Business

Investors unimpressed by Xero's jump

09:17 am on 10 October 2014

Investors responded in a luke-warm fashion to Xero's 79 percent jump in first-half sales, mainly because they're disappointed with the growth in customers in the United States.

Xero shares ended down 1 percent at $20.95 yesterday.

The software accounting company expects to post a loss of about $25 million for the latest six months, up from $17 million in the previous first half.

Xero's sales for the six months ended September rose to more than $54 million while annualised subscription revenue has now reached more than $132 million from $93 million in March.

However, customer numbers in the US reached 22,000, up just 4000 since March.

Chief executive and founder, Rod Drury, was obviously sensitive to criticism and suggestions from an analyst that Xero probably would not get traction in the US until the 2017 financial year.

"I think it'd be good if some of the New Zealand analysts did a bit more work and actually looked at what was happening in the market, especially look at what's happening in the UK and Australia."

Xero's employees passed a thousand in the latest six months and it still had nearly $171 million in cash at the end September.

Xero's largest market is Australia where customer numbers leapt 49,000 to 158,000.

Mr Drury said there was plenty more growth available across the Tasman too.