Xero slows cash burn in September quarter as customer receipts jump 73%

Friday 30th October 2015

Xero, the cloud based accounting software developer, slowed its quarterly cash burn in the July to September period as customer receipts rose at a faster pace than its wage costs.

The Wellington based company's operating cash outflow shrank to $6.3 million in the three months ended Sept. 30 from $9.6 million in the same period a year earlier, it said in a statement. Customer receipts climbed 73 percent to $48.2 million, outpacing a 43 percent increase in staff costs to $28.2 million, the company's biggest operational cost. Xero's spending on advertising and marketing almost doubled to $13.6 million in the quarter.

The company spent $14.6 million on investing activities, most of which went into acquiring intellectual property, and up from $13 million a year earlier.

"The primary reason for the stronger quarterly result is the improvement in operating cash flows, notwithstanding the deterioration of the NZD, which impacted current period operating and investing cash flows adversely by $2 million compared to the same period last year," Xero said. "Operating cash flow improvements have been driven by strong revenue increases and operating efficiencies which have allowed investments in distribution channels and product development to drive sustained global customer and revenue growth."

Xero has been a pioneer on the local stock exchange for software-as-a-service firms forgoing short-term profits in a bid to create a business that can thrive on the global stage, and has attracted major US investors happy to keep its coffers full, pumping in another $147 million in March this year.

The company had cash and deposits of $224.5 million as at Sept. 30, down from $243.5 million in the previous quarter.

Xero shares rose 2.5 percent to $15.89, and have declined 4 percent this year.

BusinessDesk.co.nz

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