XeroASX:XRO -1.26%81 Debt-to-EBITDA is 2.54 as of Mar. 2026, which is 39% below its 10-year median of 4.14. GuruFocus rates ASX:XRO with a GF Score™ of 81/100 and a GF Value™ of A$197.86 (Possible Value Trap). The stock has 6 warning signs investors should review. Among 1,714 Software companies, Xero ranks worse than 68.84% on this metric.
Debt-to-EBITDA measures a company's ability to pay off its debt.
A high Debt-to-EBITDA ratio generally means that a company may spend more time to paying off its debt. According to Joel Tillinghast's BIG MONEY THINKS SMALL: Biases, Blind Spots, and Smarter Investing, a ratio of Debt-to-EBITDA exceeding four is usually considered scary unless tangible assets cover the debt.
The historical rank and industry rank for Xero's Debt-to-EBITDA or its related term are showing as below:
ASX:XRO'
s Debt-to-EBITDA Range Over the Past 10 Years
Min: 1.74 Med: 4.14 Max: 6.37
Current: 2.39
During the past 13 years, the highest Debt-to-EBITDA Ratio of Xero was 6.37. The lowest was 1.74. And the median was 4.14.
ASX:XRO's Debt-to-EBITDA is ranked worse than 68.84% of 1714
companies
in the Software industry
Industry Median: 1.09
vs ASX:XRO: 2.39
A high Debt-to-EBITDA ratio generally means that a company may spend more time to paying off its debt.
According to Joel Tillinghast's BIG MONEY THINKS SMALL: Biases, Blind Spots, and Smarter Investing, a ratio of Debt-to-EBITDA exceeding four is usually considered scary unless tangible assets cover the debt.
Xero Debt-to-EBITDA Related Terms
Xero Debt-to-EBITDA Historical Data
* Premium members only.
The historical data trend for Xero's Debt-to-EBITDA can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
ASX:XRO vs UBER, SHOP, CRM: Debt-to-EBITDA Comparison
For the Software - Application subindustry, Xero's Debt-to-EBITDA, along with its competitors' market caps and Debt-to-EBITDA data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Xero Debt-to-EBITDA vs Software Industry
For the Software industry and Technology sector, Xero's Debt-to-EBITDA distribution charts can be found below:
* The bar in red indicates where Xero's Debt-to-EBITDA falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
In the calculation of annual Debt-to-EBITDA, the EBITDA of the last fiscal year is used. In calculating the annualized quarterly data,
the EBITDA data used here is two times the quarterly (Mar. 2026) EBITDA data.
Xero (ASX:XRO) has a Debt-to-EBITDA of 2.54 as of Mar. 2026. Debt-to-EBITDA ratio represents the ratio of total debt to total earnings before interest, taxes, depreciation and amortization. View historical data on Xero. This is 39% below median its historical median of 4.14. Over the past decade, Xero's Debt-to-EBITDA has ranged from 1.74 to 6.37. According to the industry distribution chart, Xero ranks #1180 out of 1714 companies in the Software industry, placing it in the top 68.8%.
Is Xero's Debt-to-EBITDA too high?
Xero's current Debt-to-EBITDA of 2.54 is 39% below median its 10-year median of 4.14. Over the past 10 years, this metric has ranged from a low of 1.74 to a high of 6.37. The Software industry median Debt-to-EBITDA is 1.09. Xero's value of 2.54 is 133% above this industry median. Based on the distribution chart, Xero ranks #1180 out of 1714 companies in the Software industry, which is below the industry midpoint. Overall, Xero has a GF Score™ of 81/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Xero's Debt-to-EBITDA compare to UBER and SHOP?
According to the Software industry distribution chart, Xero ranks #1180 out of 1714 companies for Debt-to-EBITDA. This places Xero in the lower half of its industry. The industry median Debt-to-EBITDA is 1.09. Xero's value of 2.54 is 133% above this benchmark. Historically, Xero's own Debt-to-EBITDA has ranged from 1.74 to 6.37 over the past decade. While the company's 10-year median is 4.14 vs. the industry median of 1.09, Xero has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Debt-to-EBITDA for a Software company?
The median Debt-to-EBITDA among Software companies is 1.09, based on 1,714 companies in the industry. Companies in the top quartile (top 25%) have a Debt-to-EBITDA significantly above this median, while those in the bottom quartile fall well below. However, Debt-to-EBITDA should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Xero's current Debt-to-EBITDA of 2.54 is 133% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Debt-to-EBITDA mean?
A high Debt-to-EBITDA can signal that a stock is expensive relative to its fundamentals. Debt-to-EBITDA ratio represents the ratio of total debt to total earnings before interest, taxes, depreciation and amortization. View historical data on Xero. For the Software industry, the median Debt-to-EBITDA is 1.09 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Xero's current Debt-to-EBITDA is 2.54, which is 39% below median its own 10-year median of 4.14. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Xero stock overvalued right now?
Based on GuruFocus' analysis, Xero (ASX:XRO) is currently considered Possible Value Trap. The stock's GF Value™ is A$197.86, compared to a current price of A$73.40 — trading 62.9% below its estimated fair value. The current Debt-to-EBITDA is 2.54, which is 39% below median its 10-year median of 4.14 and 133% above the Software industry median of 1.09. Xero's overall GF Score™ is 81/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Debt-to-EBITDA calculated?
Debt-to-EBITDA is calculated from a company's financial statements. For Xero (ASX:XRO), the current Debt-to-EBITDA is 2.54 as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Xero (ASX:XRO) Overvalued in 2026?
Based on GuruFocus' analysis, Xero stock appears to be undervalued.
The current stock price of A$73.40 is trading 62.9% below its estimated GF Value™ of A$197.86.
GuruFocus considers Xero to be Possible Value Trap.
Key valuation signals for ASX:XRO:
Debt-to-EBITDA: 2.54 (39% below median its 10-year median of 4.14)
GF Value™: A$197.86 vs. price of A$73.40 (62.9% below fair value)
Industry Position: 133% above the Software median (#1180 of 1714)
No single metric tells the full story. See the ASX:XRO stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Xero is a technology company originating from New Zealand, providing cloud-based accounting software, primarily for small and midsized enterprises, or SMEs, and accounting practices. As a first mover in the space for cloud-based accounting software, Xero has grown quickly to achieve dominant market share in New Zealand and Australia, displacing legacy providers. Xero has also expanded beyond its home region toward other English-speaking countries, primarily the UK and the US.
81GF Score
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