Broker recommends offloading Xero shares

Christopher Adams for the NZ Herald writes:  Broker Craigs Investment Partners has slapped a sell recommendation on Xero shares after initiating research coverage on the New Zealand developer of online accounting software.

In a note to clients, Craigs said that with an enterprise value to revenue multiple of 21x the market was pricing in "a more rapid take off in US growth" for Xero than "we think is likely".

Xero shares tumbled 15 per cent last week to hit a 10-month low of $20.17 on Friday, 55 per cent below the $44.98 record high they hit in March.

But the stock has rebounded strongly this week and shares were trading up 2.1 per cent at $23.49 just after 11am this morning, valuing the company at $3 billion.

Craigs has placed a 12-month target price of $18.90 on Xero shares.

The brokerage said it acknowledged the scale of the opportunity the US presented to the company and the firm was well-positioned to deliver solid growth in New Zealand, Britain and Australia.

However, much is hanging on the success of Xero's push into the US accounting market, where the company estimates it has 29 million potential customers.

At March 31 the company had 18,000 US clients, a roughly 1 per cent share of that county's small businesses market.

At the time of Xero's annual meeting last month chief executive Rod Drury declined to give numbers updating the company's US progress in the current financial year or its predictions for growth in the world's biggest economy.

Investors should "not expect too much over the next few years", he said.

On Friday Harbour Asset Management managing director Andrew Bascand also questioned Xero's US expansion and the company's valuation.

"Let's be truthful, how many clients do they have in the US right now?" Bascand told BusinessDesk. "This was never going to be an easy path for Xero but their company is growing as well, it's just a question of what valuation it should be on."

LibraTax IRS-Compliant Bitcoin Accounting Software Nears Launch

Nermin Hajdarbegovic for CoinDesk writes: Libra has announced the imminent release of LibraTax, a new software suite designed specifically for digital currency users.

The California-based software developer said LibraTax allows individuals and small businesses to comply with the latest IRS regulations and file returns reporting bitcoin, XRP and other cryptocurrency transactions. The suite should become available by the end of August.

LibraTax allows bitcoin users to comply with accounting requirements put forth by the IRS earlier this year.

Libra said the software will accommodate “all 2013 and earlier” digital currency users as well as those who filed for extensions in spring 2014.

“Even those who have already filed will want to amend their tax returns once they discover that reportable capital gains may be significantly reduced with optimized accounting options,” the company said in a statement.

Automating bitcoin accounting

Libra pointed out that recent IRS guidance on digital currencies requires that taxpayers report digital currency gains and losses on state and federal returns. The problem with this approach is that it requires a lot of manual calculation, making it extremely time consuming and prohibitively difficult.

LibraTax was developed to automate the accounting process by retrieving the user’s transaction history from the block chain. Once it collects the necessary data it synchronizes the value with the digital currency’s historical fair market value. All types of taxable events are supported, including donations, gifts and income.

This allows the software to dynamically compute gains or losses in a few seconds and Libra says it can output a “tremendously beneficial” report to realize minimized or no reportable gains.

More software on the way

Libra said it is also working on a new product suite designed for small businesses and enterprise needs. There is still no word on a launch date for the new suite, but the company said pre-registration will commence with the public beta.

“Our primary objective is to have approachable, convenient software that simplifies the end-user experience associated with taxpaying – ultimately saving users precious time and money. We’ve accomplished that without a doubt,” said Libra founder and CEO Jake Benson.

Libra has been working on LibraTax for months. The company revealed its plans back in April, when it promised to deliver an accounting suite compliant with IRS guidance in the third quarter of 2014.

At the time, Benson told CoinDesk that compliance is one of the most critical issues surrounding digital currencies. He pointed out that tax software might not be the “sexiest business” in the digital currency industry, but it is one of the most essential ones at the moment.

AU: NowInfinity collaborates with Class and Xero to deliver an industry-changing application for Self Managed Super Funds

NowInfinity has announced it has developed a two-way integration to Class to deliver all aspects of the establishment phase of Self Managed Super Funds (SMSFs), limited recourse borrowing arrangements as well as building and running real time SMSF Pensions and Reserves. Document generation, ABNs, TFNs, company reporting become an automated process, reducing time expenditure and significantly improving accuracy and integrity of superfund strategies.

The NowInfinity and Class solution provides accountants, financial planners and others involved with SMSFs with a smart, streamlined solution for the dynamic processing of a wide range of all important SMSF strategies.

The platform also connects with Xero Practice Manager such that once a client record is created in Xero Practice Manager, the same data can be used to establish and drive strategies through NowInfinity. The data is seamlessly transferred to Class and the fund automatically loaded ready for administration.

Grant Abbott, Director of NowInfinity said: "With traditional manual processes it can take several days to set up an SMSF trust deed, and up to 28 days to obtain an ABN or TFN from the Australian Business Register. This new solution reduces the time involved in completing these fund establishment tasks to only minutes - saving time, costs and enabling the accountant or financial planner to focus on providing strategic advice and better service to their clients. More complex strategies such as limited recourse borrowing arrangements can be completed in minutes not days."

