# Xero (XRO.AU)

Canonical: https://gigainvestors.com/s/XRO.AU

Analysis as of: 2026-10-15T06:42:22.261Z. Financial observations: FY2007–FY2026.

Listing currency: AUD. Reporting currency: AUD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: AUD 57.72 per share; close as of 2026-10-15.

Estimated value: low AUD 22.64 per share, central AUD 27.75 per share, high AUD 30.72 per share. Buy at or below the central value AUD 27.75 per share. Valuation as of 2026-10-15T06:42:22.261Z; scenarios are not confidence intervals.

Expected annual return: 5.6% at the stated quote. About 5.6% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; AU 10-year bond 5.2% + 4 points).

## Checklist

### understandable: fail

- 0 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 5

- Operating margin variation: 4.46×

Chart: Operating margin; fiscal year observations.

- FY2017: -0.24×

- FY2018: -0.05×

- FY2019: 0.02×

- FY2020: 0.04×

- FY2021: 0.07×

- FY2022: 0.03×

- FY2023: 0.04×

- FY2024: 0.16×

- FY2025: 0.04×

- FY2026: 0.11×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 6.0%

- ROIC, second-lowest year: -7.4%

- Typical minus recent gross margin: -11.8 pp

- Typical gross margin (annual median): 72.0%

- Recent gross margin (lower of latest and 3-year median): 83.9%

- Years with nonpositive capital: 0

- Capital spending / revenue: 19.6%

- ROIC including acquisitions, ten-year median: -15.1%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: -53.0%

- FY2018: -7.4%

- FY2019: 3.2%

- FY2020: 6.4%

- FY2021: 9.8%

- FY2022: 3.2%

- FY2023: 5.8%

- FY2024: 22.7%

- FY2025: 6.2%

- FY2026: 20.0%

### economics: pass

- Owner earnings / net income, 5-yr: 0.87×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: AUD 360M

- Net income, five-year total: AUD 412M

- Return on incremental invested capital: 27.4%

- Working capital / revenue, annual change: 1.2 pp

- Working capital / revenue, change between three-year averages: 7.1 pp

- Working capital / revenue, final three-year average: 12.0%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 25.07×

- FY2023: 3.23×

- FY2024: 2.30×

- FY2025: 2.08×

- FY2026: 0.93×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: -7.4% vs 20.0%

- Per-share earnings: -0.47 to 1.04 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 2.2%

- Ordinary dilution, 5-year annual growth: 2.9%

- Market cap gain: AUD 10B

- Cumulative retained earnings: AUD 409M

- Diluted shares, 10-year annual growth: 2.2%

- Diluted shares, 5-year annual growth: 2.9%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: AUD 1.51

- Per-share value, starting three-year median: AUD -0.47

- Per-share value, ending three-year median: AUD 1.04

- Buybacks concentrated in cheaper years (correlation): -0.40

- Average buyback yield: 0.4%

- Buyback history: 4 years

- Debt-funded buybacks: No

- Acquisition spending: AUD 6.2B

- Cumulative net income, 10 years: AUD 322M

- ROIC, first three-year median: -7.4%

- ROIC, last three-year median: 20.0%

Chart: Earnings per share; fiscal year observations.

- FY2017: AUD -0.47

- FY2018: AUD -0.17

- FY2019: AUD -0.18

- FY2020: AUD 0.02

- FY2021: AUD 0.13

- FY2022: AUD -0.06

- FY2023: AUD -0.74

- FY2024: AUD 1.04

- FY2025: AUD 1.28

- FY2026: AUD 0.98

### accounting: pass

- latest-year receivables to sales index (DSRI) exceeds 1.465

- Sloan accruals: -9.1%

- Receivables to sales index (DSRI): 5.01×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 5.99×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 1.10×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -22.7%

- FY2018: -24.1%

- FY2019: -14.2%

- FY2020: -14.2%

- FY2021: -10.7%

- FY2022: -11.3%

- FY2023: -21.7%

- FY2024: -14.6%

- FY2025: -14.9%

- FY2026: -9.1%

## Holders

## Price story

Down 69% since May 2025 · sales +44.1%

Story as of 2026-10-16T10:00:07.830Z; price observation 2026-10-15.

Price needs cash profits to grow 19.5% a year for ten years

- 2026-08-19: Xero Accelerates US Growth, Adds New Payments Capabilities and Embedded Payroll Offering ([finance.yahoo.com](https://finance.yahoo.com/small-business/articles/xero-accelerates-us-growth-adds-150000883.html))

### Sales · FY2025–2026

sales +44.1%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-15.

