Wasn't Rod Drury involved in another listed company a few years ago,I'm pretty sure it had something to do with accounting then too.
Anyone remember?
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Wasn't Rod Drury involved in another listed company a few years ago,I'm pretty sure it had something to do with accounting then too.
Anyone remember?
Not that I recall. He was Glazier Solutions sold to Advantage for about $7 mill. Then Context Connect which was a speculative play that produced some patents and is still doing something in the background. Then it was Aftermail which was private and sold to Quest in the US. I might have missed something...
Thanks Toasty,I must be thinking of someone similar,a few years back.
I see it as a hugely ambitious venture with a potentially massive payoff if the takeup by the global market takes off. I like the reinvesting for growth strategy as I believe they may as well reach for dominant position rather than become another minor player in the accounting software space. Having said that I am not so naive as to think that things are all plain sailing and that nothing could go wrong. I do however believe in the ability of Xero to pull it off. It always amazes me to read the personal shots and references to a Ponzi scheme comments in the NBR articles. I find it hard to believe there is such a depth of negative feeling by some in the investment community.
Paying customers by segment At 31 March 2011 At 31 March 2012 Year on year
change
New Zealand 23,000 47,000 104%
Australia 6,000 16,000 166%
United Kingdom 5,000 11,000 120%
United States/Global 2,000 4,000 100%
Yes they doubled the subscriber numbers, but once the subscriber numbers climb for a couple of thousand to tens of thousands they keep it up? That's the question.
To become profitable, not only will the subscriber numbers have to rise sharply, but they will also have to ensure the product reaches a level of maturity where-by the development costs can be decreased.
Market share in NZ is still growing at 100% which is positive - currently at 10% market share (http://www.stats.govt.nz/browse_for_...s_MRFeb10.aspx). Market share in the other countries is minimal so no issue getting 100% growth per year. Especially in the US. Now they are starting to make a push there (they had to develop a cheque printing module as they still pay via cheque/checks over there) I would be disappointed if they dont have a couple of 200%+ years - getting over 1,000,000 customers shouldn't be an issue provided they continue to lead the pack as far as development goes. Quickbooks has about 4m from what I can find online.
as far as getting customers go, remember they are targeting accountants, not end users. So for every new accountant they sign up, that brings in 20-50+ new customers as they transition them onto Xero over the next few years.
Have you seen the average percentage of the Accountant's clients that are migrating to Xero? IMO, that sales model is preferable, but it would be interesting to know how how well it is actually working.
Developing Xero for the NZ & AU markets is a relatively simple task, however the complication with the US is the vast differences in local state tax law and regulatory requirements raises development and maintenance costs significantly. Something to watch....
And yes, the US obsession with cheques certainly makes things look antiquated in many respects!
Thank you all, nice to be able to pick up on quality knowledge ....... to late to get in now:)
A good recovery so far this morning. I am very keen to go to the AGM. Always a good show and they generally release the customer volumes to the day of the meeting. So far has been quite a significant increase over the year end everytime.
Lack of earnings doesn't worry me too much at this stage as long as the customer acquisition rate remains high.
I must admit that I would be happy if a takeover offer came along. The problem is that these high risk companies give me heart failure everytime the share price surges up or down. At least if they were acquired I would have a result and not have to continually agonise if I should get out or stay in or take some or get some....
Maybe I should just buy bonds....
Hi Toasty
What should worry you is the other issue highlighted by Forsyth Barr a few weeks ago. As quoted in the Otago Daily Times:
"ARPU (average revenue per customer) was significantly weaker than Forsyth Barr had expected.
"The main issue is that New Zealand growth has been driven by 'ledger' customers, which are the lowest priced customers. Accountants have been switching their practices to using Xero's ledger product.
"Xero needs the business itself to switch to Xero to get higher ARPU. In essence, the customer mix is worse than we thought."
There is a world of difference between a top of the range $64 per month accounting client and a $10 per month cashbook client.
The problem that all online accounting products have is downward pressure on price - which is a natural result of their business and technical model and difficult to reconcile with Xero's extremely high cost management structure.
The fastest growing online accounting product internationally appears to be the Canadian Wave Accounting - which is free to users. They added in mroe than 100,000 users last year. Wave earn revenue from associated targeted advertising a la Google. Its functionality is very good, and includes automatic bank downloads.
