Xero UK is the Star performer in

Reporting season – a great time for those of us that love the business side of the software world, more than the code.

Steve Vamos Xero Global CEO released some powerful numbers:

·      Record numbers of subscribers adding 432,000 Year on Year (YOY) – up to 1.8 million

·      Revenue up to $638.2mil

·      Positive Free Cash flow for the first time of $6.5

·      International subscribers outstripping ANZ for the first time

But it was the UK that stole the show, with some stunning results and some wonderful promotion for CH Accountancy, who featured heavily in the corporate video announcing the results.

Xero UK announced an increase of 151,000 subscribers in 12 months to 463,000 subscribers, which is YOY increase of 48% and an increase in profit of 50%. As Hubdoc had barely landed in the UK, they will have hardly added any subscribers of their own into these UK numbers. It will be interesting to note how the additional proposition that Hubdoc offers, will have affected the subscriber numbers after the acquisition.

Of course, in the UK, we have had MTD driving the change to digital adoption and you can have no greater change agent than government legislation. Xero UK figures will have to be compared with the sector growth figures that Intuit will release next week. Sage and IRIS always mask their figures, FreeAgent have been open and had great success since the acquisition by RBS.

However, whilst the Government can create the opportunity for software companies, you have to have the team, systems and processes in place to advantage of the opportunity. So for this Gary Turner and team, have to be congratulated.

Again, many congratulations, but what’s next for Xero UK? Some of the obvious areas to reflect upon are:

MTD still has a lot of mileage left in its legs to drive subscription numbers for the foreseeable future.

InstaFile (Xero Tax) has to be delivered to the market and then sold. This will be a very different challenge for Xero in the UK compared to ANZ. We have a very competitive compliance market and Hg Capital does not pump ￡1.2BN into IRIS to give market share away. Sage has again promised a great digital future, but will there be change out in the provinces, as opposed to talking at Accountex? CCH and Thomson Reuters have well-established client bases, plus we have a cloud-based end to end compliance offerings from Capium and nomisma*

As it’s led by an ex-Microsoft executive we can see innovation, meaning acquisition. Changes in UK Open banking, make the payment sector interesting. Will Xero launch their credit card to drive products and services off the back or will they buy companies changing the payment arena like Soldo or Pleo?

Of course, as they own the eco-system Xero can see the apps that are growing!

The international growth will make internal investment harder to gain.

And of course Gary Turner himself. From being the only Xero representative at trade shows back in the day to delivering a fantastic corporate growth performance 10 years on. How much longer will Gary be motivated to drive success? There will have been no shortage of job offers along the way, but if he decides to move on, he deserves it to be as the number one man in town.

·       = currently consulting with nomisma

Feeling overwhelmed? Cloud, Apps, advisory and MTD causing you headaches? Looking for a cure to the above issues and then grow your firm, whilst spinning all these plates.

I am currently working with ambitious Accountants, looking to grow using the principle of "Acres of Diamonds."  

I have worked in the accountancy software sector since May 1996. I worked at IRIS ( Corporate Sales Director: 1996 – 2006) and Thomson Reuters Digita (Sales Director: 2008 – 2011). Since working for myself, 2011, I have consulted with onkho and ran PANALITIX UK, amongst working with many firms directly.

I am currently consulting with nomisma.

I can be contacted via LinkedIn, @LangdonHamblin or [email protected]