Sydney, June 22, 2026, 05:10 (AEST)
- Xero ended the session Friday at A$71.88, gaining 0.34% on the day. The stock fell 2.2% for the week.
- The shares are down 37.1% for 2026 and sit just 5.8% above their 52-week low of A$67.93. The S&P/ASX 200 rose 0.3% last week.
- Xero has its annual meeting set for August 27. Half-year results are due November 12.
Xero shares are set to start Monday near their lowest point in a year, with investors watching if the Melio payments deal can drive growth without cutting deeper into margins. The ASX is still closed at the dateline; trading resumes about 10 a.m. Sydney.
Xero shares fell even as the broader Australian market climbed last week. With Nasdaq shut for Juneteenth on Friday, traders didn’t get a lead from Wall Street. The long-running debate over Xero’s value is still top of mind as investors open the session.
Xero said last year it would buy U.S. payments firm Melio, paying US$2.5 billion upfront and up to US$3 billion total, aiming to build out payments on its accounting software and push into the U.S. faster. RBC Capital Markets’ Garry Sherriff said there was “much to like” in the deal but the integration would take time. E&P’s Paul Mason called the price “pretty full” unless Xero can get synergies from the deal — extra sales and cost cuts. Reuters
May’s full-year numbers explain the ongoing debate. Revenue was up 31% to NZ$2.753 billion, with customers rising 11% to 4.92 million. Adjusted EBITDA came in at NZ$757.4 million, up 18%. But net profit dropped 27% to NZ$167.4 million. Gross margin fell by 5.1 points, landing at 83.9%.
Xero is guiding for revenue between NZ$3.62 billion and NZ$3.73 billion, and adjusted EBITDA in the NZ$860 million to NZ$920 million range for the year ending March 2027. The outlook factors in up to around NZ$55 million more in U.S. brand spend. The company said it expects more of its earnings in the second half. CEO Sukhinder Singh Cassidy said last year showed “disciplined execution and macro-resilience.”
The board signed off on plans to buy back up to A$550 million of Xero shares in fiscal 2027. The company said this is to counter dilution from handing out employee share awards. So, this is about managing dilution instead of the usual type of buyback aimed at cutting down total shares.
Citi’s Siraj Ahmed said the May profit miss was down to higher interest and tax costs, but noted adjusted earnings came in roughly 2% over consensus. He called it “a strong result” and pointed to U.S. momentum, subscriber gains, Melio’s numbers, and the fiscal 2027 outlook. Capital Brief
Xero shares suggest the market wants proof now. Investors don’t seem ready to price the stock purely on revenue growth before the company proves payments sales to its accounting clients can bring lasting margins and clearer profit conversion.
Debate over ASX software names like TechnologyOne and WiseTech Global is ongoing as investors look at their existing customer bases and risks from AI agents. James Gerrish at Market Partners called Xero “a buy here, but not with the same conviction.” Jun Bei Liu from Ten Cap put it at hold, citing “too many questions” on things like distribution, pricing and margins going forward. Livewire Markets
Xero this week rolled out free standard ACH payments for U.S. business-plan customers on its Melio-powered bill-pay platform. Faster ACH, international payments, wires, and credit card transactions still carry fees. The move drops a hurdle for adoption but the real question is if those businesses will step up to Xero’s paid features.
The risks for Xero are stacking up. Slower takeup of Melio, free transfers that don’t boost premium payment volume, and bigger U.S. costs. There’s also the possibility that new AI agents could hurt the direct line with customers, all of which could mean margin pressure sticks around. For the upside, Xero will have to show lasting U.S. customer growth, higher use of paid payments and better profit conversion from revenue. For now, Monday’s open looks set to challenge investor nerves rather than give any closure.
