Xero Limited · ASX:XRO
Xero — Shareholder Meeting (July 2016)
33 slides from Xero's shareholder meeting presentation, Jul 20, 2016
Slide 1: Annual Meeting
Annual Meeting Ajuo osn feuosied 104
Slide 2: Important notice
Important notice 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 recommendation of securitie
Slide 3: CEO welcome
Rod Drury CEO welcome Ajuo esn feuosied 103
Slide 4: Introductions
For personal use only 14 Introductions Rachael Powell Chief People Officer Andy Lark Chief Marketing & Revenue Officer Duncan Ritchie Chief Platform Officer Sankar Narayan Chief Financial Officer Rod Drury Chief Executive, Founder Kirsty Godfrey-Billy Chief Accounting Officer Tony Stewart Chief Data
Slide 5: Business update
For personal use only Business update Sankar Narayan . Chief Financial Officer
Slide 6: Delivering on potential
al use only For person 717,000 SUBSCRIBERS GLOBALLY* Delivering on potential $258m MONTHLY REVENUE* *1.5b ANNUALISED COMMITTED TOTAL LIFE TIME VALUE**
Slide 7: Continuing quality growth
For personal use only 7 Continuing quality growth 12 month subscriber growth 12 month ACMR addition | | Sep 15 Mar 16 Sep 15 Mar 16
Slide 8: Execution across the company
For personal use only Execution across the company Improved all components of LTV growth Total life time value $1.6 March 2015 March 2016 $1.5b Added Subscribers 475,000 717,000 $685m FYI6 ARPU. $28 $30 v CMRchurn% 1.23% 119% $823m Gross margin 70% 76% v LTV per sub $1,733 $2,103 v
Slide 9: Improving margins
For personal use only 19 $90m $60m $30m som Gross margin and % of revenue H1FYIS H2 FYIS HI FYI6 Improving margins H2 FYI6 EBITDA margins oO EBITDA excl. SBP* 20% EBITDA 40° -60% HI FYIS H2 FY1S H1 FYI6 H2 FYI6 *Employee share-based payments (SBP) are a non-cash cost to Xero
Slide 10: Revenue growth funding investment
la ily Ou! ae! >) © FOr pers Revenue growth funding investment Cash outflows* and revenue Cash outflow* as % of revenue i *Operating and Investing cash ouflows
Slide 11: Diversified and strong global growth
For personal use only New Zealand 186,000 (138,000 FY15 Diversified and strong global growth Subscribers* Australia United Kingdom North America 312,000 133,000 62,000 New markets 24,000 (16,000 FY15) *as at 31 March 2016
Slide 12: Xero - a high margin model
Xero - a high margin model — na >) © Common global cloud platform Small business customer Nol product support Pace of innovation YSIS 0) Strong ARPU Business lin AWS platform Aversion to ci For
Slide 13: Outlook
For personal use only Operating efficiencies Operating metrics to continue improvement in FY17 as the Company continues to drive efficiencies through automation and economies of scale Outlook io) = ) (2) Cash usage Cash usage in FY17 (based on FX rates at 1 April 2016) is forecast to reduce from FY1
Slide 14: Global opportunity
For personal use only © Global opportunity S: ) Andy Lark Chief Marketing & Revenue Officer
Slide 15: When your purpose is your purpose
When your purpose is your purpose: To enable the small business economy to thrive through beautiful software, advice and connections.
Slide 16: Large unserviced global market
For personal use only Large unserviced global market* Small businesses not on cloud Global TAM potential Global cloud adoption increasing** Xero subscriber momentum 717k @ Not on cloud Cloud MS 475k ANZ UK US/NA Mar13 Mar14 MariS Mar 16 *estimated english speaking addressable market and based on pub
Slide 17: A vibrant and growing brand
For personal use only A vibrant and growing brand More people searching than ever before ’ 9 mins Total watch time Youtube & Vimeo** Orne Average view duration** XERO COMPETITOR1 COMPETITOR 2 *Google trends analysis for searches for online accounting providers in Australia 2004 - 2016. Numbers repre
Slide 18: For personal use only
For personal use only
Slide 19: Wall of innovation
| use only q® Ci For person PCWorld PC World June 2016 It’s tough to beat Xero as it has a great UI, nice mobile app and great third party integration Wall of innovation CIO A CIO Magazine on Microsoft Power BI July 2016 That is proper game changing. That’s why the Xero integration is so important b
Slide 20: Building trust
Building trust Ajuo esn jeuosied 104
Slide 21: Your small business cloud
| use only q® Ci erson Your small business cloud Beautiful Product + Beautiful Experiences + Beautiful Connections \lo Advisor Bookkeepers / Accountants € Business customers (} 500+ connected apps eas People fit Finweb
Slide 22: Accelerating network growth
For personal use only 32 Accelerating network growth 900,000» 30,000 Developers in ecosystem People paid in a month community 2 +) o) 2 Customer files added every week Tax submissions to ATO cloud services since October 2013 $ ze B@rilion Vitter Wages paid in last 90 days Transactions processed* * I
Slide 23: The advisor directory
The advisor directory (ee = on er)
Slide 24: For personal use only
For personal use only
Slide 25: On the ground in South-East Asia
personal USE ORIve, 5 ” | wh On the ground in South-East Asia
Slide 26: CEO update
For personal use only © CEO update QO Rod Drury Chief Executive, Founder
Slide 27: Years of growth
For personal use only 37 10 years of growth Subscriber net annual additions FYO7 FYO8 FYO9 FYIO FYI Fy12 FYI3 FYI4 FYIS 42k FYIG Subscribers (000's)
Slide 28: Xero is a unique globally authoritative data source
For personal use only Xero is a unique globally authoritative data source $1 trillion @ Signals transactions processed* True insights and predictions
Slide 29: Comprehensive AWS migration enables
For personal use only Comprehensive AWS migration enables: Superior customer artificial intelligence and machine learning experiences Faster launch of new services Predictive analytics and automation at scale Efficiencies and margin Commodity big data innovations
Slide 30: Opens incremental growth curves
Opens incremental growth curves New geographies Employee services a = (©) (@) SUBSCRIBER DRIVEN GROWTH ~+— TRANSITION —> ADDITIONAL GROWTH DRIVERS i) =) Small business accounting engine AWS platform migration Front office services © Channel development A Fetes Cc inanciat le © Network effects 2 @ (o
Slide 31: Our focus
Our focus - Large global TAM + Product leadership - Strong global execution + Improving margins - Cash discipline Cash outflow* as % of revenue itflow
Slide 32: Xero Network
For personal use only 6] Xero Network Connecting small businesses to each other © Financial Web Integrations with banks to automate transactions, and how they deliver next generation financial services @BARCLAYS «nab Conmonweaith iri: aa Enterprise Connect Large businesses automating their supply ch
Slide 33: Beautiful accounting software
| use only q Ci For person Beautiful accounting software www.xero.com