Cloud Accounting Xero

Xerocon Denver: Apple, Embedded Dashboards, and More!

Written by Patti Scharf

I just had the pleasure of attending my second US Xerocon conference, held in Denver June 3-4, 2015. For those who couldn’t make it, I thought I’d give a little rundown of some of the highlights.

Energy and Change Set the Tone

I’m starting to see lots of blogs coming out covering all the new Xero announcements made at Xerocon Denver, but I haven’t yet seen any commentary about the overall tone of the conference itself.

The energy at the conference was palpable and the overriding theme was definitely change. The accounting industry is certainly changing, and it appears that Xero hopes to be leading the charge. Millennials are making their mark on the industry and they attended this conference in droves. I wish I had some statistics on the average age of the attendees, but I don’t. However, I did ask the attendees at my session how many of them were practicing accounting in 1992, and only about 5% to 10% raised their hands. I would not be surprised if the majority of them were born between the late 80s and early 90s.

Xerocon Denver

Common topics at Xerocon naturally included the cloud, but talk about the cloud has slid into the background somewhat as it’s become less controversial and more mainstream. Now attention has turned to the importance of specializing in a particular vertical and in finding your place in the new collaboration economy. Xero, developers, partners, and customers are all working hand in hand to improve the accessibility and use of information to the betterment of small businesses, both individually and on a global scale.

Hazard of bringing the team to #xerocon – now they want iWatches. 😉

— Patti Scharf (@PScharfCPA) June 3, 2015

New Apple Partnership Launched

Speaking of collaboration, I think far and away the biggest announcement was Xero’s unveiling of a new partnership with Apple. An integration with the Apple Watch was demonstrated during one of the keynotes.

Xero will be focusing its attention on developing best-in-class solutions for small businesses and their accounting partners on Apple devices, but even for PC/Android users like myself, I think this is great news. This partnership will greatly increase Xero’s exposure and solidify its brand. If there was any lingering uncertainty that Xero is in this game to win, the partnership with Apple should put those doubts to rest.

 

Xero iWatch

Here is what the new partnership means for Xero and Apple users:

  • Best Xero user experience first on Apple devices
  • Best-in-class solutions from the Apple ecosystem, designed specifically for small businesses
  • Tight integration with Apple’s mobility partners to increase time-to-value and reduce friction
  • Small businesses seeking guidance can get connected at select Apple stores, Apple authorized resellers, and with Xero service advisors (that’s us, accountants!)

You can expect to start seeing bundled niche solutions for specific types of businesses, such as the retail package (including Xero, Apple, Vend, and Deputy) and the wellness industry package (including MindBody and Xero).

Embedded Performance Dashboards

One of the announcements I’m very excited about is the performance dashboards embedded into the Xero software. Business owners can now watch the performance of their business in real time by watching the change in performance ratios. One of the best parts of this new feature, in my opinion, is that our clients can not only click on the graphs for details and discover how the numbers are calculated, but can also click on the “Ask My Advisor” button to ask questions and work collaboratively with their accountant.

I believe this is an example of how Xero understands the importance of a financial advisor in an SMB’s journey toward success.

More Product Improvements

There were several other product announcements made at Xerocon. Some are already here, and others are just around the corner, but here is a taste of what Xero has going on:

  • Payroll in Colorado. What better place to announce that Colorado payroll is live than at Xerocon in Denver. Lots of people have been waiting for this launch.
  • Enhanced Gmail Integration with Contacts. Imagine all customer email correspondence being accessible within Xero by contact. I’m looking forward to this type of CRM capability existing within Xero in the near future.
  • Enhanced Reporting (known as “Report Packs” in other countries). This has been live for literally a couple of years in Australia, so I’ve been sitting on my hands for a very long time waiting for it. With the announcement at Xerocon, hopefully this is imminent. Soon we will be able to customize reports by including formulas and creating templates to quickly and easily prepare consistent reports across our entire book of clients.
  • Xero Billable Expenses. Xero users have been begging for the ability to track expenses that can be easily tagged and invoiced back out to clients. It’ll soon be a reality.

Greg Lam will be diving into some of these features more as they are released.

