Shadow over Xero shares
Xero shares have steadied just above $20 in early afternoon trading on the NZX after appearing at risk of dropping below the psychological threshold.
Chief executive Rod Drury said he didn't know why the market was soft, but speculated trading might have been affected by the holiday season in the United States.
"I just don't think there are as many buyers at the moment because it is the US summer," Drury said.
Xero had just passed $100 million in annualised monthly revenues at an 80 per cent growth rate and said it hadn't dropped any balls, he said.
"Our feedback is we are delivering outstanding results and the business is going very well."
At the company's annual meeting last month, Drury forecast Xero would grow its subscription revenue by "approximately 80 per cent" in constant currency terms in the year to March 2015 and signalled his expectation the company could float on a United States exchange in 2015.
The talk of a US float appeared to give a brief fillip to Xero's share price, which climbed above $26 for a few days.
However, Drury also cautioned at the annual meeting that it would take time for Xero to crack the US market, saying the future of that market for cloud-accounting providers "would not be decided in the next five years".
Drury said today there appeared to be a theme of "talking down" its progress in the US.
"We are going pretty well compared to all of the other SaaS (software-as-a-service) providers.
"It is going to take some time but while we are doing that we have got an awesome business in New Zealand, Australia and Britain."
Thirteen hundred people had registered to attend the company's Xerocon conference in Sydney next week, Drury said.
Forsyth Barr analyst Blair Galpin said "the Xero story" hadn't changed in the last two or three weeks, although people were becoming "more and more aware" the US market was going to take longer than perhaps some people expected.
"To me it's more around a general trend; there is a little bit of wariness around the tech sector in New Zealand," he said.
Xero shares were down 5.4 per cent at $20.34 in early afternoon trading, valuing the company at a little under $2.6 billion, after touching a day and 10-month low of $20.15.
Volumes were moderate with just over 200,000 shares having changed hands at an average price of $20.43.
Kim Dotcom fired a jibe at Drury over Xero's share price yesterday, tweeting that he might "buy some stock at $6.25".
Tempers have been frayed between the businessmen since Drury said in a television interview last month that he hoped Dotcom would "just go away".
Xero director Sam Morgan weighed in today, tweeting New Zealand would be a better place "without the Dotcom circus".