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Xero Limited Revenue Rockets 38%

This morning, Xero Limited (ASX: XRO) announced its financial results for the year to 31 March 2018 showing a 38% increase in revenue and a net loss of $NZ27.8 million.

This morning, Xero Limited (ASX: XRO) announced its financial results for the year to 31 March 2018 showing a 38% increase in revenue to $NZ406.6 million and a net loss of $NZ27.8 million.

Xero is the Kiwi accounting software business which helps small businesses with bookkeeping and accounting.

In its public report to the ASX today, Xero said it had 1.38 million subscribers, with 351,000 new subscribers joining the company during the year.

Customer lifetime value (LTV), which Xero determines using the number of customers who continue using its product, rose 8% to $2,310.

“Xero has delivered another impressive full-year result driven by subscriber and revenue growth with excellent operating discipline, reflecting the strength of our value proposition and business model,” Xero CEO Steve Vamos said.

Xero reported $41 million of operating cash flow and said its yearly recurring revenue rose 33% to $484 million.

Growth Abroad

“We are well poised to leverage Xero’s international market leading positions as we continue to build a diversified growth profile,” Vamos added.

Currently, Xero’s primary operating markets are Australia, New Zealand, UK and USA. With a 47% increase in subscribers, Xero said it is a market leader in the UK.

Integrations, Apps And More Apps

Another part of Xero’s strategy is integrating its software with banks and other third parties. “Xero is a catalyst in the changing relationships between financial institutions, financial advisory services, accountants, and small businesses,” Vamos said. 

In February, Xero teamed up with National Australia Bank Ltd. (ASX: NAB), allowing NAB customers to send and receive payments in Xero rather than logging into their online banking.

Xero has even announced partnerships with plumbing business Reece Ltd (ASX: REH) and Caltex Australia Ltd (ASX: CTX) to streamline reporting for tax deductions.

Looking ahead, Xero said its 2019 financial year will see its cash outflow reduce towards break-even. After it breaks even it expects to reinvest the extra cash flow.

“In the large, under-served small business market, there is a vast growth opportunity that we are addressing as we continue to expand the Xero product offering,” Vamos concluded.

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