XERO LIMITED — AGM Information 2021

Aug 11, 2021

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MARKET RELEASE

2021 Annual Meeting - Presentation

WELLINGTON, 12 August 2021 - Please see the attached Annual Meeting Presentation for Xero’s 2021 Annual Meeting.

Authorised for release to the ASX by the Company Secretary.

Contact

Toby Langley - Investor Relations Mobile: +61 450 223995 toby.langley@xero.com

Kate McLaughlin - Communications Mobile: +64 27 533 4529 kate.mclaughlin@xero.com

About Xero

Xero is a cloud-based accounting so�ware platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

Xero Limited (XRO) NZ Company no. 1830488 ARBN 160 661 183

Registered Address 19-23 Taranaki St Te Aro Wellington 6011 New Zealand

www.xero.com

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Xero Limited

Annual Meeting 12 AUGUST 2021 12 AUGUST 2021

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Important notice

• This presentation is given on 12 August 2021 on behalf of Xero Limited (Xero) (ASX:XRO) (Company number NZ 183 0488, AU ARBN 160 661 183) Information in this presentation:

• [is for general information purposes only, and is not an offer or ] invitation for subscription, or purchase of, or a recommendation to invest in, Xero securities

• [should be read in conjunction with, and is subject to, Xero's latest ] and prior interim and annual reports, including Xero's annual report for the period ended 31 March 2021, and Xero's market releases on the ASX

• [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 differ materially from these statements

• [includes statements relating to past performance, which should ] not be regarded as a reliable indicator of future performance

• [may contain information from third parties believed to be reliable, ] but no representations or warranties are made as to the accuracy or completeness of such information

• [includes Non-GAAP measures as we believe they provide useful ] information for readers to assist in understanding Xero’s financial performance. Non-GAAP financial measures do not have a standardised meaning and should not be viewed in isolation or considered as substitutes for measures reported in accordance with NZ IFRS. These measures have not been independently audited or reviewed

• All information in this presentation is current at 31 March 2021, unless otherwise stated. All currency amounts are in NZ dollars, unless otherwise stated.

• Due to rounding, numbers in this presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

• See page 22 for a glossary of the key terms used in this presentation.

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Board of Directors

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David Thodey, AO

CHAIR OF THE BOARD INDEPENDENT NON-EXECUTIVE DIRECTOR People and Remuneration Committee Nominations Committee (Chair)

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Lee Hatton

INDEPENDENT NON-EXECUTIVE DIRECTOR Audit and Risk Management Committee

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Steven Aldrich

INDEPENDENT NON-EXECUTIVE DIRECTOR People and Remuneration Committee

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Susan Peterson

INDEPENDENT NON-EXECUTIVE DIRECTOR People and Remuneration Committee (Chair) Nominations Committee

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Mark Cross

INDEPENDENT NON-EXECUTIVE DIRECTOR Audit and Risk Management Committee (Chair)

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Dale Murray, CBE INDEPENDENT NON-EXECUTIVE DIRECTOR Audit and Risk Management Committee Nominations Committee

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Rod Drury XERO FOUNDER NON-EXECUTIVE DIRECTOR Nominations Committee

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Craig Winkler NON-EXECUTIVE DIRECTOR People and Remuneration Committee Audit and Risk Management Committee Retiring 12 August 2021

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Agenda Chair’s CEO update Resolutions Q&A address David Thodey Steve Vamos CHAIR OF THE BOARD CHIEF EXECUTIVE OFFICER

01 02 03 04

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5

Using the online platform

Download the Online Guide at xero.com/about/investors or under Downloads

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Voting
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Help number

1 800 990 363 if you are calling from Australia +61 1800 990 363 if you are calling from outside Australia

Chair’s address David Thodey CHAIR OF THE BOARD

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CEO update Steve Vamos CHIEF EXECUTIVE OFFICER

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• Growing momentum through a challenging year Financial and operating performance highlights for the full year ended 31 March 2021

SUBSCRIBERS 2.741m + 456,000 YOY

OPERATING REVENUE $ 848.8m + 18% YOY (18% in constant currency)

ARPU $ 29.30 -2% YOY (-1% in constant currency) EBITDA $ 191.2m + $53.5m YOY

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AMRR
$
963.6m
+ 17% YOY (18% in
constant currency)
NET PROFIT
$
19.8m
+ $16.4m YOY
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TOTAL LIFETIME VALUE $ 7.6b + $2.1b YOY FREE CASH FLOW $ 56.9m + $29.8m YOY

