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XRO - XERO LIMITED


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Xero (ASX: XRO) is a global accounting software provider. XRO announced its FY19 results this week, beating consensus estimates across all key metrics: customers, revenue growth and earnings. The outperformance was driven by the success of its international division. Xero is an example of a local New Zealand business that has been successfully exported to the world.

 

Our catalyst to invest was an expected acceleration in British subscribers following the Making Tax Digital regulatory change in the United Kingdom (UK). The regulation requires all companies with more than Ãâہ¡ÃƒÆ’‚£85,000 in annual turnover to submit their VAT return online.

 

We believe that the growth in UK subscribers, as a result of the regulatory change, will accelerate further into FY20 as the company releases additional functionality on their platform. We believe that the rapid growth to date confirms that the offering is resonating with its small-to-medium enterprise customer base.

 

It is rare that people become excited about using software. In this case, Xeroâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s customers are incredibly loyal, have a low churn rate, and its customers become evangelists. Ultimately, we believe that Xero will be able to further monetise its customer base beyond the current services it provides.

We hold XRO as a research-driven investment in WAM Capital and WAM Research.

- XRO shares closed up 11.2% for the week.

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  • 5 months later...
As the market cap is less than USD5 billion now I am saying a 20 bagger is possible.

 

John Hempton's comments (posted below back in April 2018). Not quite there yet, but SP is up 8.25% currently @ $75.23/share following this mornings market release

 

Xero Delivers 32% Operating Revenue Growth & Passes 2 Million Global Subscribers

Annualised monthly recurring revenue increased 30% to $764 million

SYDNEY, 7 November 2019 - Xero Limited (ASX: XRO) today reports half year earnings to 30 September

2019 (H1 FY20) delivering strong topline growth combined with improving gross margin and free cash flow.

Performance highlights H1 FY20 (All figures in NZD and comparisons are made against H1 FY19)

ââ€â€Â Operating revenue was up 32% to $338.7 million (33% in constant currency (CC))

ââ€â€Â 30% growth in annualised monthly recurring revenue (AMRR) to $764.1 million

ââ€â€Â 30% growth in total subscribers to 2.057 million

ââ€â€Â Total subscriber lifetime value grew by 37% (38% in CC) to $5.4 billion, with more than $1 billion

added in the half

ââ€â€Â Free cash flow was $4.8 million, compared to free cash outflow of $9.8 million in H1 FY19

ââ€â€Â Net profit after tax increased by $29.9 million to $1.3 million

ââ€â€Â EBITDA excluding impairments of $65.9 million almost doubled from $34.5 million in H1 FY19

 

5 year chart

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RBC lifts Xero price target by 12.5 per cent to $90 a share

Luke Housego

 

Royal Bank of Canada analysts have lifted their price target on Xero by 12.5 per cent after the accounting software provider's half-year results on Thursday showed strong growth.

 

"Subscriber net adds, revenue growth and [free cash flow] were highlights of another solid result," the analysts wrote in research.

 

Xero reported subscriber growth of 30 percent, which saw it pass 2 million subscribers, as it continues to expand around the world.

 

Free cash flow was the key driver of the RBC price target increase. Operating cash flow for the six months to September 30 was $NZ71.5 million ($66.1 million), up 99 per cent on the 2018 first half.

 

"Higher FCF estimates lifts our price target to $90.00 per share from $80.00 per share prior." the broker noted.

 

Annual revenue per user was also notable, according to the RBC analysts.

 

"Flat ARPU was a good outcome in the context of a new lower priced single touch payroll product in Australia, implying solid ARPU growth with other existing subscribers.

 

Reiterating their "outperform" rating for the stock, the RBC research noted Xero is the only clound-native, accounting software provider to SMEs, which gives it a clear advantage.

 

"These attributes give Xero material global scalability advantages relative to key competitors who started life as desktop or on-premise software packages."

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Xero director Craig Winkler's Givia Pty Limited was the seller behind a line of 3 million shares that crossed the market on Monday afternoon @ $75/share.

 

Not unexpected - the planned 10 year time frame sell down of his holdings was made known to the market back in May 2017 - >>> https://www.asx.com.au/asxpdf/20170516/pdf/...8v06q7clm3y.pdf

 

Picked his timing well - pretty much at the top

 

 

 

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  • 2 weeks later...

Xero reaches $80

By Lucy Battersby

Cloud-based accounting services company Xero reached a milestone in the opening minutes, getting above $80 per share for the first time. It has since softened slightly and is trading at $79.87 currently, a 1 per cent gain on yesterday's closing price.

 

This takes value of the biggest shareholder and founder Rod Drury's 11.1 per cent share up to $1.3 billion.

 

Two weeks ago the company confirmed director Craig Winkler's charity Givia had sold $225 million worth of shares it holds. At the current share price its remaining 6.5 per cent stake is worth $740 million, from an original $NZ18 million investment in 2009. And Peter Thiel owns 2.9 per cent that is now worth $331 million, four times more than what he paid for it in April 2017.

 

Like many tech companies Xero is trading at eye-watering multiples of 706 times earnings with the company expected to make a profit of $18.35 million this year. It does not pay dividends. The stock price is nearing the highest analyst target price of $90, but the average target price is $73.77.

https://www.shortman.com.au/stock?q=xro

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  • 1 year later...

now around $135 a share; was at a high of $150 in Dec/ Jan

Xero's profit has soared in the 2021 financial year, driven by record subscriber growth in the second half of the year.

 

The company's revenue rose 18 per cent to $NZ848.8 million while net profit climbed 493 per cent to $NZ19.8 million. EBITDA rose 39 per cent to $NZ191.2 million.

 

While its first half performance was impacted by COVID-19, the company delivered its strongest ever half year subscriber numbers with 288,000 net additions.

 

Over the full year, total global subscribers increased by 456,000 or 20 per cent to reach 2.74 million.

 

Total subscriber lifetime value grew by 38 per cent to $NZ7.7 billion.

 

As well as responding to our customers' needs during the pandemic, we continued to execute our strategy, with strong revenue and subscriber growth, completion of a significant capital raise, and the acquisitions of Planday, Tickstar and Waddle, said Xero chief executive Steve Vamos.

 

The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and importance our customers place on their subscription and connection to the broader Xero community is increasing.

 

Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world. Small businesses make up more than 90 per cent of businesses in the markets Xero operates in, and represent a significant contribution to economic activity, jobs, and the community."

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  • 5 months later...
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