Always interesting to see what Intuit comes up with:
- total QBO subs 2.2m of which 360k is QBSE (100%yoy growth in latter).
- leveraging other products to get people onto the QB platform ASAP
- first time they actually articulated the amount of cannibalisation from
qB desktop- this is ~175k pa of the customer base (132k over 3 quarters) and is accelerating
- typical copycat moves this quarter include invoicing and payment within the app to increase customer stickiness, copying Xeros markets almost exactly (the next markets to be hit are Singapore and South Africa)...they are actually consciously letting Xero develop the market and then get in on the tailwind
- which leads me to: difference in strategy finally articulated. They are going to lead in with the cheaper QBSE product, and then upsell to QBO. They clearly articulated that the first product to be released in Sing and RSA will be QBSE.
Overall:
- there is clearly space for 2 players
- Xero is going to struggle in the US for a few more years. QB will almost certainly be second biggest player in rest of world. QB will be #1 in US for sure.
- Xero needs to be careful about this strategy from QB in the long run
- Xero needs to continue to innovate to stay ahead, this is a long slog.
XRO Price at posting:
$22.76 Sentiment: Buy Disclosure: Held
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