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Xero

ASX:XRO
Snowflake Description

High growth potential with adequate balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
XRO
ASX
A$9B
Market Cap
  1. Home
  2. AU
  3. Software
Company description

Xero Limited, together with its subsidiaries, operates as a software as a service company worldwide. The last earnings update was 62 days ago. More info.


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XRO Share Price and Events
7 Day Returns
-2.1%
ASX:XRO
1%
AU Software
-0.1%
AU Market
1 Year Returns
34.6%
ASX:XRO
37.1%
AU Software
4.9%
AU Market
XRO Shareholder Return
  7 Day 30 Day 90 Day 1 Year 3 Year 5 Year
Xero (XRO) -2.1% 3% 18.3% 34.6% 259% 175.5%
AU Software 1% 4.6% 11.6% 37.1% 114.8% 141.1%
AU Market -0.1% 1.7% 5.8% 4.9% 19.7% 12.1%
1 Year Return vs Industry and Market
  • XRO underperformed the Software industry which returned 37.1% over the past year.
  • XRO outperformed the Market in Australia which returned 4.9% over the past year.
Price Volatility
XRO
Industry
5yr Volatility vs Market

Value

 Is Xero undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Xero to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for Xero.

ASX:XRO Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 9 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 8.9%
Perpetual Growth Rate 10-Year AU Government Bond Rate 2.3%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for ASX:XRO
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year AU Govt Bond Rate 2.3%
Equity Risk Premium S&P Global 6%
Software Unlevered Beta Simply Wall St/ S&P Global 1.12
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 1.12 (1 + (1- 28%) (4.9%))
1.107
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
1.11
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 2.31% + (1.107 * 5.96%)
8.91%

Discounted Cash Flow Calculation for ASX:XRO using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for Xero is arrived at by discounting future cash flows to their present value using the 2 stage method. We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.

ASX:XRO DCF 1st Stage: Next 10 year cash flow forecast
Levered FCF (NZD, Millions) Source Present Value
Discounted (@ 8.91%)
2020 16.00 Analyst x1 14.69
2021 37.00 Analyst x1 31.19
2022 59.00 Analyst x1 45.67
2023 78.35 Est @ 32.8% 55.69
2024 96.88 Est @ 23.65% 63.23
2025 113.60 Est @ 17.25% 68.07
2026 128.10 Est @ 12.77% 70.48
2027 140.44 Est @ 9.63% 70.95
2028 150.88 Est @ 7.44% 69.99
2029 159.78 Est @ 5.9% 68.06
Present value of next 10 years cash flows NZ$558.03
ASX:XRO DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2029 × (1 + g) ÷ (Discount Rate – g)
= NZ$159.78 × (1 + 2.31%) ÷ (8.91% – 2.31%)
NZ$2,477.77
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
= NZ$2,477.77 ÷ (1 + 8.91%)10
NZ$1,055.35
ASX:XRO Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= NZ$558.03 + NZ$1,055.35
NZ$1,613.38
Equity Value per Share
(NZD)
= Total value / Shares Outstanding
= NZ$1,613.38 / 140.73
NZ$11.46
ASX:XRO Discount to Share Price
Calculation Result
Exchange Rate NZD/AUD
(Reporting currency to currency of ASX:XRO)
0.955
Value per Share
(AUD)
= Value per Share in NZD x Exchange Rate (NZD/AUD)
= NZ$11.46 x 0.955
A$10.95
Value per share (AUD) From above. A$10.95
Current discount Discount to share price of A$61.03
= -1 x (A$61.03 - A$10.95) / A$10.95
-457.4%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

  • The current share price of Xero is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Xero's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Xero's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
ASX:XRO PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings (2019-03-31) in NZD NZ$-0.19
ASX:XRO Share Price ** ASX (2019-07-15) in AUD A$61.03
ASX:XRO Share Price converted to NZD reporting currency Exchange rate (AUD/ NZD) 1.047 NZ$63.91
Australia Software Industry PE Ratio Median Figure of 19 Publicly-Listed Software Companies 36.41x
Australia Market PE Ratio Median Figure of 546 Publicly-Listed Companies 16.25x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of Xero.

