Right, misread it sorry.
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Right, misread it sorry.
Mr Drury did his usual Kiwi bloke with serious nous talk at the ASM. Although he was as always very positive, charismatic even, he also said several times that there is still a good way to go in the US and also the UK. The former he said is a very different market to NZ and Oz in that Intuit, as the main incumbent, encouraged DIY accounting rather than via an accountant. So Xero is looking 2 to 3 years out to achieve decent headway. The UK he described as very conservative. Meaning, I assume, resistant to change.
Although he pointed out more than once that Xero is looking at medium term rather than short term big numbers, and significant challenges in the US and UK, I reckon many present would not have taken real note of the not-so-positive messages.
Some interesting stuff on how Xero is bringing big players in as a means of communicating with their own clients, rather than using the Xero platform for their own accounting. New ones being Warehouse Stationery and Veda Advantage, and hints of more to come. World domination? They are using NZ as a test bed for this and other functionality.
Also Rod said that Xero could potentially save IRD half a bill on the new tax system if they allowed third parties to build the interface, with IRD supplying the rules. Xero clients would be able to do returns automagically, pretty much, and non clients would have access to free forms. (World domination again?) I know Rod has talked about this in the press previously but this is the first time I've heard a figure mentioned. Anyway, seems like discussions with IRD continue.
As shown on the screen the quote by Churchill, "......But it is, the beginning of the end". So folks, get ready to USA IPO within 2 years. As mentioned above too, what Rod is calling as Banking 2.0 is quite exciting and it's starting to happen already.
Unrelated to today's events, but over the pond in the UK an article about Sage Group's third-quarter update to investors and some of their problems.
http://www.iii.co.uk/articles/182039/little-savour-sage
We have today a higher high and (so far) also a higher low. Looking good technically to climb from here.
Next hurdle is Tuesday's high of 2424. If it breaks that, I'll be a lot more confident that we are onward and upward.
Edit: 2425 has been breached, with trading up to as high as 2443 today. This is bullish.
Discl: holding (after earlier this week the sp went down on its knee in the mid 2300's).
So, yesterday Rod was talking about a US IPO for 2015 and has posted a link to a Venture Beat article about the IPO on Twitter: http://venturebeat.com/2014/07/23/xe...-ipo-for-2015/
I'm wondering what is the benefit for the company and for shareholders of the US IPO. Xero are saying that the IPO would make them appear more reputable in the US but I'm not really buying it.
Any comments?
They would be seen as a US company which could help them with reputation. It would also open them up to a whole new set of investors who are normally willing to place higher multiples on tech stocks than otehr investors (having said that, XRO EV/R ratio is already above other comparable tech stocks so not such a factor at the moment, would have been in the early days).
A few more reasons include making it easier for US partners to buy shares, free advertising and ultimately brand recognition.
It also feels like a good way for early investors to sell out. Considering Rod is adamant that the company doesn't require further capital raising, I'm guessing the money might be going into private hands rather than the company bank account. Or am I just being a little cynical here?
All of this is off the back of little knowledge about XRO's shareholding structure but:
- raise capital... Potentially they may need to do that in the future (I say that with 50% confidence)
- current US shareholders demand it (unsure what % is held by US investors but possible internal portfolio restrictions on foreign investments)
- I agree with you about reputation, I dont think many people will care to much buying a Saas product from a NZ comapny listed in NZ or an NZ company listed in the US.
- At best it would cause hype around the IPO, possibly US analysts might take interest in covering it as well... Shareholders may get a more defined view from an investment perspective.
- Larger investor base potentially although that is generally a wash up and those in America that want exposure can normally purchase OTC derivatives on US exchanges anyway (there currently are a few in the US)
Thats really all I got