Xero passes million-customer milestone
Cloud accounting company Xero has achieved a goal chief executive Rod Dury set for the business in 2011, notching up its millionth customer.
Drury said the milestone was significant, establishing the 10 year-old Wellington-based company as "a leading, global innovator" of small business software.
"Five-and-a-half years ago, at 50,000 subscribers, we asked shareholders to imagine our business at a million subscribers. We invested for the long term to build a business and ecosystem to achieve those numbers. It's very satisfying to deliver on that promise."
Drury last year set a new goal of building Xero's annual turnover to $1 billion. Though he did not set a date, analysts believe the still-loss-making company could reach that target within four or five years.
Views on whether Xero would fly or flop were divided in 2007 when Drury first announced the company would go public on the NZX through a float that raised $15 million. Today the company is valued at more than $2.6b.
At that time, Xero was very much a fledgling business whose software had only been tested by 100 firms, but Drury said from the outset that it would be chasing a "global opportunity".
Xero's shares dipped initially on listing, but Drury called for investors to give the company a year to prove itself, saying it was definitely serious about "shooting for the stars".
Drury's credentials with early investors were helped by the fact he had previously built up and sold an e-mail archiving firm AfterMail, for $65m.
Forsyth Barr analyst Blair Galpin said investors should not necessarily be concerned Xero had yet to move into profit.
"Our view for some time is Xero could be profitable if it was willing to forgo a lot of its push for growth, so it's a choice."
Passing the million-customer milestone was not unexpected but there were not many comparable achievements in the New Zealand market, he said.
"Given it has come from nowhere 10 years ago, it is a huge gain. What it has done is help support a strong technology investment story in Wellington and to a lesser extent Auckland."
Drury said machine learning and automation would open up the next phase of innovation in accounting, "driving a transition in the industry bigger than the move to the cloud did 10 years ago".
"With technology doing more of the time-consuming, data entry work, we will see more accountants take on advisory roles within the small businesses they support," he said.