WELLINGTON, NEW ZEALAND--(Marketwired - Apr 23, 2015) - Xero Limited (NZSE: XRO) (ASX: XRO) continued to deliver exceptional growth for the year ended 31 March 2015, recording operating revenue of $123.9m, up 77% from $70.1m in FY14. (Note:all currency is in New Zealand dollars and results are unaudited)
Paying customers grew to 475,000 at 31 March 2015, up 67%, and subscription revenue grew 81% to $120.9m. Xero's recurring revenue model means that it commences its 2016 financial year strongly with $159.3m in annualised committed monthly revenue, a 71% increase on the same time last year.
The Company will continue to invest to fuel growth and scale while maintaining its focus on building a high margin business model. The business maintained a strong cash position with $268.9m of cash at 31 March 2015 to continue to invest in creating long-term shareholder value.
Highlights of the financial year ended 31 March 2015 include:
Revenue
Subscription revenue of $120.9m, up 81% from $66.9m in FY14
Constant currency subscription revenue of $122.5m, up 83% compared to FY14
Operating revenue of $123.9m, up 77% compared with FY14
Annualised committed monthly revenue (ACMR) of $159.3m, a 71% increase on FY14
Operating Loss
The net loss after tax for FY15 increased 96% to $69.5m, increasing to 56% of operating revenue from 51% from FY14, reflecting the investment in product development, and sales and marketing
Balance Sheet and Cash Flow
Cash of $268.9m available to fund future growth and expansion
During FY15, the Company used $88.4m of cash and cash equivalents in operating and investing activities compared to $48.4m during FY14
Xero raised $147.2m in March 2015
Business Highlights
Paying customers increased to 475,000 at 31 March 2015, an increase of 191,000 or 67% compared to 284,000 last year at 31 March 2014
Xero added 403 employees, and now has 1,161 staff globally to support customer growth across all markets and to scale product development. Xero anticipates a slower rate of employee growth in FY16.
Regional Breakdown
Year ended 31 March
Subscription revenue
2015
2014
% Change
New Zealand
32.6
23.2
41
%
Australia
56.5
27.7
104
%
United Kingdom
19.3
10.1
91
%
North America
7.7
3.3
133
%
Rest of World
4.8
2.6
85
%
Total
120.9
66.9
81
%
Year ended 31 March
Paying customers
2015
2014
% Change
New Zealand
138,000
102,000
35
%
Australia
203,000
109,000
86
%
United Kingdom
83,000
47,000
77
%
North America
35,000
18,000
94
%
Rest of World
16,000
8,000
100
%
Total
475,000
284,000
67
%
Comment from CEO, Rod Drury "We're delighted with our achievements this year. We focused on adding and integrating 400 talented people to our team for critical mass around the globe. We're extremely proud to have done that while continuing to drive strong revenue and customer growth across all markets. We have emerged as the cloud accounting leader in three countries and are seeing positive momentum in the U.S. market," said Rod Drury, CEO, Xero.
"Our platform now provides the most comprehensive small business accounting experience for customers, winning against desktop solutions while delivering the benefit of running a business anywhere, anytime, from any device. We have delivered payroll and inventory across all markets, and we will continue to add value to small businesses, accountants and bookkeepers through continued innovation. We are very excited about FY16 and expect strong growth to continue in all our core markets for the foreseeable future."
FY15 Commentary Xero continues exceptional growth as the leader in cloud accounting in New Zealand, Australia and the United Kingdom, with annualised subscriptions of $39.5m, $74.2m and $25.9m respectively.
Strong growth is expected to continue in these markets, and Xero has focused on building infrastructure to support its expansion in the U.S. market. The U.S. remains a significant and addressable opportunity with the majority of small businesses unserved by cloud accounting software. Xero is well positioned to meet this need through its complete small business accounting solution, purpose built for the Cloud and mobile devices.
During the second half of the year the U.S. management team formed, led by U.S. President Russ Fujioka. The focus was on ensuring a solid foundation for North America to enable it to scale, and during the second six months customer growth was 300% greater than the first six months.
Xero continued to build its Global Leadership Team appointing Andy Lark as Chief Marketing Officer, Angus Norton as Chief Product Officer, and San Francisco-based Graham Smith was appointed to the Board as a non-Executive Director.
An additional $147.2m of capital was raised in March 2015 from Accel Partners and existing investor Matrix Capital Management, positioning Xero strongly with $269m of cash.
