Pinned straw:
If you read/listen/see fundies/analysts talking about Xero. Everyone says that it's a great business but if its growth in ANZ is excellent, in the UK it's good and in the USA it's average ( general sense I get this). So I compared how subscribers have grown over the period ( from 2016 to 2023) and I found Interesting numbers.
From 2016 to 2023, in 7 years
- ANZ subscribers have gone from 498K to 2133K increase of 428%
- UK subscribers have gone from 133K to 970K increase of 970%
- USA subscribers have gone from 62K to 384K increase of 800%
- RoW subscribers have gone from 24k to 254k increase of 1270%
Considering the USA is the region it has to face maximum competition, I think I would consider it a success so far.
Another interesting fun fact, in Xero's IPO prospectus they have spelled out what is the potential market they believe they are going after and how they thought what success looked like at that point in time for them. They have done remarkably well.
Bear case for Xero after FY23 tax returns get filed?
Many small companies joined the cloud accounting program as people started to find secondary sources of income when covid hit. At $110/mth it is a definite cost for a micro business. Now with many of these micro businesses going under (eg food, online retail, online wellness classes), I'm thinking there may be a lot of people that end their subscription after they complete their taxes of 30 June 23. That is unless the tax office requires them to keep records for 5yrs after that... in which case how does that even work?
Be mindful of those pesky denominators.
ANZ/UK/USA are counting growth off an initial base of 500k, 200k and 50k respectively which inflates the percentage change