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1 INVESTOR BRIEFING Sukhinder Singh Cassidy Chief Executive Officer Xero UK partner Tyler Trew, founder of Highlight Accounting and his client Rebecca Shoobert, owner of Oh Happy Creative in Leigh-on-Sea— ohhappycreative.com Xero Limited 3 February 2026 Claire Bramley Chief Financial Officer Matan Bar Xero US CEO & Melio Co-founder Diya Jolly Chief Product and Technology Officer 1 For personal use only
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This presentation is given on behalf of Xero Limited (Xero) (ASX:XRO) (Company number NZ 183 0488, 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 Interim Report for the period ended 30 September 2025, 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 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 40 & 41 for a glossary of the key terms used in this presentation. IMPORTANT NOTICE 2 For personal use only
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Proven growth, large expanding TAM with right to win Xero’s fundamentals: proven growth engine, consistently delivering Rule of 40 Xero’s AI advantage: large TAM opportunity, Xero positioned to be a net winner Xero + Melio: accelerates US growth & delivers stronger unit economics 3 For personal use only
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AGENDA 01 AI OPPORTUNITY Xero AI strategy Product demonstration Proof points & FY27 plan 03 Q&A 02 XERO + MELIO Opportunity recap Product demonstration Growth & monetisation plan (incl. new disclosures) 4 For personal use only
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AI OPPORTUNITY Sukhinder Singh Cassidy Chief Executive Officer Diya Jolly Chief Product and Technology Officer Xero UK customer James, owner of Harris Horrology — harrishorology.com 5 For personal use only
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AI opportunity is immense. Long-term potential ~4x TAM expansion 6 AI EXPANDS SAAS TAM… Current SaaS TAM Future (2035) SaaS + AI TAM ~$3.3t 1. Current (2025) and future (2035) Total Addressable Market (TAM) estimates (expressed in US$) from Gartner (2025) report: ‘Emerging Tech: Maximize Opportunities While Managing Risks of Agentic AI on Enterprise Software’ Global SaaS TAM1 (NZ$) ...BY UNLOCKING CUSTOMER VALUE SMBs and ABs use AI to Unlock new business growth Get time back Get help Manage their business smarter~$750b ~4X For personal use only
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‘Source of truth’ on SMB financial data SMBs get help & get time back with AI-enabled actions SMBs manage business smarter & unlock new business growth 7 Xero has a critical role to play in helping SMBs realise the promise of AI System of Action System of Record System of Decision Making For personal use only
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Xero data: Whole-of-business view Xero GTM: 4m+ subscribers & growing (250k+ strong AB channel, ecosystem, affiliates) Foundation Enterprise LLMs (Google, OpenAI, AWS) GTM layer Vertical platform layer LLMs Data layer Xero app: Financial operations for SMBs Payroll Payments Ecosystem General AI assistants (e.g. ChatGPT, Gemini, Copilot) Accounting Ecosystem PublicXero app Xero has multiple strengths to leverage in the AI era Xero’s advantages Customer context which we understand deeply Global scale in multi-channel, multi-geo acquisition Domain expertise across the full suite of JTBD Higher effectiveness and efficiency for SMBs helping them operate across multiple JTBD ‘Source of truth’ across 1st party and 3rd party data Trust in accuracy, privacy & security as differentiators SMBs New distributionchannel for Xero 8 For personal use only
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We have a differentiated strategy that delivers customer value Automated actions and workflows Actionable insights Reimagined experiences Trusted partner Xero’s AI strategic pillars Foundation AI DNA with nearly a decade of AI/ML experience Team of top AI talent with exp. from Google, Amazon forming Xero North America Centre of excellence Self-serve tools to create AI experiences ~90% of engineers using AI tools A differentiated AI strategy focused on delivering customer value backed by a leading team, strong tooling & deep AI DNA 9 For personal use only
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Help sessions resolved without ticket (thanks to self-serve content, which is partly AI-enabled)1 1. Across all help surfaces (in-product, dedicated help hub ‘Xero Central’ & chat bots) over FY26 YTD; 2. Of those subscribers who have been served AI insights Customer value from AI Unlock new business growth Manage their business smarter Get time back Get help Time saved by customers monthly using bank feeds and automated actions Increase in JAX messages per user in the last 3 months Eligible subscribers that have used AI Insights2 We have clear proof points of the customer value being delivered 10 97% 12> % 61%~ ~22hrs > For personal use only
