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Jeremy Hutton: Milford Asset Management expert on Xero's rough start to 2026 · Best of Business

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