Xero Limited · ASX:XRO

Xero — Investor Presentation (May 2012)

25 slides from Xero's investor presentation, May 2012

  1. Slide 1: Xero update

    xelo Xero update May 2012

  2. Slide 2: Small Business Internet

    Small Business Internet Big market, experiencing disruption Traditionally the small businesses market has been too fragmented to sell into: • Millions of small businesses = multi-billion dollar market • Untapped – of the global software companies (including IBM, Oracle, SAP, HP) only Microsoft sells

  3. Slide 3: Positioning

    Positioning Consumer Small business Enterprise Non direct monetization Direct monetization High price Low price Expensive sales model Smart sales model Complex applications focussed on usability Small business is a big, monetizable internet opportunity

  4. Slide 4: Xero model

    Xero model Financial Raise enough money to win and build solid foundations Build the best team globally Make entry difficult for new players Operational excellence Network Build presence, channel, ecosystem and advocates Create a platform Drive network effects Innovation Disrupt existing product cate

  5. Slide 5: Company snapshot

    Company snapshot Listed in 2007 – raised $85m Global • 194 staff in NZ, Australia, UK and USA • Staff in Wellington, Christchurch, Auckland, Melbourne, Sydney, Brisbane, Perth, Milton Keynes, San Francisco, Austin & Atlanta Hi growth • 8th in Deloitte Asia Pacific Tech 500 • NZ Fastest growing expor

  6. Slide 6: It's working

    It's working Customer numbers and revenue are growing strongly Customers Revenue ($000’s) 2007 204 24 2008 950 134 2009 6,000 959 2010 17,000 3,158 2011 36,000 9,341 Annualized run rate 2012 78,000 19,370 March 2012 $25,500,000

  7. Slide 7: Competitive landscape

    Competitive landscape “Start-ups” “Nimble, funded, global” “Incumbents” Start-ups don’t have resources Expected competitors Incumbents to be successful in this market have not emerged (MYOB, Sage, Intuit) continue to struggle to Category now requires client No one else has deliver online accounting

  8. Slide 8: Changing of the guard

    Changing of the guard • MYOB sold to Archer Capital in January 2009 for AU$382m • Archer sold to Bain in August 2011 for AU$1.2B (Archer suing Sage) • Deal funded with $575m debt • Users revolting at community.myob.com Revenue targets must be missed • Character and values of new owners Bain Capital

  9. Slide 9: Reckon Intuit split

    Reckon Intuit split • February: Reckon will only do Quickbooks Hosted over Citrix • March: Relationship to end in 2014 • Intuit unlikely to deliver Quickbooks Online in AU • Old distributorship model doesn’t work in SaaS • Intuit partnered with Intaact as companies ‘graduate’ • Reckon NZ revenues do

  10. Slide 10: Single Ledger is disruptive

    Single Ledger is disruptive For the For small accounting businesses practice Shared General ledger Invoicing Management accounts data Debtors Annual accounts Creditors Fixed assets Expense claims Tax Contacts

  11. Slide 11: Channel strategy

    Channel strategy Recruit Educate Grow Accountants are Ongoing education and We provide a introduced to Xero certification events are compelling set of tools through online partner provided to the to win the entire events, online videos accountants in-practice practice and group seminars community 9,

  12. Slide 12: Product matrix

    Product matrix Small Medium Small Medium Large Partner Edition • Cashbook • Ledger Reporting Practice Management/Tax Website e-Marketing

  13. Slide 13: Pricing plans

    Pricing plans Monthly subscription plans across regions NZ AU UK US ($NZD excl GST) ($AUD incl GST) (£GBP excl VAT) ($USD) Business Edition Small $29 $29 £12 $19 Medium $49 $49 £19 $29 Large $64 $64 £24 $49 Partner Edition Cashbook $19 $19 £9 $12 Ledger $5 $5 £2 $3

  14. Slide 14: Australia payroll acquisition

    Australia payroll acquisition • Acquired Australian online payroll company • Enhances Xero’s offering and accelerates growth in AU • Includes payroll, employee leave, tax and superannuation • Provides Xero with a specialist payroll development team • Total cost of acquisition NZ$1.9 million • Fully

  15. Slide 15: WorkflowMax acquisition

    WorkflowMax acquisition • Time and Cost for professionals • New Zealand Tax • Key application for accounting practices • Total cost of acquisition $6 million ($2m cash, $4m shares) • 200+ practices already committed to convert

  16. Slide 16: Large global market opportunity

    Large global market opportunity Current Xero Claimed Potential market Current market Target Xero Implied Competitor Main market Country customers (Mar customers (SMB) size Customers market share 12) MYOB NZ, AUS 1,000,000 New Zealand 47,000 322,000 14.6% 120,000 37.3% Sage UK 6,000,000 Australia 16,

  17. Slide 17: Revenue and expenses

    Revenue and expenses 30,000 Expenses 24,000 Revenue 18,000 $000’s 12,000 6,000 0 8 9 r 10 r 11 r 12 r0 r0 Ma Ma Ma Ma Ma

  18. Slide 18: Revenue generated per employee

    Revenue generated per employee Responsibly growing the team $150,000 $131,000 pa per employee $100,000 $50,000 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12

  19. Slide 19: Financial summary

    Financial summary Summary Audited Financials (NZ$000’s) Income Statement 31 March 2012 31 March 2011 31 March 2010 31 March 2009 31 March 2008 Total number of customers 78,000 36,000 17,000 6,000 950 Operating revenue 19,370 9,341 3,158 959 134 Total operating expenses (28,385) (18,017) (12,874) (8,

  20. Slide 20: Trading performance and liquidity

    Trading performance and liquidity • 60% of shares held by directors & staff • Approximately 2,700 shareholders - 75% of investors hold less than 10,000 shares each Share price history (representing just over than 7% of total share capital) • 106 million shares on issue and Xero has an average daily

  21. Slide 21: Funding

    Funding $85 million dollars raised on market Placement Date ($000’s) Pre IPO 2,000 IPO 15,000 Jul 2007 Craig Winkler (MYOB founder) 18,000 May 2009 Private placement 5,000 May 2009 SPP 6,000 May 2009 Peter Thiel 4,000 Oct 2010 Brad Shofer (MYOB), Valar Ventures, Sam Morgan , Sam Knowles & Craig Wink

  22. Slide 22: Board of Directors

    Board of Directors Sam Knowles Chairman Graham Shaw Rod Drury Chief Executive/Executive Director Craig Winkler Sam Morgan

  23. Slide 23: Senior management team

    Senior management team Subtitle Text Rod Drury Chief Executive/Executive Director Jamie Sutherland President, USA Ross Jenkins Chief Financial Officer Chris Ridd Managing Director, Australia Alastair Grigg Chief Operating Officer Gary Turner Managing Director, UK Paula Jackson General Manager Marketin

  24. Slide 24: Just getting started

    Just getting started Xero House • $39m in the bank 3 Market Lane Wellington • New offices in Canberra, San Francisco and Milton Keynes, larger premises in Auckland, Wellington and Melbourne • Game changing product features being delivered this year • Proven we can execute and scale with an efficient s

  25. Slide 25: www.xero.com/investors

    xelo www.xero.com/investors

Xero — Investor Presentation (May 2012) on 6ix