Revenue strength boosts Xero’s 51% EBITDA rise in half year FY 2025

Xero Ltd (ASX:XRO) said its earnings before interest, tax, depreciation and amortisation (EBITDA) for the half of the 2025 fiscal year had jumped 51% (to $311.7 million) compared to the prior corresponding period.

The Wellinton-based company – which provides accounting software – also said earnings growth had been supported by a 25% rise in operating revenue (to $996 million), and an operating expense to revenue ratio of 71.2% for the period.

Xero’s free cash flow was also higher, rising to $208.7 million, alongside a free cash flow margin of 21.0% – improving from 13.3% in the prior period.

These figures meant the company maintained its greater than Rule of 40 outcome of 43.9%.

CEO Sukhinder Singh Cassidy said the results reflected Xero’s success in achieving strategic goals.

“We have delivered a solid performance across the board this half including continued strong revenue growth, and a greater than Rule of 40 outcome for the second period running,” he said.

“We’re executing our strategy with focus and purpose, through disciplined investment aligned to our strategic priorities.

“This has supported an improvement in product velocity for customers in line with
our Win the 3×3 strategic priority to build winning solutions for the three most critical small business jobs in our three largest markets.”

Xero has been trading at $161.55.

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