Xero loss almost doubles as another boss quits role
A resignation has raised the question of whether hiring could be the Achilles heel of Xero’s supercharged boss Rod Drury.
San Francisco-based Douglas Jeffries announced he would leave Xero just eight weeks after joining the cloud accounting company as its chief financial officer.
The departure coincided with the release of Xero’s unaudited annual results for the year to March 31.
The company reported a 77 per cent rise in revenues to $123.9 million, but its shares fell nearly 10 per cent to $20.89 in Friday afternoon trading as investors reacted to a near-doubling of Xero’s net loss to $69.5m and a lack of positive surprises.
Jeffries said in a statement his departure was no reflection on the company.
He is the third senior executive to leave Xero over the past year.
United States chief executive Peter Karpas quit in September after only seven months. Drury said he was not the right person to take the business forward there.
Wellington-based chief revenue officer Stuart McLean left Xero by mutual agreement in December after his job was disestablished and has since taken charge of Trade Me’s general items market.
The former Google executive had been with Xero for about 21 months.
Drury said Xero, which employed 1161 staff in March, had hired more than 400 people over the past year, had a great culture and had hired well, but it was learning.
Working with a ‘‘globallydistributed management team based out of New Zealand’’ was not for everybody and was not a fit for Jeffries, he said.
‘‘As you are trying to look credible in the US, you are looking for people who the US people know.’’
But the big thing Xero had learned was it was far better hiring through its networks of contacts than through ‘‘cold’’ recruitment processes, Drury said.
‘‘The people who have sparked are people we have known a long time.’’
A former senior executive who left Xero after a longer stint said Drury had had an informal style when hiring and was good to work for.
‘‘He will ask about your background, your life and your passions to see if there is a fit.’’
Once employed you are ‘‘either really ‘in’ and you are fully trusted, or you are ‘out’. There is no in-between,’’ the executive said.
‘‘They have employed a lot of people in a short space of time and that is going to cause any company major issues from the top to the bottom,’’ the executive said.
Forsyth Barr analyst Blair Galpin said Jeffries’ departure came as a surprise to the market.
‘‘It doesn’t provide a positive look but we also don’t know the background of what has happened here.
‘‘If it is not going to be right, you want them out sooner rather than later.’’
Galpin said Xero’s annual sales were about what it had expected and the share price drop probably reflected a feeling there was nothing to get too excited about in he result.
Xero’s loss was higher than forecast and ‘‘we didn’t get the positive surprise you might have been hoping for in the British market’’, he said.
Forsyth Barr did not expected Xero to start growing strongly in the US before the middle of 2017 at the earliest, Galpin said.
But Drury said Xero was delighted with its achievements over the year, saying it had ‘‘emerged as the cloud accounting leader’’ in Australia, New Zealand and Britain.
Xero said in commentary that there were signs of progress in the US after it established a new management team led by its newlyappointed US president Russ Fujioka. During the second half of its financial year, customer growth in North America was three times greater than in the first half, it said.