I would be interested in hearing how Xero intends to compete with such disruption to its business model. You may want to ask that question at the AGM.
I have had a quick look at Wave, signed up and will use them for my rental and investment companies. It also has a personal offering which is again free. Will be interesting to see the comparision to Xero which I also use for my Brothers retail business.
I already have a few niggles with it. I have a few bank accounts all accessed via ASB fastnet. Wave only seems to have access to the first one if they are the same type of account (ie. if you have an "omni account' for each entity it will only see the first one). I still haven't fully set it up so will report back once I have.
Wave just closed a $12m series B round yesterday and apparently has over 250,000 customers now. It is targeting micro and small businesses which while it starts below what Xero is targeting (unless you include the cheap cash book option only available through accountants), as those businesses grow, they will more likely stay with Wave.
It runs the same model that Mint (personal accounting) used in the US in that it is funded through targeted advertising. Mint was acquired by Intuit and the risk is Intuit will look to acquire Wave and own the US market, pushing out Xero.
Thanks CJ. It wil be very interesting to hear how you go with the product.
I hadn't caught up on Wave's latest customer numbers. That is very interesting and they are growing much faster than Xero. While you suggest that Wave is positioned lower than Xero, I'm not sure I agree. While Xero likes to focus on its full accounting product Forsyth Barr's analysis seems to suggest that in fact most of Xero's growth has come from its low priced cash book offering.
Wave's growth suggests there will be real pricing pressure in this market - this is backed up by the upcoming launch of Acclipse's iBizz service priced at just $5 per month.
Have had a bit of a play. Wave is fine for my purposes (less than 10 transactions per month) but there is no way I would run a proper trading company on it. I would say it is in a worse state than when Xero launched so they are many years of R&D ahead. Not a competitor in the short term.
In other news, Xero has made the NZX50: https://www.nzx.com/companies/NZX/announcements/223621
I thought their free float might have been too small since they have a number of significant investors but maybe they aren't big enough to effect the free float calcs (ie. Drury, Winkle, Theil, etc)
Wonder if there will be a bit of buying. They are still a loss making compnay so I dont imagine the big funds will be that interested just because it made the index (except true index funds).
I recently changed to Xero for my rental companies and so far I have found it to be good. I won't say great because my accounting and organisational skills are sketchy to say the least. The main thing is that I actually look forward to logging on and reconciling the latest transactions and leaving discussion notes for my accountant so that stuff I am not sure about can be sorted. Definitely beats the mess of spreadsheets and word documents I was using. Thinking about integrating it with the Pocketrent app for the complete property investing package.
XRO up 18 cents this morning. I guess people still want in. Looking forward to the AGM.
Do you think the total cost of accounting fees for the year (including xero cost) will be more or less than previous. (ie. by spending more on Xero, have you saved on the amount paid to your accountant.).
Your time should reduce and some of the time wont be as noticable as it is easy to go in quickly (and regularly) and reconcile a few items without really having to engage the brain. YOu can attach pdf scans of things(and JPEG's??) to invoices entries which may also help your record keeping (storing it all within Xero).
Actually I think the first years fees might be a bit more expensive because I got the accountant to set it all up initially. (I am just using 2 x the $10 per month version). However I do expect subsequent years to decrease due to the fact that there is not the mad scramble by my accountant to sort through all my records and documentation and create the new years accounts from scratch. They have advised me that it will save me money so heres hoping.
For me the biggest benefit is being on top of my money management. I am not trying to catch up after a couple of months inattention because the Xero interface encourages you to log in frequently.
Initial set up can take a while. I have only done one but it was enough to put me off. It didn't help that it had been a year since it had been reviewed by the previous accountant and their end of year journals hadn't been posted. Now the accounts for the company are fully upto date on a monthly basis and other than small unusual transactions, upto date on a daily basis. It can actually be used for management purposes rather than just for accounts and tax purposes.
Back to the share price, it has held up well so far today. UP 18c on the announcement of joining the NZX50 but on very small volumes. Doens't look like any fundies or short term speculators wanting to make a quick buck on entry to the index.