Investor calendar (NZT) 24 April 2015, 9am NZT - Investor conference call 21 May 2015 - Annual Report release 22 July 2015 - Annual General Meeting (Wellington, New Zealand) 19 November 2015 - Half Year Interim Report release
XERO Limited
Condensed Consolidated Statements of Financial Position
(Unaudited, in thousands)
As at 31 March
2015
2014
Assets
Current assets
Cash and cash equivalents
58,866
14,886
Short-term deposits
210,000
195,000
Trade and other receivables
21,499
14,374
Short-term derivative assets
3,151
-
Total current assets
293,516
224,260
Non-current assets
Property, plant and equipment
16,631
9,856
Intangible assets
64,057
34,828
Deferred tax asset
1,427
486
Other receivables
1,712
2,371
Total non-current assets
83,827
47,541
Total assets
377,343
271,801
Liabilities
Current liabilities
Trade and other payables
14,904
7,105
Employee entitlements
14,040
9,026
Income tax payable
2,218
732
Short-term derivative liabilities
130
-
Total current liabilities
31,292
16,863
Non-current liabilities
Deferred tax liability
398
-
Total non-current liabilities
398
-
Total liabilities
31,690
16,863
Equity
Share capital
492,173
336,308
Share based payment reserve
7,537
4,682
Accumulated losses
(155,474
)
(85,940
)
Foreign currency translation reserve
(758
)
(112
)
Cash flow hedge reserve
2,175
-
Total equity
345,653
254,938
Total liabilities and shareholders equity
377,343
271,801
XERO Limited
Condensed Consolidated Income Statements
(Unaudited, in thousands, except per share data)
Year ended 31 March
2015
2014
Subscription revenue
120,928
66,853
Other operating revenue
2,922
3,238
Total operating revenue
123,850
70,091
Other income
3,369
1,383
Total revenue and other income
127,219
71,474
Cost of revenues
37,403
24,516
Gross profit
89,816
46,958
Operating expenses:
Sales and marketing
93,478
55,105
Product design and development
48,959
18,409
General and administration
24,548
11,716
Total operating expenses
166,985
85,230
Operating deficit
(77,169
)
(38,272
)
Interest income
7,713
5,062
Interest expense
(25
)
-
Other gains/(losses)
2,025
(690
)
Net loss before tax
(67,456
)
(33,900
)
Income tax expense
(2,078
)
(808
)
Net loss from continuing operations
(69,534
)
(34,708
)
Net loss from discontinued operations
-
(838
)
Net loss after tax for the period attributable to the shareholders of the Company
(69,534
)
(35,546
)
Earnings per share
Basic and diluted loss per share
($0.55
)
($0.29
)
Amounts include non cash share-based compensation expense as follows:
Year ended 31 March
2015
2014
Cost of revenues
594
554
Sales and marketing
3,517
2,088
Product design and development
4,478
1,683
General and administration
3,402
778
Total share-based compensation expense
11,991
5,103
XERO Limited
Condensed Consolidated Statements of Cash flows
(Unaudited, in thousands)
Year ended 31 March
2015
2014
Operating activities
Cash was provided from/(applied to):
Receipts from customers
119,566
67,136
Other income
2,580
1,086
Interest received
7,950
2,613
Payments to suppliers and employees
(166,853
)
(91,175
)
Income tax paid
(1,866
)
(679
)
Net cash flows from operating activities
(38,623
)
(21,019
)
Investing activities
Cash was applied to:
Purchase of property, plant and equipment
(10,315
)
(5,150
)
Capitalised development costs
(32,994
)
(21,540
)
Business acquisitions
(5,349
)
-
Intangible assets
(174
)
(63
)
Rental bonds
(926
)
(627
)
Net cash flows from investing activities
(49,758
)
(27,380
)
Financing activities
Cash was provided from/(applied to):
Exercising of share options
709
492
Share issue
149,290
180,000
Cost of share issue
(2,845
)
(438
)
Payments for short-term deposits
(418,000
)
(256,300
)
Proceeds from short-term deposits
403,000
133,425
Net cash flows from financing activities
132,154
57,179
Net increase in cash and cash equivalents held
43,773
8,780
Foreign currency translation adjustment
207
(13
)
Cash and cash equivalents at the beginning of the year
14,886
6,119
Cash and cash equivalents at the end of the year
58,866
14,886
About Xero Xero is beautiful, easy-to-use online accounting software for small businesses and their advisors. The company has 475,000 paying customers in more than 180 countries. Xero seamlessly integrates with over 400 third-party tools, and was recently ranked No. 1 by Forbes as the World's Most Innovative Growth Company.
