How Xero is delivering with purpose for customers and investors
- Wed 19 March 2025
- 10 MIN READ
Xero is almost a year into its three-year strategy focused on customer-centric solutions, capital efficiency and technological innovation.
Cloud accounting platform Xero announced its refreshed FY25-27 strategy, Winning on Purpose, in February 2024. CEO Sukhinder Singh Cassidy shares how the strategy is simple, focused, and purpose driven with key objectives to:
- Create winning solutions for our customers: by delivering great customer experiences
- Live our purpose consistently: by making strategy choices consistent with our purpose
- Purposefully allocate capital: by focusing on the highest value opportunities
In this piece, Sukhinder also reflects on Xero's approach to investor relations as a more mature global business and the value of being listed on ASX, highlighting the importance of robust corporate governance and the benefits it brings to the business’s operations and investor base.
Alexandra Cain, editor, Listed@ASX: Xero is pursuing a ‘winning on purpose’ strategy. What do investors want to know about it?
Sukhinder Singh Cassidy, CEO, Xero: Winning on purpose is the theme for our FY25-27 strategy, it talks about doing three things really well. The first is winning for the benefit of customers, because if we don’t win for them, winning for winning’s sake is not particularly exciting. At Xero, we like being customer-first in our winning mindset.
Second, we talk about winning on purpose, making sure our purpose is felt in the business every day. A good example is the Beautiful Business Fund, an initiative we launched to foster our support for small businesses and not-for-profits. This is an opportunity for us to see, feel and support our 4.2 million small business subscribers by backing them with funds to achieve their ambitions.
The third aspect to winning on purpose is being purposeful allocators of capital. Part of how companies win is by being very focused and our strategy clearly defines the key markets we are in and the jobs we do for our customers as the holy grail of how we operate as a business. Our three largest geographies, the US, UK, Australia, are our three most strategic markets and the three most important jobs our small businesses and their advisers and accountants care about are accounting, payroll and payments.
Our investors expect our capital, product resources, marketing resources and M&A efforts to align with our winning in purpose approach.
Listed@ASX: Performance is dear to an investor’s heart, so what do investors want to know about the purpose and performance-driven part of your strategy?
Sukhinder: We aspire to be a world-class SaaS business. So, we measure our performance against some of the world’s best-of-breed software companies. Performance is about the top line and the bottom line and the best companies in the world can manage both.
Listed@ASX: Technology and AI underpin everything Xero does. What are some of the interesting innovations you're working on?
Sukhinder: AI was a core part of our business long before generative AI. In accounting, everything from scanning in your invoices and categorising your transactions is based on traditional AI, which has been built into our products for some time. Gen AI offers a new opportunity for our customers and we are really excited about adding insights and tasks that can be managed by AI agents on the platform. JAX – Just Ask Xero – our Gen AI agent is in beta, performing invoicing tasks on behalf of customers. We can use AI agents to keep giving small businesses and their advisers faster insights or complete tasks on their behalf across the platform, such as reconciliation, invoicing, paying bills and payroll. Increasingly we think gen AI can give back meaningful time to small businesses and automate many tasks. So that's what we're excited about. Gen AI offers a new way to interact to get customers’ questions answered faster and to have actions performed on their behalf.
"We aspire to be a world-class SaaS business. So, we measure our performance against some of the world’s best-of-breed software companies."
Listed@ASX: Anything that can make small businesses more productive or give them a little bit of time back is always extremely valuable.
Sukhinder: That's the promise not just for them, but for their accountants and bookkeepers too, who are also short on time and managing thousands of clients.
Listed@ASX: Capital management is top of mind for every ASX business. What are you working on in this area?
Sukhinder: We think capital allocation and capital management are two sides of the same coin. We just completed a US$925 million convertible note to bring more optionality onto our balance sheet. We just bought a leading global analytics player, Syft Analytics. So capital management is about having sufficient capital and flexible capital on your balance sheet to execute the right strategies at the right time.
Xero Customer, Adriana Feriden from Bali Nights
Listed@ASX: You've always been global, but the business is starting to become more mature. How does your investor relations strategy reflect that?
Sukhinder: We did our first investor day in February 2024, which reflects the maturation of the business and our desire to help investors further understand where we're going on a longer-term basis. We only provide outlook on operating expenses to revenue ratio and product development costs as a percentage of revenue, but it is quite important that as a company investors know where we're going, and we are bringing them on our journey. We have worked hard on simplifying our messaging and relating it back to our strategy.
Like every company, we keep trying to raise our own bar. We recently put our remuneration report forward as an advisory resolution to shareholders at our Annual Meeting as a matter of good governance, and we’re always working on increasing trust with investors.
We have a very big representation of Australian shareholders and large superannuation funds on the share register, which we're proud of. We also have a very significant international shareholder base. As a global company that operates in seven different markets and directly in more than 180 markets in total, there's a good amount of global interest in Xero.
"We have a very big representation of Australian shareholders and large superannuation funds on the share register, which we're proud of."
Listed@ASX: What value does an ASX listing deliver Xero?
Sukhinder: We're a foreign issuer on the exchange and we went from a single NZX listing to a dual ASX and NZX listing in 2012 to increase the opportunity to have more Australian and global investors on the register and to grow our liquidity and access to capital. We then moved to a sole ASX listing in 2018. As Xero CEO, I appreciate being listed on an exchange that cares about a company’s total governance obligations.
ASX is a very governance-centric market in terms of doing the right thing by shareholders on financial and non-financial metrics like sustainability and ESG. This improves the quality of our governance and our care about being a good actor in the communities and countries in which we operate. So, we welcome that.
Listed@ASX: What should we be looking out for from Xero in 2025?
Sukhinder: We will be executing our strategy and accountable to the strategy and we will be good communicators of what we're doing to the market.
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