You are using an older browser version. Please use a supported version for the best MSN experience.

Xero's 1m customer brings breakeven closer

NZN 30/03/2017 Jonathan Underhill

Xero, the cloud-based accounting software firm, says it reached a milestone of signing up 1 million customers just ahead of its March 31 year-end, keeping intact market expectations it will achieve its first-ever profit in 2019.

Chief executive Rod Drury declined to give an update on the outlook ahead of the release of the full-year results in May.

Subscriber growth had continued "in all markets" in the second half, with "just amazing numbers" in its largest regional market of Australia and New Zealand, where Xero is winning "more than 70 per cent of all new revenue" in accounting software.

Xero shares rose 1.5 per cent to $19 and have gained 26 per cent in the past 12 months, outpacing the NZX 50 Index's 6.2 per cent gain.

The stock reached a six-month high of $19.98 at the start of last week. It is rated a 'hold' based on the consensus of six analysts polled by Reuters.

Subscribers have grown by more than 16 per cent, or 138,000 since the end of the first half, when they stood at 862,000.

The Wellington-based company may narrow its loss, on an operating earnings before interest, tax, depreciation and amortisation basis, to $38 million in the year ending March 31, according to a report by First NZ Capital analyst Tristan Joll published after the first half results that affirmed his 'outperform' rating.

Mr Joll projects it will turn to an ebitda profit of $6.3m in 2018 and $63.6m the following year.

Xero had $137.9m of cash and short-term deposits on hand at the end of the first half and said at the time it posted the interim results in November that it had enough cash to reach breakeven without seeking more capital.

Australia and New Zealand accounted for 69 per cent of subscribers in the first half, at 592,000, up 39 per cent from a year earlier.

image beaconimage beaconimage beacon