Despite tripling its revenue, Wellington accounting startup Xero continues to post a net loss. Nonetheless, it's about to expand into the US and Australia, and is forking out to acquire an Aussie payroll company for starters.
Wellington success story Xero has announced plans to acquire Australian payroll company Paycycle, which it has been working with for some time, for nearly $2 million.
The deal amounts to A$1.5 million ($1.9 million) and is comprised of A$500,000 in cash and A$1 million in Xero shares.
The online accounting startup founded by entrepreneur Rod Drury also announced its customer base had grown to 45,000 since March, a 25 percent increase.
He says Paycycle will fit well with what Xero has to offer. Feedback from Australia shows Xero needs to provide a full payroll system to win market share, he says.
Paycycle is already synchronised with Xero's software. Founded in 2009, the Paycycle system manages payroll, leave and tax.
Its software will continue to be sold until next year when it becomes fully integrated with Xero.
At its annual general meeting, Xero also reported tripling of its revenue to $9 million. Despite this, it posted a net loss of more than $7 million. In 2009 it projected to break even this year. However, it says it is pursuing a "growth agenda".
Other announcements included the appointment of a new managing director for the company's US operation to begin in November, and an imminent partnership with New Zealand Post to improve small business productivity with digital postal services.