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Xero posts 67% jump in full-year revenue

NZ NewswireNZ Newswire 11/05/2016 Jonathan Underhill

Xero CEO Rod Drury. © BBloomberg Xero CEO Rod Drury. Xero, the cloud-based accounting software firm, said it has sufficient cash reserves to reach breakeven without having to raise more capital, after posting a 67 per cent jump in full-year operating revenue and a wider net loss.

The Wellington-based company said its net loss was $82.5 million in the 12 months ended March 31, from a loss of $69.5m a year earlier. Operating revenue rose to $207m from $121m, but was swallowed up by a 53 per cent increase in operating expenses to $249m as the company focuses on building its subscriber base.

Xero used up $86m on operations and investments in the latest year, down from $88m a year earlier.

It had cash and equivalents of $184m at year-end, down from about $203m at Dec. 31, suggesting it burned through about $19m in the final quarter and has at least two more years to reach breakeven before needing more funds.

Paid subscribers jumped to 717,000 in 2016, from 475,000 in the 2015 March year.

"We have extended our position globally, and lead the small business cloud accounting software market in Australia, New Zealand and the United Kingdom by subscriber numbers," chief executive Rod Drury said in a statement.

Annualised committed monthly revenue, a favoured metric for tech companies, rose 62 per cent to $257.9 million.

Xero achieved the fastest percentage growth in the key North American market, where operating revenue jumped 116 per cent to $16.9 million. That's still just 8 per cent of total operating revenue. In its biggest market of Australia, revenue climbed 65 per cent to $96.7 million and in New Zealand it climbed 42 per cent to $46.7 million. Operating revenue in the UK surged 88 per cent to $37.4 million.

Xero's shares fell 0.5 per cent to $15.60 on the NZX and have dropped 20 per cent in the past 12 months. The stock is rated a 'buy' based on the consensus of seven analysts surveyed by Reuters.

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