Xero hits ‘magic’ mile­stone

The Dominion Post - - Business - TOM PULLAR-STRECKER

Cloud ac­count­ing com­pany Xero has achieved a goal that chief ex­ec­u­tive Rod Dury set for the busi­ness in 2011, notch­ing up its mil­lionth cus­tomer.

Drury said it was a magic num­ber that es­tab­lished the 10-year-old Welling­ton-based firm as ‘‘a tierone global tech­nol­ogy provider’’.

‘‘Five-and-a-half years ago, at 50,000 sub­scribers, we asked share­hold­ers to imag­ine our busi­ness at a mil­lion sub­scribers,’’ he said.

‘‘It’s very sat­is­fy­ing to de­liver on that prom­ise.’’

Xero was now ‘‘not too far away’’ from turn­ing over $100 mil­lion each quar­ter, he said.

Last year Drury set a new goal of build­ing Xero’s an­nual turnover to $1 bil­lion.

Though he did not set a date, an­a­lysts be­lieve the still-loss­mak­ing com­pany could reach that tar­get within four or five years.

Views on whether Xero would fly or flop were di­vided in 2007 when Drury first an­nounced the com­pany would go pub­lic on the New Zealand stock ex­change through a float that raised $15m.

To­day the com­pany is val­ued at more than $2.6b.

At that time, Xero was very much a fledg­ling busi­ness whose soft­ware had only been tested by 100 firms, but Drury said from the out­set that it would be chas­ing a ‘‘global op­por­tu­nity’’.

Xero’s shares dipped ini­tially on list­ing, but Drury called for in­vestors to give the com­pany a year to prove it­self, say­ing it was def­i­nitely se­ri­ous about ‘‘shoot­ing for the stars’’.

Drury’s cre­den­tials with early in­vestors were helped by the fact he had pre­vi­ously built up and sold an email ar­chiv­ing firm AfterMail, for $65m.

Forsyth Barr an­a­lyst Blair Galpin said in­vestors should not

"Our view for some time is Xero could be prof­itable if it was will­ing to forgo a lot of its push for growth, so it's a choice." Blair Galpin, Forsyth Barr an­a­lyst

nec­es­sar­ily be con­cerned Xero had yet to move into profit.

‘‘Our view for some time is Xero could be prof­itable if it was will­ing to forgo a lot of its push for growth, so it’s a choice.’’

Pass­ing the mil­lion-cus­tomer mile­stone was not un­ex­pected but there were not many com­pa­ra­ble achieve­ments in the New Zealand mar­ket, he said.

‘‘Given it has come from nowhere 10 years ago, it is a huge gain. What it has done is help sup­port a strong tech­nol­ogy in­vest­ment story in Welling­ton and to a lesser ex­tent Auck­land.’’

Drury said ma­chine learn­ing and au­to­ma­tion would open up the next phase of in­no­va­tion in ac­count­ing by elim­i­nat­ing a lot of man­ual work.

His job was more fun than 10 years ago, he said. ‘‘If you have a mil­lion cus­tomers, it is a huge re­spon­si­bil­ity but it is also re­ally ex­cit­ing to de­fine how that many peo­ple work.’’

Brexit and the ‘‘US po­lit­i­cal sit­u­a­tion’’ showed there were ar­eas of the world that were be­ing im­pacted by the loss of tra­di­tional man­u­fac­tur­ing jobs, he said.

‘‘We think it’s our re­spon­si­bitly to play a big role ed­u­cat­ing our ac­count­ing part­ners on how to get their small busi­ness cus­tomers to ex­port. There is a magic mo­ment when you see money that has come in from over­seas hit your bank ac­count.’’

PHOTO: SUP­PLIED

Xero chief ex­ec­u­tive Rod Drury last year set a new goal of build­ing Xero’s an­nual turnover to $1 bil­lion.

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