Xero (ASX: XRO) posts green numbers again in H1 FY21

  • November 12, 2020 01:12 PM AEDT
  • Team Kalkine
Xero (ASX: XRO) posts green numbers again in H1 FY21

Summary

  • Xero Limited (ASX: XRO) increased its subscriber base by 19% during H1FY20, reaching a new high of 2.45 million customer base after a net addition of 239k subscribers.
  • The operating revenue increased from NZ$338,658 in H1FY20 to NZ$409,837 in 1HFY21, while average revenue per user decreased from NZ$30.96 to NZ$29.81.
  • EBITDA notched up massively by 86%, from NZ$64,850 to NZ$120,765.
  • The company added 21% subscribers from Australia, 13% from New Zealand. The UK and North America saw an uptick of 19% and 17% respectively.
  • Due to the high uncertainty still hovering around, the company has refrained from putting out guidance for the future.
  • Xero share price increased by 2.1% in today's early session and has delivered more than 125% return since March crash.
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On 12th November, Xero Limited (ASX: XRO) came out with its half-yearly numbers (H1 FY21) for the financial `period ending 30 September 2020 The company has posted a growth of 19% in the global subscriber base, primarily due to the pandemic situation, which is forcing the businesses to adopt online work regime.

H1 FY21 update

Although the company has been impacted by the COVID-19 situation, it reached a new milestone of 2.45 million customer base, including one million-plus subscriber in Australia alone. The net additions for the period stood at 168,000 compared to 239,000 in the previous corresponding year (pcp).

 

The operating revenue has seen an uptick from NZ$338,658 from the six months ended 30 September 2019 to NZ$409,837 in the current half. There was a slight decline seen in the average revenue per user from NZ$30.96 to NZ$29.81, but the annualized monthly recurring revenue grew by 15% to NZ$877,551 from NZ$764,096 compared to pcp.

EBITDA, on the other hand, notched up massively by 86%, from NZ$64,850 to NZ$120,765. However, the company’s net profit caught the eye of the street which grew multifold from NZ$1,336 to NZ$34,486 on the back of new subscriber addition, disciplined financial management and continued focus on tapping the M&A opportunities.

Subscriber addition from the specific markets

The subscriber base in Australia, the company’s largest market, grew by 21% to 1.01 million subscribers. The strong demand for cloud-based accounting from the businesses has been supported by JobKeeper stimulus payments by the government.

New Zealand also saw a 13% growth in the customer base, adding net subscribers to the extent of 22,000, while the revenue notched up by 13%.

The UK and North American markets also saw an uptick in the customer base of 19% and 17% respectively.

No guidance for the remaining year

Xero has been adopting disciplined cost measures with the targeted allocation of capital which allows it to respond to the uncertain environment more quickly. Xero is continuing to innovate new products and garner more customers; however, the clouds of uncertainty regarding the pandemic are still hovering around.

This has made the company refrain from putting out any guidance for the remaining FY21 and considered it to be speculative to do so.

Stock Performance

Currently, the stock is trading 2.1% up at $125.3 (as at 11:25 AM) and made a new 52-week high of $130.95 in today's session. The stock is one of the major players of the digital theme, that has been one of the investor’s favourite during the pandemic, which has led to a continuous rally since March low.

The stock is already up by 66% in the last six months and has delivered a triple-digit return of more than 125% since March low.

 

 


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