Is Xero poised to deliver a stellar half-year report?

ASX Tech shares Afterpay Touch Group Ltd (ASX: APT), Altium Ltd (ASX: ALU), Appen Ltd (ASX: APX) and Wisetech Global Ltd (ASX: WTC) have all reported. Is Xero Ltd (ASX: XRO) ready to deliver?

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The peers of Xero Limited (ASX: XRO) have all posted strong results this reporting season. Could the Xero share price be ready for the next leg up? 

How did the WAAAX stocks perform?

WiseTech Global Ltd (ASX: WTC) reported a bumper result with revenues soaring 57% and net profit rising 33%. Its share price has been going gangbusters, launching more than 30% since the day of its result, two weeks ago.

Altium Limited (ASX: ALU) also delivered a strong report with expanding profit margins and net profit rising 41%. The company is confident in achieving its near-term goals of 100,000 Altium subscribers for its printed circuit board design software and US$500m revenue by 2025. Altium subscription/subscribers are a vital source of continuous revenue, the Altium Designer 14 pricing starts at $7,245 USD for a one year subscription. The Altium share price is up more than 10% since its report on August 19.

The Afterpay Touch Group Ltd (ASX: APT) share price has gone parabolic having more than doubled all its metrics across sales, customer base and active merchants. While its share price is up more than 30% in just eight trading sessions, the company has a lot more to give.

The Appen Ltd (ASX: APX) share price has experienced some turbulence, soaring 10% the day before the release of its earnings and nose diving some 15% on the day of the announcement. In light of such volatility, Appen delivered some pleasing figures with revenue up 60%, NPAT up 67%, integration and synergies with its acquisition of Figure Eight and Leapforce.

Is Xero the lucky last?

Xero's peers have set a very high growth benchmark, but I am confident that Xero is no laggard. In the company's 2019 Annual Meeting held on 15 August, management alluded to a stellar FY19 performance. The company cited a 31% growth in subscriber numbers over FY19, with particularly strong numbers in international markets. A net 432,000 subscribers joined Xero in FY19, taking overall subscriber numbers to more than 1.8 million. Other metrics include operating revenue for the year increasing by 36% and reported EBITDA increasing by 52%.

FY19 represents a significant milestone year for Xero as it delivers a positive free cash flow result for the first time. It cites a free cash flow of $6.5 million compared to last year's negative $28.5 million.

Xero will report its half-year update in November 2019. I believe the company will deliver pleasing results that are at or above market expectations.

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Altium, WiseTech Global, and Xero. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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