UPDATE: Xero Ltd (ASX: XRO) is poised for a major market move as it prepares to release its earnings results tomorrow morning. This announcement could trigger significant fluctuations in the share price, making today a crucial moment for investors.
Xero, a leading business and accounting software provider in the S&P/ASX 200 Index (ASX: XJO), has experienced a rollercoaster ride this year. The stock surged by 36.5% from April 7 to June 24, only to plummet 27.9% from June 23 to today. With such volatility, potential investors are asking: should you buy Xero shares before the earnings announcement?
Market analyst Josh Gilbert from eToro suggests there’s reason for optimism. He notes that Xero has had a strong fiscal year, with a 23% increase in revenue and excellent performance in Australia. Gilbert refers to Xero as the “Netflix of accounting software” and anticipates a robust earnings report supporting this claim.
Adding to the excitement, Xero recently announced the acquisition of Melio, a US-based business-to-business payments company, for US$2.5 billion. This move is aimed at tapping into the lucrative US market, which boasts a total addressable market of US$29 billion for FY2025. Gilbert explains that while such investments may temporarily affect margins, they reflect Xero’s ambitions to expand its footprint beyond Australia and New Zealand (ANZ).
“Xero remains confident in its long-term growth trajectory by targeting both ARPU expansion and deeper product adoption,” Gilbert stated. The company is executing its strategy for FY25-27 focused on profitable growth, as evidenced by a 75% surge in EBITDA for FY24 and solid free cash flow.
Investing in Xero shares could offer valuable diversification away from traditional ASX sectors dominated by banks and miners. Gilbert emphasizes that Xero stands out as a key player in the local SaaS market, and this earnings report is expected to reinforce that position.
As the market anticipates the earnings results, Xero’s performance will likely influence investor sentiment across the tech sector. The results are expected to be released tomorrow, October 26, 2023, at 9:00 AM AEDT.
Investors are urged to watch closely, as the earnings announcement could significantly impact Xero’s share price and market positioning. In an ever-evolving tech landscape, this is a moment to seize for those looking to capitalize on potential growth in the software space.
Stay tuned for real-time updates and analysis following the earnings release.