ASX:XRO PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= ASX:XRO Share Price ÷ EPS (both in NZD)

= 63.91 ÷ -0.19

-327.74x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Xero is loss making, we can't compare its value to the AU Software industry average.
  • Xero is loss making, we can't compare the value of its earnings to the Australia market.
Price based on expected Growth
Does Xero's expected growth come at a high price?
Raw Data
ASX:XRO PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section -327.74x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 9 Analysts
45.9%per year
Australia Software Industry PEG Ratio Median Figure of 14 Publicly-Listed Software Companies 2.53x
Australia Market PEG Ratio Median Figure of 361 Publicly-Listed Companies 1.37x

*Line of best fit is calculated by linear regression .

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Unable to calculate PEG ratio for Xero, we can't assess if its growth is good value.
Price based on value of assets
What value do investors place on Xero's assets?
Raw Data
ASX:XRO PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings (2019-03-31) in NZD NZ$2.52
ASX:XRO Share Price * ASX (2019-07-15) in AUD A$61.03
ASX:XRO Share Price converted to NZD reporting currency Exchange rate (AUD/ NZD) 1.047 NZ$63.91
Australia Software Industry PB Ratio Median Figure of 103 Publicly-Listed Software Companies 3.43x
Australia Market PB Ratio Median Figure of 1,693 Publicly-Listed Companies 1.7x
ASX:XRO PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= ASX:XRO Share Price ÷ Book Value per Share (both in NZD)

= 63.91 ÷ 2.52

25.39x

* Primary Listing of Xero.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Xero is overvalued based on assets compared to the AU Software industry average.
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Value checks
We assess Xero's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Software industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Software industry average (and greater than 0)? (1 check)
  5. Xero has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.

    Full details on the Value part of the Simply Wall St company analysis model.

Future Performance

 How is Xero expected to perform in the next 1 to 3 years based on estimates from 9 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
45.9%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Xero expected to grow at an attractive rate?
  • Xero's earnings growth is expected to exceed the low risk savings rate of 2.3%.
Growth vs Market Checks
  • Xero's earnings growth is expected to exceed the Australia market average.
  • Xero's revenue growth is expected to exceed the Australia market average.
Annual Growth Rates Comparison
Raw Data
ASX:XRO Future Growth Rates Data Sources
Data Point Source Value (per year)
ASX:XRO Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 9 Analysts 45.9%
ASX:XRO Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 9 Analysts 18.9%
Australia Software Industry Earnings Growth Rate Market Cap Weighted Average 33%
Australia Software Industry Revenue Growth Rate Market Cap Weighted Average 20.7%
Australia Market Earnings Growth Rate Market Cap Weighted Average 7.3%
Australia Market Revenue Growth Rate Market Cap Weighted Average 3.3%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
ASX:XRO Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (3 months ago) See Below
Future Estimates Average of up to 9 Analyst Estimates (S&P Global) See Below
All numbers in NZD Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
ASX:XRO Future Estimates Data
Date (Data in NZD Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2024-03-31 1,656 263 1
2023-03-31 1,421 152 1
2022-03-31 1,109 232 114 6
2021-03-31 909 217 71 9
2020-03-31 726 162 28 9
ASX:XRO Past Financials Data
Date (Data in NZD Millions) Revenue Cash Flow Net Income *
2019-03-31 553 114 -27
2018-12-31 514 98 -31
2018-09-30 475 62 -37
2018-06-30 441 52 -32
2018-03-31 407 61 -25
2017-12-31 376 37 -36
2017-09-30 346 24 -45
2017-06-30 321 10 -57
2017-03-31 295 -4 -69
2016-12-31 274 -15 -76
2016-09-30 252 -25 -82
2016-06-30 229 -30 -82

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • Xero's earnings are expected to grow significantly at over 20% yearly.
  • Xero's revenue is expected to grow by 18.9% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Raw Data
ASX:XRO Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (3 months ago) See Below
Future Estimates Average of up to 9 Analyst Estimates (S&P Global) See Below

All data from Xero Company Filings, last reported 3 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

ASX:XRO Future Estimates Data
Date (Data in NZD Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2024-03-31 1.86 1.86 1.86 1.00
2023-03-31 1.08 1.08 1.08 1.00
2022-03-31 0.51 0.56 0.45 2.00
2021-03-31 0.54 0.93 0.21 7.00
2020-03-31 0.15 0.32 0.00 7.00
ASX:XRO Past Financials Data
Date (Data in NZD Millions) EPS *
2019-03-31 -0.19
2018-12-31 -0.22
2018-09-30 -0.27
2018-06-30 -0.24
2018-03-31 -0.18
2017-12-31 -0.26
2017-09-30 -0.32
2017-06-30 -0.41
2017-03-31 -0.50
2016-12-31 -0.55
2016-09-30 -0.60
2016-06-30 -0.60

