It has been a rollercoaster year for Xero which gained market darling status in March when its shares hit $45.99, valuing the company at nearly $6 billion.
Xero CEO Rod Drury has overseen a rollercoaster year for the New Zealand-based accounting software company. Photo: RNZ / Diego Opatowski
The shares had risen from $8 a year earlier and from their 2007 $1 float price.
This was a company whose revenue in the year ended March was just $70 million.
But then investors began to realise this was pricing for perfection and a far from certain future.
Gradually, the accounting software company revealed a lot that wasn't perfect and the shares had sunk as low as $15 in October.
The key disappointment was Xero's lack of progress in the key US market - if it doesn't succeed there, even its current share price may be too high.
Listen to Xero CEO Rod Drury's response to criticism of the company's progress in the US
View a timeline of Xero's customer numbers and share prices since 2007
Xero added just 4000 customers in the US between March and September, taking the total to 22,000 and, even worse, its churn rate in the US rose to 4.2 percent a month - that means Xero is losing almost half its customer base a year.
By contrast, its churn rates in its other key markets are improving and is less than 1 percent in New Zealand.
In the US, Xero has been spending more than 36 months' worth of revenue to acquire each customer, more than five-and-a-half times what it's costing to acquire a customer in New Zealand and well over four times the cost of acquiring customers in Australia.
The lack of progress in the US saw analysts drastically dialling back their growth forecasts: at the beginning of 2014, the consensus was that revenue would reach $550 million in the year ending March 2017. That's now back at $340 million.
A difficult market
The reasons the company has been finding it so tough in the US are many: US accountants are more conservative and risk-averse - they're afraid of being sued - than their counterparts in the three Commonwealth countries in which Xero has gained significant traction.
Yet accountants have been a key marketing avenue for Xero in New Zealand, Australia and Britain.
Then, Xero's key competitor in the US, Intuit, seems to be far more proactive in migrating its customers from desktop software to the online, cloud-based systems Xero has pioneered than its key Australasian competitor, MYOB, or its key British competitor, Sage.
Intuit's online sales of its QuickBooks accounting product grew 43 percent in the three months ended October while its desktop sales of the product fell 23 percent.
Another reason for Xero's slow progress in the US is that it has yet to develop a full range of products.
Although it began to address this problem in November by buying the Monchilla payroll business, it still doesn't offer a cheque processing facility - about 70 percent of payments in the US are still made by cheque.
Xero: Customer numbers vs share price July 2007 - December 2014 Photo: RNZ
Bringing on banks
And then there's the situation with the banks - in New Zealand and Australia, Xero has direct feeds into its software from all four of the major banks.
But the US market is much more fragmented with about 6000 banks - and the top five claim only about 38 percent of the market.
While Xero is working to sign up banks, it's mainly relying on a third-party aggregator, Yodlee, for bank feeds in the US.
Xero has been successful in gaining 61,000 customers in Britain by the end of September, but that's well behind the 158,000 customers it had signed up in Australia, despite entering these two markets at the same time.
A key reason for that slower growth in Britain is that only one bank, HSBC, provides Xero with a direct feed there - that agreement was signed as long ago as 2009.
So until it can persuade the other British banks to provide it with feeds, Xero has to rely on Yodlee in Britain too.
Mixed predictions
Analysts have mixed views on Xero's prospects. Nick Lewis at Woodward Partners has questioned whether the company has any chance of succeeding in the US.
Listen to Nick Lewis
Stephen Ridgewell at Craigs Investment Partners has a sell on the stock and says Xero's major competitors in each of its markets, including MYOB in Australia and New Zealand and Sage in Britain, are now competing fiercely.
Mr Ridgewell is also worried about Xero's rising spending on marketing for progressively poorer results.
But James Schofield at First NZ Capital is much more optimistic, expecting the shares to outperform. He expects Xero's surge in hiring product developers - of all its developers, 37 percent were hired in the last six months - will start to pay off in rising profit margins.