Vipin Kumar writes: Xero with offices in United states, United Kingdom, Australia, and New Zealand, is a global accounting software company. Effective financial planning and accounting is necessary for growth and profitability for small businesses. The following presentation explains about Xero’s business model, how they create value, and entrepreneurial ideation for Xero.
Monday, October 28, 2013
Is Xero A Buy?
Edge7 @ Seeking Alpha writes: Xero Limited (ASX:XRO) is an accounting software provider for small business. Its product provides an online 'cloud based' accounting system for invoicing, accounts payable, bank reconciliation & bookkeeping. Xero is certainly a fast growing company with an ambitious strategy. Does that make it a good value buy at current share price levels?
The chart is stellar
From a technical perspective, the price action doesn't get any better. And, congratulations to all share holders who have bought in prior to mid October, you are winners.
**Arrows represent potential long term price action, this of course is not guaranteed
The fundamental view is mixed
On the positive side:
- The company has a clear growth strategy which is global in scale
- The company is anticipating 80% revenue growth in FY14
- The company has what appears to be very savvy management
- The company has 'by all accounts' a great user-friendly product
- The company has reportedly spent seven years developing the product
On the negative side:
- The company reported a financial loss over $14 million in FY13
- The company has announced that it will incur a larger financial loss in FY14
- The company reports cash flow each quarter consistently less than 'Xero'
- On 1 August, the company announced it had "sufficient cash for current plans"
- However, on 14 October, the company raised NZ$180 million from the market
- The company has spent seven years developing an online based product that is easily copied
Would you pay $3 Billion?
The company has 125.2 million shares at a current share price of $24.50 a share.
This makes the company worth a touch over $3 Billion !!!
Without looking at the price chart and getting wrapped up in the emotion of the moment, would you rationally pay the equivalent of $3 Billion for a company that in FY14:
Will generate a loss of over $14 million
- Has negative cash flow
- Had to raise NZ$180 million of new capital to keep expanding
- And, it is unknown if the company will turn a profit in FY15
Benjamin Graham's perfect example
Benjamin Graham said that in the short run the stock market behaves like a voting machine, however, in the long run, it acts like a weighing machine. Xero is currently winning the popularity contest that is the voting machine however, its true value will be reflected in the long run with the weighing machine of its profitability.
The risk
The company has spent a long time and a lot of money 'building a better mouse trap' in the online cloud accounting space. This is a space that is very difficult to create a long term sustainable competitive advantage.
How difficult would it be for existing competitors providing accounting software to add a 'cloud-based' product offering to their mix that may not be as good but just may be good enough?
Love vs Hate = Parabolic backwards
Being one of the most loved stocks on the ASX at the moment, the share price has gone parabolic in recent weeks. This does not mean it cannot go higher especially in the short term. In fact, it is my understanding that if the company reaches a market capitalisation of $10 Billion, all shareholders receive a tulip that has been cryogenically frozen since March 1637.
However, if love turns to hate as more shareholders realise they have paid a high and hopeful price for a loss making company, the parabolic share price could turn down as the positive energy for the share price dissipates. I hope that current shareholders will have found a chair if the music stops.
In closing
I think that the company will do well in the long run and wish current shareholders all the best. However, I also think that the current share price is many years ahead of the value of the business.
As the business does not currently generate a profit and will not for the foreseeable future, those buying shares in this business are speculating that someone will be willing to pay a higher price for their shares at the time when they wish to sell.
If a parabolic share price reversal move comes to pass over the next couple of years that coincides with the company turning a strong profit, I via the Edge Fund may be interested in one day being a shareholder of this growing business.
In Accounting Selling Software, Intuit and Xero Diverge on Strategy
Sholto MacPhearson for BoxIT writes: Intuit would not use accountants and bookkeepers to sell its cloud accounting software but instead sell to businesses directly, senior executives have said. Intuit’s strategy ran counter to upcoming rival Xero, which at times has claimed that up to 60 percent of accounting software sales had been generated by accounting partners.
