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Stock of the day
Xero
Xero reported a 42% rise in after-tax profit and revenue growth of 20%, but missed EPS expectations and faces valuation concerns.
(AI video summary)
This video was created on 13 November 2025 for IG audiences by ausbiz.
ASX code: XRO
Xero profit jumps but valuation concerns remain
Xero posted a 42% rise in after-tax profit for the first half of the financial year to NZ$135 million. Revenue grew 20% to NZ$1.2 billion, showing strong momentum across major markets and products.
Operating income fell 22% due to costs from its United States acquisition of bill-paying service Melio. Despite solid results, shares dropped 5.5% as earnings per share (EPS) missed consensus by 13%.X
Valuation remains high
Xero’s price-to-earnings (P/E) ratio was about 103 before today’s decline - a level rarely sustained long term. The company has only two years of profitability after nearly 15 years, limiting confidence in future earnings.
Investment outlook
Xero is a leading accounting software provider with strong growth, but its valuation and EPS miss suggest caution. Investors may wait for a price correction before buying.
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