Drury on decision to kill Xero Personal, make write-down
Xero is killing off its Personal edition, which will be wound down and shut on November 30, 2014.
The company will take a $700,000 impairment charge on discontinuing Xero Personal, according to a statement filed with the NZX this morning.
It would rather focus on "its larger and faster growing small business and accountant software products and services," the statement says.
CEO Rod Drury tells NBR ONLINE that 12,000 customers are on a Personal subscription, which costs $5 a month (they have never been included in the company's paying customer total - which currently stands at 193,000 - which only includes business plans).
The cheapest monthly plan Xero is currently advertising is its "Small" subscription, which costs $29 a month.
The Personal plan coincided with BNZ buying just over 1 million shares in Xero (giving it a 1% stake based on the number of shares on issue today). The bank still holds the shares today according to Companies Office records.
"This was one of the strategic projects we [Xero and BNZ] did together," Mr Drury tells NBR. "That is how we've managed to have Xero cover its cost from day one."
(Xero Personal was made available to all-comers, but BNZ customers got early access to a re-branded version of the product called BNZ Money Map, launched in 2010.)
"PFM [personal finance management] is a tough category," Mr Drury tells NBR.
"Many small business owners have multiple accounts so we think it really needs to be an independent product that takes feeds from multiple banks. So either customers pay directly for the service or it goes to an advertising based model – which is not us."
The consumer category is hard to monetise he says, adding, "Ironically, adding automated feeds made it worse, because someone has to pay for those feeds."
The decision to chop Xero Personal won't impact on Xero's current guidance, the company says.
Shares [NZX:XRO] were down 38 cents or 2.44% to $15.20 in midday trading for a market cap of $1.79 billion - off from the $2.2 billion high it hit in July as shares touched $18.34.