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Xero Increases Subscription Base by 75%

October 15, 2014

 

Xero announced this week their latest subscription numbers this month, and it was a doozy. Subscribers increased 75% globally over the same time last year. Private investors are taking note--the online accounting software compnay just successfully placed a second round of $150 million in new capital. This follows of $133M in an initial round last year. 

 

Public interest in the firm has not necessarily matched the private sector's enthusiasm. Xero's shares, which trade on the New Zealand stock exchange. Shares have fallen steadily in recent months as the IPO lockup expiration date rapidly approaches and investors flee in the face of earnings dilution. 

 

Pundits from Down Under have pummeled the company for expanding into the tough U.S. accounting software market. Intuit holds a Microsoft-like market share of about 80%, and has redesigned its clunky Quickbooks Online (QBO) cloud offering to compete squarely with Xero. Intuit has aggressively cut prices on its QBO product while sharply raising its prices on its core desktop-based Quickbooks Premier. 

 

Xero costs about $360/year for a standard U.S. subscription, while a limited capability version of QBO costs $323 and the full version $480. Intuit has also been running limited-time promotions for 20%-50% discounts depending on which version of QBO the customer subscribes to. Quickbooks Premier is discount priced at $260, which comes with three years of support before an upgrade is necessary. 

 

[editor's note: Nathaniel Jacobson CPAs is both an Intuit ProAdvisor and Xero Bronze Partner.]

 

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