Through its cloud-based accounting software, Xero Limited (ASX: XRO) connects small businesses to their advisors. Due to the operating efficiencies across the business, the company reported its first positive EBITDA of $26.0 million in FY18 compared to the loss of $28.6 million in FY17. On the balance sheet front, the current ratio stood at 1.93x in FY18. The company was having cash and short-term deposits of $80 million by the end of FY 2018. Cashflow from operating activities was $41.2 million in FY 2018 which is $45.6 million higher than last year. However, cash outflow in FY 2019 is forecasted to be reduced from FY 2018. Xero witnessed subscriber base growth which has added 351,000 new subscribers totaling to 1,386 million at 31st March 2018. The company started its new office in new Denver which is in line with company’s focus on expanding the Americas business. The new office space can accommodate 300 employees which will help the company to realize growth and expansion in North America. During the year, the group increased its footprints in Australia, New Zealand, and the United Kingdom, and continued to grow its presence in the Americas, South East Asia, and South Africa regions. Xero’s SaaS model is focused on acquiring subscribers economically at scale, increase revenue per subscriber, grow gross margin of the company, have retention at scale and generate long term value for the company. The company also formed a strategic alliance with Gusto which is a leading full-service US payroll platform, to integrate Xero’s platform in the US with Gusto which will provide customer access to full service payroll in all 50 states and this alliance will bring in important financial benefits and deploy the resources efficiently to execute the company’s growth strategy.
On 5 October 2018, the company announced the settlement of $300 million convertible notes which will provide additional financial flexibility to the business. The company is planning to use the proceeds for acquisitions, investments, strategic and complementary business and assets which are in line with the company’s strategy to drive long term share holder value.
Meanwhile, the share price has risen about 8 percent in the past three months as of 5 October 2018. The stock was lately seen to trade close to 7.8% discount to 12-month high of $52.57 against the 87.8% premium to 12-month low of $25.828. Judging by the improved financial performance, increased subscribers base, increased financial flexibility and historic performance of the stock, it is expected that shares price of the company will get a boost in the future. The group which has a market capitalization of $ 6.81 billion, was down by 4% in last five days in terms of the stock price. Given the fact that the group is aiming to continuously build up on subscriber base, grow revenue per subscriber with improved gross margins and better execution of strategy, the group is expected to trail back to higher levels. Additionally, the drive towards adoption of cloud accounting for existing and new markets and enhanced global footprint, is expected to prove favorable. The lately announced acquisition of Hubdoc is anticipated to streamline platform strategy. While FY19 cash outflow is estimated to be below FY18, the group still aims to witness cash flow break-even under the prevailing cash balance position.
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.
Click here to get your free report.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.