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Xero Limited XRO

ASXApplication softwareFinancials to Mar 31, 2026 · Updated Nov 11, 2026

On Stock Analysis · affiliate link
XRO financials
Moat score
82
ROIC
4.2%
P/E
70.6
Incl. +NZ$40M one-offs
EV/EBIT
37.5
Incl. −NZ$51M one-offs
FCF yield
4.4%
Dividend yield
0.0%
Market cap
NZ$11.8B

Moat ranks

Score rankTied #119 of 396
Durabilitydurable
Market structureOligopoly
Pricing powermoderate

Balance sheet

3/31/26
NZ$BMar '25Mar '26
Cash0.80.9
Securities1.61.0
Debt1.22.0
Net cash1.1-0.0
Equity2.25.4
Leverage
Debt / EBITDA
2.79×
Debt / equity
0.36×
Leases (3/31/26)
NZ$172M
Capital
Diluted shares
176M
Book value / share
NZ$30.73
Price / book
2.2×
Net cash / share
−NZ$0.11
Market cap
NZ$11.8B
Enterprise value
NZ$11.8B

Per-share record

Fiscal years and TTM
Scale
−NZ$5NZ$0NZ$5NZ$10NZ$15NZ$20'17'18'19'20'21'22'23'24'2515.66'26
Revenue per shareCash flow per share

Key indicators

Latest: H2 '26
IndicatorLatestVs year agoLast 8 halves
Revenue growth40.8%+19.8 pts
Operating margin11.5%-5.3 pts
FCF margin12.6%-15.2 pts
Capex / revenue14.5%+1.4 pts
ANZ paying customers2.8M+7%
ANZ monthly revenue churn0.9%+0.0 pts
ANZ revenue per ledger customerNZ$48.89+17%
International paying customers2.2M+17%
International monthly revenue churn1.5%+0.2 pts

Margins and growth from reported quarters; company KPIs as reported in results releases.

About XRO

Xero supplies cloud accounting, payroll, payments and reporting to small businesses and their advisors. ANZ generated 50.6% of FY26 revenue and International 49.4%.

Revenue mix
Australia and New Zealand 50.6%International 49.4%
  • Data Workflow Lockin

    Accounting ledgers, bank reconciliation history, and advisor workflows become embedded; migrating systems is disruptive and time-consuming.

  • Interoperability Hub

    Connections to banks, government agencies and more than 1,000 applications broaden what customers can do without changing ledgers, though most complement providers also support competing platforms.

  • Suite Bundling

    Accounting, payroll, payments and analytics are combined in the platform, supporting cross-sell and reducing the need for separate point solutions.

  • Data Network Effects

    Aggregated customer data now powers peer benchmarks, but the new feature has not yet demonstrated adoption, retention impact or a material data advantage over alternative datasets.

Timeline
  1. Oct 12, 2026

    Xero appointed Mark Durcan an independent non-executive director effective October12 after Anjali Joshi retired at the annual meeting. He will stand for election at the August2027 annual meeting. Source: Xero ASX market release, October12,2026, mirrored at https://www.marketindex.com.au/asx/xro/announcements/xero-appoints-mark-durcan-to-its-board-of-directors-3A703812.

  2. Oct 1, 2026

    Xero raised US monthly plan prices to USD27, USD59 and USD97 and began removing multi-organization discounts, increasing revenue per customer but testing retention. Source: https://www.xero.com/us/pricing-plans/update/.

  3. Sep 16, 2026

    Xero released Claude for Small Business and ChatGPT integrations, broadening access to live financial information through external AI tools. Source: https://blog.xero.com/product-updates/claude-for-small-business-chatgpt-ai-integrations-launch/.

  4. Aug 19, 2026

    Xero introduced embedded Gusto payroll and Melio expense management in the US, expanding its financial suite while leaving adoption and retention gains to be demonstrated. Source: https://www.xero.com/ae/media-releases/xero-accelerates-us-growth-payments-payroll/.

  5. Jul 7, 2026

    Xero launched its AUD500-per-month Ultra plan in Australia, adding multi-entity reporting and support to retain customers whose businesses become more complex. Source: https://www.xero.com/us/media-releases/xero-targets-medium-businesses-with-ultra/.

