The Jury's still out for me, and will be until the US starts producing. They have certainly gained good traction here in NZ & Aus - and appear to be in the UK - although the number of advisors added seems to be slowing (hopefully that will be offset by organic conversion of existing advisor customers to Xero).

I believe the valuation is rich but so is the potential potential. There's no doubt the voyage has it's risks (the US market could be a tough and expensive market to crack) and they may not make it.

But I say a continued good on them for giving global domination a right royal shove.

(Disclosure: I have a very tiny lottery ticket styled holding)

The US is a tough market to crack but as Diligent has shown, can be done. Let's hope XRO shareholders have the same fortitude and experience as Diligent's - it's a rough and tough road.

Great to see Xero executing on its strategic vision and going from strength to strength. The US market is a tough nut to crack and it is good to see a kiwi company leading the way in the online world. Don't let the detractors grind you down !

Well done Edwards on getting Xero to where it is. And well done Xero for boldly going into the marketplace with the best product.

Lets remember US sales = NZ export income.

True, take the time to meet the guy, not what you are expecting

He has a whole lot of fight in him and has zero hesitation taking on anyone bigger than him - an admirable trait in a country where is it generally always someone else's fault - he tells you about his failures before his successes

The real "yawn" is the usual anonymous cowards who come out and knock Rod every time he or Xero is reported here.

The fact is, Xero is a fast moving and growing company giving it all to create a global company from our shores. That spells great things for New Zealand and we should all be supporting it, together with the visionary pushing hard for it to succeed.

Is it overvalued or undervalued? Who knows. If you think it's the former, don't buy. If you think the huge effort going into creating and building this global company will reap rewards, buy. Simple really.

I get the feeling that some here would love to see it fail. If that's the case, you need to take a good hard look at yourself.

Tall poppy syndrome is alive and well in New Zealand.

[Last sentence should read: as such, spin in...]

The problem with this argument is that it leaves Xero to change the goal posts as it suits them. My recollection of the IPO prospectus was that it forecast profits by around 2009, and that subsequent annual reports also forecast forthcoming profits. If they are 'playing to a different end game', all power to them, but perhaps quit beating the drum about profits being just around the corner. Also, I take issue with the notion that by structuring themselves to be profitable sometime soon they would lose out on future potential - SAAS such as Xero is (arguably) easy and quick to replicate by a well-heeled competitor, so there's less argument for first mover advantage - and profits are profits at the end of the day. Ideally, Xero would be profitable and then use these profits to fund expansion, sustainably. Leveraged plays targeting big end-game payouts are high-risk, especially when customers can change vendors at the drop of a hat.

Fair enough. I guess I just don't see what's to stop a company with deep pockets coming in hot on Xero's heels and eating their lunch, perhaps by using loss-leader kickbacks to accountants, etc. Software has a low cost of entry as compared to other industries, so in my humble opinion Xero would do well to consolidate at their current level and turn a profit rather than perhaps risk too much by expanding in such a way that they depend on the US market in order to stay afloat. [Or they're just hoping to be noticed by Google and get bought out....]

My understanding is that they've found that small businesses are a lot slower / less motivated to change accounting providers. They'll do it, but it's a bigger hill to climb than originally thought.

They're probably (and to be fair I am only speculating - I haven't discussed this particular point with them) trying to turn that into a strategic advantage - if they get a bunch of customers now and look after them, it's far less likely they'll in turn revert to another provider in future.

In which case speed to market becomes primary as does front of mind when businesses are in the market for a provider. The more they can snap up now in the alleged absence of a major SaaS competitor, the greater the return in the long term.

There's a lot of focus on Xero's ability to turn a profit - but that is only one (albeit important) measure of a businesses success.

Return on investment is also important.

Based on the recently reported 6 monthly results Xero has earned around $21m in revenue since it started in 2006. It has also raised around $50m from a combination of its founders initial contributions, the 2007 IPO and subsequent private investments. That's total funds at its disposal (and it is disposing of them very effectively) of around $71million.

Xero has roughly $11m left in the bank.

That means Xero has so far spent around $60m to earn $21m ie it has a $39m hole to fill before it begins generating an economic return. At the moment that hole is getting bigger and Xero is likely to have to raise more money from somewhere inside 12 months.

Xero has an awfully long way to go to be a company that produces an economic return on its investment.

But based on its history of broken forecasts I will believe Xero has produced a profit when I actually see it.

In the original IPO breakeven was estimated to occur at 8,000 customers. In 2009 Drury said it wold occur at somewhere between 15,000 and 30,000 customers. As late as November 2010 Xero predicted breakeven in 2011.

Customers numbers are now 50,000 but breakeven (originally forecast for 8,000 customers) is still no nearer.

I have no wish to bash Xero - but can't stand misleading hype.

Xero has produced a good product with that $39m. But is a product that is easily replicated and there are many companies around the world who have produced similar products. Xero faces market share pressure from them and downward pressure on its prices. First mover advantage evaporated long ago. Xero faces a very challenging future.

I have great admiration for Rod Drury and I hope they make it but my concerns about Xero are:

1) Growth is simply not high enough and I would imagine their market share in the big markets is tiny. They are right to focus on growth but it is not happening quickly enough.

2) They are a small, vulnerable company, dwarfed by bigger, well-resourced competitors.