Slide 1: Investor Briefing
XERO LIMITED INVESTOR BRIEFING 15 May 2025 Sukhinder Singh Cassidy Chief Executive Officer Claire Bramley Chief Financial Officer Xero UK partner Tyler Trew, founder of Highlight Accounting and his client Rebecca Shoobert, owner of Oh Happy Creative in Leigh-on-Sea— ohhappycreative.com 1
Slide 2: Important Notice
IMPORTANT NOTICE This presentation is given on behalf of Xero Limited (Xero) (ASX:XRO) (Company number NZ 183 0488, ARBN 160 661 183) Information in this presentation: ● is for general information purposes only, and is not an offer or invitation ● includes statements relating to past performance, wh
Slide 3: Agenda
AGENDA 01 02 03 04 Introduction and Financial Results Strategic Themes Q&A summary of results Sukhinder Singh Cassidy Claire Bramley Chief Executive Officer Chief Financial Officer
Slide 4: Introduction and Summary of Results
INTRODUCTION AND SUMMARY OF RESULTS Sukhinder Singh Cassidy Chief Executive Officer Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com 4
Slide 5: FY25 reflects strong growth delivered with disciplined capital allocation
FY25 reflects strong growth delivered with disciplined capital allocation Strong macro resilient growth, with all large markets contributing Rule of 40 outcome reflects continued investment with discipline Operating revenue Adjusted EBITDA Rule of 401 $ 2,103m $ 641m 44.3% +23% YOY +22% or +$114m YOY
Slide 6: Continued our track record of strong revenue growth
Continued our track record of strong revenue growth REVENUE ($B) SUBSCRIBERS (#M) ARPU ($) +15% YOY +23% YOY Includes impact of removing (+11% CC) Impact from removed long (+20% CC) +6% YOY 160k long idle subscriptions idle subscriptions (+11% underlying1) (+10% underlying1) $2.10b $45.08 +11% YOY 4
Slide 7: Robust growth in ANZ heritage markets
Robust growth reflects strong customer relationships in our ANZ heritage markets $1,177m REVENUE ● Australia: Strong revenue growth continues (+21% YOY, 20% constant currency) ○ New product plans embedded in GTM motions & responded to customer feedback to include payroll functionality across lower ti
Slide 8: Focused approach in International delivering strong growth
Focused approach in International delivering strong growth, improved product delivery and helping us scale globally ● UK: Quality execution delivering high growth $926m REVENUE ○ New product plans in place including release of Xero Simple for (+24% YOY, 20% constant currency) MTD for IT. Subscriber
Slide 9: Greater than Rule of 40 outcome reflects continued investment
Greater than Rule of 40 outcome reflects continued investment, operating discipline, and delivery of value to customers ADJUSTED EBITDA ($M) FREE CASH FLOW ($M) & MARGIN (%) RULE OF 401 (%) +22% YOY Revenue growth CC (%) $507m $641m 24.1% Free cash flow margin (%) +75% YOY 44% $527m 41% $342m 20.0% 32
Slide 10: Financial Results
FINANCIAL RESULTS Claire Bramley Chief Financial Officer Millie O'Neill, Bookkeeper at The Highlight Partnership and her client Oh Happy Creative in Leigh-on-Sea - ohhappycreative.com 10
Slide 11: Broad-based revenue growth across our portfolio
Broad-based revenue growth across our portfolio +23% YOY 1 (20% CC) Constant currency growth excluding exit of Revenue composition WorkflowMax and removal of long idle subs 21% $2,103m Core Accounting +22% YOY Platform (21% CC) 1% -45% Other • Group operating revenue grew 23% YOY $1,714m 11% +29% or
Slide 12: Payments growth accelerating as we pursue its $59b TAM
Payments growth accelerating as we pursue its $59b TAM1. New payroll features launching in all 3x3 markets Total payment value2 Employees paid through Xero Payroll in AU / UK / NZ 3 Indexed to March-23 Indexed to March-23 Lower growth reflects deep penetration and large existing customer base in Aust
