XERO LIMITED — Capital/Financing Update 2013

Oct 13, 2013

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MARKET

RELEASE Xero
raises
NZ$180m
for
global
growth

14 October 2013

Xero
Limited
(XRO)
has
raised
NZ$180
million
of
new
capital
from
a
range
of
US
and
New Zealand
investors
including
exisEng
shareholders
Matrix
Capital
Management
and
the
Peter Thiel
backed
Valar
Ventures.

The
transacEons
are
priced
at
NZ$18.15
per
share
for
9.92
million
shares
represenEng
8%
of
the shares
on
issue
aQer
the
raise.

Xero
has
built
a
powerful
soQware
plaRorm
supporEng
over
211,000
customers
globally,
with the
assistance
of
accountant
and
bookkeeper
partners.
Over
the
last
two
months,
the
company has
held
partner
conferences
in
Australia,
the
US,
and
the
UK
and
is
seeing
acceleraEon
in
the acceptance
and
adopEon
of
its
products.
Accordingly,
the
Board
decided
to
raise
addiEonal capital
to
conEnue
building
a
world-­‐class
team
in
the
US
market
and
support
conEnued
global growth.

US
investors
account
for
NZ$147
million
of
the
capital
raised.
In
addiEon
to
Matrix
and
Valar, the
US
investors
represent
some
of
the
most
enduring
and
well-­‐capitalised
asset
management firms
in
the
world,
all
of
whom
will
assist
the
company
with
its
strategy
and
execuEon
in
the
US market.

Xero
earlier
this
month
reported Annualised
Monthly
Commi]ed
Revenue
of
NZ$70.6m
as
at
30 September
2013,
up
from
NZ$38.7m
a
year
earlier,
and
expects
its
operaEng
revenue
to
exceed NZ$30.3m
for
the
6
months
to
30
September
2013,
up
84%
over
the
same
period
last
year. Following
the
raise
Xero
will
have
over
NZ$230m
cash
on
hand.

David
E.
Goel,
Managing
Member
of
Matrix
Capital
Management,
says
“Xero
is
emerging
as
the definiEve
soQware
plaRorm
for
small
business
worldwide.
Capturing
the
power
and affordability
of
cloud-­‐based
compuEng,
Xero
has
democraEsed
accounEng,
payroll,
and
other business
soQware
that
was
once
the
privilege
of
only
the
largest
companies.
Having
empowered hundreds
of
thousands
of
small
and
medium-­‐sized
businesses
in
New
Zealand,
Australia,
and the
United
Kingdom,
Xero
is
poised
to
do
the
same
for
its
29
million
potenEal
customers
in
the United
States.
We
are
adding
to
our
investment
to
help
facilitate
and
accelerate
this
goal.”

Xero
CEO
Rod
Drury
says
“Xero
has
had
seven
years
to
build
the
best
global
accounEng plaRorm.
That
investment
puts
us
in
a
strong
posiEon
as
the
cloud
market
accelerates.
The calibre
of
our
investors
and
our
strong
cash
posiEon
sends
a
clear
signal
of
our
aspiraEons
to serve
millions
of
small
businesses
around
the
world
and
a]ract
the
world’s
best
talent.”

Video
will
be
made
available
related
to
this
announcement
on Vimeo and
in Box.

For
more
informa+on
contact: Rod
Drury Ross
Jenkins Xero
Chief
ExecuEve Xero
CFO rod.drury@xero.com ross.jenkins@xero.com +64
27
6000
007 +64
21
963
909

About Xero

Xero is
beauEful,
easy
to
use
online accounEng soQware for
small
businesses
and
their
advisors. The
company
has
over
200,000
paying
customers
in
more
than
100
countries
around
the
world. Xero
is
listed
on
the
NZX
and
ASX. See www.xero.com

**About

Matrix
Capital
Management**

Matrix
Capital
Management
is
an
investment
advisor
registered
with
the
United
States SecuriEes
and
Exchange
Commission
and
is
based
in
Waltham,
Massachuse]s,
just
outside
of Boston.
Founded
in
1999
by
David
E.
Goel
and
Paul
J.
Ferri,
the
fund
primarily
invests
in
publicly traded
equity
securiEes
with
a
focus
on
developing
a
deep
and
detailed
“bo]om-­‐up”
analysis
of each
company
in
its
porRolio.
Under
Mr.
Goel’s
stewardship
as
the
Managing
Member,
Matrix takes
the
long
view
of
invesEng.
This
strategy
involves
developing
high
convicEon
in
companies based
on
its
parEcularised
research
into
their
fundamentals,
and
combining
that
knowledge with
a
differenEated
understanding
of
the
sectors
in
which
they
do
business.
Over
its
fiQeen-­‐ year
investment
history,
Matrix
has
specialised
in
companies
that
use
technology
to
disrupt
or disintermediate
business
models,
while
culEvaEng
specialised
experience
in
the
technology, media/telecom
and
consumer
sectors.

Within
the
technology
sector,
Matrix
has
been
extensively
involved
in
several
sub-­‐segments: soQware-­‐as-­‐a-­‐service,
cloud
infrastructure,
payments,
e-­‐commerce,
social
media,
mobile
data, and
streaming
video.
Over
the
last
two
decades,
the
Matrix
investment
team
has
built relaEonships
with
execuEves
and
entrepreneurs
in
these
areas
who
help
Matrix
idenEfy
and evaluate
potenEal
investment
opportuniEes.
Matrix’s
strategy
is
to
invest
in
a
concentrated porRolio
of
a]racEvely-­‐valued
companies
whose
innovaEve
ideas,
strong
fundamentals,
and visionary
management
teams
posiEon
them
to
grow
over
mulEple
years.
Matrix
invests
a significant
amount
of
Eme
and
resources
in
developing
high
convicEon
in
each
of
its
posiEons, holding
to
a
deliberate
strategy
designed
to
generate
strong,
durable
returns
over
Eme.

This
above
informa+on
about
Matrix
Capital
Management
does
not
cons+tute
an
offer
to
sell
or solicita+on
of
an
offer
to
buy
any
securi+es.

**About

Valar
Ventures**

Valar
Ventures
is
a
global
venture
capital
firm
backed
by
Peter
Thiel.
Based
in
San
Francisco, Valar
invests
exclusively
in
companies
outside
of
the
United
States.
Valar
believes
that
over
the next
decade
an
increasing
number
of
transformaEve
technology
companies
will
be
started outside
of
the
US,
and
that
the
founders
of
those
companies
will
benefit
from
having
a
US partner
that
understands
their
unique
challenges
and
opportuniEes
and
can
help
them
access US
networks.

See h]p://www.valarventures.com/