Ownership

CEO
Sukhinder Singh Cassidy
Since 2023 · 3 yrs
Professional CEOSingle share class

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Financial record

Fiscal year2017201820192020202120222023202420252026TrendChange 2017–26
Per share (NZ$)
Revenue2.152.963.975.025.667.399.3311.2113.6015.66+24.7%/yr
Cash flow-0.030.440.821.161.461.592.603.875.255.31–
Earnings-0.50-0.18-0.190.020.13-0.06-0.761.141.470.95–
Free cash flow-0.51-0.130.120.290.450.080.812.343.402.95–
Capex0.480.570.700.871.011.511.791.531.852.36+19.3%/yr
Dividends0.000.000.000.000.000.000.000.000.000.00–
Book value1.631.752.542.954.986.977.029.1114.2030.73+38.6%/yr
Diluted shares (M)137138139143150148150153155176+2.8%/yr
Totals (NZ$B)
Revenue0.30.40.60.70.81.11.41.72.12.8+28.1%/yr
Operating income-0.1-0.0-0.00.00.10.00.10.30.40.3–
Net income-0.1-0.0-0.00.00.0-0.0-0.10.20.20.2–
Free cash flow-0.1-0.00.00.00.10.00.10.40.50.5–
Buybacks0.00.00.00.00.00.00.00.00.00.0–
Dividends0.00.00.00.00.00.00.00.00.00.0–
Net cash0.10.10.10.10.30.10.10.41.1-0.0−NZ$0.1B
Margins & returns (%)
Gross margin76.581.583.685.286.087.387.388.289.083.9+7.3 pts
Operating margin-23.9-5.4-1.64.67.33.24.114.917.211.5+35.4 pts
Net margin-23.4-6.1-4.90.52.3-0.8-8.110.210.86.1+29.5 pts
FCF margin-23.9-4.43.05.88.01.18.720.925.018.8+42.8 pts
ROIC-46.1-9.9-2.57.69.02.64.319.023.94.2+50.3 pts
Return on equity-30.8-10.3-7.70.82.7-0.9-10.812.510.43.1+33.9 pts
R&D % of revenue31.628.624.924.829.433.935.030.729.427.8-3.8 pts
Stock pay % of revenue4.04.25.24.85.05.65.85.67.28.7+4.8 pts
Capex % of revenue22.419.517.717.417.820.519.213.613.615.1-7.4 pts

Change uses 2017 and 2026 only: compound annual growth for amounts, points for margins and returns, and the change in amount for net cash. A dash means no 2017 base. Trend shows the fiscal years.

Per-share values use diluted weighted shares.ROIC = operating income × (1 − 28.0% statutory tax rate, as the company's own rate is not meaningful) ÷ (equity + debt − cash and current securities). Returns show a dash when their base is negative or under 10% of revenue. Free cash flow = operating cash flow − capex. Debt is all borrowings; net cash counts long-term securities and excludes leases. No trailing-twelve-month column: no complete four quarters end after the last fiscal year.

Moat

Moat scorecard

Moat score82
Strength
Confidence
Structure
Oligopoly
Durability
durable
Trajectory
stable
Pricing power
moderate
Segments
  • Australia and New Zealand50.6%
    4 claims
  • International49.4%
    4 claims

Moat claims

Applies to
Australia and New Zealand
Confidence
Durability
durable
Trajectory
stableas of Oct 6, 2026
Why it holds

Accounting ledgers, bank reconciliation history, and advisor workflows become embedded; migrating systems is disruptive and time-consuming.

Why stable

ANZ monthly revenue churn increased from 0.81% to 0.85% in FY26, but 2.751 million paying customers still support strong ledger retention.

Indicators
  • ANZ paying customers2,751,000+7%
  • ANZ monthly revenue churn0.9%+0.0 pts
  • ANZ revenue per ledger customerNZ$48.89+17%
Risks
  • Improved data portability / migration tooling
  • Commoditization of core bookkeeping features
  • AI-native accounting entrants reducing setup friction

Profile change log

  1. Nov 11, 2026 · business change

    Xero appointed Mark Durcan an independent non-executive director effective October12 after Anjali Joshi retired at the annual meeting. He will stand for election at the August2027 annual meeting. Source: Xero ASX market release, October12,2026, mirrored at https://www.marketindex.com.au/asx/xro/announcements/xero-appoints-mark-durcan-to-its-board-of-directors-3A703812.

  2. Oct 6, 2026 · analyst revision

    International ledger retention is narrowing as monthly revenue churn rises. Suite and integration advantages remain stable; app and AI launches still lack evidence of adoption or retention gains. Privacy disclosures add a measurable risk to data-based features. The FY2026 mix and competing cases distinguish the ledger business from acquired payments.

  3. Oct 6, 2026 · business change

    Xero raised US monthly plan prices to USD27, USD59 and USD97 and began removing multi-organization discounts, increasing revenue per customer but testing retention. Source: https://www.xero.com/us/pricing-plans/update/.

  4. Oct 6, 2026 · business change

    Xero released Claude for Small Business and ChatGPT integrations, broadening access to live financial information through external AI tools. Source: https://blog.xero.com/product-updates/claude-for-small-business-chatgpt-ai-integrations-launch/.

