Slide 1: FY22 Annual Results Investor Presentation
Market release FY22 Annual Results Investor Presentation WELLINGTON, 12 May 2022 - Xero Limited (ASX: XRO), in accordance with the ASX Listing Rules, attaches its FY22 Annual Results Investor Presentation. Authorised for release to the ASX by the Chair of the Board & Chair of the Audit and Risk Mana
Slide 2: Investor briefing
Investor briefing Full year results to 31 March 2022 12 MAY 2022
Slide 3: 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 4: Agenda
Agenda 01 Business update 02 Financial results 03 Outlook 04 Q&A Steve Vamos Kirsty Godfrey-Billy CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER 3
Slide 5: Business update
Business update Steve Vamos CHIEF EXECUTIVE OFFICER
Slide 6: Strong result with 29% revenue growth
Strong result with 29% revenue growth Financial and operating performance highlights for the year ended 31 March 2022 SUBSCRIBERS ARPU AMRR TOTAL LIFETIME VALUE 3.271m $31.36 $1,231.1m $10.9b + 530,000 net subscriber + 7% YOY (9% in + 28% YOY (30% in + $3.3b or 43% YOY additions or 19% YOY constant
Slide 7: Revenue growth strong
Revenue growth strong Customers increasingly consider Xero as fundamental to running their business and meeting compliance and other needs Revenue composition +29% YOY (30% cc) Core accounting $1,097m • Group operating revenue Platform +18% YOY grew 29% YOY, or 24% excluding Other (18% cc) revenue f
Slide 8: Platform revenues grow, supported by rising activity
Platform revenues grow, supported by rising activity Platform revenues now account for 11% of revenues, up from 7% in FY21. The three largest contributors of platform revenue in FY22 show increasing activity levels over the last 12 months Planday users 1 Employees paid through Total payment value 3
Slide 9: Australia and New Zealand highlights
Australia and New Zealand highlights $633M REVENUE (+23% YOY) 295K NET ADDS 1.86M SUBSCRIBERS (+19% YOY) Australia New Zealand FY22 Δ YOY FY22 Δ YOY Revenue $483m +26%1 Revenue $149m +15% Net additions 229k +14% Net additions 66k +22% Winners Subscribers 1.34m +21% Subscribers 512k +15% Canstar’s Mo
Slide 10: International highlights
International highlights $464M REVENUE (+39% YOY) 235K NET ADDS 1.4M SUBSCRIBERS (+20% YOY) United Kingdom North America Rest of World FY22 Δ YOY FY22 Δ YOY FY22 Δ YOY Revenue $292m +30%1 Revenue $73m +28%2 Revenue $100m +85%3 Net additions 130k +21% Net additions 54k +23% Net additions 51k +2% Subs
Slide 11: Strategic priorities
Strategic priorities Drive cloud Grow small Build accounting business for global platform scale and innovation 10
Slide 12: Investing in our strategy: North America
Investing in our strategy: North America Canadian product localisation with TaxCycle STRATEGIC Drive cloud accounting PRIORITY CATEGORY Canadian tax compliance OPPORTUNITY Serving more Canadian customers by enhancing income tax ling capability, in line with Xero’s compliance playbook, and accessing
Slide 13: Investing in our strategy: our people
Investing in our strategy: our people Successful year in Employee value proposition talent acquisition Tools that support our talent acquisition • In a challenging hiring Purpose-led environment, delivered Our people are inspired to ful l our our biggest ever year of purpose to make life better for
Slide 14: Financial results
Financial results Kirsty Godfrey-Billy CHIEF FINANCIAL OFFICER 13
Slide 15: Strong financial performance with continued investment in the long term
Strong financial performance with continued investment in the long term AMRR EBITDA Free cash ow $1,231.1m $212.7m $1,250m $250m $80m $963.6m $191.2m $56.9m $1,000m +28% $200m $60m $137.7m +11% $750m $150m $820.6m $40m $27.1m $2.1m $500m $638.2m $100m $73.2m $20m -$54.9m $250m $50m $6.5m $0m $0m $0m
Slide 16: Continued uplift in lifetime value of subscribers
Continued uplift in lifetime value of subscribers Total LTV over time LTV movements by driver • LTV 5 year CAGR was 34% for ANZ and 49% for International From 31 March 2021 to 31 March 2022 • Average customer lifetime of 9.3 years $3.3b $12b added 0.18 10.90 0.87 $12b International 10.9 -0.15 ANZ 0.