I'm using the product, and have done so for a couple of years now. Yes, it was a pain to configure but what accounting software isn't? At least I don't have to worry about installation, patching, backups, and general maintenance.
It has most definitely saved me money, with my accountant charging me 1/10 of what they had been charging for completing my GST return, prior to using this software. The hidden cost however, is the time it takes me to personally administer the accounts.
Wave is something I haven't had a chance to look at yet, but will do so over the coming weeks. My real concern about the product is whether this free model can generate the revenue streams required to invest back into product development. The other issue is whether they can resist using data analysis to target adverts to users. Got a spare $5K sitting in your account? Maybe it's time to serve up a advert for a new HP Server costing $4,999? Perhaps a "freemium" based service will ultimately how the product evolves.
Does anyone know what happens when you want to leave Xero? Will you still be able to access all your historical info?
A few things:
you can export reports etc to spreadsheet etc. THis can be very comprehensive, though would be time consuming if you wanted to get everything.
They have said they will investigate a reduced price (data storage plan) which I assume will tie up to the 7 year record retention rules. I think they currently retain the data but at some stage data storage costs will be such that it gets deleted.
I dont think they have a "export all data" button
Thanks CJ. I'm a very happy Xero customer using the full multi-currency plan, but I do have concerns about what happens when a better product comes along from someone else that I want to switch to or even worse if something unforeseen takes Xero out. A different kettle of fish I know but imagine if you'd had your life's most important documents stored on Megaupload. No one foresaw that going down...
An "export all data" button would be ideal!!!
In the past year, IRD came out with a statement reminding people that all financial records must be kept in NZ. Xero (who had been in discussions with IRD re this so were rightly pi$$ed off) had to scramble and assure customers that Xero was OK. My guess is that Xero has had to give IRD some pretty firm assurances that the data held at Rackspace (in the US) is very safe.
I am also a happy user of the medium plan but when I do the tax return for the year, I might see what reports can be exported and stored elsewhere (ironically on dropbox, though that does have a local copy on your hard disk as well).
The upward march continues against all the negative news from the world and wider economy. $4.90 at last glance. I am a Xero supporter but this is crazy. Where is the impetus coming from. Have I missed an announcement? Is it excitement before the July AGM (seems a bit premature) Are there rumours of a large increase in the customer base?
Anyway, long may it continue.
Toasty - I think it is just index funds buying pushing up the price. I think they enter the NZX40 after today.
yeah i must admit i decided to sell some today because this seems outrageous. If it keeps going up, that's great! But in the meantime some profit taking makes me happy :)
I do beleive Xero has just hit $5 for the first time.
In other Tech company in the NZX50 news, Diligent is just of its all time high of $3.69 in April
Is this delayed NZX50 index action or something to justify the climbs.
Disc: hold both
Browsing the net about all things investment as I sometimes do at work when I am not busy...ie, constantly, I came across this unusual thread. It looks a bit suspect but contains enough truth to make it interesting.
http://www.hotstockmarket.com/t/2348...p-xero-nze-xro
Any thoughts?
hmmm.....that is interesting.... *blendy cancels current sell order just in case*
Interesting and I think it has a high degree of truth to it. Theil has just raised a new fund.
The missing link, which isn't even explicit, just implied in that post, is that the new fund will be investing in Xero, almost exlusively. How can that assumption be made. He has a NZ private equity fund and this is separate and I understand is to focus on US investments. Have a search on Techcruch which I think detailed the new fund - http://techcrunch.com/2012/06/19/peter-thiel-mithril/.
Ok so US$310m - not going to buy the company as it currenlty has a MV of NZ$500m (per Google). And it wont be an equity injection as not even Xero needs that much money in the bank to expand (You cant rule out a smaller injection like the previous ones though - say upto $20m).
Looks like someone pumping and dumping - and from someone with ....
wait for it ...
only one post.
Interesting that CCH has just acquired http://www.acclipse.co.nz/ . http://unlimited.co.nz/unlimited.nsf...-services-firm
I think this is a competitor to Xero's WorkflowMax product which it acquired recently - ie. accounting practice management and tax returns etc though the acclipse product looks more comprehensive from a very quick look (ie. DMS solution aswell (not a user of either).
