Xero swings to full-year profit

Accounting software provider Xero has swung to a full-year profit, but warned coronavirus will weigh on its 2021 results.

Steve Vamos, chief executive of accounting software company Xero.

Xero has swung to a maiden $NZ3.3 million full-year profit, but warned coronavirus will weigh on its fiscal 2021 performance.

The Auckland-based cloud accounting software provider said revenue for the 12 months through March rose by 30 per cent to $NZ718.2 million, from $NZ552.8 million a year earlier. Xero made a $NZ27.1 million net loss in 2019.

Xero said it added 467,000 subscribers over the year for a total 2.285 million but warned COVID-19 reduced annualised monthly recurring revenue growth in March.

While annualised monthly recurring revenue still rose 29 per cent to $NZ820.6 million, Xero stressed the pandemic’s impact will be reflected in its fiscal 2021 results and declined to give any outlook.

Xero said it was a difficult time for many people in small business. The company focuses on small- and medium-sized enterprises, many of whom have come under stress due to the economic downturn from the coronavirus.

The software provider said it had rolled out new support services, including cash flow insights and preparation for government stimulus packages. It has also collaborated with governments and banks on the impacts to small business and how assistance is provided, it added.

“Many of our customers and partners are having to adapt the way they operate, while investing enormous effort to survive at this difficult time,” chief executive Steve Vamos said. “While COVID-19 brings uncertainty, our long-term strategic ambitions are unchanged.”

Australia subscriber numbers grew by 188,000, or 26 per cent, to 914,000, while UK subscribers lifted 32 per cent to 613,000. New Zealand subscribers grew by 12 per cent to 392,000, and North America subscribers increased by 24 per cent to 241,000, with North American growth weighted toward the second half.

Shares in ASX-listed Xero last traded at $83.77, up 4.7 per cent in 2020.

Dow Jones Newswires