Why I’m betting big on XERO FPO shares

Well gidday Xero Limited (ASX:XRO)!

Yesterday was the last day of trading for the cloud platform company on New Zealand’s NZX as it makes the big move over to a sole ASX listing.

Despite some sour-grapes in New Zealand at the shift of such a successful company I think the decision makes a lot of sense. Just as we once outgrew the family home and looked to spread our wings in the world, Xero’s move sets the company up for its next stage of global expansion.

Thinking long-term

Drury is an iconoclast and his vision for the business stretches well beyond what the company looks like today or the next 12 months.

In a recent interview with Morgans Financial Limited, Drury re-stated his goal to see Xero logging $NZ1 billion in revenue each year – more than twice the NZ$417 million annual recurring revenue reported at 30 September 2017.

Drury’s goal reflects how early we still are in the industry for cloud accounting and services for small businesses. The opportunity in front of Xero is vast, but it will take time to get there.

This is a point I find myself drawn to as an investor focused on the long-term. One of my personal investing mantra’s (adopted from the legendary David Gardener) is ‘make your portfolio reflect your best vision for our future’. This nestles Xero nicely into my investment style more than a company like Myob Group Ltd (ASX: MYO).

Making it happen

To achieve its goal Xero is continuing to focus on subscriber growth in new and existing markets, but also constantly developing new product features to increase revenue per user.

It can do this incredibly effectively by trawling the huge volumes of high-value data the business produces with machine learning. This can identify new products or markets and in my view will be a big driver of the future transformation of the accounting process. Just today it announced an important new agreement with National Australia Bank Ltd (ASX: NAB).

Adding this kind of incremental value is what great business is all about.

As Xero transitions to a full ASX listing and begins to mature I think that value will translate into significant shareholder returns in the many years to come.

Disruptors like Xero don't come along often, but here are three top companies we think could be in the next wave of change!

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Regan Pearson owns shares of Xero. The Motley Fool Australia owns shares of Xero.

You can follow him on Twitter @Regan_Invests.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!