Net loss almost doubles as Xero continues strong growth plans
- 24 April, 2015 07:38
Xero has continued to deliver strong growth for the year ended 31 March 2015, despite the company almost doubling its net loss.
As revealed to the New Zealand stock exchange, the company reported recording operating revenue of $123.9m, up 77 per cent from $70.1m in FY14.
The company’s net loss after tax for FY15 increased 96 per cent to $69.5m however, increasing to 56 per cent of operating revenue from 51 per cent from FY14, reflecting an investment in product development, and sales and marketing with cash of $268.9m available to fund future growth and expansion.
Paying customers grew to 475,000 at 31 March 2015, up 67%, and subscription revenue grew 81 per cent to $120.9m while Xero’s recurring revenue model means that it commences its 2016 financial year strongly with $159.3m in annualised committed monthly revenue, a 71 per cent increase on the same time last year.
“We’re delighted with our achievements this year,” says Rod Drury, CEO, Xero. “We focused on adding and integrating 400 talented people to our team for critical mass around the globe.
“We’re extremely proud to have done that while continuing to drive strong revenue and customer growth across all markets.
“We have emerged as the cloud accounting leader in three countries and are seeing positive momentum in the US market.”
Drury says the Kiwi cloud computing firm will continue to invest to fuel growth and scale while maintaining its focus on building a high margin business model.
Reports also show that the business maintained a strong cash position with $268.9m of cash at 31 March 2015 to continue to invest in creating long-term shareholder value.
At the close of the financial year ended 31 March 2015, the company reported subscription revenue of $120.9m, up 81 per cent from $66.9m in FY14, constant currency subscription revenue of $122.5m, up 83 per cent compared to FY14 and operating revenue of $123.9m, up 77 per cent compared with FY14.
Furthermore, annualised committed monthly revenue (ACMR) of $US159.3m, a 71 per cent increase on FY14.
"Our platform now provides the most comprehensive small business accounting experience for customers, winning against desktop solutions while delivering the benefit of running a business anywhere, anytime, from any device,” Drury adds.
“We have delivered payroll and inventory across all markets, and we will continue to add value to small businesses, accountants and bookkeepers through continued innovation.
“We are very excited about FY16 and expect strong growth to continue in all our core markets for the foreseeable future.”
During FY15, Xero used $88.4m of cash and cash equivalents in operating and investing activities compared to $48.4m during FY14 while also raising $147.2m in March 2015.
In addition, Xero added 403 employees, and now has 1,161 staff globally to support customer growth across all markets and to scale product development with the business anticipating a slower rate of employee growth in FY16.
Xero also continues strong growth as across New Zealand, Australia and the United Kingdom, with annualised subscriptions of $39.5m, $74.2m and $25.9m respectively.
Heading into FY16, growth is expected to continue in these markets, with the company focusing on building infrastructure to support its expansion in the US market.
“The US remains a significant and addressable opportunity with the majority of small businesses unserved by cloud accounting software,” a company statement reads.
“Xero is well positioned to meet this need through its complete small business accounting solution, purpose built for the Cloud and mobile devices.”
During the second half of the year the US management team formed, led by US President Russ Fujioka.
According to Xero, the focus was on ensuring a “solid foundation” for North America to enable it to scale, and during the second six months customer growth was 300 per cent greater than the first six months.
Xero continued to build its Global Leadership Team appointing Andy Lark as Chief Marketing Officer, Angus Norton as Chief Product Officer, and San Francisco-based Graham Smith was appointed to the Board as a non-Executive Director,
An additional $147.2m of capital was raised in March 2015 from Accel Partners and existing investor Matrix Capital Management, positioning Xero strongly with $269m of cash.