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Xero’s half year 2023 financial results

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Steve Vamos

Nov 9, 2022

Today we announced Xero’s half year financial results to 30 September 2022 (H1 FY23). 

Xero continued to deliver strong growth momentum with more small businesses placing their trust in our cloud technology and open platform to run their business and meet critical compliance needs. 

Our H1 FY23 performance highlights include operating revenue growing 30% (27% in constant currency) to $658.5 million, total customer lifetime value increasing 30% to $13 billion, and subscribers up 16% to 3.5 million.   

The environment small businesses are operating in around the world remains complex. They continue to navigate and adapt to increasing inflationary and interest rate pressures and challenges in accessing talent, while responding to the evolving needs of their customers. Times like these strengthen the case for small businesses to adopt cloud technology that enables their businesses to be more efficient and effective.

Financial results

Our performance underscores how much our customers and partners benefit from Xero and the important role we play to help digitise the small business economy.

Xero’s performance highlights for H1 FY23 (All figures are in NZD and comparisons are made against H1 FY22) 

  • Operating revenue increased 30% to $658.5 million (27% in constant currency (CC))
  • Total subscribers increased 16% to 3.5 million
  • Annualised monthly recurring revenue (AMRR) grew 31% to $1.5 billion (23% in CC)
  • Total subscriber lifetime value (LTV) grew $3.1 billion or 30% to $13 billion (23% in CC)
  • Gross margin percentage decreased 0.1 percentage point to 87.0%
  • EBITDA of $108.6 million increased 11% from $98.1 million 
  • Free cash flow increased to $15.6 million from $6.4 million

We’re executing our strategy by entering into partnerships, expanding our platform offering and investing in our technology to meet our customers’ needs, while maintaining a disciplined cost focus.

The global cloud accounting market for small business is still at an early stage, and we remain excited about the opportunities ahead for Xero. We are committed to further progressing our strategic priorities which are directed at helping more small businesses discover the benefits of cloud technologies.

Xerocon returns after almost three years

During the half, our teams reconnected in person with our accounting, bookkeeping and app partner communities at our Xerocon events in London, New Orleans and Sydney. The success of these events highlighted the strength of our relationships with our partners and contributes to brand awareness in these important markets.

CEO transition

After almost five years as Xero’s CEO, today we announced that I will retire from the role. I plan to return to my previous portfolio in business coaching and leadership development as an advisor, director and investor.

I’m pleased to let you know we have announced the appointment of Sukhinder Singh Cassidy as Xero’s new CEO, from 1 February 2023. I’m excited about Sukhinder’s appointment and believe she is very well placed to lead Xero through its next phase of growth. 

Sukhinder has the opportunity to take Xero to the next level and continue to deliver world-class products and services that are critical for our customers and partners. I’m looking forward to working with Sukhinder to ensure a smooth leadership transition. 

Having the opportunity to lead Xero over the past five years and build on the legacy of our founder Rod Drury, has been a privilege and highlight of my 40 year career in the information technology industry. 

Thank you

I would like to extend my sincere thanks to our Xero people, our customers, partners, shareholders, and everyone who supports Xero.

You can find Xero’s H1 FY23 results materials on our Investor Centre here: 

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