Xero's latest annual results show a company that's growing rapidly around the world, but still a way off from hitting the black.
The cloud accounting software company posted $39 million in revenue (in the year to 31 March) in an announcement to the stock exchange, double what it achieved last year. However, this is accompanied by $14.4 million in overall losses – an 83 percent increase from the previous year.
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(Rod Drury, right, with Vend CEO Vaughan Rowsell, left, at the NZ Hi-Tech Awards where Xero won Hi-Tech Company of the Year)
Founder and chief executive Rod Drury makes no qualms about Xero riding the red line. Almost on any occasion he's been asked about profits, the technologist has thrown back the need to support long-term growth over short-term pay offs.
"If we stopped what we were doing we could drive to profitability by tomorrow, but this isn't what we want to do and our shareholders have voted with the share price," says Drury to Idealog earlier this year.
Much of this growth is an investment in staff. In the past year Xero almost doubled its payroll to 382 – along with it doubling employee entitlements to more than $30 million. A very generalised average would suggest the mean salary within the company is around the $90,000 figure.
The payroll is being strutted up thanks in part to the $78 million in cash Xero is sitting on, around $60 million of which was raised in capital investments last year from a Peter Thiel-backed venture capital firm. This isn't money for dividends, says chief executive and co-founder Rod Drury – this is money for growth.
The burgeoning army gives Xero more support for its expansion overseas. Australia is quickly shaping up to be the company's largest market, tripling the number of customers in the country and almost tripling the amount of revenue to $13.9 million. This is the largest revenue growth in any of the markets Xero operates in and $3 million below its current largest market New Zealand.
New Zealand $16.9m (2012: $10.3m) / 73,000 (2012: 47,000)
Australia $13.9m (2012: $5.0m) / 51,000 (2012: 16,000)
United Kingdom $5.5m (2012: $2.7m) / 22,000 (2012:11,000)
United States/Rest of World $2.7m (2012: $1.3m) / 11,000 (2012: 4,000)
Overall Xero now has 157,000 customers – just over double the number it had in March 2012.