By Stuart Condie
SYDNEY–Xero plans to invest in tailoring its cloud-accounting platform to better suit U.S. users after it identified key growth opportunities in the world’s largest economy, its CEO said.
The New Zealand-based software company will target small U.S. businesses with multiple needs, and accountants and bookkeepers with a focus on client advisory services, Chief Executive Sukhinder Singh Cassidy said Thursday. The focus follows Xero’s strategic review of its U.S. business.
Xero generated just 5.9% of group revenue from North America over the six months through September. Yet with the U.S. economy being more than 10 times larger than Xero’s home markets of New Zealand and Australia combined, a tight focus on specific market segments could yield strong results, Singh Cassidy told Dow Jones Newswires in an interview.
“The U.S. is a large enough market that any given segment is often the size of other people’s entire small-business market in a country,” Singh Cassidy said.
Singh Cassidy, who took charge in November 2022, said the U.S. business review had found that Xero’s product resonated most strongly with users needing greater functionality.
“A sole trader who has one job to be done every year–they don’t even need advanced bookkeeping, they just need to file their taxes–that maybe is not a place that we’re equipped to build our highest average revenue per user or win the day and get our proportionate share of business,” Singh Cassidy said.
Xero sees an opportunity to gain greater traction by better tailoring its product to local users, she added. Xero is up against rivals including Nasdaq-listed Intuit, which has a market capitalization of $146 billion compared with Xero’s $11 billion.
“If we’re going to go after deepening subscriber value in the U.S., we have to keep developing features and functionality,” she said.
Xero initially listed in New Zealand and had a dual Australia listing for a period before consolidating on the Australia Securities Exchange in 2018. Singh Cassidy said she wasn’t considering a U.S. listing.
“We have really fundamentally driven long-term shareholders who are invested in Xero and have a lot of pride in us being a company from the Southern Hemisphere,” Singh Cassidy said.
Write to Stuart Condie at [email protected]
Read the full article here
