Xero’s full year 2022 financial results

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Today we announced Xero’s full year financial and operating results to 31 March 2022 (FY22).

Our strong financial result reflects the benefits of Xero’s commitment to invest for the long-term to support our strategy and focus on current and future customer needs.

In FY22, Xero grew operating revenue 29%, and exceeded the milestone of a billion dollars for the first time to reach $1.1 billion. We ended the financial year with 3.3 million global subscribers and 4,784 employees around the world, a 19% and 31% increase on the prior year respectively.

The past year has again highlighted the resilience of small businesses and their advisors, and the strength of our relationships with customers and partners as more people realise the benefits cloud accounting and digital tools provide.

In the video below, I share the highlights from our FY22 results, joined by our CFO, Kirsty Godfrey-Billy.

Financial results

The quality of Xero’s performance, delivered against a backdrop of varying market conditions, is highlighted by robust software-as-a-service (SaaS) metrics:

Performance highlights FY22 (all figures are in NZD and comparisons are made against FY21)

Operating revenue increased by 29% to $1.1 billion (30% in constant currency (CC))
Total subscribers increased by 19% to 3.3 million
Annualised monthly recurring revenue (AMRR) grew by 28% to $1.2 billion (30% in CC)
Total subscriber lifetime value (LTV) grew by $3.3 billion or 43% to $10.9 billion (45% in CC)
Gross margin percentage increased by 1.3 percentage points to 87.3%
EBITDA of $212.7 million increased by 11% from $191.2 million
Free cash flow was $2.1 million compared to $56.9 million

Over the year, Xero’s revenue growth profile rebounded – particularly in the second half of the financial year – and we delivered a marked improvement in ARPU, good progress on subscriber growth, as well as improvement in churn, which has remained consistently below pre-COVID-19 levels. These key metrics contributed to a substantial increase in total subscriber Lifetime Value (LTV).

We continue to prioritise our investment to build new products and functionality, enter into partnerships, and acquire businesses that are a strategic fit for Xero.

Our strong revenue and subscriber growth gives us confidence to continue to invest for growth consistent with our long-term strategy and demonstrates the value Xero brings to our small business customers and the trust they place in us.

Our integrated reporting journey

Alongside our financial results, we are also sharing for the first time, an expanded range of non-financial indicators in our Annual Report. Reflecting this change, our FY22 Annual Report has been prepared with reference to the Value Reporting Foundation’s Integrated Reporting <IR> Framework in order to further demonstrate how we create value for our stakeholders.

This increased transparency provides further insight regarding how we manage and progress important issues such as our use of customers’ data, our sustainability performance, and our efforts to enhance diversity and inclusion.

Thank you

I’d like to extend my thanks to our team at Xero, customers, partners, shareholders and everyone who supports Xero. These results would not be possible without your ongoing support.

You can find Xero’s FY22 results materials on our Investor Centre here: www.xero.com/about/investors

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