Xero Strengths, Domain Expertise, and Key Differentiators
Xero provides cloud-based accounting software for small and medium-sized businesses. Its products are sold by subscription, based on the type and number of company entities managed by the subscriber.
As a Microsoft Gold Certified Partner, Xero builds its software using.NET development environment over a multi-tenanted SQL Server database, all running a Windows production server infrastructure that is hosted by Rackspace. Xero has also implemented a global Content Delivery Network with Akamai for faster application delivery to customers around the world. Xero is becoming a major ERP platform for small businesses, with third party integrations and an ecosystem featuring more than 400 partners.
Existing relationships and distribution partners include Apple, Avalara, Bill.com, Google, Microsoft, Mindbody, Shopify and Square. Xero is continuing to invest in application programming interface (API) improvements to fuel the growth of its developer ecosystem and supports tighter integrations with strategic partners.
Xero Recent Developments
In September 2018 Xero unveiled Xero Learn, an award-winning solution designed to give future small business leaders, accountants and bookkeepers the financial literacy and accounting skills needed to build better businesses.
The Swinburne University of Technology, University of Southern Queensland, Auckland University of Technology, Macquarie University, and AccountingPod are among the first institutions to onboard, giving their students access to world-class accounting tools.
More than 1000 students have been invited into Xero via Xero Learn to access over 100 courses that help teach core and advanced accounting and financial literacy skills with real-world examples and world-class accounting tools on Xero.
Xero is now rolling out Xero Learn, which is the first product of its kind, across both Australia and New Zealand. Using Xero Learn, educators can teach their financial lessons directly within Xero, giving them global access to small business accounting software that’s always up-to-date with the latest features and compliance reporting. Educators can integrate Xero into their curriculum, giving businesses and accounting students real-life experience.
Xero Mergers and Acquisitions (M&A) Activities
In December 2018, Xero acquired two companies. The first company was Instafile, a tax filing and accounts production solution that extends Xero's existing connectivity to the UK's HMRC and Companies House and the second was Cicerone Limited.
In August 2018 Xero acquired Hubdoc, a data capture solution that helps accountants, bookkeepers, and small businesses to streamline administrative tasks such as financial document collection and data entry. Founded in 2011, Hubdoc is headquartered in Toronto, Canada, currently serving customers in the US, Canada, UK, and Australia. Hubdoc will continue to operate on a stand-alone basis within Xero, led by co-founders and co-CEOs Jamie McDonald and Jamie Shulman. Hubdoc has been a Xero ecosystem partner since 2014. Hubdoc automatically collects bank statements, bills, and receipts from more than 700 financial institutions, utilities, telecom providers, and suppliers, delivering streamlined data capture and seamless integration with accounting solutions such as Xero.
This data capture capability is a key element of Xero’s code-free accounting strategy, which enables small businesses and their advisors to focus on growing their businesses. Hubdoc will continue to be sold separately, and available to non-Xero customers, maintaining its current business model. Over the longer-term, customers can expect to see a deeper integration between Hubdoc and the Xero platform, servicing customers globally. Xero remains fully committed to its open ecosystem strategy and Xero customers will continue to have access to the full range of more than 700 apps that connect with Xero.
Xero Customers in ARTW Customer Database
Leveraging a rigorous data-centric research methodology, APPS RUN THE WORLD asks the simple question: Who’s buying Xero applications and why? And we provide the answers – supported by decades of research – to our clients around the world. Our Customer database has over 100 data fields that detail company usage of Xero and other enterprise apps by function, customer size, industry, location, implementation status, partner involvement, Line of Business Key Stakeholders and IT decision makers contact details. List of Verified Xero, customers.
Ownership: - XRO: NZX and ASX
Number of Employees: 2531
Key Verticals: Aerospace and Defense, Automotive, Banking and Financial Services, Communication, Construction and Real Estate, Consumer Packaged Goods, Distribution, Education, Government, Healthcare, Insurance, Leisure and Hospitality, Life Sciences, Manufacturing, Media, Non Profit, Oil and Gas, Professional Services, Retail, Transportation, Utility,
Xero Key Enterprise and Cloud Applications
Xero Revenues, $M:
|Type/Year||2017||2018||YoY Growth, %|
|Total Revenues, $M||Subscribe||Subscribe||Subscribe|
|Enterprise Applications Revenues, $M||Subscribe||Subscribe||Subscribe|
|Cloud Applications Revenues, $M||Subscribe||Subscribe||Subscribe|
* Enterprise Applications Revenues = License + Support & Maintenance + SaaS
** All revenue figures are estimates based on public records, Cloud and Non-Cloud business models in Apps Run The World's vendor database, and annual survey results including vendor feedback.
