X8 r0 Beautiful accounting software Investor upate SAN FRANCISCO - 23 APRIL 2015 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 offer or invitation 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 (www.xero.com); • 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 differ materially 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. Financial results are unaudited. Audited financial results are due for release in May 2015. All currency amounts are in NZ dollars unless otherwise stated. 2 Investor calendar Annual results Annual report
 Annual meeting
 24th April* 21st May* 22nd July* * Dates New Zealand time 3 2015: Building the platform to win Built capability Product releases Customers People. 403 into team Fy15 Completed horizontal platform Expanded customers in all markets Team at scale after major focus recruiting and on-boarding top talent Xero now meets the needs of the majority of small businesses Building Operating Platform to support millions customers Established US leadership team Payroll and inventory in all core markets Scaled out globally distributed 
 product teams Game changing practice reporting Exceptional execution of 
 partner channel Initiated global marketing and sales infrastructure Added 214 people to the product team Product cadence outpacing competitors Capital in place for growth plans 4 Building online capability to capture large and expanding TAM Delivering a superior experience First accounting experience people love Uptime Ecosystem applications Recognised leader in first 
 three markets Best in class availability Responsive and trusted relationship with customers Innovative support model- delivering high customer satisfaction 20% attach rate across business editions Industry leading resiliency 40% attach rate across 
 premium editions Over 20,000 registered developers @Xero so many of my clients go with Xero because my other clients tell them how much they “Love” it! Amazing support by Robert at the @Xero Colorado office. Xero support folks are caring, smart, and go the extra mile. Thanks! @Xero Thanks! So nice to be dealing with actual caring, competent, human beings. @AW_GRANT @VERTECONSULTING @ASKHOLLYHOW 5 Delivered 80+% revenue growth Subscription revenue YOY subscription revenue growth $67m for year ended 31 March 2014 83% constant dollar Annualised Committed Monthly Revenue Cash to invest $93m as at 31 March 2014 $210M as at 31 March 2014 6 Winning in a competitive environment Hybrid software tactics Cloud platform effect Cloud platform effect Maintained premium pricing Flood of brand and 
 marketing spend Beautiful cloud experience 
 builds growth virally 15,000+ Banklink conversions in FY15 Aggressive price discounting Great experiences allow premium pricing +35% AU customers from incumbent software Acquisition of adjacent cloud products and customers Open ecosystem + community wins against a single brand Talk vision ahead of 
 delivery Empowered teams with no legacy products deliver faster Treat customer service as a cost Superior customer experience - even outsource drives adoption 424,000 <300,000 Incumbents Xero More cloud accounting customers in AU, UK & NZ than four incumbents combined* * Sage, Intuit, Reckon and MYOB public statements 7 Recognition as best product “Xero has helped us to just have a better handle on everything – to actually make decisions and move forward to grow” @threebabesbake “Find/Recode feature released today could quite possibly be the biggest time saver since the introduction of the bank feed” @liveca_chad “Recode in bulk @xero – This is huge. 
 And it they REALLY built it right. @DougSleeter 8 Winning global firms Large firms thinking globally and using cloud to address high growth market Partnerships Deloitte Private Australia KPMG UK KPMG Singapore 9 esults Subscription revenue 12 months
 ending 31 Mar 15 $M 12 months
 ending 31 Mar 14 $M % Change NEW ZEALAND 32.6 23.2 41% AUSTRALIA 56.5 27.7 104% UNITED KINGDOM 19.3 10.1 91% NORTH AMERICA 7.7 3.3 133% REST OF WORLD 4.8 2.6 85% TOTAL 120.9 66.9 81% 11 Customers expanded At 31 Mar 15 At 31 Mar 14 % change NEW ZEALAND 138,000 102,000 35% AUSTRALIA 203,000 109,000 86% UNITED KINGDOM 83,000 47,000 77% NORTH AMERICA 35,000 18,000 94% REST OF WORLD 16,000 8,000 100% TOTAL 475,000 284,000 67% 12 Strong financial performance Year ended 
 31 March 2015 $M Year ended 
 31 March 2014 $M % FY2015 % FY2014 Operating revenue Operating revenue Subscription revenue 120.9 66.9 - - Total operating revenue 123.9 70.1 - - Cost of revenues 37.4 24.5 30% 35% Gross margin percentage 70% 65% - - Sales and marketing 93.5 55.1 75% 79% Product and design 49.0 18.4 40% 26% G&A 24.5 11.7 20% 17% Net loss after tax 69.5 35.5 56% 51% 13 Strong financial performance Metric Expectation at commencement of FY2015 Subscription rev growth “Xero expects strong revenue growth to continue for the 
 foreseeable future.” Funding “Maintain strong cash position for growth agenda” Performance FY2015 YoY $120.9M 81% $269M +28% FY2015 Movement Gross Margin “We expect cost of revenues to continue to reduce as a percentage of operating revenue, thereby increasing the gross margin.” 