Xero posts record 2.75 billion dollar revenue as customer revolt over week-long outage compensation overshadows the result. May 16, 2026 Xero closed an extraordinary fortnight in shareholder communications this week, with the New Zealand-founded accounting software giant posting record full-year revenue of $2.75 billion on Wednesday, only to be confronted by a customer revolt over how the company is compensating subscribers for a week-long outage that knocked tens of thousands of small businesses offline. The contrast between Xero's headline numbers and the noise from its own user base could hardly be sharper. According to RNZ Business, the company lifted revenue 31 percent for the year ended 31 March 2026, added 506,000 net new customers to take its global total to 4.9 million, and grew underlying earnings 24 percent to $789 million. Free cash flow climbed 9 percent to $554 million. New Zealand and Australian revenue rose 18 percent, United Kingdom revenue rose 26 percent, and United States revenue surged, helped by the integration of payments platform Melio acquired in October. That last detail explains why the market reaction was not the celebration the top line might suggest. Reported net profit after tax fell 27 percent to $167 million, dragged down by Melio transaction costs, higher financing expenses and operating losses inside the newly acquired business. Gross margin slipped from 89.0 percent to 83.9 percent. Shares on the ASX fell 8.59 percent on the day of the result. The board declared no dividend, with the company continuing to reinvest cash into growth and into its much-talked-about artificial intelligence push. Discover more Chief executive Sukhinder Singh Cassidy framed the year as one of disciplined execution and used the result to underline the AI strategy, telling investors the company believes its proprietary customer data and trust position it to be a long-term winner as small business accounting moves toward automation. The market was less convinced. Analysts noted the company's FY27 guidance of operating revenue between $3.62 billion and $3.73 billion implies growth of roughly 32 to 36 percent at the midpoint, which lifts the bar on what Xero needs to deliver to justify its valuation. Investors, however, were not the only audience the company needed to manage this week. The annual result landed on Thursday, just two days after Xero finally restored full service following an outage that began the previous week and disrupted accounting workflows across New Zealand, Australia and the United Kingdom. The company has said the failure was caused by a combination of platform issues and third-party service problems, and confirmed service was fully restored on Monday 12 May. What followed has overshadowed the financial result for many users. According to a separate RNZ Business report, Xero emailed affected customers with a link to apply for compensation in the form of subscription credits, rather than crediting accounts automatically. Subscribers said the process required supporting documentation for each claim and directed customers to a generic support page that did not have an obvious credit request option. Promised five-hour response times were not always met. Wellington-based subscriber James Hita described the company's compensation as a Band-aid on a stab wound, telling RNZ he had eventually received a confirmation of a one-week subscription credit on the Thursday after the outage was resolved. Hilke Giles questioned why credits had not simply been applied automatically rather than requiring affected businesses to lodge their own claims. Several customers said the disruption could delay tax returns and create flow-on penalties, prompting both New Zealand's Inland Revenue and the Australian Taxation Office to confirm they would consider affected taxpayers on a case-by-case basis. Accounting firms managing multiple subscriptions were eventually told they could consolidate claims into a single request, but only after several days of complaints. Discover more The user backlash matters for Xero because the company's growth thesis depends not just on signing up new subscribers but on keeping its existing base loyal as it cross-sells payments, payroll and AI-powered features. Small business accounting is sticky, but it is also a market where word of mouth between accountants and bookkeepers shapes purchasing decisions. A poorly run compensation process risks turning a one-off technical failure into a longer reputational tail at exactly the time Xero is trying to convince the market it can extract higher revenue per customer. For context on scale, Xero now has more than 1.4 million subscribers across New Zealand and Australia combined, and the company is the dominant cloud accounting platform among New Zealand small businesses. A week-long disruption to that base is not a small operational issue, and the speed and ease of the response has become a test of the company's customer service in its own right. The Financial Markets Authority has not commented on the outage or compensation arrangements, and the disruption sits below the threshold that would normally trigger a market disclosure. NZX trading in Xero's Australian-listed shares has continued through the period without halt. The next pressure point is the company's first-quarter trading update for FY27, due later in the year, which will give the first read on whether the outage and its handling have affected subscriber growth or churn. What do you think? Is Xero's compensation process reasonable for a platform issue of this scale, or should subscription credits be automatic? Have you been affected by the outage and how did the compensation process go for your business? Leave a comment below.

Xero has launched online bill payments in the US, integrating technology from its recent acquisition of Melio into its accounting platform. The company is now the only major US small business accounting platform enabling users to pay bills by credit card on-platform. The integration targets a $29 billion US small and medium-sized business payments market. Melio co-founder Matan Bar has been appointed CEO of Xero US, overseeing both businesses. The new feature allows businesses to pay vendors via bank transfer, debit or credit card, with Xero's AI platform JAX automatically reconciling transactions. Over 70% of US small businesses consider tight integration between accounting and accounts payable software highly important. Xero reported strong momentum, with first-half fiscal year 2026 revenue increasing 20% year-on-year to NZD $1.2 billion.