Trade Me founder Morgan ups stake in Xero

Trade Me founder Sam Morgan has invested another $2 million in online accountancy software firm Xero, taking his stake in the company to close to five per cent.

Mr Morgan, a non-executive director at Xero, had agreed to buy 1.4 million shares from founders Rod Drury and Hamish Edwards and chief operating officer Alastair Grigg, chairman Phil Norman said at the company’s annual general meeting in Wellington yesterday.

The shares were sold at $1.45 each, a 4c premium to last night's closing price. Both Mr Drury and Mr Edwards have indicated that they will not sell any more shares until the company reaches financial breakeven, which is forecast to be in the second half of 2011. Mr Drury said Mr Morgan's investment was "a huge endorsement" of the company's progress and strategy.

Xero's customer base has now reached 22,000, an increase of 5000 since the end of March. The company’s $8.45 million net loss for the 2010 financial year was a better-than-expected result, Norman told the meeting. The company remains on-track to for the breakeven target of late 2011, he said.

Now that the board had proved to shareholders "that we know what we're doing" the company was being given scope to explore its potential, Mr Drury said.

"We're not after tens of thousands of customers, we want hundreds of thousands of customers and beyond.

"It feels very good, everyone's very positive on the business, and we believe we're on the way to building a significant global presence from New Zealand."

Shares in Xero climbed 1c to close at $1.41.

The full text of Norman’s address to shareholders at the meeting can be found on the NZX website.

- Additional reporting by David Watson