XRO advanced +7.6% on Monday but also remains 60% below its 2025 high. While this has been a great company over the years the market perception that XRO is prone to AI disruption in the long term, and the proliferation of AI- native services could make it more difficult to win new customers. That said, Xero’s average revenue per user (ARPU) is ~$US26.50, making it hard to envisage users seeing the benefits of vibe coding their own accounting platform. However, it will likely bring into play cheaper, and more industry and business specific competition, which could ultimately stunt further growth.
- We believe XRO is fair to good value below $80, trading at a 50% discount to its historical valuation. It was only in June last year that XRO raised ~$2b at $176 per share to buy Melio, in an oversubscribed capital raise – how things have changed! MM owns XRO in its Active Growth Portfolio.
MM is cautiously bullish and long towards XRO
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