Xero: Less about subs and more about profit & ARPU growth
About the author:
- Author name:
- By Nick Harris
- Job title:
- Senior Analyst
- Date posted:
- 10 November 2023, 7:00 AM
- Sectors Covered:
- Telecommunications, Technology
- Xero's (ASX:XRO) 1H24 result was largely inline with our expectations and marginally below consensus. Shares were sold off, in our view, due to decelerating subscriber growth momentum with slowing NAM and UK subscriber growth disappointing.
- Revenue was up 21% YoY but ARPU and ANZ did the bulk of the heavily lifting, once again. Tighter cost control, as pre-flagged, meant Underlying EBITDA was up 51% YoY. FCF was the highlight, jumping YoY and inc. $30m of interest income.
- FY24 outlook commentary unchanged with expenses “of around 75%” of revenue. We have slowed our revenue and EBITDA growth and lifted our FCF forecasts.
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