QuickBooks Online vs Xero - Number of Users

Mike @ quickbooks-blog.com writes:   I recently wrote about QuickBooks Online (QBO) vs Xero.

I wrote from memory, about some fast changing facts, without confirming them, so some things I wrote were not true. I deeply apologize for this, especially to those who reposted what I wrote. Fortunately, the exact numbers lead to the same conclusion about Xero badly beating QuickBooks. 

The attached files show actual users of QuickBooks Online vs Xero:

QBO			Xero
	users	incr		users	incr		Diff	Mult
07/31/05	49,000						49,000
07/31/06	78,000	59%					78,000
07/31/07	117,000	50%		204			116,796
07/31/08	133,000	14%	03/31/08	950	466%		132,050	33.29
07/31/09	147,000	11%	03/31/09	6,000	532%		141,000	48.36
07/31/10	201,000	37%	03/31/10	17,000	183%		184,000	4.95
07/31/11	283,000	41%	03/31/11	36,000	112%		247,000	2.73
07/31/12	380,000	34%	03/31/12	78,000	117%		302,000	3.44
04/30/13	459,000	21%	03/31/13	157,000	101%	INT	302,000	4.81
07/31/13	486,000	28%	06/30/13	193,000	147%	Q EST	293,000	5.25
07/31/14	622,080	28%	06/30/14	476,710	147%	ESTIM	145,370	5.25
07/31/15	796,262	28%	06/30/15	1,177,474	147%	ESTIM	-381,211	5.25

The number of QuickBooks Online (QBO) users is from Intuit Investor Fact Sheets:

07/31/07
07/31/09 
07/31/11
04/30/13

 The number of Xero users come from these documents:

Investor_presentation 05/28/13 
Chief_executive_address_08/01/13 

For purposes of this comparison, I ignored a one month difference in compny year ends. I also estimated the July 31, 2013 QBO year end from its April 30, 2013 figures. I then used current growth to estimate users in 2014 and 2015. 

QuickBooks desktop lost 800,000 users (16.67%) while QBO was getting 486,000 users, so QBO got less than 61% of the users that QB desktop lost. Xero got 147% more users in the year ended 06/30/13, while QBO got 28% more users in the comparable year ended 07/31/13. As the last column shows, Xero started later, but always got new users many times faster than QBO. In the years ending in 2013, Xero got new users 5.25 times as fast. 

2013 was very important in the race between the products. For the first time, Xero got more new users than QBO (10,000). It also is important that the QBO growth rate dropped each year since 2011.

As we increasiingly switch to web accounting, the number of QuickBooks desktop users should keep dropping fast. Many new QBO users are former QuickBooks desktop users. However, as the number of QuickBooks desktop users keeps declining, there will keep being fewer QuickBooks desktop converting users to drive QBO growth. In addition, as Xero becomes increasingly well known, it will keep getting a larger share of such users.

Few seem to know how quickly the online revolution is killing the QuickBooks desktop program and other desktop accounting programs. There are now more than 10 times as many online accounting users as there are QB desktop users. Most of them are the approximately 40 million users of light-accounting products, from companies like Mint and Yodlee. These and smartphone apps increasingly make users want the fast growing more complete online accounting programs, like Xero and QBO. Intuit knows this, which is why it now spends 75% of development money on web apps, vs the 25% it spent in 2007. However, it obviously is not yet doing this as effectively as Xero.

There also is increasing integration and automation in online programs. These include programs for taxes, investments, calendars, milelage logs, scanned documents (including smart phone receipts), web stores, automated ordering and bill payment, outsourcing and MUCH MORE. As I will discuss in further posts, Xero is very quickly adding more of these add-ons, with its free industry-standard RESTful interface. The number of such QB add-ons is declining fast, partly due to an expensive, proprietary, limited inteface, which keeps changing, plus a badly split product line.

As the last two ESTIMATED lines in my table show, even if present trends simply continue, much faster Xero growth will give it almost 1.2 million users in only two years. This also will then give Xero almost 400,000 MORE USERS than QBO.

Tomorrow I will discuss even more reasons why this table probably understates the the number of Xero vs QuickBooks Online users.