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