Xero records maiden profit but warns of coronavirus hit
Accounting platform Xero has swung to a maiden full year profit of $NZ3.3 million ($3.03 million) but warned that the coronavirus pandemic will take a toll on its numbers for financial year 2021.
Xero was in the black for the first time for the 12 months through 31 March, compared to a net loss of $NZ27.1 million in fiscal 2019, with operating revenue rising 30 per cent to $NZ718.2 million.
However, there was some reduction in Xero's annualised monthly recurring revenue in March and the accounting platform said it expected coronavirus would impact Xero's financial performance for the 2021 financial year.
Xero chief executive Steve Vamos said the coronavirus pandemic was a difficult time for many Xero customers. Credit:Jessica Hromas
Chief executive Steve Vamos said coronavirus was having a widespread impact on the small businesses that make up the bulk of Xero's customers.
"Many customers and partners are having to adapt the way they operate while investing enormous effort to survive at this difficult time," he said. "Helping them is our immediate priority."
Mr Vamos added that despite the uncertainty created by the coronavirus outbreak Xero's strategic ambitions remain unchanged.
"We remain committed to our three strategic priorities: to drive cloud accounting around the world, grow the small
business platform, and to continue to build for global scale and innovation."
"Now more than ever small businesses are recognising the benefit of being able to use the cloud to run their businesses and manage their finances," he said.
Xero grew its total subscribers by 26 per cent to 2.285 million in the full year, putting it well ahead of rival MYOB. Its global push has also reaped results with subscriber numbers growing by 31 per cent in the United Kingdom and 51 per cent in those countries outside the UK, Australia, New Zealand and North America.
Mr Vamos said Xero had continued to drive subscriber growth while staying focused on financial and reporting discipline.
"Digitisation of tax and compliance remains a significant driver of demand for our cloud accounting solutions during the financial year," he said.
Xero's shares fell over two per cent at the open at $81.94.