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Xero (company)

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Xero Limited
Company typePublic
ASX: XRO
IndustrySoftware as a Service (SaaS)
FoundedNew Zealand (2006)
Headquarters
Wellington
,
New Zealand
Key people
  • Graham Smith
  • (Chairman of the Board)
  • Rod Drury
  • (Founder & Director)
  • Steve Vamos
  • (CEO)
ProductsAccounting software
Revenue
  • Increase NZ$ 406.58 million
  • (FY MAR. 31, 2018)
  • Increase NZ$ -28.67 million
  • (FY MAR. 31, 2018)
  • Increase NZ$ -27.84 million
  • (FY MAR. 31, 2018)
Total assets
  • Decrease NZ$ 117.98 million
  • (FY MAR. 31, 2018)
Total equity
  • Decrease NZ$ 223.13 million
  • (FY MAR. 31, 2018)
Number of employees
  • Increase 2531
  • (FY MAR. 31, 2019)
WebsiteXero.com
Footnotes / references
[1][2][3][4][5]

Xero is a New Zealand domiciled public technology company, listed on the Australian Stock Exchange[6], that offers a cloud-based accounting software platform for small and medium-sized businesses. The company has three offices in New Zealand (Wellington, Auckland and Napier), six offices in Australia (Melbourne, Sydney, Canberra, Adelaide, Brisbane and Perth), two offices in the United Kingdom (London and Milton Keynes),[7] three offices in the United States (Denver, San Francisco and New York), as well as offices in Canada, Singapore, Hong Kong and South Africa.[8]

Xero's products are based on the software as a service (SaaS) model and sold by subscription, based on the type and number of company entities managed by the subscriber.[9]Its products are used in over 180 different countries.[10][1]

History

Xero was founded in a Wellington studio apartment in 2006 by Rod Drury and his personal accountant when they felt that traditional desktop accounting software had become outdated and decided to create a modern cloud-based product.[2] Xero Limited's global headquarters are still located in Wellington.[11]

Originally called Accounting 2.0, the name was unpopular with the company’s staff and the decimal point made registering an internet domain name impossible. Changing the name to Xero also provided a challenge with the domain name, as the existing xero.com domain was a Linkin Park fan site (Xero was Linkin Park’s original name). Rod decided to fly the existing domain administrator to New Zealand from the United States, wined and dined him, and ultimately convinced him to sell the domain for $20,000.[12]

The company entered the Australian market and the United Kingdom in 2008,[13] and United States in 2011.[14] In 2017, Xero surpassed one million customers globally and the following year, in December 2018 Xero hit a million subscribers in its home markets of Australia and New Zealand.

Rod Drury announced he would be stepping down as CEO in March 2018, with Steve Vamos starting the role in April 2018. Rod remains on the board as a non-executive director.

Xero launched its cloud accounting software platform in Asia in 2017, South Africa in 2017 and Canada in 2018.

In June 2018, Xero updated its tagline from ‘beautiful accounting software’ to ‘beautiful business’. More recently in 2019, Xero announced it had hit 1.8 million subscribers, employed 2,500+ people around the world and achieved positive fee cash flow for the first time.

Funding

Xero went public on the New Zealand Exchange on June 5, 2007 with a $15 million (NZD) IPO, gaining 15% on its first trading day.[15] Drury decided to list on the NZX rather than receive investment from Silicon Valley in order to avoid being pressured into selling to a larger competing company.[7] The company focused on the New Zealand market and product and development for its first five years before entering other markets.[7] It went public on the Australian Securities Exchange on November 8, 2012.[3] Xero transitioned to a sole listing on the ASX on February 5, 2018, delisting from the NZX on February 2, 2018. January 31, 2018 was the last day Xero shares were traded on the NZX.