Not a core product for Xero but getting workflowmax into a accounting firm will obviously drive more Xero sales due to close integration. Acclipse is in 1000 firms (average of 10 users per firm). I wonder how many Workflowmax is in? (this preso from May 2012 says 200+ firms committed : https://www.nzx.com/files/attachments/158023.pdf )
That is a good announcement - they have 150,000 customers which can now easily integrate with Xero. NOt sure if they integrate easily with the other accounting products but for companys moving to a SAAS model for their software, ADP and Xero are a good match
Who knows, Xeros success in part relies on the big incumbents not providing a modern equivelent, resulting in people changing to Xero rather than just the new version. Also competition for other similar products such as Wave (mentioned above) and Saasu which from what I have seen are not as good - this is less of a risk as in my opinion as they are many years behind in R&D though they could be acquired by an incumbent and integrated.
One also has to remember that is market cap is over $500m for a company that has never made a profit.
I am bullish at the moment though keep a close eye given the risks.
Disc - after kicking myself for years for not buying in (was going to buy when Peter Theil first invested but couldn't for various reasons), I relooked at it early this year and was happy to buy in at $4.15.
One think I have noted is the volumes traded are alot smaller than those in Diligent. There are a lot more key shareholders but still. Anyone got any views on this.
25mil of market cap for writing an import routine. Beats working!
Just wondering how cancelling that sell order worked out. It may not have been the suspect article that kicked the price up but up it is going.
I have a $10 price in mind. Not for any real reason. It just seems like a nice round figure. I almost hope they get acquired at point in the near term. All this excitement is not good for my slow and steady investing philosophy....
CJ, I sold 95% of my holding at $4, as I thought it looked overvalued, and I still do.
The stock seems to be kept driven by good news, without any tangible value. Their partnership is good news, yes, and gives Xero access to 150,000 new customers, but whether they switch to Xero or not is another story. Is this access to 150,000 new customers worth $45m+ in the increase of market cap?
Drury always indicated that if any offer was made for the company, before it was NZ's biggest listed company (ambitious), the answer would not be very polite.
I was looking at earnings multiples (not profit multiples like normal businesses) being paid for some similar SAAS businesses in the US to determine that the price would go up.
RE take over, Goolge says its market cap is now just under $600m. If $1B was offered today (earnings multiples suggest this is viable) would he accept? Note - with so many significant shareholders, they could block anyone trying to take over so even if I would accept a $1B offer, that would be irrelevant if Drury, Morgan, Theil, Winker etc didn't.
60 million on the market cap? Really?
I may be a cynic (I'm sure it is obvious!) but I believe they would fall over themselves to take a billion dollars in cash, unable to control their laughter.
Note that the 60 million in "wealth creation" is due to the trade of 32,494 shares on the news of an integration in their smallest market.
That is very different to someone writing out a cheque for the whole thing - arguably, a valuation like this actually reduces the odds of that happening.
CJ, SaaS is a normal business. All businesses are "normal", in that they're all different, the one common link is we use a range of accounting and valuation measures to normalise a diverse bunch so that the "this time its different" line is harder to get away with. (clearly, its not that hard)
If you recall, in 1999 we had to look at sales, or eyeballs, or something, when valuing dotcoms, because they were not normal businesses. People were also looking at valuations of similar insanities in the US, and rationalising that ours were ok, due to being less insane (clearly, they used different words to me).
Perhaps we could solve our obesity epidemic the same way? By looking at fatter americans, then concluding we are in fact skinny, because they're fatter? Having done that, I guess the next step would be a fat pride conference.
Oh wait. That was last week. Hmmmm.
I can't believe we're back here again after just over a decade. When will people learn?
See my comment re trade volume above. While DIL has had a healthy 500,000 shares traded today, XRo is still under 40,000, and the price is jumping up in 5 and 10c lots on volume of 250 -500 shares.
yip. If an offer of $1B did come along, people might see the rate of shareprice growth and decide to hand on. Quickbooks would probably be quite happy to pay today what XRO market cap was 1 year ago (~$350-$400m) but with the price continuing to rise, it is questionable. What takeover premium is required for a share growing 60% a year!
CJ, yes i agree, and I may live to regret it. However I bought in at a really good price, so I was extremely happy to lock in some partial gains at this stage.
