We’re proud to present our first half results today.
Our focus has been to balance our investment with managing cash to hit break even, while ensuring we deliver massive internal projects to drive long term scale, yet we continue to also deliver amazing growth passing $300m in Annualized Recurring Revenue (ARR).
For the six months ending September 30, 2016, Xero posted operating revenues of $137.2 million, a 48% year-on-year increase. Achieving a milestone of annualized committed monthly revenue of $303.2 million, Xero’s subscriber base reached a total of $1.7 billion of life-time value.
Xero now has more than 862,000 paying subscribers around the world, a 45% increase from 30 September, 2015. We’ve added a third of all customers in the last year alone and in the U.S., we’ve grown our subscriber base by 250% in the past 24 months.
The U.K., where Xero is the leading small business accounting product, is emerging as our next major growth engine – growing 61% in the 12 months to September 30 to hit 164,000 subscribers.
We are gaining traction in the important US market winning large form deals and adding thousands of accountants into our family.
Thank you shareholders for your support to give us the opportunity to build such and important company. Thank you to our valued partners and customers. We know we have to earn the right to serve you every day and we appreciate your patience as we go through the massive replatforming – almost there.
We’re more excited than ever. It’s incredibly exciting to be building a business that is empowering such a truly global community.
Ten years after launching our cloud accounting platform, our vision remains: to connect more small business owners with an advisor to help them grow.
In the beginning, cloud accounting was unheard of, the industry still worked on desktop software which was outdated, and a beautiful customer experience simply didn’t exist.
Since then, we’ve reshaped the landscape — our work to transform the accounting and small business sectors, bringing best-in-breed innovation to a subset that had never had this sort of technological love before, is helping boost productivity, create more jobs and lift the global economy. Together, we’re making accounting magical.
Today, hundreds of thousands of small business owners start their day in Xero.
Thanks to the tireless work of our more than 1,450 people around the world, and the staunch support of these 862,000+ subscribers – many of whom bleed blue – our business is flying. Our subscribers and revenues are growing and we expect the magnitude of what we’re achieving to come into full fruition over the next few years. I’m extremely proud of what we’ve built together in ten short years.
We’ve come a long way. Automation and machine learning are driving a significant transformation in the accounting sector. Today, cloud accounting isn’t just the future, it’s the bedrock modern firms are built on and a key component of their future growth strategies.
Now, to stay ahead of the curve, we need to not only prepare ourselves to meet the demands of a hyper-growth business, but also continue to push the boundaries of technology, business, and policy — to remain a leader in providing SaaS software for small businesses. We have refined our plan to achieve these objectives. It entails us making changes to focus our business and product strategy. Importantly, the plan enhances our focus on new technology – including artificial intelligence and machine learning applications – and the decision to evolve our teams so we can remain agile.
These changes to our business and technology will have some immediate results. Our move to AWS will lift our pace of innovation, while our refined team structures will improve efficiencies and collaboration right across the company.
Looking at what we’ve achieved over the past ten years, I’m humbled by what our talented teams have built. Our growth and progress, while not always traditional in nature, has been one hell of a bet and one I’m forever grateful I went all-in on.