After a bruising year on the ASX, Xero Ltd (ASX: XRO) has failed to win over investors with its latest result.
The accounting software company released its FY26 result today, with revenue moving strongly higher but profit going backwards.
At the time of writing, the Xero share price is down 3.93% to $77.82.
That adds to a painful run for shareholders. Xero shares are now down 32% in 2026 and 55% over the past year.
Here's what was in the result.
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Revenue jumps, but profit goes backwards
According to the release, Xero reported operating revenue of NZ$2.8 billion for the year ended 31 March 2026, up 31% on FY25.
That included 28% growth in constant currency. Excluding the Melio acquisition, organic revenue growth was 21%.
The company also grew its customer base to 4.92 million. That was up 11% from last year, with 506,000 net customer additions.
Average revenue per customer increased 23% to NZ$55.44, helped by price changes, product mix, payments revenue, and currency movements.
Adjusted EBITDA rose 18% to NZ$757.4 million, while free cash flow increased 9% to NZ$554 million.
Unfortunately, the strong revenue and cash flow numbers did not stop reported profit from going backwards.
Net profit after tax (NPAT) fell 27% to NZ$227.8 million as Xero said its Melio-related acquisition costs weighed on reported earnings.
Melio drives the US expansion
Xero's US push remains one of the biggest pieces of the update.
The company said the US was its fastest-growing market, with revenue up 240%, or 30% on a pro-forma basis.
A large part of that growth is tied to Melio, the US payments platform Xero acquired last year.
Xero said global payments revenue grew 53% in FY26.
The company is also putting more weight behind artificial intelligence (AI).
Management said more than 500,000 customers are now using its generative AI features. It also said 2.6 million customers used some form of AI feature over the past year.
While that sounds promising, investors will now want to see how it flows into revenue and margins.
Outlook points to more growth
Xero guided to FY27 operating revenue of between NZ$3.62 billion and NZ$3.73 billion.
It also expects adjusted EBITDA of between NZ$860 million and NZ$920 million.
That points to more growth, although management said the result will include extra US brand spending of up to NZ$55 million.
The board has also approved a share buyback of up to $550 million which should help with share dilution.
Foolish takeaway
There's enough in this result to see why some investors may still like Xero.
The business is still growing, customer numbers are higher, and free cash flow remains healthy.
The problem is that the market has become much tougher on expensive software stocks on the ASX.
After a 53% fall over the past year, expectations are now much lower than they once were.
