High Five Xero!

Date: 6th June 2011

Xero, the cloud-based accounting platform provider, narrowed its loss in the year, as it trans-Tasman units underpinned a surge in sales.

The Wellington-based company reported a loss of $7.5 million, or 8 cents per share, in the 12 months ended March 31, compared to a loss of $8.5 million, or 10 cents, a year earlier.

Operating revenue almost tripled to $9.3 million in the period, with most of the growth coming from the New Zealand and Australian units.

“The company will continue to execute its sales and marketing strategies in regional markets, while positioning itself to take advantage of the massive opportunities in the US,” Xero said in a statement.

“The company has taken a measured approach to the US market as it refines the U.S. version of the software.”

This year, the company rolled out new payroll software and banking feeds as it strives to reach profitability. It had previously flagged calendar 2011 as its ‘break-even’ year.

Though Xero didn’t provide any guidance in today’s release, it flagged more analysis will be available in its annual report, which will be out next month.

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Earnings growth was damped by increased spending on IT infrastructure of $1.5 million to $2 million, as the company introduced Akamai web application services and dealt with rising customer numbers.

It also added $1 million to its marketing expenses, spending $2.2 million in the year.

Xero’s cash reserves fell $4.5 million to $16.9 million in the year, though that’s up $300,000 since its half-year update in November.

The company’s New Zealand unit narrowed its net loss to $7.6 million from $8.4 million a year ago, while its U.K. business made a profit of $23,000, compared to a profit of $8,000 in 2010, and the Australian business earned $19,000, up from $8,000 a year earlier.

The shares rose 0.4 per cent to $2.48 in trading yesterday, and have dropped 21 per cent from a peak in December.

Originally published in the New Zealand Herald, May 20

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