Slide 13: Good momentum in AMRR and strong relationship with revenue
Good momentum in AMRR and strong relationship with revenue historically1 AMRR ($m) FY-1 AMRR ($m) Revenue ($m) +22% YoY FY23 $1,231m $1,400m $2,388m FY24 $1,554m $1,714m $1,961m FY25 $1,961m $2,103m $1,554m $1,231m ● Annualised Monthly Recurring Revenue (AMRR) represents the annualised benefit of our
Slide 14: ARPU expansion supported by focus on value of each subscriber
ARPU expansion supported by increased focus on the value of each subscriber and ensuring we are solving their Jobs to be Done >50% contribution 50% - 25% contribution 25% - 0% contribution Negative contribution ARPU has increased $5.79 (up 15%) to 31 March 2025 $45.08 Price changes ● Important drive
Slide 15: Churn remains historically low
Churn remains historically low MRR churn (%) Churn is reported on a percentage of monthly recurring revenue basis Underlying1 churn (%) Headline churn (%) Long term pre-pandemic2 average — 1.15% 1.04% 1.07% 1.13% 1.01% 1.10% 1.11% 0.99% 0.91% 0.94% 1.03% 0.88% 0.90% 0.90% 1.00% Underlying churn excl
Slide 16: Strong LTV expansion reflects investment to drive ARPU
Strong LTV expansion reflects investment to drive ARPU and subscriber growth LTV movements by driver ($b)1 $1.81b $0.93b $17.95b ($0.40b) $1.02b ($0.94b) $15.53b Group SaaS metrics1 $4,066 LTV per sub: CAC per gross add: $717 CAC months: 15.9 LTV / CAC: 5.7x 2 2 1. SaaS metrics including LTV, LTV per
Slide 17: Driving operating leverage while investing for growth
Driving operating leverage while investing for growth Total operating expenses $m and as a % of operating revenue Operating expenses ($m) Operating expenses as a % of revenue 80.7%1 FY26 OPEX to operating revenue expected to be around 71.5%2 The ratio is expected to be higher in H1 FY26 versus H2 FY
Slide 18: Capital allocation remains disciplined
Capital allocation remains disciplined Sales & marketing Product design & development General & administration Expenses as a % of revenue $664m Expenses ($m) +23% YoY $618m 33.9% Gross product spend (up 0.3pp) +17% YoY 10.8% 42.0% Capitalisation rate (up 1.1pp) Flat YoY $228m +23% YoY 31.6% Flat YoY
Slide 19: Strong 22% Adj-EBITDA growth reflecting return on investment
Strong 22% Adj-EBITDA growth reflecting return on investment Movements in Adj-EBITDA ($m)1 Primarily performance marketing spend across digital channels $389m Continued investment to deliver product velocity ($28m) $10m $641m ($122m) $527m ($92m) ($43m) 1. Data based on Note 5 of Xero’s FY25 Financia
Slide 20: Strong free cash growth continues
Strong free cash growth continues Movements in free cash flow ($m)1 Interest on $2.3b of cash and short term deposits Majority of interest expense in P&L is non-cash in nature $403m Investment in product design & development to increase product velocity across the 3x3 $18m $507m 24.1% FCF margin ($18
Slide 21: Balance sheet strength provides financial flexibility
Balance sheet strength provides financial flexibility to pursue opportunity ahead ● Net cash position grew $326 million YOY Movement in net cash position reaching $683 million at 31 March 2025 $000s FY24 FY25 Δ YOY ● Reflects refinance of convertible notes alongside strong free cash generation partly Ca
Slide 22: Strategic Themes
STRATEGIC THEMES Sukhinder Singh Cassidy Chief Executive Officer Xero Australia customers Wayne & Sallina, owners of Cheol’s in Perth — cheols.com.au 22
Slide 23: A look back on our journey & commitments
A look back on our journey & commitments US review complete New CRO, CMO hires to build GTM Investment to align with playbooks enabling new motions & data Acquired Syft JAX beta growth and focus on driven marketing Aligned with our released target segments 3x3 strategy Xero’s GenAI business companio
