has risen by 660 per cent to close at $34.20 on November 6. This lifts its market capitalisation to $4.36 billion.
The growth has led to investment bank Credit Suisse dubbing Xero as the “Apple of accounting”.
In early trading on Thursday, Xero is 5.9 per cent higher at $36.20.
Xero sells accounting software and uses cloud computing technology to keep prices low.
The biggest beneficiary of Xero’s share price growth is its chief executive Rod Drury. The New Zealander’s shares were worth $743 million at the close of trading on November 6.
Melbourne-based Winkler made his first fortune from another accounting software company, MYOB. He exited the company in 2008 when he sold his 28 per cent stake for about $125 million.
A year later, Winkler spent about $15 million on his Xero stock. He remains a non-executive director of the New Zealand based company, of which he owns 16.4 per cent. As of yesterday, Winkler’s stake was worth $632 million.
More than money
Most of Winkler’s Xero shares are held in a charitable trust. An active Christian, Winkler is a long-time supporter of indigenous causes. Little is known about Winkler’s plans for the money but he appears to be on the verge of making one of the biggest philanthropic gifts in history.
That is if Xero shares can maintain their momentum. Investors fondness for Xero stock is largely based on speculation. In its full year report for the year to March 2013, Xero reported a $NZ14.4 million ($12.7 million) loss on revenue of $NZ39 million ($34.3 million).
This means that its market capitalisation is a staggering 127 times larger than its most recent full year revenue result.
Investors’ confidence about the company’s ability to grow was buoyed on October 3 when Xero informed the market that it was set to exceed NZ$30 million ($26.4 million) in operating revenue for the first half of the 2014 financial year.
Among other achievements, the 18 per cent surge on November 6 made Xero larger than employment classified business SEEK.
SEEK, which is worth $4.34 billion, is widely regarded as one of the best technology companies ever to come out of Australia.
In contrast to Xero, SEEK reported revenue of $620.2 million last year and a $141.1 million profit.
Companies smaller than Xero by market cap*
•SEEK, $4.34 billion
•Toll Holdings, $4.11 billion
•Bank of Queensland, $3.90 billion
•Harvey Norman, $3.44 billion
•Qantas Airways, $2.72 billion
•Seven Group Holdings, $2.44 billion
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