Increasing subscriber numbers alongside increasing ARPU yields 20% annual revenue growth as more and more businesses turn to cloud based accounting solutions with strong integrations and eventual AI features to run their businesses. Xero has high scalability of its products, with current gross margin of ~88%. The higher revenue will be applied across relatively static operating expenses as Xero reaches the point where it can continue steady feature rollouts without needing to increase spending relative to revenue, resulting in higher net profit margins. Strong revenue and net profit margin results alongside continued feature rollouts causes the market to still view Xero as having much room to grow and results in a Future PE of 80x.
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