SPP completed

Our Share Purchase Plan was completed this morning. We were thrilled to raised a further $15.6 million from existing shareholders. The full announcement is here.

SPP takes Xero capital raised to over $35m

Online accounting software provider Xero (XRO) has raised a further $15.6m through its Share Purchase Plan (SPP), bringing the total capital raised in recent months to $35.6m.

Following a $20m private placement in February, the SPP was initiated to enable existing shareholders to increase their shareholding at the same price of $2.75.

The SPP exceeded the company’s expectations – more than 50% of eligible shareholders participated, investing on average in excess of $10,500. Following the SPP, shares issued will be 103.6m.

“This is a strong endorsement of our growth strategy from shareholders,” says Xero CEO Rod Drury.

“Xero is emerging as the leader in global online accounting. There are over 30 million small businesses in our current markets. Having achieved over 100% annual compound growth for the last four years, a million customers looks attainable. With substantial funding in place the company is uniquely positioned to support large scale growth which will see Xero become a significant global company.”

Xero is also pleased the NZX has provided an efficient mechanism for raising growth capital from domestic and international investors.

It was very important to us that all shareholders had the opportunity to participate on the same basis as our recent placement and we again thank our valued shareholders for their support.

 

6 Comments

Anna
March 8, 2012 at 12:47 pm

Congratulations on the successful capital raising.

Anja
March 8, 2012 at 1:53 pm

Thank you for letting me have more shares like the big boys! from a little fish

Michael Porter
March 8, 2012 at 5:06 pm

Great result. De-risked, opportunity opening up, ahead on the technology curve, no major competitive move seriously challenging the present strategy.
So…
How many businesses are available in other markets once you hit the gold seam in your existing ones…
Are you seeing new businesses or individuals utilise Xero that weren’t using any previous application (moving from excel / cashbook), so your market potential size actually exceeds 30m (whether from business or personal).
When are you going to target >3% market share in 4 primary markets !
What’s could be the upside potential in the longer term – what’s the size of the prize?
How does that translate to equity value ?
questions questions and more questions. These are rhetorical but might stimulate a few grey cells amongst the investor community…
Great that you’ve got the facility to capitalise on all of the above, merely execution to go ! Looking forward to seeing updated user numbers given noise levels in Australia and UK markets and the fact it appears Xero slows down mid morning when Australia comes online ! (telling with what would appear to be recent ramp up in Australian progress…).

Rod Drury
March 8, 2012 at 9:13 pm

Some good questions Michael

How many businesses are available in other markets once you hit the gold seam in your existing ones…
>> lots of tens of millions.

Are you seeing new businesses or individuals utilise Xero that weren’t using any previous application (moving from excel / cashbook), so your market potential size actually exceeds 30m (whether from business or personal).
>> Over half (last time we checked) were first time users of accounting software. We’re very pleased as we seem to have lowered the entry barriers to using accounting software. Microsoft Excel is still the most used accounting software in the world!

When are you going to target >3% market share in 4 primary markets !
>> We are targeting that now but it takes a while.

What’s could be the upside potential in the longer term – what’s the size of the prize?
>> Someone will create a new multi-billion global player in this space. We’re going to have a good go at it.

How does that translate to equity value ?
>> We’ve actively talked about a million customers which feels quite doable. Hopefully that gives our investors something to build a picture from.

questions questions and more questions. These are rhetorical but might stimulate a few grey cells amongst the investor community…

Great that you’ve got the facility to capitalise on all of the above, merely execution to go ! Looking forward to seeing updated user numbers given noise levels in Australia and UK markets and the fact it appears Xero slows down mid morning when Australia comes online ! (telling with what would appear to be recent ramp up in Australian progress…).

>> yes good noise, but that’s just the start of the journey. We need to get accountants with their first few customers, then trained, and then using and recommending. It still takes time but we’re excited that the awareness is growing and our challenge is to convert that to real usage.

>> We have provided guidance that revenue will double for this year but it does feel like things will really take off soon. We are all very aware internally the loads have jumped up significantly so the the team is working hard on that right now. You should be starting to see improvements but we do have a big program of work behind the scenes upping capacity.

Cheers

Rod

Gayle Buchanan
March 9, 2012 at 1:33 pm

There is a lot going on in the ‘plumbing’ of xero that we as partners don’t see and sometimes forget (sorry!) know that Tokes and the team will have steam coming out their department 24/7 to get the loads and server space in place before we know it.

Super congrats on the capital raised to help partners around the world and ultimately the economies (so nice to hear good news).

@Anja – ditto from a fellow small fish!

Kelvin Hartnall
March 13, 2012 at 2:25 pm

Congratulations on your momentum in Australia. I’ve just noticed that the number of Australian accountants listed in your directory of qualified partners has just surged past the 500 mark! Still a lot of growth to go to get the same penetration as New Zealand, but your strategy in Australia obviously has legs.

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