URGENT UPDATE: Xero Ltd (ASX: XRO) is poised for significant market movements as it prepares to announce its latest earnings results tomorrow morning. Investors are eagerly awaiting the report, which could dramatically impact share prices in the S&P/ASX 200 Index.
The tech stock has experienced sharp fluctuations recently. After a remarkable surge of 36.5% between April 7 and June 24, shares have plunged 27.9% since June 23. This volatility raises the crucial question: should investors buy Xero shares today in anticipation of tomorrow’s earnings?
Josh Gilbert, a market analyst at eToro, predicts a favorable outcome, stating, “When Xero, the ‘Netflix of accounting software’, posts earnings on Thursday, we’ll likely see a good result built on the momentum from a strong year prior and its strong foothold as a top-billed provider across the SMB space.”
Xero’s fiscal year 2025 has been robust, with revenue increasing by 23% and exceptional performance noted in Australia. The company’s recent inclusion in the ASX 200 has further cemented its status as a key player for retail investors seeking exposure in the Software as a Service (SaaS) sector.
Gilbert remains optimistic about Xero’s long-term growth prospects, especially following its recent acquisition of Melio, a US-based business-to-business payments company. Officially announced on June 25 for US$2.5 billion, this acquisition aims to enhance Xero’s growth trajectory in the world’s largest market, which boasts a total addressable market (TAM) of US$29 billion for FY2025.
“Xero remains confident in its long-term growth trajectory by targeting both ARPU expansion and deeper product adoption,” Gilbert emphasized. The company is executing its strategic plans for FY25-27, focusing on profitable growth. This strategy is supported by a 75% surge in EBITDA for FY24 and solid free cash flow.
Investors may find Xero shares appealing, not only for their growth potential but also for the diversification they offer against the dominant banking and mining sectors in Australia. Gilbert concludes, “Xero stands out as a differentiator on the ASX, and I expect this round of earnings will only affirm that SaaS can shine in the local market.”
As anticipation builds for tomorrow’s earnings release, investors should keep a close eye on Xero’s performance. The results could reinforce market confidence in the company’s profitable growth strategy and its position as a leading player in the technology space.
Stay tuned for updates on Xero’s earnings and potential market reactions, as this story continues to develop.
