The starting point of every achievement is desire in real life. In stock markets, every smart move is preceded by planning. Adoption of the latest AI innovations by one of the ASX Top 100 Companies, Xero Limited, is supporting its expansion into the North American market for accounting software.
Xero Limited (ASX: XRO) recently announced its plan to acquire Syft Analytics, a leading global cloud-based reporting, insights and analytics platform for accountants, bookkeepers and small businesses. It is likely to accelerate Xero’s insights, advanced reporting and analytics offerings for customers in Australia, the UK, the US and its other markets globally.
Xero Limited, is one of the Best Stocks to Invest in, as it has demonstrated notable improvements across key financial and operational metrics.
In FY24, Xero achieved a balanced growth in Annualized Monthly Recurring Revenue (AMRR), which increased by NZD 407.6 million or 26% year-over-year (22% in constant currency). reaching NZD 1,961.4 million .This growth was driven by both a notable 11% rise in subscriber numbers and a 14% expansion in average revenue per user (ARPU) to NZD 39.29.
Revenue in Australia and New Zealand rose 22% to NZD 969.9 million, driven by a 11% increase in ARPU to NZD 37.97 and a total of 2.4 million subscribers. Australia added 205,000 subscribers, reaching 1.8 million, while New Zealand gained 38,000, totaling 605,000. Internationally, revenue grew 24% to NZD 743.9 million, with ARPU up 17% to NZD 41.05 and subscribers reaching 1.8 million. The UK added 107,000 subscribers to reach 1.1 million, North America grew by 38,000 to 422,000, and the Rest of World added 31,000 subscribers, reaching 285,000.
One of ASX best companies, Xero saw a dramatic rise in EBITDA to NZD 497.4 million, compared to NZD 158.4 million in the previous year, and adjusted EBITDA grew by 75% to NZD 526.5 million. Operating income improved substantially to NZD 255.7 million from NZD 57.3 million, while net profit turned positive at NZD 174.6 million, reversing the previous year's loss. Free cash flow also saw a significant increase to NZD 342.1 million from NZD 102.3 million. Additionally, the total lifetime value of subscribers rose by 16% to NZD 15.5 billion, and the gross margin improved to 88.2%, up from 87.3%.
Xero Limited is an ideal stock for long term holding as depicted by financial history from 2020 to 2024 reflects a trajectory of significant growth and evolving profitability . Over this period, the company's revenue surged from NZD 718.2 million to NZD 1,713.8 million, highlighting robust demand for its software solutions and successful market expansion. Gross profit increased steadily, with margins remaining high, peaking at 88.2% in 2024, which underscores the company's effective cost management and strong pricing power. Operating profit and EBITDA also demonstrated substantial improvement, rising from NZD 34.11 million and NZD 139.2 million in 2020 to NZD 267.1 million and NZD 524.9 million in 2024, respectively. Cash flow from operating activities improved notably, reaching NZD 591.8 million by 2024, while free cash flow also saw a positive trend. The company's liquidity remained strong, with a high current ratio and stable working capital relative to total assets.
Xero is among those fundamental stocks committed to enhancing its fundamental capabilities in the upcoming years, which is anticipated to lead to a modest increase in expenditures, particularly in the areas of product design and development. The company aims to achieve substantial advancements in its payment solutions, intending to streamline payment processing for clients by integrating various payment methods. Furthermore, Xero plans to improve its bulk tools to increase their utility for customers, while the launch of JAX Beta is progressing, with trials set to commence with select customers. Collectively, these initiatives are expected to significantly enhance the company's marketability and customer satisfaction, ultimately contributing to sustained sales growth in the long term.
Source: Company’s Report
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