Slide 24: Winning On Purpose
Winning On Purpose Purpose Vision WHY WE To make life better for people in small business, their To be the most trusted and insightful EXIST advisors and communities around the world small business platform To be a world class SaaS business ASPIRATION To double the size of our business and deliver R
Slide 25: Strong execution delivering key wins against our FY25–27 strategy
Strong execution delivering key wins against our FY25–27 strategy and more value to customers FOCUSED BETS TO WIN THE 3X3 A WINNING GTM PLAYBOOK UNLEASH XERO(S) TO WIN WIN THE FUTURE ● AU payments & AutoSuper ● Streamlined plans launched ● JAX beta launched & rolled out to ● New CFO & CPO hires BE c
Slide 26: Focused delivery across the 3x3 in FY25
Focused delivery across the 3x3 in FY25 Accounting Payroll Payments Launched Xero Simple, our product for Enhanced AutoSuper capabilities Tap to Pay released across both MTD for IT and improved UK tax offering for Australian customers major mobile platforms with partnership tax capabilities Rosterin
Slide 27: FY26 priorities will accelerate execution of our strategy
FY26 priorities will accelerate execution of our strategy Delight our Accelerate Deliver in Invest in AI Unlock our customers our customer all our regions across the 3x3 talent for scale more value 27
Slide 28: Accelerating AI everywhere at Xero
Accelerating AI everywhere at Xero Speed of JAX beta roll out demonstrates focus on delivery for customers Unlocking greater customer & internal value FY25 ● JAX beta launched and rolled out < 12 months to all BE customers ● AI driving Customer Experience efficiencies internally FY26 ● Focus on expa
Slide 29: FY26 Outlook
FY26 Outlook Total operating expenses as a percentage of revenue is expected to be around 71.5% in FY261 This ratio is expected to be higher in H1 FY26 versus H2 FY262 1 This includes an expected ~$45m from the accounting treatment of option grants and sign on from new remuneration packages. The maj
Slide 30: Xero continues to focus on its aspirations outlined in February 2024
XERO CONTINUES TO FOCUS ON ITS ASPIRATIONS OUTLINED IN FEBRUARY 20241 We aspire to be a world class SaaS business We believe we have the opportunity to both double the size of our business2 and deliver Rule of 40 or greater performance3,4 As we grow, we will also seek to be more balanced between sub
Slide 31: Wrap up of FY25 key themes
Wrap up of FY25 key themes Strong macro resilient growth, with all large markets contributing Rule of 40 outcome reflects continued disciplined investment Strong execution in Year 1 of our FY25-FY27 strategy while delivering more value for our customers 31
Slide 32: Appendix
APPENDIX Xero UK team members in our London office 32
Slide 33: Removal of long idle subscriptions complete
Removal of long idle subscriptions complete, impact mainly in the International segment Background information ● Long idle subscriptions were those that had been undeployed for more than 24 months and were not expected to be deployed in a reasonable timeframe. These subscriptions were low value and
Slide 34: Subscriber growth trend
Subscriber growth trend Includes impact of 160k long idle subscriptions removed during H1 FY25. Underlying subscriber growth was 10% in both H1 and H2 FY25 excluding this impact Closing subscriber balance from H2 FY22 to H2 FY25 +6% YOY +11% YOY +6% YOY 4.41m Australia +13% YOY 4.19m +14% YOY 4.16m
Slide 35: SaaS metrics summary
SaaS metrics summary1 ANZ International Group Australia, New Zealand UK, US, CA, ROW Global Total FY22 FY23 FY24 FY25 FY22 FY23 FY24 FY25 FY22 FY23 FY24 FY25 ARPU $32.00 $34.24 $37.97 $41.66 $30.53 $35.10 $41.05 $49.82 $31.36 $34.61 $39.29 $45.08 CAC months 8.8 9.1 8.1 9.4 22.9 23.3 22.4 20.7 15.5 1