“We don’t see accountants as a sales channel. We see them as a partner and a customer,” said Brad Paterson, Intuit’s new Asia Pacific managing director.
“Every person in the ecosystem is as important to us. We will have equal support and energy to small businesses as accountants and bookkeepers, as well as developers building for the API,” Paterson said. (An API is a programming interface that lets a program send and receive data with other programs.)
QuickBooks Online, Intuit’s cloud program, was built around the small business, said Terry Hicks, senior vice president of small business financial solutions. “It’s less about double entry accounting than how do I know how my business is performing? Do I know when I can pay the bills?”
Intuit refused to reveal how many accountants in Australia and New Zealand had signed up to its ProAdvisor program. The company claimed 300,000 accountants had joined the program globally.
Intuit said it wasn’t fazed at the building momentum of Xero, which claimed 200 to 300 paying customers were signing up every business day.
“Intuit has been in a lot of competitively intense markets for its entire existence. There’s a company in Redmond, US (ed: Microsoft is based there) that has made multiple attempts to compete with Quicken in the US. At least two times we fought them out of the market with a better product and better relationships our customers,” Hicks said.
“When we launched QuickBooks we were the last entry to the market. Because we took a very customer-centric approach, in six months we became the market leader. We’re pretty confident that the right things will come to bear here,” Hicks said.
The biggest opportunity was not taking market share from rivals, however. “Excel is the biggest competitor in the market,” Paterson said. “They are the people who we know we can help the most.”
Intuit had calculated that across markets in developed countries, half of small businesses were using either Excel or paper and pencil to manage their accounts, Hicks said. In developing markets the figure jumped to 70 percent.
New Tools for Nest Eggs / Services to ease navigation of variable annuities, taxes and IRA rollovers
Robert Powell for the Wall St Journal writes: The right tools can make investing for retirement easier, by helping you manage the details of particular investments or by managing your entire portfolio. Here's a look at some services that do just that.
Annuity Review ( annuityreview.com )
Millions of new and would-be retirees find themselves holding—and trying to decipher—variable annuities. Annuity Review analyzes variable-annuity contracts (and any supplemental riders) and explains, in plain English, how your annuity works and how to get the most out of it.
The service does well at helping buyers understand the basics of their annuity contracts, such as investment restrictions and the impact of excess withdrawals. It was developed by Mark Cortazzo, a senior partner at Macro Consulting Group, a financial-advisory firm in Parsippany, N.J.
"They have been able to point out things about my clients' annuity contracts that I…would not have been able to figure out, even after scouring the prospectus for 10 hours," says Dana Anspach, the founder of Sensible Money LLC, a registered investment adviser in Scottsdale, Ariz.
Cost: $199 for an analysis of as many as three contracts. Each additional contract is $49.
Wealthfront (wealthfront.com)
Wealthfront Inc.'s software-driven investment management "basically replicates what the larger registered investment advisers do with their rebalancing/trading software," saysMichael Kitces, publisher of the Kitces Report and director of research at Pinnacle Advisory Group, a wealth-management firm in Columbia, Md.
Wealthfront, whose chief investment officer is Burton Malkiel, author of "A Random Walk Down Wall Street," will craft a diversified, low-cost portfolio for you and rebalance your investments automatically as necessary. If your account is $100,000 or more, the service also will help you harvest tax losses—that is, use your investment losses to offset taxes due on investment gains and income.
Wealthfront, in Palo Alto, Calif., uses only exchange-traded funds when managing your money, not individual securities or mutual funds.
Cost: None for the first $10,000 of assets under management. On amounts over $10,000, a monthly advisory fee is charged, based on an annual rate of 0.25% of your assets. There are also fees embedded in the ETFs the service buys for your portfolio.
