Xero shares sink to 15-month low despite revenue growth
Xero shares hit their lowest level in more than a year, despite the New Zealand-based cloud accounting platform posting double-digit revenue growth and free cash flow of NZ$321.1 million (US$278 million).
Kiwi cloud accounting platform operating income increased It rose 20 per cent to NZ$1.19 billion in the six months to 30 September; Its adjusted earnings rose 12 percent to NZ$350.9 million.
“We have demonstrated strong momentum with our portfolio of major markets and products contributing to our macro-resilient growth,” said Sukhinder Singh Cassidy, Chief Executive Officer.
In Australia and New Zealand, Xero’s revenue rose 17 per cent to NZ$663.7 million and subscribers rose to 2.7 million.
Apparently investors expected more; Xero shares changed hands at $134.61 just before noon on Thursday, their lowest since August 2024.
XRO shares are down 3.8 per cent from Wednesday’s close, nearly 20 per cent year-to-date and nearly 30 per cent lower than their June 24 peak, when Xero announced it was acquiring US payments group Melio in a $2.5 billion ($3.9 billion) cash-and-notes deal.
Xero plans to use Melio’s features to roll out bill payment features in the US in December.
eToro analyst Farhan Badami said the result showed the company was “quietly shifting gears” and providing “solid numbers that show the underlying business is progressing nicely.”
He said the market was skeptical of Xero’s acquisition of Melio, but it showed long-term strategic logic.
RBC Capital Markets analyst Garry Sherriff said results were solid, with better-than-expected average revenue per user and in-line subscriber growth.
Xero also said in October that it was upgrading its AI agent called JAX (Just Ask Xero) to deliver automatic bank reconciliation and advanced financial insights through Xero’s partnership with OpenAI.
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