XRO - Xero Limited

ASX Announcement this morning

Must be great news with INDICATED OPENING PRICE UP 3.11%



Motley reported
https://www.fool.com.au/2019/05/16/results-xero-posts-36-increase-in-revenue-to-nz552-8-million/
Results: Xero posts 36% increase in revenue to NZ$552.8 million
James Mickleboro | May 16, 2019

The Xero Limited (ASX: XRO) share price will be on watch this morning following the release of the business and accounting software company’s full year results.

In FY 2019 Xero posted operating revenue of NZ$552.8 million, which was an increase of 36% on the prior corresponding period. In constant currency this was an increase of 34% year on year.

This strong top line growth was driven by a 31% lift in total subscribers to 1.818 million and a small increase in average revenue per user to NZ$29.25.

According to the release, international net subscriber additions came in at 239,000 in FY 2019, which means they exceeded net subscriber additions from the ANZ region for the first time. The ANZ region accounted for 193,000 net subscriber additions during the 12 months.

The majority of the company’s international net subscriber additions came from the UK market, where the company reported a net increase of 151,000 subscribers. Over 100,000 of these came in the second half of the financial year.

This ultimately led to Xero posting a 32% increase in Annualised Monthly Recurring Revenue (AMRR) to NZ$638.2 million, positive free cash flow of $6.5 million, and a second half net profit after tax of $1.4 million. For the full year the company posted a net loss after tax of NZ$27.1 million.

Another key metric which continues to head in the right direction was Xero’s total subscriber lifetime value (LTV). This increased 36% year on year to NZ$4.4 billion, reflecting subscriber growth and gross margin improvement.

Xero’s CEO, Steve Vamos, appeared to be pleased with the company’s performance in FY 2019.

He said: “We’ve delivered a strong result with a number of major milestones for Xero including our first positive free cash flow result, and the UK adding more than 100,000 subscribers within a six-month period. Another important milestone was the positive bottom line result delivered in the second half, which demonstrates our improving profitability.”

He added: “As we head into FY20 and beyond, we’re making great progress towards our strategic priority of driving cloud accounting adoption globally. We have a genuine competitive edge by prioritising investment in growth, and partnering closely with accountants and bookkeepers, to deliver a human-centered technology experience for small business communities across the globe.”

Looking ahead, Xero intends to continue to focus on growing its global small business platform and maintains a preference for reinvesting the cash it generates to drive long-term shareholder value. It expects free cash flow in FY 2020 to be a similar proportion of total operating revenue to that reported in FY 2019.

Prior to today the Xero share price was up 36.5% over the last 12 months, just behind Altium Limited (ASX: ALU) with its 41% gain and WiseTech Global Ltd (ASX: WTC) with its 53% gain.

362

The market loved the news; up 10.75%

A quiet thread for a stock that has been performing very well.

Up 13% at one point today but seems to be fading now.

1st half results due out tomorrow.

It is interesting to read the full thread on this one, what a little ripper from N.Z.

Ferret said:

A quiet thread for a stock that has been performing very well.

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and into the S&P/ASX 50 Index – Effective 21 Dec, 2020
Action ..... Code ...... Company
Addition ... XRO ...... Xero Limited

The HY results in November had a noncommital Outlook

Xero is a long-term oriented business with ambitions for high-growth. We continue to operate with disciplined cost management and targeted allocation of capital. This allows us to remain agile so we can continue to innovate, invest in new products and customer growth, and respond to opportunities and changes in our operating environment. The continued uncertainty created by COVID-19 means it remains speculative to provide further commentary on our expected FY21 performance at this time

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... this hasn't impaired performance. Some insto(s) sold down, another one (or two) bought in:

Three year daily

Dona Ferentes said:

and into the S&P/ASX 50 Index – Effective 21 Dec, 2020
Action ..... Code ...... Company
Addition ... XRO ...... Xero Limited

The HY results in November had a noncommital Outlook... this hasn't impaired performance. Some insto(s) sold down, another one (or two) bought in:

Three year daily
View attachment 116298

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Excellent company. Great prospects.

Knobby22 said:

Excellent company. Great prospects.

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Arrrg ...was just thinking the same and going to buy a few long term shares: investor.
Last time i did that on msb,@Knobby22 was extatic as well and msb went within 2 days from $5 to $3.
We seem to share wrongly placed optimism

@Knobby22 and i should open the K-F short fund.
Short the hell out of Xero?
So now, i am seriously scared of entering my order.
Will so pass this week but i believe xero is becoming a quasi mandatory tool in Australia due to the ever increasing red tape on small business.super.payg,bas,ias...
Now impossible to manage on a spreadsheet or simple tool as rules change every 3 months or so

qldfrog said:

Arrrg ...was just thinking the same and going to buy a few long term shares: investor.
Last time i did that on msb,@Knobby22 was extatic as well and msb went within 2 days from $5 to $3.
We seem to share wrongly placed optimism

@Knobby22 and i should open the K-F short fund.
Short the hell out of Xero?
So now, i am seriously scared of entering my order.
Will so pass this week but i believe xero is becoming a quasi mandatory tool in Australia due to the ever increasing red tape on small business.super.payg,bas,ias...
Now impossible to manage on a spreadsheet or simple tool as rules change every 3 months or so

Click to expand...