Betterment (betterment.com)
Betterment LLC, like Wealthfront, offers low-cost portfolio-management services. And it can help transfer your retirement savings from a 401(k) or other accounts into an individual retirement account in as little as 60 seconds.
The New York-based registered investment adviser has a team of representatives who can help answer questions about IRA rollovers. And if need be, a rep will "join a call with [your] existing provider" to smooth the process, says Joe Ziemer, Betterment's communications manager.
There are no fees or minimum balances for the IRA rollover service, but the account that's created will be subject to Betterment's regular fees. Like Wealthfront, Betterment uses only exchange-traded funds when building your portfolio.
Cost: A management fee of 0.15% to 0.35% annually, depending on your balance, plus the ETFs' fees.
Do You Have an Accountant in Your Pocket? New Intuit Report Says Small Business Owners Will Seek Accounting Professionals Who Offer High-Touch Through High-Tech
The future of the accounting profession is undergoing a dramatic shift as current and potential clients expect real-time support, access to their financial information anytime, anywhere, and expert advice from their accountant in an increasingly complex, global business world. These are some of the highlights in the new Intuit 2013 Future of Accountancy Report released today.
The report focuses on the demographic, social, economic and technology shifts that will shape the accounting profession over the next decade. The report was prepared by Emergent Research in partnership with Intuit Inc. (Nasdaq: INTU) and 37 top influencers in accountancy from around the world. The Future of Accountancy Report provides an update to the Intuit 2020: Future of the Accounting Profession report released in 2011.
“Business owners are more demanding in their approach to the accounting professional,” said Margaret Carey, CPA, Masters of Commerce and blogger at Business EEz in Australia. “They want an accountant who will be their partner and help drive their businesses forward. The successful accounting firm is adopting new technologies that connect their accounting system with their clients’ small business systems to provide a complete, integrated ecosystem. This expands the accountant’s role into one of advisor working within a truly collaborative platform. It’s an exciting time to be an accountant!”
The Next Decade in Accounting
The services accounting professionals provide are impacted by significant shifts in the global business environment, online and mobile technologies, social networks and the rise of Gen Y and Millennials. According to the Intuit 2013 Future of Accountancy Report, these trends will impact the accounting industry in the following ways:
- Global Business Environment
Accounting professionals will see new and increased competition as banks, other financial services companies, software, Internet firms, and government agencies offer an array of accounting and tax-related products and services. As a result, the demand for accounting professionals to master new skills, knowledge and standards will intensify.
- Online, Mobile, Social Technologies
Smartphones, tablets, notebooks and other mobile computing devices will become the main tools for accounting professionals to practice greater flexibility in their careers and life. Cloud services will allow them to provide real-time customer support; and accounting firms can use tools to provide an “appified” experience and provide clients with an “accountant in their pocket.” At the same time, firms and professionals who use online content to help build their brand by demonstrating experience, domain knowledge and thought leadership will be at a competitive advantage.
- Demographic Shifts
Quick to adopt new technology, Gen Y, or Millennials, will look for careers that provide work/life balance and flexibility. As they start their own businesses, they may be more inclined than their baby boomer counterparts to outsource certain factors of financial management, including payroll, health care/benefits programs and compliance.
“Small businesses are facing a massive shift in technology, and they must adopt these technologies into their business processes to compete effectively over the next decade,” said Joe Woodard, founder of Woodard Consulting Group and host of Scaling New Heights, a premier accounting conference. “To best serve their clients, accounting professionals need to embrace new technologies quickly, understand the best way to incorporate those technologies into the small business process and proactively guide their clients through to full adoption. As an industry, we must take the lead and be out in front of the coming changes.”
“With increased competition, technology advances, globalization and demographic shifts, trust will remain paramount in the relationship between accounting professionals and the clients they serve,” said Jill Ward, senior vice president and general manager of Intuit’s Accountant and Advisor Group. “The trends happening within the industry provide several opportunities for accountants to deliver the service their clients expect and demand. Intuit will continue to partner with accounting professionals, helping them save time, grow their practice and thrive in this rapidly changing environment.”
