Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Stenoveek on Bloomberg Radio.
Speaker 3: A company that plays in the cloud and data really
Speaker 3: works with small business companies A great read. In fact,
Speaker 3: we're talking about the company Zero. It's an eighteen point
Speaker 3: one billion dollar market cap cloud accounting software and small
Speaker 3: business platform company. So Kinder saying. Cassidy is the chief
Speaker 3: executive officer of Zero, which trades outside the United States,
Speaker 3: is based in Wellington, New Zealand, and she's joining us
Speaker 3: from San Francisco on this Tuesday. So Kinder, good to
Speaker 3: have you here with Tim and myself. Tell us a
Speaker 3: little bit more about your company, the bulk of your business,
Speaker 3: where growth comes from, who your customers really are industry
Speaker 3: wide as well as geographically.
Speaker 1: Sure, well, thank you so much for having me on.
Speaker 4: As you know, Zero is a cloud based accounting platform
Speaker 4: global in nature. We're about two point one billion dollars
Speaker 4: in revenue aud We trade on the ASX. But the
Speaker 4: most important thing is we have over four million customers
Speaker 4: around the world in key geos like the US, the UK, Australia,
Speaker 4: New Zealand and one hundred and eighty other countries providing
Speaker 4: them not just cloud based accounting software to small businesses
Speaker 4: and their accountants, but also providing payroll and payment services
Speaker 4: alongside that. So global footprint many markets, but certainly in
Speaker 4: the US, the UK and Australia are Big three.
Speaker 2: So given what you do, you have an incredible view
Speaker 2: on the economy globally, not just based on who your
Speaker 2: clients are and what they're actually doing with their software,
Speaker 2: but how your software is actually selling. So given the
Speaker 2: data points that you understand, the regions in which you operate,
Speaker 2: how would you characterize the global economy right now?
Speaker 4: You know, I'd see the global economy as almost as
Speaker 4: you all read it, which is, I would say an
Speaker 4: economy of mixed signals versus the data. So, as you noted,
Speaker 4: we operate across many geographies, and you would still see
Speaker 4: relatively strong jobs growth. As an example, you would still
Speaker 4: see relatively strong sales growth across many markets for our
Speaker 4: small business customers. And yet the sentiment in many markets
Speaker 4: is one of uncertainty. You have small businesses in different
Speaker 4: markets looking at different tear pressure that might put pressure
Speaker 4: on their cost of goods sold or imply price increases
Speaker 4: for their customers. They're certainly nervous about cash flow in
Speaker 4: that regard. And then you have some enduring issues for
Speaker 4: small businesses that are despite macro. You know, macrocanoptimes, which
Speaker 4: is the enduring problem of cash flow in managing things
Speaker 4: like late payments. So we see, as I said, relatively
Speaker 4: mixed signals. But I think we can agree that they
Speaker 4: feel uncertain in this environment, and of course we believe
Speaker 4: our software is there to help them manage their cash
Speaker 4: flows in that uncertainty.
Speaker 3: How much of the uncertainty is a result of what's
Speaker 3: going on here in the United States.
Speaker 1: I think a fair amount.
Speaker 4: I mean, look, you know, as you all know, small
Speaker 4: businesses in the US, including in the US. In the
Speaker 4: US as an example of small businesses, we're growing very
Speaker 4: healthily pre COVID, five to six percentage points a year
Speaker 4: according to our data. And then what we saw is
Speaker 4: with COVID, a big disruption. And then of course, just
Speaker 4: as they started to recover from COVID inflationary pressure eleven
Speaker 4: interest rate increases. And this is that we're trying to
Speaker 4: starting to settle from that, and maybe the promise of
Speaker 4: let's say a deregulated environment, well, along comes new uncertainty
Speaker 4: with it, as an example, tariffs, So they are having
Speaker 4: to navigate a lot, and in the last ten years, certainly,
Speaker 4: certainly in the last few months even more so.
Speaker 3: Kid, what are the things too we're worried, not worried,
Speaker 3: curious about. And I know it's something you have been
Speaker 3: working on, and that is to expand your presence in
Speaker 3: North America. And it sounds like the US specifically walk
Speaker 3: us through what you have been doing, the investments you've
Speaker 3: been making, and what kind of growth you are seeing.
