The New Zealand Growth Fund returned -0.6% in November, compared to its benchmark of -0.4%.

Xero (-16%) shares fell heavily, despite delivering a solid half year result, amid a broader sell-off in software shares. The company delivered strong growth, with revenue up +18% in constant currency terms to $1.19 billion and core operating profit (Adjusted EBITDA) rising +12% to $351 million. Total subscribers grew +10% to 4.6 million, while Average Revenue Per User lifted +8% in constant currency terms, reflecting the value of recent features and capabilities brought to market. Free cash flow surged to $321 million, driving a greater than "Rule of 40" outcome of 45%, underscoring a healthy balance of strong revenue growth and free cash flow margin. Operating efficiency continues to improve, with full-year expense guidance reduced to 70.5% of revenue, from 71.5% previously. International markets, particularly the US, showed positive momentum, and the integration of its recently acquired Melio payments platform is set for December. The rapid turnaround from the transaction closing in October is an encouraging sign of execution speed and bodes well for subscriber growth in what has historically been a tough market to crack. Management reaffirmed its aspiration to at least double revenue by the 2028 financial year and achieve another greater than "Rule of 40" outcome, maintaining its strong track record of delivering on guidance. We have been actively increasing our position, taking advantage of the lower share price.

Mainfreight (+12%) reported its first half result broadly in line with expectations, with Profit Before Tax of $132 million, down -18% on a year ago, although an improvement on the -24% decline in the first 17 weeks unveiled in July. Shares were up as management confidently "expect [the large] New Zealand and Australia businesses to all trade better through our second half". The company continues to deliver strong underlying performance in its Australian operations, driven by consistent market share gains that point to ongoing growth. In New Zealand there have been heavy investments in new facilities during the recent tough economic times, which along with weak activity levels has weighed on profits (Profit Before Tax -7% on a year ago). Management highlighted several large customer wins that position the business well as the economy recovers. Challenges remain in the US, where Transport operations are losing money and dragged the region to a US$2m overall loss for the half, however, having the core Australasian businesses on track is a positive sign.