SYDNEY, May 18, 2026, 02:04 (AEST)
- Xero closed Friday at A$79.67, up 8.13%, after a 9.04% fall a day earlier; it still ended the week about 4.7% below the prior Friday close.
- The ASX cash market was shut at the dateline time, with Monday trade listed for 9:59 a.m. to 4:00 p.m. AEST.
- The week ahead turns on whether investors treat Xero’s A$550 million buyback as enough to offset weaker profit and Melio acquisition costs.
Xero Ltd heads into Monday’s ASX open with investors still testing whether Friday’s rebound was the start of a reset or just a sharp bounce after results-day selling.
The accounting software maker’s shares jumped 8.13% on Friday to A$79.67, recouping part of Thursday’s 9.04% fall after the company reported full-year earnings and authorised a buyback of up to A$550 million. The two-day swing matters because it leaves the stock caught between two readings of the same result: faster U.S. growth, but weaker statutory profit.
Xero reported operating revenue of NZ$2.75 billion for the year to March 31, up 31%, and adjusted EBITDA of NZ$757.4 million, up 18%. Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, with some one-off or non-cash items stripped out. Net profit after tax fell 27% to NZ$167.4 million, while operating income dropped 13%.
The company said the buyback would offset dilution, meaning the smaller ownership stake investors face when staff shares vest, tied to share-based compensation for FY27 and earlier staff share issuance. It did not present it as a broad capital return.
Chief Executive Sukhinder Singh Cassidy said Xero had shown “disciplined execution and macro-resilience” and pointed to “powerful momentum across our markets.” The company added 110,000 U.S. customers, including Melio direct payments customers, and said pro-forma revenue growth was 50%.
That U.S. point is the crux. Xero bought payments provider Melio in 2025 to deepen its North American push, a market where Reuters reported Xero then derived only about 7% of sales. The move puts Xero more squarely against Intuit’s QuickBooks in small-business accounting and payments, rather than just against ASX-listed software names.
Citi analyst Siraj Ahmed said the profit result missed estimates because of higher-than-expected interest and tax, Capital Brief reported. But he also wrote that the result looked strong when considering “US momentum,” subscriber numbers, Melio and FY27 guidance; he added that “buy-side expectations was for a beat,” which helped explain the first selloff. Capital Brief
For FY27, Xero forecast operating revenue of NZ$3.62 billion to NZ$3.73 billion and adjusted EBITDA of NZ$860 million to NZ$920 million. The outlook includes up to about NZ$55 million in extra U.S. brand spending, with earnings expected to be more heavily weighted to the second half.
Xero is also leaning into artificial intelligence. It said it had extended its AI partnership with Anthropic to integrate Claude into Xero, alongside an existing OpenAI partnership, and launched XeroForce, an invite-only alpha tool for building custom finance and accounting AI agents.
But the risk is that the stock’s rally runs ahead of the earnings repair. Xero’s gross margin fell to 83.9% from 89.0%, and its presentation said Melio’s payments model carries a lower gross margin than subscription revenue. If U.S. payments growth slows, integration costs linger, or the added U.S. brand spend takes longer to convert into customers, the buyback may blunt dilution without changing the profit debate.
The broader market backdrop was not much help. The S&P/ASX 200 fell 0.12% to 8,630.8 on Friday as miners pulled the index lower, though the All Tech index rose 2.25% and information technology gained 3.20%.
That leaves Monday’s first trade as a clean test. Buyers have the buyback, U.S. growth and FY27 guidance. Sellers have the profit fall, margin pressure and the still-heavy Melio execution risk.
