Xero (XRO) H2 2025 earnings summary

Executive summary

• Achieved strong, macro-resilient revenue growth across all major markets, with disciplined capital allocation driving profitability and a Rule of 40 outcome of 44.3 for FY25, up 3.3 points year-over-year.

• Subscriber growth was 10% underlying, with ARPU up 11% underlying and 15% headline, excluding the removal of long idle subscriptions.

• Strategic focus on product innovation, AI, and platform expansion, including the launch of Jax AI companion and SIFT/Syft Analytics integration.

• All large markets (Australia, UK, US) contributed robustly to revenue and subscriber growth.

• Strategic execution in the first year of the FY25–FY27 plan delivered more value to customers and improved product offerings.

Financial highlights

• Revenue grew 23% year-over-year to NZD 2.103 billion, with platform revenue up 29% and core accounting revenue up 23%.

• Adjusted EBITDA rose 22% to NZD 641 million; free cash flow reached $507 million (24.1% margin).

• Net profit was $227.8 million; gross profit $1,872 million (+24% YoY), with gross margin at 89%.

• AMRR surpassed $2.3 billion, up 22% year-over-year.

• Platform revenue now 11% of total operating revenue.

Outlook and guidance

• FY26 OPEX ratio expected around 71.5%, with higher ratio in H1 due to non-recurring expenses and seasonality.

• Continued focus on Rule of 40 performance, balancing subscriber and ARPU growth.

• Strategic priorities for FY26 include accelerating AI delivery, deepening customer value, and investing in international growth.