Today, we announced Xero’s financial and operating results for the full year ending March 31, 2023 (FY23).
Having started my journey as Xero’s CEO in February of this year, I’m excited to share the company’s strong operating performance in 2023. We are also very excited about the opportunity to help revitalize the global small business economy.
Our results demonstrate Xero’s resilience in a complex macroeconomic environment, our value proposition to our customers, our increased efficiency, and our commitment to disciplined, customer-centric growth.
Operating revenues increased 28% (25% at constant currencies) to $1.4 billion in 2023, contributing 45% to Adjusted EBITDA. Compared to FY2010, it was $301.7 million. That boosted free cash flow significantly to his $102.3 million, 7.3% compared to a free cash flow margin of 0.2% for fiscal year 22.
We also incurred non-cash impairment and related charges and restructuring charges during the year. This resulted in EBITDA of $158.4 million, down 26% from FY2022. This included a $77.9 million impairment charge to Planday (primarily reflecting lower market valuation multiples in line with operating results), a $48.5 million impairment charge and other charges related to Waddle, a $34.7 million restructuring charge, and Includes a non-cash accounting revaluation gain of $17.9 million. .
Total lifetime value increased 23% (21% at CC) to $13.4 billion. This was due to his double-digit subscriber growth across all regions as average monthly churn (0.90%) remained low and ARPU improved by 10% (8% for CC). This confirms the trust his customers place in Xero to help manage their businesses.
Financial Summary
Performance Highlights for FY2023 (All figures are in NZD and compared to fiscal year 2022)
- Operating revenue increased 28% to $1,399.9 million
- Total number of subscribers increased by 470,000 to 3.74 million
- Annualized monthly recurring revenue (AMRR) increased 26% to $1,553.8 million
- Total subscriber lifetime value increased $2.5 billion to $13.4 billion
- Gross profit margin remained flat at 87.3%
- Adjusted EBITDA increased $93 million to $301.7 million
- Operating income increased 61% to $57.3 million
- Net loss increased $104.4 million to $113.5 million
- Free cash flow increased by $102.3 million $102 million
- Total available liquidity of $1.1 billion, including cash on hand, short-term deposits and unfunded commitment facility
Our strong underlying operating results are underpinned by continued earnings momentum from both subscriber and ARPU growth. We are pleased to deliver these results, supported by a program designed to improve operational efficiency and effectiveness. This enhances our ability to deliver better value to all our stakeholders and capitalize on the significant opportunities ahead.
The company continues to invest in a multi-year platform modernization strategy to deliver long-term efficiency, scalability, productivity and speed-to-market improvements, as well as product and technology initiatives. We remain focused on delivering continuous value to our customers through
next chapter
We are pleased with Xero’s performance in 2023 and continue to perform well. We are heading into FY24 with strong momentum, but we still have a lot of work to do.
As we strive to provide the world’s most insightful and trusted small business platform, we are committed to the multiple initiatives Xero needs to achieve growth, including driving further adoption of cloud accounting and deepening customer engagement. Think positively about the means. We are committed to building on the strong momentum seen in our 2023 results and pursuing our goal of building a higher performing global SaaS company.
We are excited about the opportunity to help drive Xero’s next chapter of growth.
A big thank you to the Xero team, customers, partners, shareholders and everyone who supports Xero.
Xero’s 2023 financial results are available on our Investor Center. www.xero.com/about/investors
number one,
Skunder Singh Cassidy
CEO