Operating Update to 30 September 2008
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Xero Limited (XRO) | 1:57 pm, Wednesday 1 October 2008 | XRO | 0.780 |
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1 October 2008
The following are Xero’s provisional operating metrics for the six months ended 30 September 2008.
Customer update
- Xero has 2200 paying customers, a growth of 132% from 31 March 2008. In addition Xero has built a substantial sales pipeline for conversion in the following half year.
- We have recently modified our signup process allowing users to trial their own organisations in Xero for 30 days before inputting their payment details. We have not counted these customers in the figure above and now have a significant number of trial users.
- We have shifted the emphasis of our sales effort from our initial one-on-one approach to focus on more leveraged opportunities. This strategy is working well with a number of networked customers standardising on Xero. In New Zealand, organisations such as Hell’s Pizza, Sierra Coffee, Hot Chilly, NZ Brands, Touch NZ, and Carpet One are beginning to implement Xero across their networks.
- Xero now has 192 accounting partners. In the past three months, over 100 individuals have completed our certification training. Accountants continue to be an important focus and we have gained support from firms of all sizes, including larger firms such as Deloitte.
- The Xero Network – where third parties link their own software products into the Xero application is progressing well with 11 partners and a strong pipeline of opportunities.
- Xero is executing on co-marketing campaigns with leading banks and telecommunications companies.
Product highlights
- Launch of Xero Accountants Edition allowing accountants to bundle Xero as part of a managed cashbook service for their clients.
- Release of iPhone, Blackberry, and Windows Mobile interfaces.
- Integration with Google Docs and Skype.
- Additional user roles providing limited access to some functions for different levels of staff – making Xero a ‘front office’ application.
- Direct daily bank feeds from Westpac. Xero is now connected to all major New Zealand banks.
- Xero achieving accreditation by The Institute of Chartered Accountants in England and Wales.
- An Australian version of software was released on 30 September.
Company News
- A partnership was entered into with leading Australasian practice management accounting software provider Acclipse, providing access to over 1000 accounting practices in New Zealand and Australia.
- Xero was recently named as one of the top ten user interface applications by US design usability gurus, The Nielsen Norman Group.
- In August, Xero announced a global version would be available in early 2009.
- Employee numbers in NZ and the UK have remained constant at around 55.
Market commentary
- We believe that Xero is largely isolated from current financial market conditions due to the diversity of small businesses it serves and the reality that these small businesses all need an accounting system. Increasing numbers of small businesses are choosing to use web-based software to run their businesses, as such software offers productivity, ease-of-use and cost benefits.
- Banks are likely to be more focussed on retail services for small businesses as spending from larger organisations slow down. Many displaced employees will start new businesses.
- There is increased Government awareness of the need to encourage small businesses to go online to reduce compliance costs and raise national productivity.
- Activity from Google and Microsoft, including the release of Google’s Chrome browser, confirms acceleration in the trend for applications to move online.
Summary
- Xero has successfully established its NZ business and is now making solid progress in the UK. Our Australian market entry has just commenced with the announcement of an Australian version of the software. This is consistent with our previously announced strategy.
- Our strong customer acquisition and rapid global recognition has validated the Xero product and concept.
- Over the next half year Xero will announce key global partnerships to exploit the potential of our borderless product in the global small business market.
- Xero will release its half year results in late October.
For more information contact:
Alastair Grigg
Chief Operating Officer
021 623 866
Alastair.grigg@xero.com
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