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Xero is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
X
Future performance checks
We assess Xero's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the Australia market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the Australia market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Xero has a total score of 5/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Xero performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Xero's growth in the last year to its industry (Software).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Xero does not make a profit even though their year on year earnings growth rate was positive over the past 5 years.
  • Unable to compare Xero's 1-year earnings growth to the 5-year average as it is not currently profitable.
  • Unable to compare Xero's 1-year growth to the AU Software industry average as it is not currently profitable.
Earnings and Revenue History
Xero's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from Xero Company Filings, last reported 3 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

ASX:XRO Past Revenue, Cash Flow and Net Income Data
Date (Data in NZD Millions) Revenue Net Income * G+A Expenses R&D Expenses
2019-03-31 552.82 -27.14 312.79 137.80
2018-12-31 514.08 -30.52 291.39 133.55
2018-09-30 475.27 -36.82 274.92 131.86
2018-06-30 440.92 -32.33 257.89 125.35
2018-03-31 406.66 -24.91 235.94 116.31
2017-12-31 376.30 -35.54 224.73 111.10
2017-09-30 345.98 -44.73 210.84 105.24
2017-06-30 320.68 -56.89 207.75 99.25
2017-03-31 295.39 -69.06 204.65 93.27
2016-12-31 273.52 -75.56 202.93 86.68
2016-09-30 251.65 -82.06 201.21 80.09
2016-06-30 229.36 -82.26 190.17 74.88
2016-03-31 207.06 -82.46 179.13 69.66
2015-12-31 184.72 -85.93 165.87 65.72
2015-09-30 162.38 -89.39 152.61 61.77
2015-06-30 143.20 -79.46 134.97 53.65
2015-03-31 124.02 -69.53 117.34 45.53
2014-12-31 108.68 -56.18 101.27 36.25
2014-09-30 93.35 -42.83 85.21 26.96
2014-06-30 81.72 -38.77 76.01 22.68
2014-03-31 70.09 -34.71 66.82 18.41
2013-12-31 61.28 -29.30 63.21 19.35
2013-09-30 52.46 -23.89 59.59 20.29
2013-06-30 45.41 -19.28 44.82 15.95
2013-03-31 38.35 -14.68 30.04 11.62
2012-12-31 33.57 -13.00 18.80 5.81
2012-09-30 28.79 -11.32 7.57

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • It is difficult to establish if Xero has efficiently used shareholders’ funds last year (Return on Equity greater than 20%) as it is loss-making.
  • It is difficult to establish if Xero has efficiently used its assets last year compared to the AU Software industry average (Return on Assets) as it is loss-making.
  • It is difficult to establish if Xero improved its use of capital last year versus 3 years ago (Return on Capital Employed) as it is currently loss-making.
X
Past performance checks
We assess Xero's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Software industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Xero has a total score of 0/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Xero's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Xero's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Xero is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Xero's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Xero's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Debt is covered by short term assets, assets are 1.6x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from Xero Company Filings, last reported 3 months ago.

ASX:XRO Past Debt and Equity Data
Date (Data in NZD Millions) Total Equity Total Debt Cash & Short Term Investments
2019-03-31 353.31 357.73 458.35
2018-12-31 353.31 357.73 458.35
2018-09-30 329.57 390.98 76.19
2018-06-30 329.57 390.98 76.19
2018-03-31 241.08 0.00 79.96
2017-12-31 223.13 0.73 79.96
2017-09-30 216.50 3.51 84.33
2017-06-30 216.50 3.51 84.33
2017-03-31 224.15 0.00 113.70
2016-12-31 224.15 0.00 113.70
2016-09-30 242.58 0.00 137.91
2016-06-30 242.58 0.00 137.91
2016-03-31 279.09 0.00 184.02
2015-12-31 279.09 0.00 184.02
2015-09-30 316.72 0.00 224.46
2015-06-30 316.72 0.00 224.46
2015-03-31 345.65 0.00 268.87
2014-12-31 345.65 0.00 268.87
2014-09-30 236.23 0.00 170.77
2014-06-30 236.23 0.00 170.77
2014-03-31 254.94 0.00 209.89
2013-12-31 254.94 0.00 209.89
2013-09-30 89.55 0.00 55.33
2013-06-30 89.55 0.00 55.33
2013-03-31 102.65 0.00 78.24
2012-12-31 102.65 0.00 78.24
2012-09-30 47.65 0.00 30.58
  • Xero's level of debt (101.3%) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (0% vs 101.3% today).
CASH RUNWAY ANALYSIS

