Xero is one of these post hype companies which used to be one of these analyst and fundmanager darlings ... they loved the team spirit and the long runway and happily paid twice of todays share price to fill their clients portfolios. Hey, not their own money anyway, isn't it - so all good. Yes, SP peaked above A$155 in November 2021. Today the shares are on sale below $79. What a bargain ... isn't it?
Anyway - XRO does have a very healthy revenue CAGR (close to 50 every year over the last 10 years) ... and at least they managed in the last years to confine their losses.
Better not look at the forecasted PE, though (hint : still in the hundreds), but hey - they might not need another cash injection, this is good.
But maybe I am a bit cynical here ... their revenue CAGR (as above) and the growth of their customer base is really good - and their customer churn is very low (single percentages). So - maybe this is one of the hidden gems which might start through at the end of the bear market like Phoenix out of the ashes?
Question is - did the SP already bottom out and likely to return from here to its previous lofty heights, or is 50% of the recent heights not yet enough punishment?
It is still not really possible to value the company based on its earnings (the result would be too depressing), the only DCF I have seen puts them around the $40 mark ... and the professional analyst estimates are as usual just random fantasies. Yahoo puts the analyst forecasts between $67 and $145. Hey, this is good to know.
I am still sitting on my hands related to XRO. What do other people think?
Go on Peter .... I know you are keen on them .... maybe not desperately keen ... but keen .... just BUY some ..... today
i won't be joining you .... that's a good sign
Quote from: BlackPeter on Jul 05, 2022, 11:03 AMXero is one of these post hype companies which used to be one of these analyst and fundmanager darlings ... they loved the team spirit and the long runway and happily paid twice of todays share price to fill their clients portfolios. Hey, not their own money anyway, isn't it - so all good. Yes, SP peaked above A$155 in November 2021. Today the shares are on sale below $79. What a bargain ... isn't it?
Anyway - XRO does have a very healthy revenue CAGR (close to 50 every year over the last 10 years) ... and at least they managed in the last years to confine their losses.
Better not look at the forecasted PE, though (hint : still in the hundreds), but hey - they might not need another cash injection, this is good.
But maybe I am a bit cynical here ... their revenue CAGR (as above) and the growth of their customer base is really good - and their customer churn is very low (single percentages). So - maybe this is one of the hidden gems which might start through at the end of the bear market like Phoenix out of the ashes?
Question is - did the SP already bottom out and likely to return from here to its previous lofty heights, or is 50% of the recent heights not yet enough punishment?
It is still not really possible to value the company based on its earnings (the result would be too depressing), the only DCF I have seen puts them around the $40 mark ... and the professional analyst estimates are as usual just random fantasies. Yahoo puts the analyst forecasts between $67 and $145. Hey, this is good to know.
I am still sitting on my hands related to XRO. What do other people think?
I think lots of people missed the original sailing on this one and now have the chance to reboard the 2nd sailing. Lol
Quote from: kasper on Jul 05, 2022, 11:37 AMQuote from: BlackPeter on Jul 05, 2022, 11:03 AMXero is one of these post hype companies which used to be one of these analyst and fundmanager darlings ... they loved the team spirit and the long runway and happily paid twice of todays share price to fill their clients portfolios. Hey, not their own money anyway, isn't it - so all good. Yes, SP peaked above A$155 in November 2021. Today the shares are on sale below $79. What a bargain ... isn't it?
Anyway - XRO does have a very healthy revenue CAGR (close to 50 every year over the last 10 years) ... and at least they managed in the last years to confine their losses.
Better not look at the forecasted PE, though (hint : still in the hundreds), but hey - they might not need another cash injection, this is good.
But maybe I am a bit cynical here ... their revenue CAGR (as above) and the growth of their customer base is really good - and their customer churn is very low (single percentages). So - maybe this is one of the hidden gems which might start through at the end of the bear market like Phoenix out of the ashes?
Question is - did the SP already bottom out and likely to return from here to its previous lofty heights, or is 50% of the recent heights not yet enough punishment?
