Xero Grows 129% a Year, Badly Beats QuickBooks

Mike at QuickBooks Blog writes: Headlines like Xero Revenue Loses Pace are nonsense, when Xero grows 129% a year.

Even financial analysts may not compound growth correctly. Xero had these paying customers:
                                                                         Increase      March 31, 2013        157,000    June 30               193,000     23%

Instead of multiplying 23% by four, for a 92% annual increase, project the 23%:

    September 30          237,000     23%
    December 31           292,000     23%
    March 31, 2014        359,000     23%

Now divide 359,000 by 157,000, for the 129% annual increase. Xero actually will have far more than 357,000 users by March, 2014. The June quarter is bad for users to change accounting programs. That is why Xero actually had a 147% increase in users for the year ended July 31, 2013 (193,000 vs 78,000).

Xero also said it would go from from 300 to 700 employees in a year (133%), but added 67% more in six months. This may be 178% more employees a year, if continued. These new employees will not get new customers right away, but Xero should have far more than 357,000 users by March.

I will write again soon about other reasons that will guarantee this.