After opening in the green, Xero Ltd (ASX: XRO) shares have joined the broader market today and dipped into the red.
Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed yesterday trading for $174.50. They hit an intraday high of $175.51 but have since retraced to $173.94 apiece, down 0.3%.
For some context, the ASX 200 is down 0.4% at this same time.
But don't feel too bad for long-term shareholders.
As you can see on the above chart, Xero shares are up a very respectable 74% since this time last year amid strong revenue growth.
So, should I buy the ASX 200 tech stock today?
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Are Xero shares a buy?
Discussing his views on Xero shares, Sequoia Wealth Management's Peter Day pointed to the company's half-year results (H1 FY 2025), reported on 14 November.
"This cloud-based accounting software provider delivered a strong first half result in fiscal year 2025," Day said (courtesy of The Bull).
Day noted:
The company lifted subscriber numbers by 6% to 4.186 million when compared to the prior corresponding period. Operating revenue was up 25% to NZ$996 million. Average revenue per user rose 15%. Price increases in the past have sustained overall revenue growth.
Despite those strong results, Day remains on the fence about buying Xero shares today, following the sizeable share price rise.
"We retain our hold recommendation in anticipation of a more favourable entry point," he said.
What else did the ASX 200 tech stock report for H1 FY 2025?
Xero shares closed up 5.9% on 14 November, the day the company reported its half-year results.
Atop the metrics cited by Sequoia Wealth Management's Day above, the company's profit growth really stood out for me.
Xero reported a net profit after tax (NPAT) of NZ$95.1 million, up 76% from H1 FY 2024.
And the company's free cash flow for the six months increased to NZ$208.7 million, with a free cash flow margin of 21.0%. That was up from 13.3% in the prior period.
Commenting on the results that gave Xero shares a big boost on the day, CEO Sukhinder Singh Cassidy said:
This result reinforces our ability to deliver on our strategy. We have delivered a solid performance across the board this half including continued strong revenue growth and a greater than Rule of 40 outcome for the second period running.
We're executing our strategy with focus and purpose, through disciplined investment aligned to our strategic priorities.
