Intuit rival Xero had less than half the number of customers at 250,000, of which 100,000 were Australian businesses.
Although Intuit has sold Quickbooks Online for more than 10 years it hasn’t received as much attention as its desktop programs. But the company recently refocused its accounting software business around the potential of its cloud program. Intuit dominated the US market for small business accounting software and had amassed a customer base of 5 million businesses with a broad range of financial products and services.
Xero recently raised $180 million from prominent investors to launch an assault on the US market where it is estimated to have less than 50,000 customers. The company was hiring senior executives in preparation for a listing on the US stock markets to add to its New Zealand and Australian public listings.
Comments
- Interesting numbers, however what Intuit doesn’t reveal is how many of those 45,000 customers are conversions from the desktop version as opposed to totally new to accounting software or conversion from another product. Are they robbing Peter to pay Paul? We know every Xero customer is a brand new one to Xero. Also not revealed is how many of those 45,000 are US-based versus the rest of the world. Intuit has a large share of the SMB market in the US so has brand awareness there. I would love to know the number of paying QBO customers in Australia – this is a closely guarded secret – need a Wikileak to expose.
- Insiders previously said that QuickBooks desktop lost more than 800,000 users. That means QuickBooks Online cannibalized about half the desktop losses. That is a disaster for Intuit, since Xero is still growing more than twice as fast as QBO in percentage terms. QBO and QB desktop now have less than 10% of the small / medium desktop and online accounting program market, counting companies like Yodlee (a Xero partner). Intuit also has bought back more than a billion dollars a year in mainly insider stock for more than four years. Buy-backs exceeded adjusted lifetime earnings after a $320 million Digital Insight loss and accelerated buy-backs may exceed its net worth. The big difference: Xero stock is up 5500% (yes 55 times), while Intuit is up 200%.
- Or another take, Xero and Quickbooks are now adding customers at a near identical rate (though Xero’s growth rate is accelerating faster and should overtake Quickbooks additions shortly) . This despite Xero operating predominantly in much smaller markets and with about 10% of Intuits employee base, as it notes, it’s significantly more efficient at customer acquisition. If you were putting odds on the outcome, i think the bookies are calling the odds via Xero’s share price. It’s the leading favourite. Intuit’s share price has also gone well, as there’s a new rick vein to be tapped by both companies of recurring SaaS revenue. Win win for both companies, they’ll both do well. Win win for the accountants via competitive product development. and Win win for the users as it’s transforming the SME technology experience.
- Mike – not sure this statement is correct these days …..it’s significantly more efficient at customer acquisition.” I think it may well have been but the Xero business has had significant cost growth and the cost of people to sales is pretty horrid –http://www.asx.com.au/asxpdf/20140131/pdf/42mfhbzd78ntb9.pdfI am sure that many are betting on the share price and it has been a huge performer but will this last….I think the continued comparison of Xero and Intuit is unhealthy for the market and from where I sit all the “noise” is coming from Xero supporter… I think an open mind and sensible competition should replace all of this noise so we can all concentrate on getting on with it…I do agree with Mike – well done to Intuit and Xero for continuing to invest in the great market.