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http://blog.xero.com/2013/08/hug-a-shareholder/
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Shareholders get an optimistic view...
Chief executive Rod Drury told shareholders in Wellington on Thursday the company has 193,000 customers. That's up from 157,000 at the end of the March financial year, according to slides published on the NZX.
(* up by 36,000, or 12,000 a month)
Xero's annualised monthly revenue (AMR) has climbed to $64 million from $51.5m at March 31.
(up by $13m, or +$4.3m a month )
The company sees sales rising 80 percent in the 12 months ending March 31, 2014, from $39m in 2013, implying revenue of some $70m.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10907439
7 comments
Mike Porter
3 August 2013 #
Another great presentation and strategic overview. A few questions.
1. Handling growth rate
What pace of growth could the curent background infrastructure of Xero sustain?
You’ve been clear that you’re working hard to build the platform to handle 1m + but if you suddenly tripled or quadrupled customer numbers over a year, could you handle that level of inflection? I realise you’ve signalled 80% by year end. But would be interested to know whether a rapid rise would present problems.
Xero has done an amazing job of building a fly wheel for growth that is slowly cranking and developing amazing market momentum. I’m curious to know whether you feel you could go quicker – either by way of further capital investment or a referral scheme, but you’re holding back due to the necessity to build the underlying platform and not become a victim of your own success.
If you were confident of handling 5m+ customers in the background, would you or could you change the current sales strategy ?
2. US market
Xero represents an opportunity for accountants to differentiate their service offering. Arguably the US market has been stale for years. I would theorise the US aggressive corporate culture lends itself to mirroring Australian dynamics and should display an attitude of early adoption. More so than say a deeply conservative UK dynamic. Do you have a view or early observation on this ?
Thanks for the inspirational journey.
Rod Drury
3 August 2013 #
Good questions Mike
1. Up until now keeping up with doubling has been a race. We have made some big steps in the last year in our hosting architecture that we’re comfortable on projected growth rates with upside.
Interesting how some media interpreted our ‘at least 80%’ as saying we were slowing down. It’s only 4 months into the financial year so we simply don’t know. It is hard to keep folding a piece of paper but the board wanted to say that growth will again be substantial this year and comfortable saying 80%+ at this early time.
Selling to small business is hard and it takes a while to build a brand. But we think our product strategy and network effects could mean that things really take off over the next few years which is why we’re investing for a million customers now. That is not just platform but management talent so we can grow a team that can handle fast growth. Right now we are focussed on proving our Accountant model in California with offices in NorCal and SoCal, and serving the rest online. When we see that working well we’ll probably add people in other states.
2. US is growing faster than other countries as you’d expect but its still early days. Intuit has dominated for years so we have some work to due to let accountants know about Xero and to change their mindset. Early signs are good but lot’s to do.
It’s also interesting how many have said the US is make or break for Xero. We actually see that NZ, AU and UK are a substantial markets so we can afford the time for the US to take off which are very confident in. But we do think the business is not as risky or exposed to the USA as commentators might portray.
Creating a brand in the US does provide a global halo though which is why we are going for it there.
Rod
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Anna
3 August 2013 #
I was hoping you would have reached 200,000 by this year’s annual meeting. Since this did not happen, will you be letting the market know when this milestone is reached or will you wait until 250,000 customers? Also, would you consider having your next year’s annual meeting in Auckland instead of Wellington? I have been shareholder for over 5 years and would like to attend, but travelling to Wellington is impractical.
Rod Drury
4 August 2013 #
@Anna we did a shareholder briefing in Auckland on Friday morning which was very well attended. We have done that for the last 3 years at least.
We are doing Sydney and Melbourne later this week coming so we are getting around.
The largest number of our shareholders are still in Wellington but we’re getting around the big bases anyway.
