Xero posts wider loss, eats into cash buffer to ramp up global growth

by BusinessWire.co.nz

Monday, 17 May 2010

Xero reported a wider full-year loss as it spent more to ramp up global growth.

The net loss was $8.45 million, or 10 cents a share, in the 12 months ended March 31, from a loss of $6.75 million, or 12 cents a year earlier, the company said in a statement. Sales rose 229% to $3.2 million.

Operating costs outstrip revenue by about three times at Xero, which is optimistic it will break even in 2011. It raised $29 million in new capital last year, providing the funds to meet its outgoings, which outstrip sales during its growth phase.

The company has attracted some high-profile backers, including cashed-up TradeMe founder Sam Morgan and Craig Winkler, a founder and former CEO of Australian rival MYOB.

Net cash used for operations rose to $6.8 million in the latest year, from $5.1 million a year earlier. Its cash and funds at the bank stood at $21.4 million. Operating expenses were $12.87 million in the year ended March 31, reflecting its expansion, with headcount rising to 90 from 56 during the year.

As a 'growth' company, Xero's revenue is dwarfed by its market capitalisation, which stands at about $139 million. The shares fell 0.6% to $1.57 on the NZX today and have climbed 5% in the past year.

Comments from our readers

On 19 May 2010 at 4:07 am Rhys Barlow said:

Perhaps it is time for the Board to look at its bottom line result now that the global aspirations of its founder have been accomplished...original shareholders will be wanting a return very soon so profit has to start featuring on the Board's radar screen rather than be led by the nose by the very persuasive Rod Drury.....

On 19 May 2010 at 4:51 am Mark Lawton said:

Xero's global market is so huge it is merely dipping its toes into the water. I don't think Rod Drury will be at all satisfied with Xeros international growth. With the speed & excellence of its implementation of new technology, Xero may be at the start of an exponential growth curve.

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