Xero to deploy generative AI as part of strategy update

SaaS accounting system provider Xero is developing a generative artificial intelligence (GenAI) “companion” to help customers and automate common accounting tasks.

Once available, “Just Ask Xero” (JAX) will help small businesses and their advisors to automate accounting tasks, deliver personal insights and reclaim time, the company told shareholders on 29 February.

“Customers will be able to ‘Just Ask Xero’ to complete tasks like generating an invoice either in Xero or other apps such as email or WhatsApp,” Xero announced.

“JAX will complete the task and anticipate and propose other tasks that may follow, such as following up overdue payments or crafting emails.”

Xero was initially focused on invoice, quote and contacts functionality with JAX, given the importance of these jobs for customers. Over time, however, it intended to broaden JAX to support other areas such as bills, cash flow forecasting and reporting.

JAX will be available in beta later in the calendar year.

CEO Sukhinder Singh Cassidy described Xero’s strategy through to 2027, called “winning on purpose” and released today, as “simple, focused and purpose driven”.

“We have solid foundations, a strong financial profile, turbocharged capabilities, and continued large global TAM [total addressable market] to pursue, as we seek to become an even more trusted platform for small businesses and their advisors,” she said.

“As we continue to build Xero for the long term, we aspire to be a world class SaaS [software-as-a-service] business and believe we have the opportunity to double the size of our business and deliver Rule of 40 or greater performance over time.”

The “Rule of 40” is a principle stating a software company’s combined revenue growth rate and profit margin should equal or exceed 40 per cent.

SaaS companies above 40 per cent are generating profit at a rate that’s considered sustainable, whereas companies below 40 per cent may face cash flow or liquidity issues.

“As we grow, we will also seek to be more balanced between subscriber growth and ARPU [average revenue per user] expansion, ” Singh Cassidy said.

The strategy includes winning in three key areas of accounting, payments and payroll.

A winning go to market approach will also include deepened customer relationships and optimised pricing and packaging to optimise customer value. The cusotmer experience would also be enhanced through AI and mobile.

In addition, “Xeros”, or staff, would be purpose and performance driven and Xero’s own enterprise systems would be transformed.

Xero’s total revenue in 2023 was A$1.4 billion. Additionally, founder Rod Drury left Xero’s board last year.