Today Xero Ltd [ASX:XRO], the online accounting and business software provider, announced its annual results and all signs point to a profitable year.
The Xero share price rose 11.36% from the previous low on 24 April, yet at the time of writing the price sat at $80.04, down just under 4%.
The growth of Xero
In a recent article we discussed the fortunes of Xero and how their products have been utilised throughout the COVID-19 pandemic. The annual results hold some revealing information on the company.
Xero noted that overall, usage levels have remained relatively steady during the 2020 calendar year, as measured by subscriber log in activity. With a lot of people working from home and Xero providing online accounting solutions, it matches up to the current climate of the COVID-19 pandemic that Xero would produce some good results.
This has seen Xero report a 30% increase in revenue.
CEO Steve Vamos noted:
‘In FY20 we continued to execute our strategy, delivering operational revenue growth of 30 percent driven by subscriber growth in all markets.’
What’s next from here…
Xero sits firmly in the top 100 stocks of Australia. Whilst posting wonderful results it can still be susceptible to market forces. Speaking in the market release, CEO Steve Vamos also noted:
‘Many of our customers and partners are having to adapt the way they operate, while investing enormous effort to survive at this difficult time.’
Taking a broader view, the [XJO] is experiencing a recovery, but this may be short term with this rise starting to taper off. For Xero this may also have the effect of a pullback in price should another drop in the market take place.
Taking a technical view, from the high in February to the low in March, the price has now retraced 78.6%, a Fibonacci number. This is also sitting at the historical resistance level of $82.62. If price were to continue to the upside, the previous all-time high of $90.22 may come into play.
Conversely should the price fall, levels of $74.53 and $67.23 may come into focus.
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For Money Morning