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We’re growing

Next week is a huge event for us, our local #XeroCon where we have over 400 accountants and bookkeepers joining our team in Auckland. As a public company we’re subject to continuous disclosure of material information, so in order to talk freely next week we’ve just updated the market on some key metrics.

You can see the release here.

The key points and some additional commentary are as follows:

  • Operating revenue for the full year ended 31 March 2012 will double 2011 (which was $9.3m).
  • Committed Monthly Revenue (CMR) is now $1.75m or $21m annualized. We’re delighted that 50% of CMR is from offshore markets showing that we becoming a truly global company.
  • Paying customers using the Xero business software worldwide exceeds 60,000. There are 240,000 user accounts.
  • There are over 3,300 accounting firms now using Xero. The accountant and bookkeepers channel model, proven in New Zealand, is showing similar early signs of success in offshore markets.
  • The company now employs 170 staff across four countries. The US sales office has been established with six staff in San Francisco.

We know we still have a lot to do, but we’re firing on all cylinders – and still hiring. We still think we’re just at the beginning of this ride and we have so much more we want to do.

Huge thanks to our customers and especially to our hard working team to continue to deliver such outstanding growth.

Any questions please fire away.  We’re always happy to share experiences and we’re still learning.

 

Read more about Company News

 

26 comments

Campbell
26 January 2012 #

Great to see the numbers increasing. I expect the next release will show more offshore income than NZ based. Thats when the acceleration will really get going.

Chris
26 January 2012 #

Sounds great and nice to see the blog back on form!

Patricia Dearnaley
26 January 2012 #

Well done and well deserved

Simon Crosland
26 January 2012 #

Excellent news! Will this hiring help speed up the fulfilment of the many Xero Personal feature requests that your users have been clamouring for, such as automated feeds and multi currency?

Jeff Nutbeem
28 January 2012 #

Congratulations on all that income. All the more surprising that you have built this on accounting software which doesn’t produce a remittance advice when paying a supplier, nor allows for multple cheques to be entered prior to banking them. And those are just two obvious omissions which spring to mind. Nice work if you can take 21m whilst the product is work in progress.

Rod Drury
28 January 2012 #

Hi Simon and Jeff, yes still lots to do.

The challenge with building horizontal accounting software is there is simply a massive amount of functionality to build to be all things to all people. We’ve written often before about our process of prioritizing features (which we do based on the great feedback), which has led to surprising things we haven’t done yet.

All accounting software has bits that they do better and worse than all the others. The stuff mentioned we know about and we’ll get to. It frustrates us as well that we haven’t done everything yet.

We hit some of the most requested items in the last few releases and the next few and this year want to nail most of the biggies. In the same time we’ve been doing some massive behind the scenes projects which are important strategically.

So yes we are very pleased with the numbers while we are still a work in progress, and know we have a lot to do.

Anyone wants to come and help … http://xero.com/careers

Gayle Buchanan
30 January 2012 #

Hi Rod, really looking forward to xerocon and catching up with a heap of advisors … congrats on the global growth and all that is does for the nz economy – major high 5 and see you at the end of the week

Jeff Nutbeem
30 January 2012 #

So Rod, if you acknowledge that it is work in progress, then perhaps you should make that clear on your website. I also then wonder if there could be a discount on the subscriptions prior to the product being finished?

“The stuff mentioned”? A remittance advice? How much of a surprise should that have been?

Graeme Leo
31 January 2012 #

Jeff,
As software developers ourselves and with an add-on for Xero but no other affiliation, I think Xero are no less attentive to customer feature request then any other vendor, they are somewhat victims of there own success and accelerated growth. As a company producing an all singing & dancing accounting solution it isn’t instant nirvana. It takes time and it is always a matter of compromise.That is why software companies have trial products/periods and there is a responsibility on people to fully trial a product to ensure that it satisfies their needs. If it doesn’t then find an alternative product.

Michael Porter
31 January 2012 #

Jeff,
A list of product features describing functionality would have thousands of items.
Xero has ticked (95%?), the majority of which are ahead in presentation and functionality of their competitors products. In my world that’s the reason why they’ll book $21m, 60,000 customers and counting presently believe the benefits outweigh the (relatively) minor gaps in functionality. It’s clear they’re investing in further product development / differentiation and as users we’ll benefit from that investment profile. Some of the difficulties of just solving everyone’s wish list brings credence to the view that it’ll be difficult for any competitors to close the significant (and growing) product gap. Not withstanding the above, agree that there are a few items on the ‘fundamentals list’ that support a higher priority and need to be closed down, but doesn’t justify discounting / or havng a pop at their revenue growth.

Rod Drury
31 January 2012 #

Thanks Michael and hi Jeff.

I’d just add that our core values are about being as open as possible. We try to be clear about what we do on our web site. We provide a free trial so customers can see exactly what we do, and we don’t make customers sign up to contracts so we have to earn their love each month.

We fully accept that we don’t have everything for all customers, which is why we don’t (yet) have a million customers but the plan is that we’ll gradually get enough features that we become compelling to a very large number of customers globally.

