Xero delivers first positive annual EBITDA but suffers NZ$28m loss
New Zealand's Xero has reported its results for the 2018 financial year, posting an after-tax loss of NZ$27.9 million. The result is a much improved on FY2017, which saw the company report an after-tax loss of NZ$69.1 million.
For the 12-month period, the cloud accounting firm cum small business platform reported positive earnings before interest, taxation, depreciation, and amortisation (EBITDA) of NZ$26 million, a NZ$54.6 million improvement over FY17's NZ$28.6 million EBITDA loss.
Cash flow from operating activity was NZ$41.2 million, while operating revenue was recorded as NZ$406.6 million.
In FY18, core accounting product revenues grew 37 percent, while other platform revenues grew at 94 percent.
Commenting on the results, Xero's new CEO Steve Vamos, who was appointed to the chief's role in April after founder Rod Drury announced he was stepping down as leader of the company he founded 11 years ago, said the Xero team is focused on delivering a "scalable, world-class product and customer service experience" as the company looks to expand further into new and existing markets.
Previously dually-listed on both the Australian Securities Exchange (ASX) and the New Zealand Stock Exchange (NZX), Xero ceased trading the NZX on February 2, 2018, after in November revealing it had exhausted all its other options in an "extensive strategic process".
At the time, the company outlined a number of key reasons for the change, the first being that consolidating its listing on the ASX should "provide longer-term access to a broader marketplace for Xero shareholders" given the ASX is supported by a large number of international investors. The potential inclusion in major ASX indices is expected to facilitate increased investment interest over time.
While the company's financial results did not address the delisting, Vamos said that as Xero continues to expand globally, it's "important to reiterate that we remain a proud New Zealand business".
"Over half of our team -- more than 1,000 people -- work and live in New Zealand and we remain headquartered in Wellington," the company told shareholders.
After reaching the 1 million global subscriber milestone in March last year, Xero reported adding 351,000 net subscribers during the 2018 financial year, with subscribers numbering just under 1.4 million as of March 31, 2018.
In Australia and New Zealand, Xero boasts 884,000 subscribers; 312,000 in the UK; 132,000 in North America; and 58,000 in the "rest of the world".
This financial year, Xero released a number of product updates and new features, including initiatives to service small businesses that go beyond accounting products, such as projects, expenses, and financial web partnerships.
See also: Stripe, Xero form ACH payment integration | Xero launches partnership with Macquarie Bank for BPAY payments | Xero launches Apple Pay through payments platform Stripe | Xero expands Stripe partnership for automated reconciliation
Speaking with ZDNet in September after unveiling a slew of products aimed at providing small business with an even larger platform to work on, Drury said the "biggest ever wave of new products" forms part of the company's evolution from an online accounting software firm into a global small business platform.
"Our purpose now is to help small businesses create jobs, get capital into them, and to give them pathways to trade with other businesses all over the world," he said of the shift.
"We're moving away from the software to actually being a business platform that accountants and bookkeepers can run their practices on to make small business customers more productive.
"Xero is a catalyst in the changing relationships between financial institutions, financial advisory services, accountants, and small businesses," Vamos added on Thursday. "In the large, underserved small business market, there is a vast growth opportunity that we are addressing as we continue to expand the Xero product offering."
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