- FY2017: AUD 278M 

- FY2018: AUD 376M 

- FY2019: AUD 516M 

- FY2020: AUD 700M 

- FY2021: AUD 849M 

- FY2022: AUD 1.1B 

- FY2023: AUD 1.4B 

- FY2024: AUD 1.6B 

- FY2025: AUD 1.9B 

- FY2026: AUD 2.8B 

### Gross margin · FY2026

gross margin 83.9%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-15.

- FY2017: 63.3% 

- FY2018: 65.6% 

- FY2019: 69.7% 

- FY2020: 71.5% 

- FY2021: 72.7% 

- FY2022: 72.5% 

- FY2023: 70.7% 

- FY2024: 91.1% 

- FY2025: 89.0% 

- FY2026: 83.9% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software application; annual sales are AUD 2.8 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2026: revenue 2753081000; grossProfit 2308621000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-04); XRO.AU: Xero Limited, together with its subsidiaries, provides online business solutions for small businesses and their advisors in Australia, New Zealand, the United Kingdom, the United States, and internationally. It offers accounting, payroll, payments and other solutions through its Xero platform. The company also provides Planday, an online employee scheduling software; Hubdoc for bills and receipts; Syft, which creates reports, forecasts, dashboards, and consolidations with AI insights; Melio, a place to pay bills, send invoices, and automate AP/AR workflows; TaxCycle, a tax preparation software for accountants and bookkeepers; and Tickstar, an e-invoicing product. Xero Limited was incorporated in 2006 and is headquartered in Wellington, New Zealand.

### Why customers stay

Margins ranged from 83.9% to 91.1% during 2024–26; it earns 6% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2024: grossProfit / revenue = 91.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2025: grossProfit / revenue = 89%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2026: grossProfit / revenue = 83.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); 10-year return on capital observations [[2017,-0.5297548744327297],[2018,-0.07400431105824547],[2019,0.03167614125463552],[2020,0.06437390981383659],[2021,0.09769460895776541],[2022,0.032047252134739086],[2023,0.05849653465686401],[2024,0.2270852196661113],[2025,0.06180772482276111],[2026,0.19959376185900154]]; median 0.06015212973981256. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 73% gross margin through 2022 cost inflation.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); Gross margin observations: [[2021,0.7266464086184674],[2022,0.7251752578296894],[2023,0.706792411371228]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 1 of 10 years; bought back AUD 55.7 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2024: growth capex 0; upkeep 6587000; owner earnings 368824245.128. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2025: growth capex 0; upkeep 13153554; owner earnings 430826816.11399996. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2026: growth capex 0; upkeep 10103072; owner earnings 154910435.672. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); Dividend observations: [[2017,0],[2018,0],[2019,0],[2020,0],[2021,10861839],[2022,0],[2023,0],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); FY2026: cash repurchases 55731320.88 AUD.

### Are managers owners

Insiders own 5.2% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-04); XRO.AU SharesStats.PercentInsiders = 5.204000000000001 percentage points; cache date 2026-10-04.

### What the price says

The price assumes cash profits grow 19.5% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15T06:42:22.261Z); Ten-year compound average after fade. Initial solved rate 0.2707356618502076. Price 57.72; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share -0.6411023588241482 → FY2026 0.9081980645486577. Closing-price date 2026-10-15.

