There are very few stocks from ASX listed companies, which even after a strong run up still have a long term growth potential. Among such best growth stocks to buy now is
Xero Limited (ASX: XRO)
Xero Limited (ASX: XRO) has delivered a strong financial performance for the first half of FY25, with operating revenue up by 25% to $995.9 million, and 23% growth in constant currency. The company, one of the top growth stocks, demonstrated its ability to execute its strategy effectively, achieving a Rule of 40 score of 43.9%. This impressive result reflects both solid revenue growth and disciplined expense management, as operating expenses represented 71.2% of revenue. The company’s EBITDA grew 51% to $311.7 million, and free cash flow rose to $208.7 million, marking a free cash flow margin improvement from 13.3% to 21.0%. These strong results highlight Xero’s continued ability to grow and deliver value to its customers while focusing on strategic investments.
Xero’s annualised monthly recurring revenue (AMRR) increased 22% to $2.2 billion, with subscriber growth contributing to the overall revenue expansion. The company added 186,000 new subscribers in H1 FY25, even as it removed 160,000 long-idle subscriptions, which had minimal impact on revenue. In addition, total lifetime value (LTV) grew by 15% to $17.0 billion, and customer churn remained low, at 1.00%, reflecting the resilience of its customer base and the value Xero provides. Simplified subscription plans were introduced across Australia, the UK, and New Zealand, aiming to better meet the needs of small businesses, enhancing the user experience and ensuring easier growth for customers.
Xero continued to focus on innovation and product development, with several key product updates and new offerings. Among the highlights were the launch of Tap to Pay in the Xero Accounting mobile app, allowing small businesses in Australia and the UK to accept instant payments via smartphone. Other advancements included the release of the GenAI-powered “Just Ask Xero” (JAX) tool, new integrations for payroll management, and the introduction of an embedded bill payment solution in the US, powered by BILL. Additionally, Xero announced the acquisition of Syft Analytics, a move designed to enhance its reporting, forecasting, and analytics capabilities, further strengthening its product portfolio.
The company’s growth was also notable across its key markets. In Australia and New Zealand, Xero achieved a 24% increase in revenue, with strong subscriber growth, particularly in Australia, where net additions totaled 84,000, reaching 1.9 million subscribers. International markets also showed robust performance, with a 25% increase in revenue, largely driven by the UK, North America, and the Rest of the World. Subscriber growth continued, despite the removal of long-idle subscriptions. As Xero looks ahead to the rest of FY25, it expects operating expenses to account for around 73% of revenue and anticipates ongoing investment in product development.
Source: Company’s Report
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