Xero Limited: AI Expansion and US Payments Push Signal Strong Long-Term Growth Path

XRO is growing by expanding its AI capabilities and strengthening its US payments business whereas also improving performance and focusing on better efficiency and long term growth.
Xero Limited (ASX: XRO) on 03 February 2026 shared updates during an investor briefing. The session explained its global AI plans and its push in US payments. It included product showcases such as AI agents working under JAX on Xero.com and Melio payment tools across different channels. 

XRO aims to combine accounting and payments into one platform to create more value for small businesses. It is targeting a large market in AI and US accounting plus payments. The approach focuses on helping small firms move into an AI driven environment while also improving growth in the United States through its payments offering.

AI strategy and strengths

Xero described how it is building its AI capabilities using its existing platform. It already operates as a trusted system that stores business data and now plans to evolve into a system that also drives actions and decisions. More than two million users are already using its AI features while over three hundred thousand are using newer generative AI tools launched earlier. 

The company believes its strengths come from deep data access a unified platform strong expertise in small business needs and a well established partner network of accountants and bookkeepers. These elements support its ability to expand into a larger AI driven market which is expected to grow significantly over time.

Outlook 

The company specified that Melio is expected to reach adjusted EBITDA breakeven on a run rate basis in the second half of FY28. 

For FY26 total operating expenses are expected to be around 70.5 percent of revenue which is lower than earlier expectations. This includes the impact of Melio and reflects improved efficiency. The ratio is expected to improve further in the second half of FY26 compared to the first half. 

From May 2026, XRO will shift to adjusted EBITDA guidance instead of the current expense ratio method. It also plans to give a one time revenue growth range for FY27. 
During FY27 the focus will be on increasing AI usage improving product value and generating revenue from new AI features.

Growth performance 

Xero reaffirmed its FY28 goals first outlined in June 2025. It expects strong US growth supported by the Melio deal and aims to more than double FY25 group revenue by FY28 excluding added synergies. This supports a target of achieving above Rule of 40 performance.

In H1 FY26 results announced previous the company reported revenue of about 1.2 billion dollars which marked 20 percent growth. It delivered a Rule of 40 result of 44.5 percent along with solid cash flow and margin expansion. 

The business continues to show steady growth supported by its strategy large market reach and increasing role of AI across its offerings.

(Source: Company Report)