Thursday, January 15, 2015

Xero seeks US boost with new platform

Holly Ryan for the New Zealand Herald writes: Accounting software firm Xero has introduced a new combined payroll and accounting software platform to help increase growth in the US.

The company hit some speed bumps in the US last year.
After conceding expansion there had been slower than expected, Xero faced market concern that it might not be able to crack the difficult American market.
Chief executive Rod Drury yesterday said he was excited about growth this year, and a US listing was still a possibility.
"The US is really our focus for this year so we're getting our US team in place so we can add some other [countries] maybe towards the end of the year," Drury said.
The focus on the United States was partly a result of the possibility of an initial public offer (IPO), as the company had to prove it could take a firm foothold in the US market before listing.
"I think that to have that [listing] as an option we need to show traction in the US because a lot of the influential analysts want to see traction in their home markets," he said.
"So even though we're doing a great job in Australia and the UK, we really need to demonstrate traction in the US, which is why we're really focused there and if the market conditions are right, then we can do the IPO."
Recommendations by accountants to their clients had been an important way for the NZX-listed company to increase its global customer base.
But concerns about litigation in the US meant accountants there tended not to provide such general business advice, and they also had less exposure to cloud computing.
Drury said software purchases straight from the company's website were increasing.
"The external view [last year] was that we were off track but that wasn't the internal reality, it just takes a while to get off the ground, and we still had over 20,000 [US] customers so we were reasonably comfortable with where we got to last year," he said.
The latest payroll addition to the company's software offering has been introduced in California, Florida and Texas, and will come to New Zealand and Britain in April. Other countries will get it later in the year.
"Payroll is usually the biggest expense for small business owners," Drury said.
"So integrated accounting and payroll is compelling and inevitable. More than 40 per cent of our customers already use our payroll software in markets where it is available," he said.
"We're still putting out guidance of 80 per cent growth for the year, so we've got US$100 million [annualised] revenue and are growing quickly. We're still one of the fastest-growing software companies."
Drury said much of the hard work required to get the right team and build a solid base had been completed last year.
If the rate of software shipping continued, the company would be in "a very good position" this year.

On the move

• Xero has introduced a combined payroll and accounting software platform in the US.
• It will come to New Zealand and Britain in April, and to other countries later in the year.
• The company is looking at new areas for expansion and a possible US listing.
• Xero has more than 400,000 customers in 180 countries.
• The company is predicting 80 per cent growth for the year.


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