## Monthly share-price history (AUD per share)

- 2016-10: AUD 16.61 per share

- 2016-11: AUD 16.75 per share

- 2016-12: AUD 16.98 per share

- 2017-01: AUD 18.03 per share

- 2017-02: AUD 17.54 per share

- 2017-03: AUD 18.10 per share

- 2017-04: AUD 20.00 per share

- 2017-05: AUD 23.92 per share

- 2017-06: AUD 24.19 per share

- 2017-07: AUD 24.87 per share

- 2017-08: AUD 23.82 per share

- 2017-09: AUD 28.39 per share

- 2017-10: AUD 30.90 per share

- 2017-11: AUD 28.25 per share

- 2017-12: AUD 28.66 per share

- 2018-01: AUD 31.47 per share

- 2018-02: AUD 31.76 per share

- 2018-03: AUD 33.44 per share

- 2018-04: AUD 38.03 per share

- 2018-05: AUD 40.97 per share

- 2018-06: AUD 45.01 per share

- 2018-07: AUD 42.80 per share

- 2018-08: AUD 51.07 per share

- 2018-09: AUD 49.00 per share

- 2018-10: AUD 39.78 per share

- 2018-11: AUD 39.88 per share

- 2018-12: AUD 42.02 per share

- 2019-01: AUD 43.53 per share

- 2019-02: AUD 47.50 per share

- 2019-03: AUD 48.65 per share

- 2019-04: AUD 54.45 per share

- 2019-05: AUD 59.81 per share

- 2019-06: AUD 59.94 per share

- 2019-07: AUD 64.92 per share

- 2019-08: AUD 63.47 per share

- 2019-09: AUD 62.29 per share

- 2019-10: AUD 68.99 per share

- 2019-11: AUD 81.28 per share

- 2019-12: AUD 80.00 per share

- 2020-01: AUD 85.58 per share

- 2020-02: AUD 73.65 per share

- 2020-03: AUD 67.91 per share

- 2020-04: AUD 79.53 per share

- 2020-05: AUD 85.27 per share

- 2020-06: AUD 90.11 per share

- 2020-07: AUD 89.94 per share

- 2020-08: AUD 100.97 per share

- 2020-09: AUD 100.75 per share

- 2020-10: AUD 110.15 per share

- 2020-11: AUD 132.50 per share

- 2020-12: AUD 146.82 per share

- 2021-01: AUD 129.89 per share

- 2021-02: AUD 118.43 per share

- 2021-03: AUD 126.53 per share

- 2021-04: AUD 141.56 per share

- 2021-05: AUD 132.65 per share

- 2021-06: AUD 137.10 per share

- 2021-07: AUD 140.28 per share

- 2021-08: AUD 151.82 per share

- 2021-09: AUD 139.00 per share

- 2021-10: AUD 149.51 per share

- 2021-11: AUD 144.84 per share

- 2021-12: AUD 141.44 per share

- 2022-01: AUD 112.91 per share

- 2022-02: AUD 93.73 per share

- 2022-03: AUD 102.75 per share

- 2022-04: AUD 96.35 per share

- 2022-05: AUD 89.29 per share

- 2022-06: AUD 76.96 per share

- 2022-07: AUD 92.99 per share

- 2022-08: AUD 87.75 per share

- 2022-09: AUD 73.51 per share

- 2022-10: AUD 78.07 per share

- 2022-11: AUD 70.64 per share

- 2022-12: AUD 70.27 per share

- 2023-01: AUD 76.80 per share

- 2023-02: AUD 77.70 per share

- 2023-03: AUD 89.42 per share

- 2023-04: AUD 93.34 per share

- 2023-05: AUD 109.95 per share

- 2023-06: AUD 118.93 per share

- 2023-07: AUD 122.21 per share

- 2023-08: AUD 125.10 per share

- 2023-09: AUD 112.43 per share

- 2023-10: AUD 106.69 per share

- 2023-11: AUD 103.05 per share

- 2023-12: AUD 112.30 per share

- 2024-01: AUD 110.79 per share

- 2024-02: AUD 127.31 per share

- 2024-03: AUD 133.32 per share

- 2024-04: AUD 122.08 per share

- 2024-05: AUD 135.00 per share

- 2024-06: AUD 136.40 per share

- 2024-07: AUD 138.18 per share

- 2024-08: AUD 142.84 per share

- 2024-09: AUD 149.44 per share

- 2024-10: AUD 149.50 per share

- 2024-11: AUD 173.85 per share

- 2024-12: AUD 168.56 per share

- 2025-01: AUD 183.27 per share

- 2025-02: AUD 170.73 per share

- 2025-03: AUD 154.75 per share

- 2025-04: AUD 164.19 per share

- 2025-05: AUD 184.29 per share

- 2025-06: AUD 179.80 per share

- 2025-07: AUD 180.99 per share

- 2025-08: AUD 163.59 per share

- 2025-09: AUD 157.50 per share

- 2025-10: AUD 145.00 per share

- 2025-11: AUD 122.25 per share

- 2025-12: AUD 114.02 per share

- 2026-01: AUD 93.75 per share

- 2026-02: AUD 83.14 per share

- 2026-03: AUD 75.12 per share

- 2026-04: AUD 80.04 per share

- 2026-05: AUD 75.17 per share

- 2026-06: AUD 72.22 per share

- 2026-07: AUD 70.00 per share

- 2026-08: AUD 82.87 per share

- 2026-09: AUD 56.92 per share

- 2026-10: AUD 59.71 per share

## Annual estimated value (AUD per share)

- FY2026: low AUD 23.45 per share, central AUD 28.74 per share, high AUD 31.82 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:42:22.261Z where newer inputs omit a numeric field or fiscal period.

## Sources

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.