Xero Beats 1st Half Profit Expectations Despite Melio Margin Hit

By Stuart Condie

SYDNEY--Xero reported a stronger-than-expected first-half profit despite the margin hit from the accounting-software provider's recent acquisition.

The New Zealand-based company on Thursday reported a net profit for the six months through September of 134.8 million New Zealand dollars, equivalent to US$76.2 million. That was up 42% on the NZ$95.1 million from a year earlier.

Revenue increased 20% to NZ$1.19 billion as Xero's subscriber base rose 9.7% to 4.6 million.

Analysts had been looking for a net profit of NZ$132.0 million from revenue of NZ$1.20 billion, according to data compiled by Visible Alpha.

Adjusted earnings before interest, tax, depreciation and amortization, which strip out costs associated with the US$2.5 billion acquisition of bill-pay provider Melio, rose 12% to NZ$350.9 million.

Excluding the acquisition, Xero's operating-expenses-to-operating-revenue ratio rose to 72.8% from 71.2% a year earlier. Including the acquisition, it was 77.0%.

Australia-listed Xero, which did not declare a dividend, said it expected its second-half operating-expense ratio to be lower than in the first half. It lowered its full-year ratio guidance to 70.5% from 71.5%.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

November 12, 2025 16:55 ET (21:55 GMT)