Xero boss Rod Drury says his company is ‘just around the corner’ from breaking even, as its annual net loss continues to narrow.
The New Zealand-based Xero reported a net loss of 69.1 million New Zealand dollars ($64.14m) in the year through March, down from a net loss of NZ$82.5 million in the 2016 fiscal year. It didn’t pay a dividend as expected.
Xero’s annual operating revenue rose by 51 per cent to NZ$295 million after stripping out the impact of currency swings, while its cash balance totalled NZ$113.7 million at the end of the reporting period.
“We’re starting to show all the signals that break-even is just around the corner,” Mr Drury told The Australian. “We’ve still got plenty of cash, and people aren’t expecting us to swim for safety at the side of the pool.
“We’re at 51 per cent growth on a constant currency basis so it’s about getting that balance right.”
With a market value of NZ$3.01 billion, Xero has become one of the biggest stocks on New Zealand’s share market despite never having turned a profit. Investors are betting Xero’s cloud program for small businesses to organise their finances, bill customers and keep a record of payments will be highly profitable once the Wellington-based company slows the investment being made overseas.
They include tech billionaire Peter Thiel, who still owns 4.8 per cent of the company despite paring his stake last month.
Xero, founded in 2006, said it now has 1.04 million paying subscribers compared to 862,000 at the end of September. Its annualised committed monthly revenue jumped by 45 per cent to NZ$360 million at constant exchange rates.
“Operating metrics are expected to improve in the 2018 fiscal year as the company drives efficiencies through automation and economies of scale,” Xero said in a statement.
Management expects to reduce its cash burn during the current fiscal year and said it aims to reach “cash flow break-even” without needing to raise fresh equity.
Mr Drury said the next step for Xero will be thinking about ‘getting rid of accounting’ for end users.
“This next innovation for us is code free accounting. We want a builder to not worry about coding a transaction, they can just send the transaction in, and Xero codes it for them.
“You just send us the documents and we’ll do it for you, that’s really interesting for us.”
With Dow Jones.
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