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Lower churn and increasing customer activity

Reduction in churn reflects a number of factors including the value of Xero to our customers in a difficult environment. Customer activity, illustrated below by employees paid and total invoice payments, shows recovery and continued momentum throughout the year

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MRR churn[1]

FY20 FY21 Δ YOY ANZ 0.84% 0.73% -0.11pp International 1.59% 1.43% -0.16pp Group 1.13% 1.01% -0.12pp

Total employees paid through Xero to March 2021[2]

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160
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JAN-20MAR-20MAY-20JUL-20 SEP-20NOV-20 JAN-21 MAR-21
Indexed to Mar 20
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Total payment value to March 2021[3]

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JAN-20MAR-20MAY-20 JUL-20 SEP-20 NOV-20 JAN-21 MAR-21
Indexed to Mar 20
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1 See glossary on page 22 for definition of churn

• 2 Monthly total employees paid through Xero Payroll in Australia, New Zealand and the UK (markets with a Xero Payroll solution)

• 3 Total monthly invoice payment value across our connected online payment service providers who process the payment of invoices on the Xero platform

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Strategic priorities

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Drive cloud accounting

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Grow small Build business for global platform scale and innovation

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Progress on acquisitions in FY21

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ACQUISITION Invoice lending platform leveraging Workforce management platform E-invoicing technology providing connections customers’ accounting data for employers and employees to the Peppol global e-invoicing network Completed 1 October 2020 Completed 1 April 2021 Completed 1 April 2021 CONSIDERATION[1] A$80 million ($87m) €183.5 million ($305m) SEK150 million ($25m) Grow small business platform Drive cloud accounting STRATEGIC PRIORITIES Build for global scale and innovation ALIGNMENT Makes worker scheduling, payroll Provides access to well-established WITH Provides access to capital compliance and communicating e-invoicing capability and network CUSTOMER through invoice financing with employees easier for faster, more secure transactions NEEDS

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1 Total consideration subject to performance and/or product development milestones

• Investing into product and partnerships

Xero Analytics Plus

• Short-term cash flow and business snapshot now part of a suite called Xero Analytics

• Launched Xero Analytics Plus, providing advanced AIpowered forecasts and business insights

Xero Me

Refreshed the user interface of our Xero Me app, which integrates with Xero Payroll and lets employees access payslips, timesheets and request leave

Xero App Store

• Launched the Xero App Store as the next evolution of the Xero App Marketplace

• Moving towards a more commercial model with new, enhanced features including subscription and billing APIs

Bank reconciliation, tax reporting

• Enhanced bank reconciliation with smarter algorithms leveraging AI capabilities

• Enhanced tax reporting in the US and Canada, lodgements in South Africa and investing in readiness for MTD in the UK

Waddle and invoice financing Entered partnership to support CBA’s new invoice financing offer, Stream Working Capital, in Australia

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Outlook

Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value. Total operating expenses (excluding acquisition integration costs) as a percentage of operating revenue for FY22 are expected to be in a range of 80-85% which is consistent with levels seen in the second half of FY21 and the pre-pandemic period. Integration costs, relating to the three acquisitions announced during FY21, are expected to increase total operating expenses as a percentage of operating revenue by up to 2% for FY22. As previously stated, the acquisition of Planday is expected to contribute approximately three percentage points of additional operating revenue growth in FY22.

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Resolutions

RESOLUTION 1

Fixing the fees and expenses of the auditor That the Board is authorised to fix the fees and expenses of Ernst & Young as auditor for the ensuing year

For 98.54% 97,042,609

Against 1,375,429 1.40% Discretionary 63,769* 0.06%

• 47,683 of which are held by the Chair of the Meeting who intends to vote in favour of the resolution

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RESOLUTION 2

Re-election of Dale Murray, CBE

That Dale Murray, retiring from office as a director of Xero at the Meeting, and being eligible, be re-elected as a director of Xero

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For 98.47% 96,963,936

Against 1,443,706 1.47% Discretionary 64,514* 0.07%

• 48,428 of which are held by the Chair of the Meeting who intends to vote in favour of the resolution

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RESOLUTION 3

Election of Steven Aldrich

That Steven Aldrich, appointed as a director of Xero on 1 October 2020, who will retire at the Meeting, and being eligible, be elected as a director of Xero