It is still not really possible to value the company based on its earnings (the result would be too depressing), the only DCF I have seen puts them around the $40 mark ... and the professional analyst estimates are as usual just random fantasies. Yahoo puts the analyst forecasts between $67 and $145. Hey, this is good to know.
I am still sitting on my hands related to XRO. What do other people think?
I think lots of people missed the original sailing on this one and now have the chance to reboard the 2nd sailing. Lol
No doubt - many people missed the first sailing, and many people missed as well to leave the boat when it reached its northern most harbour.
I guess the real question is - will the journey from here go Northwards or further South?
Always difficult to say with these growth shares. Todays $78 could be next months $39, couldn't it? And looking at the (known) fundamentals it still would not be a cheap share (though probably more fairly valued than today).
Looking at the wasteland the XRO threads resemble both here and in the other forum ... all the cheerleaders still firmly asleep ... I think the hype wave hasn't yet started to return - but who knows, maybe we just started the first trickle?
Regardless of anyone's personal opinion of this company its been an absolutely fantastic NZ success story and huge kudos to those that bought very early on and held until it hit near its peak.
When do you think they will make a real profit and pay a dividend ?
Maybe you are better off in mega cap tech in the US markets some of which have real earnings and attractive multiples e.g. Alphabet (Google) on 17 times FY23 earnings https://www.marketscreener.com/quote/stock/ALPHABET-INC-24203373/financials/ or Oracle with fast growing earnings on sensible metrics
https://www.marketscreener.com/quote/stock/ORACLE-CORPORATION-13620698/financials/
No earnings SAAS and tech companies are not for me. Plenty of them are down 60-80% or worse on the Nasdaq this year.
Quote from: Basil on Jul 07, 2022, 10:52 AMor Oracle with fast growing earnings on sensible metrics
https://www.marketscreener.com/quote/stock/ORACLE-CORPORATION-13620698/financials/
No earnings SAAS and tech companies are not for me. Plenty of them are down 60-80% or worse on the Nasdaq this year.
Oracle has a very good product, NetSuite, which is going great guns and deservedly so. For any business that finds the likes of Xero to be too small or lightweight, then NetSuite is a very good alternative where a company is not large enough for a full blown ERP system. In my experience there are a number of NZ businesses using it in the $10-$100m turnover range. I can't rate NetSuite highly enough - it's like a proper ERP system with fully integrated financials and all sorts of APIs & add-ons etc. but without the 12 month hugely expensive implementation. Oracle deserve to do well with such a good product.
Quote from: kasper on Jul 05, 2022, 12:47 PMRegardless of anyone's personal opinion of this company its been an absolutely fantastic NZ success story and huge kudos to those that bought very early on and held until it hit near its peak.
Don't be blinded by parochialism, based on their NZ origins. Plenty of better growth stock stories on the ASX.
Quote from: Hectorplains on Aug 08, 2022, 01:41 PMDon't be blinded by parochialism, based on their NZ origins. Plenty of better growth stock stories on the ASX.
I'm not blinded as i don't own the stock and haven't since 2014, just giving credit where it is due, as an aside had i put the same amount of money into XRO instead of A2 I would be in a hugely better place than I am now and remember A2 was one of the hottest growth stocks on the ASX a few years ago.
Quote from: kasper on Aug 08, 2022, 03:25 PMI'm not blinded as i don't own the stock and haven't since 2014, just giving credit where it is due, as an aside had i put the same amount of money into XRO instead of A2 I would be in a hugely better place than I am now and remember A2 was one of the hottest growth stocks on the ASX a few years ago.
... I see.
XRO is the orange line, ATM is blue:
A2M-XRO.JPG
Actually - interesting comparison you are making here. High correlation between these two growth wonders up to mid 2021 ... and yes, after that they both managed to get uncorrelated both from each other as well as from the exponential growth curve they both were sitting on, but one of them managed to do this more thoroughly than the other :p ;
Tells us maybe something about exponential growth curves in the real world ... :(
Been a bit of commentary about XRO and other high flying 'tech' companies lately. The recent 'tech wreck' has prompted many to question the future of some of them.
