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Highlights:
- Xero Limited (ASX:XRO) stock surged as much as 11.3% on Thursday, 09 March 2023 and was one of the top gainers in the S&P/ASX 200 Index.
- The accounting software company announced restructuring its operations to improve profitability and growth.
- Under the organisational restructuring, it announced slashing 700-800 roles across its business.
Xero Limited (ASX:XRO) stock surged as much as 11.29% on Thursday, 09 March 2023, after the accounting software provider announced a major restructuring of its operations to reduce costs and improve profitability and growth. At around 3:55 pm AEDT, XRO shares were trading 10.51% higher at AU$86.886, to be one of the top five gainers in the S&P/ASX 200 index.
The company, as part of the restructuring, announced reducing its workforce by 700-800 across its business. The step is taken to improve operating leverage, profitability, and growth.
By streamlining the operations, the management expects to reduce its operating expenses, which came at 83.9% of operating revenue in H1FY23, to around 75% in FY24.
Also, it plans to exit from its lending platform Waddle, which it bought in 2020. Xero is doing everything to reduce expenses and improve profitability by focusing on the small business platform strategy.
The latest decision which made the company's stock jump came after considering strategies to reduce the overall expenses, including headcount reduction.
As per the company, these changes would mean improved resource prioritisation and utilisation for gaining both in the short and long term.
For the half-year FY23 ended 30 September 2022, the company posted a 30% increase in operating revenue over the previous year to AU$658.5 million and an 11% increase in EBITDA to AU$108.6 million. However, it incurred a net loss after tax of AU$16.13 million, reflecting a 172% increase YoY due to higher operating and asset impairment expenses.
Reportedly, its general and administrative expenses in H1FY23 came 25% higher to AU$82.5 million compared to the same period in FY22, where personnel cost was identified as the main contributor. In comparison with the previous year, its full-time employees increased by 17% to 4,915 as of 30 September 2022.