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For 99.92% 98,393,639

Against 13,103 0.01% Discretionary 65,281* 0.07%

• 49,195 of which are held by the Chair of the Meeting who intends to vote in favour of the resolution

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RESOLUTION 4

Increase the non-executive directors’ fee pool cap

That, for the purposes of ASX Listing Rule 10.17, the maximum annual fees able to be paid to all of the non-executive directors of Xero taken together be increased by NZ$500,000, from NZ$2,200,000 to NZ$2,700,000 per annum

Note: A voting exclusion applies to this resolution

For 99.80% 91,479,057

Against 117,090 0.13% Discretionary 66,018* 0.07%

* 52,910 of which are held by the Chair of the Meeting who intends to vote in favour of the resolution

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RESOLUTION 4

Director fees

Target annual fees ($)

Current annual fees ($)

Country of residence	Chair	Director	Committee Fees Chair Member	Committee Fees Chair Member
New Zealand	450,000 450,000 500,000 650,000	190,000 190,000 360,000 190,000	38,000 38,000 38,000 38,000	19,000 19,000 19,000 19,000
Australia
United States
United Kingdom

Country of residence	Chair	Director	Committee Fees Chair Member*	Committee Fees Chair Member*
New Zealand	358,000 358,000 358,000 373,000	145,000 145,000 252,000 145,000	38,000 38,000 38,000 38,000	19,000 19,000 19,000 19,000
Australia
United States
United Kingdom

* Committee fees apply to the Audit and Risk Management Committee and the People and Remuneration Committee. No additional fees are currently paid for the chair and membership of the Nominations Committee

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RESOLUTION 4

Increase the non-executive directors’ fee pool cap

That, for the purposes of ASX Listing Rule 10.17, the maximum annual fees able to be paid to all of the non-executive directors of Xero taken together be increased by NZ$500,000, from NZ$2,200,000 to NZ$2,700,000 per annum

Note: A voting exclusion applies to this resolution

For 99.80% 91,479,057

Against 117,090 0.13% Discretionary 66,018* 0.07%

* 52,910 of which are held by the Chair of the Meeting who intends to vote in favour of the resolution

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Q&A

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Glossary

Subscribers

Subscriber means each unique subscription to a Xerooffered product that is purchased by an accounting partner or an end user (small business subscriber) which is (or is available to be) deployed. Subscribers that have multiple subscriptions to integrated products on the Xero platform are counted as a single subscriber

AMRR

Annualised monthly recurring revenue (AMRR) represents monthly recurring revenue at 31 March, multiplied by 12. It provides a 12 month forward view of revenue, assuming any promotions have ended and other factors such as subscriber numbers, transaction volumes, pricing and foreign exchange remain unchanged during the year

ARPU

Average revenue per user (ARPU) is calculated as AMRR at 31 March divided by subscribers at that time (and divided by 12 to get a monthly view)

Churn

Churn is the value of monthly recurring revenue (MRR) from subscribers who leave Xero in a month as a percentage of the total MRR at the start of that month. The percentage provided is the average of the monthly churn for the previous 12 months

Constant currency

Constant currency comparisons for revenue are based on average exchange rates for the 12 months ended 31 March 2020. Comparisons for ARPU, AMRR and LTV are based on exchange rates at 31 March 2020

Lifetime value (LTV)

LTV is the gross margin expected from a subscriber over the lifetime of that subscriber. This is calculated by taking the average subscriber lifetime (1 divided by churn) multiplied by ARPU, multiplied by the gross margin percentage. Group LTV is calculated as the sum of the individual segment LTVs, multiplied by their respective segment subscribers, divided by total Group subscribers

CAC months

Customer Acquisition Cost (CAC) months are months of ARPU to recover the cost of acquiring each new subscriber. The calculation is sales and marketing costs for the year excluding the capitalisation and amortisation of commissions paid to sales people, less conference revenue (such as Xerocon), divided by gross new subscribers added during the same period, divided by ARPU

Liquid resources

Liquid resources comprises cash and cash equivalents, short-term deposits including proceeds from convertible notes, and undrawn committed debt facilities

Free cash flow

Free cash flow is defined as cash flows from operating activities less cash flows used for investing activities excluding cash used for acquisitions of, and investments into, businesses and strategic assets

TAM

Total addressable market

GAAP

Generally accepted accounting principles

CAGR

Compound annual growth rate

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Beautiful business xero.com/investors