Seems that many are coming to the view that many of these companies will never make any decent sustainable profits. Increasing interest rates and tougher times for their customers have highlighted that maybe (probably) they don't really have a viable business model.
Xero for instance have a Gross Margin of over 80% of sales but expenses aren't running much less than this even as revenues grow - it seems they need to add a buck of expenses for every buck of extra sales.
One conclusion is that businesses like XRO just don't charge enough for what they sell. Therein lies a problem charge heaps more and they lose customers.
So is XRO on a slow path to oblivion or needing to evolve into a smaller profitable company - charge more and cut costs and produce some semblence of profitability
Wonder what XRO would be valued on such basis? Nowhere near $70 a share where it is now
The world may be changing and XRO could be be that suffers
I have never understood the share price of Xero. Nobody I have asked has been able to explain it to me. Analysts make far reaching assumptions (guesswork at best) far into the distant future and hope one day that the rate of revenue growth will significantly outstrip costs. Good luck to them.
Me too basil
I only had another look at XRO after reading that commentary about how some businesses are possibly beginning to realise they don't actually have a business model that is profitable ....unless they charge heaps more for what they offer and then that changes the model radically.
Looking at XRO F22 results I was a bit aghast as this slide in their preso - Really high margins but look at that Operating Expense trand as % of revenues..... and then they also capitalised $200m odd of development costs.
Still a A$10 billion (down from A$20 billion) company
So like you I just don't get it ....but'll check in every now and again to see how things develop and to see if those dudes were right about having a business model that doesn't work.
0000xro.JPG
Agreed Winner I have never understood the hype. To be honest I was really perplexed when Rod Drury won some prestigious business award here many years ago when the market cap hit $4 Billion. Had never made a profit at that stage and was losing heaps. Why people win business awards for best in class when the business model was still completely unproven is beyond my comprehension. I thought that award was to recognize successful companies...you know, ones that make a real profit.🤷�♀️ I think some people simply get blinded by all the hype and the marketing dribble of it being "beautiful" a favorite adjective they use in their advertising. Being in the accounting profession all it is to me is just another accounting system...nothing sexy, racy or beautiful about that.
I suspect the hype will continue to gradually die down as this is not a market that places a high value on vague promises of profit far into the distant future.
Nice work guys and thanks for sharing. Given how much they spend on PD&P in addition to amounts that are capitalised, you would think they could put together a decent sales report for their users. Other parts of Xero are pretty good but the sales reporting is woeful. If I try to find top 10 clients for last year and/or how much I billed a client.....can't do it in Xero. I am actually astonished. Unless I have missed something obvious.
Talked to Rod many years ago and he excitedly told me that they were close to the stage where the cash for every new customers would flow through to the bottom line because expenses would not need to increase much ....he used to carry around a diagram/chart which had future sales and expenses shown and loved to describe it as a set of crocodile jaws sucking in all the cash.
These days I often think this automated cloud stuff is an illusion and that in reality Xero buildings around the world are full of good old fashioned bookkeepers (humans) who take the stuff that comes through from this cloud and manually update the customers set of books/accounts and then sending those back through this cloud thing
Get the picture - more accounts/customers more human bookkeepers working away in the buildings
Maybe I was influenced by Mr Grimm and his story of the The Elves and the Shoemaker .... at least the elves sneaking in at night and doing the work
https://thebull.com.au/18-share-tips...6+January+2023
The Bull is keen on Xero.
30 cents eps in FY24...wow that's impressive, puts them on a forward FY24 PE of "only" 233 lol
Quote from: Basil on Jan 16, 2023, 03:04 PM30 cents eps in FY24...wow that's impressive, puts them on a forward FY24 PE of "only" 233 lol
Yep, price dropped a lot and still so dear ... market must still price in a sh*tload of future growth.
