Xero set to hire as sales near $300m
Xero boss Rod Drury says a change is taking place on its share register as early backers take profits and institutional investors move in.
Xero shares jumped 6 per cent to a two-year high during lunchtime trading yesterday, after the company announced its operations had became cash-flow positive during the second half of its last financial year.
The measure does not take into account the cash the company is still investing in its software.
Xero reported a $69 million loss for the year to the end of March, down 16 per cent from its $82m loss the previous year.
Revenues climbed 43 per cent to $295m, from $207m in its 2016 financial year.
Drury said Xero’s share price jump – which added $160m to the company’s $3.2 billion market value – was a reward for Xero delivering on a strategy shift it announced two years ago, when it shifted away from a singular focus on growth over profitability.
Becoming operating cash-flow positive sent ‘‘the right signals’’, he said.
‘‘Passing those milestones means we are starting to see the [share] register change. The early investors who have done very well are rebalancing their portfolios and [shares] are being picked up by larger funds that want to see stability but which also want to be exposed to global growth.’’
Investors did not want to see Xero ‘‘swim to the safety of the side of the pool’’, he added. ‘‘They want to see us keep growing.’’
Xero had 1700 staff and numbers were likely to grow between 300 and 500 this year, he said.
In keeping with past practice, Xero did not release any new financial forecasts with its annual result. Drury said that was more likely mid-year, around the time of its annual meeting.
Forsyth Barr had forecast a $68m annual loss on sales of $307m in a research note issued last week. Drury said the revenue difference was the result of currency movements.