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Jeremy Hutton: Milford Asset Management expert on Xero's rough start to 2026 · The SME Stream

• 0:00
  Speaker 1: Jeremy Hutton's with US Milford Asset Management for our market update. Jeremy,
• 0:03
  Speaker 1: good evening.
• 0:04
  Speaker 2: Good evening, Ryan, how are you going very good?
• 0:06
  Speaker 1: Thanks? Can we start in the US? SO market's back
• 0:08
  Speaker 1: open overnight after the public holiday Monday. Bit of a
• 0:11
  Speaker 1: wobbly over Greenland and Trump.
• 0:15
  Speaker 2: Yeah, that's right. The Cell America trade was back on
• 0:18
  Speaker 2: last night, and the Nasdaq SMP five hundred indexes both
• 0:22
  Speaker 2: down two percent, and our own z X down over
• 0:26
  Speaker 2: one percent as well. So, yeah, a bit of a wobbly.
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  Speaker 2: And most importantly that US ten year bond that's broken higher,
• 0:33
  Speaker 2: and you know that's interest rates going up, which is
• 0:36
  Speaker 2: never really a good sign for markets, and politicians start
• 0:39
  Speaker 2: to get nervous too. So maybe even that rate we'll
• 0:42
  Speaker 2: contain some of President Trump's tendencies at the moment.
• 0:46
  Speaker 1: Yeah, right, Let's go to New Zealand and Zero. This
• 0:48
  Speaker 1: is accounting software business. Of course, everyone knows that sheer
• 0:51
  Speaker 1: price has been under some pressure, fell under the psychological
• 0:55
  Speaker 1: one hundred dollars level. What is going on?
• 0:58
  Speaker 2: Yeah, Regarded as one of New Zellen's great companies, Zero
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  Speaker 2: is going through a bit of a lean pad of
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  Speaker 2: late this year. Price is almost halved from its one
• 1:07
  Speaker 2: hundred and ninety three dollars peak in June last year,
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  Speaker 2: So in just six months it's halved, and it started
• 1:13
  Speaker 2: twenty twenty six pretty poorly as well, down over sixteen percent.
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  Speaker 2: So yeah, painful for ZERO investors generally accustomed to lots
• 1:22
  Speaker 2: of success, but Zero has been caught up in a
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  Speaker 2: bit of this global software sell down and the sentiments
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  Speaker 2: really struggling. And as effectively, it's these recent AI models
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  Speaker 2: and they're getting very good at producing basic and good
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  Speaker 2: looking software packages that pretty much the touch of a button.
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  Speaker 2: So you know, some market commentators out there, they're even
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  Speaker 2: calling it a potential existential threat to software and SaaS businesses.
• 1:47
  Speaker 2: So Zero is getting a little bit tied up with that.
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  Speaker 2: We will follow that this year, you know, as the
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  Speaker 2: AI models continue to develop and get a bit smarter,
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  Speaker 2: we'll see what the impact will have on these software businesses.
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  Speaker 1: He was also they did a big act because psition
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  Speaker 1: out of the US, didn't they last year, and that
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  Speaker 1: hasn't been received well either.
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  Speaker 2: Yeah, more stock specific issue, but it hasn't helped the sentiment.
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  Speaker 2: They bought this US payments business called Media paid a
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  Speaker 2: princely some of two point five billion US dollars, so
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  Speaker 2: a big chunky amountain and the market's given that feedback
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  Speaker 2: pretty clearly that perhaps they paid a little bit too
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  Speaker 2: much for it. But to be fair, you know, the
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  Speaker 2: US it's always been been a key geography for zero
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  Speaker 2: to expand into, and also payments as a technology or
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  Speaker 2: addition to their product. That's that's been the radar too.
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  Speaker 2: But perhaps they could have done it a little bit
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  Speaker 2: more efficiently. So the market is taking its time to
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  Speaker 2: digest this transaction and figure out if it was a
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  Speaker 2: good deal or not.
• 2:41
  Speaker 1: Jeremy, does that mean we should all go out and
• 2:43
  Speaker 1: buy shares then.
• 2:47
  Speaker 2: Well that's a million dollar question, Ryan. But you know,
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  Speaker 2: no doubt that Zera remains a very high quality company.
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  Speaker 2: It's got some great growth runway ahead of it, and
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  Speaker 2: we know it's had a lot of success in New Zealand, Australia,
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  Speaker 2: in the UK. If it cracks the US market in
• 3:02
  Speaker 2: its core accounting software, or if this payments expansion goes well,
• 3:06
  Speaker 2: then the share price could perform really really strongly. You know,
• 3:09
  Speaker 2: sometimes markets get a little bit nervous and these great
• 3:12
  Speaker 2: opportunities can pop up, but the pressure's really on on
• 3:16
  Speaker 2: the zero management team to restore some of this confidence
• 3:19
  Speaker 2: and get and get the share price moving again.
• 3:22
  Speaker 1: Appreciate that, Jeremy. Thank you, Jeremy Hutton from Milford. You're
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