1 Reason Xero Limited Joined Forces With Gusto

This morning Xero Limited (ASX: XRO) announced a strategic alliance with Gusto for its US payroll solutions.

In an ASX filing, Xero said it will integrate its platform with Gusto, a cloud software payroll business, to provide its US-based customers with full-service payroll across 50 states.

As it pushes its “beautiful accounting software” around the world, Xero had been developing its own US payroll systems by investing in research and development (R&D).

While the United States economy is much larger and more valuable than ours here in Australia, each US state has its own rules and regulations on tax. Therefore, payroll processes within and across US states can be complex and difficult to develop.

“Through the alliance Xero will serve the needs of customers in all 50 States and address one of the greatest pain points for US small businesses – managing payroll with beautifully integrated accounting,” Xero CEO Steve Vamos said.

By partnering with Gusto, Xero will be able to leapfrog some of the R&D that would be necessary to develop its systems in-house. But it means the company will incur a NZ$16.2 million write-down to assets in its 2019 financial year for development projects it has already undertaken, Xero said.

What Now

Xero said it will now be able to focus its resources in other areas of development while servicing its existing US customers better.

“We have found the majority of US small businesses want a full-service payroll solution,” Vamos added. “This strategic alliance allows us to focus our investment in our payroll product and brings important financial benefits and more efficient deployment of our resources as we execute our growth strategy.”

Xero claims to have more than 1.4 million subscribers using its accounting, bookkeeping and tax software spread throughout Australia, New Zealand, UK, USA and elsewhere. Gusto’s software boasts more than 60,000 companies in the US alone.

Xero shares were trading 0.2% higher on Friday morning, according to CommSec.

Free report: 3 cloud stocks to buy now

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

We’ll send you our report for free, including the names, ticker codes and analysis when you click the button above and enter your email address.

Free report: 3 cloud stocks to buy now

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Click here to access this report for free, including the names, ticker codes and analysis.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

10 ASX software shares under $1 billion

On the ASX and globally, shares in the software industry are my favourite stomping ground. Nitro Software Ltd (ASX: NTO), Whispir Ltd (ASX: WSP), Hansen Technologies Ltd (ASX: HSN) and ELMO Software Ltd (ASX:ELO). There’s a lot to choose from.

Read More

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.