Xero has also received funding from various investors. In 2009, it closed a $23 million (NZD) round of funding led by MYOB founder Craig Winkler.[16] It raised an additional $4 million (NZD) in 2010 from Peter Thiel's Valar Ventures,[17] who also invested an additional $16.6 million (USD) in February 2012.[18] It raised $49 million in a funding round in November 2012 with the largest amounts coming from Peter Thiel and Matrix Capital. It was reported by PandoDaily that the company has raised more than $100 million and had a valuation of approximately $1.4 billion on the NZE as of May 2013.[7][19] This was prior to the company receiving an additional $180 million (NZD) from Thiel and Matrix in October 2013, bringing total funding to more than $230 million.[20] Xero raised an additional $100 million from Accel and $10.8 million from Matrix Capital in February 25, 2015.[21]On October 5, 2018, Xero announced the settlement of $300 million (USD) in convertible notes. The capital raise was groundbreaking for a New Zealand or Australian company not listed in the United States and was awarded best hybrid deal of 2018 by Finance Asia.

Acquisitions and strategic partnerships

Xero has acquired several companies since its launch. In July 2011, the company acquired Australian online payroll provider Paycycle for a mixture of cash and shares totaling $1.9 million (NZD). The acquisition allowed Xero to integrate payroll into their Australian product offering.[22] It acquired Spotlight Workpapers in July 2012 for a mixture of cash and shares totaling $800,000.[23]The same year it acquired online job, time and invoice management solution WorkflowMax for cash and shares totaling $6 million (NZD).[23][24]

On July 20, 2018, Xero announced a strategic alliance with US payroll platform Gusto, a full-service US payroll platform to provide customers access to full-service payroll in all 50 States.

On August 1, 2018, Xero announced the acquisition of Hubdoc, a data capture solution that helps accountants, bookkeepers, and small businesses to streamline administrative tasks such as financial document collection and data entry. Xero paid the acquisition price for Hubdoc in two stages, initially US$60 million consisting of 35% cash and 65% in Xero equity. Xero arranged new debt funding for the cash component of the acquisition price. A second tranche of US$10 million in equity was promised to the Hubdoc’s shareholders in 18 months following the acquisition, subject operational targets and conditions.

Three months later, on November 15, 2018, Xero announced the acquisition of Instafile to provide direct tax filing functionality to accountants and small businesses in the UK. Xero acquired Instafile for £5.25 million (GBP), which will be paid over three years, based in part on the achievement of certain performance targets.

Product

Xero’s key features include automatic bank feeds, invoicing, accounts payable, expense claims, fixed asset depreciation, purchase orders, bank reconciliations, and standard business and management reporting. Xero has more than 200 secure connections with banks and financial service partners around the world. A free API also enables customers and 3rd-party software vendors to integrate external applications with Xero. Xero has built the industry’s largest marketplace of 700+ third party apps, and there are over 50,000 users of Xero’s API developer tools

All financial data is stored in the cloud on a single unified ledger, allowing users to work in the same set of books regardless of location or operating system.[24] Fast Company featured the software's UI design in a 2012 article, stating that the design is simple and makes it easy for users to get an at-glance idea of real time financial situations.[25] In 2011, Xero released the Xero Touch mobile apps for iOS and Android devices,[26] allowing users to issue invoices while on-site with clients.[27] On August 16, 2016, Xero announced they were partnering with PayPal to allow invoices to be paid via PayPal directly from the invoice.[28]

In the 2019 financial year, Xero embraced digital government initiatives in New Zealand (Payday Filing), Australia (Single Touch Payroll) and the United Kingdom (Making Tax Digital), allowing subscribers to manage their compliance obligations through the Xero platform.

