The Xero Ltd (ASX: XRO) share price is in focus today as the company showcases its progress in global AI and US payments, with over two million subscribers now using its AI features and key advances following the Melio integration.
What did Xero report?
- Over two million Xero subscribers now benefitting from AI features, with 300,000 using new GenAI tools.
- Melio’s US payments functionality successfully integrated, strengthening Xero’s presence stateside.
- Xero reiterates FY26 guidance: operating expenses expected at around 70.5% of revenue (including Melio).
- Melio expected to reach Adjusted-EBITDA breakeven in H2 FY28 (on a run-rate basis).
- More than four million customers now using Xero’s platform globally.
What else do investors need to know?
Xero is focusing squarely on driving the adoption and value of AI features in its products, aiming to make small business accounting smarter and easier. Its AI strategy rests on four main goals: helping customers get assistance quickly, saving them time, supporting smarter business decisions, and unlocking new growth.
In the US, the combination with Melio is already delivering benefits, with unified teams and improved payments integration enabling Xero to target higher revenue per customer and stronger unit economics. Xero has also started reporting more detailed US business metrics, covering payment volumes and customer profitability.
What did Xero management say?
CEO Sukhinder Singh Cassidy commented:
We are deeply focused on capturing the global AI and US accounting plus payments TAM. Xero is well positioned to shepherd SMBs into the AI era and take advantage of this technology. We are already a trusted system of record and are now orchestrating multiple agents to evolve into the key system of action and decision making for our customers. Combined with our deep domain knowledge, unique data platform and go-to-market strengths, we have a clear AI strategy that supports our long-term growth opportunity.
What’s next for Xero?
Looking ahead, Xero plans to accelerate its AI rollout, deepen product adoption, and begin monetising new AI-powered features during FY27. The company will also move to an Adjusted-EBITDA framework for forward guidance, aiming to give investors a clearer picture of ongoing profitability.
Xero’s FY28 goal is ambitiousâmore than doubling FY25 group revenue and delivering Rule of 40 outcomes at group level, supported by US growth and efficiencies from the Melio acquisition.
Xero share price snapshot
Over the past 12 months, Xero shares have declined 49%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 5% over the same period.
The post Xero highlights AI progress and Melio momentum in US market update appeared first on The Motley Fool Australia.
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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.