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

  • Whilst loss making Xero has sufficient cash runway for more than 3 years if it maintains the current positive free cash flow level.
  • Whilst loss making Xero has sufficient cash runway for more than 3 years, even with free cash flow being positive and shrinking by -65% per year.
X
Financial health checks
We assess Xero's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Xero has a total score of 4/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Xero's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from Xero dividends. Estimated to be 0.04% next year.
If you bought A$2,000 of Xero shares you are expected to receive A$0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Unable to evaluate Xero's dividend yield against the bottom 25% of dividend payers as the company has not reported any payouts.
  • Unable to evaluate Xero's dividend against the top 25% market benchmark as the company has not reported any payouts.
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
ASX:XRO Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 9 Analyst Estimates (S&P Global) See Below
Australia Software Industry Average Dividend Yield Market Cap Weighted Average of 14 Stocks 1.1%
Australia Market Average Dividend Yield Market Cap Weighted Average of 416 Stocks 4%
Australia Minimum Threshold Dividend Yield 10th Percentile 1.5%
Australia Bottom 25% Dividend Yield 25th Percentile 2.5%
Australia Top 25% Dividend Yield 75th Percentile 5.8%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

ASX:XRO Future Dividends Estimate Data
Date (Data in NZ$) Dividend per Share (annual) Avg. No. Analysts
2024-03-31
2023-03-31
2022-03-31 0.05 5.00
2021-03-31 0.02 8.00
2020-03-31 0.01 8.00

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Unable to perform a dividend volatility check as Xero has not reported any payouts.
  • Unable to verify if Xero's dividend has been increasing as the company has not reported any payouts.
Current Payout to shareholders
What portion of Xero's earnings are paid to the shareholders as a dividend.
  • Unable to calculate sustainability of dividends as Xero has not reported any payouts.
Future Payout to shareholders
  • No need to calculate the sustainability of Xero's dividends in 3 years as they are not expected to pay a notable one for Australia.
X
Income/ dividend checks
We assess Xero's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 1.5%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can Xero afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. Xero has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Xero's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Steve Vamos
COMPENSATION NZ$1,068,000
AGE 61
TENURE AS CEO 1.3 years
CEO Bio

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 Limited since September 15, 2009 until October 16, 2018. He served as International Vice President of Online Services Group of Microsoft Pty., Ltd. since February 2007. Over the past 18 months, he has worked closely with Xero’s executive team developing its management capability and operating model. Mr. Vamos has over 30 years’ experience in the information technology, internet and online media industry. He served as the Managing Director of Australasian operations of Microsoft Pty., Ltd. He served as the Chief Executive officer of Nine Msn of ECorp Ltd. from 1998 to February 2007. He served as Vice President/head of Worldwide Sales and International Operations for Microsoft Corporation Online Services Group from 2007 to 2008. He served as Managing Director of Apple Computers Asia Pasific from 1996 to 1998 and also held a variety of senior executive positions with Apple Computers from 1994 to 1998. He served as Chief Executive Officer of Microsoft Australia and New Zealand from 2003 to 2006. Mr. Vamos also worked for Apple Computers in the 1990s after spending 14 years in senior management roles at IBM Australia from 1979 to 1994. He has been an Independent Non-Executive Director of Fletcher Building Limited since July 6, 2015. He serves as Director of Fletcher Building Industries Limited. He has held senior management roles at ninemsn. He has been a Director of Reading Room, Inc since 2013; BDB Soti Pty Ltd since 2012 and eGeneration Investments Pty Limited since 1999. He served as a Director of Medibank Private Limited from October 24, 2011 to 2014. He served as an Independent Non-Executive Director of David Jones Limited from June 5, 2012 to February 10, 2014. He is a member of the Advisory Board of the University of Technology Sydney Business School since 2011. He was a Director at Divvy Parking from 2016 to 2018. He founded the Society for Knowledge Economics (SKE), a not for profit think tank that operated from 2005 to 2014, to encourage and promote new and better leadership and management practices that enable innovation, productivity and sustainability. Mr. Vamos has a Bachelor of Civil Engineering (Hons) from the University of New South Wales.

