Xro - xero

[Stranger_Danger]

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.

If the reason for substantial early SaaS losses are to build an infrastructure and be a disrupter, but, it turns out you have to do this prior to profitability every 10 years involving massive investment, are we actually certain that this industry will be profitable long term?

Keep in mind, we don't have 100 years of data - this is an industry that, largely, has been founded and funded during an era of generationally low interest rates where risk capital has been quite easy to come by, even at lofty valuations.

The previous economics of boxed software tells us nothing of the potential economics of SaaS - the truth is, nobody really knows yet.

[forest]

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.

Thanks unhumen for this info, I have not followed XRO very closely,
This all makes sense now and explains why after XRO spending so much on software development their software as a whole hardly grows in value and therefore the NTA per share is not growing in the last financial year.

[Baa_Baa]

That nicely defines the challenge and the balls out 'on the never never' psych of XRO. Firstly they have to nail the USA market with the 'legacy improved for the USA' platform, this is an imperative for growth and shareholder confidence. They seem to have recurring issues with doing that, it could take years still or maybe never. Secondly they have to redefine their offering into the "financial web" (as they put it) to secure a future beyond "beautiful accounting". The net impact of this is massive investment and prolonged uncertainy for shareholders, though one cannot fathom the time horizons of the deep pockets, nor the motivation or potential to move move to traditional shareholder values like NTA or profit. As one slalwart proclaimed, they could fire half the software developers and cut the sales force to go to profit overnight. But that won't happen, one needs to factor in the sheer magnitude of aspiration for global domination. It is an intriguing story and still unfolds but in any event it does not and will not fit any traditional investor norms. And may never do. I sincerely hope the legacy of Xero, and Rod with it, is not defined by having never earned a cent. In the meantime the SP imo is still all hype and hope.

[Stranger_Danger]

That nicely defines the challenge and the balls out 'on the never never' psych of XRO. Firstly they have to nail the USA market with the 'legacy improved for the USA' platform, this is an imperative for growth and shareholder confidence. They seem to have recurring issues with doing that, it could take years still or maybe never. Secondly they have to redefine their offering into the "financial web" (as they put it) to secure a future beyond "beautiful accounting". The net impact of this is massive investment and prolonged uncertainy for shareholders, though one cannot fathom the time horizons of the deep pockets, nor the motivation or potential to move move to traditional shareholder values like NTA or profit. As one slalwart proclaimed, they could fire half the software developers and cut the sales force to go to profit overnight. But that won't happen, one needs to factor in the sheer magnitude of aspiration for global domination. It is an intriguing story and still unfolds but in any event it does not and will not fit any traditional investor norms. And may never do. I sincerely hope the legacy of Xero, and Rod with it, is not defined by having never earned a cent. In the meantime the SP imo is still all hype and hope.

Yeah, that is why I can't invest in it.

It could become a really profitable, huge, global company.

Or it could never make a profit and be worthless.

Or it could never make a profit, but somehow be worth a bundle. Amazon has never really made money. Current market cap : USD $349 billion!

I have a lot of respect for Xero, but it is the sort of opportunity someone with my investment style is destined to miss out on. The range of outcomes is simply too wide and I'm not smart enough to be able to predict which end of them Xero will end up sitting.

But....I remember my shock and awe at how overvalued Amazon was....... on the day it floated.

[kiwi_on_OE]

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

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.

[Santiago]

https://twitter.com/roddrury/status/793910912226734081

Confidence, or stupidity?

[RGR367]

Gut feel says it would be a good report. But how good is good to unbelievers?

[Santiago]

Gut feel says it would be a good report. But how good is good to unbelievers?

I think we were posting at the same time...

Good is subjective. It'll never be good enough for some. I think, like always, there'll be bits of good, great, and disappointing but overall it'll continue to be a promising story (for me, but not for some of the new and old guys around here)

[silu]

http://www.afr.com/brand/rear-window...#ixzz4OsWmUK9x

Online accounting software firm, Xero are expected to announce their results on Thursday. But what the numbers may not reveal is the exodus that is continuing among the company's senior ranks.

[OldGuy]

Revenue growth slowing, and absolutely no sign of profits in sight. I recently asked rod on twitter "how long to profitability" and he replied "when we feel like it.".

Yeah, right. Good luck to all that still "believe"

https://www.nzx.com/files/attachments/247344.pdf