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World’s Most Innovative Growth Company

World’s Most Innovative Growth Company 31
Beautiful accounting software Annual Meeting World’s Most Innovative Growth Company 2014Rod Drury
 CHIEF EXECUTIVEImportant 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 oer or in ff vitation for subscription, purchase, 
 or recommendation of securities in Xero Limited; • should be read in conjunction with, and is subject to, Xero’s Annual Report, market releases, and information published on Xero’s website (; • includes forward-looking statements about Xero and the environment in which Xero operates, which are subject to uncertainties and contingencies outside of Xero’s control – Xero’s actual results or performance may dier mat ff erially from these statements; • includes statements relating to past performance, which should not be regarded as a reliable indicator of future performance; and • may contain information from third parties believed to be reliable; however, no representations or warranties are made as to the accuracy or completeness of such information. All information in this presentation is current at the date of this presentation, unless otherwise stated. All currency amounts are in NZ dollars unless stated otherwise. 3FY2014 highlights as at 31 March 2014 Operating revenue Customers Staff 284,000 758 70.1m ACMR at 93m 45% in “Class of 2014” Staff numbers doubled in 12 months Accounting partners Cash to invest 11,573 210m 45% of partners Raised 180m added in FY2014 in Oct 2013 4FY2015 outlook 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 US100m in • annualised committed monthly revenue positioning us 
 for a US listing when the timing is deemed right. 5Early target of 1M we’re 1/3 there 50,000
 4 months Customers today 50,000
 4 years 2007 2009 2011 2012 Today 6Years to 100m 11 SalesForce (33B) 34% 7 4 Workday (15B) 71% 7 5 (US2.7B) 83% 8 6 ServiceNow (8B) 74% 8 6 NetSuite (6B) 34% 10 8 13% 11 ConstantContact (1B) 8 (USD valuation July 2014) % YoY growth Yrs to 20m Yrs to 100m Yrs to 1b 7Market share 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 34k 5% Nrth America 18,000 29.0m 1% 1,408 446k 1% Rest of World 8,000 - 1% 394 - 1% Total 284,000 - 1% 11,573 - 1% Estimated from various market sources – March 2014 8Sizing the market for a disruptor based on an incumbent’s market is like sizing the car industry off how many horses there were in 1910. AARON LEVIE – CEO, BOX.COM 9Adoption curve NZ AU UK 3%
 Go deep and win share
 Leading product, 
 and go broad B2B and B2G initiatives ecosystem and platform 10Winning Australia Leading online accounting provider • AU1 Billion of payroll processed in June 2014 • 350,000 employees paid over last tax year • 140+ sta in A ff ustralia • Advertising campaign increasing brand awareness from 16% – 32% • 11UK accelerating Already, leading cloud accounting provider • BEST CLIENT 
 Strategic alliance with KPMG • SOFTWARE Over 100% customer growth YoY • 90+ UK staff • 12Spotted this on my way back from a meeting in Holborn this morning. QB feeling the force of XERO MUKESH KHATRI MUKESHBB 13Focus on 
 the USA 14Global run rate vs. Intuit Average monthly net new customers 30 24 18 12 6 Xero QBO 15 Customer additions per month (000) OCT 03 Jul-04 Apr-05 Jan-06 OCT 06 Jul-07 Apr-08 Jan-09 OCT 09 Jul-10 Apr-11 Jan-12 OCT 12 Jul-13 Apr-14Xero vs. Intuit Estimated as at 31 March 2014 Xero QBO 6% 10% 90% US Outside US 16 94%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 17It’s not easy 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. 18US accountants have not begun
 the journey from compliance Interactive Accounting – Right Way – Mint Accounting – 19Product well positioned 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 built-in features as well as hours they’d converted, verified, its practical side.” because of its integrations.” and imported it into Xero.” 20Largest online accounting 
 add-on ecosystem in the USA 21US market entry phase Partnerships
 Product People GTM & integrations 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 
 Online acquisition service ratings QBO conversion 22US is o the gr ff ound, now building the engine PHASE PHASE PHASE Get o the gr ff ound Build Sales Engine Accelerate 23US 2015: Building the engine Partnerships
 Product People GTM & integrations 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 Change product
 Large distribution category New US Directors partners US listing ready 24Building the best online engine 25New Zealand seeing scale 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 effects • Large businesses connecting to the platform - Major player in Business to Government interaction - Championing next generation banking - 26Banking 2.0 integration Direct Bank Feeds 27Improving small business at scale Days to get paid – 2 year change 43 31 Invoices sent Recipients Invoices received 9.2m 10.8m 800k+ of Xero online invoices 16.6B 13.4B Measured 12 months to 31 December 2013 28Mobilising Government for Small Business NZ Business number IRD GST Webservices 29Reaching the heart of 
 the New Zealand economy Rural suppliers 30Our industry does not respect tradition 
 – it only respects innovation SATYA NADELLA, MICROSOFT 31efficiently invested to build 
 the world’s best cloud company 32870 talented people today 390 sta hir ff ed in the past 12 months 8 Country leadership 88 127 Customer Product experience 86% growth 22 Marketing 60 68 General & admin Sales, education 17 & enablement Platform 33Milton Keynes New York Denver San Fran Globally distributed product teams Canberra Auckland Melbourne Wellington 34Where we are at Connected
 services TODAY Business
 platform Online accounting Full accounting Data
 platform Establish the platform to play Change the game 35Financial platform for small business Xero Practice Studio Financial
 Data + Docs Modern Practice Add-ons 36Financial platform for small business 

 Customers Accounting Payroll B2B Payments Financial
 Data + Docs 37External data inside Xero Financial
 Data + Docs 8,500 products
 4.4M businesses
 available online 16.5M credit active people 38Pipeline of innovation Mobile Bank Rec Inventory Notifications QB Conversion Add-ons Directory PayDay App AU Tax Smart Lists Quotes 39Now 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 40Beautiful accounting software Annual Meeting World’s Most Innovative Growth Company 2014
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