Xero plays long game in US

TOM PULLAR-STRECKER
Last updated 17:33 23/07/2014

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Xero chief executive Rod Drury has forecast the software firm will grow its subscription revenue by "approximately 80 per cent" in the year to March 2015.

He dismissed a report questioning its momentum in the United States market as "ridiculous", but acknowledged it would take time to crack that market.

This year it achieved revenues of $70.1 million, up 83 per cent, after forecasting at least 80 per cent growth.

Chairman Chris Liddell, a former chief financial officer of General Motors and Microsoft, told shareholders gathered in Wellington for the company's annual meeting that it would be a "logical step" for Xero to look at listing on a United States exchange "in due course".

Woodward Partners analyst Nick Lewis said yesterday that rumours had resurfaced in the past fortnight that Xero would list on the Nasdaq exchange but said he would be surprised if that was imminent.

Drury said the timing could be right once Xero was turning over more than US$100m ($115m) in annual revenues.

He reassured investors Xero was going to be successful in the United States market, but said it would take time and emphasised the importance of the Australian and British markets, where its business was further progressed. The US market "would not be decided in the next five years", he said. "It is not 'game-on' with Intuit yet."

Nevertheless, Intuit, the dominant provider of accounting software in the US, had been "spooked" by Xero arriving "well dressed" in its home market, he said. "The hypothesis we are not going to get some market share doesn't make sense any more."

Drury described as "ridiculous" a report this morning in which US accountant Michelle Long said she believed Xero had lost momentum in the US. Drury said Long was a "paid Intuit adviser".

Long, who runs her own consulting business, Long for Success, has had a long association with Intuit for whom she has carried out training since 2007. She had previously made positive comments about Xero, which paid for her to visit New Zealand and attend its XeroCon conference as its guest in Auckland last year.

Long, who has almost 80,000 followers on her LinkedIn group, said today that she valued her independence highly and was not paid to promote Intuit.

"I have been paid as an independent contractor to do training for both Xero and Intuit. I am not paid to be pro-Intuit. I have always pointed out anything good and anything bad and been totally honest. That is why I have so many followers," she said.

Long said she stopped carrying out Xero training last year after the work dried up.

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Liddell said Xero was one of the most important companies to come from New Zealand. "Xero is in my mind on a path to become the best in the world at what it does. If I can play a small role in its success that is something I will be incredibly proud of."

A vote increasing directors' maximum remuneration by $350,000 to a new cap of $850,000 was passed with no questions from the floor. All but a few of the shareholders gathered at the meeting raised their hands in approval.

Liddell said the remuneration pool had last been set in 2012 and its board had expanded from six directors to eight since then.

- Stuff

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