Australian shareholders now own a third of Xero

Australian shareholders own almost a third of dual-listed accounting software company Xero as of July, with local developers now helping the business build its US product.

In an update to the market today, Xero chairman Sam Knowles said Australian-based shareholders now made up 32 percent of the company’s register, up from 4 percent before the company’s dual listing on the ASX in November last year.

Xero continues to grow its user base, boasting 193,000 customers at July 2013, up from 93,000 a year ago. It spent $9 million of its cash reserves in the June quarter.

The group reported a net financial annual loss after tax of NZ$14.4 million earlier this year, and today said continued investment would lead to greater losses in 2014.

Despite the losses, chief executive Rod Drury said shareholders had been supportive of the group’s growth strategy.

Xero gave Australian investors exposure to the cloud computing sector, and the company’s accounting partners had also bought in, Drury said.

“Before they used to be able to invest in MYOB, but that was taken private, and if they want exposure to the cloud market we give them a vehicle they can understand.”

Xero raised more than $50 million from investors late last year to help support its growth plans.

Around 100 of Xero’s 500-strong staff are based in Australia, Drury said, with development teams in Melbourne and Canberra, but it’s not likely the company’s larger development team will shift any time soon.

“NZ labour rates are probably under 60 percent than the equivalent in the Australian market, so it’s cost effective to do a lot of central services [in NZ],” Drury told iTnews.

“We have a team that’s split between Melbourne, Canberra, and San Francisco now building payroll for the US market, so were creating a lot of jobs in Australia too.”

Drury said the company now thought of itself as "Australasian".