Saturday 20th May 2023 | No. 55
XU Biweekly
The independent user news source for accounting apps and their ecosystems
3.7 MILLION OVOLU LAUNCHES SUBSCRIBERS Xero's FY 2023 Financial Results By Sukhinder Singh Cassidy, Xero
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ODAY WE ANNOUNCED XERO’S FULL YEAR FINANCIAL AND OPERATING RESULTS TO 31 MARCH 2023 (FY23). Having started my journey as Xero’s CEO in February this year, I’m pleased to share our strong FY23 operating results, and I’m deeply excited about our opportunity to help power the global small business economy. Our results demonstrate Xero’s resilience in a complex macroeconomic environment, our valuable customer proposition, our increasing efficiency, and commitment to even more disciplined, customer-focused growth. We grew FY23 operating revenue by 28% (25% in constant currency (CC)) to $1.4 billion, which contributed to a 45% increase in adjusted EBITDA compared to FY22 to $301.7 million. This drove a significant increase in free cash flow to $102.3 million, reflecting a free cash flow margin of 7.3% compared to 0.2% in FY22. We also incurred non-cash impairments and associated costs, and restructuring charges during the year. This led to EBITDA decreasing 26% compared to FY22 to $158.4 million. This included a $77.9 million impairment to Planday (mainly reflecting a reduction in market valuation multiples along with operational performance), $48.5 million of impairments
and other costs related to Waddle, $34.7 million in restructuring costs, and noncash accounting revaluation gains of $17.9 million. Total lifetime value grew 23% (21% in CC) to $13.4 billion. This was driven by double digit subscriber growth across all regions – as average monthly churn (0.90%) remained low and ARPU improved 10% (8% in CC). This underscores the trust customers place in Xero to help them manage their businesses.
Financial results Performance highlights FY23 (All figures are in NZD and comparisons are made against FY22) • Operating revenue increased 28% to $1,399.9 million • Total subscribers increased by 470,000 to 3.74 million • Annualised monthly recurring revenue (AMRR) grew 26% to $1,553.8 million • Total subscriber lifetime value grew $2.5 billion to $13.4 billion • Gross margin percentage remained flat at 87.3% • Adjusted EBITDA increased $93.0 million to $301.7 million • Operating income grew 61% to $57.3 million • Net loss grew $104.4 million to $113.5 million • Free cash flow was $102.3 million, up $100.2 million
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Saturday 20th May 2023
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tures of Ovolu is its use of near field communication (NFC) in the card. Users can tap their digital business card on any smartphone. This seamless tapping process instantly transfers the user's contact information to the recipient's smartphone, ensuring an efficient and accurate exchange of information. Gone are the days of manually entering contact details into your phone. Ovolu is doing things a little differently however by offering its digital business cards for free! Speaking with
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