Xero revenue surges, but profit slumps following Melio acquisition

Detailed summary

Accounting software company Xero has posted strong revenue growth and upgraded its full-year outlook, despite its bottom-line profit falling sharply following its acquisition of…

Accounting software company Xero has posted strong revenue growth and upgraded its full-year outlook, despite its bottom-line profit falling sharply following its acquisition of US payments business Melio.

Key numbers for the six months ended September compared with a year ago:

The Wellington-based but Australian-listed company reported revenue of $1.75 billion for the six months ended September, up 46 percent on a year earlier, while net profit fell 86 percent to $18.5 million.

Adjusted EBITDA, a measure of underlying earnings, rose 3 percent to $361.6 million.

On a pro-forma basis, which includes Melio in the previous comparable period, it rose 23 percent.

Xero has also announced an on-market share buyback of up to A$1b over the next 12 months, saying its current share price does not fully reflect the company's long-term value and growth prospects.

Chief executive Sukhinder Singh Cassidy said the company's rising customer numbers and increasing revenue per customer were driving growth.

"At the same time, we're improving our efficiency, and that is translating to significant and growing free cash flow."

The company added 226,000 customers during the half, taking its total customer base to 5.15 million, while average revenue per customer rose 25 percent to $62.21.

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