A push into the US market is on Xero’s agenda for the coming year.
The online accounting software provider has announced a net loss of $4.7 million for the six-month period to September 30, describing the figure as “expected to be the maximum loss incurred as the company drives toward break-even”.
Getting a foot hold in the US market is a key goal, with the commentary accompanying the posting of the results on the NZX website noting: “Xero continues to take a measured approach to its entry into the vast US market and plans to establish an initial team on the ground during the current financial period.”
The commentary concedes that securing a $4 million investment from early Facebook investor Peter Thiel was motivated, in part, by raising Xero’s profile in the US: “The latest step in the company’s US strategy was the private placement by Facebook investor Peter Thiel of 2.6 million ordinary shares at $1.49, raising a total of $4m in cash. Xero’s ability to secure significant investment and access to networks of such industry leaders provides confidence that the company is on track.”
Xero has been consistently in the red since listing on the NZX, but the commentary notes: “The UK operation is on target to achieve monthly break-even in the fourth quarter of calendar 2010.
“The Australian operation will follow in the first quarter of calendar 2011. Company break-even remains on track for the second half of calendar 2011 as per previous guidance.”
Recruitment and staffing costs were a factor in the $4.7 million loss, with Xero’s headcount increasing from 73 to 101.
Another expense during the six months was the $200,000 purchase of a 15.9 percent stake in Max Solutions.