Join our daily newsletter At The Bell to receive exclusive market insights
- An influx of subscribers over the last 12 months has lifted Xero (XRO) out of its pandemic-induced slump, while cost-cutting measures drove a surge in profit
- For the year ending March 31, the accounting software platform saw a 20 per cent rise in users, jumping 456,000 to more than 2.74 million
- Operating revenue for the year increased 18 per cent, from NZ$718.2 million (almost A$666 million) to NZ$848.8 million (roughly A$787 million)
- Most significant was a jump in net profit from NZ$3.3 million (over $3 million) to more than NZ$19.7 million (roughly A$18.3 million)
- Despite the news, shares in Xero are currently down 8.87 per cent to $122.91
An influx of subscribers over the last 12 months has lifted Xero (XRO) out of its pandemic-induced slump, while cost-cutting measures drove a surge in profit.
For the year ending March 31, the Wellington-based accounting software platform saw a 20 per cent rise in users, jumping 456,000 to more than 2.74 million. The last six months proved particularly fruitful, with a record 288,000 subscribers.
Australia represents the largest segment of subscribers at roughly 1.11 million, and saw 22 per cent growth during the 2021 financial year.
The U.K. and New Zealand came in at second and third, with 720,000 users and 446,000 users, respectively, while North America hosts 285,000. All of these segments posted user increases of at least 14 per cent.
The most significant level of growth, however, came from the rest of the world, which saw a 40 per cent increase to 175,000 — representing the largest jump in this market to date.
“The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change,” said chief executive Steve Vamos.
“The value and importance our customers place on their subscription and connection to the broader Xero community is increasing.”
While Xero’s financial performance may not have matched the record-breaking increase in users, the figures certainly suggest that any woes brought on by COVID-related lockdowns are abating.
Operating revenue for the year increased 18 per cent, from NZ$718.2 million (almost A$666 million) to NZ$848.8 million (roughly A$787 million).
Likewise, EBITDA jumped 39 per cent, from NZ$137.7 million (roughly A$127.7 million) to NZ$191.2 million (roughly A$177.3 million).
Most significant, perhaps, was a jump in net profit from NZ$3.3 million (over $3 million) this time last year to more than NZ$19.7 million (roughly A$18.3 million) in 2021, driven largely by cuts to sales, marketing and travel expenses.
Xero said it will continue to focus on growing its small business platform worldwide, particularly on reinvesting cash which it said would bolster long-term shareholder value.
It estimates that operating expenses next year will be largely in line with those seen in the second half of 2021 — at around 80 to 85 per cent of operating revenue. That said, integration costs related to the acquisitions of Planday, Tickstar and Waddle are anticipated to bolster overall expenses by around two per cent.
“Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world,” Vamos added.
“Small businesses make up more than 90 per cent of businesses in the markets Xero operates in, and represent a significant contribution to economic activity, jobs, and the community.”
Despite the news, shares in Xero are currently down 8.87 per cent to $122.91 at 10:40 am AEST.
