XERO FPO NZ (ASX: XRO) is quickly gaining traction in the global market with the company announcing it has officially surpassed 100,000 subscribers in the United Kingdom.
That's up from 30,000 two years ago, according to the company. Xero is a provider of cloud-based accounting software which is becoming increasingly popular among small businesses.
Not only is it a convenient alternative to other desktop-based accounting platforms, it is also easy to use and is raved about by customers using the software. In a statement to the ASX, the New Zealand-based company's CEO Rod Drury said: "Xero's growth globally can be attributed to constant innovation and delivering best in class tools to our partners and small businesses who inspire us every day to keep raising the bar."
Indeed, 100,000 customers in any market is no easy feat, yet Xero is recording similar growth elsewhere. In fact, the company announced 400,000 subscribers across Australia and New Zealand in August this year, while it is also expanding throughout the United States.
Long-term success in each of these markets could make Xero's shares look very cheap at today's price of $13.71.
Should you buy?
Before I continue, I should note that Xero's shares are not for the fainthearted. They traded as high as $43 in March 2014 but have since fallen sharply as a result of the group's lack of profitability. This trend even prompted Drury to say that local investors simply don't understand tech companies and the amount of cash-burn required to better ensure their long-term success.
For a company so early in its growth days, investors should look beyond the immediate bottom-line results, and instead focus on the company's ability to secure new customers (and retain them) and their ability to generate sales from marketing.
Xero is ticking all the boxes in that regard and could become a very profitable company when management's focus does turn to the bottom line. Until then, I'd be happy to take a long-term focus and buy more shares at today's price levels.
