Xero Limited · ASX:XRO
Xero — Shareholder Meeting (July 2014)
41 slides from Xero's shareholder meeting presentation, Jul 23, 2014
Slide 1: Beautiful accounting software – Annual Meeting
For personal use only Beautiful accounting software Annual Meeting World’s Most Innovative Growth Company 2014
Slide 2: Rod Drury, Chief Executive
For personal use only Rod Drury CHIEF EXECUTIVE
Slide 3: Important notice
Important notice For personal use only This presentation is given on behalf of Xero Limited (Company number NZ 1830488, AU ARBN 160661183 NZX/ASX:XRO). Information in this presentation: • is for general information purposes only, and is not an offer or invitation for subscription, purchase, or recom
Slide 4: FY2014 highlights
FY2014 highlights For personal use only as at 31 March 2014 Operating revenue Customers Staff $70.1m ACMR at $93m 284,000 45% in “Class of 2014” 758 Staff numbers doubled in 12 months Accounting partners Cash to invest 11,573 $210m 45% of partners Raised $180m added in FY2014 in Oct 2013 4
Slide 5: FY2015 outlook
FY2015 outlook For personal use only • While it’s early in the fiscal year we are forecasting subscription revenue growth of approximately 80% for the 2015 financial year. This is on a constant dollar basis. • During the year we will pass through US$100m in annualised committed monthly revenue posit
Slide 6: Early target of 1M, we're 1/3 there
Early target of 1M we’re 1/3 there For personal use only 50,000 4 months Customers today 50,000 4 years 2007 2009 2011 2012 Today 6
Slide 7: Years to $100m
Years to $100m For personal use only SalesForce ($33B) 34% 4 7 11 Workday ($15B) 71% 5 7 ($US2.7B) 83% 6 8 ServiceNow ($8B) 74% 6 8 NetSuite ($6B) 34% 8 10 ConstantContact ($1B) 13% 8 11 (USD valuation July 2014) % YoY growth Yrs to $20m Yrs to $100m Yrs to $1b 7
Slide 8: Market share
Market share For personal use only as at 31 March 2014 Small business Partners Current Small Current Current Accounting & Current customers businesses* market share partners Bookkeeping firms* market share NZ 102,000 0.45m 23% 2,646 3.5k 76% AU 109,000 2.0m 5% 5,328 29k 18% UK 47,000 4.3m <1% 1,797
Slide 9: Sizing the market for a disruptor
For personal use only Sizing the market for a disruptor based on an incumbent’s market is like sizing the car industry off how many horses there were in 1910. AARON LEVIE – CEO, BOX.COM 9
Slide 10: Adoption curve
Adoption curve For personal use only NZ AU UK US 3% 13% 34% 34% 16% INNOVATORS EARLY ADOPTERS EARLY MAJORITY LATE MAJORITY LAGGARDS Win influencers Recruitment Go deep and win share Leading product, and go broad B2B and B2G initiatives ecosystem and platform 10
Slide 11: Winning Australia
Winning Australia For personal use only • Leading online accounting provider • AU$1 Billion of payroll processed in June 2014 • 350,000 employees paid over last tax year • 140+ staff in Australia • Advertising campaign increasing brand awareness from 16% – 32% 11
Slide 12: UK accelerating
UK accelerating For personal use only • Already, leading cloud accounting provider • Strategic alliance with KPMG BEST CLIENT SOFTWARE • Over 100% customer growth YoY • 90+ UK staff 12
Slide 13: Customer comment on Xero vs QB
For personal use only Spotted this on my way back from a meeting in Holborn this morning. QB feeling the force of XERO! MUKESH KHATRI @MUKESHBB 13
Slide 14: Focus on the USA
For personal use only the USA 14 Focus on
Slide 15: Customer additions per month
For personal use only Customer additions per month (000) 6 12 18 24 30 OCT 03 Jul-04 Apr-05 Jan-06 OCT 06 Jul-07 Xero Apr-08 15 Jan-09 QBO OCT 09 Jul-10 Average monthly net new customers Apr-11 Global run rate vs. Intuit Jan-12 OCT 12 Jul-13 Apr-14
Slide 16: Xero vs. Intuit
Xero vs. Intuit For personal use only Estimated as at 31 March 2014 Xero QBO 6% 10% 94% 90% US Outside US 16
Slide 17: Cloud-native applications quote
For personal use only Every application that is doing well in the cloud today was built from scratch to be in the cloud: Salesforce, Workday, ServiceNow, Amazon, Google. It wasn’t repurposed legacy software that now works in the cloud. ANEEL BHUSRI, CO-FOUNDER & CEO, WORKDAY 17
Slide 18: It's not easy
It’s not easy For personal use only I hate this new version! Please I don't like this new system on Not only is the product give me the old version back QuickBooks online. Is there any unusable, but the customer or I am considering changing. way to use the old system? service is awful. blog.qbo.intu
Slide 19: US accountants have not begun the journey