100% up since the last SPP, the current price gives management the opportunity to protect current holders by raising more capital now, while investor optimisim is high, raise another $100m cash at $5.50 a share, would make the balance sheet look great, and cement the current value.
Easier to raise cash when the market loves your business, especially one that has not turned a profit yet.
It is a nice growth rate, but I would say they probably got a lot of those new customers from changing accounting system at the end of Australian financial year.
It will be interesting to see if they can maintain that rate of grow over the coming months. It is still a positive development for Australian market.
AGM this week. Really looking forward to this as they usually update the customer numbers on the day. Also one more acquisition to be announced?
Just been reading through the NBR articles and I must say its nice to be on this forum where posts are generally considered, well thought out and not generally emotional. There seem to be a lot of people(or just one) who are taking the increasing Xero share price as a personal insult.
I can understand someone posting a reasoned comment on why they believe the price may be too high but I don't understand all the vitriolic posts telling shareholders they will regret it and that it is just a ponzi scheme etc... very strange.
Opinion piece on stuff with the headline "Xero: Lemming bubble or hero?"
best wishes
Paper Tiger
Disc: do not hold.
Toasty, the reasons Xero gets some stick (on NBR and some other places) are straightforward:
* It hypes itself up in a way that does not sit well with many kiwis
* It has a history of bending information to suit its own purposes
* Drury and his followers attack Xero's competitors at any opportunity
* Drury himself is widely disliked in the accountancy profession.
Personally, I think Xero is a very interesting company with some good technology and reasonalby growth potential, but its management and Board has let it down - both in controlling Drury's behaviour and in controlling expenditure. Drury's vision is its greatest strength but his hubris is its biggest weakness.
Belgarion - the business model of acquiring parties with related software is exactly what MYOB and Sage have been doing for years. It starts off as a good idea but great care has to be taken that you don't end up bloated - in respect of managing the different software codes and ensuring integration works, in respect of bringing in management from the other companies and ensuring they stay motivated when they are no longer the founding entrepreneur, and in enduring the company maintains its original focus and doesn't get sidetracked.
Xero also have to be very careful not to upset the many other independent vendors who integrate with their service.
There is a very delicate balance with Xero's strategy. You only have to look at their history with Acclipse (with whom they partnered and then fell out) to see they don't always get it right. Nevertheless I think their acquisition of Spotlight Workpapers makes sense. I'm not so sure about PayCycle which was acquired in Australia a few months back.
A relevent post from Rod Dury.....
We think a lot about the effect on the ecosystem when we make acquisitions.
We’ve so far acquired 3 ecosystem partners (Paycyle, Workflowmax and Spotlight work papers) who are all very inline with a strategy that we communicate often.
In all cases our acquisitions came after strong feedback from our customers and advisor partners.
In the case of Paycycle we did a lot of work to stimulate payroll providers in AU before we acquired. We deliberately haven’t introduced payroll into New Zealand where we had strong existing partners.
For WorkflowMax we have preserved the independent brand and present it fairly neutrally with other job costing providers and we hope we’ll see other vertical solutions develop. Our real focus is on the accountants practice management side.
We are always open with our API partners when they approach us on if this is an area we’ll likely get into over time. For example better accounts receivable features is a space we’d like to do eventually but we haven’t got there yet but we have been open with partners about that.
We have no interest in acquiring all good partners. Despite irresponsible speculation in the media (in turn based on uninformed guesses) that we were looking at Vend – our partner of the year last year and an exciting company – our strategy is to be a horizontal accounting engine. Investing directly in verticals has never been part of our strategy and doesn’t make sense.
Something we are looking at though is: do our top partners have the resources to keep up? We’re investigating ways we can help them get funded so they can invest along side us. We’re very aware that investors in smaller private companies will be different from those that invest in Xero as a public company but we’re thinking through ideas there now.
The posting was written on the Xero blog
http://blog.xero.com/2012/07/the-apportunity/
I'm just a learner here but, does Spotlight Workpapers being a related entity have any bearing on things?
Thanks. I had read the blog but did when first posted so missed out on all the following comments. I don't normally go back and re-review.
In other news:
Xero's price has crashed to a level not seen since July 3rd!!
