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XRO, XERO LIVE LIMITED
nipper
post Posted: May 13 2021, 08:39 AM
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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.

QUOTE
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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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Nov 26 2019, 10:28 AM
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In Reply To: blacksheep's post @ Nov 12 2019, 09:52 AM

Xero reaches $80
By Lucy Battersby
QUOTE
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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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 12 2019, 09:52 AM
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In Reply To: blacksheep's post @ Nov 8 2019, 01:48 PM

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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Attached File  xro.png ( 128.22K ) Number of downloads: 3

 




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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 8 2019, 01:48 PM
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In Reply To: blacksheep's post @ Nov 7 2019, 12:46 PM

QUOTE
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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Attached File  xro.png ( 90.41K ) Number of downloads: 3

 




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 7 2019, 12:46 PM
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In Reply To: blacksheep's post @ Aug 1 2018, 05:37 PM

QUOTE
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
QUOTE
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)
● Operating revenue was up 32% to $338.7 million (33% in constant currency (CC))
● 30% growth in annualised monthly recurring revenue (AMRR) to $764.1 million
● 30% growth in total subscribers to 2.057 million
● Total subscriber lifetime value grew by 37% (38% in CC) to $5.4 billion, with more than $1 billion
added in the half
● Free cash flow was $4.8 million, compared to free cash outflow of $9.8 million in H1 FY19
● Net profit after tax increased by $29.9 million to $1.3 million
● EBITDA excluding impairments of $65.9 million almost doubled from $34.5 million in H1 FY19


5 year chart
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Attached File  xro.png ( 126.38K ) Number of downloads: 3

 




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: May 17 2019, 08:46 PM
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Posts: 9,138
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QUOTE
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 £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, Xero’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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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


blacksheep
post Posted: Aug 1 2018, 08:06 PM
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In Reply To: nipper's post @ Aug 1 2018, 06:39 PM

This is how he explained his "$100 billion number "

QUOTE
The $100 billion number

The biggest debate in the office came about because of my $100 billion number as an end-game market cap. In some sense that is the big-hairy-audacious-goal (BHAG) for any putative tech giant.

But in this case thinking about how you get there explains it pretty well and also explains to some degree what the company needs to do.

Xero currently has about a million customers paying on average about $400 per year each. We pay a bit more mostly because we transact some of our business in foreign currencies and as we add optional features we would expect to pay more still. We would expect revenue per customer to grow over time and think $600 is not unrealistic. At least some of the customers become bigger over time. We know one 200 person business who runs the entire thing on Xero. Their next transition would typically be to Oracle accounts - but they do not feel this is necessary.

To get to $100 billion in market cap you probably need $15 billion in revenue at some point. Even that is fairly expensive at 7x revenue - but most of the tech giants trade at about 7x revenue.

At $600 per customer that means you need 25 million customers. To get to my BHAG Xero needs 25 million customers. It needs to be 25 times bigger.

My first cut was simple. Xero has the bulk of the market in New Zealand - its home market - and about a third of the market in Australia. It has a small market share in the UK and a tiny market share in the US. Australia is about 2 percent of the world - and so Xero could - if it got to this market share globally - be 50x bigger.

It is a superior product, mission critical and sticky. This seemed plausible to me.

Then one of my staff members pointed out that there are less than 6 million incorporated businesses in the US. And sure this doesn’t count sole-traders but it does make my 25 million customer target seem hard.

This of course led to a debate. How is it possible to have a million customers mainly in Australia and New Zealand (very small countries economically) and there only be a target market of about 6 million customers in the US.

The first answer was the one alluded to above which is that Australia and New Zealand both have value added taxes which means that everyone with any private business has to file regular tax statements and the vast bulk of them use software to comply. This will apply in Europe too. Xero should have gone to Europe before going to America.

The second answer (which I would love to confirm) is about the structure of the US economy versus countries without large pools of low-income labour. In the US there is a vast pool of labour at approximately $10 an hour which is lightly skilled. Many businesses work out how to leverage an entrepreneur’s talent through using dozens of these people. The average restaurant in America is much larger than the average restaurant in Sydney - and leverages one executive chef over many staff. By contrast this low-income labour pool barely exists in Australia - and of consequence I suspect the average small business is smaller and there are many more of them. Australia, not America is a land of thriving small businesses (at least by number).

I suspect the same is true in Europe. Indeed in Europe in many jurisdictions there are penalties for businesses getting too big. France for instance has different labour laws for companies that employ more than 50 people rather than less than 50 people and many businesses deliberately stop growing under that threshold. My guess is that the market is again relatively bigger in Europe than America. Just because there are more potential customers.

In all cases it leads me to the conclusion that Xero has focussed its energy wrongly (on trying to grow in America) rather than going to countries where it is a natural fit.

Done well though I think there are 25 million customers out there to win. Whether they can do it - that is yet to be seen.




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Aug 1 2018, 06:39 PM
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In Reply To: blacksheep's post @ Aug 1 2018, 05:37 PM

QUOTE
.... the potential to be a $100 billion global tech behemoth.

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

- in a perfect world. But there's going to be capital raised (= dilution) to fund that growth along the way, I'd reckon



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Aug 1 2018, 05:37 PM
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Posts: 6,791
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In Reply To: nipper's post @ Jul 30 2018, 08:55 AM

Bronte Capital's blog on XRO
extract - see link for complete article - http://brontecapital.blogspot.com/2018/08/...1.html?spref=tw
QUOTE
Xero
I was quoted in the Australian Financial Review on Monday stating that Xero is the only Australian company with the potential to be a $100 billion global tech behemoth.

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

The $100 billion number was a matter of some dispute in the office - and a discussion is in the appendix. However suffice to say there is huge upside provided it all works.

Xero however have a few hoops to jump through on that path. This post is to explain my view and also what I hope management improve. I do not think they have done a great job of it so far (even though the stock and business have been a success).

But for the uninitiated I am going to explain what Xero does and why it has such potential.




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
Mags
post Posted: Jul 31 2018, 09:05 AM
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In Reply To: nipper's post @ Jul 30 2018, 08:55 AM

I didn't know USA small business didn't use accountants/packages as much. No surprise there I guess given that the ATO seems to have been able to seek revenue from every possible crack in the economy.

No surprise there's been a change at the top. I thought early on it looked to be a pump and dump stock: founders/directors earning millions while no profits made, but huge loans being drawn...... Now they sell down their holdings.... I've seen this story before.

Then chuck in the new cash grabbing managers, which will simply bleed them of customers:

Xero discussion thread

It's a dangerous game, as xero had an almost cult like status amongst small business and their accountants. Destroy that, and their cost of customer acquisition will raise even higher!

And I suspect I'm not alone in seeing people leaving cloud based stuff and return to desktop, or even locally server hosted stuff. With all the telecommunication/NBN dramas, power issues, etc having your own local copy is a smart move. Never mind the privacy stuff.

I'll give this one a wide berth

 
 


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