Xero Limited · ASX:XRO
Xero — Corporate Update (November 2014)
28 slides from Xero's corporate update, November 2014
Slide 1: Operating update
Beautiful accounting software Operating update World’s Most Innovative Growth Company 2014
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 securities
Slide 3: Investor calendar
Investor calendar v Annual meeting Operating update Interim financial results (strategic update) 3
Slide 4: FY2015 half year highlights
FY2015 half year highlights 30 September 2014 H1 SUBSCRIPTION REVENUE H1 YOY SUBSCRIPTION CUSTOMERS REVENUE GROWTH $28.1m for 6 mths end 30 Sep 2013 91% constant dollar 76% increase from 30 Sep 2013 ACMR CASH TO INVEST ACCOUNTING PARTNERS 87% growth from 30 Sep 2013 Equivalent USD $133m 4
Slide 5: Country performance
Country performance PAYING CUSTOMERS PARTNERS SEP 2014 SEP 2013 GROWTH SEP 2014 SEP 2013 GROWTH NEW ZEALAND 119,000 86,000 38% 2,818 2,465 14% AUSTRALIA 158,000 79,000 100% 6,400 4,085 57% UNITED KINGDOM 61,000 30,000 103% 2,467 1,267 95% NORTH AMERICA 22,000 10,000 120% 1,663 734 127% REST OF WORLD
Slide 6: Revenue growth
Revenue growth SUBSCRIPTION REVENUE ACMR $millions – 6 months to 30 Sep $millions – as at 30 Sep SEP 2014 SEP 2013 GROWTH SEP 2014 SEP 2013 GROWTH NEW ZEALAND 15.1 10.6 42% 34.0 23.9 42% AUSTRALIA 23.9 11.1 115% 63.9 30.2 112% UNITED KINGDOM 8.0 4.0 100% 20.9 10.2 105% NORTH AMERICA 3.0 1.3 131% 8.2
Slide 7: Early into a huge opportunity
Early into a huge opportunity CUSTOMER MARKET MARKET GROWTH SHARE SIZE* RATE NZ 38% AU 100% UK 103% NA 120% *Number of small businesses estimated from various market sources – March 2014 7
Slide 8: New Zealand
New Zealand ACMR SUB REVENUE GROWTH H1 YOY CUSTOMERS At 30 Sep 2014 $15.1M sub revenue 38% increase since 30 Sep 2013 ACMR CMR BY CHANNEL CUSTOMERS BY CHANNEL 42% growth 60% 40% 80% 20% Sep 13 Sep 14 Partners Online Partners Online 8
Slide 9: New Zealand – innovation market
New Zealand – innovation market • Focus now on winning entire practices • Introduce NZ Payroll in 2015 • Developing next phase of platform services: • Connect Small Business to Enterprise, Financial Institutions and Government • Banking 2.0: Two way bank connectivity and new Financial Services • Sma
Slide 10: Australia
Australia ACMR SUB REVENUE GROWTH H1 YOY CUSTOMERS At 30 Sep 2014 $23.9M sub revenue 100% increase since 30 Sep 2013 ACMR CMR BY CHANNEL CUSTOMERS BY CHANNEL 112% growth 55% 45% 71% 29% Sep 13 Sep 14 Partners Online Partners Online 10
Slide 11: Australia summary
Australia summary Achievements Growth actions • Xero online tax lodgements to ATO • Complete delivery of Xero online tax for approaching 200,000 accountants & bookkeepers • Xero voted #16 in BRW best places to work • Xero Cashbook for Financial Advisors in Australia (for companies >100 staff) • Conti
Slide 12: United Kingdom
United Kingdom ACMR SUB REVENUE GROWTH H1 YOY CUSTOMERS At 30 Sep 2014 $8.0M sub revenue 103% increase since 30 Sep 2013 ACMR CMR BY CHANNEL CUSTOMERS BY CHANNEL 105% growth 58% 42% 71% 29% Sep 13 Sep 14 Partners Online Partners Online 12
Slide 13: United Kingdom summary
United Kingdom summary Achievements Growth actions • Strategic partnership with KPMG • Introduce Payroll in 2015 • Direct bank feeds with RBS, NatWest • Expand partner channel and SVB • Grow online channel • Grew UK team from 45 to 98 staff, expanding UK footprint • Secure technical & commercial rela
