Xero reports strong first half FY26 results, reiterates FY28 aspirations

Xero Limited reported H1 FY26 operating revenue of NZ$1,194,193, a 20% increase year-on-year, with net profit after tax rising 42% to NZ$134,784. Adjusted EBITDA increased 12% to NZ$350,927, and free cash flow surged 54% to NZ$321,098. The company achieved a Rule of 40 outcome of 44.5%, driven by sustained subscriber growth and ARPU expansion across its key markets.

Total subscribers reached 4.6 million, up 10%, with 176,000 net additions in H1 FY26. Annualized monthly recurring revenue (AMRR) grew 26% to NZ$2,733,820. Operating expenses as a percentage of revenue were 77.0%, with a FY26 outlook of approximately 70.5% due to improved efficiencies and Melio's incorporation.

The Melio acquisition, completed on October 15, 2025, is a significant milestone, with bill pay for US customers launching in December 2025. Xero anticipates this acquisition to significantly accelerate US revenue growth and contribute to more than doubling FY25 group revenue by FY28, excluding anticipated revenue synergies of ~US$70 million.