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Highlights
- Xero is the worst performing company on the ASX today.
- Xero delivered net loss despite recording revenues of over NZ$1 billion.
- Overall weakness in the technology sector also weighed on share prices of Xero.
Shares of Xero Limited (ASX:XRO) hit a new 52-week low today (12 May 2022) after sharing its full-year results for the year ending on 31 March 2022. The company recorded a net loss of NZ$9.1 million in the preceding financial year despite a 29% jump in its operating revenue to NZ$1.1 billion.
The shares have been declining continuously today. At 11:54 AM AEST, the share price slipped by 11.11% on the ASX to AU$77.38 apiece. It is the lowest the shares have reached since May 2020. During intraday trade, the stock touched a fresh 52-week low of NZ$75.80.
At the time of writing, Xero topped the list of the worst-performing stock on the ASX. Including today's fall, Xero's share price has declined by around 42% in a year and by 47% year-to-date.
Worth mentioning here is that the full-year results are not the sole reason behind the fall in the cloud accounting platform provider’s share price on Thursday. The overall weakness in the tech sector also weighed on Xero share prices. The Nasdaq-100 technology index ended with over 3% loss overnight while the S&P/ASX All Technology (XTX) was down by around 5%.
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Key highlights of FY22 financial performance
Image source: © Joingate | Megapixl.com
- In full-year 2022 (FY22), the operating revenue of the tech company grew by 29% to NZ$1.1 billion in comparison to the previous year.
- The total subscribers reached 3.3 million, a 19% increase from the prior corresponding period (pcp).
- The gross margin percentage reached 87.3%, an increase of 1.3%.
- EBITDA surged to NZ$212.7 million, an 11% rise on pcp.
- Xero reported a 96% decline in the free cash flow, from NZ$56,946 to NZ$2,073.
- The net loss reached NZ$9.1 million, upon which the company said that it is consistent with the company's strategy to reinvest capital back into the business.
Image source: © 2022 Kalkine Media®
On the full-year earnings, Steve Vamos, CEO of XRO, commented:
Acquisitions by Xero in FY22
In FY22, Xero acquired LOCATE Inventory, TaxCycle, Tickstar and Planday. These businesses contributed NZ$41.7 million of operating revenue. These strategic acquisitions have added talent, product and technology capabilities to Xero and enabled category expansion.
Road ahead!
XERO said that it would continue its focus on developing its small business platform. The company would prefer reinvestment of cash generated considering the shareholder's value and market conditions. The company expects to deliver operating expenses at the lower end of the range – 80 to 85%.
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