Ah well, sometimes markets are right and often they are wrong. Just hard to determine for the future which it will be ...
Another tech outfit realising they don't charge enough for what they offer
So 800 jobs to go
Yes, staff are just consumables
https://www.rnz.co.nz/news/business/485606/xero-announces-plan-to-cut-up-to-800-jobs
Seems like the "San Francisco" effect has already taken over Xero
screenshot_20230309-205332_facebook.jpg
Suspect these old technology platforms will implode.. not this year of course or next... putting up a quick invoice app could be where CHAT AI could EXCEL.. rather than sending a HIT Squad out to kill you.
After all sole traders are END POINT solutions which begs the question why would you need advanced low level record and field locking databases when other data storage that is much cheaper could be used.
Of course since MB and ZRO data mine la customer databases.
Actually when data privacy gets going clients could possible ask for money back for data extracted or SUE them.
XRO has hit an all time high of $182.50 - that's over $200 NZD.
Incredible performance for an NZ-based enterprise.
Wish I'd bought more when I first invested at around $5.
sell - or hope the old SQL stuff lasts a bit longer ...
Block chain hasnt gone away ...
with google having big problems with there AI models going into repeat stall loops these old tech companies cant afford a stuff up...
Great acquisition by XRO
https://hotcopper.com.au/threads/ann-xero-to-acquire-melio-to-accelerate-us-growth-raises-equity.8637510/?post_id=79554702
Quote from: Left Field on Jun 25, 2025, 12:23 PMGreat acquisition by XRO
https://hotcopper.com.au/threads/ann-xero-to-acquire-melio-to-accelerate-us-growth-raises-equity.8637510/?post_id=79554702
Definitely. Should give a significant boost to XRO's penetration into the US market.
It will be interesting to see the Placement price!
XRO appears to be well out of favour at the moment. Any thoughts on why the SP has dropped so much over recent months?
Maybe it wasn't really worth $185 it got to a few months ago
Still in long term uptrend though
Quote from: Pierre on Nov 12, 2025, 01:38 PMXRO appears to be well out of favour at the moment. Any thoughts on why the SP has dropped so much over recent months?
Sorry mate I can't help you on this one. Trades on 89 times FY26 earnings per share. Average target price is $A222. Disc: I've never understood their valuation so I stay in my lane and invest in companies with valuations I DO understand. https://www.marketscreener.com/quote/stock/XERO-LIMITED-11900043/consensus/ I see analysts are expecting EPS of over $3 per share by FY28 so the PE will be less than 50 by then. Is that good for a SAAS company growing at their speed ? I have no idea.
Quote from: winner (n) on Nov 12, 2025, 03:53 PMMaybe it wasn't really worth $185 it got to a few months ago
Still in long term uptrend though
I hope the current downtrend is not longterm.
Seems not too many punters believe the latest acquisition will do what XRO says it will achieve - not quickly, anyway.
Quote from: Pierre on Nov 14, 2025, 12:07 PMI hope the current downtrend is not longterm.
Seems not too many punters believe the latest acquisition will do what XRO says it will achieve - not quickly, anyway.
Interesting Investment Strategie. Hope as investment criterium didn't work so far for me ...
Anyway, what do you think they are really worth? I guess if we take their current PE and their PE CAGR, than Grahams formula offers even something like $270 - on a forward Earnings CAGR of 75! . Only question to me is - how likely is it that they keep this earnings CAGR in the future. Much easier to go fròm a handful of cents to a handful of dollars over 10 years, then to do the same thing from a handful of dollars to some hundred of dollars (per share).
Should keep the wolf from the door for a few months.....Xero's CEO gets pay-rise after review finds pay below other technology company leaders | RNZ https://share.google/OvYQgs25jJbUsZeNN
Oh wait - shareholders not happy.....Xero shareholders reject executive pay
https://www.rnz.co.nz/news/business/1153263/xero-shareholders-reject-executive-pay-report