Thursday is shaping up to be a big day for Xero Ltd (ASX: XRO) shares.
That's because tomorrow morning, the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider is scheduled to release its latest earnings results.
And depending on how the market receives those, Xero shares could see some big moves on Thursday.
Of course, big moves aren't unusual for this ASX 200 tech stock.
Between April 7 and June 24 this year, the Xero share price surged 36.5%. Then, from June 23 through to intraday trade today, shares have tumbled 27.9%.
Which brings us back to our headline question.
With the company set to release its eagerly awaited earnings results tomorrow, should you snap up some shares today?
Are Xero shares a good buy right now?
"When Xero, the 'Netflix of accounting software', posts earnings on Thursday, we'll likely see a good result built on the momentum from a strong year prior and its strong foothold as a top-billed provider across the SMB space," Josh Gilbert, market analyst at eToro, noted.
Gilbert added:
Xero had a strong FY25, with revenue up 23% and a particularly strong performance in Australia. Its recent inclusion in the ASX 200 has only bolstered its standing as THE company to watch for retail investors seeking SaaS exposure.
And Gilbert is optimistic that Xero shares should get a long-term boost from the company's acquisition of Melio.
He said:
It recently completed the acquisition of Melio in the United States, aiming for inorganic growth. While investments like this can crimp margins in the short term, it reflects Xero's ambitions of reflecting its success in ANZ overseas.
Xero announced its intention to acquire the United States-based business-to-business payments company on 25 June for the tidy sum of US$2.5 billion. The US represents Xero's largest total addressable market (TAM) segment, at US$29 billion in FY2025. And Xero plans to leverage Melio's business to accelerate its own growth in the world's biggest economy.
"Xero remains confident in its long-term growth trajectory by targeting both ARPU expansion and deeper product adoption," Gilbert said.
He noted:
Management continues to execute on its FY25–27 strategy with a focus on profitable growth. After years of heavy investment, the company is now balancing growth with improving margins, evidenced by a 75% surge in EBITDA in FY24 and solid free cash flow.
And he pointed out that investing in Xero shares offers some welcome diversification from buying the big banks and miners.
Gilbert concluded:
On the ASX, where banking and mining giants typically dominate, Xero stands out as a differentiator, and I expect this round of earnings will only affirm that SaaS can shine in the local market.
All signs point to Xero delivering another strong result, reinforcing the market's optimism about its profitable growth game plan.
