Xero delivered full year results to 31 March 2026 that demonstrate sustained momentum across its operations, with revenue climbing to A$2.8 billion, a 31 percent increase on the prior year. The growth rate, equivalent to 28 percent in constant currency terms, reflects solid execution across the company’s customer base alongside meaningful contributions from the recently integrated Melio payments platform. The expansion in top-line revenue was matched by disciplined cost management, with the company achieving an 18 percent increase in adjusted EBITDA to A$757.4 million while simultaneously absorbing acquisition-related costs and integrating a new business segment into its platform.
The profitability metrics offer a window into Xero’s operational leverage and capital efficiency. The operating expense to revenue ratio stood at 70.5 percent, excluding Melio-related transaction costs, signaling that the company continues to operate with discipline even as it invests for growth. The group generated free cash flow of A$554.0 million during the period, underlining the quality of reported earnings and the conversion of growth into actual cash generation. These figures suggest Xero is moving beyond high-growth startup economics into a phase where expansion is achieved without sacrificing near-term profitability or cash generation. This balance is particularly notable given the challenging macroeconomic backdrop in which many of Xero’s customers operate.
The US market, central to Xero’s 3×3 strategy, showed accelerating momentum with 110,000 new customer additions during the year. Pro-forma revenue for the US market, assuming Melio and Xero had been combined from the start of FY24, grew 50 percent, a step change from prior growth rates. This acceleration demonstrates that the Melio acquisition has successfully moved Xero beyond single-workflow offerings by uniting accounting and payments functionality on a single platform. The strategic value of that combination is evident in the customer uptake data and the velocity of growth in the company’s largest growth market.
Xero’s management articulated a vision of evolving into a financial operating system for small businesses and their advisors in the artificial intelligence era. The company’s proprietary data assets and established trust relationships with customers position it to capture value as AI-driven workflows reshape business operations. This positioning extends beyond simple application of generative AI tools to a deeper integration of AI capabilities into the core product experience. Management’s confidence in this direction was underscored by the decision to authorize share buybacks of up to A$550 million in FY27 to offset dilution from equity compensation, a decision that typically reflects confidence in the underlying business and capital deployment priorities.
The outlook for FY27 and FY28 will depend on sustained execution in the US market, continued integration benefits from the Melio acquisition, and the ability to translate AI initiatives into customer value and operational efficiency gains. The company’s financial performance and strategic positioning have positioned it as a potential long-term beneficiary of the small business software market and the ongoing shift toward AI-powered workflows. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Xero Limited (ASX: XRO)
Xero Limited is a cloud-based accounting software company that provides accounting, payroll, payments, and financial management solutions for small businesses. The company operates globally with offices in New Zealand, Australia, the United Kingdom, the United States, Canada, South Africa, and Singapore. Its platform serves accountants, bookkeepers, and small business owners with integrated financial and operational tools.
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