CEO Compensation
  • Insufficient data for Steve to compare compensation growth.
  • Steve's remuneration is lower than average for companies of similar size in Australia.
Management Team Tenure

Average tenure of the Xero management team in years:

1.4
Average Tenure
  • The average tenure for the Xero management team is less than 2 years, this suggests a new team.
Management Team

Steve Vamos

TITLE
Chief Executive Officer
COMPENSATION
NZ$1M
AGE
61
TENURE
1.3 yrs

Rod Drury

TITLE
Founder & Non-Executive Director

Kirsty Godfrey-Billy

TITLE
Chief Financial Officer
COMPENSATION
NZ$692K
TENURE
0.8 yrs

Mark Rees

TITLE
Chief Technology Officer
TENURE
1.5 yrs

Chaman Sidhu

TITLE
Chief Legal Officer & Company Secretary
TENURE
2.8 yrs

Rachael Powell

TITLE
Chief Customer
TENURE
0.8 yrs

Damien Tampling

TITLE
Chief Strategy & Corporate Development Officer

Gary Turner

TITLE
Managing Director of United Kingdom & EMEA
TENURE
10 yrs

Anne Allen

TITLE
Head of People Experience - UK
TENURE
5.7 yrs

Anna Curzon

TITLE
TENURE
0.8 yrs
Board of Directors Tenure

Average tenure and age of the Xero board of directors in years:

3.9
Average Tenure
59
Average Age
  • The tenure for the Xero board of directors is about average.
Board of Directors

Graham Smith

TITLE
Chairman of the Board
COMPENSATION
NZ$460K
AGE
59
TENURE
2.5 yrs

Rod Drury

TITLE
Founder & Non-Executive Director
TENURE
13 yrs

Lee Hatton

TITLE
Independent Non-Executive Director
COMPENSATION
NZ$110K
TENURE
5.3 yrs

Susan Peterson

TITLE
Independent Non-Executive Director
COMPENSATION
NZ$90K
TENURE
2.4 yrs

Andrew Winkler

TITLE
Non-Executive Director
COMPENSATION
NZ$90K
TENURE
10.2 yrs

Bill Veghte

TITLE
Independent Non-Executive Director
COMPENSATION
NZ$299K
AGE
52
TENURE
5.4 yrs

Dale Murray

TITLE
Independent Non-Executive Director
COMPENSATION
NZ$111K
TENURE
1.3 yrs

David Thodey

TITLE
Non-Executive Director
AGE
65
TENURE
0.1 yrs
Who owns this company?
Recent Insider Trading
  • Xero individual insiders have sold more shares than they have bought in the past 3 months.
Recent Insider Transactions
Announced Type Name Entity Role Start End Shares Max Price (A$) Value (A$)
08. Jul 19 Buy David Thodey Individual 05. Jul 19 05. Jul 19 4,000 A$62.96 A$251,840
28. May 19 Sell Andrew Winkler Individual 23. May 19 27. May 19 -750,000 A$59.72 A$-38,818,000
26. May 19 Sell Rod Drury Individual 21. May 19 21. May 19 -2,000,000 A$58.00 A$-115,999,999
28. Nov 18 Buy Dale Murray Individual 22. Nov 18 22. Nov 18 950 A$37.50 A$35,625
16. Nov 18 Buy Susan Peterson Individual 13. Nov 18 13. Nov 18 1,265 A$39.22 A$49,613
27. Aug 18 Sell UBS Asset Management Company 24. Apr 18 23. Aug 18 -6,395,580 A$43.86 A$-280,485,339
27. Aug 18 Buy UBS Asset Management Company 24. Apr 18 23. Aug 18 6,972,272 A$43.64 A$304,247,882
30. Aug 18 Sell UBS Asset Management Company 27. Aug 18 28. Aug 18 -269,364 A$50.64 A$-13,639,896
30. Aug 18 Buy UBS Asset Management Company 27. Aug 18 28. Aug 18 148,962 A$50.56 A$7,532,168
28. Aug 18 Sell UBS Asset Management Company 24. Aug 18 24. Aug 18 -76,620 A$49.90 A$-3,823,645
X
Management checks
We assess Xero's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Xero has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

News

Simply Wall St News

Who Owns Most Of Xero Limited (ASX:XRO)?

Today, I will be analyzing Xero Limited’s (ASX:XRO) recent ownership structure, an important but not-so-popular subject among individual investors. … When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. … It also impacts the trading environment of company shares, which is more of a concern for short-term investors.

Simply Wall St -

Xero Limited's (ASX:XRO) Shift From Loss To Profit

Xero Limited, together with its subsidiaries, operates as a software as a service company worldwide. … The AU$6.07b market-cap company announced a latest loss of -AU$27.84m on 31 March 2018 for its most recent financial year result? … View out our latest analysis for Xero

Simply Wall St -

Was Xero Limited's (ASX:XRO) Earnings Growth Better Than The Industry's?

