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Xero Beautiful business MARKET RELEASE Xero Delivers H1 Revenue of $ 506 Million with 3 Million Subscribers Strong performance driven by continued adoption of cloud - based software and digital tools WELLINGTON , 11 November 2021 - Xero Limited ( ASX : XRO ) today reports its half year earnings to 30 September 2021 ( H1 FY22 ) that demonstrate the benefits of investments made in the areas of products , markets and people over a number of years , to support the execution of its global strategy . Performance highlights H1 FY22 ( All figures are in NZD and comparisons are made against H1 FY21 ) Operating revenue was up 23 % to $ 505.7 million ( 26 % in constant currency ( CC ) ) • • Total subscribers increased by 23 % to 3.0 million • Annualised monthly recurring revenue ( AMRR ) grew 29 % to $ 1,132 million Total subscriber lifetime value ( LTV ) grew by 61 % to $ 9.9 billion Free cash flow was $ 6.4 million compared to $ 54.3 million EBITDA of $ 98.1 million decreased by 19 % from $ 120.8 million Gross margin increased by 1.4 percentage points to 87.1 % Xero delivered a strong performance ; including operating revenue , which grew 23 % ( 26 % in CC ) to $ 505.7 million , subscribers , which increased by 23 % to 3.0 million , and AMRR , which surpassed $ 1 billion for the first time . While conditions varied across its markets , the strength of Xero's performance is evident in a number of Xero's Software as a Service ( SaaS ) metrics which trended positively over the period , including average revenue per user ( ARPU ) , gross margin and churn . These contributed to a substantial increase in total LTV to $ 9.9 billion . Xero continues to monitor the macroeconomic environment , and is positive about the critical role small business will continue to play in the global economic recovery . Financial highlights Six months ended 30 September 2021 Operating revenue ( $ 000s ) Subscribers 505,703 3,013,000 2020 409,837 change 23 % 2,453,000 23 % Net subscriber additions 272,000 168,000 62 % Average revenue per user ( $ ) 31.32 29.81 5 % Annualised monthly recurring revenue ( $ 000s ) 1,132,465 877,551 29 % EBITDA ( $ 000s ) 98,080 120,765 -19 % Net profit / ( loss ) after tax ( $ 000s ) ( 5,922 ) 34,486 NM Free cash flow ( $ 000s ) 6,351 54,268 -88 % Total lifetime value of subscribers ( $ b ) 9.94 6.17 61 % Gross margin percentage 87.1 % 85.7 % 1.4pp * NM stands for not meaningful ** pp stands for percentage points Xero Limited ( XRO ) NZ Company no . 1830488 ARBN 160 661 183 Registered Address www.xero.com 19-23 Taranaki St Te Aro Wellington 6011 New Zealand 1