Key Highlights

• Xero Ltd (ASX:XRO) reported FY26 Operating Revenue of NZ$2.75 billion, up 31% year-on-year, supported by customer growth and higher average revenue per customer.

• The company increased customers to 4.92 million, while annualised monthly Recurring Revenue reached NZ$3.27 billion.

• Adjusted EBITDA rose 18% to NZ$757.4 million, while net profit after tax declined 27% to NZ$167.4 million.

• Xero continued expanding AI capabilities and introduced initiatives including Just Ask Xero and XeroForce for small Business financial workflows.

Xero Ltd (ASX:XRO) was trading at AUD 65.25 on 17 September 2026 at 3:59 pm, down 1.09% on the day. The share movement reflects market trading activity at the time of writing and is not directly attributed to any individual company announcement. The company remains focused on developing its global small business platform through subscription growth, payments expansion and artificial intelligence-enabled products.

FY26 Financial Performance Shows Revenue Expansion

Xero reported operating revenue of NZ$2.75 billion for the year ended 31 March 2026, representing a 31% increase from NZ$2.10 billion in FY25. Customer numbers increased 11% to 4.92 million, with net customer additions reaching 506,000 during the year.

Average revenue per customer increased 23% to NZ$55.44, contributing to annualised monthly recurring revenue growth of 37% to NZ$3.27 billion. The company also reported free Cash Flow of NZ$554.0 million, compared with NZ$506.7 million in FY25.

While revenue and recurring revenue metrics improved, some profitability measures declined. Net profit after tax decreased 27% to NZ$167.4 million, while Operating Income declined 13% to NZ$316.1 million. Xero attributed the operating income impact to costs associated with the Melio acquisition. Gross Margin percentage decreased to 83.9% from 89.0%.

Regional Performance and Market Expansion

Xero’s Australia and New Zealand business recorded revenue growth of 18% to NZ$1.4 billion, with customers increasing to 2.8 million. Average revenue per customer in the region rose 17% to NZ$48.89.

International markets generated revenue growth of 47% to NZ$1.4 billion. The company reported continued momentum in the US market, including growth supported by the integration of Melio, a payments platform acquired to expand small business payment capabilities.

The UK market also recorded revenue growth of 26%, with customer numbers increasing 14%. Xero continues to position its platform around accounting, payroll, payments and connected financial services.

Artificial Intelligence and Product Development

Xero has continued investing in artificial intelligence capabilities across its platform. The company expanded Just Ask Xero (JAX), an AI-powered assistant designed to support small businesses and advisors with financial tasks.

During FY26, Xero reported that more than 500,000 customers adopted new generative AI features launched over the previous 18 months. The company also introduced XeroForce, a natural language AI agent builder designed to help customers automate financial workflows.

Xero also announced an agreement with Anthropic to integrate Claude AI capabilities into its platform, building on its existing AI partnerships.

FY27 Outlook and Strategic Priorities

For FY27, Xero expects operating revenue between NZ$3.62 billion and NZ$3.73 billion. Adjusted EBITDA is expected between NZ$860 million and NZ$920 million, including additional US Brand Investment of up to approximately NZ$55 million.

The company is also progressing its broader strategy through product expansion, including Ultra, a higher-tier plan designed for medium-sized businesses with additional reporting and administrative capabilities.

Key Takeaways

Xero’s FY26 results highlight continued expansion in subscription revenue, customer numbers and recurring revenue, while profitability metrics were affected by acquisition-related costs and investment initiatives. The company’s future performance will depend on execution across international markets, integration of acquired capabilities and adoption of new AI-driven products.