Welcome to ‘My key KPI’, our weekly content series where we ask CFOs and FDs about a key metric or KPI they use in their day-to-day work.
The aim is to understand how different finance professionals, across a broad array of industries and sectors, use data to inform their decision making.
For this week’s edition, we speak to Sankar Narayan, the CFO and COO of Xero.
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My key KPI: Revenue and Subscriber growth
Sankar Narayan’s role at Xero isn’t just a CFO, it’s COO as well. The dual role has led to Narayan’s job title having the nifty acronym COFO next to his name: chief operating and financial officer.
“My role at Xero is unique in that as well being the CFO, I’m COO,” Narayan said. “Having the dual roles means I bring a strong operational focus to our financial performance and direction, and likewise, when I’m leading our operational performance I bring genuine financial disciplines.
Along with the usual requirements of a CFO, Narayan also guides strategy, working with the executive team, and keeping Xero’s growth trajectory sustainable. The company has steadily decreased its operating losses over the years, reporting a positive EBITDA and an improved after tax loss in 2018.
The steady improvement in Xero’s financials chimes with Narayan’s aversion to the growth zealotry that’s led many startups astray. “The CFO also needs to keep a close watch on the operating performance of the business ensuring the lead indicators are in line with the targeted course of the company and flagging course corrections where required.”
Growth, in other words, isn’t going to save you in and of itself. Metrics and KPIs are central to Narayan’s bearish approach. “I have a really strong focus on Xero’s organisational health including the people metrics.
“From a performance perspective, my primary focus is on revenue and subscriber growth. Cash usage is very important. Other key metrics that I watch are lifetime values, gross margins and cost of acquisition.”
