Slide 1: Investor briefing: Full year results to 31 March 2021
Investor briefing Full year results to 31 March 2021 13 MAY 2021
Slide 2: Important notice
Important notice This presentation is given on behalf of Xero Limited (Xero) (ASX:XRO) (Company number NZ 183 0488, AU ARBN 160 661 183) Information in this presentation: • is for general information purposes only, and is not an o er or • includes statements relating to past performance, which shoul
Slide 3: Agenda
Agenda Business Financial Outlook Q&A update results Steve Vamos Kirsty Godfrey-Billy CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER 01 02 03 04 3
Slide 4: Business update
Business update Steve Vamos CHIEF EXECUTIVE OFFICER 4
Slide 5: Growing momentum through a challenging year
Growing momentum through a challenging year Financial and operating performance highlights for the full year ending 31 March 2021 SUBSCRIBERS ARPU AMRR TOTAL LIFETIME VALUE 2.741m $29.30 $963.6m $7.6b + 456,000 YOY -2% YOY (-1% in + 17% YOY (18% in + $2.1b YOY constant currency) constant currency) O
Slide 6: Lower churn and increasing customer activity
Lower churn and increasing customer activity Reduction in churn re ects a number of factors including the value of Xero to our customers in a di cult environment. Customer activity, illustrated below by employees paid and total invoice payments, shows recovery and continued momentum throughout the y
Slide 7: Drive cloud accounting
Drive cloud accounting ANZ International Australia New Zealand United Kingdom North America Rest of World FY21 Δ YOY FY21 Δ YOY FY21 Δ YOY FY21 Δ YOY FY21 Δ YOY Subscribers 1.12m +22% 446k +14% 720k +17% 285k +18% 175k +40% Net additions 201k +7% 54k +32% 107k -29% 44k -4% 50k +19% Revenue $384m +20
Slide 8: Australia and New Zealand highlights
Australia and New Zealand highlights Australia New Zealand • Record subscriber net additions in FY21 • Strongest subscriber net additions • Increased partner channel cloud in three years adoption • Partner cloud adoption remained • Launched Online Business Lending app elevated throughout FY21 integr
Slide 9: International highlights
International highlights United Kingdom North America Rest of World • Second best net additions ever in a half year • Record subscriber net additions2 in a half year • Bank feed coverage live across major period in H2 FY21 period in H2 FY21 banks in Singapore • Investment in readiness for next phase
Slide 10: Grow the small business platform
Grow the small business platform FY21 revenue FY21 revenue growth YOY composition 21% 20% Group operating revenue $848.8m Core Platform2 Core accounting1 accounting1 Platform2 91% • Other revenues3 decreased 28% primarily due Other3 to cancellation of Xerocons and other in-person events such as road
Slide 11: Build for global scale and innovation
Build for global scale and innovation Talent acquisition continued Optimisation of operational Building stakeholder trust throughout the period in line and nancial structure to meet by embedding social and with strategic objectives strategic needs of the business environmental impact activities acro
Slide 12: Financial results
Financial results Kirsty Godfrey-Billy CHIEF FINANCIAL OFFICER 12
Slide 13: Responsive spending and investment plan to support growth under changing conditions
Responsive spending and investment plan to support growth under changing conditions AMRR EBITDA Free cash ow $963.6m $191.2m $56.9m $1,000m $200m $60m $750m +17% $150m +39% +29.8m $820.6m $40m $137.7m $500m $638.2m $100m $20m $27.1m $250m $50m $ 73.2m $6.5m $0m $0m $0m FY19 FY20 FY21 FY19 FY20 FY21
Slide 14: Unit economics and track record of value creation
Value of a Xero subscriber Unit economics AT 31 MARCH 2021 and track record $2,500 $2,000 of value creation LTV/CAC $1,500 6.4 $1,000 LTV $2,789 $500 March 2021 Δ YOY CAC $0 $433 $-500 ARPU $29.3 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 MRR churn 1.01% $2.1b Gross margin 86.0% Total l
