Xero doubles annual sales as customers surge

Rod Drury, founder and chief executive of internet-based accounting software company Xero. Photo / NZ Herald

Xero, the $1.33 billion cloud-based accounting software firm that's yet to turn a profit, doubled annual sales as its customer numbers continued to surge and said it expects an annual loss of below $15 million.

The Wellington-based firm doubled operating revenue to $39 million in the 12 months ended March 31, meeting its own target, with customer numbers climbing to 157,000 from 78,000 a year earlier, it said in a statement. The second-half loss will be in line with the first half, when it reported a loss of $7 million. It made a loss of $7.9 million in the 2012 financial year.

"It takes significant investment and many years to build a broad and global small business financial platform," the company said. "Xero is now investing in its global sales capability and feels confident in achieving its objective of gaining a million paying customers."

The shares fell 1.1per cent to $11.20 today, having jumped 50 per cent this year, cracking the billion dollar market capitalisation last month. The stock is rated a 'hold' by Forsyth Barr analyst Andrew Harvey-Green, the one analyst formally following it.

Xero added 22,000 customers since February and reported its fastest annual growth in Australia, which jumped 219 per cent to 51,000, followed by the US which gained 175 per cent to 11,000. UK customer numbers doubled to 22,000 and New Zealand clients advanced 55 per cent to 73,000.

Annual monthly committed revenue grew to $4.3 million, and is up to $51.5 million on an annualised basis from $25.5 million a year earlier.

The software firm is on a growth binge as it looks to build its customer base at the expense of short-term profitability, building its staff to 382 from 194 a year earlier.