(quote originally referred to Apples recent 'crash' but equally applies here)
The AGM is today isn't it? I'm also wondering if I had missed some awful news. I thought we are expecting some positive news from the AGM. I guess we will see later in the day :)
I dont think much is going on. The Spike in relation to the spotlight acquisition was overstated (a $800k acquistion does not add $50m of value). They had their Australian conference on at the time and I wonder if the accountant there was so high on the kool-aid, they bought at any price for what is in reality a relatively thinly traded stock (their enthusiasm is good for future sign ups though). Then the long term holders decided to lock in some profits having had a 100% over 1 year.
There is probably a bit of uncertainty leading into the AGM as they will announce new customer numbers I assume.
Disc: hold (only a 20% gain as I jumped in too late). I should have locked in the 40% gain at 5.80 and rebought now under $5 but I am not a trader.
I think the recent rise (to to a high of $5.80) was driven by two issues - Xero's entry to the NZX50 (which both gave it added credibility and forced certain funds to buy shares), and the rumour mill (particularly speculation about Peter Thiel's Mithril fund).
As the share has limited liquidity (as most are tightly held by parties close to the company) it will be prone to shooting up on a slight increase in demand.
Countering that is that there are also relatively few buyers for such a high risk stock. So if a small number of parties decide to offload shares it could drop dramatically as has happened this week. My guess is that the Sunday Star Times article freaked a few people out into selling this week and taking a very good profit (http://www.stuff.co.nz/business/opin...bubble-or-hero) .
Even at the current price Xero is hardly cheap based on its fundamentals - so could drop quite a bit further. On the other hand Drury will undoubtedly release some good PR at the AGM this afternoon and the market could calm down again.
Belg : did you sell some or all?
AGM announcement - 100k customers. Up from 78k at prev FY end. Most growth now overseas. At this rate NZ customers might only grow 50% this FY (47k to 70k), and overseas could grow from 31k to 80k maybe, as already about 45k after 4 months of the year. HY targets of 60k NZ customers and 50k overseas (110k in total)? If they then go on to 70k NZ and 80k overseas for the FY (150k in total), revenue could double from previous FY ie. from 19m to 40m (rev from overseas 50% more per customer than NZ too). What will the expenses do? Two years ago 18m, last year 28m, so could it be a linear increase to ~40m? That would have them at about break even.
If at some point they further doubled customer numbers to 300k, with no further growth after that, then revenue would level out at 100m (not 80m as that includes part-year revenue from customers). If expenses went from 40m to 60m, then profit would be 40m, and perhaps a value of 5-600m would be understandable. Will they get to 300k? Will they keep growing after that? How long would it take? Are they too expensive given the possible future outcomes?
Xero is considering a dual listing in ASX. I have a novice's question: what would be the influence to the share price in NZX when the dual listing happens on some day.
Efficient markets theory would suggest that price should be exactly the same. However, it makes it easier for Australians to buy. They have 500 partners who are enthusiastic (ie accounting firms) and 25,000 customers who know how good the product is so that is a good start at potential new shareholders. Also australian super funds might want a punt so increased demand should push up price.
IF they do this though, they need to increase liquidity. If you want to purhcase $50k worth (about 10,000 shares) you will probably push up the price but 20-30c. That is one of the reasons why the price is so volatile. When it is running hot, there is not enough people selling and when it is running cold, no one is buying as they are waiting for it to settle. You just have to look at the last 10 days to see it run hot, then cold, now hot again.
Compare it to DIL which can put through 50,000 shares an move the price by 2 cents. XRO is lucky to do 50,000 shares a day even though the price moves 25c.
They will be the same shares, just on different exchanges. I understand that there is a process for move the shares from one exchange to another, so in theory, the prices on both exchanges should reflect each other (if they didn't, you would buy on one exchange, get them transferred to the other, and sell). Look at the likes of FBU on both exchanges to see how the track each other.
CJ - I think you may have that wrong about different exchanges, instead it should be different registries. Companies can have multiple registries (FBU), or just the one (NPX), but both are dual listed. So for NPX you would be buying and selling the same shares no matter which exchange, but FBU is presumably related to the registry in that country.
BHP is listed in Aus and UK, I believe there is a significant price difference between the two, because of franking credits avail in Aus but not in UK. I haven't checked this, so I could be wrong.
