Xero abandons goal of breaking even this year

UPDATED: Chief Executive Rod Drury tells AGM that Xero is the next Trade Me

Xero chief executive Rod Drury remains upbeat about the company's prospects, telling the company's well-attended annual general meeting in Wellington yesterday that Xero is the next Trade Me.

He says that with 45,000 businesses now running the online accountancy software, it is currently processing $44 billion of transactions annually.

“Our start-up phase is complete and we’ve now adopted a think big approach,” Drury says.

That means that rather than pay down debt, the company will use its cash reserves war chest of $16.9 million to target growth.

Operating revenue for the fiscal year was $9.3 million, around three times that of a year ago. There was an after-tax net loss of $7.5 million.

Notes from the presentation listed in a statement posted on the NZX website state that in 2009 Xero provided market guidance that the company would break-even in 2011. But Drury told the meeting that the "Board has decided to focus on growth rather than short-term profit guidance."

He announced a partnership with New Zealand Post, to link Xero to Post’s new digital postal services.

“It’s about getting big players like Telecom to deliver bills in an online format. This will also drive the next level of productivity for small businesses.

“We’re using New Zealand as a lab to grow the service into other postal jurisdictions.”

Xero has also bought an Australian payroll company, PayCycle, for $A1.5 million. The meeting was told that payroll in Australia is regarded as a necessary part of an accountancy service.

“This will accelerate our penetration of the Australian market,” Drury says.

PayCycle will be integrated into Xero early next year.

The company now has more than 100 staff, producing per-employee revenue of $120,000.

It’s close to launching a new mobile application, Xero Touch, which will generate invoices on the spot and remotely deal with expense claims. The launch awaits approval from Apple.

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