Xero finalizes Melio acquisition, details funding and equity adjustments

Xero Limited announced on October 15, 2025, the completion of its acquisition of Melio Limited for an upfront consideration of $2.5 bn. The acquisition, funded through cash, debt, and new Xero shares, is expected to accelerate US revenue growth and contribute to Xero's aspiration of more than doubling its FY25 group revenue by FY28. Funding included ~$1.8 bn in cash, ~$0.4 bn from a new debt facility, and ~$0.36 bn in newly issued shares to Melio shareholders.

The company anticipates non-recurring impacts in H1 FY26, including NZ$52m in transaction costs and a non-cash FX translation gain of NZ$78m. Xero also expects amortizable intangible assets of $350-$490m from the acquisition, with related expenses recognized from H2 FY26. Its FY26 operating expense to revenue guidance of around 71.5% remains unchanged.

In connection with the acquisition, Xero assumed Melio's existing Shopify warrants, which allow Shopify to acquire Xero ordinary shares under specific performance milestones. ASX waivers were granted for these warrants. Additionally, Xero adopted an Israeli Equity Plan to govern awards for Israeli participants, with grants related to the Melio acquisition to be made under this plan. Xero also reported the cessation of 86,395 Restricted Stock Units and 1,865 Options due to unfulfilled conditions.