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Xero adds 36k customers since March, sees 80% lift in 2014 sales but wider loss

Cloud-based accounting software firm Xero added 36,000 customers since the end of March and is predicting an 80 percent pickup in annual sales as it continues its drive for global growth, which will widen the loss at the end of the year.

Chief executive Rod Drury told shareholders in Wellington today the company has 193,000 customers, up from 157,000 at the end of the March financial year, according to slides published on the NZX.

Xero's annualised monthly revenue has climbed to $64 million from $51.5 million at March 31.

The company sees sales rising 80 percent in the 12 months ending March 31, 2014, from $39 million in 2013, implying revenue of some $70 million.

The push for growth is expected to lead to a wider loss than the $14.4 million it reported for 2013, though it has sufficient cash on hand to deal with that.

Xero's cashflow statement published yesterday showed it was sitting on $68.8 million of cash as at June 30, down $9.4 million from three months earlier. It used $6.57 million in the first quarter of the year.

The shares fell 1.9 percent to $16.98 today, having surged some 128 percent this year, valuing the firm at about $2 billion.


Comments and questions

Great to see.

That means more and more small to medium businesses getting better information and productivity gains.

Good stuff.

The momentum is still there... Great to see.

Shareholders - including me - will be happy, though a little nervous, so long as they believe in future profits. But continuing rapid growth in market share will get harder for Xero as its global competitors sharpen up their alternative offerings. Perhap's Rod's forecast of 80% growth in annual income, rather than the previous annual doubling, is the first taste of that? Or is he trying to dampen our expectations just a little?

Xero has plenty of money to invest and is using its own funds to ahieve this growth, so who cares that it is not making money yet? It will as its model provides recurring revenue and it is employing clever NZers to achieve it. Stop talking about losses and start talking about investment.

80% growth in revenue but 120% growth in expenses. Doesn't sound that great to me!