ASX:XRO) (NZE:XRO) has again significantly grown revenue and customer numbers in its 2014 financial year and is now the leading accounting software provider in New Zealand and the leading online accounting software in Australia and the United Kingdom.Xero recently passed 300,000 paying customers and was this week ranked number one by Forbes in its list of the World's 100 Most Innovative Growth Companies 2014.
Xero's operating revenue was $70.lm for the year ended 31 March 2014, up 83% from last year's $38.4m result. On a constant currency(1) basis Xero grew operating revenue by 92% in the period. Customer numbers increased to 284,000 at 31 March 2014, up from 157,000 at 31 March 2013.
As anticipated, the full year loss grew to $35.5m.
Xero has $210m of cash to fund its growth strategy and commences its 2015 financial year strongly with $93m in annualised subscriptions (representing an 8 1% increase on the $51.5m reported at the same time last year).
Performance highlights
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Yr ended Yr ended Year-on-year
31 03 2014 31 03 2013 change
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Total operating revenue $70.1m $38.4m 83%
Net loss after tax ($35.5m) ($14.4m) 147%
Cash and cash equivalents $209.9m $78.2m 168%
Paying customers 284,000 157,000 81%
Annualised Committed Monthly Revenue $93.0m $51.5m 81%
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(1) The constant currency analysis is a non-GAAP financial measure which has been provided to assist readers to better understand and assess the company's financial performance excluding the impact of foreign currency fluctuations during the year.Regional breakdown
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Subscription revenue Paying customers
Yr ended Yr ended At At
31 03 2014 31 03 2013 31 03 2014 31 03 2013
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New Zealand $23.2m $15.7m 102,000 73,000
Australia $27.7m $12.6m 109,000 51,000
United Kingdom $9.8m $5.1m 47,000 22,000
North America $3.3m $1.3m 18,000 6,000
Rest of World $2.6m $1.4m 8,000 5,000
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Total $66.6m $36.1m 284,000 157,000
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CommentaryRecruiting senior management for growth and filling out global teams was a key focus for the 2014 financial year as Xero added a further 376 employees.
With strong growth expected to continue in New Zealand, Australia and the United Kingdom, Xero turns its focus on the important US market. The US market entry phase was completed successfully, allowing Xero to raise an additional $180m of capital in October 2013, bolster the Board with appointments of New York-based Chris Liddell as Chairman and San Francisco-based Director Bill Veghte, and appoint Peter Karpas as CEO North America.
Xero has been receiving US industry recognition, including: Accounting Today's 2013 Top New Products:
Honorable Mention - Xero Touch, Mobile category; CPA Practice Advisor's 5-Star review 2013 (for Software as a Service); and "Top Choice" for the best online business accounting app by PC World / Macworld.
Xero has also made progress on a number of large-scale partnerships, and has recently announced integration with Square, Inc. in the US and a strategic alliance with H&R Block.
Closing Comments
Xero has proven its strategy and execution and continues to build a world-class team, while substantially growing revenue.
Progress against the incumbents and its strong cash position sees Xero well placed as the adoption of cloud software accelerates for small business.
Xero expects strong growth to continue for the foreseeable future.
Investor calendar
23 May 2014 - FY14 Investor Briefing conference call, 10.00am (NZST)
23 July 2014 - Annual Meeting from 4pm at Shed 6, Queens Wharf, Wellington
20 November 2014 - Half Year Interim Report release
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