'We can't control market cap' - Drury as Xero passes $2.2 billion mark

UPDATE / July 8: Xero has continued its roll as a new trading week kicks off. The online accounting software company's shares [NZX:XRO] were up 2.51% in late afternoon trading to $18.80 for a market cap of just over $2.2 billion - another all-time high.

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UPDATE / July 5: In midday trading, Xero shares have hit $18.00 [NZX:XRO] for a market cap of $2.1 billion - edging the company ahead of Sky TV.

Xero is also ahead of cash machine Trade Me ($1.88 billion), and now twice the value of dividend-generating reliable value play Chorus ($1.02 billion). Investors in the online accounting company are of course figuring it has a lot more room for growth than its NZX 20 fellows.

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July 4: Xero [NZX:XRO] closed up 6 cents yesterday to new all-time high of $16.75 for a market cap of $1.93 billion - a rise of more than 300% over the past 12 months [UPDATE: in early Thursday trading, Xero shares were up 3.88% to $17.40, pushing Xero's market cap over the $2 billion mark and taking CEO Rod Drury's paper fortune to $388 million by a BusinessDesk estimate].

Its latest market cap high puts Xero within a whisker of Sky TV - a mature company, if one starting to face the first nibbles of competition. Unlike growth company Xero, Sky TV pays a dividend. In its half year to December, made $68.2 million on $443 million sales.

On May 23, Xero reported a $14.4 million loss for the 12 months ended March 31, from a loss of $7.9 million a year earlier.

Operating revenue rose 102% to $39 million.

Paying customers rose from 78,000 to 157,000, of which 46% were in NZ, 32% in Australia, 14% in the UK and 7%  in the rest of the world.

In September, Xero will hold its first XeroCon conference in the US, in San Francisco to coincide with the America's Cup. The US market is seen by Woodward Partners as a key market to crack to justify Xero's soaring stock price.

Late yesterday, Xero CEO Rod Drury described the day's trading as "Small volume.People seem to like us and buying our stock. We're still in the early days and can't control market cap."

In early March, boutique Wellington investment bank Woodward Partners put a 12-month target of $12.00 on Xero. It seemed ambitious at the time given shares were trading at $8.59. Even bullish Woodward has underestimated the stocks gains upon gains.

Forsyth Barr has a hold rating and a 12-month target of $6.32.

Another Google hire
Xero named two new managers yesterday.

Jeremy Wood has been appointed head of global marketing, responsible for the design, development and execution of Xero’s global marketing strategy. This role leads all marketing efforts for the company including headqaurters marketing and in-country marketing teams, the company said in a sstatment to the NZX.

Mr Wood was with Google from 2005, most recently as Google’s head of SMB [small-to-medium business] co-Marketing, Americas and before that Google Apps SMB marketing manager, APAC.

He is the second manager Xero has poached from the search giant.

In March it hired Stuart McLean to the new role of chief revenue  officr. Mr McLean moved to Xero from Google in Sydney where he has been head of enterprise  Australia New Zealand, driving cloud applications business for products such as Google Apps.

Duncan Ritchie was appointed to the newly-created role of chief platform officer (CPO), responsible for the design, development, operations and support of Xero’s online accounting software.

Mr Ritchie was previously Xero’s general manager of operations, managing IT and operations teams. He is a former Gen-i head of application management.

Xero also disclosed Mr Richie owns  21,514 ordinary shares, 12,757 through beneficial ownership.

100 more staff
Xero’s growth in staff continues with over 100 recruited in the last three months, the company says, taking total staff numbers to nearly 500.

Another 200 jobs to be created by the end of March 2014, Xero says.