Highlights

  • AI Adoption: Over two million subscribers use Xero’s AI features, with 300,000 leveraging the newer GenAI tools.
  • US Expansion via Melio: Integration of Melio’s payments platform is advancing, with bill payment functions embedded, go-to-market teams unified, and US operations consolidated to drive revenue growth.
  • Investor Guidance: Melio is projected to reach Adjusted-EBITDA breakeven on a run-rate basis in H2 FY28.

Xero Limited (ASX:XRO) shares rose 3.2%, to AUD 96.69 during trading hours on 3 February, reversing recent declines. The gain comes after an investor briefing detailing Xero’s global AI strategy and US growth plans through the integration of Melio, its payments platform. The briefing highlighted product demonstrations, adoption metrics, and guidance on Melio breakeven, signaling investor confidence in future revenue expansion.

AI Integration Expands Platform Capabilities

Xero’s briefing showcased how AI is being embedded across its platform to enhance small business operations. More than two million subscribers are using AI features, with over 300,000 benefiting from newer GenAI tools introduced at Xerocon Brisbane. The company’s AI strategy focuses on helping customers resolve queries efficiently, save time on routine tasks, manage business operations smarter, and identify growth opportunities.

Melio Integration Drives US Expansion

Xero highlighted progress on Melio, its US payments platform acquired in October 2025. Integration efforts have focused on embedding Melio’s bill payment functions, unifying go-to-market teams, and consolidating US offices. This combined Xero–Melio proposition is expected to increase US revenue, expand average revenue per user (ARPU), and improve unit economics, supporting Xero’s plan to capture a larger share of the SMB BillPay market.

Investor Confidence Boosted by Future Guidance

Xero provided additional disclosures on its US business and AI monetisation strategy, reaffirming its FY26 guidance. Melio is projected to reach Adjusted-EBITDA breakeven on a run-rate basis in H2 FY28, while total operating expenses as a percentage of revenue are expected to decline in the second half of FY26. The briefing emphasized long-term growth opportunities in AI and US payments, contributing to the positive market reaction.

Outlook and Strategic Focus

Xero’s CEO, Sukhinder Singh Cassidy, reiterated that the company is positioned to capture AI-driven opportunities for SMBs while scaling its US operations through Melio. The combined initiatives aim to accelerate revenue growth, increase profitability per customer, and support Xero’s FY28 revenue aspirations, which include doubling FY25 group revenue excluding synergies. Today’s share gain signals investor optimism around the execution of these strategies.

Xero’s share gain today highlights investor optimism around its AI initiatives and US expansion through Melio. With growing adoption of GenAI features and ongoing integration of Melio into the US business, the company is positioning itself to increase revenue per customer and broaden its addressable market. While recent months have seen significant share price declines, the updates on product development, AI monetisation, and US growth have provided a clear rationale for today’s positive market response, reinforcing confidence in Xero’s long-term growth trajectory.