Skip to content

Xero announces $NZ100 million ARR

We reported a huge milestone for our team today as we hit $NZ100m in Annualized Recurring Revenue (ARR).

What is ARR?

ARR is a key metric for SaaS companies. It is the most recent month’s revenue multiplied by 12. Essentially, if we got no more customers in Xero, we’d bill this amount over the next year.

You can check out the media release here: Xero hits NZ$100m Annualised Revenue

$100 million ARR for Xero

Why is $100 million ARR so important?

When you start a company, $100m of revenue is one of the big milestones you dream of. Very few startups ever get there. $100m is a ‘real’ business. At many industry events we’d hear “we need to create 100 more $100m businesses.” All of our team are thrilled to be one of the very few companies to get there.

Most of the SaaS companies we follow are in the Enterprise space where they sell a smaller number of high value deals using traditional software selling models. You simply can’t do that in the small business market. Xero is a hybrid. A combination of complex business software (like SAP, Salesforce or Workday) coupled with a more consumer market like – high volume sales.

So the significance for achieving $100m quickly is an important validation for our business model and demonstrates Xero is one of very few software companies to have cracked the code of selling into the large, fragmented small business market. What’s also significant is that we have achieved these revenue numbers building a business primarily outside the US domestic market.

To date we have solely focused on customer acquisition to achieve our revenue. We didn’t use a freemium model as we correctly believed that small businesses will pay directly for quality software solutions that improve their business. While we’ve focussed solely on customer acquisition our healthy ecosystem of 300+ add-on partners have successfully leveraged our customer base and channel to build their own successful businesses without massive sales and marketing spend. This confirms our belief that once you have created a relationship through accounting software, there is plenty of opportunity to grow revenue from existing customers by adding new products and services while making life even easier for them. As we complete core accounting we can turn our mind and resources into many additional services to create new revenue opportunities.

There is a massive investment to build these types of businesses and it doesn’t seem that long ago when were excited to get our first 1000 customers. It was only back in 2009 our revenues were just under $1 million. In 2010 we did $3 million. It wasn’t long ago we hit a million a month which was another big day. It’s very gratifying to see that massive multi-year investment beginning to deliver.

The scary thing is it is still so early. We’re thinking five to 10 years out and over the last year have added so much fantastic new talent into the business. We don’t see barriers for us to grow to a billion of revenue over time.

A huge thank you to our team who have worked tirelessly for seven years. Thank you to our partners and customers. We know we still have so much to do but with your support we are able to keep investing.

Our most exciting work is yet to come.

 

Read more about Company News, ARR

 

19 comments

Campbell Yule
16 June 2014 #

Fantastic news! Great work and congrats to the entire team

Ed Henry
16 June 2014 #

Fantastic!
I have just celebrated a year with my new business as a Xero partner and it has been an awesome ride. From the outset the excitement of partnering with Xero has given me a whole new lease of life and to be able to celebrate these awesome milestones along with probably the most exciting company in the world is a real high.
Thank you Rod for your amazing vision for Xero and thank you team both staff and partners for the ability to make this all happen!

Sim from Vend
16 June 2014 #

Congrats Rod and the Xero team. This is exciting news for Xero, and also its Add-on community – showing what can be achieved with beautiful cloud software designed to help small businesses do amazing things. As always, you guys are inspiring the next generation of awesome SMB apps!

Cheers, Sim – Vend Community Manager.

Thiva
16 June 2014 #

Great news! Looking forward to the blog post for $1B milestone in the near future!

Greg Tuckwell
16 June 2014 #

What a great achievement. Congratulations to all the Xero team for achieving this milestone and I look forward to the future as you continue your journey.

bain
16 June 2014 #

Great news. Congratulations to Rod and team at Xero. Go you good things. Go kiwi. Go go go!

Patti Scharf
16 June 2014 #

Congrats on the huge milestone!

Peter Neal
16 June 2014 #

An awesome milestone on the way to the SaaS future – congratulations.

Ben Reid
16 June 2014 #

Wow. Huge achievement in just 7 years. *Admiration*.

Elizabeth Salter
16 June 2014 #

Wow!

Ricardo
16 June 2014 #

Congratulations! Well Done. Keep up the great work. Based on the your article, The business is gaining so much momentum in the last few years.
I am a shareholder and happy to see the result.

Ricardo
16 June 2014 #

Congratulations! Well Done. Very happy to see the result. Keep up the great work.

Ricardo
17 June 2014 #

@ Thiva. $1B milestone would be great but one step at a time. Next one, it should be 200M milestone in the next few months :)

@ Rod In your 31 Mar 2014 Update, the number of UK customers were 47,000. Why is it only over 50,000 in May? Also, any update about the number of customers in the USA. It was 18,000 customers in Mar 2014. I am surprised by the growth of customers in Australia from 109,000 in Mar 2014 to over 120,000 in May 2014.

I am hoping Xero will significantly increase its US and UK market share this year.

Thanks for all your hard work.

Michael Mori
17 June 2014 #

There is one person that really understands what Cloud Technology can do for small business, and that same person also knows how to build a company that can deliver that technology at an affordable rate. Yes, your team probably do all the hard work nowadays, but the vision, belief and drive come from you Rod, we all salute you.

Aidan Malone
17 June 2014 #

Congratulations Xero, fantastic work! Exciting times ahead for Xero, I look forward to seeing the new features you guys will add to the already excellent software.

Rod Drury
17 June 2014 #

@Ricardo we give full updates at our half and full year results but in these early stages we do sneak the marketing milestones in as they are useful in each of those markets.

We are already number one online accounting in the UK. And we are focussed now on building product and our senior team in the USA. Like the other countries it will take a while but we’re pleased with progress.

Jamie Shulman
18 June 2014 #

Congratulations Rod and everyone at Xero! This is a phenomenal achievement and is fantastic for the Xero Add-on community. This clearly highlights the value & power of great design coupled with highly functional SaaS cloud software. Huge win for small businesses.

Looking forward to continuing the ride! Onward!

Best,

Jamie & Jamie and the entire Hubdoc team!

Tim
18 June 2014 #

Thrilled hearing you’re #1 online in the UK, in addition to your fabulous progress in Australia and NZ. Keep up the good work!

Ricardo
18 June 2014 #

As Sales figures continue to grow, Just a gentle reminder to keep an eye on the costs too. I have read a lot of company results and the main reason for their profitability is they are on constant guard of their expenses. I know the principle “Inorder to make money, we need to spend”. Congratulations again.

Add your comment





We welcome all feedback but prefer a real name and email address.