Xero says its share price, which has halved this year, doesn’t reflect its true value. It plans to buy back up to A$1 billion of stock over the next 12 months.
Xero will spend up to A$1 billion purchasing its own stock over the next year as the accounting giant tries to reverse a year-long slide in its share price.
The move was announced in Xero’s earnings for the first half of the 2027 financial year, where it reported revenue rose 46 per cent year-on-year to NZ$1.75 billion ($1.42 billion) for the six months to September 30, thanks partly to the integration of its Melio acquisition.
“We believe current market valuations do not fully reflect Xero’s long-term value and growth potential,” said CEO Sukhinder Singh Cassidy. “Supported by a healthy balance sheet and disciplined capital allocation, our buy-back program announced today demonstrates our long-term conviction in Xero.”
Xero’s stock jumped 12 per cent on Thursday morning following market open.
Xero’s pro-forma revenue growth – that is, if Melio had been part of Xero in the same period last year – was 27 per cent. Melio’s losses and acquisition financing costs dragged net profit down 86 per cent to NZ$18.5 million ($15 million).
Xero on Thursday also announced that CFO Claire Bramley will depart the company on January 31, less than two years after joining in April 2025. She will be joining an unnamed “global organisation.”
It will be the third executive departure from Xero in six months. As Forbes Australia previously reported, the company’s chief people officer left the company in July. He was followed soon thereafter by Xero’s CTO.
Xero entered 2026 with a market capitalisation of over A$19 billion, a figure that has since fallen as low as A$10.2 billion. Much of that has been attributed to the “SaaSpocalypse”, as investors dumped tech stocks on fears that companies could use AI to vibe-code software instead of buying it from the likes of Xero.
But while many enterprise software stocks have rebounded, Xero has remained in the doldrums. Analysts cite its costly, US$2.5 billion (A$3.9 billion) acquisition of payments platform Melio as contributing to Xero’s stock-price woes.
Melio payments generated NZ$283 million ($230 million) for Xero during this reporting period, or about 16 per cent of its total revenue. Xero says it expects Melio to reach breakeven on an adjusted EBITDA basis in the 2028 financial year.
Xero told investors it expects to generate between NZ$3.77 billion and NZ$3.83 billion ($3.06 billion and $3.11 billion) for the full financial year, upgrading earlier guidance of NZ$3.62 billion to NZ$3.73 billion ($2.94 billion to $3.03 billion).
“The $100m-$150m revenue FY27 upgrade is almost entirely offset by higher costs ($100m-$130m higher), suggesting the revenue upgrade is lower quality,” RBC Capital Markets analyst Tom Beadle wrote in an otherwise positive research note following the earnings.
“Plenty of noise but a headline net positive outcome,” Beadle wrote.
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