The XERO FPO NZX (ASX: XRO) share price could head higher if the cloud accounting company continues to rapidly grow its subscriber base.
Xero Share Price
Who is Xero?
Xero is a New Zealand-based cloud accounting software provider. That's fancy talk for accounting software that can be accessed on any computer or smartphone. Xero prides itself on its 'beautiful' accounting software, which enables small business owners to slash costs associated with accounting, bookkeeping and payroll personnel.
Xero then, Xero now
Xero has long been a household name in New Zealand, where it has already captured more than 30% of the total market. In Australia, the company has around 15% share. In the UK, where it had 164,000 subscribers at 30 September 2016, it controlled less than 5%. And in North America, it had 77,000 subscribers or 5% of the market.
Today, the company announced and celebrated its one-millionth subscriber milestone.
"Xero has doubled subscriber numbers in less than two years and has quickly grown to become a global leader in cloud accounting, adding nearly 300,000 subscribers in the last year alone," Xero CEO Rod Drury said. "Achieving more than a million subscribers is a significant milestone, establishing Xero as a leading, global innovator of small business software."
In addition to rolling out its software to as many small businesses as possible. Xero is growing its advisor network.
"One of our key growth strategies has been to develop a global channel of accountants and bookkeepers," Drury added. "There are now more than 100,000 business advisors in our global community which enables us to support small businesses around the world."
Foolish Takeaway
Xero shares are criticised as being expensive because the company has not yet made a profit. However, from the latest half-year accounts, the company appears to be making progress towards cash flow breakeven. In my opinion, profitability can wait so long as the company is making cash.
With a market capitalisation of $2.6 billion, Xero shares do not come cheap but with a positive view to the long-term, it is easy to see why some investors are happy shareholders at today's prices.