  5. Oct 6, 2026 · business change

    Xero introduced embedded Gusto payroll and Melio expense management in the US, expanding its financial suite while leaving adoption and retention gains to be demonstrated. Source: https://www.xero.com/ae/media-releases/xero-accelerates-us-growth-payments-payroll/.

  6. Oct 6, 2026 · business change

    Xero launched its AUD500-per-month Ultra plan in Australia, adding multi-entity reporting and support to retain customers whose businesses become more complex. Source: https://www.xero.com/us/media-releases/xero-targets-medium-businesses-with-ultra/.

  7. Oct 6, 2026 · business change

    Xero connected live financial data to Microsoft 365, extending access beyond its own interface while keeping the ledger as the source of records. Source: https://www.xero.com/ae/media-releases/xero-launches-integration-with-microsoft-365/.

  8. Oct 6, 2026 · business change

    Xero launched Industry Benchmarks using pooled customer data, adding an analytics service whose paid adoption and retention effect remain unreported. Source: https://www.xero.com/uk/media-releases/xero-introduces-industry-benchmarking-intelligence-for-small-businesses/.

  9. Oct 6, 2026 · business change

    Xero acquired Melio for initial USD2.5 billion consideration plus closing adjustments, adding US bill payments and distribution while raising funding, integration and loss exposure. Source: FY2026 Annual Report.

  10. Oct 6, 2026 · business change

    Sukhinder Singh Cassidy became CEO, beginning a change toward tighter spending and a focused accounting, payroll and payments strategy. Source: FY2023 Annual Report, https://brandfolder.xero.com/8HSCTPAX/as/4gvpkxzbcbvgq8k48f3vhtw/FY23_Annual_Report.

Industry & peers

Peer map

0%10%20%30%40%50%60708090100Moat scoreIndustry medianXROORCLSAP

Hover a point for its values; click a peer to compare. Dashed lines: industry medians.

ANZ small-business financial software

As of Oct 6, 2026
OligopolyMedium cyclicality

Accounting ledgers and connected payroll, payments, tax and reporting applications for small and growing businesses and their advisors in Australia and New Zealand. Excludes large-enterprise ERP, banking credit and accounting labor; payroll and payments are adjacent competitive services rather than an exclusive accounting rail.

StocksMoatGross m.Op. m.
XRO8283.9%11.5%
Industry median317875.8%19.9%
Sector median777564.7%23.8%
All stocks median3987653.1%20.0%

Moat medians cover every stock. Margin medians count only stocks with collected numbers and need at least three.

Drivers & risks

Demand drivers
  • Mandatory digital payroll and tax records create repeat demand; Australian Payday Super increases the value of accurate, fast connections.
  • Migration from spreadsheets and older software supports cloud adoption, while accountants and bookkeepers train and refer customers.
  • A larger business needs payroll, payments, multi-entity reporting and controls, creating expansion revenue for capable ledger platforms.
  • Automation saves bookkeeping labor and can support higher prices if users see a clear return.
  • Small-business formation, employment and payment volume follow the economy; recurring compliance softens this exposure.
Risks
  • Established rivals can bundle accounting and payroll or offer cheaper plans; independent apps support more than one ledger.
  • Business failures, weaker sales and high borrowing costs reduce the pool of paying firms, payroll headcount and transaction volume.
  • Price increases and bundle changes can cause downgrades or switching when customers change advisors.
  • Payroll, bank-feed or tax-filing outages create direct customer costs, and privacy incidents can damage trust.
  • Cloud hosting, engineering wages and AI inference raise supplier costs; AUD/NZD movements change New Zealand-reported revenue and costs.

Bulls & bears

Key question · as of Oct 6, 2026

Can Xero turn its US payments and AI expansion into sustained organic customer cash generation while preserving ledger retention after price increases?

Arguments

5 forFaded: weakening or settled5 against

What to watch

  1. 1ANZ and International monthly revenue churn excluding Melio
  2. 2Organic US ledger customer additions and Melio direct paying customers, without acquisition additions
  3. 3Ledger ARPC excluding Melio, payments revenue and capitalized development cash spending
  4. 4Melio adjusted EBITDA progress and group operating cash flow after software capex
  5. 5International acquisition payback and gross margin excluding the acquired payments mix

Next check: November 12, 2026 H1 FY2027 results: compare churn, organic US growth, Melio losses and capitalized development. October 1 US prices affect the following half year, so recheck their retention effect with FY2027 full-year results on May 20, 2027. Dates: https://www.xero.com/us/investors/.

Sources: company filings and dated sources collected for Find My Moat; market cap as of Oct 6, 2026. Not investment advice.

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Moat Score 82/100 by <a href="https://www.findmymoat.com/stocks/XASX:XRO">Find My Moat</a> (as of September 2026)

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