Increased user base lifts Xero (ASX:XRO)'s profit by nearly 6 times

Company News

by Michael Luu

Cloud-based accounting platform Xero (ASX:XRO) has reported its net profit grew by almost 6 times to $18.4 million, according to the company’s FY21 results.

The digital bookkeeping firm has attributed the strong full-year performance to a record surge in its subscriber base in the second half of the fiscal year.

The New Zealand-based tech developer’s digital accounting products and services generated revenue of 786.6 million, representing an 18 per cent rise in annual income as compared to the previous fiscal year. Xero’s earnings also increased by a staggering 493 per cent from last year’s $3.1 million.

These encouraging figures indicate a strong rebound from the first half’s pandemic challenges, as the $20 billion accounting solutions provider attracted an extra 288,000 new users to its platforms in the second half. The firm’s highest ever rise in a six-month period lifted the total number of subscribers to 2.74 million

“The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and importance our customers place on their subscription and connection to the broader Xero community is increasing.

Xero’s CEO Steve Vamos reiterated that Xero attended to customer needs and consistently met the demands to overcome coronavirus-induced difficulties. The company’s strategic acquisitions of Planday, Tickstar and Waddle also contributed to revenue and subscriber growth. Xero has revealed its intention to enhance services provided to its core target market of small and medium enterprises, which make up 90 per cent of the company’s business users.

Xero said, “Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world”, as these companies :represent a significant contribution to economic activity, jobs, and the community.”

Shares in Xero (ASX:XRO) last traded at $134.88