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21-02-2014, 04:04 PM
#3111
Originally Posted by Everwood
Thanks for the pointer. If we assume 190k for ANZ, then UK/ROW number must have jumped from 47k to 60k. That's not too shabby if they can maintain that.
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23-02-2014, 08:32 PM
#3112
Sam Stewart reckons current shareprice implies 3.1 million customers by 2020
http://www.samstewartnz.com/2014/02/...omers-by-2020/
This blog post was found/linked from Clare Capital ....fooled me
Interesting analysis
Last edited by winner69; 23-02-2014 at 08:36 PM.
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23-02-2014, 08:54 PM
#3113
Originally Posted by winner69
So according to this analysis we wouldn't then expect any increase in share price for a very long time,even years?
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23-02-2014, 09:12 PM
#3114
Originally Posted by couta1
So according to this analysis we wouldn't then expect any increase in share price for a very long time,even years?
But they going to have even more customers than this one day
There is another analysis on Clare Capital site
http://clarecapital.co.nz/cc-content...s-20131003.pdf
They sort of say the market is consistently valuing XRO based on the relationship between Revenues and EV (surprised)
If you look at the chart from that article below they have an EV of nearly $30 billion under one of their growth scenarios A SHAREPRICE OF `$235
So couta .... sleep well tonight ..... and never sell your XRO shares until they are over $200
Better bet than SUM I reckon
Last edited by winner69; 23-02-2014 at 09:22 PM.
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23-02-2014, 09:20 PM
#3115
I love your confidence winner,I think the Indian cricket team could borrow you for a year and pay you a fortune in the process
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23-02-2014, 09:23 PM
#3116
Originally Posted by couta1
I love your confidence winner,I think the Indian cricket team could borrow you for a year and pay you a fortune in the process
Don't you believe it couta
I think those jokers from Clare did a serious analysis
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23-02-2014, 09:42 PM
#3117
All good winner,looks a more thorough analysis than others have done,the confidence comment was actually a compliment,cheers
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24-02-2014, 06:01 AM
#3118
Member
Reading the last para on page 7, and looking at the chart on page 8, it would appear their scenario 3 is playing out at present. That would indicate, according to their analysis, and using EV as a measure of market cap, that the SP is around double what it should be now, about right for a year from now, and that it should double with each year. Of course, most investors are buying in at elevated prices expecting that level of growth to continue. So, and again with the caveat that this is one group's perspective, the upwards trend should continue, with the usual waxing and waning, but reasonably rapidly. Buy and hold for 2 years... I think the most interesting comment in this research is that Xero is unique for a NZ listed company and the market isn't used to valuing thus sort of proposition. I totally agree. Look to the US for guidance on how these stocks behave.
As as an aside, a friend of mine, small scale investor, based in the Bay Area (SF) just bought in (after the 250000 customer announcement confirmed for him the growth trajectory). His comment was that he'd buy for 40 and sell at 120 in 18 months.
Everyone has an opinion, eh.
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25-02-2014, 09:31 AM
#3119
Originally Posted by turmeric
While the assumptions are pretty rough and the analysis very simple, basically what this suggests (to me anyway) is that we will likely see XRO's overall customer number growth falling throughout the rest of this year (dipping below 80% p.a. largely driven by slower NZ growth) before starting to pick up again and taking off from 2015 potentially breaking through 90% p.a. and maybe even back to 100% through 2016 (largely driven by US growth and to a lesser extent OZ and the UK).
Interested to hear others thoughts
Sounds about right. The key has always been the US market and from this low base, they should be able to maintain 200% for a few years, and then hold above 100%. THat is the metric to be watching for as if they dont hit it, the price support will fall.
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25-02-2014, 08:30 PM
#3120
Member
Originally Posted by turmeric
I had a look at the Clare Capital analysis on XRO again last night and the various scenarios, which are each based on different, yet constant, overall customer growth assumptions over time, and it got me thinking a bit more about what might be expected in terms of XRO customer growth over the coming couple of years. On the face of it, it might seem a bit worrying that overall growth is slowing, but I expect this to only be short term, and over the longer term I actually think growth in overall customer numbers will start to pick up quite strongly.
The way I see it, we should not be expecting constant customer growth over the next few years (as per CCs analysis) rather we are likely looking at an inverted bell curve type growth. (see graph below).
The main issue I see for XRO right now is that a large proportion of their customers are NZ based (roughly 35% or 90k out of 250k) however customer number growth in NZ, which was once over 100% p.a. has now slowed to an estimated 35% p.a. and will likely slow even more. In contrast, the fastest growing world region (the US at an estimated 200% p.a.) is coming off a very small base and therefore while in itself is a high growth rate, contributes very little currently to overall customer growth. However over time if this growth can be sustained it will start to contribute more and more to overall customer growth.
So in order for me to try and get a better handle on what might be expected over the next couple of years I set up a pretty simple situation where we expect constant customer number growth by region (NZ 30%, OZ 100%, UK 90%, and US 200% p.a.) and extrapolate this out through to the end of next year to see what that might look like overall.
Attachment 5544
While the assumptions are pretty rough and the analysis very simple, basically what this suggests (to me anyway) is that we will likely see XRO's overall customer number growth falling throughout the rest of this year (dipping below 80% p.a. largely driven by slower NZ growth) before starting to pick up again and taking off from 2015 potentially breaking through 90% p.a. and maybe even back to 100% through 2016 (largely driven by US growth and to a lesser extent OZ and the UK).
Interested to hear others thoughts
Exactly what I think Tumeric.
Will be interesting to see how it plays out. On one hand I think that Xero are entering US with a mature product compared to when they entered AU and UK so potential uptake may be faster.
On the other hand the US is a huge market. It may take longer to get to a 'critical mass'. You may need to break out growth curves in each state as well...
Intuit have been fairly consistently adding about 30k customers per quarter for a while but I notice that took a big jump to 45k customers in the last quarter. Xero aren't too far behind in terms of numbers or customer additions.
Whatever happens with the relative growth rates between Xero and QBO they're both on the way up fast. But Xero's market share can only go up and Intuit's can only go down because they're converting Desktop customers.
I don't think Xero's customer growth will explode in the short term. I think shareholders need to be patient as your graph shows.
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