Xero first-half loss more than doubles, losses to grow with new customers
Xero [NZX: XRO], the cloud-based accounting software company that's now the second-biggest listed company more than doubled its first-half loss as it continues its drive for global domination.
Unprofitable by design as it grabs market share,Xero says it sees faster sales growth and more red ink for the rest of the year.
Wellington-based Xero's net loss widened to $17.1 million, or 14 cents per share, in the six months ended Sept. 30, from $7 million, or 7 cents, a year earlier, it said in a statement after the close of trading on the NZX.
The company had already reported an 84 percent gain in first-half sales to $30.3 million, and said it expects annual revenue to exceed 80 percent growth and bigger operating losses in the second half of the year.
Xero is flush with cash after raising $180 million in new capital last month, mainly from US investors, leaving it with some $230 million in funding to launch its assault on the US market, where it claims to be the number one challenger.
"The board is continuing to follow a growth agenda focused on creating longer-term shareholder value rather than short-term profitability," the company said. "Xero is investing in the infrastructure to support millions of customers and create a significant cloud-based financial platform for its customers and partners."
The shares fell 0.9 percent to $35.66 on the NZX, before the release, and have almost doubled from $17.95 from before the October capital raising. The shares were down 1.8 percent to A$31.61 on the ASX, where trading was still open.
Xero's operating cash-burn more than doubled to $8.9 million in the first half from $3.7 million a year earlier, while investing cash outflow surged to almost $14 million in the half from $4.8 million, mainly on increased capitalised development costs.