Xero shares sink 11.3% as results disappoint
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More news: Xero shares have plunged further, down 11.3% by 2pm AEDT on Thursday despite a switch to profit and lifting revenue by 21%, as sales growth in the US and the UK disappointed investors.
Xero drops despite switch to half-year profit
The news: New Zealand-based accounting software business Xero has swung to a half-year profit amid strong revenue growth but its numbers failed to impress the market.
The numbers: The company posted a net profit of NZD54.1 million ($50 million) for the six months to 30 September, compared to a net loss of $16.1 million a year ago. Revenue jumped 21% to NZD799.5 million, supporting a 90% jump in first-half earnings. However, shares in Xero were down 5.5% to $108.35 in early trading on the ASX.
The context: The company said earnings were boosted by disciplined cost management and restructuring, and it is now targeting a lower operating expense to operating revenue ratio of around 75% in FY24, to improve operating income margin. “We’ve demonstrated good momentum this half. As we look forward, we’re sharpening our focus on Xero’s key levers of growth as we aspire to become a higher performing SaaS company,” new chief executive Sukhinder Singh Cassidy said.
However, RBC analysts described Xero’s results as mixed, with the market likely disappointed by a lower-than-expected growth in revenue and earnings.
The source: ASX announcement