About Emergent Research
Emergent Research is a research and consulting firm focused on identifying, analyzing and forecasting the key demographic, social, technology and economic trends and shifts impacting business and society. Emergent Research partners, Steve King and Carolyn Ockels, are co-authors of the Intuit 2020 Report and the Intuit Future of Small Business Report Series.
Click below for:
Intuit QuickBooks Powers Ahead in India
Intuit today announced that QuickBooks, the company’s flagship business and financial management software, has been tried by more than 50,000 small business owners in India, providing them with easy access to their finances through an internet-connected computer or data plan-enabled smartphone.
In a survey conducted by Intuit with the subscribers of QuickBooks in India, nearly 90% of the respondents agreed that QuickBooks provides anytime, anywhere accessibility as it’s a cloud based offering. About 81% of them agreed QuickBooks provides them with the benefit of automatic software upgrade feature and 74% of the respondents agreed that its easy for their employees to access through the multiple-user login feature. 76% of the respondents agreed that they have benefited from the automatic data backup feature.
Over 50% of subscribers of QuickBooks in India are located primarily in 4 cities – Bangalore, New Delhi, Mumbai and Chennai. The majority of the offering’s userbase comes from the services industry (62%), which largely comprises of Tech Startups, HR Consultants, Marketing Consultants and Travel Agents.
Underscoring QuickBooks appeal amongst the Accountant community in India, adoption in this user base has been growing at 49% over the last six months. Accountants are also playing a key role in recommending their own clients to migrate to QuickBooks.
Nikhil Arora, Vice President and Managing Director of Intuit India, said: “We are very encouraged by the traction QuickBooks has experienced in just under a year since we launched it in India. Intuit is very pleased to have had the opportunity to carry forward our longstanding legacy of working with customers to understand their needs and build solutions based on their feedback. Using this feedback, we are continuously iterating on the product to deliver on the localization needs in India. We have also run several initiatives and worked collaboratively with the government and other industry bodies to create awareness among small business owners about technology adoption. We look forward to continuing to work with and empower small businesses in their journey to success.”
QuickBooks lets small businesses easily create localised invoices, pay bills and track expenses. The easy-to-use, cloud-based service needs no professional accounting training and allows the small business owners to take data-driven business decisions on the move.
Suraj Nayak, Founder of EcoSpace and a QuickBooks user said: “QuickBooks takes care of all my accounting needs and most importantly has helped me immensely in making the right business decisions. Its comprehensive features and anytime-anywhere access helps me streamline my work. QuickBooks has taught me the essentials of managing business intelligently.”
For accountants, QuickBooks helps them collaborate with their teams better and efficiently deliver to their customers across regions. Some of the key product features that have been influencing accountants across major cities in India are online banking integration capabilities, customizable reporting and seamless collaboration. Intuit also launched a ProAdvisor Programme for accountants in India wherein they receive international certification and advanced training to provide priority support to their clients.
Intuit QuickBooks ProAdvisor, CA, Mukesh said: “Besides offering great features such as anytime-anywhere access, QuickBooks has allowed me to take better business decisions. It has also helped me grow my business by enhancing my ability to provide timely and informed advice to my clients.”
In a survey conducted by Intuit with the subscribers of QuickBooks in India, nearly 90% of the respondents agreed that QuickBooks provides anytime, anywhere accessibility as it’s a cloud based offering. About 81% of them agreed QuickBooks provides them with the benefit of automatic software upgrade feature and 74% of the respondents agreed that its easy for their employees to access through the multiple-user login feature. 76% of the respondents agreed that they have benefited from the automatic data backup feature.