500,000 Paid Subscribers

Another big announcement from Xero was the fact that they had reached 500,000 worldwide paid subscribers. It was no surprise to me that as soon as this information was out, Intuit reacted with a #thanksamillion Twitter campaign announcing that QuickBooks Online had reached the million worldwide subscribers mark.

This piqued my curiosity, so I looked up some of the paid subscriber numbers over the past few years.

The primary difference between the Intuit and Xero numbers lies in the primary markets they’ve captured. The vast majority of Intuit’s subscribers are in the US, whereas the bulk of Xero’s customers are in New Zealand, Australia, and the United Kingdom. Xero entered the US market in early 2012 and is just now starting to pick up speed here.

Here are the paid subscriber numbers reported by the two companies since 2012. It’s important to keep in mind that while Xero charges by the company, QuickBooks Online charges by the user. Given that difference, I’m not sure we’re comparing apples to apples—Xero may have more actual users of their product than Intuit. But for argument’s sake, let’s assume the numbers are comparable.

 

Product Date No. of Subscribers Growth from Previous Period Annualized Growth Source
QBO 8/28/2012 360,000 Intuit press release
QBO 4/30/2013 459,000 27.50% 41.25% Intuit Q3/FY2013 Fact Sheet
QBO 5/31/2014 624,000 35.95% 33.18% Intuit press release
QBO 6/4/2015 1,000,000 60.26% 60.26% Twitter campaign from Intuit, 6/4/15
Xero 3/31/2012 78,000 Xero Update
Xero 3/31/2013 157,000 101.28% 101.28% Xero Investor Briefing
Xero 3/31/2014 284,000 80.89% 80.89% Xero Annual Meeting PDF
Xero 3/31/2015 475,000 67.25% 67.25% Xero Annual Meeting PDF

Three things caught my eye when I looked at this data:

  • Xero is less than two years behind Intuit in worldwide paid subscribers.
  • Xero’s annualized growth when they hit 450K to 500K is substantially higher than QBO’s when they reached that level.
  • QuickBooks Online’s growth picked up speed a LOT in the past year as Xero started nipping at their heels for market share.

As I’ve been saying for years, this will be an interesting race to watch.

Russ Fujioka, President of Xero US

Russ Fujioka, President of Xero US, a dangerous man with a t-shirt cannon

Overall

So, overall, I continue to be excited about Xero, not only as a product but also as a company. In my opinion, Xero has brought the accounting industry back to life and continues to challenge and inspire developers, partners, and customers. Xerocon Denver has reaffirmed our choice of Xero as our accounting platform, and we’re excited to see what the next few years hold in store.

About the author

Patti Scharf

Patti is a blogger, speaker, and thought leader in the accounting technology industry and is the co-founder and Chief Controller for Catching Clouds LLC. She is a CPA and holds several current software certifications: Xero, Bill.com (Guru), QuickBooks Online, and FreshBooks and was previously an Advanced Certified QuickBooks ProAdvisor. She absolutely loves designing effective accounting systems for ecommerce businesses and is committed to advancing the artistry of accounting through the use of technology.

9 Comments

  • Great article Patti.
    Definitely agree that the energy was electric. Maybe that’s what caused the storms over Denver on the last night…

    I’ve not been to a show where people danced all night in the torrential rain before either!

    • Thanks, Colin.

      It was definitely interesting seeing all the people who hadn’t really ever experienced hail before. Being from Colorado, it’s not the uncommon here (although the past month of rainy weather certainly is!).

  • QBO 1 million has ugly truth. in August 2014 Intuit acquired KDK systems (India)-Web based tax filing software. KDK got Accountant subscribers are around 22k in India. They file tax returns for 300k to 400k firms across india using KDK software. Some how those numbers are added to QBO paid subscribers count between Aug 2014 to April 2015. End of the day charge 1 cent per user and count them as paid subscriber. None of the Indian users are ever going to pay or use QBO in India as their American counterparts.

    – QBO growth is plateauing, Market is measuring QBO growth in paid subscriber numbers. KDK Acquisition is to address number anxiety rather than genuine growth.
    – Takeout the KDK number, growth is around 15% or so.
    – Compare the quarterly revenue of Quickbooks division, there is not much growth at all.

