Xero shares surge on full-year result
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More news: Xero shares surged at market open after the New Zealand accounting software company posted a double-digit rise in full-year revenue and a swing to profit in FY24.
Shares were up 7.4% to $133.19 by 10:45am AEST.
Analysts were upbeat on the result with E&P Capital analysts calling it a "relatively strong beat" versus consensus overall, with revenue marginally ahead, and EBITDA "well ahead", of estimates.
However, both E&P and RBC Capital Markets analysts considered Xero's FY25 guidance to be lower than expected. RBC analysts suggested that Xero's management were being "conservative" to beat the FY25 target.
Xero posts double-digit revenue rise, swing to profit
The news: Xero posted a surge in full-year revenue, helping the New Zealand accounting software company swing to profit in FY24.
The numbers: The ASX- and NZX-listed tech company reported operating revenue growth of 22% year on year, rising to NZD1.7 billion ($1.57 billion) in the 2024 financial year. Average revenue per user of NZD39.29 was up 14% compared to FY23 and adjusted EBITDA climbed 75% to NZD526.5 million.
Net profit after tax totalled NZD174.6 million over the year, compared to a loss of NZD113.5 million in the previous year.
While subscribers grew 11% to 4.16 million, net subscriber additions were down 11% compared to the prior corresponding period.
The software as a service platform said that total operating expenses as a percentage of revenue is expected to be around 73% in FY25, while product design and development costs as a percentage of revenue are expected to be higher compared to FY24.
The context: Xero said its year-on-year revenue growth was driven by subscriber growth and improved annual revenue per user.
The Wellington-based company said its FY24 highlights included the announcement of strategic partnerships with US counterpart BILL, to build a US bill payment solution, and Deputy, including investing USD25 million ($37.75 million) in the Australian workforce management platform.
Earlier this month, shares in Xero climbed on the ASX as Jarden analysts upgraded their rating on the stock, describing the company as having "successfully transitioned from a startup to being self-funding".
What they said: Xero CEO Sukhinder Cassidy said: "We've delivered a strong and profitable FY24 result and Rule of 40 outcome, demonstrating our commitment to balancing growth and profitability".
"As we aspire to be a world class SaaS business, we seek to capture our large global TAM [total addressable market] opportunity and become an even more trusted platform for small businesses and their advisors," she said.
The source: ASX announcement
