CORRECT: Xero 3Q cash burn accelerates for a second quarter

Xero, the cloud-based accounting firm, accelerated its quarterly cash burn in the September quarter from the June period as marketing spend and fit-out costs rise.

Net operating and investing cash outflow was $22.6 million in the three months ended Sept. 30, compared to an outflow of $17.3 million in the June quarter as the software developer ramped up its spending on advertising and marketing, and paid for the fit-out of offices in Milton Keynes and Auckland. That's the second quarter of an accelerating cash burn after Xero slowed its spending in the first three months of the year.

The cash burn was more than twice the $4.52 million in the 2013 September quarter, and the company has been eating into the $180 million war chest it raised last year to help fund its push into the US.

The software developer wants a million customers, and is targeting growth in the US market where it sees the potential to take market share of an estimated 29 million small to medium sized business owners.

Xero had a cash and short-term deposit balance of $170.8 million at Sept. 30, down from more than $230 million a year earlier, when it sold 9.92 million shares at $18.15 apiece.

Shares bought in the capital raise have since come out of escrow, boosting the stock's liquidity. Xero's share price has fallen more than two thirds from its record high of $45.99 in March, and touched a low of $15 earlier this month. The shares were unchanged at $15.85.

The company doubled staff numbers to 758 in the 12 months ended March 31 and has continued to hire workers as it attempts to scale up to a profitable size.

Xero told shareholders at the annual meeting last month that it is considering a listing in the US after it reaches annual revenues of US$100 million, expected in this financial year, and has tapped former Microsoft chief financial officer Chris Liddell as chairman.