Xero to acquire Syft Analytics for $70m to strengthen accounting software capabilities

Xero Limited has announced its acquisition of Syft Analytics, a global cloud-based reporting, insights, and analytics platform, in a deal worth up to $70 million. This strategic acquisition is set to enhance Xero’s advanced reporting and analytics offerings for accountants, bookkeepers, and small businesses globally. The transaction is expected to be completed in the third quarter of Xero’s FY25, pending customary closing conditions and approvals.

Expanding Advanced Reporting and Insights Capabilities

With the acquisition of Syft Analytics, Xero aims to further strengthen its position in the accounting software market by integrating Syft’s advanced analytics capabilities into its existing platform. Syft Analytics, headquartered in Johannesburg, South Africa, serves clients in over 80 countries, including Xero’s key markets like Australia, the United Kingdom, and the United States. The integration will allow Xero to offer more powerful analytics, reporting, and benchmarking tools to its customers, providing deeper insights to help small businesses and their advisors make informed decisions.

Xero CEO Sukhinder Singh Cassidy noted that the acquisition aligns with Xero’s strategy to offer comprehensive customer solutions by enhancing its core accounting offering. Cassidy said that the move is part of Xero’s focus on reimagining accounting software to empower small businesses through data-driven insights.

Deal Structure and Financial Implications

The total consideration for the acquisition of Syft Analytics, including related employee incentive payments, will be up to $70 million. This sum comprises an upfront payment of $40 million, including $10 million in Xero shares, and additional payments in the form of earnouts and employee restricted stock units (RSUs) over the next three years. Xero has stated that the costs associated with the transaction, integration, and ongoing operations are expected to have a minimal impact on its financial metrics for FY25.

Syft Analytics will continue to operate as a standalone offering within the Xero App Store while also being integrated into Xero’s platform over time. More than 70 Syft employees, most of whom are based in South Africa, will transition to Xero as part of this acquisition. The existing partnership between Xero and Syft will be further strengthened, ensuring a seamless transition for existing customers.

Expert Opinion: A Strategic Move in a Competitive Market

Industry experts suggest that this acquisition is a strategic move for Xero in an increasingly competitive accounting software market. By bringing Syft’s advanced analytics capabilities in-house, Xero is positioning itself as a leader in providing data-driven insights to small businesses and accounting professionals. As cloud-based accounting solutions continue to gain traction, the demand for more robust and integrated reporting tools has increased. Syft’s capabilities will enable Xero to meet this demand and potentially attract more customers seeking comprehensive financial management solutions.

Financial technology analysts say that Xero’s acquisition of Syft Analytics is a clear indication of its commitment to expanding its ecosystem of integrated apps and tools. This move not only strengthens Xero’s product offerings but also reinforces its competitive positioning against other major players like Intuit QuickBooks and Sage.

Strengthening Customer Offerings

The acquisition of Syft Analytics is a significant step for Xero in enhancing its accounting software capabilities and expanding its market reach. With a stronger focus on advanced reporting, analytics, and insights, Xero is well-positioned to deliver comprehensive solutions that help small businesses and their advisors make data-driven decisions. As Xero integrates Syft’s powerful analytics tools, customers can expect more sophisticated and insightful reporting options to support their financial decision-making.