Xero falls deeper into the red with NZ$28.6m H1 loss
Cloud accounting firm cum small business platform Xero has ended another half-year in the red, posting a loss of NZ$28.6 million for the first-half of 2019.
The figure is down from the NZ$19.6 million loss reported in H1 FY18.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) was NZ$16.8 million, compared to NZ$15.6 million in the same period a year prior. EBITDA excluding impairments came in at NZ$34.5 million, up from NZ$17.1 million.
Xero told shareholders on Thursday that the net loss includes NZ$18.6 million from impairments and additional costs relating to its alliance with Gusto, and the $70 million acquisition of Hubdoc. The company reported NZ$16.3 million in impairment costs related to the Gusto partnership.
Revenue was up 37 percent to NZ$256.5 million and operating revenue for the six month period was NZ$256.5 million, with Xero attributing the figure to subscriber growth.
The company ended the first-half with nearly 1.6 million subscribers, of which 380,000 were added in the last 12 months.
Xero boasts 657,000 subscribers in Australia, 324,000 subscribers in New Zealand, 355,000 subscribers in the United Kingdom, 178,000 subscribers in North America, and 65,000 subscribers in the rest of the world.
"We remain focussed on disciplined execution of our strategy to drive growth while improving financial outcomes through operating efficiencies," said Xero CEO Steve Vamos, who assumed the position following former CEO and founder Rod Drury stepping down earlier this year.
"Our acquisition of Hubdoc delivered a key element in Xero's code-free accounting strategy, enabling small businesses and their advisors to focus less on paperwork and more on growing their business. Likewise Xero's strategic alliance with leading US payroll provider Gusto is an important step in the implementation of our US strategy."
During the reported period, Xero secured $300 million in capital via a convertible note offering, with the company saying on Thursday it intends to use the capital to "enhance and extend its small business platform and ecosystem capabilities through complementary and targeted acquisitions and investments".
"Xero is very well positioned to take advantage of organic growth opportunities and following the completion in October of our $300 million convertible notes issue, we have the financial flexibility to target complementary acquisitions and investments," Vamos continued.
For the 2018 financial year, Xero posted an after-tax loss of NZ$27.9 million. The result was much improved on FY2017, which saw the company report an after-tax loss of NZ$69.1 million.
The company reported EBITDA of NZ$26 million, a NZ$54.6 million improvement over FY17's NZ$28.6 million EBITDA loss.
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