Executive Summary
Xero Limited, together with its subsidiaries, operates as a software as a service company worldwide.
Rewards
Risk Analysis
Snowflake Analysis
Exceptional growth potential with mediocre balance sheet.
Similar Companies
Share Price & News
How has Xero's share price performed over time and what events caused price changes?
Latest Share Price and Events
Stable Share Price: XRO has not had significant price volatility in the past 3 months.
Market Performance
7 Day Return
-2.3%
XRO
2.0%
AU Software
1.9%
AU Market
1 Year Return
100.6%
XRO
49.8%
AU Software
21.4%
AU Market
Return vs Industry: XRO exceeded the Australian Software industry which returned 47.9% over the past year.
Return vs Market: XRO exceeded the Australian Market which returned 19.4% over the past year.
Shareholder returns
| XRO | Industry | Market | |
|---|---|---|---|
| 7 Day | -2.3% | 2.0% | 1.9% |
| 30 Day | 3.4% | 3.9% | 5.2% |
| 90 Day | 25.8% | 12.1% | 6.2% |
| 1 Year | 100.6%100.6% | 51.1%49.8% | 26.9%21.4% |
| 3 Year | 363.2%363.2% | 153.3%142.1% | 40.1%21.3% |
| 5 Year | 471.6%471.6% | 206.4%182.8% | 61.8%25.3% |
Price Volatility Vs. Market
How volatile is Xero's share price compared to the market and industry in the last 5 years?
Simply Wall St News
1 week ago | Simply Wall St
Here's Why Xero (ASX:XRO) Can Manage Its Debt Responsibly1 month ago | Simply Wall St
Is Xero Limited (ASX:XRO) Struggling With Its 3.4% Return On Capital Employed?1 month ago | Simply Wall St
Could Xero Limited's (ASX:XRO) Investor Composition Influence The Stock Price?Valuation
Is Xero undervalued compared to its fair value and its price relative to the market?
4446.68x
Price to Earnings (PE) ratio
Share Price vs. Fair Value
Below Fair Value: XRO (A$84.58) is trading above our estimate of fair value (A$41.84)
Significantly Below Fair Value: XRO is trading above our estimate of fair value.
Price To Earnings Ratio
PE vs Industry: XRO is poor value based on its PE Ratio (4489.6x) compared to the Software industry average (37.5x).
PE vs Market: XRO is poor value based on its PE Ratio (4489.6x) compared to the Australian market (18.9x).
Price to Earnings Growth Ratio
PEG Ratio: XRO is poor value based on its PEG Ratio (80.4x)
Price to Book Ratio
PB vs Industry: XRO is overvalued based on its PB Ratio (32.8x) compared to the AU Software industry average (4.3x).
Next Steps
Future Growth
How is Xero forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?
55.8%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: XRO's forecast earnings growth (55.8% per year) is above the savings rate (1.1%).
Earnings vs Market: XRO's earnings (55.8% per year) are forecast to grow faster than the Australian market (9.6% per year).
High Growth Earnings: earnings are expected to grow significantly over the next 3 years.
Revenue vs Market: XRO's revenue (20.5% per year) is forecast to grow faster than the Australian market (3.8% per year).
High Growth Revenue: XRO's revenue (20.5% per year) is forecast to grow faster than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: XRO's Return on Equity is forecast to be high in 3 years time (24.3%)
Next Steps
Past Performance
How has Xero performed over the past 5 years?
25.6%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: XRO has a large one-off loss of NZ$3.2M impacting its September 30 2019 financial results.
Growing Profit Margin: XRO became profitable in the past.
Past Earnings Growth Analysis
Earnings Trend: XRO has become profitable over the past 5 years, growing earnings by 25.6% per year.
Accelerating Growth: XRO has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.
Earnings vs Industry: XRO has become profitable in the last year, making it difficult to compare its past year earnings growth to the Software industry (22.6%).
Return on Equity
High ROE: XRO's Return on Equity (0.7%) is considered low.
Return on Assets
Return on Capital Employed
Next Steps
Financial Health
How is Xero's financial position?
Financial Position Analysis
Short Term Liabilities: XRO's short term assets (NZ$646.4M) exceed its short term liabilities (NZ$115.4M).
Long Term Liabilities: XRO's short term assets (NZ$646.4M) exceed its long term liabilities (NZ$564.9M).
Debt to Equity History and Analysis
Debt Level: XRO's debt to equity ratio (103.9%) is considered high.
Reducing Debt: Insufficient data to determine if XRO's debt to equity ratio has reduced over the past 5 years.
Debt Coverage: XRO's debt is well covered by operating cash flow (38%).
Interest Coverage: XRO's interest payments on its debt are not well covered by EBIT (1.7x coverage).
Balance Sheet
Inventory Level: XRO has a low level of unsold assets or inventory.
Debt Coverage by Assets: XRO's debt is covered by short term assets (assets are 1.6x debt).
Next Steps
Dividend
What is Xero's current dividend yield, its reliability and sustainability?
0.026%
Forecast Dividend Yield
Dividend Yield vs Market
Current dividend yield vs market & industry
Notable Dividend: Unable to evaluate XRO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.
High Dividend: Unable to evaluate XRO's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if XRO's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if XRO's dividend payments have been increasing.
Current Payout to Shareholders
Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Future Payout to Shareholders
Future Dividend Coverage: No need to calculate the sustainability of XRO's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.
Next Steps
Management
What is the CEO of Xero's salary, the management and board of directors tenure and is there insider trading?
