Just in the nick of time .....was it the old hope they don't notice trick?
Spose Monday morning on the NZX
Printable View
Revenues up 81% .....good but no real surge
Wage bill $24m (some to go to iP sometime) compared to $11m Dec 13. All those people need to be paid
Cash burn $23m (did include monchilla) so perhaps enough cash for the next couple of years
Still a case of believe the story .....keep spending until you make it big.
I was focused on one thing, sustained customer growth, only because I think it's important that the CEO's promises are fulfilled 'growth at 80%', which they seem to have achieved in aggregate. So that's promising.
The report however doesn't contain all the ARPU and other numbers some here expect, and neither does it have a breakdown of growth by market (which would inform about success in the USA), so I expect some disappointment as a result of that lack of detail.
Overall, I'm impressed that Xero seems to have sustained growth, but I'm concerned whether that growth is coming from the all important USA market. These high-level quarterly reports are a double-edged-sword. The company can be making its growth targets, but if it's not clear where it's coming from, then the forward earnings potential is also unclear.
I still think Xero is over priced at $15 or so. There is a lot of optimism in the SP at present against the numbers reported, though while encouraging, they aren't illuminating enough to suggest that they are cracking ahead with the golden goose, the USA.
In that respect I'd anticipate Monday some initial price appreciation from the optimists followed by another three months of decline. Possibly wrong as no one seems to be able to realistically value XRO.
The price chart isn't pretty either. Basically on Friday, yeah the last trading day, it triple-bottomed on the barely rising trendline from the Oct'14 low at $15. Just a smidgeon under that, is the longer term trendline going back to Apr'13. $15 is an extremely important support. So the question is, is it enough support without hard evidence about growth in the USA?
I don't think so. $11 seems reasonable to me, but $7 is the number that make the most sense, which is where the US story emerged and the share price got legs. Scary as it may seem.
What's everyone else thinking?
BAA
A department of the ASX posts the company's quarterly reporting to their website, they work through to at least 7:30pm Aus time. They seemed to have worked a bit of over overtime on Friday as well. Can't equate the time that the XRO report hit the AXS website with the actual time XRO reported, or the 'close'.
I agree that the U.S. is the big prize, but having said that, if the growth is still accumulating in Aust and the UK at this stage, what's wrong with that? There's still a long long way to go in both markets- Aust on its own could hit a million customers one day, and the UK could be far beyond that. I still see the US as at the very beginning of the curve, and as a holder while of course I'd love to see the numbers explode there, I'm more interested in where they will be in a couple of years. The big months in the US and the UK are Jan thru March. Aust is July. If they have managed to maintain 80% growth in the third quarter of calendar 2014, which should be their slowest quarter, then I'm happy. Their strongest customer acquisition occurs right now, so I can understand why they don't want to release numbers after their slowest quarter. Figures for end-March will be much more illuminating on how they're tracking year on year, and they do normally give updates broken down into regions on a 6-monthy basis (with the occasional update outside of that cycle when they hit a milestone). For example, expect something from Xerocon in the UK soon. All in all, 80% growth maintained, revenue growth starting to outpace spending growth as hiring slows, cash in the bank, annualized run-rate at around $120m it would seem and growing fast, exchange rate much more favorable, product gaps being addressed, reviews looking good. On the downside, high cost of customer acquisition in the US, competition getting its act together, product still not fully complete, cash burn remains high, exchange rate not so favorable if paying salaries from NZ... If you're a holder or not, it's a fascinating journey. I think unless they make some startling announcement at Xerocon UK we may see share price drift (agree with you). As a company they won 2013, lost 2014, and I reckon are clever enough to have learned and to win 2015 (in simple terms). For me, par in their March report would be 480k customers. I'd want to see the US to have doubled year on year. I'm more interested, though, in how the UK and Aust are tracking.
And, having bashed all of that out, what I would really live to know is if they could break down revenue and cost per market. Does the model work? Are they profitable in NZ? Might be hard to do as development costs are global, but if it were somehow measure able, and if they were profitable in NZ and perhaps Aust as their most mature markets, that's would give me a whole load of confidence about the cost/revenue curve...
Interesting how the non holders like to come up with all sorts of cherry picked share price valuations so as a holder I've got one $25 by the end of this year based on continued 80% growth,,sounds good to me and I'm sticking with it:cool:
The market is valuing XRO $15.64 at the moment. It is not cherry picking prices to point out the previous market price support points under the current price, around $11 and beneath that about $7. Disappointment sends prices down, so it remains to be seen whether the market is sufficiently disappointed with the numbers, or lack of detail in the numbers, that support breaks here, or happy enough with the numbers that they buy. Overhead price resistance points are too numerous to mention, particularly if $25 is the target, the monthly closing price in Aug'14.
Baa baa ....this was just a quarterly cash flow report stating movements in cash and current cash position.
XRO did comment on appropriate points to clarify movements.
The revenues stated is cash received from customers - the revenues in the P&L will be different so a cash flow statement is only indicative of actual revenues. They will be much the same though.
Casino did remind us that Rod had stated there won't be a quarterly update of customer numbers this time around ...we all need to wait eh