Xero slows cash burn in December quarter as knuckle-down kicks in

Friday 29th January 2016

Xero slowed its quarterly cash burn in the final three months of 2015 as the cloud-based accounting software developer knuckles down on keeping a lid on spending.

The Wellington-based company's operating cash outflow shrank to $6.5 million in the three months ended Dec. 31, from $8.5 million a year earlier, it said in a statement. Customer receipts climbed 62 percent to $52.6 million, outpacing a 34 percent increase in staff costs to $32.4 million, the company's biggest operational cost. Spending on marketing and advertising more than doubled to $14.1 million.

Xero spent $13.6 million on investing activities, the bulk of which was in acquiring intellectual property, down from $14.4 million a year earlier.

"Continued global customer and revenue growth, sustained operating efficiencies, and developing economies of scale in distribution channels and product development have delivered an improvement in net operating and investing cash flow," Xero said.

In November, Xero promised to maintain its cash burn for the current financial year, having built up a war chest in recent years to fund its aspirations for rapid global expansion.

The company's total operating and investing cash outflow was $69.6 million in the nine months ended Dec. 31, up from $62.8 million a year earlier.

Xero had cash and short-term deposits totalling $202.7 million as at Dec. 31, having raised another $147 million from investors last year to fund its expansion on the prospect of creating a company that can thrive on the global stage.

The company's shares fell 0.5 percent to $17, and have dropped 14 percent so far this year.

BusinessDesk.co.nz

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