1.9yrs
Average management tenure
CEO
Steve Vamos (61yo)
1.8yrs
Tenure
NZ$1,068,000
Compensation
Mr. Steven M. Vamos, also known as Steve, BEng Civil (Hons) is the Chief Executive Officer of Xero Ltd since April 1, 2018. Mr. Vamos was an Independent Non-Executive Director at Telstra Corporation Limite ...
CEO Compensation Analysis
Compensation vs Market: Steve's total compensation ($USD706.07K) is below average for companies of similar size in the Australian market ($USD2.84M).
Compensation vs Earnings: Insufficient data to compare Steve's compensation with company performance.
Management Age and Tenure
1.9yrs
Average Tenure
Experienced Management: XRO's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.
Board Age and Tenure
3.0yrs
Average Tenure
Experienced Board: XRO's board of directors are considered experienced (3 years average tenure).
Insider Trading
Insider Buying: XRO insiders have only sold shares in the past 3 months.
Recent Insider Transactions
| Entity | Individual |
| Role | Member of the Board of Directors Non-Executive Director |
| Shares | 3,000,000 |
| Max Price | AU$75.00 |
| Entity | Individual |
| Role | Member of the Board of Directors Independent Non-Executive Director |
| Shares | 803 |
| Max Price | AU$59.00 |
| Entity | Individual |
| Role | Member of the Board of Directors Non-Executive Director |
| Shares | 4,000 |
| Max Price | AU$62.96 |
| Entity | Individual |
| Role | Member of the Board of Directors Non-Executive Director |
| Shares | 750,000 |
| Max Price | AU$59.72 |
| Entity | Individual |
| Role | Member of the Board of Directors Founder & Non-Executive Director |
| Shares | 2,000,000 |
| Max Price | AU$58.00 |
Ownership Breakdown
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.4%.
Management Team
Steve Vamos (61yo)
Chief Executive Officer
- Tenure: 1.8yrs
- Compensation: NZ$1.07m
Rod Drury
Founder & Non-Executive Director
- Tenure: 13.5yrs
Gary Turner
Managing Director of United Kingdom & EMEA
- Tenure: 10.5yrs
Anne Allen
Head of People Experience - UK
- Tenure: 6.2yrs
Chaman Sidhu
Chief Legal Officer & Company Secretary
- Tenure: 3.3yrs
Anna Curzon
Chief Product Officer
- Tenure: 1.3yrs
Kirsty Godfrey-Billy
Chief Financial Officer
- Tenure: 1.3yrs
- Compensation: NZ$692.00k
Mark Rees
Chief Technology Officer
- Tenure: 2yrs
Damien Tampling
Chief Strategy & Corporate Development Officer
Nicole Reid
Acting Chief People Officer
- Tenure: 0.3yrs
Board Members
Graham Smith (59yo)
Independent Chairman of the Board
- Tenure: 3yrs
- Compensation: NZ$460.00k
David Thodey (65yo)
Non-Executive Director
- Tenure: 0.6yrs
Andrew Winkler
Non-Executive Director
- Tenure: 10.7yrs
- Compensation: NZ$90.00k
Rod Drury
Founder & Non-Executive Director
- Tenure: 13.5yrs
Dale Murray
Independent Non-Executive Director
- Tenure: 1.8yrs
- Compensation: NZ$111.00k
Susan Peterson
Independent Non-Executive Director
- Tenure: 2.9yrs
- Compensation: NZ$90.00k
Lee Hatton
Independent Non-Executive Director
- Tenure: 5.8yrs
- Compensation: NZ$110.00k
Company Information
Xero Limited's company bio, employee growth, exchange listings and data sources
Key Information
- Name: Xero Limited
- Ticker: XRO
- Exchange: ASX
- Founded: 2006
- Industry: Application Software
- Sector: Software
- Market Cap: AU$12.052b
- Shares outstanding: 141.04m
- Website: https://www.xero.com
Number of Employees
Location
- Xero Limited
- XERO ONE
- 19-23 Taranaki Street
- Wellington
- 6011
- New Zealand
Listings
| Ticker | Exchange | Primary Security | Security Type | Country | Currency | Listed on |
|---|---|---|---|---|---|---|
| XROL.F | OTCPK (Pink Sheets LLC) | Yes | Ordinary Shares | US | USD | Jun 2007 |
| XRO | ASX (Australian Securities Exchange) | Yes | Ordinary Shares | AU | AUD | Jun 2007 |
| XRO | CHIA (Chi-X Australia) | Yes | Ordinary Shares | AU | AUD | Jun 2007 |
| 0XE | DB (Deutsche Boerse AG) | Yes | Ordinary Shares | DE | EUR | Jun 2007 |
Biography
Xero Limited, together with its subsidiaries, operates as a software as a service company worldwide. The company offers Xero, a cloud-based accounting software that connects small businesses to their advisors. It also provides Xero mobile app; and accountant/bookkeeper tools, including Xero HQ, Xero Practice Manager, Xero Workpapers, and Xero Cashbook/Ledger. The company serves various businesses, such as retail, high tech, non-profit, legal, Amazon sellers, hospitality, cafés, startups, construction, creatives, e-commerce, small business, healthcare, farming, manufacturing, tourism, real estate, and franchises. Xero Limited was founded in 2006 and is headquartered in Wellington, New Zealand.
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2020/01/23 10:38 |
| End of Day Share Price | 2020/01/23 00:00 |
| Earnings | 2019/09/30 |
| Annual Earnings | 2019/03/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.