Xero shares slide despite in-line result as Melio revenue soars
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More news: Xero shares lowered in morning trade after the accounting software group reported a first-half result that largely met expectations.
Shares were down 4.8% to $133.33 at 11:40am AEDT, having fallen around 21% since January.
RBC Capital Markets analyst Garry Sherriff said the core result was in line with estimates, with a "solid" performance by newly acquired payments software company Melio.
Sherriff said Xero's cash flow "looks particularly strong", with first-half revenue up 68% year on year.
Xero first-half revenue lifts 20% to $1b
The news: New Zealand-based accounting software company Xero has delivered 20% year-on-year operating revenue growth to NZD1.19 billion ($1.03 billion) as subscriber count lifts 10%.
The numbers: Xero’s subscriber count increased from 4,186,000 in the six months to 30 September 2024 to 4,590,000 in the six months to 30 September 2025.
Total subscribers in Australia and New Zealand hit 2.7 million while international subscribers hit 1.9 million.
Net subscriber additions in the first half of FY26 were 176,000. This is 5% less than the 186,000 additions in the previous corresponding period when excluding the effect of removing long idle subscriptions.
EBITDA in the first half of FY26 came in at NZD377.87 million, about 21% higher than NZD311.7 million. Average revenue per user grew 15% from NZD43.08 to NZD49.63.
Xero also generated free cash flow of NZD321.1 million, which was 54% higher than the NZD208.69 million in the previous corresponding period.
The context: The operating revenue figure does not include the impact of acquiring US payments software company Melio for an upfront cost of about $3.9 billion, which was announced in late June.
What they said: “Xero’s H1 FY26 results reinforce our ability to deliver as we continue to do what we said we would do, in line with our strategy. We have demonstrated strong momentum, with our portfolio of large markets and our products' contribution to our macro-resilient growth,” Xero CEO Sukhinder Singh Cassidy said.
The source: ASX
