The Xero Limited (ASX: XRO) share price has been a very impressive performer over the last 12 months.
Over the period the cloud-based business and accounting software platform provider's shares have doubled in value.
This makes Xero the second-best performer in the WAAAX group of shares. Only Afterpay Ltd (ASX: APT) has performed better over the period with its gain of 128%.
Why has the Xero share price doubled in value in the last 12 months?
The catalyst for this strong gain has been an impressive full year result in FY 2019 and a very strong start to the new financial year.
In FY 2019 Xero posted operating revenue of NZ$552.8 million, which was an increase of 36% on the prior corresponding period. This strong top line growth was driven by a 31% lift in total subscribers to 1.818 million and a small increase in average revenue per user to NZ$29.25.
At the end of the period Xero's Annualised Monthly Recurring Revenue (AMRR) had increased 32% to NZ$638.2 million
Strong start to FY 2020.
It has been a case of more of the same so far in FY 2020. In November Xero released its half year results and revealed a 32% increase in operating revenue to NZ$338.7 million.
The company's AMRR grew at a similarly strong rate. At the end of the half, its AMRR had increased 30% on the prior corresponding period to NZ$764.1 million.
Once again, this strong growth was driven by yet another increase in subscriber numbers. Total subscribers grew 30% over the prior corresponding period to 2.057 million.
This means that after taking over a decade to reach one million subscribers, Xero achieved its second million in just two and a half years. This impressive growth in customer numbers demonstrates just how rapidly its software is being adopted across a number of markets.
Is it too late to invest?
Whilst I feel Xero's shares are arguably fully valued now, I would still be a buyer of them with a long term view.
I believe this high quality company is still only scratching at the surface of a massive market opportunity and has the potential to grow its top line at a strong rate for many years to come.