BUSINESS
Xero Reports Record Revenue Despite Profit Decline After Major Acquisition
MyDigiFolio Editors
2 min read
Xero’s results show how technology companies are prioritising long-term growth, AI expansion, and strategic acquisitions over short-term profitability. While the Melio acquisition reduced net profit, the company’s rapid customer growth, expanding US presence, and strong recurring revenue position it as a major global fintech and accounting software player.
Xero reported record full-year revenue for the financial year ending March 2026, despite a significant decline in net profit caused by acquisition-related costs and higher financing expenses.
The cloud accounting software company posted:
- Revenue: $2.75 billion
- Up 31% year-over-year
compared to:
- $2.1 billion last year
Profit Falls Despite Strong Growth
Xero’s:
- Net profit after tax
fell to:
- $167.4 million
down from:
- $227.8 million last year
The company said the decline was mainly driven by:
- Transaction costs
- Financing expenses
- Operating losses tied to the acquisition of:
- Melio
a payments platform acquired in October 2025.
The acquisition also shifted Xero from:
- Net cash position to:
- Net debt position
Customer Growth Accelerates
Xero added:
- 506,000 new customers
during the year, bringing its total global customer base to:
- 4.9 million users worldwide
The company saw strong growth across major regions:
- Australia & New Zealand revenue up 18%
- UK revenue up 26%
- US revenue surged significantly
The US expansion was boosted by:
- Melio integration
- Strong organic growth
EBITDA and Cash Flow Improve
Despite lower net profit, the company improved several operational metrics:
- EBITDA rose to:
- $789.5 million
- Up from:
- $638.5 million
Free cash flow increased:
- 9% to:
- $554 million
AI Becomes Long-Term Growth Focus
CEO:
- Sukhinder Singh Cassidy
said the company is positioning itself for long-term AI-driven growth.
According to Cassidy:
- Xero’s proprietary business data and customer trust provide a strong foundation for AI expansion
The company believes artificial intelligence will play a major role in:
- Accounting automation
- Financial management
- Business analytics
- Productivity tools
No Dividend Planned
Xero confirmed it will:
- Not pay dividends
as the company prefers to:
- Reinvest cash into growth initiatives
- Expand AI capabilities
- Scale global operations
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