Slide 15: Steady gross margin, dynamic CAC settings and continued growth in product investment
Steady gross margin, dynamic CAC settings and continued growth in product investment Gross margin CAC as % of revenue Product costs including opex and capex, as % of revenue 1 100% 50% 44.9% 43.6% 50% 86.0% 36.3% 36.7% 90% 83.6% 85.2% 40% 40% 30.9% 31.4% 80% +0.8pp 30% -7.3pp 30% +5.3pp 70% 20% 20%
Slide 16: Financial performance
Financial performance FY20 ($000s) FY21 ($000s) Δ YOY (%) Total operating revenue 718,231 848,782 18% Operating revenue growth of 18% YOY (18% constant currency), driven primarily by subscriber growth across Gross pro t 611,649 729,889 19% all markets Gross margin 85.2% 86.0% +0.8pp EBITDA improved
Slide 17: Total liquid resources of $1.3 billion
Total liquid resources of $1.3 billion Net cash position more than doubled Movement in net cash position to $256.6m at 31 March 2021 Total available liquid resources at FY20 FY21 Δ YOY ($000s) ($000s) ($000s) 31 March 2021 of $1.3b, inclusive of $150m of undrawn committed debt facilities Cash and 10
Slide 18: Strategy update
Strategy update Steve Vamos CHIEF EXECUTIVE OFFICER 18
Slide 19: Strategic priorities
Strategic priorities Drive cloud Grow small Build accounting business for global platform scale and innovation Ok 19
Slide 20: Progress on acquisitions in FY21
Progress on acquisitions in FY21 ACQUISITION Invoice lending platform leveraging Workforce management platform E-invoicing technology providing connections customers’ accounting data for employers and employees to the Peppol global e-invoicing network Completed 1 October 2020 Completed 1 April 2021
Slide 21: Planday a key step into workforce management
Planday a key step into workforce management CUSTOMER NEEDS Makes running businesses easier Employee scheduling, time tracking and attendance, payroll compliance, reporting Global TAM 100m+ users1 Integrated employee communications Managers can contact employees quickly and securely through the shif
Slide 22: Outlook
Outlook Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value. Total operating expenses (excluding acquisition integration costs) a
Slide 23: Q&A
Q&A Steve Vamos CHIEF EXECUTIVE OFFICER Kirsty Godfrey-Billy CHIEF FINANCIAL OFFICER
Slide 24: Appendix
Appendix 24
Slide 25: Subscriber growth trend
Subscriber growth trend Closing subscribers from H1 FY19 to H2 FY21 +20% YOY Australia +19% YOY 2.74m +26% YOY New Zealand +30% YOY 2.45m 2.29m 175k United Kingdom +31% YOY 2.06m 136k 285k +32% YOY North America 1.82m 125k 251k 720k Rest of World 1.58m 99k 241k 638k 83k 215k 613k 65k 195k 536k 178k
Slide 26: Financial performance
Financial H1 FY19 ($000s) H2 FY19 ($000s) H1 FY20 ($000s) H2 FY20 ($000s) H1 FY21 ($000s) H2 FY21 ($000s) performance Total operating revenue Gross pro t 256,527 212,277 296,292 249,627 338,658 288,517 379,573 323,132 409,837 351,161 438,945 378,728 Gross margin 82.8% 84.3% 85.2% 85.1% 85.7% 86.3% O
Slide 27: SaaS metrics summary
SaaS metrics summary ANZ International Group H1 FY20 FY20 H1 FY21 FY21 H1 FY20 FY20 H1 FY21 FY21 H1 FY20 FY20 H1 FY21 FY21 ARPU $31.64 $29.83 $30.79 $31.23 $29.98 $30.05 $28.44 $26.74 $30.96 $29.93 $29.81 $29.3 CAC months 8.6 9.7 9.1 8.9 16.0 18.1 22.0 22.4 12.3 14.0 14.9 14.8 MRR churn 0.82% 0.84%
Slide 28: Glossary
Glossary Subscribers Constant currency Liquid resources Subscriber means each unique subscription to a Xero- Constant currency comparisons for revenue are based on Liquid resources comprises cash and cash equivalents, o ered product that is purchased by a user (eg a small average exchange rates for
Slide 29: Contact
Contact Toby Langley Kate McLaughlin INVESTOR RELATIONS COMMUNICATIONS toby.langley@xero.com kate.mclaughlin@xero.com +61 450 223 995 +64 27 533 4529 Mentorloop, Australia 29
Slide 30: Beautiful business
Beautiful business xero.com/investors