New Zealand's Xero pushes back U.S. listing plan to 2016

By Naomi Tajitsu

WELLINGTON 

(Reuters) - New Zealand online accounting software developer Xero (XRO.NZ) has pushed back plans for a U.S. stock listing to the start of 2016 at the earliest, as fresh capital funding buys transition time for the fast-growing company's new U.S. leadership team.
Xero, which makes cloud-based accounting software for small businesses, said its priority for 2015 was to grow the number of its UK subscribers, while also getting its U.S. expansion plan back on track after growth momentum slowed last year.
"The primary thing is to get our new U.S. leadership team to do two or three quarters (with the company), so the earliest we would go now is early next year. But there's no hurry," Xero CEO Rod Drury told Reuters in an interview on Wednesday. He had earlier forecast a U.S. listing for later this year.
Xero (XRO.AX), which is listed in New Zealand and Australia, last week announced a $110.8 million capital raising from U.S. venture capital firms, while
appointing a new president and board member in the United States, where it is expanding with the goal of becoming its top market in the future.
Its shares traded at NZ$24.15 ($18) on Wednesday, after rallying to a five-month high of NZ$25.25 last week. The stock has climbed nearly 50 percent so far this year.
With revenues of NZ$54.3 million in the six months to September, Xero has a total of 400,000 subscribers in New Zealand, Australia, the UK and the United States.
Xero has become the dominant online accounting services provider in the UK, overtaking Sage (SGE.L), and competes fiercely in Australia with MYOB, which is expected to list this year.
Drury said Xero would grow its market share in the UK, which comprises roughly 15 percent of global revenues, to closer to 30 percent, while also making more inroads in the U.S., where it has just a sliver of the market dominated by Inuit (INTU.O).
Another focus was attracting small businesses directly in the United States, where many accountants have been hesitant to embrace the cloud or to offer value-added advice. This would be a departure from acquiring subscribers through accountants, as it does in other markets.
"We thought the accounting model would work in the U.S. as it did in every other country we operate in," Drury said.
"We got the U.S. a little bit wrong ... but we've responded, fixed it and now we're in a great position."
($1 = 1.3235 New Zealand dollars)