Accounting software company Xero has indicated it’s considering listing in the US as it pivots operations to go after market share in the States over the next 12 months.
At its annual general meeting in New Zealand company chief executive Rod Drury indicated the company expects it will surpass $US100 million in annualised committed monthly revenue – a milestone which positions it for a US listing.
The company had a stellar year, posting $70.1 million in operating revenue for the 2014 financial year, up from $39 million in FY2013, And while a listing in the US is something that has been speculated about publicly in the past with such strong growth, which is expected to continue, this looks like the time to start looking at a US IPO.
“Whilst we haven’t made any commitments there are a lot of boxes to tick as far as internal and external factors but certainly now it’s something we’d consider given our aspirations to grow in the US market,” Xero MD Chris Ridd told Business Insider.
“The only time frame that’s been suggested is 2015.
“It seems a logical next step to do that.”
Ridd said there’s been significant interest from investors.
“When we listed in Australia a couple of years ago it was very good for our profile in the market but actually there’s a lot of interest from investors all around the world,” he said.
“We’re a tightly held share and so this would obviously improve liquidity.”
Founded in New Zealand in July 2006, the company has a strong customer base in Australia and is already listed on both the Australian and New Zealand stock exchanges. It’s a company which is shifting towards the US market where it would be battling it out for market share against fellow cloud-based accounting company Intuit.
Currently 6% of Xero’s customer base is in the US, compared to Intuit’s QuickBooks which is heavily focussed on the market with 90% of its users based there. But with an estimated 27 million small businesses in the US, it’s a market Xero is chasing.
“It’s a logical next step given the market opportunity,” Ridd said.
Xero shares on the ASX were trading up 2.3% at $22.25 a short time ago.