Xero Ltd (ASX: XRO) shares enjoyed a strong run higher on Thursday.
Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed up 4.71% to finish the day trading for $182.05 apiece.
That sees shares in the ASX 200 tech stock up more than 50% since this time last year.
And the company looks well placed to continue on the growth path into 2026.
Thursday's outperformance followed the release of Xero's full-year results for the 12 months to 31 March (FY 2025).
Here's a quick recap of how the company performed over the past year.
Xero shares lift alongside revenue and profit growth
Investors sent Xero shares marching higher on Thursday after the company reported operating revenue of NZ$2.1 billion, up 23% from FY 2024 in reported terms and up 20% in constant currency measures.
Xero's operating expense to revenue ratio for the year came out to 71.8%. That's an improvement from the 73.3% reported last year.
In other core financial metrics, the ASX 200 tech stock achieved a 22% increase in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to NZ$640.6 million,
The accounting software company also reported strong free cash flow generation of NZ$506.7 million. The free cash flow margin of 24.1% was up from 20.0% in FY 2024.
And Xero shares likely caught added tailwinds on Thursday, with FY 2025 net profit after tax (NPAT) also increasing year on year, up 30% to NZ$227.8 million.
"Our FY 2025 results demonstrate Xeroʼs macro-resilient growth and effective execution of our strategy," Xero CEO Sukhinder Singh Cassidy said of the results.
Can Xero keep growing?
Looking at what could impact Xero shares in the year ahead, the company expects its total operating expenses as a percentage of revenue to be around 71.5% in FY 2026. This is slightly lower than the 71.8% reported for FY 2025.
With an eye on the future, Sukhinder said:
We remain excited about the large, untapped opportunity to help SMBs and accountants and bookkeepers globally to digitise, and we continue to focus on making life better for people in small business, their advisors, and communities around the world.
Commenting on the full-year results that helped lift Xero shares, eToro market analyst Farhan Badami noted, "Xero demonstrated strong cost control with operating expenses as a percentage of revenue declining. This sends a positive signal to investors focused on sustainable growth."
Badami added:
On the ASX, where banking and mining giants typically dominate, Xero stands out as a differentiator, proving SaaS can shine in the local market.
Xero's blend of innovation and AI, along with its strong fundamentals and strategic execution, makes it a company to watch for retail investors seeking SaaS exposure.
