TOM PULLAR-STRECKER writes: Forsyth Barr now expects Xero to post a net loss of $41 million in the year to March 2014, $6.3m more than it had previously forecast.
Analyst Andrew Harvey-Green said it had downgraded its projections "a wee bit" in the wake of Xero's interim results, which the company posted after the close of NZX trading yesterday.
Xero shares were down 7.5 per cent at $33 in early afternoon trade following the news.
All but Xero's most recent investors are still sitting on huge paper profits, however.
Chief executive Rod Drury, whose personal stake in Xero is worth about $700m, tweeted this morning that he had been given a free ride to the airport by a taxi driver who he had persuaded to buy shares in Xero "a couple of years' ago".
"He was happy," Drury said, describing it as a "nice moment".
Xero yesterday posted an interim loss of $17.1m on revenues of $30.3m. That compared with a loss of $7m on revenues of $16.5m during the same period in 2012
Harvey-Green noted Xero's costs were continuing to accelerate at a faster rate than its revenues.
"Most of the additional expenditure has been in the United States and Australia where Xero is pushing harder to secure market share."
The biggest positive from the interim result was a drop in Xero's operating costs and a lift in its margins in the New Zealand market, he said.
"This result provides an indication of the operating leverage inherent in the Xero business model once it stops investing for growth," he said.
Forsyth Barr nevertheless has a "sell" recommendation on Xero shares, which it now values at $22, down 30 cents on its previous valuation.
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Paul McBeth for BusinessDesk writes: Cloud-based accounting software firm Xero is sticking to its grand ambition for world domination, chasing faster sales growth and signalling more red ink to come.
The Wellington-based firm more than doubled its first-half loss to $17.1 million, or 14 cents per share, in the six months ended Sept. 30. Xero had already reported an 84 percent gain in first-half sales to $30.3 million, and said it expects annual revenue to exceed 80 percent growth and bigger operating losses in the second half of the year.
Xero is flush with cash after raising $180 million in new capital last month, mainly from US investors, leaving it with some $230 million in funding to launch its assault on the US market, where it claims to be the number one challenger.
The shares fell 1.2 percent to $32.25 today after Forsyth Barr trimmed its projections for the company’s earnings, and downgraded the stock to a ‘sell’ on the view that it wasn’t offering investors good value at its current levels.
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Paul McBeth for BusinessDesk writes: Cloud-based accounting software firm Xero is sticking to its grand ambition for world domination, chasing faster sales growth and signalling more red ink to come.
The Wellington-based firm more than doubled its first-half loss to $17.1 million, or 14 cents per share, in the six months ended Sept. 30. Xero had already reported an 84 percent gain in first-half sales to $30.3 million, and said it expects annual revenue to exceed 80 percent growth and bigger operating losses in the second half of the year.
Xero is flush with cash after raising $180 million in new capital last month, mainly from US investors, leaving it with some $230 million in funding to launch its assault on the US market, where it claims to be the number one challenger.
The shares fell 1.2 percent to $32.25 today after Forsyth Barr trimmed its projections for the company’s earnings, and downgraded the stock to a ‘sell’ on the view that it wasn’t offering investors good value at its current levels.
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