Slide 14: North America
North America ACMR SUB REVENUE GROWTH H1 YOY CUSTOMERS At 30 Sep 2014 $3.0M sub revenue 120% increase since 30 Sep 2013 ACMR CMR BY CHANNEL CUSTOMERS BY CHANNEL 116% growth 38% 62% 51% 49% Sep 13 Sep 14 Partners Online Partners Online 14
Slide 15: US opportunity is open
US opportunity is open US 29M SMALL BUSINESSES • Early adopter accountants are beginning the transition to the cloud and 5M delivering advisory services Small Businesses with Desktop • Majority of accountants remain compliance focussed and only at the software beginning of the transition to the clou
Slide 16: US performance
US performance GOING GREAT NEEDS WORK Growing more confident in our “cloud– Some product gaps native” products and GTM strategy as we Speed of refining and tuning sales model deliver US features Dissatisfied with execution and leadership Positive early adopter accountants Recruitment a challenge in
Slide 17: US execution
US execution ACTIONS UNDERWAY EXECUTIVE FOCUS Recruit local leadership team Global success allowing more executive time in the US Implement sales model: • Rod Drury (CEO) 2 out of every 5 weeks • Hyperlocal for field sales • Ross Jenkins (CFO) in US • Inside sales in Denver • Simon McIver (VP Global
Slide 18: US product progress
US product progress REVIEWED IN SHIPPED SINCE MAR 2014 IN PROGRESS • Payroll updates • Features to match TOP ONLINE ACCOUNTING APP • Batch deposits and exceed available desktop products • Faster spend/receive money data entry • Integrated Payroll in more states • New Profit and Loss report • Payment
Slide 19: When they find us, they love us
When they find us, they love us Cristina Garza Jeremy Smith David Barrett John Schweisberger Accounting prose H&R Block CEO, Expensify CEO, RBZ Xero has allowed me to H&R Block scanned the market They're smart, passionate, Couple a great product with double my practice. for the best online accountin
Slide 20: Group outlook
Group outlook • Net loss after tax for the six months to 30 September 2014 is expected to be around $25M • We confirm our guidance of full financial year subscription revenue growth of approximately 80% on a constant dollar basis 20
Slide 21: Investor story
Investor story 21
Slide 22: What valuable company is nobody building?
What valuable company is nobody building? PETER THIEL, ZERO TO ONE PUBLISHED SEPTEMBER 2014 WWW.AMAZON.COM/ZERO-ONE-NOTES-STARTUPS-FUTURE 22
Slide 23: As Facebook is to the consumer market, someone must build the global financial platform
As Facebook is to the consumer market, someone must build the global financial platform for small business SMALL BUSINESS CLOUD NATIVE FINANCIAL PLATFORM GLOBAL 250m invested in a pure cloud Natural accountants channel Day-one global strategy company Diversified global growth and Connect small busin
Slide 24: Massive and expanding TAM
Massive and expanding TAM MARKET SHARE TAM EXPANDING 24
Slide 25: History of strong growth
History of strong growth % ) 371k 9 3 R ACM % , $132 CUSTOMERS e 9 8 e nu ev ACMR p t ion R scr i SUBSCRIPTION S u b R( 211k CAG REVENUE (FOR 6 MTHS END 30 SEP) $71 112k $52 36k $39 17k $28 $17 $9 $15 $8 25
Slide 26: Cloud native disruptors routinely succeed
Cloud native disruptors routinely succeed 26
Slide 27: Q&A
Q&A 27
Slide 28: Beautiful accounting software
Beautiful accounting software