Xero doubles employees, seeks 100 more
BUSINESSDESK: Cloud-based accounting platform provider Xero has doubled its employees, hiring 128 new staff in the calendar year and is seeking 100 more.
The Wellington-based company now has 267 employees and is looking to add more in its Wellington and Auckland offices before April next year.
"Emerging global companies like Xero are opening up new types of career options for New Zealanders," general manager human resources Natasha Hubbard says.
"Software testing is becoming a valued and well-paid new career option.
"Customer care roles for computer software have also evolved into prestigious careers and help staff become product experts and responsible for building lifetime relationships with customers all over the world," she says.
In Wellington, the decline in public sector jobs has contributed to the capital's rising unemployment rate.
The local economy is instead focusing on attracting and retaining innovative businesses, investing in infrastructure, manufacturing and information technology.
Shares in Xero last traded at $4.45 and the stock has gained about 58% this year.
Xero joined the NZX 50 in June alongside Diligent Board Member Services, replacing GPS-components maker Rakon and building supplies manufacturer Steel & Tube.
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Comments and questions16
Yes it is great that more people have jobs and thank you to Xero for that - but this rather reeks of desperately trying to get some good news out to counter the problems with disclosure and the dropping share price that have occurred this week.
Xero already told us a month ago at the AGM they had 260 employees so this is hardly news.
What are all these people going to be doing?
Work. What a stupid question. Xero is not a government department.
Well, yes, but the notion of a Software as a service company is that you massively leverage lower fixed costs. If those people are on expected salary multipliers of 2.5 (let's say), then we should expect to see $20M of growth in the next year. Otherwise, as another poster points out, there are no economies of scale and genuine profit (not shareholder sales) will remain elusive.
The only thing keeping up with customer growth is fixed expense growth! No wonder the company can't (and won't) turn a profit - it has no economies of scale! How can it leverage against its fixed cost base to generate a profit if its fixed cost base grows exponentially? I'm all for growth companies but all valuation and financial theory requires Xero's current high valuation to be justified by huge future profits. Show us the money - xero - show us PROFIT and not propaganda.
Well, it is good news.
It would be even better news if one of the hundred people they plan to hire is involved in assisting with NZX compliance and similar matters.
ahhhhh ahaha - well played pablo
There is something wrong with their business model that prevents them from making a profit. Apart from the obvious large Director Salaries before the publicly listed company has made a profit reeks of various ship wrecked finance companies.
Nothing wrong with not making a profit unless you are publicly listed company and huge salaries are preventing a profit. Then it is up to the discerning investor to decide whether the share price / earnings ratio is justified.
Lets hope that the plan sequence was not to create a company, list, sell the directors shares and then maybe make a profit. The correct sequence is create a company, make a profit, list to fund expansion, and everyone wins.
Perhaps Rod Drury and his senior management need to humbly visit the premises of Mail Marshall and SMX, and ask how they made a profit and take notes.
This process is something we can all learn from.
You might have the hottest product since sliced bread, but if the business model is wrong it will never make a profit. Perhaps karma from having the name Xero (Zero) is holding it back... LOL
At the revenue per user required to attract customers Xero are going to have to unload all the support (customer care) and marketing to a distribution channel if they have any plans on being profitable. The more customer care and the more developers they bring on the more obvious it becomes that there model is not scalable where Revenue growth out paces all cost growth.
Watch for Xero getting a loan to keep development in NZ because of ballooning costs. Then you will know its being grown in the hope of exiting via a buy out.
SaaS business models rely on build fast, attract customers quickly and create long term annuity revenue. Unlike a traditional 'sale' model where the dollar comes in once (and maybe possibly again in the future at a much smaller amount for upgrades/maint) the beauty is in the future.
I'm sure you all know this, but I think the comments warrant a reminder.
Well done to Xero for getting out there and recruiting in NZ - we need good opportunities for young tech bods and a lot less snide comments from grouchy old has beens....
In 1999 Google had 40 employees in 2004 they had 800 employees. Now they have 54,000+
Some real idiots on these forums who have no idea whats involved in building a world class anything!
Or is it idiotic to compare a fast growing multinational that converted a significant global market advantage (the fastest search engine) with a piddly company in an increasingly crowded SAAS market space that has lost any competitive lead time advantage it had to its biggest rival?
I have every faith in the Saas model. And I don't doubt that it will grow exponentially. It is just a question of where is the revenue/costs threshold where it will show a profit? And is the costs threshold moving up faster than the revenue?
Being in software development myself, the amount of money that has been spent is concerning when you compare it with more humble ventures such as SMX, Marshall, and even TRADEME. Yes Xero is aiming bigger and understand the huge investment required.
I genuinely hope they succeed to the point where they make a profit and pay a dividend however I don't see them paying a dividend anytime soon even if it made a profit. A profit on paper does not mean you have the cash for dividends.
It is not good to compare it to google.
Firstly as someone else pointed out its a different market, and has severe competition.
Secondly google state on their website that they have never paid a dividend and also state that they probably never will. - despite the huge advertising revenues.
Google stock is not normal investment stock, it's market driven buying and selling stock. You will only ever make money on google stock buying low and seeking high. But like all bubbles, the share price will not always be going up. Same as Facebook.
Xero is rapidly starting to look like buying and selling stock. OK for those that are professional traders but not mum and dad investors expecting a dividend sometime in the future.
Right on Datacraft, sounds like a whole lot of knock3rs trying to talk the share price down so they can buy in.
I wonder how many of these arm chair experts here have built a real company. Every industry and segments has it's own operational pitfalls. You can' put all SaaS companies in one basket just because they all operate in cloud.
In a year are two you get all the answers. There are combination of factors have helped Xero what it is today. Xero timing, entry, execution are not flawless. Myob's missteps have certainly helped Xero to capitalise. It may not be same case across the globe. Sage in UK and Intuit in US are responsive but they are still saddled with the same baggage as Myob. Let's see if Xero can really grow exponentially in next few months.