XERO to grow UK subscribers

XERO forge ahead with UK growth plan through 2015, aiming for USA stock listing at the start of 2016

New Xero President Russell Fujioka: U.S. Market Will Be “Biggest”

cloud accountingXERO, one of the worlds fastest growing cloud accounting systems (see global growth trends) predict a surge in UK business throughout 2015. With eyes firmly set on a US stock listing for start of 2016 following massively capital injection of $111 million alongside formidable new leadership team.

“The primary thing is to get our new U.S. leadership team to do two or three quarters (with the company), so the earliest we would go now is early next year. But there’s no hurry,”

Xero CEO Rod Drury told Reuters in an interview on Wednesday

XERO has had an exciting start to the year already, with bringing on board a number of top executives such as Russell Fujioka (Fujioka most recently worked as a consultant for Xero with global venture capital firm Bessemer Venture Partners), and other critical hires in the past three months includeJames Maiocco (General Manager, Business and Corporate Development U.S & U.K), John Forrester (Vice President, U.S. Marketing), and Greg Volm (Vice President, U.S. Sales).

XERO shares traded at NZ$24.15 ($18) on Wednesday, after rallying to a five-month high of NZ$25.25 last week. The stock has climbed nearly 50 percent so far this year. XERO (XRO.AX) is currently listed in Australia and New Zealand and has a total of 400,000 subscribers covering the United Kingdom, United States of America, Australia and New Zealand, totalling a revenue of NZ$54.3 million in the 6 months to September. according to the company’s fiscal year 2015 report, Xero had 119,000 paying customers in New Zealand, 158,000 in Australia and 22,000 in North America as of September 2014

Without a shadow of a doubt, XERO has taken the pole position in the UK overtaking SAGE (SGE.L) in popularity as shown here via Google. XERO certainly is competing fiercely with local Australian competitor MYOB, who intends to list this year.

cloud accountingCEO Rod Drury believes XERO will be able to DOUBLE their UK market share throughout 2015, comprising currently 15% of annual revenue, to 30% whilst making serious inroads into the USA market which is currently dominated by INUIT Quick Books cloud accounting.

According to XERO CEO Drury, the USA has been a tough market to crack so far, and pins the initial resistance on the accounting firms hesitant to move over to true cloud accounting for their practice and their clients. Moving forward XERO believe they are now in an excellent US position and ready for expansion.

“I have the opportunity to come in and look at things from a non-historical bent as we go forward,”

Fujioka (@russfujioka) shared.

“I’ve had the realization of a couple of things. The business Xero was able to grow, to thrive in New Zealand and Australia, is not a model that is going to work in the U.S. That was primarily through accountants, bookkeepers and CPAs. There is a different way to convert people under the Xero platform.”

The US strategy will certainly be aimed at targeting the small business directly due to the nuances of the US’s 50 states and lagging adoption of cloud accounting practices.

“The central mission of the company is to strive to create a platform that helps small businesses thrive,”

Fujioka said.

“Accountants, CPAs and bookkeepers are a very important part of that. A financial platform like Xero, and particularly Xero, ties into the professional services of a CPA or accountant and the businesses have a higher predisposition to succeed.”

Also giving these businesses a leg up, according to Fujioka, is the foundational community of more than 29 million fellow small businesses.

“Any archetype for the heart of small businesses, the U.S. is the fabric of it,” he said, stressing the company mission “to help small businesses and be material, in the global view, to get the U.S. healthy on Xero and for small businesses.”

Cloud Accounting – An Integral Part Of Business Success

Just take a look at some of our client testimonials. We believe that what we can offer as a cloud accounting practice to the new start business, as well as existing business, is something that is truly revolutionary. Here at A&C Chartered Accountants we understand what is needed to perform in business these days. With so many of us used to working in the cloud in our personal lives, it seems bizarre not to have the flexibility of 24/7 bookkeeping, payroll and accounting also in line with how you’re currently doing business in other areas, as well as outside of the office.

xero vs sage uk

XERO – have they already won?

What a fantastic year it has been to date already for XERO. And now, with the financial sector press literally buzzing with the truly awesome battle shaping up between XERO (ASX-XRO) and MYOB (an Australian accounting software rival), we have to ask – has XERO already won?

Some of the latest data that has come to light (ref: www.fool.com.au) certainly indicates a warning for anyone interested in buying into the upcoming MYOB IPO.

Remember back to the great battle between Facebook and Myspace? Here we had a very market dominant leader (MySpace) that most people genuinely believed had won the online social media revolution game, set and match, when in reality, Facebook derailed them like a steam roller by focussing relentlessly on user experience and innovation… there are some very strong parallels here between MYOB and XERO, with the thesis for investing in XERO is that this innovative upstart from a tiny country will be able to overthrow it’s established rivals. Something we’re seeing almost every day in the news.

One metric that was fascinating in that battle was the popularity of searches on Google (NASDAQ: GOOG). Once Facebook had overtaken MySpace in Google search term popularity it was already game-over for MySpace – in only a matter of months Facebook was also winning on user count and engagement.

Yesterday we shared news that Russell Fujioka (formerly of Dell) joined the XERO team as they announced a whopping $111 million capital investment. This comes shortly after XERO announced the addition of the fantastic innovative move to integrate cloud Payroll successfully into the XERO platform.

To test the above thesis when comparing the search term popularity for XERO against MYOB using Google Trends, alongside ‘Quicken‘, ‘QuickBooks‘ and ‘Reckon‘  pitched for battle in XERO’s home market of New Zealand. Here you can see the trends for yourself.

xero vs myobIn terms of popularity, XERO clearly took over from MYOB back in July of 2011 on their home ground of New Zealand. Ever since they have been putting clear and growing distance between them in the popularity race. As a clear indicator of market popularity, from gaining the winning position in Google search, XEROs market share almost doubled over the following year in New Zealand. It’s showing no signs of slowing down.

Without a doubt, XERO is now the undisputed leader in the cloud accounting market in New Zealand.

Now take a look at the growing curve in the United Kingdom pitched against Sage, Quickbooks, Quicken and Myob (view the trend here). Although Sage take the market dominance overall since 2004, XERO is showing the biggest growth curve in popularity. Could this mean that XERO is already setting the stage for pole position in the UK for 2015 and beyond just like Facebook versus Myspace?

xero vs sage uk

Of course, winning the Google search race was a massive turning point for XERO on home ground in New Zealand. Now, this trend is being duplicated all over the world. You can see the same popularity growth curve in Australia. Over the past few months alone in Australia and New Zealand, XERO’s popularity via Google Search is soaring ahead of New Zealand based MYOB.

Zooming out on this search we see see the true impact of XERO’s GLOBAL appeal! Since as early as 2013 XERO has seriously widened the gap between themselves and MYOB in terms of worldwide popularity.

xero vs myob worldwide

This performance is a testament to the wall of innovation that Xero has been releasing, not to mention the company’s relentless focus on user experience and customer engagement. Xero still has a big mountain to climb in the United States, but Xero’s massive cash injection from one of the world’s biggest and most successful VC funds is a great indication that Xero is armed and ready for battle there too.

This is just further evidence to keep your eyes on XERO, and further establishes exactly why we have partnered with a global leader in cloud accounting innovation.