Completely acknowledge we’re not there yet and your strong feedback is useful and appreciated.

Rod

Braden
31 January 2012 #

Rod,

I dont understand how your boardroom gives the OK to Xero Personal ( @ $59 per year) vs focusing on XERO Business functionality? Whats the resource going in there whilst business customers with more long term and upsellable potential move on because of lack of functionality ?

I dont need to do my accounts in a coffee shop but I do need to let my suppliers know what I’ve just paid them. My suppliers would like to know as well

But well done on those achievements. Xero still feels sexy to me after many logins!

But ask me again in a month after we’re using the AP function fully. Can I redirect my supplier calls to your help desk lol

Rod Drury
31 January 2012 #

@Braden, great question.

Small businesses blur their business and personal expenditure so we believe they need a ‘front end processor’ to split out their money – which Xero personal does well.

Rewards on credit cards encourage this business/personal blurring.

Xero Personal gives us a brilliant tool for building a deeper relationship with banking partners. It allows us to push for automated feeds for example.

Xero Personal allows potential customers to get an inexpensive look at the Xero experience and gets them into a relationship with us.

You may recall that Mint sold to Intuit for $US170m so PFM is a very valuable space.

Xero Personal is a long term play but we believe it creates significant value for us.

Rod

Braden
31 January 2012 #

Rod,

I dont agree that small business blur their business & personal expenditure in this day. There are too many smart tools and banking options around that make it easy to keep expenditure separate. And anyone jumping on Xero that learns to code an invoice understands basic business & personal expense logic.

Gone are the days of the small business entrepreneur too busy making money to have the time to record it correctly.

But back to the core functionality question as I need your software to work for my business….No remittance Advices ?!?

C’mon Rod…should have been there from the start !

Apparently its been almost 2 years on the list…so long voting has closed!!

http://xero.uservoice.com/forums/144158-non-api-functionality/suggestions/1093019-add-remittance-advices-for-supplier-payments ?

Fail

How’d you & your team like to get 60,000 payments a month from all of us and not know what they are for ???

Jeff Nutbeem
1 February 2012 #

@Michael well I wonder which other products you are comparing against with your 95%. Pure accounting software maybe. But not in the market Xero is trying to compete in – appealing directly to small and medium sized businesses who want to do their own accounts. Because it simply does not have some basic functionailty.

Here are examples:

- The much vaunted remittance advice. A ludicrous omission for any serious accounts package.Did I test it would be there? No. Why would I? This is supposed to be a serious accounts package. Now i find out others have been asking for it for two years!?

- Practical credit control functionailty is pretty much non-existent. There are no standard letters (indeed there isn’t even a template for the email you send with an invoice). Re-send the emails in bulk? Sure, but have just found out that no audit trail is left in the invoice record. So you have no idea what you have sent any given customer when trying to chase money. You can, of course, wade through the tons of invoice copies which you have emailed yourself (provided, of course, you remember to tick the box to send them *every* time you do this).

- Here’s a good one which is also difficult to spot in testing. Two users are issuing invoices at the same time. The first one to finish gets the next invoice number! The unlucky person who finishes second has to *guess* which is the next invoice number in sequence, as the invoice number (according to support) is apparently only actually locked by the system on “save”. Either that or they have to abandon their invoice completely and start again – hoping that no-one else has starts and finishes another one before them. That’s not accounts Rod – that’s pretty basic programming.

- Nice to be able to attach a scanned image of a purchase invoice on the record. Don’t try to do that with a credit note though. Who tested that part?

- No generic/alternative email addresses to send invoices from. I run a company, I don’t want to send invoices from my own email address. I don’t want Fred or Bert to send them from theirs either, and receive replies back from customers to their personal address. we have had to put in all kinds of redirects and rules in our mail system to cope with this.

- Can’t hide or archive old inventory items?

- Can’t rearrange / insert invoice lines?

- No bulk recording of cheque banking. You have to manually add cheques up, bank them, wait for them to appear on the statement, and then reconcile them to receipt them. That seems to be the only way to deal with those awkward customers who inist on paying two invoices with one cheque.

- The search facility for contacts is woefully inadequate

- Online credit card processing?

I have been using Xero for three months now. I think it is very straightforward for pure accounting, which is where the fans appear to be. I, like many others I suspect, got it for its reputation. I tested the imports, checked the API, looked at the chart of accounts, figured out how we would use the products. I didn’t think so many basic issues would not be addressed.

So to be honest, I don’t find Rod’s answers on here particularly satisfactory, and am already weary of the politicians answer of “lots done, lots still to do”. Sorry, I am paying for this. I am also slightly tired already with the sycophantic way the acolytes worship at the altar, and go along with the “work in progress” mantra. I have changed to Xero from another online software package which has its own problems, but does have very good basic functionality. I suspect that if the two were joined together there would be a world-beating product. Until then I can’t easily change again at the moment, but will need more than the response here to keep my miniscule contribution to the £21m and stay long-term, and also to recommend the product.

