Xero posts 18% jump in FY21 operating revenue amid Covid-19 recovery

Accounting software firm Xero reported an 18% jump in its operating revenue for FY2021 ended March 31 as its subscription numbers recover from the Covid-19 pandemic in the second half of the financial year.

Photo credit: Xero

The New Zealand-headquartered company posted a net profit of NZ$19.8 million (US$14.2 million) in FY2021, an increase of NZ$16.4 million (US$11.8 million) from the previous year. That’s despite taking a hit to its top line in the first six months from the pandemic.

“As well as responding to our customers’ needs during the pandemic, we continued to execute our strategy with strong revenue and subscriber growth, completion of a significant capital raise, and the acquisitions of Planday, Tickstar, and Waddle,” said Xero CEO Steve Vamos.

However, integration costs relating to the three acquisitions are expected to increase total operating expenses as a percentage of operating revenue by up to 2% for FY2022, according to the firm.

In FY2021, Xero’s total subscribers grew by 20% to hit over 2.7 million, delivering its strongest ever half-year subscriber numbers with 288,000 net additions in the second half of the fiscal year.

The growth in subscription numbers also contributed to a 17% increase in annualized monthly recurring revenue to reach NZ$963.6 million (US$691.7 million), driven by a “growing awareness” among small businesses of the benefit of digital tools and cloud technology.

“Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world. Small businesses make up more than 90% of businesses in the markets Xero operates in and represent a significant contribution to economic activity, jobs, and the community,” added Vamos.

Currency converted from US dollar to NZ dollar : US$1 = NZ$1.39.