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Half year numbers

Posted 6 years ago in Xero news by Rod Drury
Posted by Rod Drury

This morning we put out our half year results.  As one of the few early stage public SaaS companies we know these generate a lot of interest and we’re happy to answer questions as much as we can.

You can read our market release here: Xero gaining offshore momentum

The main messages are:

  1. Recurring revenues are growing solidly.  Our last years full year revenue was $9m and so to do almost $8m in the first half is very pleasing. Monthly committed subscription revenue now running at $1.5m
  2. Growing revenue in multiple geography’s
  3. We’ve reduced a lot of risk in the business – still a lot of hard work to do of course, but a lot of startup, execution, product and market risk has been reduced
  4. Incumbents not executing
  5. Continuing to invest in growth and capability
Thank you to our valued customers, shareholders, partners and exceptional staff for trusting us with the opportunity to grow a significant global business.


Mike Porter
November 19, 2011 at 3.13 pm

Great results. Thanks. A few questions;

1. What’s your approx capacity for customer numbers with your current IT infrastructure?
2. To increase your server / hosting capacity to your stated target of 1m+ customers, is it a multi million dollar investment? ie significant in relation to your current cash reserves/ burn rate ?
3. Timing on US MD appointment – delayed from your earlier indication of an October release – can you indicate an updated release date?
4. Is Xero considering a referral model ?
5. As cloud based technology is proliferating on all forms of IT applications and is becoming widely accepted/adopted, and given that Xero would have been paddling upstream against inherent conservatism of the accounting channels to change – do you perceive a shift (this year) in accounting partner acceptance that could lead to a real point of inflection in growth rates?
6. Do you think the equity analyst community understands the monetised value of your customer base (given growth rates) and the SAAS model. If you had say MYOB levels of market share in Australasia alone, would your business model create a higher cash generation than the present desktop incumbents, thus your hurdle rate for customer volume growth is a lot lower than the current incumbents for a like for like value? Don’t yet see equity analysts having tuned into the Xero model and potential. Adhoc comments (recent NZ herald press) that they’ve missed the boat seem odd. Any publishable thoughts?!

Rod Drury Xero
November 19, 2011 at 3.34 pm

@Mike great questions

1 and 2. You would note over the years we’ve taken a number of infrastructure scale up steps. Just recently we moved to a new SAN and a while ago we did the huge work to move to a true multi-sharded database model which allows us to scale out horizontally. That was particularly difficult as we have many cross organization views. With that work complete we can add database servers every n-thousand customers so in theory can scale out to huge numbers.

We constantly monitor our hosting cost per customer between a certain range. As we drop down costs to the lower end of the range we invest a bit more (sawtooth type profile).

Fascinating to see Intuit into a 3rd day of rolling outages which shows that it is a nontrivial exercise to build and operate a financial platform at this scale

Summary – we continue to invest as customers grow but have done the big hard stuff to scale costs effectively and see downward trending cost per customer.

3. Visa issue – close now we hope

4. Yes – but focussed on Accountant channel now. Have lots of ideas for end user network accelerators once we get some resources clear ( if anyone wants to help)

5. We believe so. Still think we’re in the early adopter phase in most markets. 50,000 customers is a very small market share globally.

6. As a low liquidity stock the institutions can’t buy much of us so they can’t spend a lot of time on us. We have noticed that we’re being more warmly received now by the investment community and we hope that will grow. We do have a couple of firms initiating research.

It just takes time and as revenue continues to jump into the tens of millions you become a lot more real.

Again, good questions, thanks.


Justin Ward
November 20, 2011 at 7.46 pm

Hi Rod,
I am an Aussie user and would like the opportunity to invest in Xero. I have seen in previous comments the details of a NZ broker who would be able to assist but am unable to find the details. Would you be able help me with his detail?


Rod Drury
November 20, 2011 at 7.54 pm

@Justin – In theory your Australian broker should be able to make an investment but we have heard that it can be hard.

There is more information here: You can email who can assist – let us know if you have any difficulties.

Appreciate your support,


Justin Ward
November 21, 2011 at 12.05 pm

Thanks Rod…

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