Class Super CEO, Kevin Bungard added: "The NowInfinity integration with Class Super provides accountants and financial planners with a complete and streamlined solution for fund establishment, document generation and administration. The solution will help drive innovation and change in the SMSF industry, changing traditional work practices and significantly boosting productivity."

Class and NowInfinity will be demonstrating the new integration, along with the Xero Practice Manager integration, at Xerocon, which takes place 21-22 August at Sydney Olympic Park.

NZ: Accounting app takes flight / when a customer accepts a quote on Quotient it can automatically generate an invoice in Xero.

Jamie Small for Stuff.co.nz writes: Two Hamilton web app developers are getting on a plane to show their wares at Xero's annual conference in Australia.

Nathan Carter and Dale Vink co-own Quotient, an online system they say revolutionises the way companies deliver quotes.

Accounting software company Xero's conference Xerocon Sydney 2014 will take place from August 20 to 22.

Quotient has a stand at the conference, but also has been invited to give a presentation to the 1500-plus attendees.

"It's the perfect audience to present to," says Vink. "They become little salesmen."

Quotient was designed from the ground up as a standalone app, but has become part of Xero's global network of more than 300 tie-in apps.

"Xero's got a whole ecosystem of partner companies," says Carter.

According to Xero's website, Quotient ranks in the top 12 add-ons for its software.

One way the two apps work together is when a customer accepts a quote on Quotient it can automatically generate an invoice in Xero.

The company - which was born when Carter and Vink developed a new quoting system for their other company Black Sheep - has grown to the point where it pays its own way.

"We're just about to hit 1000 paying customers around the world," says Carter.

He says 80 per cent of client companies are based offshore, with the biggest growth markets in Australia and the United Kingdom.

Around 10 new businesses sign up for the app's free trial every day, and two in every 10 go on to become paying customers.

Digital First: Xero “De-Lists” Intuit-Owned Invitbox from Marketplace

Sholto MacPherson for Digital First writes: On the eve of Xerocon, Xero has removed receipt-processing app Invitbox from its directory of compatible add-on programs and from its recommended software portfolio for accounting firms, Xero Practice Studio.

Invitbox was one of the few apps in the Xero ecosystem to earn a five-star rating and Xero crowned it Emerging Add-On App of the Year in 2013. Invitbox was bought by Intuit in May, although it continues to operate as a standalone program that is listed on add-on directories for MYOB and Saasu, both of which compete with Intuit QuickBooks Online.

Xero’s decision to delist the program raised hackles among Intuit-aligned developers. It led to a public spat on Twitter involving senior executives from Xero and Intuit last week over which company was more committed to an open platform.

“Everyone who joins our family remains open in ecosystem. Nothing closed off from others,” tweeted Brad Paterson, Intuit vice president and managing director of Asia Pacific.

“Buying ecosystem partners en mass doesn’t make (a platform) open,” responded Stuart McLeod, Xero’s vice president for product strategy – and former CEO of PayCycle, an app acquired by Xero.

“Stu, closing ecosystem? We list competing apps – ‘open means open’,” said Arian Motivalli, an Intuit business development manager.

Invitbox emailed customers on Monday afternoon to reassure them that the program still worked with Xero.

“Xero has assured us that we will continue to receive development support and API access so that we can continue to bring you further functionality and features to make both you and your client’s lives easier,” Invitbox CEO Roger Gregg wrote in the email.

“It’s just that they are no longer going to tell Accountants, Bookkeepers and business owners that Invitbox (and any new products we develop) exist through their Add-on page, nor will you be able to rate us there. Ouch.”

Xero’s decision was an act of censorship, Gregg told Digital First.

“It’s suppression of information which might be considered inconvenient. That’s close to what censorship is,” Gregg said.

“It’s not going to have too much of an impact on us. It will be more of an impact on accountants and bookkeepers. They are no longer going to have all the business tools available to their business presented to them.”

Xero was definitely an open platform, said Chris Ridd, managing director for Australia. “Invitbox are still in the ecosystem,” Ridd said, noting that three Invitbox employees were attending the Xerocon developers’ day this week.

“When MYOB invested in Kounta (a cloud point-of-sale app in the Xero ecosystem) I just rang Nick Kloete and had a chat. We’ve had a really good conversation internally and we certainly believe open wins,” Ridd said.

MYOB took a minority investment in Kounta, which is still displayed in the Xero add-on directory.

However, Xero would not list apps owned by a competitor in its ecosystem, Ridd confirmed.

“We still view Invitbox as a partner but the reality is that they are owned by a competitor and we’re not going to hand a competitor leads from our website,” Ridd said.

“That’s just the commercial reality. The day that Intuit start promoting Xero on their website, maybe we’ll rethink it.”

Ridd questioned Intuit’s strategy of buying add-on programs such as Invitbox. “We don’t think acquisitions send a great signal to partners in the ecosystem because all of a sudden you’re playing favourites. Why would you acquire if you want to keep it open?”

Sholto Macpherson - Editor and Publisher of Digital First

Sholto is a journalist, presenter and public speaker with 14 years’ experience writing about IT for enterprise and consumer audiences.  Digital First was formerly named BoxFreeIT.com.au from its launch in June 2011 until 28 July, 2014.