Xero joins elite club as value surges past $10 billion

Friday, 6 September 2019

Xero has learnt to play on a world stage.

The value of Wellington cloud software company Xero has topped $10 billion after its shares surged on the Australian stock exchange.

The business founded by former chief executive Rod Drury in 2006 has yet to make its first annual profit, but is widely expected to post one this financial year after moving into the black during the second half of its last financial year.

Xero is now the third most-valuable New Zealand firm, after Auckland Airport and A2Milk which are worth more than $11b, though Fisher & Paykel Healthcare is not far behind after a jump in its share price over the past few days which has been spurred by a profit upgrade and a decline in the New Zealand dollar.

Rod Drury cashed up shares worth more than $200 million in 2017 and earlier this year but the value of his stake in Xero is now larger than ever at close to $1.3b thanks to its stock-market rise.

* Xero looks to attract global growth funds through ASX consolidation

* Rod Drury: from surf and software to shares and social endeavours**

Xero chief executive Steve Vamos moved to Wellington from Sydney earlier this year - in the opposite direction to its share market listing.

Xero's shares were up 4.7 per cent during lunchtime trading on the ASX to just over A$68, valuing the firm at A$9.6b (NZ$10.3b) and the Drury family's 12.58 per cent stake in the business at close to $1.3b.

The company's current Australian chief executive Steve Vamos relocated from Sydney earlier this year, to Wellington which remains Xero's biggest office with about 1000 staff.

The share surge follows the completion of Xero's showbiz-style annual Xerocon conference in Brisbane on Thursday, at which it turns on the razzle and dazzle for thousands of accountants.

The company announced a partnership with BP at the event that allows invoices from BP to flow into small businesses' Xero accounting software, allowing them to be paid electronically from within the app and automatically reconciled.

Xero appears to be benefiting from a broader positive re-rating of cloud accounting stocks that also saw shares in its giant United States rival Intuit climb 2.1 per cent to a record high overnight.