The Xero Limited (ASX: XRO) share price is under pressure today after the cloud accounting software company held its 2022 AGM.
At the time of writing, the Xero share price has tumbled around 5% in early afternoon trade.
Today's losses extend a red year for Xero shares, which are down around 37% in the year to date.
Despite years of market-beating returns, the Xero share price has underperformed even the S&P/ASX All Technology Index (ASX: XTX) this year.
The current market hasn't been kind to ASX tech shares, with the All Tech index shedding roughly 25% since the beginning of the year.
What did Xero announce?
Xero's AGM kicked off by recapping the company's FY22 results for the year ended 31 March 2022. Here's a summary.
- Total subscribers increased by 19% to 3.27 million
- Operating revenue grew 29% to NZ$1.1 billion
- Average revenue per user (ARPU) lifted by 7% to NZ$31.36
- EBITDA improved 11% to NZ$212.7 million
- Net loss after tax came in at NZ$9.1 million
At the time, the market reacted negatively to these results, sending the Xero share price tumbling to a 52-week low.
In a rising interest rate environment, investors were likely spooked by the reported drop in free cash flow and further expectations of heavy spending.
Xero's FY23 update
In today's address, CEO Steve Vamos spared a moment to provide a brief update on the ASX tech share's performance so far in FY23.
Encouragingly, revenue growth is in line with expectations in each market and overall. Xero's customer base also continues to grow.
However, net subscriber additions in the UK have remained more subdued than the company would like.
Xero's UK performance continues to be impacted by slower than expected uptake of the final stage of Making Tax Digital, a government initiative to reform and modernise the UK tax system.
The company has also implemented changes to its partner sales approach, organisation, and territory assignments in the UK. This is having a short-term impact on partner channel productivity.
Management commentary
Despite the blip, CEO Steve Vamos remains upbeat, stating:
We are well positioned in the UK market and it is an important growth opportunity for us and despite a less than buoyant macro environment, we continue to drive and aspire to strong revenue and subscriber growth.
The momentum generated from Xerocon London along with the positive feedback from our partners following the launch of Xero Go gives us great encouragement.
Vamos also reaffirmed the brief outlook statement provided in Xero's recent results. In FY23, the company expects total operating expenses as a percentage of operating revenue to be towards the lower end of 80-85%. For context, this figure stood at 84% in FY22.
Xero share price snapshot
The Xero share price has lagged the S&P/ASX 200 Index (ASX: XJO) recently, suffering a 36% fall over the last 12 months.
But there's no doubt Xero shares have been a standout long-term performer, notching up a 270% gain over the last five years.
As a high-quality S&P/ASX 200 Index (ASX: XJO) share with stiff industry tailwinds at its back, impressive unit economics, and plenty of optionality, the recent pullback in the Xero share price could present a buying opportunity.
