13-May-2021: Xero Full Year Results Presentation for year ending 31-Mar-2021
Plus: 2021 Annual Report
Plus: FY21 Results Investor Briefing Webcast recording
Highlights for me:
- After passing that inflection point last year and now being profitable, they've generated heaps of cashflow and finished March with:
- Net cash of $256,585K, i.e. $256.6 million, being more than double the $111.5m they had one year ago.
- Despite making acquisitions during the year including a reasonably large one (Planday - for a total potential consideration of €183.5 million [NZ$305m] including an earnout payment of up to €27.8 million based on product development and revenue milestones being reached), they remain in a net cash position - with NO NET DEBT!
- Pandemic? What pandemic - everything that matters has continued to move in the right direction, including:
- Total Subscribers (see graphic below) up +20% to 2.74m,
- AMRR +17% to NZ$963.6m,
- EBITDA +39% to NZ$191.2m
- EBITDA margin +3.3 pp to 22.5%,
- free cash flow up +NZ$29.8m to NZ$56.9m,
- even lower Churn (1.01%),
- Total Revenue +18% to NZ$848.8m,
- Gross Margin up to 86%,
- Net Profit up from NZ$3.336m in FY20 to NZ$19.774m,
- CAC as a % of revenue down -7.3pp to 36.3%,
- Total Cash and short-term deposits up +NZ$574.6m to NZ$1.11 billion, and
- Net Cash up +NZ$145m to NZ$256.6m.
Glossary (Acronyms and Abbreviations):
AMRR = Annualised monthly recurring revenue (AMRR) represents monthly recurring revenue at 31 March, multiplied by 12.
ARPU = Average revenue per user (ARPU) is calculated as AMRR at 31 March divided by subscribers at that time (and divided by 12 to get a monthly view).
Churn = the value of monthly recurring revenue (MRR) from subscribers who leave Xero in a month as a percentage of the total MRR at the start of that month. The percentage provided is the average of the monthly churn for the previous 12 months.
Constant currency comparisons for revenue are based on average exchange rates for the 12 months ended 31 March 2020. Comparisons for ARPU, AMRR and LTV are based on exchange rates at 31 March 2020.
Lifetime value (LTV) is the gross margin expected from a subscriber over the lifetime of that subscriber. This is calculated by taking the average subscriber lifetime (1 divided by churn) multiplied by ARPU, multiplied by the gross margin percentage. Group LTV is calculated as the sum of the individual segment LTVs, multiplied by their respective segment subscribers, divided by total Group subscribers.
CAC months: Customer Acquisition Cost (CAC) months are months of ARPU to recover the cost of acquiring each new subscriber. The calculation is sales and marketing costs for the year excluding the capitalisation and amortisation of commissions paid to sales people, less conference revenue (such as Xerocon), divided by gross new subscribers added during the same period, divided by ARPU.
Liquid resources comprises cash and cash equivalents, short-term deposits including proceeds from convertible notes, and undrawn committed debt facilities.
Free cash flow is defined as cash flows from operating activities less cash flows used for investing activities excluding cash used for acquisitions of, and investments into, businesses and strategic assets.
GAAP = Generally accepted accounting principles.
TAM = Total addressable market.
CAGR = Compound annual growth rate
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Not much there to complain about really.