It seems to me that this was a pure and simple accounts package, which I reckon probably statred life just as a bank rec tool. And that’s where the fans are. As competition has emerged, half-hearted attempts have been made to put in a business “front end” – for the functions of actually taking and spending money. But half-hearted they certainly are.

Chris
1 February 2012 #

@Braden, you said “I dont agree that small business blur their business & personal expenditure in this day”. I would sya that you obviously have very little experience in dealing with small businesses. As a small business accountant I can tell you with certainty that many small businesses blur personal and business expenditure.

Graeme Leo
1 February 2012 #

Jeff,
You moved to Xero from another online product, it appears subjectively, based on ” got if for its reputation”. Presumably your first choice wasn’t satisfying the need, so having found shortcomings in your initial choice, what testing did you do with Xero?.Your list is comprehensive and I recognise that some of the points you raise are interesting; as it happens we don’t use Xero and I can see that I would miss some of those facilities in moving to Xero, presuming your list to be accurate. One point that does intrigue me is your observation that the invoice number not being assigned until the invoice is saved. Why is that an issue?

Braden
1 February 2012 #

@Chris, yes I have no experience in dealing WITH small businesses providing accountancy services. All the experience I have is as an employee managing the finance function of small & medium sized businesses and that includes countless month ends. ( I’d say we have different interpretations of small & medium sized businesses). At the end of the day its about education to non finance staff and that’s applicable whether you are inside the business or outside looking in.

Small businesses with say 5 or more employees can use the Expense Claim function in Xero and that includes the owner as well. He (or his finance staff member) can sign off/approve employees expenses so he’s up with the play in terms of business v personal which is why I don’t buy the “blur their expenses” line and Xero’s play into Xero Personal when there is core functionality missing.

Maybe the blur happens with the one man band business but thats not Xero’s key target market or I hope its not because I will have chosen wrong !

Jeff Nutbeem
2 February 2012 #

@Graeme – I have set out the testing which I did. Some things are difficult to spot in testing. The one issuse I should have tested better was the credit control. Re the invoice number, as I have said above – if two people are issuing invoices at the same time then the system issues them the same invoice number. Whoever finishes first gets that invoice number number saved. The second person gets an error message helpfully telling them that the invoice number ALREADY SHOWING on the invoice screen is no longer available. So they have to either abandon the invoice completely and start again, or guess another number in the future sequence.

Graeme Leo
2 February 2012 #

@Jeff
Thanks for the update Jeff. As developers of CRM and working with various accounting software including Xero, our approach is to allow the invoice number assignment on saving and not display any number prior to saving. I can’t comment on the Xero approach, I’m sure they can advise. I can say that from a technical aspect, in our experience in interfacing software with their product, they are very capable in what they do. The point I am making is that it really doesn’t matter what the invoice number is. It’s just a number and as long as it is unique who cares. You might say that you need to record the number somewhere for reference, in our case you can see the assigned invoice number in the list of invoices after saving the invoice.
As to credit control I suspect that there are many ways of conducting that and all valid. For ourselves we rely on CRM to record the communication. You need to communicate with a person and typically accounting products are very average when it comes to managing communications whether it be making sales or collecting money. You need to have an oversight of the whole conversation when collecting money, possibly with multiple people making different commitments depending on who answers the phone. I’m not advocating CRM here, just drawing attention to the fact that accounting products aren’t designed for that purpose and if your organisation is of a size that credit control is a significant task, perhaps Xero isn’t the right product in this particular situation.

[...] In light of the big conference tomorrow Rod and the team have made some big announcements over the last week including a revenue update. [...]

JC
3 February 2012 #

Everybody’s world view is different. @Braden, a bunch of colleagues at my firm are eagerly awaiting bankfeeds in Xero personal as it is a both a great companion product to xero as well as a stand alone product. We want to use it personally and will recommend to out individual and business clients (but importing a CSV is just one step to hard at the moment).

And i definitely agree with @Chris, many/(most?) small businesses mix private and business expenses. Remembering that Xero’s small plan includes 5 A/R invoices a month with 1 employee…. This does hint at one of the target markets.

@Jeff – it sounds like Xero doesn’t meet your needs. OK, perhaps check back in another little while, and continue with the software that works for you. Xero doesn’t market itself as a complete CRM solution – i’m pretty sure that the homepage says “Beautiful accounting software”

>”I think it is very straightforward for pure accounting, which is where the fans appear to be.”

Yes, because that’s what it is…. Though I did stumble across this on their homepage http://www.xero.com/advisors/solutions/crm/

Jeff
7 February 2012 #

@JC Fully aware of what a CRM is. We use Salesforce. If you read it properly, instead of what you want to read to support your agenda, nothing I put in my list was anything to do with a CRM.

JC
14 February 2012 #
Kylie
11 July 2012 #

VERY DISAPOINTED – We have just moved over to Xero and am finding life VERY FRUSTRATING not being able to send out remittances. I am required to pay 100′s of invoices to one supplier and not be able to give them anything to say what the payment is for? I want to move back to Quicken….

[...] a blog post, Xero CEO Rod Drury says the company is ‘firing on all [...]

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