Speaker 3: And I'm also just kissous generally about your exposure to
Speaker 3: the US market.
Speaker 4: Yeah, so interestingly, we're probably one of the few, you know,
Speaker 4: native cloud SaaS businesses of very large scale that is
Speaker 4: underweight the US meeting.
Speaker 1: The US was a new market for Zero.
Speaker 4: Obviously, I'm based here in Silicon Valley and have been
Speaker 4: here for the last thirty years. But for Zero, they
Speaker 4: entered the US market maybe a decade ago on the
Speaker 4: promise of bringing cloud based accounting to the market. It
Speaker 4: was largely a desktop market, and over the last ten years,
Speaker 4: i'd say the company's steadily increased its focus and presence
Speaker 4: in the US and is now seeing a nice acceleration
Speaker 4: of those efforts in subscriber growth, very strong subscriber growth.
Speaker 4: We just reported results about a month about a week ago,
Speaker 4: very strong revenue growth here in the US, and what
Speaker 4: we see is very much in.
Speaker 1: A lot of white space.
Speaker 4: There's still a large, large number of small businesses that
Speaker 4: have never digitized their back end accounting here in the US,
Speaker 4: and obviously the opportunity to do so save some time,
Speaker 4: saves some money, and with AI can offer new insights.
Speaker 4: So we see a pretty attractive market landscape her that
Speaker 4: we've been building towards.
Speaker 2: How do you do this at scale with a salesforce
Speaker 2: that you know? Is it cold calling? Because when you're
Speaker 2: calling on these small and medium sized businesses, some of
Speaker 2: them are indeed very small, and those could be pretty
Speaker 2: small accounts. Is it self service? How do you handle
Speaker 2: the incoming or is it outgoing?
Speaker 4: Well, you know, in the US, we have a multi
Speaker 4: channel approach, just because we do everywhere around the world.
Speaker 4: We have a pretty big direct or self service motion
Speaker 4: where small businesses can discover zero online through ads through
Speaker 4: social media. We have large Facebook and LinkedIn engagement and
Speaker 4: can come to the website and sign up directly so
Speaker 4: we have a big direct funnel.
Speaker 1: We have a salesforce, but that salesforce, believe it.
Speaker 4: Or not, calls on accounts and bookkeepers, not some small
Speaker 4: businesses directly, because of course, many of the small businesses
Speaker 4: we have work with an account and bookkeeper for their
Speaker 4: taxes and bookkeeping. And then the third thing is we
Speaker 4: have increasingly new channels and new partnerships working with other
Speaker 4: vertical SaaS providers. You know, people like the neo banks
Speaker 4: around the world where they refer customers into zero as
Speaker 4: an SMB is starting their journey in payroll of payments
Speaker 4: or banking. And so we work across all three channels
Speaker 4: everywhere in the world pretty successfully.
Speaker 2: How are you using AI right now from the not
Speaker 2: just of with your clients, but also when it comes
Speaker 2: to sales.
Speaker 4: Yeah, so look, I think that like many cloud based
Speaker 4: accounting services or cloud based services, our first goals to
Speaker 4: put AI in the hands for our customers. So the
Speaker 4: full focus is on launching Jacks, which we did this
Speaker 4: past year. Jacks's just as zero. It's our sort of
Speaker 4: CampaignOn if you think on the site of your mini
Speaker 4: CFO in a box that helps you use zero. This
Speaker 4: year we're very much focused on the expansion of jacks
Speaker 4: for our customers so we can do more jobs for
Speaker 4: you on our platform. And of course that is the
Speaker 4: promise of AI. Just really give back first and foremost
Speaker 4: time on these tasks, accounting tasks, payment tasks, and then
Speaker 4: to give you more intelligence, more reasoning, and all the
Speaker 4: insights our platform has to offer. To really expand that
Speaker 4: offering through AI. That's the first and foremost focus of
Speaker 4: the company right now.
