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XROLF - Xero: Great Business But Mr. Market Overshoots On The Upside
Xero Ltd Ord
Xero is a world class software business (A provider of SaaS accounting software for small businesses.) with a long growth runway, however I also think that the shares have become overvalued as it trades at Fwd EV/sales of 15.3x, a 66% premium to 5-year average.
FY20 result summary
-Revenue growth of +30% YoY to $718m, 2% below consensus of $730m.
-Subscriber growth of 26% over pcp to 2.285m (vs. 2.057m at 1H20 and 1.818m at FY19).
- ARPU increased by 2% YoY in NZ$ terms, but fell by 1% in ccy terms, reflecting mix shift.