• Continuing to deliver above Rule of 40, strong cash generation
• Sustained, strong revenue growth across our 3x3 portfolio
• H1 FY26 reflects momentum and execution to deliver strong financial results

Xero Limited (ASX: XRO) has released its FY26 Interim Results Investor Presentation, showcasing continued strong financial and operational performance. The company reported a 44.5% increase in operating revenue to $1,194 million, along with a 12% year-over-year increase in adjusted EBITDA to $351 million. Xero's Rule of 40 metric, which combines revenue growth and free cash flow margin, improved by 0.6 percentage points year-over-year to 44.5%. The company's ANZ region delivered quality growth, with Australia seeing strong revenue growth and momentum in new sales motions, while New Zealand maintained a deeply penetrated market. Xero's international revenue also grew strongly, reflecting strategic execution, with the UK, North America, and Rest of World segments all reporting double-digit revenue increases. The company continued to demonstrate consistent delivery, performing above the Rule of 40 target and generating robust cash flow. Xero's financial results were underpinned by sustained subscriber growth, ARPU expansion, and strong payments performance. The company also maintained a strong balance sheet, with a pro-forma net debt position of $0.5 billion following the completion of the Melio acquisition, which is expected to accelerate Xero's revenue growth and expand its presence in the US market.

Xero expects its FY26 OPEX to operating revenue ratio to be around 70.5%, including the Melio business. The company also expects an estimated value of NZ$350-490 million of amortisable intangible assets to arise from the Melio acquisition, with related expenses to be recognized as an operating expense from H2 FY26 onwards.

Xero is well-positioned for further growth, with the Melio acquisition expected to accelerate revenue growth and expand the company's presence in the US market. The company continues to invest in product development, sales and marketing, and customer experience to drive long-term sustainable growth.