Why's that New Guy?
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Today from XRO "Xero Limited (NZX/ASX: XRO) today announces achieving more than 400,000
paying subscribers across Australia and New Zealand on its small business
cloud accounting software.
Within the next week, Xero expects to reach the significant milestone of
250,000 subscribers in Australia, and recently announced 150,000 subscribers
in New Zealand. This latest announcement demonstrates the continued momentum
Xero has in these markets, as small businesses choose Xero as their preferred
cloud accounting platform over competitor products.
Xero also recently announced it has over 540,000 subscribers globally."
540k globally now less 475k 3-4 weeks ago at AGM = 65,000 per month (roughly). Not bad.
It has the same speculative value as it did before I agree, but however the price for that speculation has dropped considerably from mid 20s to $16.
Market cap is now a little over $2Bln, was before around $3.5Bln.
It is a lottery ticket in some respects but they are growing and I think the current valuation is about right ish.
I was also saying the same when it was valued in the mid 20s by the way.
Looks like customer growth is around 200-250k per annum, but I am more confident about their UK strategy than the US one & I can easily see them getting something like 500k customers in the UK.
Sorry for not having the numbers at hand.
Can anyone tell me how many times revenue they are currently priced at... and how many customers would they need to acquire to get to a respectable number like 3 x earnings.
From memory it's around 15 x at the moment and got credit from a U.S. Broker for being the most expensive stock in the world lol.
It's crazy expensive and if you believe the story there is some upside... but why not go for some other speculative stocks that have more chance of making it like Tesla, Netflix, Alibaba, Twitter, there are loads of options.
Ok so currently around 17 x revenue. If they grow by 80% in F16 and 17, they will be around 5.5 x revenue.
I feel it's going to take 2 really good years to get to the point where current SP seems fair value. If they grow faster then I can see the SP rocketing.
I have been pretty critical of Rod Drury, however one thing he is right on and there are plenty but you can't value this stock on straight revenue multiples, its obviously about the growth potential. And at $3.5Bln I thought that potential was fully valued, at $2Bln not so much & starting to look far more reasonable. I would suggest the way they are going they should be starting to make money in the next 12-18 months & after that further growth should start pulling in quite considerable surplus cash. Once the market gets a whiff of that I think we will see the SP bounce back strongly. As mentioned I like what they are doing in the UK and with a population of 60M throw in Ireland which is another NZ sized market.
Anyway, proof will be in the pudding obviously.
Xero Sales Lead - Rest of the World Johnny MacAvoy replied in a blog that the interest they're getting from accountants/bookkeepers/business owners in other markets is not any different to what they seen in their named markets. So what do you know/heard/seen about their UK approach that would be different or something that got you liking it?