Intuit also claims its net promoter score in Britain is six points higher at 43 than that of its "rival" - which is clearly Xero. Sage was the incumbent desktop software provider in Britain, but it's been clear for a couple of years that Xero has overtaken it in the online space.
However, Google Trends still shows Xero having a significant lead over QuickBooks in Britain over the past 12 months and that lead remains for every period from three months through to five years.
Stephen Ridgewell, an analyst at Craigs Investment Partners, says the Intuit numbers show that company has strong momentum in Britain but he points out that Intuit's average revenue per customer/unit is just above half that of Xero's.
"They have, clearly, a price-led strategy outside the US and, to a degree, that has been successful," Ridgewell says.
However, Xero had a very strong second half in Britain in its last financial year because value-added-tax-filing in that country has gone digital. Ridgewell expects that will have continued into the first half of this year.
Xero still has a clear lead in Australasia with 1.08 million subscribers at March 31, up 22 per cent on a year earlier. Intuit is reporting its subscribers in Australia – it doesn't mention New Zealand – totalled 224,000, up 39 per cent from a year earlier.
Intuit was the incumbent desktop provider of accounting software for small businesses in the US before Xero began disrupting that market with its online software-as-a-service product. It is unquestionably the dominant player with 3.3 million subscribers at July 31, up 25 per cent from a year earlier.
Intuit also has another 315,000 subscribers in Canada, up 48 per cent from a year earlier.
Xero reports both its US and Canadian figures together as North America and it had 195,000 subscribers in that region at March 31, up 48 per cent.
Surprisingly, though, Intuit says its US net promoter score of 53 is just 11 points ahead of Xero's and at 36 in Canada is only 4 points ahead.
Ridgewell says Intuit had a five-year start on Xero in Canada and both companies are also competing against strong domestic Canadian providers.
"We don't think it's going to be a roll-over for Xero in that market," he says. While he expects Xero's subscriber numbers in Canada will grow quickly from a low base, "they're late to the party in Canada. This is a timely reminder that Intuit has good growth in that market."
Xero doesn't break down numbers for the rest of the world outside Britain, North America and Australasia. But Intuit says it has 59,000 small business and self-employed subscribers in Brazil, up 47 per cent, 23,000 in France, up 143 per cent and 48,000 in India, up 42 per cent.
In the rest of the world, Intuit says it has 72,000 small business and self-employed subscribers, up 33 per cent.
Xero reported 83,000 subscribers in the rest of the world at March 31, up 48 per cent.
Ridgewell says Intuit is talking about lifting ARPU in the US market, and has taken advantage of its incumbent status to lift prices about six times in the past year, which should be positive for Xero.
However, he notes that Intuit announced its intention to lift ARPU a year ago and it still fell in the current year.
Xero made a major blunder in the US a few years ago when, frustrated at the slow pace of technology adoption by accountants there, it tried to go over their heads to target small businesses directly.
It learnt its lesson and is now following the same strategy of partnering with accountants that has made it successful everywhere else it operates.
Ridgewell says Intuit is now trying to bypass accountants with its QuickBooks Live and TurboTax Live products and "that's a risk for them."
Regardless, Xero still has a lot of work to do in the US, he says.
"We remain a bit cautious on whether Xero can meet market expectations for growth in the US and Canada," he says.
"We don't think anything out of Intuit's release today changes our view on Xero" but Intuit clearly has gained momentum in a couple of key markets for Xero.
Xero shares, which trade only on ASX, closed at A$60.39 yesterday and have gained about 22 per cent in the last 12 months.
- BusinessDesk