Slide 17: Higher ARPU, low churn helping drive LTV uplift
Higher ARPU, low churn helping drive LTV uplift ARPU movement contributors Churn 2 ARPU has increased by just over $2 since 31 March 2021 Churn has remained consistently below pre-COVID-19 pandemic levels ARPU at 31 March 2021 $29.30 1.40% Price changes 1.10% 1.10% 1.13% 1.11% 1.15% 1.01% Product mi
Slide 18: Improved gross profit reflects continued investment
Improved gross profit reflects continued investment Gross pro t and gross margin percentage Operating expenses as a % of revenue Gross pro t Sales and marketing Gross pro t Gross margin percentage Product design and development +31% YOY General and administration $957m $1000m 100% 81.7% 80.8% 84.0%
Slide 19: Financial performance
Financial performance FY21 FY22 Δ YOY ($000s) ($000s) (%) Operating revenue growth of 29% YOY (30% constant currency), driven primarily by subscriber growth and Total operating revenue 848,782 1,096,819 29% platform revenue Cost of revenue (118,893) (139,388) 17% Operating expenses, inclusive of acq
Slide 20: Total liquid resources of $1.1 billion
Total liquid resources of $1.1 billion Net cash position decreased by $205.4m YOY to Movement in net cash position $51.2m at 31 March 2022 FY21 FY22 Δ YOY Total available liquid resources at 31 March 2022 of ($000s) ($000s) ($000s) $1.1b, inclusive of $150m of undrawn committed debt facilities Cash
Slide 21: 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 (including acquisition integration costs) a
Slide 22: Evolution of Xero's financial profile
Evolution of Xero’s financial profile LONG TERM EXPENSE RATIO FY22 FY23 EXPECTATION ASPIRATION SALES & MARKETING 37.0% of revenue Ç trend: Expected ratio OUTCOME • Revenue Growth: +29% • Revenue Growth • Subscriber Growth: +19% • Subscriber Growth • LTV/CAC: 6.9 • Attractive LTV/CAC PRODUCT DESIGN 3
Slide 23: Q&A
Q&A Steve Vamos CHIEF EXECUTIVE OFFICER Kirsty Godfrey-Billy CHIEF FINANCIAL OFFICER
Slide 24: Appendix
Appendix 23
Slide 25: Subscriber growth trend
Subscriber growth trend +19% YOY Closing subscribers from H1 FY19 to H2 FY22 +23% YOY 3.27m +20% YOY 3.01m Australia +19% YOY 2.74m 226k +26% YOY 201k New Zealand 2.45m +30% YOY 339k +31% YOY 2.29m 175k United Kingdom 308k 2.06m 136k 850k North America +32% YOY 1.82m 125k 285k 785k 99k 251k Rest of
Slide 26: SaaS metrics summary
SaaS metrics summary ANZ International Group FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 ARPU $29.83 $31.23 $32.00 $30.05 $26.74 $30.53 $29.93 $29.30 $31.36 CAC months 9.7 8.9 8.8 18.1 22.4 22.9 14.0 14.8 15.5 Churn 0.84% 0.73% 0.66% 1.59% 1.43% 1.23% 1.13% 1.01% 0.90% Subscribers 1,306,000 1,561,0
Slide 27: Financial performance
Financial H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 H2 FY22 performance ($000s) ($000s) ($000s) ($000s) ($000s) ($000s) Total operating revenue 338,658 379,573 409,837 438,945 505,703 591,116 Gross pro t 288,517 323,132 351,161 378,728 440,417 517,014 Overview of nancial Gross margin 85.2% 85.1% 85.7%
Slide 28: Recent acquisitions FY21 to FY22
Recent acquisitions FY21 to FY22 ACQUISITION Invoice lending E-invoicing technology Workforce Cloud-based Canadian tax platform leveraging providing connections management platform inventory preparation software customers’ to the Peppol global for employers management for accountants and accounting
Slide 29: Glossary
Glossary AMRR Constant currency (cc) Liquid resources Annualised monthly recurring revenue (AMRR) represents Constant currency comparisons for revenue are based on average Liquid resources comprises cash and cash equivalents, short- monthly recurring revenue at 31 March, multiplied by 12. exchange r
Slide 30: Contact
Contact Toby Langley / Kate McLaughlin Nicole Mehalski COMMUNICATIONS INVESTOR RELATIONS toby.langley@xero.com kate.mclaughlin@xero.com +61 450 223 995 +64 27 533 4529 nicole.mehalski@xero.com +61 400 947 145 29
Slide 31: Beautiful business
Beautiful business xero.com/investors