Xero’s Melio Set to Break Even by H2 FY28 as AI Adoption Surges

Xero’s AI Strategy – From Record-Keeping to Decision-Making

Xero Limited is doubling down on artificial intelligence as a core driver of its future growth, positioning itself as more than just a system of record for small and medium businesses (SMBs). With over two million subscribers already benefiting from AI-powered features, including 300,000 using its latest generative AI tools, Xero is orchestrating multiple AI agents under its JAX platform to transform how SMBs manage their finances and operations.

CEO Sukhinder Singh Cassidy emphasised that Xero’s unique combination of deep domain expertise, a rich data platform, and an established network of accountants and bookkeepers gives it a distinct advantage in helping SMBs embrace AI. The company’s AI pillars focus on resolving customer queries efficiently, saving users significant time, enhancing business management intelligence, and unlocking new growth opportunities.

Melio Integration Accelerates US Market Ambitions

Following its acquisition in late 2025, Melio’s payment capabilities are being rapidly integrated into Xero’s US operations. This integration is central to Xero’s “Win the 3x3” strategy, which aims to combine accounting and payments on a single platform to deepen customer value and improve unit economics. The consolidation of US offices and go-to-market teams is underway, targeting operational synergies and a stronger foothold in the lucrative US SMB payments market.

Xero disclosed new metrics highlighting growth in total payment volume and average revenue per user (ARPU) in the US, underpinning confidence in Melio’s potential. The company forecasts Melio will achieve adjusted EBITDA breakeven on a run-rate basis by the second half of FY28, a key milestone for its US expansion.

Financial Outlook and Strategic Aspirations

Xero reaffirmed its FY28 aspirations to more than double its FY25 group revenue, excluding anticipated revenue synergies estimated at around US$70 million. The company also plans to shift its financial guidance framework from operating expense ratios to adjusted EBITDA starting with its FY26 results in May 2026, providing investors with clearer insights into profitability trends.

Despite expected short-term impacts from non-recurring remuneration costs and planned investments, Xero remains focused on delivering strong growth and improved profitability metrics, including aiming for Rule of 40 outcomes by FY28. The company’s strategic focus on AI and payments integration positions it well to capture expanding total addressable markets globally and in the US.

Looking Ahead

Investors can look forward to further updates on Xero’s US performance and Melio integration at the upcoming FY26 results announcement in May. Meanwhile, the company’s webcast and product demonstrations provide a window into how AI and payments innovations are shaping its future trajectory.