This one chart shows why Xero lost even more money this year

Cloud accounting software company Xero’s net loss increased 81% from last year to $NZ44.3 million ($AU40.9M), despite a 60% jump in subscribers and 71% increase in revenue year-on-year.

But the loss says a lot about how much the business is betting on the future – the main reason for the additional $NZ20 million ($AU18M) in losses is an increased investment in research and development.

The profit and loss sheet shows spending on product design and development has almost doubled, rising to $NZ 34.5 million ($AU31.8M) from $NZ 17.2M ($AU 15.9M) last year.

This chart, from Xero’s presentation to investors, suggests that spending blows away the competition.

Total R&D spending includes all new product costs, which means it is higher than the amount listed on the profit and loss sheet.

Xero refused to name the companies they were comparing themselves to, but competitors include the likes of ASX-listed MYOB and Quickbooks.

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