Despite FY19 Losses, Xero Shares Surge

Small business accounting firm Xero saw its financial losses widen for the 2019 fiscal year, yet shares surged for the company as much as 10 percent.

Reports in SBS News this week said the New Zealand-based company posted a 9 percent increase in statutory losses to $17.72 million due to impairment charges against the company’s U.S. payroll operations. Yet a 31 percent jump in subscribers for the year, and a 36 percent increase in revenue, proved to be enough to satisfy investors.

Separate reports in Motley Fool said shares reached an all-time high on the ASX, hitting $41.28, a 1 percent increase. Analysts pointing to rising demand for Xero accounting software, particularly in the U.K., where Xero posted a boost of 151,000 subscribers – most of which stemmed from the second half of the fiscal year.

“We will continue to prioritize investment in growing our subscriber base, improving our capability to deliver more services to our customers and partners, and expanding our presence in new markets such as Asia, Canada and South Africa,” said Xero CEO Steve Vamos in a statement.

“We have a genuine competitive edge by prioritizing investment in growth, and partnering closely with accountants and bookkeepers, to deliver a human-centered technology experience for small business communities across the globe,” he added.

Last November, Xero announced the acquisition of Instafile, a U.K.-based cloud tax preparation and filing solution that connects accountants with tax authorities to promote compliance. The acquisition was purchased for $6.82 million.

At the time, Vamos pointed to the U.K. as a critical market for Xero’s growth plans. “The headroom for Xero’s growth in the U.K. is very exciting, and the initiatives we’ve announced will enable Xero’s accounting and bookkeeping partners to efficiently file tax returns and free up time to focus on providing advisory services to their small business customers,” he said.