Xero posts loss as sales surge

Xero founder Rod Drury. Photo / Mark Mitchell

Xero, the online accounting software provider whose shareholders include MYOB founder Craig Winkler and cashed-up Trade Me founder Sam Morgan, posted a first-half loss on costs to upgrade and expand its systems and bolster its sales teams in the U.K. and Australia.

The net loss widened to $3.8 million in the six months ended Sept. 30, from $3.47 million a year earlier, the Wellington-based company said in a statement today. Sales soared 282 per cent to $1.27 million, while operating costs jumped 31 per cent to $5 million.

Xero is sitting on about $26 million cash and near-cash after a two-pronged capital raising and share buyback that saw former CEO Winkler subscribe for $18 million of shares and a further $5.8 million raised via a Share Purchase Plan. Expenses are outpacing revenue as the company rolls out its products in more countries.

The shares have more than doubled in the past 12 months.Shares of Xero last traded at $1.65, valuing the company at $145 million.

"The capital raising has reduced much of the risk faced by a young listed company," the company said in its statement today. "It provides a sound financial base for future growth and building an international business that's scalable."