Australian Taxation Office’s single touch payroll initiative and JobKeeper boost Xero

Accounting software company Xero has lifted its six-month revenue 21 per cent.

Steve Vamos, chief executive of accounting software company Xero.

Accounting software company Xero has lifted its six-month revenue 21 per cent to $NZ409m ($387m) despite COVID-19 being a headwind for attracting new customers.

In its half-year results, the company reported a net profit of $NZ34.5m, up from just $NZ1.3m one year ago. During the six months to September 30, the company’s subscriber base grew 19 per cent to 2.45 million users.

Chief executive Steve Vamos said the Australian Taxation Office’s single touch payroll initiative and JobKeeper had been a boost for the company.

“The way that JobKeeper was rolled out and the connection to administer it through single touch payroll certainly encouraged the adoption of our single touch payroll solution,” he said.

“We took the proactive action to deliver to our customers updates to our product that made it much easier to administer.”

A 10 per cent cut in sales and marketing costs helped the company to increase profit.

“This result demonstrates the value our customers attribute to their Xero subscription and the underlying strength of Xero’s business model,” Mr Vamos said.

Mr Vamos said less COVID-19 disruption in Australia and New Zealand was reflected in stronger subscriber growth in the two countries.

During the six months, Australia became the first Xero market to reach more than one million subscribers, with 21 per cent growth during the period. In New Zealand, subscribers grew by 13 per cent to reach more than 400,000. British subscribers grew by 19 per cent to 638,000.

“We see opportunity in all the markets we are in. Outside Australia and New Zealand, adoption rates of cloud accounting are low — they’re around 20 per cent or less.

“So we have growth aspirations because we believe small businesses can benefit from using technology and managing their business in the cloud.”

The company reported earnings before interest, tax, depreciation and amortisation of $NZ120.8m.