Xero 1Q cash burn accelerates on rising staff, marketing costs
By Paul McBeth
Aug. 3 (BusinessDesk) - Xero, the cloud-based accounting software developer, burned through cash at a faster pace in the
June quarter as it ramped up spending on an expanding workforce and more than doubled expenditure on marketing and
advertising.
The Wellington-based company's operating cash outflow more than doubled to $17 million in the three months ended June 30
from the same quarter a year earlier, and widened from the $12.2 million outflow reported in the March period. Customer
receipts jumped 72 percent to $40.5 million from a year earlier, with staff costs up 66 percent to $31.8 million and
Xero's advertising and marketing spend more than doubling to $11.5 million. The staff costs included $3.7 million
relating to annual tax payments on share-based compensation, more than twice the $1.4 million it spent a year earlier
The company's investing activities reported a cash outflow of $11.5 million in the quarter as Xero bought intellectual
property and other current assets, up from the $9 million outflow a year earlier.
"Xero continues to believe that ongoing investment in customer growth and product innovation is the correct strategy
given the substantial opportunity and potential long-term returns," it said in a statement. "Xero is focused on
containing its full financial year cash outflow to similar levels to Xero's prior financial year."
The software developer's total operating and investment outflow was $88.4 million in the 2015 financial year, and it
raised a further $147 million in the year from US-based institutional funds.
Xero had cash and deposits totalling $243.5 million as at June 30, down from $268.9 million at the start of the quarter.
The shares fell 0.6 percent to $17.60, and have gained 9.6 percent this year.
(BusinessDesk)