Key Highlights

  • Xero (ASX:XRO) was trading at A$80.31 at 10:35 am on 14 August 2026, up A$3.11 or 4.03% on the day.
  • FY26 Operating Revenue increased 31% to NZ$2.8 billion, while adjusted EBITDA rose 18% to NZ$757.4 million.
  • International revenue increased 47%, with US revenue growth accelerating following the integration of Melio and the addition of 110,000 customers.
  • Xero expects FY27 operating revenue of NZ$3.62 billion to NZ$3.73 billion and adjusted EBITDA of NZ$860 million to NZ$920 million.

Xero (ASX:XRO) was trading at A$80.31 at 10:35 am on 14 August 2026, up A$3.11, or 4.03%, on the day. Xero’s FY26 results released on 14 May 2026 gains attention which outlined accelerating international growth, continued customer expansion, higher Recurring Revenue and increasing adoption of artificial intelligence across the company’s small-business financial platform.

Xero reported operating revenue of NZ$2.753 billion for the year ended 31 March 2026, representing a 31% increase from FY25. Revenue growth was 28% on a constant-currency basis. The company also reported 4.92 million customers, an increase of 11%, while net customer additions reached 506,000.

Recurring revenue and customer Economics improve

Annualised monthly recurring revenue increased 37% to NZ$3.273 billion. On an organic basis, AMRR growth was 25%, or 20% in constant currency. The increase reflected customer additions, higher average revenue per customer and additional payments revenue following the integration of Melio.

Average revenue per customer increased 23% to NZ$55.44, while total customer lifetime value increased 17% to NZ$21.0 billion. Monthly churn remained at 1.14%, below Xero's pre-pandemic levels.

These figures indicate that growth during FY26 was not solely dependent on customer numbers. Expansion in revenue generated from existing customers also contributed to the increase in recurring revenue, providing an important component of the company's operating model.

US expansion becomes a larger growth driver

Xero's international Business generated particularly high growth during FY26. International revenue increased 47% to NZ$1.4 billion, while organic growth excluding Melio was 25%.

The US was a major contributor, with revenue increasing 240%, or 30% on an organic basis excluding Melio. Xero added 110,000 customers in the US, including customers using Melio's direct payments capabilities.

The Melio Acquisition has expanded Xero's presence in US small-business payments and enabled the company to combine accounting and payment functions on a single platform. Xero launched bill payments during FY26 as part of this integration, while the company continues developing additional services for US customers.

The UK also maintained a notable growth rate, with revenue increasing 26% and customers rising 14%.

AI becomes increasingly integrated into the platform

Artificial intelligence is another major element of Xero's product strategy. During FY26, the company expanded its AI capabilities through Just Ask Xero, automated bank reconciliation, personalised insights, business and web search, and AI-powered document capture.

More than 40 million transactions had been reconciled through automated bank reconciliation by the end of FY26, with the company reporting 97% accuracy. Adoption of new generative-AI features introduced during the preceding 18 months reached 500,000 users.

Xero also introduced XeroForce, a natural-language AI agent builder designed to allow accountants, bookkeepers and small businesses to automate repeatable financial workflows. The product was in invite-only Alpha at the time of the FY26 announcement.

Profitability and cash generation remain important

Adjusted EBITDA increased 18% to NZ$757.4 million, while reported EBITDA rose 24% to NZ$789.5 million. Free Cash Flow increased 9% to NZ$554.0 million.

The company reported a 5.1 percentage-point decline in gross Margin to 83.9%, while its operating expense-to-revenue ratio, excluding Melio-related transaction costs, was 70.5%. Operating Income declined 13% because of acquisition-related costs, while net profit after tax fell 27% to NZ$167.4 million.

Xero's Capital position also enabled the board to authorise purchases of up to A$550 million of shares during FY27 to offset dilution associated with share-based compensation and historical employee share issuance.

FY27 outlook points to continued expansion

Xero expects FY27 operating revenue between NZ$3.620 billion and NZ$3.730 billion. Adjusted EBITDA is forecast at NZ$860 million to NZ$920 million, with the outlook including up to approximately NZ$55 million of additional US Brand investment.

The company expects a greater proportion of adjusted EBITDA to be generated during the second half of FY27. It has also maintained its FY28 aspiration of more than doubling FY25 group revenue, excluding anticipated revenue synergies, while targeting a greater-than-Rule-of-40 outcome at group level.

Conclusion

Xero's FY26 results show continued expansion across customers, recurring revenue and international markets, with the US increasingly important following the integration of Melio. At the same time, AI is becoming more deeply embedded in the platform through automation, workflow tools and new agent capabilities. The company enters FY27 with revenue guidance of NZ$3.620 billion to NZ$3.730 billion and adjusted EBITDA guidance of NZ$860 million to NZ$920 million, alongside continued Investment in US expansion and product development. With Xero trading at A$80.31 on 14 August 2026, the company's next phase will centre on converting its expanded US presence, AI capabilities and recurring-revenue base into continued operating growth.