Xero CEO Sukhinder Singh Cassidy says artificial intelligence tools can't easily replicate her company's accounting software, citing proprietary small business data and payment infrastructure as a competitive moat.
Singh Cassidy told investors she tested Anthropic's Claude coding tools to attempt cloning Xero. The result lacked the transaction data and banking integrations central to the platform's value.
The assertion comes as Xero shares have dropped from $194.51 in June to $95.60, driven by concerns over the company's $4 billion Melio acquisition and broader software sector worries about AI disruption. Companies like Atlassian, Microsoft, and SAP have faced similar sell-offs after Anthropic launched coding capabilities that investors believe could democratize software development.
Singh Cassidy argues the market isn't differentiating between easily replicated tools and platforms with deep data moats. Xero integrates AI through features like its "Jack" agent and third-party enhancements for accounting and payroll workflows. The company maintains its US business is growing at roughly 20% underlying rates while it invests in AI capabilities.
The timing is notable. Deepfake experts predict 2026 as the year voice and video cloning technology becomes indistinguishable from real recordings, now accessible via consumer tools like OpenAI's Sora 2 and Google's Veo 3. Major retailers report over 1,000 AI-generated scam calls daily. The shift is pushing security defenses toward provenance verification rather than detection.
Singh Cassidy's data moat argument faces a test: whether proprietary datasets truly insulate subscription software businesses from AI-driven disruption, or whether the market is correctly pricing in new competitive threats. Xero's US expansion strategy and AI integration will provide evidence either way.
The real question is whether Xero's decade of accumulated transaction data creates a genuine barrier, or whether new AI models can achieve comparable utility with less historical context. Investors remain unconvinced, at least for now.