Wellington, May 11, 2026, 10:04 NZST
Xero Limited is set for a crucial week, as the ASX-listed accounting software player prepares to deliver FY26 full-year results on May 14. Investors will also be watching for fresh details on Melio and its U.S. operations. This marks the first time the company’s scheduled earnings will reflect the AI and U.S. payments roadmap it outlined back in February.
This timing lands after a steep reset in the stock. Xero closed at A$83.56 on May 8, slipping 0.63% that session and nursing a 51.5% loss over the last year. Shares have swung between A$67.93 and A$196.52 during the past 52 weeks, according to Investing.com data.
Xero is set to update the way it presents its outlook, moving away from its operating-expense-to-revenue metric. The company plans to guide investors using adjusted EBITDA — that’s earnings before interest, tax, depreciation and amortisation, after certain adjustments. Alongside that, expect a one-time revenue growth range for FY27 meant to tie back to its FY28 target.
Xero’s half-year numbers showed operating revenue climbing 20% to NZ$1.19 billion. Adjusted EBITDA rose 12%, landing at NZ$350.9 million, while free cash flow hit NZ$321.1 million. The company reported a Rule of 40 result of 44.5%—Xero’s measure combines constant-currency revenue growth with the free-cash-flow margin.
Back then, Chief Executive Sukhinder Singh Cassidy pointed to the result as evidence Xero was still capable of “above Rule of 40 outcomes” and throwing off cash, crediting what she described as “disciplined allocation of capital.” Now, investors are waiting to see if that still stands with Melio more deeply integrated into the financials.
The main sticking point: Melio. Xero struck a deal last year to buy the U.S.-Israeli bill-pay platform for US$2.5 billion in a mix of cash and equity, with another US$500 million possible in contingent payouts, deferrals and rollovers. Garry Sherriff at RBC Capital Markets called the deal “longer term…makes sense.” Paul Mason, E&P analyst, described the price as “pretty full”—unless Xero pulls off those distribution gains. Reuters
Xero wasted little time on the product front. Back in March, it rolled out online bill payments for U.S. small businesses, letting users handle and settle bills right from inside Xero. The company is eyeing a US$29 billion small-business payments market with the new feature. “Closing the gap between bill payments and bookkeeping,” is how chief product and technology officer Diya Jolly described the move. Xero
There’s a practical angle to the payments push, thanks to what’s happening in the U.S. Xero’s latest small-business snapshot, released April 30 and based on data from over 32,000 U.S. firms, found March-quarter sales were up 2.5% year-on-year. But payment times crept higher: businesses waited an average 28.8 days to get paid, compared with 28.3 days in the previous quarter. Invoices went unpaid for an average of 9.0 days past due. Xero economist Louise Southall flagged the early warning signs, saying “conditions are becoming more challenging.” Xero
Most of the real jockeying happens in the U.S., with Xero still looking to loosen Intuit QuickBooks’ grip. Melio, after the deal, plans to keep backing both QuickBooks Online and Desktop—so Xero isn’t aiming to lock out rivals, but rather to grab a bigger slice of small business payments and accounting.
Broker tables lean supportive, but there’s hesitation. Out of 14 analysts tracked by Investing.com, 12 call it a buy and two say hold, pegging the average 12-month target at A$134.88. JPMorgan stuck with its buy rating and a punchy A$150 target as of May 8. Jefferies, on the other hand, last showed a hold and a sharply lower A$82.70 target.
The risks stand out. Betashares flagged that Xero’s purchase of loss-making Melio will likely hit FY26 EBITDA hard, thanks to transaction and integration costs plus fresh ongoing losses—analysts have already moved their forecasts lower. Xero itself is only aiming for Melio to hit adjusted-EBITDA breakeven on a run-rate basis in the back half of FY28.
This week’s figures for Xero aren’t only a test of cloud accounting’s growth runway. With 4.59 million subscribers reported at the half-year mark, the real issue now is whether payments, AI, and a stronger U.S. move will make that Melio acquisition pay off—before investors decide to walk.
