The Xero Ltd (ASX: XRO) share price is in focus today after reporting its FY26 result, with revenue up 31% to $2.8 billion and adjusted EBITDA growing 18% to $757.4 million.
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What did Xero report?
- Operating revenue of $2.75 billion, up 31% on FY25
- Adjusted EBITDA of $757.4 million, up 18%
- Net profit after tax of $167.4 million, down 27% due to Melio acquisition costs
- Free cash flow of $554.0 million, up 9%
- Net customers grew by 506,000, reaching a total of 4.92 million globally
- Annualised monthly recurring revenue (AMRR) lifted 37% to $3.27 billion
What else do investors need to know?
Xero's international segment delivered strong revenue growth, with the US standing out—core revenue jumped 240%, boosted by the integration of Melio, a US bill pay platform acquired during the period. The business added 110,000 US customers, and ARPC (average revenue per customer) rose 23% to $55.44 across the group.
AI remains a key strategic focus. Xero extended its partnership with Anthropic to integrate Claude's AI, ramped up GenAI-powered features like Just Ask Xero and smart document capture, and launched XeroForce, a natural language AI agent builder currently in early testing.
To offset staff share-based compensation dilution, the board authorised a $550 million share buyback for FY27.
What did Xero management say?
CEO Sukhinder Singh Cassidy said:
Our strong full year results demonstrate Xero's disciplined execution and macro-resilience. Our 3×3 strategy is hitting its stride, demonstrated by accelerating US growth with 110,000 new customers, including new Melio direct payments customers, and pro-forma revenue growth of 50%. We have powerful momentum across our markets, and delivered strong EBITDA growth while absorbing Melio. This has moved us beyond single-job workflows in the US by integrating Melio to unite accounting and payments on one platform. Globally, we are providing a small business financial operating system for the AI era, driving value for customers while deepening our technology foundations, compliance capability and data advantages, and driving stronger unit economics.
What's next for Xero?
Looking to FY27, Xero expects operating revenue between $3.62 billion and $3.73 billion and adjusted EBITDA of $860 million to $920 million, including extra brand investment in the US market. The business plans to roll out its Ultra plan for larger businesses, expand AI-powered product features, and build on its strategy to unify accounting, payroll, and payments.
Longer term, Xero is aiming to double group revenue by FY28 (compared to FY25) and achieve Rule of 40 outcomes, driven by ongoing US momentum and wider adoption of its financial operating system.
Xero share price snapshot
Over the past year, the Xero shares have declined 53%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.