      • Google for quickbooks 1 million, switch to google images, you get a tweeted image by QBO team that shows subscribers across world. Look at India map. India has highest subscriber base outside US. Based on historic quarterly results and previous announcements we already know that QBO got 500k + subscribers in US alone in 2014. This spike in late 2014 and early 2015 coincides with KDK acquisition. Acquired for “Undisclosed” amount (means peanuts), which means less revenue from KDK.

        Also revenue from QBO should have doubled, that didn’t happen- in fact it’s flat. That implies revenue of new growth is coming from low/no paying subscriber base.

        Intuit India shows just 300 QBO certified advisers. Again that’s not consistent with subscribers highlighted in image.

        Talk to anyone from accounting industry in India. Market is still in 90″ s with pirated CDs of tally readily available for 2 dollars.

        Each adviser lodges returns for 100s of companies. Allocate a QBO account each, since they are paying (in peanuts) for web tax lodgement for each return they can all be counted as paid subscribers.

        I can go on with few more, bottomline is, Intuit stock is way overvalued, it’s time to cashout. This rally won’t last long.

        • I wouldn’t say that this is hard evidence of what you are saying. Revenue – well, we know that in other markets, Intuit has heavily discounted pricing to get into a market. Number of Certified ProAdvisors? I don’t know that in any market that you are going to see a direct correlation between the number of Certified ProAdvisors and the number of QBO subscribers, particularly in a relatively new market. Pirated CD’s? Doesn’t have any relation to this particular subject.

          I can’t say if you are right or wrong, but what you are claiming doesn’t have any hard, direct support. Of course, we don’t have any real way to audit Intuit’s figures either. You may be right as far as the number of subscribers, but I’m not convinced by what you are showing here.

          Stock price? That is a far different issue.

          In general, I think that online accounting systems like this aren’t growing as fast as some people had anticipated. We can go into the reasons for that some other time, as it isn’t a simple discussion. Xero and Intuit go back and forth arguing about who is growing the fastest, each uses different numbers to bolster their arguments. Who will win? Well, Xero and Intuit are both fairly well financed at this time, so I feel that they’ll be sticking around for some time. But, time will tell, and all of the online accounting products have a lot of growing to do.

  • Hi Patti,

    Great article. Thank you for the key summaries.

    We were unable to attend Denver due to client projects. Good read, it helps.

    I would like to add that Xero is really making inroads in the Mobile and eCommerce areas, as well. And they are not approaching it just as Add-On’s.

    They are running Podcasts and Placements in eCommerce news journals. And they were recently at a Singapore eCommerce trade show, featured by KPMG and Singapore Bank.

    Here are two interesting links, one is iTunes – Podcasts and the other is from Id, IdeaLog, a journal from New Zealand. Please share them.

    https://itunes.apple.com/us/podcast/xero-hour-bob-knorpp-saul/id977452702

    http://idealog.co.nz/tech/2015/04/xero-takes-cloud-accounting-smes-lion-city-singapore-kpmg-partner

    Look at the comparisons to other financial software app.s., Idealog makes.
    They are not comparing Xero to it’s competitors. They are listing them with their comparable higher end apps in the financial software industry, solely.

    This may show where Xero’s sights are, and it is not in competing with the other high end apps., either. Xero likes new technology and the business advancement that goes along with it. Their approach creates the customer experience and the global markets grab on to that partnership.

    Xero has “tip toed” into Asia, KPMG has grabbed it and spurred them on.

    All very interesting… Tell us what you think of these two links.

    Enjoyed reading the others comments, as well.

    Sincerely,

    Tamra

    Tamra Groff, Senior Consultant, GASC/GHFG

    • Hi Tamra – thanks for chiming in.

      I haven’t had a chance to listen to the podcast yet, but I found the article about their entrance into Singapore interesting. I hadn’t heard much yet about their move into that country. I find it really interesting that although Intuit often markets themselves as the global leader in cloud accounting software, they really only lead in the US by such a large margin as to make that possible. If you actually look at countries outside the US, it seems that Xero is the one that’s always in the news. As I always say, I’m really interested to see where this race goes.

      As far as Xero’s presence in the eCommerce world, you’re preaching to the choir a bit as that’s my company’s (www.catchingclouds.net) area of expertise, and Scott (my partner in business and life) has done quite a few webinars and speaking engagements on the topic. Stay tuned for an upcoming preconference ecommerce session at SleeterCon in November. {shameless plug}