XERO LIMITED — Capital/Financing Update 2021

Mar 25, 2021

Proposed issue of securities

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Announcement Summary

Entity name

XERO LIMITED

Announcement Type

New announcement

Date of this announcement

Friday March 26, 2021

The Proposed issue is:

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A placement or other type of issue

Total number of +securities proposed to be issued for a placement or other type of issue

Maximum Number of ASX +security code +Security description +securities to be issued XRO ORDINARY FULLY PAID 92,914

Proposed +issue date

Thursday April 1, 2021

Refer to next page for full details of the announcement

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Part 1 - Entity and announcement details

1.1 Name of +Entity

XERO LIMITED

We (the entity named above) give ASX the following information about a proposed issue of +securities and, if ASX agrees to +quote any of the +securities (including any rights) on a +deferred settlement basis, we agree to the matters set out in Appendix 3B of the ASX Listing Rules.

1.2 Registered Number Type

ARBN

Registration Number

160661183

1.3 ASX issuer code

XRO

1.4 The announcement is

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New announcement

1.5 Date of this announcement

Friday March 26, 2021

1.6 The Proposed issue is:

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A placement or other type of issue

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Part 7 - Details of proposed placement or other issue

Part 7A - Conditions

7A.1 - Are any of the following approvals required for the placement or other type of issue? +Security holder approval Court approval Lodgement of court order with +ASIC ACCC approval FIRB approval Another approval/condition external to the entity Yes

7A.1a Conditions

Approval/Condition Date for determination Is the date estimated or ** Approval actual? received/condition met? Other (please specify in Thursday April 1, 2021 comment section) Estimated No Comments Approval / Condition Issue of new shares to sellers of the acquired business in accordance with the share purchase agreement as described in the ASX announcement on 24 March 2021: a) on completion of the acquisition; and b) on achievement of specified earnout milestones. Date for determination a) Completion of the acquisition - expected on 1 April 2021; and b) Achievement of earnout milestones over the following periods: i) 9 months after closing; ii) 18 months after closing; iii) 24 months after closing; and iv) for the 12 months to 30 June 2024.

Part 7B - Issue details

Is the proposed security a 'New class' (+securities in a class that is not yet quoted or recorded by ASX) or an 'Existing class' (additional securities in a class that is already quoted or recorded by ASX)? Existing class

Will the proposed issue of this +security include an offer of attaching +securities? No

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Details of +securities proposed to be issued

ASX +security code and description XRO : ORDINARY FULLY PAID

Number of +securities proposed to be issued

92,914

Offer price details

Are the +securities proposed to be issued being issued for a cash consideration? No

Please describe the consideration being provided for the +securities

Approximately 37,165 shares on completion of the acquisition; and Up to approximately 55,749 shares on satisfaction of the earnout milestones.

Please provide an estimate of the AUD equivalent of the consideration being provided for the +securities 11,469,238.000000

Will these +securities rank equally in all respects from their issue date with the existing issued +securities in that class? Yes

Part 7C - Timetable

7C.1 Proposed +issue date

Thursday April 1, 2021

Part 7D - Listing Rule requirements

7D.1 Has the entity obtained, or is it obtaining, +security holder approval for the entire issue under listing rule 7.1? No

7D.1b Are any of the +securities proposed to be issued without +security holder approval using the entity's 15% placement capacity under listing rule 7.1? Yes

7D.1b ( i ) How many +securities are proposed to be issued without security holder approval using the entity's 15% placement capacity under listing rule 7.1?

Approximately 37,165 shares on completion of the acquisition; and

Up to approximately 55,749 shares on satisfaction of the earnout milestones - to be issued on satisfaction of the earnout milestones on any date up to 31 July 2024.

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7D.1c Are any of the +securities proposed to be issued without +security holder approval using the entity's additional 10% placement capacity under listing rule 7.1A (if applicable)? No 7D.2 Is a party referred to in listing rule 10.11 participating in the proposed issue? No 7D.3 Will any of the +securities to be issued be +restricted securities for the purposes of the listing rules? No 7D.4 Will any of the +securities to be issued be subject to +voluntary escrow? Yes 7D.4a Please enter the number and +class of the +securities subject to +voluntary escrow and the date from which they will cease to be subject to +voluntary escrow All of the fully paid ordinary shares issued at completion and on satisfaction of the earnout milestones will be subject to a voluntary escrow period for 12 months from their relevant date of issue, during which they cannot be sold or transferred. Part 7E - Fees and expenses 7E.1 Will there be a lead manager or broker to the proposed issue? No 7E.2 Is the proposed issue to be underwritten? No 7E.4 Details of any other material fees or costs to be incurred by the entity in connection with the proposed issue Fees and costs incurred by Xero in connection with the proposed issue include share registry fees, settlement fees and legal and other external adviser fees. Part 7F - Further Information 7F.01 The purpose(s) for which the entity is issuing the securities To pay for the acquisition of an asset. 7F.1 Will the entity be changing its dividend/distribution policy if the proposed issue proceeds? No 7F.2 Any other information the entity wishes to provide about the proposed issue The numbers in response to questions in Part 7B and 7D.1b(i) are based on the share price and SEK/AUD exchange rate as at the date of this Appendix 3B and may change to the reflect the share price or exchange rate on or around the time of each share issue.

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