The Xero Limited (ASX: XRO) share price will be on watch this morning following the release of the business and accounting software company's full year results.
In FY 2019 Xero posted operating revenue of NZ$552.8 million, which was an increase of 36% on the prior corresponding period. In constant currency this was an increase of 34% year on year.
This strong top line growth was driven by a 31% lift in total subscribers to 1.818 million and a small increase in average revenue per user to NZ$29.25.
According to the release, international net subscriber additions came in at 239,000 in FY 2019, which means they exceeded net subscriber additions from the ANZ region for the first time. The ANZ region accounted for 193,000 net subscriber additions during the 12 months.
The majority of the company's international net subscriber additions came from the UK market, where the company reported a net increase of 151,000 subscribers. Over 100,000 of these came in the second half of the financial year.
This ultimately led to Xero posting a 32% increase in Annualised Monthly Recurring Revenue (AMRR) to NZ$638.2 million, positive free cash flow of $6.5 million, and a second half net profit after tax of $1.4 million. For the full year the company posted a net loss after tax of NZ$27.1 million.
Another key metric which continues to head in the right direction was Xero's total subscriber lifetime value (LTV). This increased 36% year on year to NZ$4.4 billion, reflecting subscriber growth and gross margin improvement.
Xero's CEO, Steve Vamos, appeared to be pleased with the company's performance in FY 2019.
He said: "We've delivered a strong result with a number of major milestones for Xero including our first positive free cash flow result, and the UK adding more than 100,000 subscribers within a six-month period. Another important milestone was the positive bottom line result delivered in the second half, which demonstrates our improving profitability."
He added: "As we head into FY20 and beyond, we're making great progress towards our strategic priority of driving cloud accounting adoption globally. We have a genuine competitive edge by prioritising investment in growth, and partnering closely with accountants and bookkeepers, to deliver a human-centered technology experience for small business communities across the globe."
Looking ahead, Xero intends to continue to focus on growing its global small business platform and maintains a preference for reinvesting the cash it generates to drive long-term shareholder value. It expects free cash flow in FY 2020 to be a similar proportion of total operating revenue to that reported in FY 2019.
Prior to today the Xero share price was up 36.5% over the last 12 months, just behind Altium Limited (ASX: ALU) with its 41% gain and WiseTech Global Ltd (ASX: WTC) with its 53% gain.
