Shares of the New Zealand-based technology company Xero Limited (AU:XRO) gained 2.56% today after the announcement of the acquisition of South Africa-based Syft Analytics. The company expects this acquisition to expand its insights, advanced reporting, and analytics capabilities for global customers.
Xero provides cloud-based accounting software tailored for small businesses, with a subscriber base of 4.16 million across New Zealand, Australia, and the UK. Meanwhile, Syft Analytics offers reporting and data analysis software tailored for accountants and small businesses. Its software is utilized in over 80 countries, predominantly within Xero’s largest markets.
Xero Expands its Capabilities Through Syft Deal
Through this deal, Xero intends to integrate Syft’s features into its platform gradually. This, in turn, will lead to enhanced analytics, reporting, and benchmarking capabilities for its customers. Moreover, the deal will boost Xero’s services across international markets, including Australia, the U.S., and the UK.
The total cost of acquiring Syft and related employee incentives could reach up to $70 million. This includes an initial payment of $40 million, which consists of about $10 million in Xero shares. Additionally, the balance will be distributed through earnouts and employee stock compensation over three years.
The deal is expected to be completed by the third quarter of Xero’s financial year ending on March 31, 2025.
Are Xero Shares a Good Buy?
As per the consensus among analysts on TipRanks, XRO stock has been assigned a Strong Buy rating based on a total of 13 recommendations, including 11 Buys. The Xero share price target is AU$157.32, which is 6.5% above the current level.
Year-to-date, Xero shares have gained 31% in trading.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
