Xero (ASX: XRO) shares FY25-27 strategy, aspires for future growth

February 29, 2024 06:29 PM AEDT | By Team Kalkine Media

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Xero (ASX: XRO) shares FY25-27 strategy, aspires for future growth — Image source: © Transversospinales | Megapixl.com

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The Xero Ltd (ASX: XRO) shares closed 0.24% up at AU$127.31 apiece on Thursday. However, during the morning trading session, XRO share price marked a drop of 1.5% due to setback in technology sector, overshadowing the release of the company's FY25-27 strategy update ahead of the Investor Day event.

Navigating Xero's Strategy Landscape

Xero's strategy, outlined in four strategic priorities, serves as the guiding force for its future endeavors:

Win the 3 x 3 – Core Accounting, Payments, and Payroll: Crafting winning customer solutions for the critical tasks of accounting, payments, and payroll.
A Winning Go-To-Market Playbook: Efficiently acquiring and onboarding subscribers to the right products, deepening customer relationships, and optimizing pricing for enhanced customer value and growth.
Focused Bets to Win the Future: Enhancing customer experience through AI and mobile technologies, and realizing the full potential of its ecosystem and APIs.
Unleash Xero(s) to Win: Delivering a purpose and performance-driven employee value proposition, along with enhancing product, technology capabilities, and the operating model.

Strategic Partnership with BILL: Strengthening Xero's Footprint

Xero seizes the moment to announce a strategic partnership in the United States with BILL, a financial operations platform catering to small and midsize businesses. This collaboration, with over 470,000 businesses utilizing BILL's financial automation solution, is expected to fortify Xero's US payments offering, providing added value for customers. The embedded solution enables secure bill management, approval, and payment through Xero, offering various payment options without leaving the platform.

Enter Xero AI: Just Ask Xero (JAX)

Xero introduces its latest innovation, Just Ask Xero (JAX), a generative AI solution designed as a smart business companion. JAX assists small businesses and their advisors in automating accounting tasks, delivering personal insights, and reclaiming valuable time. Customers can seamlessly command JAX to complete tasks like generating invoices, whether within Xero or other applications like email or WhatsApp. JAX not only completes the task but also anticipates and proposes subsequent actions, enhancing overall task efficiency.

Outlook for FY 2024: Affirming Commitments

Xero concludes by reiterating its existing FY 2024 outlook, targeting an operating expense to operating revenue ratio of around 75%. This strategic move aims to improve the operating income margin compared to FY 2023.

In summary, as Xero faces a temporary dip in share prices due to broader market challenges, the company's strategic initiatives, partnerships, and innovative solutions position it for resilience and sustained growth in the competitive landscape.

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