|Traded as||ASX: XRO|
|Industry||Software as a Service (SaaS)|
|Founded||New Zealand (2006)|
Number of employees
|Footnotes / references|
Xero is a New Zealand domiciled public technology company, listed on the Australian Stock Exchange. Xero 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), three offices in the United Kingdom (London, Manchester and Milton Keynes), three offices in the United States (Denver, San Francisco and New York), as well as offices in Canada, Singapore, Hong Kong and South Africa.
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. Its products are used in over 180 different countries.
In 2006, Xero was founded in a Wellington studio apartment by Rod Drury and Hamish Edwards, who felt that traditional desktop accounting software had become outdated. They decided to create a modern cloud-based product. Xero Limited's global headquarters are still located in Wellington.
Originally called Accounting 2.0, the name was unpopular with the company’s staff and the decimal point made it impossible to register for an internet domain. The company changed the name to Xero, which also proved to be a challenge, as the existing xero.com domain was a Linkin Park fan site (Xero was Linkin Park’s original name). Drury flew the existing domain owner to New Zealand from the United States and ultimately convinced him to sell the domain for $20,000.
Rod Drury stepped down as CEO on 31 March 2018, with Steve Vamos replacing the role in April 2018. Drury remains on the board as a non-executive director.
In 2019, Xero announced it had hit 1.8 million subscribers, employed 2,500+ people around the world and achieved positive free cash flow for the first time.
Xero went public on the New Zealand Exchange on June 5, 2007, with a $15 million (NZD) IPO, and gained 15% on its first trading day. 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. It went public on the Australian Securities Exchange (ASX) in November 2012. Xero transitioned to a sole listing on the ASX on February 5, 2018, and delisted from the NZX on February 2, 2018. January 31, 2018 was the last day Xero shares were traded on the NZX.
In 2009, Xero closed a $23 million (NZD) round of funding led by MYOB founder, Craig Winkler. It raised an additional $4 million (NZD) in 2010 from Peter Thiel's Valar Ventures. In November 2012, it raised $49 million in a funding round, with the largest amounts coming from Peter Thiel and Matrix Capital. In May 2013, the company had raised more than $100 million and had a valuation of approximately $1.4 billion on the NZE. This was prior to when the company received an additional $180 million (NZD) from Thiel and Matrix in October 2013, bringing total funding to more than $230 million. Xero raised an additional $100 million from Accel and $10.8 million from Matrix Capital in February 25, 2015. On October 5, 2018, Xero announced a 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 the company was awarded best hybrid deal of 2018 by Finance Asia.
Acquisitions and strategic partnerships
In July 2011, Xero acquired the 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. In July 2012, it acquired Spotlight Workpapers for a mixture of cash and shares totaling $800,000.
The same year it acquired WorkflowMax for cash and shares totaling $6 million (NZD).
In July 2018, Xero announced a strategic alliance with US payroll platform Gusto.
In August 2018, Xero acquired Hubdoc, a data capture solution.
In November 2018, Xero acquired Instafile, a cloud-based accounts preparation and tax filing service for £5.25 million (GBP).
Its 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 integrations with 700+ third party apps, and there are over 50,000 users of Xero’s API developer tools.
Xero also supports multiple tax rates and currencies. It also incorporates payroll, projects and expenses features.
In the 2019 financial year, Xero embraced Making Tax Digital in the United Kingdom, Single Touch Payroll in Australia and Payday Filing in New Zealand, allowing subscribers to manage their compliance obligations through the Xero platform.
Awards and recognition
In 2007 Xero received the Overall Partner Solution of the Year for Small Business and also featured as part of a Microsoft case study. The company was the recipient of two Webby Awards in 2009, including the People's Choice Award for Banking/Bill Pay. It was recognized again with a Webby in 2010 for Web Services & Applications. It received a Fast Company Innovation by Design Award in 2012. and was recognized as one of the 10 Smart Financial Apps to Solve Small Business Accounting Challenges by YFS Magazine in 2013. Additional awards in 2013 included the Awesome Application Award from the Sleeter Group and the New Zealand Company of the Year from Hi-Tech. In June 2014, Xero topped the Forbes magazine "100 most innovative growth companies" list. Also in 2014, the company was named one of Macworld's recommended online business accounting apps. In January 2015, Xero was crowned best accounting software in the Cloudswave Awards with a score of 83,and New Zealand Company of the Year from Hi-Tech for the second time. Xero won Product of the Year at the British Accountancy Awards 2017 and also won Best Overall Fintech platform by the Fintech Breakthrough Awards in 2017. The company was rated by CANSTAR Blue as Australia’s best accounting software four consecutive years from 2015-2018. On the inaugural 2018 Financial Times FT1000 High-Growth Companies Asia Pacific list, Xero was the fastest growing tech company in the $200 million+ segment. In 2018 Xero also won ‘Bookkeeping software of the Year’ from the Institute of Certified Bookkeepers UK and Small Business Accounting Software of the Year' – Practitioners’ Cchoice’ from members of AccountingWeb (UK).
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