Xero is eyeing growth potential in Asia, with the exciting prospects seen in Singapore, Hong Kong, and the Philippines, among others.
Victoria Crone, managing director for Xero (New Zealand and Global), sees a strong fit between Singapore SMEs and Xero’s offerings, given the city’s strong business-centric ethics, particularly the government’s focus on reducing business barriers.
Xero has just announced a partnership with KPMG in Singapore, combining Xero’s cloud-based accounting software with KPMG’s business expertise. Singapore is one of the world's wealthiest nations, with a per capita GDP of over US$55,000 against NZ's US$41,000.
Eye on Asia
The move also makes KPMG Xero’s first Platinum Partner in Asia – and the first outside the four main markets of New Zealand, Australia, United Kingdom and United States. Xero also has similar alliances with KPMG in UK and New Zealand.
What this means for Singapore enterprises and startups is, through KPMG, they can have access to select online accounting and tax services at affordable prices to track their business performance and cash-flow online in real-time. They will also have access to business expertise from KPMG professionals, when they need it. Services include accounts preparation, bookkeeping, payroll, GST and filing of corporate tax returns.
Crone says: “Cloud adoption will increase significantly over the coming years as the Singapore Government and IRAS (Inland Revenue) invest in reducing barriers for small businesses operating in the market. We're certainly seeing that Singapore is progressive in addressing the need to stimulate the small business sector and ranks #1 globally in terms of ease of doing business. Singapore is a strong service-based economy which fits well with Xero's offering and I expect that these factors will see good growth within the start-up sector.”
Selling the cloud accounting story
Asked about the challenges of the Singapore market, Crone is confident Xero will be able to address local nuances, much like what it is doing in the US, but believes the fundamental tools are in place for SMEs to customise to the product to their needs.
“We have global teams who support our Singaporean business customers so our challenge is to continue to build more awareness to the benefits of cloud accounting in a region that seems already receptive to the global shift towards the cloud,” she adds.
Xero is used by more than 400,000 customers in over 180 countries globally.
“And the speed at which small businesses globally are adopting Xero show they want accounting software that is beautiful, easy to use, and can be operated from anywhere, on any device,” Crone says.
US challenges, UK opportunities
Xero shares were last year under heavy selling pressure as analysts were less than glowing in their assessment of Xero’s US operations. The company’s share price dipped to $15 from a high of $45.99 in March 2014. But the shares have been rebounding, trading around $24 just before 2 pm on Friday, but still well below the dizzy heights of over $45.
Most analysts polled by Reuters has either a Hold or Underperform rating on Xero.
In February, the company announced investments from Silicon Valley venture capital company Accel Partners ($132.9 million) while Matrix Capital Management topped up its investments with $14.3 milion, according to the NBR, contributing to a short-term share price spike.
Rod Drury, founder of Xero, was quoted in the NBR saying the company did not go seeking for the money but took the offer as it was able to price its shares at a premium. Xero is exploring using the extra cash for a US IPO or to fund the acquisition of smaller software as a service companies, according to the NBR.
Drury was also reported saying Xero would be growing its market share in the UK where it is already a dominant online accounting services provider.
In the US, its focus would be on attracting small businesses directly in the US, departing from the model where it relied on accountants to access subscribers.
Drury has been reported saying Xero remains committed to the US market despite calls by Wellington-based Woodward Partners to abandon its US pursuits, deemed costly for shareholders.