Xero’s Drury says too early for listing in US
Xero, the cloud-based computing company whose shares have more than tripled in the past 12 months, is not yet large enough to consider a US listing, founder and chief executive Rod Drury says.
The shares [NZX:XRO] have dipped from Friday's record high. In midday trading they were down 2.80%.
"A US listing is certainly something a business with global aspirations would consider," Mr Drury says in a statement.
"We have been advised it would not make sense to consider a listing in the US until we can see at least $US100 million of revenue," Mr Dury said, reiterating his comment to NBR last week, "So the focus for now remains on growing the team, customers and revenue while building systems and processes for efficiency."
He reiterated that Xero is on track to double revenue in the year ending on March 31, which would put annual sales at about $38.8 million ($US32 million).
Shares of Xero, which is yet to make a profit, fell 4.2 percent to $10.25 on the NZX today.
Mr Drury's statement attempts to explain the meteoric rise in the company's stock, which now has a market value of $1.21 billion – more than retailer Warehouse Group and global transport firm Mainfreight on about $1.2 billion.
He says the share price gain coincides with increased overseas investor appetite for exposure to Software as a Service technology, which is seen as a fast-growing segment over the next five years.
Xero's own profile has been lifted offshore by the appointment this month of Stuart McLean, a Google executive in Australia, to the new role of chief revenue officer, media interest in the US and roadshows for accountants in Australia.
The company will provide an operating update in early April, he says.
(BusinessDesk)
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Comments and questions9
me doth sense a tulip - not a nay sayer poppie slaughterer, just seen ICT b4
Wise words from Rod Drury. It is good that the high performance of the share price is not burdening the management with unrealistic expectations on execution.
I would say that Rod doesn't lose any sleep about the poor mums and dads that are piling into Xero are $10 and if that is fair (it's not). But his press release today that blamed (and implied) it was overseas investors were the ones driving up the share price was disingenuous at best, and willfully deceitful at worst. Unsophisticated investors are piling into this stock and Rod and his Board actively encourage the pumped up share price. If this deflates - it will be very painful.
Unfortunately, the level of Rod's ego is also directly tied to the movements of the Xero stock price.
Well said, Keyser.
There aren't any Mums and Dads in here. They are all waiting for the MRP IPO because the Government told them to. If you surveyed the cross section of investors you will find people who see a global play and accept that its risky.
Well done, Rod. The news of this success must be a bitter for those who bagged Rod at the IPO of Xero. Would also be interesting if NBR ran the comments/stories showing how wrong they are now re XERO. Maybe even comment from Labour's Selwyn Pallet would be entertaining?
John Doe? I don't recall being owned by anyone (including Labour) but very happy to "continue" to wish Rod the best. His ambition and drive is breathtaking and he deserves all the success he has gained thus far. He has done an amazing job and set a whole new standard in many areas related to growing hi-tech companies. His success will bear fruit of its own through aspirations of others to achieve such goals. It's now the four Bs: Beemer, Batch, Boat and a Billion!
Does anyone care to know Xero has app ecosystem with more than 100+ companies? Some of these companies are small and NZ-based, Xero is providing instant market access of 135,000 businesses to across globe. NZ-based software companies like Vend, Unleashed lot of others have connected to Xero. If a Singapore-based business signs up to Xero they are most likely to consider one of these apps due to API partnership. That brings revenue to partner app like Vend or Unleashed. If Xero has a closed system like MYOB then these dollars would have gone to someone else. These ecosystem partnerships are lifelines for smaller companies who don't have wider reach. Some of the app partners don't have big enough market inside NZ. They are bound to export for survival. With low seed capital it's almost impossible spread the message across the globe, let alone competing with leaders in their own business segments.
If you add up the Xero export dollars with export dollars of Xero's API connected apps then you will notice how it is contributing to economy. This is what the difference Xero could make to economy. Imagine a big manufacturing company that supports lot of small companies and businesses in a nearby community - that's what the difference Xero could bring to NZ.
Share price in the market is never a true measure of a company's actual worth. I suspect people who are buying at this level are not mom and pop investors from NZ - they could be institutional investors from Australia. Look at the volume of transactions; they are people with deep pockets.