Shares in Xero soared through the $20 barrier yesterday as investor interest in the software accounting firm was piqued further following a successful capital raising.
Xero is valued at $2.38 billion, more than casino and hotel operator SkyCity Entertainment Group and dominant pay-TV firm Sky Network Television.
The shares rose 5.5% to $20.58, an intra-day record, after the Wellington-based company announced on Monday it raised $180 million in new capital, mainly from United States investors.
That left it flush with $230 million in the bank to fund its global growth plans.
The shares have surged this year, and are more than 20 times the $1 they were sold at in the company's 2007 initial public offer.
It is now the eighth-biggest domestic company on the NZX.
Craigs Investment Partners broker Chris Timms is retaining his neutral hold recommendation on the stock.
''We are maintaining our `niche neutral' recommendation on Xero. Xero is continuing to show very strong growth.
"The announcement of a capital raising is a clear indication of the company's success in the United States and the company wanting to make the most of this strong momentum.
''Based on its early success and the overall size of the market, we believe Xero has a good chance of capturing a share of the US market.''
However, it was also important to remember the strong cloud accounting competition in the US, particularly from Inuit, Mr Timms said.
In the future, there would continue to be strong global competitive risks as the cloud accounting market heated up, with software developers rolling out their own cloud-based accounting software.
In a research note, Craigs said first-half operating revenue was expected to exceed $30.3 million, up 84% on the previous corresponding period, with strong growth seen across all regions.
Xero noted the figure had been adjusted to account for the discontinuation of its Xero personal product.
Annualised committed monthly revenue increased 82.4% to $70.6 million, from $38.7 million.
The geographic breakdown for the committed revenue saw New Zealand with $23.9 million, Australia $30.2 million, the United Kingdom $10.2 million and the United States and the rest of the world $6.3 million.
Offshore revenue now accounted for 66% of monthly committed revenue, up from 62% in the year ended June, and 82.4% in the first half of 2013.
Mr Timms said Xero provided no guidance on its operating performance for the first half but earlier in the year the company provided guidance for a larger loss as it continued to increase staff, software development and marketing.
Customer numbers increased 89% to 211,300 - driven by strong growth in all regions.
Australia continued to show the strongest growth, making it an even more important driver of revenue and operating profit.
Xero's workforce increased by 110% to 584, up 53% since March this year.
The company increased staff in all areas and regions of its business in order to boost product development, sales and marketing, he said.
Its workforce was expected to continue to expand based on management commentary from the company's latest Xerocon conferences.
Management noted seeing higher-than-anticipated growth in the adoption of its products and the continued expansion of a world-class team in the US and support for global growth would be necessary, Mr Timms said.