Examining Xero Limited's (ASX:XRO) past track record of performance is a valuable exercise for investors. … See our latest analysis for Xero Commentary On XRO's Past Performance I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. … This may not be consistent with full year annual report figures.

Simply Wall St -

Does Xero Limited (ASX:XRO) Generate Enough Cash?

Free cash flow (FCF) is the amount of cash Xero has left after it pays off its expenses, including its net capital expenditures, which is what the company needs to spend each year to maintain or grow its business operations. … There are two methods I will use to evaluate the quality of Xero’s FCF: firstly, I will measure its FCF yield relative to the market index yield; secondly, I will examine whether its operating cash flow will continue to grow into the future, which will give us a sense of sustainability. … Free Cash Flow = Operating Cash Flows – Net Capital Expenditure Free Cash Flow Yield = Free Cash Flow / Enterprise Value where Enterprise Value = Market Capitalisation + Net Debt After accounting for capital expenses required to run the business, Xero is not able to generate positive FCF, leading to a negative FCF yield – not very useful for interpretation!

Simply Wall St -

One Thing To Consider Before Buying Xero Limited (ASX:XRO)

A popular measure of market risk for a stock is its beta, and the market as a whole represents a beta value of one. … Thus, we can expect XRO to be more stable in the face of market movements, relative to its peers of similar size but with a higher portion of fixed assets on their books. … However, this is the opposite to what XRO’s actual beta value suggests, which is higher stock volatility relative to the market.

Simply Wall St -

Is Xero Limited (ASX:XRO) An Industry Laggard Or Leader?

Tech analysts are forecasting for the entire software tech industry, a strong double-digit growth of 15.35% in the upcoming year , and a whopping growth of 71.40% over the next couple of years. … ASX:XRO PE PEG Gauge Mar 16th 18 The software tech industry is trading at a PE ratio of 31.83x, higher than the rest of the Australian stock market PE of 17.63x. … If Xero has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the tech industry.

Simply Wall St -

Is Xero Limited (ASX:XRO) Undervalued?

Xero Limited (ASX:XRO), a software company based in New Zealand, saw a significant share price rise of over 20% in the past couple of months on the ASX. … Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. … XRO’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value.

Simply Wall St -

Xero Limited's (ASX:XRO) Path To Profitability

Many investors are wondering the rate at which XRO will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for XRO. … What rate will XRO have to grow year-on-year in order to breakeven on this date? … ASX:XRO Past Future Earnings Feb 28th 18 I’m not going to go through company-specific developments for XRO given that this is a high-level summary, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Simply Wall St -

Why Xero Limited (ASX:XRO) Has Low Debt On Its Balance Sheet?

View our latest analysis for Xero How does XRO’s operating cash flow stack up against its debt? … With this ramp up in debt, the current cash and short-term investment levels stands at NZ$113.70M for investing into the business. … Next Steps: Although XRO’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings.

Simply Wall St -

Where Xero Limited (ASX:XRO) Stands In Terms Of Earnings Growth Against Its Industry

In this article, I will take a look at Xero Limited's (ASX:XRO) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, along with how the rest of XRO's industry performed. … For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. … Each year, for the last five years Xero's top-line has risen by 42.57% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses.

Simply Wall St -

Company Info

Description

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.

Details
Name: Xero Limited
XRO
Exchange: ASX
Founded: 2006
A$8,588,665,847
140,728,590
Website: http://www.xero.com
Address: Xero Limited
XERO ONE,
19-23 Taranaki Street,
Wellington,
6011,
New Zealand
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
ASX XRO Ordinary Shares Australian Securities Exchange AU AUD 05. Jun 2007
OTCPK XROL.F Ordinary Shares Pink Sheets LLC US USD 05. Jun 2007
DB 0XE Ordinary Shares Deutsche Boerse AG DE EUR 05. Jun 2007
CHIA XRO Ordinary Shares Chi-X Australia AU AUD 05. Jun 2007
Number of employees
Current staff
Staff numbers
2,531
Xero employees.
Industry
Application Software
Software
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2019/07/16 11:52
End of day share price update: 2019/07/15 00:00
Last estimates confirmation: 2019/07/09
Last earnings filing: 2019/05/15
Last earnings reported: 2019/03/31
Last annual earnings reported: 2019/03/31


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

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.