Thursday, 08 November 2018 10:33

Xero half-year revenue, subscribers up, but losses dampen the result Featured


New Zealand accounting software company Xero has lifted revenue by 37% to NZ$265.5 million for the first half of the 2019 financial year, but suffered a net loss for the six months of NZ$28.6 million.

The increase in losses — from NZ$19.6 million in the first half of the 2018 financial year — comes despite the Xero (ASX: XRO) lift in revenue and the addition of 193,000 subscribers for the six months.

The net subscriber additions for the half year takes Xero’s total subscribers for its software to 1.579 million at 30 September.  

Xero says that following the consolidation of the company’s listing on the ASX in February 2018 — and subsequent inclusion in the S&P/ASX 100 index — the business executed a number of significant initiatives in the first half of the 2019 financial year that position it for continued growth.

The accounting software provider noted that the initiatives included the acquisition of leading data capture solution Hubdoc, a strategic partnership with US payroll provider Gusto, and successfully securing US$300 million (NZ$451 million) in capital via a convertible note offering.

Xero says it intends to use the raised capital to enhance and extend its small business platform and ecosystem capabilities through complementary and targeted acquisitions and investments.

“Xero’s half-year results demonstrate strong top and bottomline results with significant improvements in cash flow margins and average revenue per user. We remain focussed on disciplined execution of our strategy to drive growth while improving financial outcomes through operating efficiencies,” said Xero chief executive Steve Vamos.

“Our acquisition of Hubdoc delivered a key element in Xero’s code-free accounting strategy, enabling small businesses and their advisors to focus less on paperwork and more on growing their business. Likewise Xero’s strategic alliance with leading US payroll provider Gusto is an important step in the implementation of our US strategy.

“Xero is very well positioned to take advantage of organic growth opportunities and following the completion in October of our US$300 million convertible notes issue, we have the financial flexibility to target complementary acquisitions and investments.”

On its outlook going forward, Xero says it will continue to focus on growing its global small business platform – with cash outflow (operating less investing cash flows) in the financial year ended 31 March 2019 (FY19) forecast to reduce from the 2018 financial year ended 31 March.

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Peter Dinham

Peter Dinham - an iTWire treasure is a mentor and coach who volunteers also a writer and much valued founding partner of iTWire. He is a 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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