Xero doubles revenue – but still mum on breakeven date

Xero expects revenue for its year ending March 31, 2012 to double, according to an NZX filing this morning.

In its 2011 financial year, the online accounting software company reported revenue of $9.3 million (and a loss of $7.5 million).

Revenue from Xero monthly subscriptions has reached $1.75 million, or an annualised rate of $21 million.

The company also said the number of paying Xero customers now exceeds 60,000 - up from the 51,300 reported in a November 18, 2011 update.

When it listed in 2008, Xero told investors it would breakeven by the end of the 2011 calendar year.

On July 31 last year, the company formally abandoned that goal.

This morning, chief executive Rod Drury told NBR the time-frame to make a profit remained open-ended.

It was in investors’ interests to focus on long-term growth, Mr Drury said.

A change in private equity ownership at key regional rival MYOB, and issues releasing MYOB’s cloud computing product, had “left the door open” for Xero to grab market share, Mr Drury said.

Half of Xero revenue now comes from off-shore markets, the Xero boss said, up from around 30% a year ago.

 Australia was particularly strong, and the UK market was growing.

Xero now has six staff in the US, based at the Sam Morgan, NZ government-backed Kiwi Landing Pad in San Francisco and a high-profile manager to lead its US operation.

Mr Drury said Intuit dominated the US accounting software scene.

So far, progress is modest. Xero is still in the process of adding a key feature for the US market – cheque printing – and developing a network and support among accountants.

Once these issues have been addressed, “We’ll see if we can take share from Intuit. That’s when things will get really exciting,” Mr Drury said.

Around 3300 accountants were now using Xero, Mr Drury said, up from around 3000 this time last year. The chief executive said a key difference was that his company was now winning full practices.

Xero shares [NZX:XRO] were up 6.27% to $2.71 in early afternoon trading. 

Below: Xero 24-month chart courtesy NZX.com (click to zoom):