Xero has gone Gangbusters!

Online accounting software provider Xero has announced a $3.7 million loss for the six months to September, an improvement on its $4.7m loss in the same period last year.

The company says its operating revenue is up significantly to $7.9m, compared with $3.7m in the first half of 2010.

This was due to rapid customer acquisition, it said. Customer numbers more than doubled to 51,000 in the period.

More than 40 per cent of Xero's revenue now comes from offshore and it expects this to grow as the brand becomes established in large overseas markets, it told the NZX.

It has opened an office in San Francisco with key staff relocating there. It has also opened a second office in Canberra, with others planned for Sydney and the UK.

The New Zealand market remains its greatest source of revenue at $4.6m for the period, followed by Australia at $1.8m and the UK at $1.1m.

Xero continued to invest in product innovation, and in August it received a technology and development grant from the Ministry and Science and Innovation of $4m over three years.

The improvement in its revenue validated its ability to deliver a scalable SaaS (software as a service) business, Xero said. Large competitors such as Intuit, Sage and MYOB were still grappling with this, while smaller competitors lacked the scale.

MARIA SLADE www.stuff.co.nz 18/11/2011