A dual listing is interesting for xero given there nz success, most companies would do it to gain access to additional capital, but xero has been really successful raising capital in nz, so why bother?
On the dual list thing, FBU is completely fungible between ASX and NZX, you can buy shares and shunt them to aus by filling in a transfer form on computer shares website, and vice versa.
BHP Ltd and BHP plc are two separate registers with claim to the same asset base, read more about it here:
http://www.rba.gov.au/publications/r...rdp2003-06.pdf
The Xero share price has drifted down quite a bit in recent weeks. Anybody got any ideas why?
The only issue I've seen is that MYOB is just starting to promote its new AccountRight Live platform. It is still a wee way away and MYOB has had its own issues with the underpinning AccountRight platform this year. But if they do get it right it could have a significant impact on the market in both Australia and New Zealand.
I think Acclipse's (now CCH's) much cheaper IBizz product is also not too far away.
It seems to be getting hammered today. Not sure if it is caused by people foreseeing issues as you suggest or just people trying to exit reasonable sized holdings. The market has very little liquidity so to sell 20,000 shares, you have to drop the price 10c+ to get them away in one go.
Wish I had got out at $5.70 now so I could buy in now. The problems of the buy and hold investor.
Disclosure: Hold. NOt concerned about competition as it there is still plenty of room to grow even with a strong competitor.
[QUOTE=CJ;379640]Wish I had got out at $5.70 now so I could buy in now. The problems of the buy and hold investor.[QUOTE]
I actually unloaded few at $3.00 many moons ago thinking that I would climb back in when they settled back as they always seemed to do. They pretty much climbed from there to $5.80 so damn...
Also I have spoken to a few Accountants lately and they are total Xero supporters. A couple of them are forcibly moving customers across from other platforms and actively shedding customers who remain on MYOB or others. There seems to be a big groundswell towards constantly engaging with the customer and helping steer the business rather than just collecting data at year end and sending out some reports.
I believe remittance advices are being added soon and this will satisfy quite a large amount of potential customers who have held off converting.
There are also quite a few Accountant blog sites in the US singing its praises so maybe gathering momentum over there?
There is a lot of small accouting practices taking it on. I think this is the more entrepenerial ones who beak out and start their own practice on the back or a different business model to established firms.
Fixed fee with regular income. Can work from anywhere and on line so no IT overheads to worry about. They get involve monthly and are able to give SME (especially those who aren't accounting minded) real time feed back rather than 6 months after year end.
This is why they bought workflow max and the other one recently. It gives accounting firms a full solution so they can really push it to their clients.
I look after my brothers business with Xero even though he is 3 hours drive away. He does all the manual stuff and I look over and make sure it is correct in real time. Fantastic.
Having said that, nothing that new entrants can do as well, but Xero does have early leader advantage and are constantly improving their product so hopefully the others never catch up so accountants will keep recommending Xero over them.
I am optimistic about their business model and future. At $5.80 though, it did seem full priced in. Having said that, If they keep going (100% growth per year (which is harder the bigger you get)), it will be at $10 share in 2 years time.
Last week's weak share price has continued. There's been a very big drop today down 38c to $4.33 - that's over 8%. There doesn't seem to be any particular reason why - but something has obviously triggered the drop.
It was CJ's comment above about being fully priced in. We just need him to say something positive like " I see $6.60 by the end of the day due to ......"
doesn't look good. Drop seems big enough for a 'please explain' just to confirm there is no information that should be out in the public sphere.
Or maybe it is just because Rod has been quiet recently
The Dear Fraser letter says nothing to explain why the fall. .......just silly punters
Rod needs to tell another good story methinks
I rather suspect it is just one or two parties selling shares. Xero's market is sufficiently illiquid (or tightly held depending on your point of view) that the actions of just one or two parties can have a big impact on share price.
The share price has been highly variable this year - big rises and now big falls. More liquidity would probably smooth this out - but we're not likely to see that happening.
I wonder whether Xero is continuing to meet the liquidity demands of being a member of the NZX50. The daily volumes are generally not large.
