Xero has just posted its half yearly results and it’s a bit of a mixed bag.
The cloud accounting company set its sights on US expansion earlier this year but it hasn’t gone exactly to plan.
Earlier this year the company said there were a number of product gaps, that its sales model needed refining and that is was having a tough time recuriting is San Francisco.
It also said it was “dissatisfied with execution and leadership” in the US.
The weaker than expected performance in the US market to date has resulted in the company recruiting three senior executives and relocating its CFO Ross Jenkins to manage its growth in North America.
“Xero did not execute to plan during the period. Key leadership changes are being made in the region and Xero expects to accelerate growth over future periods,” the company said.
New recruits include two former Microsoft execs, Angus Norton who will take on the chief product officer role, and James Maiocco who has been appointed GM of business and corporate development as well as John Forrester who will head up the company’s US marketing division.
After raising $180 million in October last year, the company has been executing an aggressive expansion plan. Staff numbers have grown 70% year-on-year to 993 people at the end of September.
Growing customer numbers has pushed the company’s subscription revenue up 85% from $NZ28.1 million to $NZ52 million.
Investment in the product and growing its headcount saw the company post an after tax loss of $24.5 million for the six months to September 30 compared with a loss of $17.1 million for the corresponding period in 2013.
At September 30, Xero had $NZ170.8 million in cash.
Here are the numbers.
The company also recently appointed former Commbank CMO Andy Lark as its marketing boss and Xero CEO Rod Drury said there will be more staff announcements over the next couple of months.
“We’re thrilled at the growth we’re achieving in our initial three markets and are now focussed on execution in the important US market and are making good progress on building our leadership team there,” he said.
“Our investment over the last year, combined with our clean cloud-first platform, will allow us to further increase the rate of innovation.
“It will be an exciting next few years for small businesses and accountants.”
The latest product development, a soon-to-be-launched business performance dashboard was also previewed today. Drury said it’s one of the latest projects the company has been working on to help businesses gain insights from their own data.
“This is just the first step in how we’ll be looking to use big data from our global accounting platform to put small businesses in control and grow,” Drury said.
Xero is expecting subscription revenue growth to increase 80% and operating losses to continue for the full year to March 2015.
“With a market share of less than 10% in the major markets outside New Zealand, Xero expects strong revenue growth to continue for the foreseeable future,” the company said.