Over 50% of subscribers of QuickBooks in India are located primarily in 4 cities – Bangalore, New Delhi, Mumbai and Chennai. The majority of the offering’s userbase comes from the services industry (62%), which largely comprises of Tech Startups, HR Consultants, Marketing Consultants and Travel Agents.
Underscoring QuickBooks appeal amongst the Accountant community in India, adoption in this user base has been growing at 49% over the last six months. Accountants are also playing a key role in recommending their own clients to migrate to QuickBooks.
Nikhil Arora, Vice President and Managing Director of Intuit India, said: “We are very encouraged by the traction QuickBooks has experienced in just under a year since we launched it in India. Intuit is very pleased to have had the opportunity to carry forward our longstanding legacy of working with customers to understand their needs and build solutions based on their feedback. Using this feedback, we are continuously iterating on the product to deliver on the localization needs in India. We have also run several initiatives and worked collaboratively with the government and other industry bodies to create awareness among small business owners about technology adoption. We look forward to continuing to work with and empower small businesses in their journey to success.”
QuickBooks lets small businesses easily create localised invoices, pay bills and track expenses. The easy-to-use, cloud-based service needs no professional accounting training and allows the small business owners to take data-driven business decisions on the move.
Suraj Nayak, Founder of EcoSpace and a QuickBooks user said: “QuickBooks takes care of all my accounting needs and most importantly has helped me immensely in making the right business decisions. Its comprehensive features and anytime-anywhere access helps me streamline my work. QuickBooks has taught me the essentials of managing business intelligently.”
For accountants, QuickBooks helps them collaborate with their teams better and efficiently deliver to their customers across regions. Some of the key product features that have been influencing accountants across major cities in India are online banking integration capabilities, customizable reporting and seamless collaboration. Intuit also launched a ProAdvisor Programme for accountants in India wherein they receive international certification and advanced training to provide priority support to their clients.
Intuit QuickBooks ProAdvisor, CA, Mukesh said: “Besides offering great features such as anytime-anywhere access, QuickBooks has allowed me to take better business decisions. It has also helped me grow my business by enhancing my ability to provide timely and informed advice to my clients.”
Why You Should Not Use Wave Accounting Software (and Comments) / Updated: I’ve Change My Mind About Using Wave Accounting Software
UPDATE January 2014 Wave Now Has a Bank Reconciliation Feature! I received communication from Scott Zandbergen, VP of the ProNetwork at Wave, and he’s informed me that wave now has a bank reconciliation feature. This is the busy season for bookkeepers, so I won’t be able to check out the feature until a month or so. But congratulations Wave!
Stephanie Travis for GainesvilleTech writes: Just recently, a New York City (bragging) startup found me online and hired me to help with bookkeeping. The startup uses Wave Accounting, and I was open to working in this software. I was hoping to be able to officially recommend an alternative to QuickBooks.
But in our first session of working together, I found a major shortcoming of Wave Accounting: it does not have a bank reconciliation function. Wave Accounting provides an import function where it links to your bank and credit card accounts and then imports the transactions into your Wave company books. (QuickBooks offers this same function.) The founder was savvy enough to notice that the checking and credit card account balances on the Balance Sheet did not match what Wave said was currently in the bank account per its import module. How could this be?
If the bank and credit card accounts had been reconciled, then this issue would not exist. A basic bookkeeping function is to reconcile these accounts each month. A solid accounting software program will provide a reconciliation function. If you are not reconciling your bank and credit card accounts each month, your books are worthless. Reconciliation helps you find errors such as missing transactions, transactions entered twice or transactions entered with typos or wrong amounts. I hear you asking, “If Wave imports the transactions electronically, then how can any of these errors happen?” They can, and they did.
In order to find his error, the founder had to view his bank and credit card statements and compare every transaction on the statements to the transactions in Wave to find the errors.
Are you using an accounting software program other than QuickBooks? Shoot me a note at stephanie@onesourceaccounting.com, and I’ll review it . Comments To Date BELOW, Visit the site to comment!
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