Xero lifts FY27 outlook, launches A$1bn share buy-back

CEO Sukhinder Singh Cassidy unveiled an upgraded FY27 revenue range of NZ$3.77 billion-NZ$3.83 billion and an on-market buy-back of up to A$1 billion over the next 12 months, after six-month revenue rose 46% to NZ$1.745 billion.

First-half performance

For the six months ended 30 September 2026, Xero delivered:

• Revenue of NZ$1.745 billion, up 46% year on year.
• 5.146 million customers, up 12%, including 226,000 net additions. Average revenue per customer rose 25% to NZ$62.21.
• Adjusted EBITDA of NZ$362 million, up 3%. On a pro-forma basis, with Melio included in both comparative periods, adjusted EBITDA grew 23%.
• Statutory net profit of NZ$18.5 million, down 86%, as Melio losses entered the accounts and the previous period’s substantial foreign-exchange gains did not recur.

“Our H1 FY27 results show we’re continuing to do what we said we’d do, delivering strong macro-resilient growth at scale with momentum across every region,” Cassidy said. “Our infrastructure, data, scale and trust advantages position Xero well and help customers continue to benefit in the agentic era.”

CFO transition raises the stakes

Chief financial officer Claire Bramley will leave Xero on 31 January 2027 for a new role at another global organisation. Xero will begin a global search for her successor, while Bramley remains in post until her departure to support the transition. Cassidy said Bramley guided financial strategy through sustained growth and strengthened discipline in capital allocation.

Her departure coincides with Xero pursuing a larger US presence, investing in AI-powered accounting and business automation, integrating Melio and working toward profitability. The company also aims to exceed NZ$4.6 billion in revenue in FY28. Integration and Melio’s path to profitability will be key financial priorities for her successor.

AI moves into operational workflows

AI has become central to Xero’s product strategy. The company said six times more customers now use JAX chat each month to obtain answers and take action. The agentic platform is powered by Xero OS. Xero has already deployed AI in automated bank reconciliation, cash-flow forecasting, payment follow-ups and smart-document capture.

More than 100 million transactions have passed through automated bank reconciliation since launch. Ninety per cent of customers return to the feature, which saves them about 50% of their monthly reconciliation time. Xero also cited its infrastructure, financial data, customer relationships and ecosystem as advantages as small businesses and accounting practices adopt agentic AI.

The strategy extends beyond core accounting software into the operational workflows of accountants and bookkeepers. Xero announced Xforce by Xero, a service for accounting practices to automate manual financial tasks and build scalable workflows.

Initially, partner consultants and forward-deployed engineers will work directly with practices to design and implement AI-enabled workflows, drawing on Xero APIs, Xero OS and the wider technology ecosystem while integrating with software practices already use.

More than 40 design partners participated in early development and gave positive feedback. Xforce remains in beta, and a select group of design partners has signed across Australia, New Zealand and the UK. Its commercial model has three tracks:

• Bundling AI features into existing subscription plans.
• Selling standalone AI add-ons.
• Establishing foundations for future usage-based pricing.

That structure moves Xero toward monetising AI as customers increase their use of automated workflows and AI-powered services.

US expansion and Melio’s drag

International revenue rose 79% to NZ$950 million after the Melio acquisition; on a pro-forma basis, it increased 33%. US revenue jumped 536% to NZ$365 million. Payroll powered by Gusto strengthened the US offer with accounting, payroll and payments in one platform, supported by AI and Syft Analytics.

Across the group, annualised monthly recurring revenue increased 41% to NZ$3.8 billion. Melio remains loss-making, although Xero expects it to reach adjusted EBITDA break-even on a run-rate basis in the second half of FY28. Integration and profitability sit high on the agenda for Bramley’s successor.

Higher guidance, larger capital return

Xero raised FY27 revenue guidance to NZ$3.77 billion-NZ$3.83 billion from NZ$3.62 billion-NZ$3.73 billion, citing stronger-than-expected Melio payments performance and foreign-exchange benefits from a weaker New Zealand dollar. Adjusted EBITDA guidance now calls for NZ$880 million-NZ$920 million.

The new A$1 billion buy-back runs for 12 months and sits on top of a recently completed A$550 million programme designed to offset dilution from share-based compensation. The new programme also includes an amount intended to offset expected FY28 share-based-compensation dilution.

Cassidy said the programme reflected board confidence in Xero’s long-term growth prospects and financial position. “We believe current market valuations do not fully reflect Xero’s long-term value and growth potential,” she said.

What does this change for customers and shareholders?

For customers, the practical change is a broader automation stack: JAX, bank reconciliation, cash-flow forecasting and Xforce extend AI from assisted answers into accounting workflows and back-office execution.

For shareholders, the A$1 billion buy-back signals capital confidence, and part of it addresses expected FY28 compensation dilution. The 86% statutory profit fall and Melio’s losses keep execution risk high.

The next test is whether the next CFO can preserve growth, improve profitability, integrate Melio and sustain shareholder returns without slowing the AI and US build-out.