Xero contributes their AWS migration for improving its gross margin by 81 percent

Xero reveals the impact of mammoth AWS migration.

Channel Reseller News

Xero has reported its first-ever positive earnings thanks in part to a mammoth migration of customer data to Amazon Web Services in 2016.

In its first annual report since consolidating its shares onto the Australian Securities Exchange, the New Zealand-headquartered company posted positive EBITDA of NZ$26 million (A$24 million) for the year ending 31 March 2018, up from a NZ$28 million loss the previous year.

The cloud accounting firm said that it managed to bring its cost of revenue as a proportion of operating revenue, largely driven by the decision to migrate the data of more than 700,000 customers from Rackspace to Amazon’s public cloud in November 2016, which helped to lower hosting costs, along with productivity gains from investing in a new customer service platform.

Xero also thanked the AWS migration for improving its gross margin by 81 percent. The company said in a presentation to shareholders that there would be even more opportunities to increase gross margin with AWS, as well as the opportunity to automate customer experience.

Cost of revenue was up by just 10 percent to NZ$76 million, due to personnel costs from hiring more customer support staff, while operating revenue was up 38 percent to NZ$407 million.

At the time, Xero said the primary reason for migrating to AWS was to enable machine learning capabilities and to be able to deploy software updates in a shorter timeframe. Xero now hosts its data in two AWS data centres based in the US.

One of Xero’s first machine learning projects was a solution to make it easier for customers to enter supplier bills. Xero also created a learning model to predict bill codes based on previous codes that have already been used.

As part of the 2016 migration, Xero moved 59 billion records, 3000 apps and 120 databases to the new cloud platform.

Read the full article in CRN.

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