Sparky, while I understand where you are coming from and there are plenty of people who share your opinion (see NBR), but that doesn't explain the sudden drop today. Sudden drops without public explanation tend to suggest rumours may be circulating somewhere. It may only be one or two people have heard the rumour, but their actions have had significant consequence.
I certainly understand NZX writing a please explain letter to Xero:
https://www.nzx.com/companies/XRO/announcements/226501
My guess is it is just a few people trying to exit. With the volitility in this stock and the risk that their expansion plans will not be met, speculators are just dumping their shares.
Disc - still hold. Not concerned (yet)
I see NBR is connecting the recent drop in share price to COO Alistair Grigg recently selling 124,500 shares. This occurred on August 11 but wasn't disclosed until August 21:
http://www.nbr.co.nz/article/nzx-que...drop-ck-126923
That's not a good look.
They need to get systems in place - this is simple stuff. They are a very fast growing company (at least if staff numbers are anything to go by). Maybe they could reallocate one of the new new hires could be reallocated from their current positions to look after than.
I understand they have hired 150 staff in the past 12m and have job positions open for another 50 including:
5 junior staff to kiss Rods arse
7 senior staff solely allocated to brown nosing, and
2 junior and 3 mid level people required to full time to keep the bosses egos inflated.
Disc: And for some reason I hold.
Forgot to add, considering Rod is on the Board of NZX, want do you think they will had out as punishment.
I stand corrected. Have hired 128 so far in calendar year and have 100!!!!! open positions.
http://www.sharechat.co.nz/article/a...-100-more.html
Competition for the best new job title.
Next they will be wanting a slide: http://www.stuff.co.nz/dominion-post...-in-new-office
In shareprice related news, Freshbooks, a current Xero add-on is moving into the accounting space. Will be interesting to see what this does for Xero: http://www.diversity.net.nz/back-to-...ng/2012/08/30/
I actually took a photo of that slide the other day when I was in Wellington, just to post on here! It's in the new Xero building, so I actually assumed it was Xero's. I didn't realise they shared their fancy new office with Trademe (there was no Trademe signage, which seems odd).
At the top of the slide were about 4 safety signs with all the warnings of what not to do on the slide. LOL.
Do you only get speeding tickets when the price goes down?
Depends if your CEO is on the board of the Regulator.
If this is the case, please explain letters are only issued once every blue moon (hence the letter last week) and the requirement to fully comply with other disclosure requirements are optional, though "strongly recommended".
Now it gets interesting, Intiut- the company that has the lions share of the US market comes to play in Xero's back yard.
"From Intuit’s perspective, director of global accountant strategy and programs Rich Walker says Australia is a significant growth opportunity for the firm, which reported revenues of $US4.15 billion in the 2012 fiscal year.
“As we looked into the opportunity in Australia, we felt that we had a great opportunity, given the large number of small and medium sized businesses here, to bring QuickBooks online directly into the market with a localised Australian version,” Walker says.
(AFR Article from 3 September 2012 - for full article see link below)
http://www.afr.com/p/technology/friend_becomes_foe_in_battle_for_W8yAKVdITnIEQR3x9 XTnZO
Quickbooks was already in the Australian market, but licensed through Reacon, not direct from Intiut (that license has now expired to Intiut can go direct). So now Xero has three competitors in Australia - MYOB, Reacon and Intiut.
My understand is that Xero still has the most comprehensive full cloud solution and is has (almost) as much features as a full desktop solution for SME's. The others are either a hosted solution or the features aren't as comprehensive and more suitable for SE only.
Interesting to see how this plays out.
Disc: hold
Where there are the markets, there are competitions. I think it is not a bad news for the industry.Quote:
Originally Posted by Nandi
Now it gets interesting, Intiut- the company that has the lions share of the US market comes to play in Xero's back yard.
I have used MYOB forclose to 20 years and Xero for a year. Frankly I have found the transition from MYOB to Xero less than straight forward, as the format of Xero is quite different from MYOB. Having it on the cloud is really useful where there are multiple users working remotely as the charity I act for does. What pains me with MYOB is their business model of releasing upgrades with almost useless "improved " functionality and a refusal to support older versions of their software. Sometimes I am about 3 versions behind. Xero reports are better formatted than MYOB. However Xero prermissions require careful set up as many functions such as Journals are shut off from ordinary users.