Xero (XRO) H2 2026 earnings summary

Executive summary

• Achieved 31% revenue growth to NZD 2.75 billion (or $2.8 billion) and 18% adjusted EBITDA growth to NZD 757 million for FY 2026, driven by strong US momentum, Melio integration, and payments/AI innovation.

• Added 506,000 net new customers, reaching 4.92 million globally, with ARPC up 23% to NZD 55.44, fueled by payments and AI features.

• Maintained capital and operational discipline, supporting robust free cash flow, a strong balance sheet, and consistent returns.

• Accelerated innovation in payments and AI, launching new features and deepening customer penetration.

Financial highlights

• Operating revenue up 31% year-over-year to NZD 2.75 billion; organic revenue up 21%.

• Adjusted EBITDA rose 18% to NZD 757 million; organic adjusted EBITDA up 30%.

• Gross profit reached NZD 2.31 billion, up 23% year-over-year; gross margin at 83.9% due to Melio, but held at 89% organically.

• Free cash flow increased to NZD 554 million, up 5x over four years.

• ARPC up 23% to NZD 55.44, with Melio contributing NZD 4.24 to group ARPC.

Outlook and guidance

• FY 2027 revenue guidance: NZD 3.62–3.73 billion, supported by ARPC expansion, customer growth, and AI monetization.

• Adjusted EBITDA guidance for FY 2027: NZD 860–920 million, including up to NZD 55 million in U.S. brand investment.

• Melio targeted to reach run-rate EBITDA breakeven in H2 FY 2028.

• Aspiration to more than double FY25 group revenue by FY28, excluding anticipated revenue synergies.