Slide 36: No impact from impairments & exits on adjusted EBITDA
No impact from impairments & exits on adjusted EBITDA FY24 FY25 Δ YOY FY24 FY25 ($000s) ($000s) (%) ($000s) ($000s) Total operating revenue 1,713,767 2,102,652 23% EBITDA 497,418 638,466 Cost of revenue (202,505) (230,402) 14% Add back: restructuring costs 3,013 - Gross profit 1,511,262 1,872,250 24%
Slide 37: Financial performance
Financial performance H1 FY23 H2 FY23 FY23 H1 FY24 H2 FY24 FY24 H1 FY25 H2 FY25 FY25 Total operating revenue 658,512 741,372 1,399,884 799,547 914,220 1,713,767 995,865 1,106,787 2,102,652 Gross profit 572,912 649,029 1,221,941 699,790 811,472 1,511,262 885,332 986,918 1,872,250 Gross margin 87.0% 87
Slide 38: Cost to serve well managed, operating leverage delivering margin improvement
Cost to serve well managed, operating leverage delivering margin improvement Gross profit ($m) Gross margin (%) +24% YoY Gross profit increased by $361m or 24% YOY, more than the 23% growth in revenue. This resulted in a 0.8pp increase in gross profit $1,872m margin reflecting scale benefits $1,511m $1,2
Slide 39: Next wave of Making Tax Digital is coming to the UK
Next wave of Making Tax Digital (MTD) is coming to the UK MTD for Income Tax (IT) Enhanced UK product plans will meet MTD for Income Tax needs confirmed for 2026-2028 Ledger Xero Simple Ignite Xero will add MTD IT functionality Reporting & Implementation in phases (>£50k from Apr reconciliation (curr
Slide 40: Syft to enhance reporting and insights capability
Syft to enhance reporting and insights capability Tightly aligned with 3x3 strategy and our M&A criteria delivering best in class capabilities across: ● Forecasting and modelling tools ● Customised reporting, visualisation and benchmarking across industries ● Interactive live view, collaboration bet
Slide 41: Xero's top three super jobs represent ~$100b TAM
Xero’s top three super jobs, accounting, payments and payroll, represent ~$100b TAM in AU, NZ, US, UK and CA1 Rest of World (Xero markets) ~$100b Acct.2 ($26b) Payroll ($14b) Payments3 ($59b) Other ($39b) Subscriber growth Other Xero markets (US, UK, CA) 22 14 55 Australia & New Zealand 3 <1 4 Accou
Slide 42: Our focus for FY25–27
Our focus for FY25–27: Complete the most critical jobs in the biggest markets, embed key JTBD, and extend even further through the ecosystem and APIs Rest of World SMALL The ‘3 x 3’ ($43b SAM1) Complete the three key JTBD Singapore 1 (accounting, payroll and payments) for SMBs and ABs in our large m
Slide 43: Jobs to be Done
Jobs to be Done Jobs reflect the common tasks that a customer can perform on the Xero platform to run their business. A job does not directly represent a specific product or solution. Some examples are below. XERO PRODUCT AREAS Accounting Payments Payroll Adjacents JOB AREAS Book- Reporting & Invoicin
Slide 44: 2025 Exchange Rates
2025 Exchange Rates Full year ended / as at 31 March 2025 2024 Average rate Closing rate Average rate Closing rate NZD / AUD 0.911 0.909 0.927 0.915 NZD / CAD 0.826 0.814 0.822 0.805 NZD / EUR 0.553 0.526 0.562 0.552 NZD / GBP 0.465 0.442 0.485 0.473 NZD / SGD 0.795 0.767 0.820 0.805 NZD / USD 0.594
Slide 45: Glossary
Glossary Adjusted EBITDA Churn Liquid resources Adjusted EBITDA (a non-GAAP financial measure) is provided as Xero Churn is the value of monthly recurring revenue (MRR) from subscribers Liquid resources comprises cash and cash equivalents, short-term believes it provides useful information for users
Slide 46: Contact
CONTACT Nicole Mehalski Kate McLaughlin INVESTOR RELATIONS COMMUNICATIONS nicole.mehalski@xero.com kate.mclaughlin@xero.com +61 400 947 145 +64 27 533 4529