Xero zooms on back of three triumphs

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Share price surges after MYOB founder invests

By Stephen Bell | Wellington | Wednesday, 8 April, 2009

Xero chairman Phil Norman and CEO Rod Drury have similar perceptions of the reasons for a marked rise in the value of Xero shares over the past few weeks.

From a low point of less than 70 cents on March 17 the stock has risen steadily to $1.34 at last reading (1:00pm April 8).

Both Drury and Norman point to: a doubling of the Xero customer base, from 3,000 to 6,000, in the past three months; the partnership deal with Telstra, announced on April 1, making Xero available to Telstra customers in Australia through the telco’s T-Suite portal, and; a capital-raising exercise which has attracted $23.2 m, $18m of it from Craig Winkler, co-founder and former major shareholder of Xero's Australian rival MYOB.

The market confidence evident in Xero shows “we’ve got a lot of the uncertainty out of this business”, Drury says.

“Until [the success of] TradeMe, people didn’t understand the economics of scalable technology, where the server runs the business. We’ve proved we can scale up.”

Drury adds he hopes this confidence proves contagious and means other New Zealand software companies will now attract major funding from overseas.