Speaker 3: You know, it's so funny when earning season we go
Speaker 3: through in the United States and we get to the
Speaker 3: application software part the earning cycle, We're.
Speaker 1: Like, oh, yeah, there's another one.
Speaker 3: There's another one, there's another one. It's not companies we
Speaker 3: talk about all the time. Some of the bigger one were.
Speaker 2: Driving from the San Francisco Airport into San Francisco and
Speaker 2: seeing the billboards.
Speaker 3: Yeah, it's exactly.
Speaker 1: You know, we do not have a billboard on the
Speaker 1: one oh one.
Speaker 4: I will say that we're more targeted in our advertising,
Speaker 4: but I know a lot of tech companies do. Our
Speaker 4: small businesses are all over North America, so we spend
Speaker 4: our dollars or elsewhere outside of just the tech corridor.
Speaker 3: That's what I'm trying to get to like our audience
Speaker 3: or the investment audience, like what is it that they
Speaker 3: need to understand? But you guys specifically amid a space
Speaker 3: that has a lot of players.
Speaker 4: Sure, So first of all, just to note, Zoo was
Speaker 4: one of the you know, highest growing software SaaS platforms
Speaker 4: in the world. You know, we just grew twenty three
Speaker 4: percent year over year. We're profitable, we're rule of forty four.
Speaker 4: Just because we don't trade on Nasdaq does not mean
Speaker 4: we don't have a gold global footprint. We were based
Speaker 4: and launched in from the Australian New Zealand region, so
Speaker 4: that's why we trade there. But the most important thing is,
Speaker 4: you know, we are a strong, growing SaaS player betting
Speaker 4: on the macro digitization of small business software and the
Speaker 4: cloud accounting space still has a lot.
Speaker 1: Of yield in most markets in the world, including the US.
Speaker 4: So excited to play where we do and excited to
Speaker 4: stead this many small businesses.
Speaker 3: Are you looking to list in the United States? Like,
Speaker 3: as you make investments in the US, look to expand
Speaker 3: your business in the US, or you're looking to list
Speaker 3: in the United States, Well, right.
Speaker 4: Now, we're pretty happy on the ASX. We have shareholders
Speaker 4: who are very fundamentally oriented and interested in our longterterm growth.
Speaker 4: We do have US shareholders in the share base. If
Speaker 4: we would ever consider, you know, listing, it would probably
Speaker 4: we'd be thinking about maybe at some point in the
Speaker 4: future of duel listing, no time frame, no commitments, but
Speaker 4: really just to widen the ability for all investors to
Speaker 4: participate easily in the zero story. But pretty contemp right
Speaker 4: now with that ASX listing and a really great shareholder base.
Speaker 2: Hey, very briefly, before we let you go, tariffs in
Speaker 2: the new tariff regime here in the US, where the
Speaker 2: average tariff rate is pretty much increased fivefold over the
Speaker 2: last year, and that's before deals have been signed with
Speaker 2: many different trading partners here in the US. How's it
Speaker 2: affecting the small businesses that make up the North American
Speaker 2: portion of your companies.
Speaker 4: Well, I think you have hit the nail on the head.
Speaker 4: I think what they're trying to forecast is what the
Speaker 4: cost or disruption is to the supply chain. You know,
Speaker 4: let's hope it's not disruption, but rather, you know, the
Speaker 4: management of a lower triff scenario. We will wait and
Speaker 4: see what happens here over the next ninety days. I
Speaker 4: think they're mostly trying to figure out, Hey, what is
Speaker 4: the implication for their cost of good sold, what's the
Speaker 4: implication for availability of supply, and lastly, what's the implication
Speaker 4: for price rises they may need to entertain in order
Speaker 4: to be able to hold margin if their cost of
Speaker 4: good goes up. And again, like we really think of
Speaker 4: our business as trying to help them navigate those changes
Speaker 4: with increasing insight and foresight.
Speaker 3: All right, really appreciate getting some time with you, so Kinder,
Speaker 3: Thank you so much. S Kinder seeing Cassidy, chief executive
Speaker 3: officer of Zero, joining us from San Francisco,