MYOB says revenues grow 10%
Xero's biggest competitor, Australia's MYOB, claims it is gaining traction converting its customers to cloud accounting after reporting double-digit revenue growth.
MYOB, which only sells its software in Australia and New Zealand, reported a 21 per cent rise in its revenues to A$140 million for the six months to June and a 29 per cent increase in its interim operating profit to $70m. Its interim net loss fell to $5.6m from $6.3m.
Taking out the impact of acquisitions, revenue growth was "just north of 10 per cent", it said.
The result does not appear to have unnerved Xero investors, however. Xero shares had one of their strongest days on the NZX in months, climbing 5.3 per cent to hit an August high of $25 in morning trading.
MYOB claimed more than 400,000 paying customers in Australia and New Zealand of which it said more than 86,000 subscribed to its cloud software, up from 43,000 a year ago.
The company is privately owned but has some debt instruments listed on the Australian stock exchange.
Xero chief executive Rod Drury noted in February that comment about MYOB on one social media site was, in his words, "questioning their viability with so much debt". MYOB had total borrowings of A$571m at the end of June, down from $593m a year prior.
MYOB's listed debt securities have appreciated about 10 per cent this year on the ASX, suggesting growing confidence in the firm's staying power.
Although analysts' focus in recent weeks has centred on Xero's prospects of eating into the market share of United States' incumbent Intuit in North America, the main frontline at the moment is in Australia and New Zealand, where Xero is battling to poach MYOB customers as they consider moving to the cloud.
Almost three-quarters of Xero's revenues in the year to March were derived from Australia and New Zealand.
Drury said it was well ahead of MYOB in the cloud market, with 267,000 customers in those markets based on its own most recent public updates.
Xero knew it was converting "thousands" of MYOB customers to its software every month, he said.
Xero today launched an online marketplace to help its customers find the 350 add-ons to its software that had been created by third-party developers.