Xero launches volley in cloud accounting battle with MYOB

Online accounting contenders Xero and MYOB are at it again, with New Zealand's Xero ramping up efforts to convert MYOB customers, as the Australian incumbent reports record online customer registrations.

New Zealand-based cloud accounting provider Xero announced today it would indefinitely extend its free MYOB-to-Xero conversion service, Jet Convert, allowing MYOB customers to easily shift their accounting ledgers onto Xero’s platform.

The move comes as MYOB, the Australian incumbent bookkeeping and accounting software provider, announces it has hit a record client milestone of 100,000 online subscribers.

Xero has made no secret of its desire to wrest marketshare away from MYOB in Australia, and this latest move clearly lays out the company's ambitions in this most unexpected of turf wars.

Xero first offered the Jet Convert service in April, and now claims that thousands of customers have used the service to join its quickly-growing base of customers.

"We've been incredibly happy with the uptake of the conversion service offered by Jet Convert, but also with the rapid acceleration in customer growth this year," said Xero Australia managing director Chris Ridd.

Meanwhile, MYOB is celebrating hitting the 100,000 online subscriber mark, which comes after the company reported a self-proclaimed record first-half result, with revenue growth of 21 percent and earnings (EBITDA) growth of 29 percent.

The company said in a statement that the 100,000 online subscriber milestone has been achieved in under two years since the launch of its flagship AccountRight cloud accounting offering.

"Of equal significance is the way in which new MYOB clients are adopting our cloud solutions, with over 70 percent now choosing one of our cloud accounting solutions," said MYOB CEO Tim Reed.

While MYOB is the market leader for SMB accounting software in Australia in terms of total customers, its record 100,000 online customers in Australia falls somewhat short of Xero's claim of 147,000 customers in Australia, all of which are online customers by default, as all of Xero's platforms are cloud-based.

"We find it perplexing that MYOB would claim to be leader in a market where Xero has 147,000 Australian customers — all of which are on the cloud," said a spokesperson for the company in August. "That is a 96 percent growth rate compared to 12 months ago, when Xero had 75,000 customers. As of March 2014, Xero also saw 145 percent revenue growth in the Australian market."

In August, MYOB released its half-yearly financial report, revealing that it had pumped more than AU$100 million into research and development over the past three years in a bid to grow its cloud-based services.

Reed said at the time that the company's ongoing acquisition and investment in other companies has put it at the "forefront of cloud accounting solutions" for Australia and New Zealand, and that its acquisition earlier that month of New Zealand HR and payroll software company PayGlobal had boosted its footprint in the mid to large business sectors in the ANZ region.

Xero also announced in August it had spent millions boosting its own cloud presence, investing in a global redundant datacentre footprint in a bid to avert potential service outages.

"We've spent millions and millions of dollars on something that you guys won't even see, and we may not even need," said Drury at the time. "We now operate in fully geographic redundant datacentres."