NZX shock – Xero to delist

Xero shares fall on news of delisting despite posting a break-even earnings result.

Sharemarket darling Xero is to delist from the NZX in February, ending a stellar 10-year run that built its value to $4.7 billion.

In a statement to the stock exchange this morning, the accounting software company said the decision was made after “an extensive strategic process which thoroughly canvassed all available options.”

Xero shares fell 4.29% to $32.59 following the announcement.

Its founder and chief executive Rod Drury said Xero was an ambitious company.

“We will remain headquartered in Wellington and domiciled in New Zealand. We thank the NZX for providing a valuable platform to support Xero’s first decade as a public company. Our success wouldn’t be possible without the support of the NZX and our shareholders.

“While more than half of Xero’s people live and work in New Zealand, 80% of our revenue now comes from outside New Zealand. Our strategy is to drive further growth in markets like UK, North America and Southeast Asia.

“As Xero continues to grow, gaining enhanced access to deeper capital markets, increased liquidity and a broader base of potential investors is critical to fulfilling our ambition to be the leading global small business platforms serving millions of customers."

NZX chief executive Mark Peterson is in Singapore and was unavailable for comment.

In a statement, the NZX said it was proud of Xero’s achievements over the past decade.

“Its strong performance and support from the New Zealand market has generated opportunities and wealth for local investors. 

“Xero’s listing on the NZX has extended beyond the benefits of solely raising capital. It has supported Xero’s growth aspirations, with the company successfully leveraging its local listing to reinforce its brand and compete globally. NZX is pleased to have played a pivotal role in this. 

“We are naturally disappointed that Xero has decided to leave the local market.” 

Xero breaks even
Xero has passed breakeven at the operating profit level much quicker than expected as subscriber numbers hit nearly 1.2 million.

The accounting software company reported $5.4 million in earnings before interest, tax, depreciation and amortisation (ebitda) for the six months ended September.

Operating revenue rose 37% in the six months to $187.8 million compared with the same period a year earlier.

Cashflow from operating activities was also positioned at $6.1 million for the six months.

Its bottom line was still negative to the tune of a $21.1 million net loss compared to a loss of $43.9 million in the same six months last year.

“Xero delivered another strong half-year result, achieving positive ebitda for the first time and is emerging as one of the largest and fastest growing technologies in Australasia,” Mr Drury says.

“We continue to cement our position as the cloud accounting leader in Australia, New Zealand and the UK, with more than half a million subscribers in Australia and a quarter of a million subscribers in each of the New Zealand and UK markets.”

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