Thursday, 24 July 2014 14:44

Xero hints at US listing as global revenues pass US$100 million Featured

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New Zealand-based accounting software company Xero is likely to list in the US early in 2015 on the back of strong growth in the cloud market and its announcement that annual revenues have now reached over US100 million.

Company chairman Rob Drury (pictured) told the company’s annual meeting late last night in Wellington that Xero (ASX:XRO had now exceeded US$100 million in subscriber-based revenue.

Announcing full year results for 2014, Drury forecast a subscription revenue growth of 80% per cent in the new fiscal year in line with previous predictions.

Xero is currently jointly listed on the ASX and the New Zealand Stock Exchange.

The Australian accounting software market has expanded rapidly over recent years with aggressive competition between the major players, including Xero, MYOB and the entry of US-based giant Intuit, the makers of QuickBooks.

Market growth has been driven by cloud solutions, with adoption rates rising rapidly.

Xero’s results for the full year to March 2014 show the company now has 284,000 customers, up from 157,000 in the previous year – with revenues of $70.1 million, an increase of $31 million over 2013.

Drury has indicated a US listing will likely occur during the 2015 calendar year, but that Xero is still in the process of considering its options.

Xero sees the benefits of a US listing as a way of raising its profile in that market as well as increasing liquidity.

Xero currently has less than a 1% share of the US market, which is dominated by Intuit. In its home market of New Zealand, Xero shows its marketshare of small business (SMBs) at 23% and partner accounting and bookkeeping companies at 76%.

In Australia, Xero claims 5% of the SMB market and 18% of the market for accounting and bookkeeping companies.

In the UK market, Drury paints a strong picture of growth, telling investors that the market there for accounting software was accelerating.

According to Drury, Xero is already the “leading cloud accounting provider,” in the UK market, with 100% customer growth year-on-year, a strategic alliance with KPMG and 90-plus UK staff.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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