Results: Xero posts 36% increase in revenue to NZ$552.8 million

The Xero Limited (ASX:XRO) share price will be on watch on Thursday after the release of the market darling's full year results…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Xero Limited (ASX: XRO) share price will be on watch this morning following the release of the business and accounting software company's full year results.

In FY 2019 Xero posted operating revenue of NZ$552.8 million, which was an increase of 36% on the prior corresponding period. In constant currency this was an increase of 34% year on year.

This strong top line growth was driven by a 31% lift in total subscribers to 1.818 million and a small increase in average revenue per user to NZ$29.25.

According to the release, international net subscriber additions came in at 239,000 in FY 2019, which means they exceeded net subscriber additions from the ANZ region for the first time. The ANZ region accounted for 193,000 net subscriber additions during the 12 months.

The majority of the company's international net subscriber additions came from the UK market, where the company reported a net increase of 151,000 subscribers. Over 100,000 of these came in the second half of the financial year.

This ultimately led to Xero posting a 32% increase in Annualised Monthly Recurring Revenue (AMRR) to NZ$638.2 million, positive free cash flow of $6.5 million, and a second half net profit after tax of $1.4 million. For the full year the company posted a net loss after tax of NZ$27.1 million.

Another key metric which continues to head in the right direction was Xero's total subscriber lifetime value (LTV). This increased 36% year on year to NZ$4.4 billion, reflecting subscriber growth and gross margin improvement.

Xero's CEO, Steve Vamos, appeared to be pleased with the company's performance in FY 2019.

He said: "We've delivered a strong result with a number of major milestones for Xero including our first positive free cash flow result, and the UK adding more than 100,000 subscribers within a six-month period. Another important milestone was the positive bottom line result delivered in the second half, which demonstrates our improving profitability."

He added: "As we head into FY20 and beyond, we're making great progress towards our strategic priority of driving cloud accounting adoption globally. We have a genuine competitive edge by prioritising investment in growth, and partnering closely with accountants and bookkeepers, to deliver a human-centered technology experience for small business communities across the globe."

Looking ahead, Xero intends to continue to focus on growing its global small business platform and maintains a preference for reinvesting the cash it generates to drive long-term shareholder value. It expects free cash flow in FY 2020 to be a similar proportion of total operating revenue to that reported in FY 2019.

Prior to today the Xero share price was up 36.5% over the last 12 months, just behind Altium Limited (ASX: ALU) with its 41% gain and WiseTech Global Ltd (ASX: WTC) with its 53% gain.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of Altium and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Growth Shares

3 unstoppable ASX shares to buy and hold for the next decade

These shares are going places over the remainder of the decade and beyond.

Read more »

Four piles of coins, each getting higher, with trees on them.
Growth Shares

2 high-growth ASX shares to buy today: brokers

These stocks have a strong growth outlook.

Read more »

Two university students in the library, one in a wheelchair, log in for the first time with the help of a lecturer.
Growth Shares

2 top-quality ASX shares to buy for beginner investors

These stocks could be a great place to start investing.

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Growth Shares

Here's why these two ASX 300 shares are great ones to own

These businesses are two of the fastest-growing stocks in the ASX 300 and are liked by fund manager WAM.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Growth Shares

3 ASX growth shares you'll wish you bought in June

Analysts think these shares could be destined for big things in the future.

Read more »

Father and daughter with hands on a small plant.
ETFs

Focused on growth? Here are 3 ASX ETFs to consider

Growth investors must ignore the current market noise about tariffs and focus on the long-term horizon.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Growth Shares

Top brokers name 3 top ASX growth shares to buy now

Why are brokers feeling bullish on these names? Let's find out.

Read more »

Two plants grow in jars filled with coins.
Growth Shares

3 ASX 200 growth stocks up more than 100% in 1 year that could charge higher

It's been a memorable year for shareholders of these 3 companies.

Read more »