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Key agents & features launched Help in JAX chat AI in Xero Central JAX web search Automated bank reconciliation AI invoice generation Xero Analytics AI Insights Xero Analytics cashflow forecasting JAX in Xero Partner Hub JAX Financial Insights AI document ingestion % AI Benchmarking Key jobs-to-be-done for 90% of users 11 Customer value from AI Supported by the depth & breadth of our AI offering Automated actions Actionable insights Reimagined experiences Trusted partner Unlock new business growth Manage their business smarter Get time back Get help For personal use only
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DEMOS Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com 01 DEMO: AUTO BANK RECONCILIATION 02 DEMO: FINANCIAL INSIGHTS 03 DEMO: JAX FOR ABs Lisa Huang SVP Product 12 For personal use only
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Customer feedback is overwhelmingly positive 13 “...It’s things like this that make my job, to my clients, more of value. This is the impact of automation in our jobs…” – AB using Syft AI Analytics Unlock new business growth “...One thing that we've always focused on is accurate data, because we can't make decisions without it. Just looking quantitatively, we've had zero mistakes…” – SMB using Auto bank reconciliation Manage their business smarter “...It saves about 4 hours a week. I went away last week and came back yesterday and only had a few transactions to reconcile, which was amazing…” – SMB using Auto bank reconciliation Get time back “...The fact that this gives us the answer without having to look for it is pretty cool…” – AB using JAX Get help For personal use only
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Pre-FY26 launches FY26 launches Bank rec suggestions Cashflow prediction Email to bills Hubdoc / doc extraction JAX Help Xero Analytics AI Insights JAX in Partner Hub AI invoice generation Auto bank rec 2m+ subs 300k+ subs1 AI in Xero Central Xero Analytics cashflow forecasting JAX financial insights AI benchmarking 1. Excludes users of the widely used ‘Xero Central’ help hub JAX web search 14 Over 2m Xero subscribers benefiting from Xero AI capabilities For personal use only
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Add-ons widen access, giving more customers opportunity to experiment with premium AI features Features bundled across plans, consistent with customer expectationsKeep it simple Encourage adoption Introduce usage-linked pricing, with additional credits available for heavy users Futureproof it Monetisation principles Monetisation principles: focus on simplicity and driving adoption, while providing future optionality 15 For personal use only
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MONETISE IN LINE WITH OUR PRINCIPLES DRIVE USAGE / ADOPTION DEEPEN AI VALUE IN OUR PRODUCTS 16 FY27 goals 16 Multiple new agents across core JTBD of Accounting, Payments and Payroll For personal use only
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XERO + MELIO Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com Sukhinder Singh Cassidy Chief Executive Officer Matan Bar Xero US CEO & Melio Co-founder 17 Millie O'Neill, Bookkeeper at The Highlight Partnership and her client Oh Happy Creative in Leigh-on-Sea - ohhappycreative.com For personal use only
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NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Our conviction STRATEGIC RATIONALE 4 TOGETHER: COMPELLING VALUE CREATION 3 MELIO: WORLD-CLASS TEAM & PLATFORM 2 POWERFUL STRATEGIC FIT Owning Payments critical to our 3x3 strategy Delivers a step-change in US proposition & scale 1 SOLVES CRITICAL CUSTOMER NEED ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Accounting + Payments = critical for US SMBs Large and growing US SMB Payments TAM US$29b1 Consistent high growth (127% FY21-25 CAGR2) Loved by customers (NPS 453) & industry recognised Extends reach to millions of US SMBs ✓ Highly complementary platforms Improved unit economics to invest & scale the US Attractive long-term global growth profile for Xero 1. Total Addressable Market (TAM) estimated by Xero using government statistics, public market data, internal Xero data and commercial assumptions; 2. Revenue growth based on Melio Financial Statements restated to 31 March year-end (unaudited); 3. NPS calculated from internal Melio survey of 400 direct customers, conducted in December 2024 & January 2025; for further detail refer to page 20 of the Investor Presentation lodged with the ASX on 25 June 2025 Note: slide from 25th June 2025 acquisition announcement 18 For personal use only
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1. Total Addressable Market (TAM) estimated by Xero using government statistics, public market data, internal Xero data and and commercial assumptions; 2. Refers to ACH, cheque, and cash payments. Composition based on analysis of SMBs with <100 employees; 3. Software penetration estimated using survey data & market analysis; 4. Software penetration estimated using survey data & market analysis and estimated to grow each year from 2025 to 2030 A/P TAM GROWING TO US$19B… US SMB TAM1 (<100 employees, US$b) …WITH SIGNIFICANT WHITESPACE 6% CAGR Note: slide from 25th June 2025 acquisition announcement of US SMB payments volume are made using slow & inefficient methods270%~ 90%~ 20~ % of US SMB A/P TAM are not using software yet3 growth in software-penetrated US SMB A/P TAM each year4 US SMB Payments TAM – US$29b1, fast-growing & whitespace 19 For personal use only
