Xero shares have hit their lowest level in more than a year even as the New Zealand-based cloud accounting platform posts double-digit revenue growth and $NZ321.1 million ($278 million) in free cash flow.
The Kiwi cloud accounting platform grew operating revenue by 20 per cent to $NZ1.19 billion in the six months to September 30, with its adjusted earnings climbing 12 per cent to $NZ350.9 million.
"We have demonstrated strong momentum, with our portfolio of large markets and our products contributing to our macro-resilient growth," chief executive Sukhinder Singh Cassidy said.
In Australia and New Zealand, Xero's revenue rose 17 per cent to $NZ663.7 million, and subscribers grew to 2.7 million.
Investors had apparently expected more, with Xero shares changing hands at $134.61 just before midday on Thursday, their lowest level since August 2024.
XRO shares are down 3.8 per cent from Wednesday's close, down nearly 20 per cent year-to-date and about 30 per cent lower than their June 24 peak, which is when Xero announced it was acquiring US payments group Melio in a $US2.5 billion ($3.9 billion) cash and scrip deal.
Xero plans to use Melio's features to roll out bill payment capabilities in the US in December.
The result showed a company "quietly shifting gears" and delivering "solid numbers that show the core business ticking along nicely", eToro analyst Farhan Badami said.
He said the market has been sceptical about Xero's Melio acquisition, but it showed long-term strategic logic.
RBC Capital Markets analyst Garry Sherriff called the results solid, with better-than-expected average revenue per user and in-line subscriber growth.
Xero also that in October it upgraded its artificial intelligent agent named JAX - "Just Ask Xero" - to offer automated bank reconciliation and advanced financial insights through Xero's partnership with OpenAI.
