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Becoming a $1 billion business


Jul 19, 2016

There’s a lot of talk among tech startups these days of reaching a $1 billion market valuation and joining the halls of so-called ‘unicorns’. Few of those who do reach that status, however, ever achieve $1 billion in annual revenues. That’s a far harder task.

At our Annual Meeting today, we set out a clear path to doing just that. And we’re well on our way to achieving that goal. At our full-year financial results in May, we announced we had achieved a staggering $257 million in annualized committed monthly revenue, with our global subscriber base now contributing a total life-time value of $1.5 billion.

You can see more about our goal to reach $1 billion annual revenues in our presentation to shareholders.

We are also committed to managing the business to cash flow break-even within our current cash balance, enabling us to continue to invest in Xero and make it a world-beating product from our revenues.

Our ability to reach that ambitious goal is thanks to our loyal small business customers and their accounting and bookkeeping partners, who are helping to transform the way thousands of small businesses do their accounting. We reached 717,000 subscribers at the end of March this year and have a clear pathway to reaching more than 1 million subscribers.

In fact, we have become one of the fastest growing cloud accounting companies in the world while maintaining firm focus on executing on a global strategy of high margins and diversified global revenue. Xero is the market-leading small business cloud accounting software in Australia, New Zealand and the United Kingdom, based on number of subscriptions. That’s not to mention the fact that we have an expanded focus in countries like Singapore, Malaysia and Hong Kong, where the potential for a cloud revolution among small businesses is massive.

Xero is used by small businesses in more than 180 countries around the world, showing just how global and diversified our company has come from humble origins in New Zealand.

It’s this scale that has enabled us to become a unique globally authoritative small business data source, recording more than a $1 trillion across 450 million ingoing and outgoing transactions over a 12 month period.

We have an unrelenting pace of innovation in an industry that used to be dictated by slow, out-of-date desktop software and accounting ledgers strewn across computers. We’re taking advantage of cutting-edge technology, such as the Amazon Web Services public cloud, that enables us to innovate faster than before and push into new geographies.

We have continued to grow our financial web, the network of financial institutions that share data with the Xero accounting platform. We recently announced deeper integrations with Wells Fargo in the United States and Commonwealth Bank in Australia, helping us reach millions of small businesses in those two markets. We now have strong relationships with more than 80 financial institutions around the world to build the financial web, allowing small business owners to control and connect their accounting ledger — the heart of their business — to their bank, financial institution or a financial services provider.

By helping small businesses connect their accounting ledger to their financial service, we can start to unlock productivity and growth in businesses around the world, especially when it comes to accessing capital. We can look at ways to automatically code banking transactions so business owners and their accountants don’t have to spend precious time making sure they have accurate, up-to-date data to make business decisions on.

The path to $1 billion looks bright, and we can’t wait to share what else we have in store.


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