Best Growth Strategy & Most Improved Performance
Cloud-based accounting software firm Xero, nearing its 15th year of operating, sees itself as a catalyst of change for small businesses as it continues its impressive growth.
Craig Hudson, managing director of Xero New Zealand and Pacific Islands, said the Covid pandemic showed the importance of moving to the cloud to complete daily tasks.
“Over the past six months, we have supported small businesses and encouraged them to adopt technology on trust. Our branding connection and advocacy in the market has been crazy. We have become a coach in the cloud.
“By using analytics and data, we are able to overcome businesses’ uncertainty, fear and anxiety and provide insights and security for their future. We can add a portfolio of products to solve their daily tasks,” said Hudson.
“If you want to make a loan application, then just push the (Fast Capital) button. Cash flow is the main problem for the small businesses, and we can speed up payments, if they use the Pay Now button. Payments will take 14 days instead of the usual 28 days and this cash can be reinvested back in the business.”
Xero, New Zealand born and bred but now listed on the Australian ASX, continues to grow from strength to strength. It recently reported its halfyear 2021 result, showing revenue increased 21 per cent to $409.8 million, operating earnings (EBITDA) climbed 86 per cent to $120.8m, and net profit reached a record $34.5m.
Since it moved across the Tasman to the ASX market in February 2018, Xero’s share price has soared NZ$100 and is currently trading around A$130 (NZ$137). It is enough for Xero to win the Best Growth category in the Deloitte Top 200 Awards.
Top 200 judge and independent director Jonathan Mason said Xero is one of the leading technology success stories in Australasia with leading market positions in New Zealand, Australia and the UK. “Its success in this highly competitive industry has been driven by product innovation backed by country-specific sales efforts in its key markets.
“Xero has managed to achieve close to 30 per cent annual sales growth with a steady increase in profitability and high credibility among analysts who cover Xero.”
Operating with a staff of 3000, Xero has grown its subscribers to 2.45 million, an increase of 19 per cent in the six months ending September, and it spent almost $140m on product development.
In New Zealand, Xero increased subscribers by 13 per cent to 414,000 with revenue of $64m. Australia crossed a milestone with 21 per cent increase to 1.01m subscribers producing $184m revenue, the UK has 638,000 subscribers worth $107m, North America 251,000 and $29m revenue, and the rest of the world 136,000 worth $27m.
The Australian Taxation Office Single Touch Payroll initiative and the roll-out of JobKeeper stimulus payments by the Australian Government contributed to continued strong demand in cloud accounting across the Tasman.
Hudson said New Zealand had a net growth of 22,000 subscribers for the first time since 2017, and Xero has between 55 and 60 per cent of the small business market, for companies with up to 20 staff.
“We are incredibly grateful that 13 years of hard work is paying off and we can concentrate on the problems being encountered by small businesses. We want to encourage the businesses to use a multitude of technology to help their lives.
“Xero is racing to get 80 per cent penetration in the New Zealand market and to onboard as many accountants and bookkeepers as we can. We have been talking to some of them for 10 years and they are saying ‘I’m ready now’,” said Hudson.
Xero now offers an ecosystem of more than 800 third-party apps and 200-plus connections to banks and other financial partners. Small business owners and their advisors have access to real-time financial data anytime, anywhere on any device.
This year Xero was included in the Bloomberg Gender Equality Index and recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications.
Finalist: Bunnings
Household hardware retailer Bunnings Warehouse hardly missed a beat during the Covid-19 crisis, rolling out digital initiatives to keep their Do-It-Yourself and trade customers satisfied.
When Covid struck, Bunnings quickly advanced plans and rolled out click and deliver and contactless drive and collect services, as well as a product finder app. For commercial customers, it introduced a digital selfcheckout option via mobile. It also has an online marketplace, Bunnings MarketLink.
Jacqui Coombes, director for New Zealand and group human resources, said the team of 4500 has done amazingly well working together over the last few months. The team focus has kept the business going through the Covid crisis.
“We went online in the third week of the first lockdown — it was new to the team and they rose to the challenge. We were categorised as an essential business but could sell only certain products. That was tricky but we did what we could and I’m proud of what we achieved,” said Coombes.
Bunnings, established in Western Australia in 1886 and opening its first warehouse in Melbourne in 1994, has continued to grow in the rapidly changing environment.
For the year ending June, the retailer increased revenue by 13.9 per cent to $14.99 billion, representing total store sales growth of 14.7 per cent, and operating earnings before tax (EBITDA) by another 13.9 per cent to $1.85b. Bunnings has experienced five-year compound annual growth rate in revenue of 8.5 per cent and EBITDA of 10.5 per cent.
Across New Zealand Bunnings has 46 small and large format stores including trade centres, and employs more than 4500 team members. It has closed 10 small format stores in the last 12 months, incurring about $70m costs for those moves and for rolling out the digital programme.
Judge Jonathan Mason said Bunnings has experienced impressive revenue growth over the past 10 years both absolutely and relative to key competitors.
This is through a combination of picking great locations for its stores, developing an extensive selection of inventory for its retail and wholesale customers (it stocks more than 45,000 products), and being highly competitive on prices and costs, backed by strong marketing campaigns through multiple media channels.
“Despite the business disruption due to the Covid lockdown, Bunnings has posted another strong performance in 2020, taking advantage of the increase in home renovations, and making it easier to buy products through the deployment of a click and deliver service and an ecommerce platform,” Mason said.
Finalist: Beca
Professional services firm Beca, founded by returning serviceman Arthur Gray in 1920, has been celebrating its centenary this year — and it just keeps growing into an international force.
Auckland-based Beca now has 3500 staff, representing 75 different professional disciplines, operating out of offices in eight Asia-Pacific countries, and they deliver projects digitally to another 45 countries around the world.
Beca has just picked up its first global client, building a common software platform for one of the world’s largest manufacturing companies at its 270 production plants in 100 countries. The platform manages and co-ordinates the capital investment going into the plants, and Beca provides support from Melbourne and Auckland, as well as a help desk in Singapore.
“There is a big increase in interest globally for delivering products and services digitally,” said Beca group chief executive Greg Lowe. “When the lockdown occurred and the computers and screens were being emptied from the offices for home, I was a bit concerned whether our technology and internet providers would hold up.
“We had 3500 people in eight countries working from home. How were they going to work together on design, verification and delivering products to clients? We learned a lot about having resilience and keeping teams connected, and it worked really well,” Lowe said
Judge Jonathan Mason said Beca has been a fixture in the New Zealand business community, with the majority of the company owned by employees in the highly-skilled markets of infrastructure and building.
Even as the lockdown disrupted Beca’s ability to travel and visit its projects in New Zealand, Australia and Asia, it was able to switch to virtual project engineering and has posted strong growth in sales and profitability for the past two years both absolutely and relative to its key competitors.
Beca, which has recently expanded with full-service offices in Palmerston North, Nelson, Queenstown, Dunedin and Hawke’s Bay, has reached annual turnover of $600 million, with 30 per cent of the revenue earned offshore.
“We’ve pretty much grown 15 per cent year on year since the early 2000s,” said Lowe. “Any one year we are completing about 5000 projects for 1100 clients.”
He said Beca is seeing growth in professional services for the defence sector in Australia and New Zealand, and also in the health and education sectors here in New Zealand.
“We are also seeing clients taking a more holistic approach and integrating spatial, transport, social and health planning, such as building a whole new city at Drury.”