Xero’s Australian operating revenue up 107% on strong customer growth

Xero (NZX/ASX: XRO), the leading cloud accounting software provider, continued to deliver exceptional growth for the year ended 31 March 2015, recording operating revenue of $114.9 million, up 84.7% from $62.2 million in FY14. Annual results were released on the ASX this morning.

Paying customers grew to 475,000 small businesses globally, up 67%.

Australian customers now exceed 203,000, growing 86% from 109,000 customers the same time last year.

Of the new customers coming to Xero, 35% are switching from other accounting software providers.

Across Australia and New Zealand, Xero has also seen more than 15,000 customers switch from MYOB subsidiary BankLink.

Globally, subscription revenue grew 88.9% to $112.2 million. Xero’s recurring revenue model means that it commences its 2016 financial year strongly with $156.4 million in annualised subscriptions, a 79.6% increase on the same time last year.

“Xero continued to grow strongly over the past 12 months, showing that small businesses in this country want accounting software they can use anywhere, from any device,” said Chris Ridd, Managing Director of Xero Australia.

“Our recent partnerships with NAB and CGU Insurance have enabled small businesses to tap into our vision for smarter financial services.

In the case of our recent API partnership with NAB, we are providing small business customers the ability to immediately and automatically link their bank accounts to their Xero dashboard, and open up new possibilities in the future.

“We’re expecting the 2016 financial year will be even bigger than 2015, with a large number of updates planned for our customers.”

Australian highlights for the financial year included:

  • Grew to 203,000 customers, up 86% from 31 March 2014
  • Appointed Andy Lark as global Chief Marketing Officer
  • Over 500 customer-facing updates in FY2015, and more than 220 updates so far in the 2015 calendar year
  • Commendations included being ranked No. 1 in the Most Innovative Growth Companies for 2014 by Forbes, and Most Innovative Company in Australia by BRW. Xero was also ranked No. 16 for BRW’s Best Places to Work for 2014
  • Forged landmark partnership with NAB to create automatically establish bank feeds for small businesses
  • Now used by Australian small businesses to process $1.5 billion in payroll each month
  • Attracted 1300 attendees to Xerocon in August, making it the largest accountants conference in the country
  • Opened new Sydney office in the heart of the city

Xero now has three platinum accounting partners in Australia, including Crowe Howarth Australia, Mulcahy & Co and Bentleys Paragon Pty Ltd. Xero awards Platinum status to partners with over 500 clients on Xero.

“Our firm has seen great efficiencies and savings by using Xero and we have passed these on to our clients by providing more value added services” said Chris Mulcahy, Partner at Mulcahy and Co.

Xero will continue to invest to fuel growth and scale while maintaining its high margin business model. The business maintained a strong cash position with $264.0 million of cash at 31 March 2015 to continue to invest in creating long-term shareholder value. Xero raised $140.8 million in March 2015.

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