XRO
20/11/2013 17:13
HALFYR
REL: 1713 HRS Xero Limited
HALFYR: XRO: Xero Interim Report FY2014
Attachment contains: Market Release, Appendix 1 Release, Interim Report
MARKET RELEASE
Xero's global success prompts increased investment in US
20 November 2013
(Note: All currency in this release is in New Zealand dollars)
Growth and momentum
Xero Limited (XRO) has emerged as the online accounting leader in New
Zealand, Australia and the United Kingdom and the number one challenger in
the United States. This gives the company confidence to invest substantially
in the US market and new product development. Xero continues to deliver
features and innovation at a pace faster than the incumbents, setting in
place a solid platform for sustained long term growth.
Xero's $180m capital raise in October 2013 from sophisticated technology
investors has removed substantial risk from the business. It is a clear
signal that the company is operating on a world-class basis and provides the
necessary funding to continue its growth agenda. For the first half year
operating revenue grew 84% over the same period last year, to $30.3 million*.
Performance highlights
6 months ended 6 months ended
30 September 2013 30 September 2012 Increase
________________________________________
Total Operating Revenue $30.3m* $16.5m* +84%
________________________________________
Net loss after tax ($17.1m) ($7.0m) +144%
________________________________________
Cash at bank $55.3m $30.6m +81%
________________________________________
Paying business customers 211,300 111,800 +89%
________________________________________
Annualised Monthly $70.6m $39.7m +78%
Committed Revenue
________________________________________
*These figures exclude revenue from Xero Personal, for which an announcement
to withdraw from market was made in August 2013, and which is deemed to be a
discontinued operation.
Regional Operating Revenue
6 months ended 6 months ended
30 September 2013 30 September 2012 Increase
________________________________________
New Zealand $10.8m $7.3m +48%
________________________________________
Australia $12.3m $5.5m +124%
________________________________________
United Kingdom $4.4m $2.4m +83%
________________________________________
US/Rest of World/Other $2.8m $1.3m +115%
________________________________________
Total Operating Revenue $30.3m $16.5m +84%
________________________________________
(These figures exclude revenue from Xero Personal, for which an announcement
to withdraw from market was made in August 2013, and which is deemed to be a
discontinued operation)
Commentary
It has been an exciting six months at Xero with many highlights. There has
been a major focus on growth and investment to take advantage of the massive
opportunity of small businesses moving to the Cloud. The adoption is
beginning to accelerate and the investment in Xero's global accounting
platform is apparent in the quality and speed to market advantage that Xero
has over incumbent providers.
In the past year incumbent competitors have delivered competing online
accounting products or major new versions. Xero believes these offerings
demonstrate how difficult it is to move from a desktop-centric approach to
world-class online software. Xero is benefiting from seven years and $200m of
investment in developing a modern, global accounting platform that is free of
legacy. No other new entrant has had comparable resources to create the
breadth of platform that Xero has already delivered.
With an excellent product and proven ability to innovate and operate, the
company has been building up its marketing and sales teams to take the
product to market at scale. Total staff numbers have been expanded from 382
to 584 during the period. New offices have been opened in Los Angeles, San
Francisco, London, Melbourne, Perth, Auckland and Wellington.
The investment in sales teams have seen the partner channel grow to 8,800 as
at 30 September 2013, up 91% from 4,600 a year ago with strong progress with
US accountants. There are around 100 staff in the US including 25 working on
the US payroll product, which is currently in beta testing for launch in
December.
The company expects to exceed 80% growth in operating revenue for the full
year to 31 March 2014 and to continue to incur increased operating losses for
the second 6 month period as it continues to invest. With cash reserves at 31
October 2013 of $230 million the Board is continuing to follow a growth
agenda focused on creating longer-term shareholder value rather than
short-term profitability. Xero is investing in the platform to support
millions of customers and create a significant cloud-based financial platform
for its customers and partners.
Xero Chief Executive Rod Drury says the company is focusing on building a
long-term highly profitable business and this will involve incurring further
losses. "Our track record and cash reserves put us in a very strong position
to take on incumbent providers of desktop accounting software. The move to
the cloud is well underway and we will invest heavily to grow the business in
the best interests of our shareholders."
Additional commentary is included in the Xero 2013 Interim Report, which has
also been released today.
For more information contact:
Rod Drury Ross Jenkins
Xero Chief Executive Xero CFO
[email protected] [email protected]
+64 27 6000 007 +64 21 963 909
About Xero
Xero is beautiful, easy to use online accounting software for small
businesses and their advisors. The company has over 210,000 paying customers
in more than 100 countries around the world. Xero is listed on the NZX and
ASX.
See www.xero.com
End CA:00244077 For:XRO Type:HALFYR Time:2013-11-20 17:13:45
