The Xero Ltd (ASX: XRO) share price is in focus after the business announced its FY26 result.
Xero is a major provider of accounting software, tax reporting, financial analysis and business operations services.
Xero FY26 result
Here are the highlights from the 12 months to 31 March 2026:
- Operating revenue grew 31% to $2.75 billion
- Subscribers increased 11% to 4.9 million
- Net customer additions (excluding removed long idle subscriptions) increased 22% to 506,000
- Average revenue per customer (ARPC) grew 23% to $55.44
- Annualised monthly recurring revenue (AMRR) rose 37% to $3.27 billion
- Gross profit margin decreased from 89% to 83.9%
- EBITDA (EBITDA explained) increased 18% to $757.3 million
- Net profit sank 27% to $167.4 million
- Free cashflow grew 9% to $554 million
What happened in the result?
The business said that the 37% increase in the AMRR, of 25% on an organic basis, was driven by stronger customer growth, price increases and growth of payments revenue (including Melio’s revenue contribution).
ANZ saw revenue growth of 18% to $1.4 billion, with ARPC growth of 17% and total customers increased to 2.8 million.
International saw revenue increase 47% to $1.4 billion, or 25% on an organic basis excluding Melio. ARPC grew 28% and customers increased to 2.2 million.
Within international, the UK performance remained strong, with revenue growth of 26% and customers up 14%, which included some early flow through Making Tax Digital (MTD) for income tax.
Xero said that profitability suffered, with a significant reason for that being Melio-related acquisition costs.
In March, Xero launched bill payments thanks to Melio, with the business delivering a full-service financial platform for US small businesses.
AI progress
The company highlighted two AI initiatives – AI efforts it was already working on and also XeroForce.
On existing efforts, Xero said it’s aligning AI value with its commercial model through three core principles: keeping it simple by bundling AI features across existing plans, encouraging adoption by offering standalone AI add-ons, and future-proofing its models by incorporating usage-based pricing to align costs with utility.
Xero also said it’s accelerating its internal use of AI to increase operational efficiency and ‘speed to market’.
Now, turning to XeroForce.
The ASX tech share revealed XeroForce is a natural language custom AI agent builder for the financial workflows of accountants, bookkeepers and small businesses.
Using simple prompts and no technical expertise or IT resources, customers will be able to automate repeatable finance and accounting tasks.
XeroForce will enable the building of custom AI agents across both Xero and third-party applications commonly used by accountants, bookkeepers and small businesses.
XeroForce is currently in ‘invite-only alpha’.
Outlook for the Xero share price
In FY27, the business is expecting to be between $3.62 billion to $3.73 billion. Adjusted EBITDA is expected to be between $860 million to $920 million.
That suggests adjusted EBITDA could grow by between 13.5% to 21.5%.
Xero re-iterated that it aims to double its FY25 revenue by FY28, excluding anticipated revenue synergies between Xero and Melio.
I think Xero is one of the best ASX tech shares around, but the market has sent it down heavily. At the pre-open price, it’s down 53% in the last year.
In my view, it’s one of the appealing ASX growth shares to own for the next three to five years.
