Xero is one of the most interesting SaaS companies we don't talk about that much in the U.S. etc.
They are coming up on $1B ARR, selling to SMBs
Yet, only 17% of their revenue is in the U.S.
5 Interesting Learnings:
They are coming up on $1B ARR, selling to SMBs
Yet, only 17% of their revenue is in the U.S.
5 Interesting Learnings:
#1. All the way until $600m+ ARR, the majority of Xero’s new bookings and revenue still came from Australia and New Zealand!
The U.K. has since grown substantially to $100m ARR, but they got all the way to $500m+ selling mainly in Australia+NZ
Nail a niche
The U.K. has since grown substantially to $100m ARR, but they got all the way to $500m+ selling mainly in Australia+NZ
Nail a niche
#2. The U.S. isn’t everything.
The U.S. remains an important but a smallish market for Xero, and isn't outperform the rest-of-the-world.
The U.S. is growing 17%, just a smidge faster than 15% overall growth -- and from a much smaller base.
The U.S. remains an important but a smallish market for Xero, and isn't outperform the rest-of-the-world.
The U.S. is growing 17%, just a smidge faster than 15% overall growth -- and from a much smaller base.
#3. Net churn is 1.1% a month from very small SMBs. Xero’s SMB churn isn’t net zero like Shopify.
Aim for that at least in your Very Small Business segment if you can, and if you can provide at least as much value as Xero.
Aim for that at least in your Very Small Business segment if you can, and if you can provide at least as much value as Xero.
#4. Customer Lifetime Value is 81 months, from very small SMBs.
That’s impressive and useful to see calculated for real.
Inclusive of upsells and churn, their ARPU is $29.25 and LTV is $2,398. That means an effective 81 month customer lifetime value from SMBs. Not bad!
That’s impressive and useful to see calculated for real.
Inclusive of upsells and churn, their ARPU is $29.25 and LTV is $2,398. That means an effective 81 month customer lifetime value from SMBs. Not bad!
#5. Their CAC >isn’t< small/short at 14+ months from SMBs. It takes them over a year to go profitable on an SMB customer.
They have a sales-assisted SMB sales process, which isn’t easy to make efficient. But they’ve done it. A LTV/CAC of ~6 makes for a still efficient model
They have a sales-assisted SMB sales process, which isn’t easy to make efficient. But they’ve done it. A LTV/CAC of ~6 makes for a still efficient model
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