Xero (company)


Xero is a New Zealand domiciled public technology company, listed on the Australian Stock Exchange. Xero offers a cloud-based accounting software platform for small and medium-sized businesses. The company has three offices in New Zealand, six offices in Australia, three offices in the United Kingdom, three offices in the United States, as well as offices in Canada, Singapore, Hong Kong and South Africa.
Xero's products are based on the software as a service model and sold by subscription, based on the type and number of company entities managed by the subscriber. Its products are used in over 180 different countries.

History

Xero was founded in a Wellington studio apartment in 2006 by Rod Drury and his personal accountant Hamish Edwards when they felt that traditional desktop accounting software had become outdated and decided to create a modern cloud-based product. Xero Limited's global headquarters are still located in Wellington.
Originally called Accounting 2.0, the name was unpopular with the company's staff and the decimal point made registering an internet domain name impossible. Changing the name to Xero provided a challenge with the domain name, as the existing xero.com domain was a Linkin Park fan site. Rod decided to fly the existing domain administrator to New Zealand from the United States, wined and dined him, and ultimately convinced him to sell the domain for $20,000.
The company entered the Australian market and the United Kingdom in 2008, and United States in 2011.
In 2017, Xero surpassed one million customers globally, and the following year, in December 2018, Xero hit a million subscribers in its home markets of Australia and New Zealand.
Rod Drury stepped down as CEO on 31 March 2018, with Steve Vamos replacing the role in April 2018. Rod remains on the board as a non-executive director.
In 2019, Xero announced it had hit 2 million subscribers and in 2020 the business made its first full year profit.

Funding

Xero went public on the New Zealand Exchange on June 5, 2007, with a $15 million IPO, gaining 15% on its first trading day. Drury decided to list on the NZX, rather than receive investment from Silicon Valley in order to avoid being pressured into selling to a larger competing company. The company focused on the New Zealand market and product and development for its first five years before entering other markets. It went public on the Australian Securities Exchange on November 8, 2012. Xero transitioned to a sole listing on the ASX on February 5, 2018, delisting from the NZX on February 2, 2018. January 31, 2018 was the last day Xero shares were traded on the NZX.
Xero has also received funding from various investors. In 2009, it closed a $23 million round of funding led by MYOB founder, Craig Winkler. It raised an additional $4 million in 2010 from Peter Thiel's Valar Ventures who also invested an additional $16.6 million in February 2012. It raised $49 million in a funding round in November 2012 with the largest amounts coming from Peter Thiel and Matrix Capital. It was reported by PandoDaily that the company had raised more than $100 million and had a valuation of approximately $1.4 billion on the NZE as of May 2013. This was prior to when the company received an additional $180 million from Thiel and Matrix in October 2013, bringing total funding to more than $230 million. Xero raised an additional $100 million from Accel and $10.8 million from Matrix Capital on February 25, 2015. On October 5, 2018, Xero announced a settlement of $300 million in convertible notes. The capital raise was groundbreaking for a New Zealand or Australian company not listed in the United States, and the company was awarded .

Acquisitions and strategic partnerships

Xero has acquired several companies since its launch. In July 2011, the company acquired the Australian online payroll provider Paycycle for a mixture of cash and shares totaling $1.9 million. The acquisition allowed Xero to integrate payroll into their Australian product offering. It acquired Spotlight Workpapers in July 2012 for a mixture of cash and shares totaling $800,000.
The same year it acquired online job, time, and invoice management solution WorkflowMax for cash and shares totalling spot $6 million.
In July 2018, Xero announced a strategic alliance with US payroll platform Gusto.
In August 2018, Xero acquired Hubdoc, a data capture solution. Xero paid the acquisition price for Hubdoc in two stages, initially US$60 million consisting of 35% cash and 65% in Xero equity. A second tranche of US$10 million in equity was promised to the Hubdoc's shareholders in 18 months following the acquisition, subject to operational targets and conditions.
In November 2018, Xero acquired cloud-based accounts preparation and tax filing solution Instafile for £5.25 million, which will be paid over three years.

Product

uses a single unified ledger, which allows users to work in the same set of books regardless of location or operating system.
Its key features include automatic bank feeds, invoicing, accounts payable, expense claims, fixed asset depreciation, purchase orders, bank reconciliations, and standard business and management reporting. Xero has more than 200 secure connections with banks and financial service partners around the world. A free API also enables customers and 3rd-party software vendors to integrate external applications with Xero. Xero has integrations with 800+ third party apps, and 200+ connections to financial service providers around the world..
In 2011, Xero released the Xero Touch mobile apps for iOS and Android devices, allowing users to issue invoices while on-site with clients.
Xero also supports multiple tax rates and currencies. It also incorporates payroll, projects and expenses features. On August 16, 2016, Xero announced its partnership with PayPal, and in June 2019, Xero announced it was partnering with global payments processor, Stripe. These partnerships allow invoices to be paid directly from the invoice.
In the 2019 financial year, Xero embraced Making Tax Digital in the United Kingdom, Single Touch Payroll in Australia and Payday Filing in New Zealand,  allowing subscribers to manage their compliance obligations through the Xero platform.

Awards and recognition

In 2007 Xero received the Overall Partner Solution of the Year for Small Business and also featured as part of a Microsoft case study. The company was the recipient of two Webby Awards in 2009, including the People's Choice Award for Banking/Bill Pay. It was recognized again with a Webby in 2010 for Web Services & Applications. It received a Fast Company Innovation by Design Award in 2012. and was recognized as one of the 10 Smart Financial Apps to Solve Small Business Accounting Challenges by YFS Magazine in 2013. Additional awards in 2013 included the Awesome Application Award from the Sleeter Group and the New Zealand Company of the Year from Hi-Tech. In June 2014, Xero topped the Forbes magazine "100 most innovative growth companies" list. Also in 2014, the company was named one of Macworld's recommended online business accounting apps. In January 2015, Xero was crowned best accounting software in the Cloudswave Awards with a score of 83, and New Zealand Company of the Year from Hi-Tech for the second time. Xero won Product of the Year at the British Accountancy Awards 2017 and also won Best Overall Fintech platform by the Fintech Breakthrough Awards in 2017. The company was rated by Canstar Blue as Australia's best accounting software four consecutive years from 2015-2018 and in New Zealand in 2019. In 2018 Xero also won ‘Bookkeeping software of the Year’ from the Institute of Certified Bookkeepers UK and Small Business Accounting Software of the Year' – Practitioners’ Choice’ from members of AccountingWeb.
The IDC MarketScape recognised Xero as a Leader in the Worldwide SaaS and Cloud-Enabled Small Business Finance and Accounting Applications 2020 Vendor Assessment. On the 2020 Financial Times High-Growth Companies Asia Pacific list, Xero was the largest company by revenue to come from New Zealand or Australia. Xero has also been included in the 2020 Bloomberg Gender-Equality Index.