Xero's loss up but outlook strong

Cloud-based accounting company Xero posted its eighth consecutive annual loss yesterday, but revenue grew more than 80% and paying customers have surpassed 300,000 to date.

Xero's after-tax loss was up almost 150% to $35.5 million, but revenues for the year to March grew 83% from $38.4 million to $70.1 million and it retained a $210 million war chest from capital raising.

Xero's shares, which had soared to a high of almost $45 in March, were down 15c at $32.35, following yesterday's announcement.

Xero chief executive Rod Drury said the company's ''entry phase'' to the United States market had been completed successfully, including the raising of $180 million in capital last October, and had progressed with several large-scale partnerships, including with H&R Block.

''Xero has proven its strategy and execution and continues to build a world-class team, while substantially growing revenue,'' Mr Drury said in a statement yesterday.

Xero separately announced it had been ranked

No 1 in Forbes annual list of World's 100 most innovative growth companies. Craigs Investment Partners broker Peter McIntyre said the $35.5 million loss was expected.

''From here on in depends how Xero uses that cash [$210 million]. The market is watching with much anticipation,'' he said.

Forsyth Barr broker Haley Van Leeuwen said Xero's full-year result was ''well signalled'' so there were ''no surprises'' yesterday.

''Xero's changed the way it reports its costs to better align with the approach taken by US SaaS (software as a service) companies, a signal of how it wants to be viewed and of its long-term aspirations,'' she said.

New Zealand and Australia, with more than 100,000 subscribing customers apiece, provided

76% of the total $66.6 million subscription revenue for the year.

Employee numbers grew by 376 during the year, largely in the US. Xero had appointed Chris Liddell,

the former vice-president and chief financial officer of General Motors and Microsoft, as its New York-based independent board chairman.

''We're pursuing a growth agenda to become the long-term global leader in small business accounting software,'' Mr Liddell and Mr Drury said in a joint statement.

 

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