Xero targets financial planners in a bid to push $30m revenue mark

Nassim Khadem for BRW writes:  The company dubbed the ‘Apple of accounting’, Xero Limited, is aggressively chasing financial planners in a bid to move beyond $30 million revenue by early next year.

Xero Australia managing director Chris Ridd told BRW the company signs up 30 to 40 accountants and bookkeepers a week to adopt its cloud-based accounting software for dealing with their SME clients, and is now starting to see greater uptake by financial planners.

The company, headquartered in New Zealand, was founded in 2006 by Wellington-born technology entrepreneur Rod Drury. It now has over 200,000 paying customers in more than 100 countries around the world.

The Australian arm is a big revenue generator. Operating revenue exceeded $30.3 million in the six months ended September 30, from $16.5 million a year earlier. The fastest growth in the first half came from Australia, where customers rose 143 per cent from a year earlier to 79,100.

With offices in Melbourne, Sydney, Canberra, Perth and Brisbane, Xero has seen local staff numbers rise to 100.

Gloablly, the company wants to increase its customer base to 1 million (total paying customers rose to 211,300, up 89 per cent from September last year).

Chasing new partners

Ridd, who previously worked for Microsoft Australia, says about 70 per cent of Xero’s business in Australia comes from referrals.

The company, which listed on the Australian stock exchange in November last year, has enjoyed phenomenal growth on the ASX since its debut.

This led to investment bank Credit Suisse dubbing Xero as the “Apple of accounting”.

Ridd says Xero now has about 2200 accountant and financial planners ‘partners’ who refer various Xero products onto their customers. Of these partners 600 are bookkeepers, 1300 are accountants and the rest are financial planners.

To be known as a ‘partner’, the professional has to refer the chosen Xero product to at least five clients. The product is then sold by subscription, based on the number (and type) of company entities managed by the subscriber.

“Since the beginning of the first of April we’ve signed up 900 new partners,” he says. “That’s a real achievement considering there’s 8500 to 9000 accounting practices in Australia.

What’s more incredible is that 58 of the Top 100 BRW Accounting Firms are Xero bronze, silver or gold Partners, totalling 8740 organisations. And of the top 10 firms, eight are Xero partners.

“These numbers verify that the more progressive firms are using cloud accounting software,” Ridd says.

He says financial planners, which are increasingly teaming up with accountants, are now also taking up Xero’s cloud software to more easily engage with clients in real-time.

“We’ve signed up about 270 financial planners in the past five months alone.” he says. “These are dedicated, stand-alone financial planners who are finding our products extremely useful devising wealth accumulation strategies for their Gen Y and Gen X business clients. It gives the financial planner a real-time view of spending.”

Ridd says with 15,000 financial planners across Australia, there’s potential to exceed the number of accounting partners, with financial planning partners.

“With a major focus on growth supported by NZ$200 million in the bank and no debt, we are moving quickly on market share in the Australasian market,” Ridd says.