Doesn't have the thrill of a biotech waiting on USA government decisions which can be effected by big Pharma.

I would not be at all confident that now is the time to buy after such an acceleration in price (so maybe that helps you execute) but the more the rules change, the more advantage this company has over old school accounting programs.

I have this - still holding it frog. You missed another 2% today.

This & afterpay have been rippers.

Did you buy yet @qldfrog?

over9k said:

View attachment 116473

Did you buy yet @qldfrog?

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No, for the reason mentioned above, will be one i will buy at the next crash.just be patient...xero is a direct consequence of red tape and a de facto mandatory purchase for sme and i do not see that reducing with the reset.

Dunno man, you reckon it'll pull back to this level (assuming you get the pullback you're looking for)?

over9k said:

Dunno man, you reckon it'll pull back to this level (assuming you get the pullback you're looking for)?

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I believe we will have s general pullback probably early next yet, i will jump then .
If not plenty others to go for

"There are multiple drivers for cloud-based software adoption, including digitisation of tax compliance, innovation of financial services and an imperative for small businesses to prepare for the future”
- Steve Vamos, CEO, Xero Ltd

qldfrog said:

but i believe xero is becoming a quasi mandatory tool in Australia

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Accounting software yes, xero specifically, no. Lots of businesses & accountants prefer other solutions. Xero is very expensive, especially for the small & medium sector. At the enterprise level very few businesses or organisations use retail software like xero, they nearly all have bespoke accounting software.

Its a contrarian take, but i see xero as very exposed to disruption, its not difficult software to develop, xero are very expensive, and a cheaper option is very attractive to SMEs. Businesses rarely switch accounting software, which means most of xeros growth has to come from new businesses.

There is a price i would be a buyer, but its multiples of that currently.

XRO is another one that has been up the stairs, and now coming down the escalator. Down 8%, now $79; back to 2019 pricing

Acquisitions and continued subscriber growth have seen Xero push revenue above the $NZ1 billion ($910 million) mark for the first time.

Operating revenue had climbed 29 per cent to $NZ1.1 billion for the year to March 31 (c/f only 18% growth a year ago). Excluding acquisition, its organic growth rate was 24 per cent.

Xero’s annual monthly recurring revenue figure (a figure that extrapolates out how much revenue the business would make in a year if monthly recurring revenue was maintained) also topped the $NZ1 billion mark, climbing to $NZ1.23 billion, up 28 per cent on 2021.

Dona Ferentes said:

XRO is another one that has been up the stairs, and now coming down the escalator. Down 8%, now $79; back to 2019 pricing

Acquisitions and continued subscriber growth have seen Xero push revenue above the $NZ1 billion ($910 million) mark for the first time.

Operating revenue had climbed 29 per cent to $NZ1.1 billion for the year to March 31 (c/f only 18% growth a year ago). Excluding acquisition, its organic growth rate was 24 per cent.

Xero’s annual monthly recurring revenue figure (a figure that extrapolates out how much revenue the business would make in a year if monthly recurring revenue was maintained) also topped the $NZ1 billion mark, climbing to $NZ1.23 billion, up 28 per cent on 2021.

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Rising interest rates hurt these high growth companies.
What is it worth? That is the question. Also how much of their profit is international?
I will have to have a look. I did own previously some time ago but sold out.

cost creep.

Xero said in its statement it anticipates operating costs to account for 80-85% of revenue over the full fiscal year, excluding acquisition integration costs, which will add about two percentage points to the total.

• Australia was key to the solid performance with revenue increasing 22% to $NZ224.9 million following the addition of 124,000 net subscribers. This brought its total to 1.24 subscribers Australia.
• NZ had a 13% rise in revenue to $NZ72 million after adding 34,000 net subscribers to reach a total of 480,000 subscribers. In a market saturated with existing subscribers that was a solid effort.
• In the UK Xero saw a 24% rise in revenue to $NZ132.8 million following the addition of 65,000 net subscribers. This took total subscribers in the UK to 785,000
• But the North American business was sluggish; it delivered revenue growth of just 5% (or 14% in constant currency) $NZ30.1 million. Xero said it added 23,000 net subscribers to reach a total of 308,000 subscribers. The company said it continues to focus on developing the partner channel in North America and signed with a number of US and Canadian accounting firms to make Xero a preferred solution for their practices.
• The rest of the world saw a 72% rise in revenues to just on $NZ46 million, with a 26,000 net increase in subscribers to 201,000.

Gapped down 5.5% today on above average volume. All buyers over the last 2 years are down and last time shares were this low was the first month of recovery after the WuFlu. I think there's a reasonable chance this will plumb the low of March 2020 (i.e $55)

Not Held (yet)

Daily 3 Years

Still traveling down? Might have to find out how busy the accountants are.