Xero buys bill payment giant to grow its US business 300%
Wednesday, 25 June 2025
New Zealand-born ASX-listed accounting software firm Xero has taken a big step in securing its position in the tough United States market with purchase of business-to-business payment platform Melio for US$2.5 billion (NZ$4.16b).
Xero chief executive Sukhinder Singh Cassidy said Melio aligned with Xero’s growth strategy and enabled a step change in North America scale, where it was up against US market giant Intuit.
Melio’s platform provides a flexible payment system for vendors, tools for bookkeepers and processed US$30b of total payment volume in the 2025 financial year.
Singh Cassidy said Melio would significantly boost Xero in the US, driving a three-fold increase in Xero’s North American revenue and average revenue per user on day one.
Adding Melio to Xero immediately transformed the business in the US, she said.
“Its core segment overlaps strongly with Xero's current core segment of employing small businesses with one to 20 employees.”
The combined North America business will have 480,000 SME customers with revenue in the 2025 financial year of US$235 million.
The merged company will bring together a total value US$56b of invoices and US$88b of bills volume.
Singh Cassidy said most accountants and bookkeepers want to see accounting and accounts payable software integrated.
“This acquisition solves a critical customer need, uniting accounting and payments in one platform for customers,” she said.
The deal would significantly strengthen Xero’s position “as we seek to grow our US business further and capture more customers together”.
It’s a powerful strategic fit, and it brings Melio's team and platform to Xero.
“These are two very complementary platforms, delivering improved unit economics and an attractive long-term growth profile for the US and broader Xero group, Singh Cassidy said.
Xero will pay US$2.5b upfront in cash and Xero shares.
An addition US$500m was payable over three years to Melio employees.
Singh Cassidy said Xero’s growth strategy included expansion in its core markets, the US, United Kingdom and Australia and a focus on its main accounting, payroll and payments products.
The two companies were ‘highly complementary“, she said.
“Together they complete the key jobs to be done for US SMEs — extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.”
Melio chief executive Matan Bar said “joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other”.
The deal was expected to extend and improve customer segment reach further beyond small businesses to self-employed and medium-sized businesses, and diversify Xero’s business into a subscription and transactions revenue model.
Xero has identified expected synergies for the 2028 financial year of US$70m in revenue and US$20m in costs.
These synergies were expected to be driven by winning new customers and cross-selling across customer bases and reducing costs.
The acquisition would be partly funded through a fully underwritten A$1.85b (NZ$2b) placement at a fixed offer price of A$176 per new share.
The placement price represented a 9.4% discount to Xero’s last closing price of A$194.21 on June 24.
The transaction is targeted to be completed within 6 months.