only every 6 months. Despite being in the US for 2 years, they only had 16000 customers there, unless I'm mistaken. We need to know how many they have now to gauge how expensive it will be to get to 1000 000 customers.
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I guessing everyone already knows that accountant's generally get a percentage of the of the monthly software subscription price clients pay with these sort of systems. Bigger percentages for higher numbers of clients. The average client churn is apparently every 7 years so most people have a fairly close relationship with their accountant. In my opinion the established software players in the U.S. will be very keen to retain their professional networks and are well postioned to trump any kickback, (oh that's a dirty word isn't it), system Xero offers.
I suspect growth in the U.S. will be slower and more expensive than many are projecting. The stock appears to be priced on meeting very optimistic growth projections, (priced for perfection like Ryman ?), and for meaningful upside it would have to consistently blow those most optimistic projections out of the water in my opinion.
Anyone linked to this article yet? http://www.sleeter.com/blog/2013/06/...-introduction/
While I don't like the comparison at the end to cars and smartphones, it is quite comprehensive and Xero + QB online come out on top (though I would say it gives Xero the edge).
That depends on what the reason is--Do you believe that that kind of rise in that period of time is because everyone believes they are executing to perfection(with no hype involved)
Could there have been a meager 10-20% rise because they were executing to perfection(,minus the hype)
In my opinion there has been a few instances of some pretty hefty ''leaps of faith'' recently in more than one sharemarket.
RYM is a very different scenario--check out the chart --Its basically steady growth,no parabolic jumps.They kept delivering and the share price rise reflects this.
Its much harder to apply logic to XROs chart in the last 4 weeks. Just exactly what was it that caused the stampede up?
The company may be good --or great--or it could have more to do with whats going on inside peoples head than the company itself.
Maybe it will double from here pretty soon,but statistically until some real good sales figures come in,the odds are getting tougher.
Right, given even Thiel probably didn't expect his investment in Xero at $18 to double in a month we can assume that one month ago when Thiel signed over the money he saw Xero as 5% of his total worth. I would be fairly comfortable with that as an informed speculation. It is certainly not chicken feed even by Theil's standards, but neither will Theil lose the farm if it all goes bad. I wonder how many investors here though have Xero as no more than 5% (or 10% with a months hindsight) of their investment portfolio?
SNOOPY
Ryman have earned investors respect based on an enviable track record of profit growth and probably deserve to be priced where they are because people can say with confidence that they have executed to perfection, whereas in XRO's case what we have are essentially early encouraging signs and people appear to be automatically assumming that they will execute to perfection in the U.S.
I think both companies will find that just because something works well in their home market, doesn't automatically mean it will work well in other markets. The difference is that while it will hurt Ryman if execution is too hard in Australia, they're just dipping their toe in the water at the moment ($30 estimated cost for Wheelers Hill failure which is nothing for a company of this size), if XRO don't execute well in the U.S. with what basically amounts to an all or nothing expansion stratagy, well...I'm sure I don't have to spell it out. I would have thought if someone has a ten bagger + they'd be out buying a new supercharged Jaguar, or something similar for some summer fun. You can't take it with you last time I checked :)
Bain Capital bought MYOB for ~1.3 billion when revenue of MYOB was ~200 million. Corresponds to ~6 times their revenue; ~11 times of their operating profit.
http://www.reuters.com/article/2011/...77K0BD20110821
Xero makes losses. If they hit their target of 1 million customers, which is uncertain, they will have revenues of ~350 million. At that level, a valuation of 2-3 billion seems fair. That's half of where we are now and assumes that we hit 1 million. Based on that, I would say that there is more room to the bottom than to the top. Locking in profits/cutting losses could make sense.
^^ Those multiplles make sense mate. I think the other thing that people who arn't familiar with accounting programms need to know is that all cloud based subscription services appear to be targeting mainly small business operators, (they don't really appear to offer a full functionality accounting system for larger business operators) and many small business owners are very cost conscious. You can buy a good accounting system like quick books for a one off fee of a couple of hundred bucks, is it realy worth paying $90 bucks every month plus GST indefintly ? Is your data absolutly safe and incapable of being hacked on someone else's server ? What happens if we have a significant outage in internet functionailty ?
Small business operators are well capable of executing desktop based systems on their mobile laptops and e.mailing invoices, credit notes, quotes e.t.c. or take a portable printer and prtint them out for the customer...none of this is rocket science. I guess its safe to call me a sceptic, especially at 35 bucks !!
In case anyone is wondering its really hard to design software to encompass all the specific nuances of an overseas trading jurisdiction including their specific taxation and trading characteristics and all existing business's will already have a system they're presently using. It took the Australian based MYOB for example, many years to adapt their system to N.Z. tax and GST requirements properly. For years it ran like a pig and they lost plenty of customers because of it...I have had a dislike for it ever since due to the massive early problems.