Xero adds 41,000 UK customers in first half of 2018

Businessman Rod Drury, chief executive of accounting software company Xero. Photo / Jason Oxenham

Xero's drive to sign new customers in the UK picked up the pace in the first half of the current financial year, adding more than 40,000 new clients and putting it alongside the software developer's home market of New Zealand.

Wellington-based Xero today said it had 253,000 UK customers as at September 30, the company's first-half balance date, up from 212,000 six months earlier. Xero added 79,000 UK customers in the 2017 financial year, where it had been teaming up with the major banks and building an active accounting and bookkeeping sales channel.

"It's very encouraging to see growth continuing to accelerate in such a large and important global market for us," Xero UK and EMEA managing director Gary Turner said.
"It's particularly gratifying to see our significance to the UK market translating into closer relationships with the UK's banking community in the past 12 months."

The UK was singled out as Xero's next growth engine in the company's 2017 annual report, with the Conservative government's 'Making Tax Digital' programme seen as an opportunity for the New Zealand firm to build on.

"Passing through quarter of a million UK subscribers with a focus on strong revenue growth as well sends clear signals that our global platform is delivering powerful value to accountants, bookkeepers and small businesses - and we are only getting started," chief executive Rod Drury said.

The increase in UK customers puts it on an equal footing with Xero's New Zealand base, where it's also crossed 250,000 customers having been just shy at 246,000 at the end of March. New Zealand added 60,000 customers in the 2017 financial year.

Xero's UK business generated revenue of $49.7 million in the year ended March 31, up 33 per cent from a year earlier, or 62 per cent on a constant currency basis, which accounted for the slump in the British pound after last year's Brexit vote. The New Zealand division increased revenue 33 per cent to $62.3m in the 2017 year.

The company's shares rose 0.2 per cent to $30.95, adding to the 77 per cent surge this year as the company gets closer to delivering its maiden profit and as investors reassess Xero's expanding product range and positioning as an online intermediary between businesses and financial services firms.