Online accounting startup Xero has made a lower than expected loss of $4.31 million in its first full year.
The company also signed up more customers that it had expected – 1406 against the target of 1300 set out in its Offer Document issued last May.
However, Xero’s audited full year results to 31 March show it earned just $134,000 in subscriptions from customers. This equates to around $95 a customer for the year, while on average each customer would have cost Xero just over $3000 to maintain.
Nevertheless, the company is pleased with its results and backed by a cash balance of $8.9 million as at May 10, it plans to now focus on converting the “substantial sales pipeline” it has in place, says CEO and founder Rod Drury.
“With our first year behind us, we’re now working hard to leverage our competitive advantage and focus on customer acquisition,” he says.
In documents released to the NZX today, Xero states its average revenue per customer was less than forecast in the Offer Document. This is because in the past year it had a greater focus on accountants and their request for the company to spend more time on the core accounting engine, rather than value-added services.
The company says it has signed up 104 accounting partners in New Zealand and 11 in the UK.
Xero also reports that fewer new customers than expected opted for a one-year in advance payment discount, preferring to pay monthly.
A highlight for the company in the year was signing up customers in the UK, where it opened an office in March, although it had forecast no revenue from this market for the first year.
Drury says Xero has demonstrated that it is “well on the way to creating a significant business from New Zealand”, adding exceeding its target has given the company great confidence.
In addition to its subscription revenue, Xero received a $216,000 grant from New Zealand Trade and Enterprise and the Foundation for Research Science and Technology, and earned $793,000 from interest.