US accountants have not begun For personal use only the journey from compliance Interactive Accounting – Right Way – Mint Accounting – 19
Slide 20: Product well positioned
Product well positioned For personal use only APPS MARKETPLACE TOP ONLINE ACCOUNTING APP “Made for the cloud and right “Xero is the best software for “I provided my QuickBooks Online at home on mobile, Xero automation, both because of data to Xero and in just a few pairs its innovative side with its
Slide 21: Largest online accounting add-on ecosystem in the USA
For personal use only Largest online accounting add-on ecosystem in the USA 21
Slide 22: US market entry phase
US market entry phase For personal use only Partnerships Product People & integrations GTM Foundations in place New US Directors Influencers Payroll v1 US CEO PR Product reviews VP education Education match QBO CA sales teams Accounting channel Superior customer service ratings Online acquisition QB
Slide 23: US is off the ground, now building the engine
US is off the ground, now building the engine For personal use only PHASE PHASE PHASE Get off the ground Build Sales Engine Accelerate https://www.flickr.com/photos/gsfc/8465603992 23
Slide 24: US 2015: Building the engine
US 2015: Building the engine For personal use only Partnerships Product People & integrations GTM Deliver best in class Complete Best ecosystem Build online US product US leadership team channel Execute on existing Innovate faster Global Management relationships Focus on key focussed on US segments
Slide 25: Building the best online engine
Building the best online engine For personal use only 25
Slide 26: New Zealand seeing scale
New Zealand seeing scale For personal use only • Significant exporter - 70% of revenue • Quarter of all small businesses on Xero • $45.2B (30%) of GDP value processed through Xero in 12 months (to 31 Dec 2013) • Seeing next level effects - Large businesses connecting to the platform - Major player i
Slide 27: Banking 2.0 integration – Direct Bank Feeds
Banking 2.0 integration For personal use only Direct Bank Feeds 27
Slide 28: Improving small business at scale
Improving small business at scale For personal use only Days to get paid – 2 year change 43 31 Invoices sent Invoices received Recipients 10.8m $16.6B 9.2m $13.4B 800k+ of Xero online invoices Measured 12 months to 31 December 2013 28
Slide 29: Mobilising Government for Small Business
Mobilising Government for Small Business For personal use only NZ Business number IRD GST Webservices 29
Slide 30: Reaching the heart of the New Zealand economy
Reaching the heart of For personal use only the New Zealand economy Rural suppliers 30
Slide 31: Our industry does not respect tradition
For personal use only Our industry does not respect tradition – it only respects innovation SATYA NADELLA, MICROSOFT 31
Slide 32: Efficiently invested to build the world's best cloud company
For personal use only efficiently invested to build the world’s best cloud company 32
Slide 33: Talented people today
870 talented people today For personal use only 390 staff hired in the past 12 months 8 Country leadership 88 Customer 127 experience Product 86% growth 22 Marketing 60 68 General & admin Sales, education 17 & enablement Platform 33
Slide 34: Globally distributed product teams
For personal use only Milton Keynes New York Denver San Fran Globally distributed product teams Canberra Auckland Melbourne Wellington 34
Slide 35: Where we are at
Where we are at For personal use only Connected TODAY services Business platform Online accounting Full accounting Data platform Establish the platform to play Change the game 35
Slide 36: Financial platform for small business
Financial platform for small business For personal use only Xero Practice Studio Financial Data + Docs Add-ons Modern Practice 36
Slide 37: Financial platform for small business
Financial platform for small business For personal use only Accounting Payroll Customers B2B Payments Financial Data + Docs 37
Slide 38: External data inside Xero
External data inside Xero For personal use only Financial Data + Docs 8,500 products 4.4M businesses available online 16.5M credit active people 38
Slide 39: Pipeline of innovation
Pipeline of innovation For personal use only Mobile Bank Rec Inventory Notifications QB Conversion Add-ons Directory PayDay App AU Tax Smart Lists Quotes 39
Slide 40: Winston Churchill quote
For personal use only Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. WINSTON CHURCHILL 40
Slide 41: Beautiful accounting software – Annual Meeting
For personal use only Beautiful accounting software Annual Meeting World’s Most Innovative Growth Company 2014