Online accounting software company Xero has reported a $3.7 million net loss after tax for the six months ending September 30.
For the same period last year, Xero lost $4.7 million (and for its full-year lost $7.5 million).
Revenue increased to $7.9 million - more than double the $3.8 million for the six months to September 30, 2010 (full-year revenue was $9.66 million).
Xero said it had $11.4 million in cash and equivalents, against $16.6 million for the year-ago period.
In a separate statement, the company said 40% of its revenue was now coming from off-shore. After New Zealand ($4.6 million), Xero's largest market was Australia ($1.8 million) followed by the UK ($0.5 million).
Xero said it had 51,300 paying business customers.
The interim result was not audited.
On September 21, Xero said it had 50,000 paying customers.
On July 21, at its annual meeting, the company abandoned its goal of breaking even by the end of this calendar year.
Chief executive Rod Drury said it made more sense to focus on growth.
Xero shares [NZX:XRO] were up 3.57% to $2.90 in early afternoon trading. The company's shares have a 52-week range of $1.96 to $3.16.
Comments and questions
All credit to the Xero team - revenue building and loss falling but it is certainly taking its time. I am starting to believe in the story but still think you have a while before the revenue can justify the current market capitalisation so at this stage I still prefer Diligent. I would like more evidence that +ve cashflow can be achieved as I fear the push for growth will always be your focus. Any comment from Rod or the company ?
Xero is the best accounting system out. Do the comparison with all the others and you will see it is the best by price and functionality. Well done. May you continue to grow and prosper.
Garbage
Another poor result and time for Rod Drury to step down
Agree
Time for fresh blood and a new direction
Fantastic result. Going from strength to strength.
If you're waiting for the revenue to justify the market cap before buying shares then I think you'll be waiting a very long time.
While the company continues to grow so quickly the share price will reflect the future. It has been priced for the future since IPO at $1. Based on performance to date, market potential and a bit of optimism I'm one of the believers pushing the price up sorry.
THe package itself is pretty goof fro lower end SMEs and the new reporting packages make it a good NFP and low-med SME management reporting tool. They have some clever and maturing software hook ins.
One of the biggest benefits of Xero is that they have lit a fire under MYOB to compete online and on desktop.
As a small business owner, i still don't get how great Xero is. I tried it for a while, but it was more complicated than I needed. I let my accountant deal with it all as I just got it wrong again and again. I'm no accountant, and xero didn't really solve that for me.
Back in May Xero was caught out in NBR for being misleading with respect to its annual results.
Back then it proudly announced a $900,000 reduction in net loss compared to the previous year.
Later it emerged that a change in accounting policies with respect to how it amortised software costs accounted for $880,000 of this improvement.
This time Xero released a market announcement which noted that its losses for the six months to 30 September 2011 were $3.7m compared to $4.7m last year. Again it makes no mention of the impact of the change in accounting policiies on this reduced loss.
As software costs at Xero have gone up its amortisation costs will also have gone up. It is almost certain that once again the improvement in performance compared to last year is largely due to this same change in accounting policiies. But Xero does not highlight this or quantify the impact of the change. Instead it once again makes out this reduced loss is due to operational improvements.
Eventually the impact of this change will disappear. But in the meantime Xero should be transparent with how it reports its results. At the moment it is not.
Can NBR please ask Xero what impact this change in accounting policies had on the results just reported.
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