Xero sees deepening negative cash flow amid receipt rise

​Xero has reported an operating and investing cash flow of NZ$-22.9 million for the quarter ending December 2014, despite seeing an 81 percent increase in receipts from customers compared to the same period the previous year.

New Zealand cloud accounting company Xero has reported a negative net operating cash flow of NZ$-8.5 million for the quarter ending December 31, 2014.

According to the Auckland-based company's unaudited quarterly results (PDF), Xero received NZ$32.5 million in receipts from customers, but spent over NZ$44 million on expenses, including staff costs, advertising and marketing, and other working capital.

Xero reported NZ$26.4 million in negative cash flow for the year to date, despite receiving NZ$83.9 million in customer receipts for the nine-month period.

The company's total operating cash flow for the quarter came to NZ$-22.9 million, a greater cash outflow than the NZ$-22.6 million it recorded in the September quarter,

Its total operating cash flow and investing cash flow for the year to date came to NZ$-62.8 million.

The results come as Xero continues its aggressive expansion into the Australian market and further afield, in countries such as the United States and the United Kingdom.

In Australia, the company has been working to wrest small and medium-sized business customers away from the local incumbent MYOB; in September last year, Xero indefinitely extended its free MYOB-to-Xero conversion service.

In November, Xero revealed that it had 371,000 paying customers globally compared to 211,000 in the same period the previous year -- a 76 percent increase -- while as of September 2014, its cash holdings came to NZ$170.8 million.

It pumped some of this into new acquisitions, with Xero paying NZ$5.3 million cash and 238,490 in shares for a deal to acquire United States-based online payroll software provider Monchilla.

Xero reported a net loss after tax of NZ$24.5 million for the six months ending September 2014, with the company saying that this result reflected "investment in product development, and sales and marketing".

Last week, the company announced that it had appointed US-based tech industry stalwart Douglas Jeffries as its new executive vice president and chief financial officer.

Jeffries has done time with eBay; Taleo Corporation, which was acquired by Oracle; RetailMeNot; HP acquisition Palm; and PricewaterhouseCoopers.

"Doug brings a world-class technology finance background to ready us for more growth and strengthen our leadership in North America," said Xero chief executive officer Rod Drury.