XRO +8.74%: full-year results for the NZ-based accounting software company were out this morning with the share price seeing its best day in 12 months on the back of the strong numbers. Revenue was in line, climbing 22% in constant currency terms to $1.7b thanks to subscriber growth of 11% and Average Revenue Per User (ARPU) up 14%.
The key beat came from lower-than-expected costs with Operating Expenses running at 73.3% of Revenue, down from over 80%, leading to a ~12% EBITDA beat coming in at $NZ527m, and stronger than expected Free Cashflow. There was some concern that recent price hikes would feed into lower subscriber growth, however, the numbers look to be holding up, supporting a strong FY25 outlook.
Xero expects costs to climb in FY25 in line with revenue growth, largely on the back of additional development spend, though there looks to be some flex in this number and the market had expected the OPEX ratio to fall marginally through the year.
- A strong result for Xero, winning subscribers on higher-value plans.
MM is long and bullish XRO
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