Xero Revenue Breakdown By Type, $M:
|Type||License||Services||Hardware||Support & Maintenance||SaaS|
|% of Total Revenues||Subscribe||Subscribe||Subscribe||Subscribe||Subscribe|
Xero Enterprise Applications Revenues By Functional Markets, $M:
Xero Enterprise Applications Revenues By Verticals, $M:
Xero Revenues By Region, $M
|Region||% of Total Revenues||2018 Total Revenues, $M||2018 Enterprise Applications Revenues, $M||2018 Cloud Applications Revenues, $M|
Xero Direct vs Indirect sales
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Xero Customers - Breakdown by Geo, Size, Vertical and Product
No. of Xero Customers: 1818000
No. of Xero Enterprise Applications Customers: 1818000
No. of Xero Cloud Customers: 1818000
No. of Xero Cloud Subscribers: 1818000
Xero is used in over 180 countries by almost 2M paying subscribers and integrates with 800+ add-on apps. Following strong subscriber growth over the past 12 months, Xero is the marketleading small business cloud accounting software in Australia, New Zealand, and the United Kingdom, based on the number of subscriptions. They have also made good progress in the competitive United States market where the accounting industry is early in its migration to cloud technologies.
Xero Market Opportunities, M&A and Geo Expansions
Xero released TaxTouch, a cloudbased tax solution for freelancers and the self employed in the United States. It has also released Xero Tax, a cloudbased tax solution for the Australian market that has been used for more than 1.4 million tax lodgements. Additionally, Xero started migrating to Amazon Web Services which is now at the deployment stage – a move that will unlock a new platform for innovation.
In July 2018 Xero partnered with Gusto for its small business and accountant customers in the U.S. The strategic partnership brings together the power of the company’s world-class accounting platform with Gusto’s innovative full-service payroll service and will allow Xero to deliver full-service payroll in all 50 U.S.states for the first time. Xero’s U.S. subscribers will have access to the following benefits of Gusto:
● Payroll made easy. Gusto enables businesses to run payroll completely online with modern software and design. All federal, state and local payroll taxes are automatically paid and filed.
● Data synced and automated. Gusto automatically syncs payroll and financial data with Xero, as well as popular expense tracking and time tracking software.
● HR built for today.
Gusto also integrates with workers’ compensation, benefits like health insurance or 401(k) retirement plans, and human resources, providing compliance, ease, and flexibility.
Xero acquired the Seattle-based cloud accounting and payroll company Monchilla for $4.13 million to speed up its growth in the USA. Xero raised 110 million and hired the new U.S. president to speed up its USA expansion. The Company continues to pursue opportunities to meet the needs of small businesses worldwide through partnerships, acquisitions, and its ecosystem.
Xero Risks and Challenges
Xero has become a darling in the Cloud-based accounting applications for the SMB market by growing its revenues from next to nothing in 2008 to $279 million in its fiscal 2017 ended March 31.
Xero has a pretty big challenge that is, to take on the mighty Intuit, Sage and the other smaller vendors such as MYOB, Saasu, and Freshbooks. But so far, the company is doing quite well with its fight. Now even though Xero has made lots of headway against Intuit, there is still much to do. But then again, QuickBooks has been around for several decades.
Reaching its first millionth customer will be a major milestone for a Cloud vendor that has defied the odds by competing against on-premise incumbents that for years have had a lock on the SMB market with millions of customers.
Xero Ecosystem, Partners, Resellers and SI
Xero: sighed a partnership with MailGuard to help accountants, bookkeepers, and small business owners stay safe online; announced a deeper integration with Google to help small businesses manage customer relationships; unveiled an integration with Microsoft Power BI to deliver Xero’s 600,000 users an easier way to access and analyze information; strategic alliance with professional services firm KPMG Australia to boost the reach of its global cloud accounting software to small businesses in Australia, and signed strategic partnerships with Dropbox, Adobe, Bigcommerce, Insightly, Mindbodyand to create bestinclass integrations with the global accounting platform.
Xero Cloud Infrastructure Insights
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- Xero Public Cloud and Infrastructure (IaaS)
- Xero Platform (PaaS)
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- Xero Private Cloud and Data Centers
Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.
Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).
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