What's going on with Xero's share price?

The market value of cloud accounting software company Xero is under pressure as investors question the viability of software companies in general as AI agents become more sophisticated.

By Nona Pelletier of RNZ

Despite steady growth in customer numbers, Xero's share price has seen a steady decline since it was knocked off its peak of A$196.52 in late June 2025.

Xero's share price fell more than a third from the start of the year with its latest ASX traded price around A$70.

The company's full year net profit fell 27% to NZ$167.4 million, for the period ended March, though the underlying profit was up 18 percent to $757.4m, with revenue growth of 31% to $2.75 billion.

The Wellington-headquartered business had grown into a global business with the offer of SaaS (software as a service), since it was established in 2006, to become a leading accounting brand in New Zealand and Australia, with customers in more than 180 countries, and offices in the United Kingdom, United States and South Africa.

Despite its strong customer network, Xero was among many other software companies to be caught up in rising global concern about the increasing capablity of AI agents to perform tasks traditionally offered by SaaS businesses.

"Basically, it's fear from the SaaS-apocalypse. The idea that software is now so cheap to write that previous human-written software has just been depreciating at a commensurately rapid clip," said Morningstar equities analyst Roy Van Keulen, who specialises in the technology sector.

"That's basically the big fear for most SaaS companies, and I think this is no exception."

Xero's share price was knocked again in early February during the 'SaaSpocolypse', coined by equity trader Jeffrey Favuzza, following a sharp market decline as the market digested the AI-agent capabilities from Anthropic.

"I think the SaaSpocolypse narrative is a bit exaggerated, to say the least, and specifically for Xero," Van Keulen said, adding the company was supported by a strong customer base, with many well established accountants and their customers using the product.

"If you're a new accountant and you want to get customers, you want to steal them from other accountants, which means you also have to be on Xero because those clients are on Xero. So there's a network effect there.

"We specifically think that protects Xero from replicability of the software."

Generate Wealth investment specialist Greg Smith said Xero had built real-world networks and relationships that couldn't be recreated by asking an AI agent to write some code.

"Building a small business accounting package is only a tiny part of the value proposition," Smith said, adding Xero had invested millions to build its business over the years.

However, Smith said there were some other issues affecting Xero's performance, with the recent departure of senior members of Xero's staff, as well as the timing of the sale of a large number of shares by the chief executive Sukhinder Singh Cassidy, completed in early July.

She sold more than 100,000 shares over a five-week period for about A$7.6 million, which was about 62% below the peak price reached the year earlier.

"That obviously raises some elements of concern ... the CEO has actually been selling shares around these levels to pay tax. I suppose, regardless of the reason to sort of sell the shares, it doesn't send a great signal to investors," Smith said.

There was also concern about the recent departure of some high profile members of Xero's team, including Xero's chief people officer Jeff Ryan and chief technology officer Rick Carragher.

Van Keulen said it wasn't a good look.

"It sounds like it's you know a bit of mutiny on the ship, and morale seems seems low, right?

"That's probably the easy read that anyone can take from that - and these were people that were brought in under the current CEO. So that's a sign that you can hear within the company as well. The morale is pretty low."

A Xero spokesperson said the departure of Ryan and Carragher were for personal reasons.

"We have a deep bench of leaders at Xero globally; over 200+ in our senior leadership community who help manage our workforce," the spokesperson said in a statement to RNZ.

"When one or a few people choose to leave Xero, we respect their reasons, and are grateful for their service and contributions. At the same time, we continue to be excited about the team we have here, building the business every day."

Still, Xero's two-tiered remuneration package may have also been an issue, which included a base pay, plus a bonus tied to the performance of the share price.

"If you get paid in shares and you see the shares fall a lot, that's that hurts people more than if you get paid in shares and they go up by the same amount," Van Keulen said.

He said software companies had historically benefited from software valuations going up for many, many years.

"So it was kind of a free ride, but now, yeah, it just feels very bad, right?

"You think you get paid this amount, and then by the time you can actually sell your shares, it's worth a lot less, and you just feel ripped off. It's not really something you can do much about as as management because ... you've got choppy waters that you're having to sail through."

The Xero spokesperson confirmed the company offered a "market-informed base salary and broader reward opportunities", benchmarked against the global markets it competed in for talent.

"Our equity programs use a combination of performance and service, similar to many large global tech companies. We regularly review our approach to stay competitive."

Still, the Australian Financial Review reported in June 2026 that Xero chair David Thodey was consulting investors about a pay-package reset after Xero's share-price slump.