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Xero shares slip 2.5% in first day of sole ASX listing

Monday 5th February 2018

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Xero shares fell 2.5 percent in their first day as being solely listed on the ASX, following the fall-out of a sharp sell-off on Wall Street which drove markets lower in Australia and New Zealand and weighed more heavily on growth-orientated equities. 

The shares fell 84 Australian cents to A$32.65 as at 12.50pm in Wellington, having gained 6.4 percent since they stopped trading on the NZX on Jan. 31. The sole listing was a controversial decision for the Wellington-based company, which had seen its share price soar 3,300 percent over the decade it spent on the NZX, but one which chief executive Rod Drury has previously characterised as necessary to attract a broader range of analyst coverage and a wider pool of investors as the software developer steps up its global aspirations. 

"The noise came from a small number of funds that couldn't hold Xero," Drury said today. "For individual retail shareholders, we've had so many notes of congratulations after our debut last week, a lot of them saw all of the coverage, the negativity, and I think seeing the share price up so strongly so quickly, revalidated that we understand what we're doing." 

Xero is on the cusp of turning an annual profit since crossing the million customer threshold and is now pursuing free cash flow, which Drury says opens more opportunities for the firm as it embarks on accelerating its global aspirations. 

The Kiwi company derives about 80 percent of its revenue overseas and still sees blue-sky opportunities in markets such as Australia where the total addressable market can be expanded by converting more businesses to using cloud-based accounting software, and becoming more heavily embedded in the broader financial system. 

Drury says that growth story is attractive to overseas investors, who can more readily access Xero shares on the ASX, which he said also doesn't offer many growth-orientated companies. 

"Building that global operating model is our real focus and making sure we're delivering on our global platform as the whole technology market is shifting to be these big global companies," he said. 


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