Xero breaks through $3 billion mark

Xero chief executive and founder Rod Drury. Photo / Mark Mitchell

Cloud accounting software provider Xero has become a $3 billion company.

After opening at $22.10 this morning, shares in the Wellington-based firm surged 14 per cent to hit $25.20 this afternoon, valuing the business at $3.2 billion.

The company is now worth more than casino and hotel operator Sky City and lines firm Vector.

Xero's announcement this week that it had raised $180 million of new capital from high-profile investors including Facebook billionaire Peter Thiel sparked a major rise in the stock.

Forsyth Barr analyst Andrew Harvey-Green said today's rally was being driven more by the capital raising announcement than the news from the United States today that a deal on that country's debt ceiling and budget had been reached, which boosted US equities.

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"The US is the key to Xero being able to justify its share price so if US investors are going in it gives some confidence to that viewpoint," Harvey-Green said.

Chief executive Rod Drury said on Monday that the new capital was "money in the tank" for Xero to build its United States-based management team.

"We find talent follows money and talent follows talent ... it's a massive war chest and it means we can hire the very best people," Drury said.

The company expects operating revenue for the six months to September 30 to exceed $30.3 million, up 84 per cent from the year before.

Xero's paying customers grew to 211,300 by September 30, 89 per cent up on the same time a year earlier.

In its last annual result, the company posted a net loss of $14.4 million for the year to March 31.

This grew from a loss of $7.9 million a year earlier.