New Xero boss signals where he will stick to the Drury line – and where he will not

Steve Vamos is still assessing how he can manage Fletcher and Telstra directorships along with his Xero workload.

New Xero boss Steve Vamos said nothing to scare the horses in his first interview with NBR, largely emphasising continuity with the strategies pushed by his predecessor, Rod Drury.

Talking to NBR after the online accounting company’s solid full-year result yesterday, Mr Vamos signalled a continued focus on growth over an immediate push for profit.

There was a shift of emphasis, however. While Mr Drury led engineered notable capital-raising rounds, Mr Vamos says Xero will live within its means until it breaks even – for which he would give no timeline.

And while Mr Drury spoke several times about his ambition to ultimately list on the Nasdaq, the new Aussie boss makes it clear it’s not on his agenda.

Asked if there was still a plan to list in the US, he said, “No. We’re very happy where we are and our focus is on continuing to drive growth in the business as we did in the 2018 financial year. It’s definitely not on the table.”

Fletcher Building directorship: still hangs in the balance
When Mr Vamos' appointment was first announced, the New Zealand Shareholders Association questioned his decision to maintain his Fletcher Building and Telstra directorships.

The investor group said he risked being overcommitted, given the challenges facing both companies.

Earlier this year, Mr Vamos said he would assess his workload as he went, as would his fellow shareholders at Fletcher and Telstra.

Asked yesterday if he had a feel yet whether his new workload was doable, he talked around the question, saying “My current term on both boards is expiring this year. And as we go forward there will obviously be consideration by those boards as to board renewal. There will be consideration that I will take around workload. So I expect all of that will play out in the appropriate way.”

ASX move 'well-executed'
The new chief executive is unapologetic about Xero abandoning the NZX in favour of an ASX-only listing.

“If you look at what’s happened since, on-market liquidity has increased by 205%, we’ve seen an increase in international index-based investment and on March 9 Xero was included in the S&P ASX100. So all of those are clear evidence that it was a well-intended and executed move.”

He could also have added that Xero has been on a bull run since it left the NZX at the end of January.

Shares jumped to $A41.91 after the full-year result was released yesterday for a new all-time market cap high of just under $NZ6 billion (although they slipped later in the day to close at $A39.89).

But despite the listing across the Tasman, the last two AGMs being in Australia and Mr Vamos working out of Sydney, the new chief executive says Xero should not be thought of as Australian.

“Xero is a New Zealand company and it always will be, and Wellington is where we are based and will be.”

Living with Xero’s means
“I had the opportunity to work with Rod and the team over the past 18 months [as a consultant] and these results reflect very much a focus on continued growth … but also making sure that in the way we use cash we are focused and demonstrate disciplined execution. So that’s been a focus of the work the team has been doing for some time, and that’s definitely our intention to continue."

So there’s still a strong emphasis on growth over profit?

"There’s an emphasis on growth and making sure we invest our capital as wisely as we can to support that growth.

"Our intention is to continue to drive growth, and also disciplined execution, and making sure that, in essence, we get to cashflow-positive using the funds we have available today, and that excludes our access to debt funding.

"So with the funding we have, we believe we can get to cashflow-positive. The timing isn’t something we have committed to."

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