70% +5% Sales and Marketing “costs will increase in absolute dollar terms as investment toward growing global market share continues, however we expect to see a significant reduction in “months to recover CAC” and in sales and marketing costs as a percentage of operating revenue” 75% -4% Product “Product design and development costs will increase in absolute dollar terms and are expected to increase as a percentage of operating revenue” 40% +14% 14 Investment in people 403 staff hired in the past 12 months 29 General & admin 26 214 Product 35 86% growth in FY2015 Business support Cost to serve GLOBAL STAFF* NZ 658 AU 185 UK 104 US 214** Total 1,161 99 Sales & marketing 15 * Total staff in each country ** US GTM team 64 staff Country SaaS metrics FY2015 FY2014 NZ AU UK NA ROW Group ARPU CAC months Customer Churn $23.90 7.8 0.9% $30.50 8.7 1.1% $26.00 16.7 1.3% $29.70 42.5 3.1% $37.50 2.9 2.1% $28.00 13.5 1.2% Life time value (LTV) Life time value / CAC* $1,818 9.8 $2,008 7.6 $1,418 3.3 $662 0.5 $1,387 12.6 $1,622 4.3 NZ AU UK NA ROW Group ARPU CAC months Customer Churn $23.40 5.3 1.2% $31.00 9.1 1.5% $25.20 9.6 1.4% $28.70 42.3 5.0% $35.40 3.1 2.2% $27.30 11.8 1.6% Life time value (LTV) Life time value / CAC* $1,303 10.6 $1,332 4.7 $1,142 4.7 $385 0.3 $1,043 9.4 $1,133 3.5 * Lifetime value/CAC is the ratio between the gross margin derived over the life of a customer and the cost to acquire that customer 16 Group SaaS metrics Group CAC months for the Group increased from 11.8 to 13.5 months due to the ongoing focus to accelerate growth through sales and marketing activities. Excluding North America, CAC months for the Group were 9.9 (8.2 in FY14) representing an efficient sales model. Improved churn has driven higher LTV and LTV to CAC ratio. SaaS metrics New Zealand CAC months increased due to investment activities undertaken to further develop future revenue streams via connections to Enterprise and Government. This has led to a lower LTV to CAC ratio despite an improvement in churn. FY15 FY14 $28.00 $27.30 CAC months 13.5 11.8 Customer Churn 1.2% 1.6% Life time value (LTV) $1,622 $1,133 Life time value / CAC 4.3 3.5 ARPU Australia United Kingdom North America Local currency ARPU increased due to strength in the online channel but decreased in NZD due a weakened AUD. CAC months decreased reflecting efficiency gains during the period. This along with improved churn has driven higher LTV and LTV to CAC ratio. CAC months increased due to growth in the sales and marketing team during the period. This growth reflects the market size and stage with Xero continuing to solidify its leadership position. As a result, the LTV to CAC ratio reduced despite a slight improvement in churn. Metrics such as CAC months are currently not considered relevant in this market given its very early stage and with Xero continuing to invest to build the platform for future growth. A significant improvement in churn during the period resulted in the increase in LTV and LTV to CAC ratio. 17 New Zealand Leading accounting software provider Payroll launched to increase ARPU in FY2016 Launched cloud farming solution increased farming segment ACMR by over 100% CUSTOMERS SUB REVENUE 138,000 $33M 31% share* ACMR $40M Improving reporting in practice tools accelerating partner channel growth Business platform test lab: Banking 2.0
 NZ Business Number
 Enterprise EDI
 Business to Government * Based on estimated market size of 450,000 **processed during CY2014 $70B TRANSACTIONS PROCESSED THROUGH THE PLATFORM** 18 CUSTOMERS BY CHANNEL 80% 20% Partners Online Australia Leading cloud accounting solution Ranked #1 most innovative company** Leading branded search in category Over 8,000 accounting and bookkeeping partners CUSTOMERS SUB REVENUE 203,000 $57M 10% share* ACMR $74M ‘Big 4’ bank API partnership 800+ accounting firms adopted Xero practice management Leveraging strategic partnerships: Telstra, Google and Shopify $114B TRANSACTIONS PROCESSED THROUGH THE PLATFORM** * Based on estimated market size of 2,000,000 **processed during CY2014 19 CUSTOMERS BY CHANNEL 75% Partners 25% Online United Kingdom Leading cloud accounting solution Increased team from 57 to 104 to drive growth Partnerships with: RBS, Natwest, Santander and Metrobank CUSTOMERS SUB REVENUE 83,000 $19M 2% share* Building senior leadership team Increasing momentum following 
 UK Xerocon 1,500 accountants and bookkeepers on current ‘Evolve’ 9 city roadshow Delivery of payroll in April unlocking market $26M ACMR * Based on estimated market size of 4,300,000 20 CUSTOMERS BY CHANNEL 72% 28% Partners Online North America Product fit addressed 300% YoY increase in online leads in last quarter H2 delivered a 300% increase on H1 net new customers Focus on building online direct model to address massive TAM Strong progress with strategic partnerships and banking US go-to-market team is 64 CUSTOMERS SUB REVENUE 35,000 $8M <1% share* XERO CUSTOMER GROWTH TREND US Other markets Time since entered market * Based on estimated market size of 29,000,000 21 ACMR $12M CUSTOMERS BY CHANNEL 53% 47% Partners Online US progress Actions US executive focus US leadership in place Investment in bookkeeping and
 accounting channel Growing digital and channel engagement Establish high velocity automated sales and marketing engine Full solution with accounting, invoicing, 
 payroll in 7 states, and inventory Continue to build marketing and PR momentum Increased solutions via integration with ecosystem partners Invest in mobile and viral features Key strategic and ecosystem partnerships Create new US specific solutions 22 Leading growth 475k CUSTOMERS ACMR SUBSCRIPTION REVENUE u n e ev R n R G CA i r c s b u (S R M C A , % 10 1 e $159 ) % 91 $121 284k o i t p $93 157k $67 $52 81k 36k 17k $6 $12 $8 2010 2011 $36 $25 $18 2012 2013 23 2014 2015 At the beginning of platform evolution Accounting 
 features 2007 Accounting platform 
 foundation development Integrated
 accounting
 & payroll Small
 Business
 platform TODAY 2015+ 24 The
 Big data for 
 Financial
 Small Business Web Rapid platform development
 beyond accounting Incredibly well positioned Xero’s around the world all on a mission to win First global accounting solution people love Massive and expanding TAM, significant new revenue opportunities First global small business cloud accounting platform Global strategy and proven execution 25 X6 Beautiful accounting software