See also

References

  1. ^ a b "Xero Limited Annual Report (Fiscal Year: March 31, 2018)" (PDF). Xero Limited. Retrieved November 27, 2018.
  2. ^ a b Laugesen, Ruth (17 October 2013). "From Xero a hero". New Zealand Listener (subscription required). Retrieved 15 January 2014.
  3. ^ a b Barwick, Harrish (8 November 2012). "NZ-based SaaS provider Xero lists on ASX". Computer World. Retrieved 15 January 2014.
  4. ^ "Xero Limited 2016 Annual Report" (PDF). Retrieved 24 May 2016.
  5. ^ "Xero Limited 2018 Interim Report" (PDF). Retrieved 17 March 2018.
  6. ^ "Australian Securities Exchange", Wikipedia, 2019-06-16, retrieved 2019-06-26
  7. ^ a b c d McKenzie, Hamish (1 May 2013). "Xero: A billion-dollar software company that had five years in stealth at the bottom of the planet". Pando Daily. Retrieved 15 January 2014.
  8. ^ Campbell, Anita (13 October 2013). "Small Biz Accounting Software Space Heats Up As Xero Raises $150 Million". Small Biz Trends. Retrieved 15 January 2014.
  9. ^ Robins, Brian (6 November 2013). "Sharemarket darling Xero dubbed 'Apple of accounting'". The Sydney Morning Herald. Retrieved 15 January 2014.
  10. ^ "Xero grows to $1 Billion revenue - Enterprise Times". Enterprise Times. 2016-07-20. Retrieved 2018-05-30.
  11. ^ Brooks, Steve (2016-07-20). "Xero grows to $1 Billion revenue -". Enterprise Times. Retrieved 2019-06-27.
  12. ^ "THE UNTOLD STORY: How Xero took a band name and changed accounting for a million companies". Business Insider. Retrieved 2019-06-27.
  13. ^ "Xero Chairman's Address for 2009 Annual Meeting" (PDF). XERO. 23 July 2009. Retrieved 24 May 2016.
  14. ^ "Chairman's Address for 2011 Annual Meeting" (PDF). XERO. 21 July 2011. Retrieved 24 May 2016.
  15. ^ Niesche, Christopher (6 June 2007). "Xero begins strongly". New Zealand Herald. Retrieved 15 January 2014.
  16. ^ Smith, Robert (7 April 2009). "MYOB founder helps Xero raise $23m for global push". National Business Review. Retrieved 15 January 2014.
  17. ^ Wauters, Robin (22 October 2010). "Peter Thiel Invests $3 Million In Xero To Support Its US Expansion". Tech Crunch. Retrieved 15 January 2014.
  18. ^ Wauters, Robin (3 February 2012). "Small business accounting service Xero raises $16.6M". Venture Beat. Retrieved 15 January 2014.
  19. ^ Williams, Alex (29 November 2012). "Peter Thiel And Existing Investors Put Another $49 Million In Accounting Software Company Xero". Tech Crunch. Retrieved 15 January 2014.
  20. ^ Lunden, Ingrid (13 October 2013). "Xero Zeros In On Another $150M To Do Battle With Intuit In The World Of Online SMB Accounting Software". Tech Crunch. Retrieved 15 January 2014.
  21. ^ "Xero Attracts World-Class Investment and Talent to Fuel Growth" (PDF). Xero. Retrieved 25 February 2015.
  22. ^ Rogers, Claire. "Xero buys payroll firm to boost Aust growth". Stuff.co.nz. Retrieved 19 September 2013.
  23. ^ "Xero's latest acquisition a 'compelling' one for accountants". Idealog. Retrieved 19 September 2013.
  24. ^ Gorham, Tom. "Xero review". PC Pro. Retrieved 16 January 2014.
  25. ^ LaBarre, Suzanne (25 February 2012). "Xero Reinvents Accounting For Small Businesses, With Superb UI Design". Fast Code Design. Retrieved 15 January 2014.
  26. ^ Fineberg, Seth. "Xero Debuts Mobile App for Android". Accounting Today. Retrieved 9 September 2013.
  27. ^ Smith, Heather (23 May 2013). Xero For Dummies. John Wiley & Sons. p. 35. ISBN 978-1-118-57252-8.
  28. ^ Gagliordi, Natalie. "Xero teams with PayPal for streamlined invoice payments | ZDNet". ZDNet. Retrieved 2016-08-24.
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