Half Year 2025 Xero Ltd Earnings Call Transcript
Key Points
- Xero Ltd (XROLF) reported a strong revenue growth of 25% year-over-year, reaching $996 million.
- The company achieved an adjusted EBITDA of $312 million, marking a 52% increase from the previous year.
- Xero Ltd (XROLF) delivered a Rule of 40 outcome of 43.9%, up by 10.3 points year-over-year, indicating a balance of growth and profitability.
- Subscriber growth was robust, with a 10% increase year-over-year, and ARPU expanded by 11%.
- The company successfully completed the removal of 160,000 long idle subscriptions, which positively impacted ARPU.
- Subscriber growth in Canada was limited due to a subdued market backdrop and lack of cloud adoption momentum.
- The company faced challenges in driving payroll adoption in the U.K. and New Zealand, requiring further effort to improve product market fit.
- There was a slight increase in churn to 1%, reflecting a slight uptick from post-COVID lows.
- The increase in share-based payments to 9% of sales reflects higher costs associated with hiring domain experts, particularly in the U.S.
- The timing of hiring key domain experts was slower than expected, impacting the planned reinvestment in product development.
Thank you for standing by, and welcome to the Xero Limited Half Year 2025 results conference call. I'm joined by Xero's Chief Executive Officer, Sukhinder Singh Cassidy; and Chief Financial Officer, Kirsty Godfrey-Billy. (Operator Instructions) I would now like to hand the call over to Sukhinder Singh Cassidy, Chief Executive Officer of Xero. Please go ahead.
Thank you. Good morning from Sydney, Australia. Thank you for joining our investor briefing today, covering Xero's financial and operating results for the half year ending September 30, 2024. I'm Sukhinder Singh Cassidy, and I'm here with Kirsty, our CFO. Our first agenda item is a summary of Xero's performance during the half year. I'll then pass over to Kirsty to cover our financial results in detail before I finish with strategic priorities and Xero's outlook. After that, we'll move to Q&A.
So moving to a summary of our results on Slide 5. We're really pleased with this result and in particular, our
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