Xero hit by Covid19 but not giving figures

AUCKLAND: Xero said its business took a hit in March and April from the coronavirus crisis but it would not provide hard numbers for those months.

Chief executive Steve Vamos said the company had acknowledged subscriber additions were low in March and that the crisis would affect its currentyear results but that was as far as he would go.

‘‘It’s just so early in the fiscal year . . . it’s not information we think is going to be helpful,’’ he said.

The company’s annual results — it reported a $3.3 million net profit — slightly missed analysts’ forecasts, partly because it had deferred a $2 per month price increase in March planned for some markets.

That deferral ‘‘definitely had an impact’’ on annualised monthly recurring revenue, although AMRR was still up 29% to $820.6 million for the year ended March.

‘‘There’s no question this Covid19 environment has been very, very hard on everyone and particularly on small business owners,’’ he said.

Key to how well Xero performs over the next couple of years is going to be how well its customers can weather the crisis.

On that front, a study by Dimensional Research that Xero commissioned in 2015 suggested businesses who used Xero had a better chance of survival.

It found that new businesses using Xero had an 85% survival rate after five years compared with US Bureau of Labour Statistics data showing a 50% survival rate after five years.

In the UK, the survival rate was slightly higher at 88% after five years compared with Office for National Statistics data showing a 41% survival rate over that period.

Another key to Xero coming through the crisis is cash and cash flow.

After positive free cash flow of $27.1 million in the year ended March, operating cash flow up 46% at $166.6 million, and total available liquid resources of $686 million at balance date, Xero clearly entered the crisis from a position of strength.

Cash resources include its $150 million committed but undrawn bank facility and $428.1 million in shortterm deposits.

Fisher Funds portfolio manager Sam Dickie said that liquidity meant ‘‘they’re not going to have to cut any muscle and bone, they might cut a bit of fat here and there.’’

Xero lifted annual revenue 30% to $718.2 million and earnings before interest, tax, depreciation and amortisation was up 52%, excluding impairments, at $139.2 million. — BusinessDesk.