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1. Internal analysis of US transaction volumes and survey of payment methods used by US SMBs with <100 employees (n=293), April 2025; 2. Including Real-time payments (RTP), digital wallet to wallet (W2W), instant bank transfers and other; 3. Based on review of payout times by method on websites of leading providers of SMB payments; 4. The level of remittance data has a direct relationship with the ease of reconciliation for accounting purposes. Access to better remittance data is a driver of digital payments adoption, especially for SMBs; 5 US Commercial cheque value (all cheques drawn on private banks, including B2B, consumer and local government payments, excluding federal treasury cheques), drawn from US Federal Reserve Quarterly Data for Q4 2024 to Q3 2025 52% 20% Paper (including cheque, cash) ACH (standard bank transfer) Card (credit & debit) Digital (including RTP, W2W2) 2 - 5 business days Near instantaneous (seconds for RTP and W2W) As fast as same day (pay a fee for ‘instant’ payouts) Best data Good data Limited A/P payment method 2025 US A/P volume mix1 Typical settlement time3 5 - 10 business days Remittance data4 20% 6% 22% 52% High friction drives digitisation Multiple ways to monetise Opportunity None / Analog Note: slide updated from 25th June 2025 acquisition announcement Over US$8 trillion cheques annually5 SMBs are digitising their payments to reduce friction, bringing monetisation opportunities 20 For personal use only
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EASY TO USE A/P WORKFLOWS AI-powered bill capture Payment approval workflows MULTIPLE WAYS TO PAY & GET PAID FASTER Ways to pay incl. instant & same-day payments Self-employed APPEALS TO MULTIPLE SMB & AB SEGMENTS1 inc. pre-accounting SMBs Micro & Small SMBs (<20 employees) Medium+ SMBs (20+ employees) Accountants & Bookkeepers 1. For further details on Xero’s customer segments refer to Xero’s Investor Day presentation from 29 February 2024 ✓ ✓ ✓ ✓ Seamless processes reduce the time & cost of managing payments Payors & payees can each choose preferred payment method, helping to manage cash flow Ease of use attracts SMBs of all sizes, and their advisors Note: slide from 25th June 2025 acquisition announcement Melio helps customers save time & optimise cashflow when managing bills and accounts payable 21 For personal use only
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DEMOS 22 01 DEMO: MELIO.COM & SYNDICATION CAPABILITIES Ilan Atias Melio Co-founder & CTO 02 DEMO: XERO + MELIO Eli Danziger SVP Product For personal use only
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Simple onboarding Biller experience Breadth of payment options Syndication network New technology stack An intuitive and flexible platform Melio ✓ ✓ ✓ ✓ ✓ ✓Leading✓ Competitive✓ Basic Peer 2 ✓ ✓ – – ✓ Peer 1 – – ✓ ✓ ✓ – N/A Forbes Fintech 50 (2024, 2023 & 2022) CB Insights Fintech 250 (2022) Forbes Cloud 100 (2024) 45 STRONG CUSTOMER SATISFACTION Net Promoter Score1 TPV growth/customer (in 12m post first transaction)2 DEEP PRODUCT ENGAGEMENT 71 % 1. NPS calculated from internal survey of 400 direct customers, conducted in December 2024 & January 2025; 2. For direct customers only, represents the average quarterly A/P TPV increase per customer cohort 12 months after the end of the first quarter that the cohort made their first transactions. Most recent available data indicates that this figure is 75% Leading alternatives to Melio Note: slide from 25th June 2025 acquisition announcement Loved by customers, recognised by industry 23 For personal use only
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Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com GROWTH AND MONETISATION Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com Claire Bramley Chief Financial Officer 24 For personal use only
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PAYMENTS UNIT ECONOMICS ARE ATTRACTIVE Xero + Melio delivers the unit economics to accelerate scale in the US Illustrative Average Gross Profit per user (NZ$, monthly) UNLOCKS FLYWHEEL TO SCALE SUSTAINABLY IN THE US 1. Xero subscription, invoicing & other revenue, calculated using Xero H1 FY23 and H1 FY26 reported ARPU and Gross Margin; 2. Based on an illustrative cohort of Melio.com retained direct customers with 3 years of data from Jan-23 to Dec-25. Includes transactional gross profit and subscription gross profit, excludes float-related gross profit ~$30 Accounting1 ~$45 ~$30 Payments2 Month 1 Month 36 ~13% CAGR Month 1 Month 36 ~90% CAGR ~$200 25 For personal use only
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Additional disclosure on BillPay payments revenue composition Provides key drivers to Xero BillPay payments revenue Adds transparency on absolute Gross profit $s for combined US business New disclosure detail 26 Xero + Melio: new drivers for our US business New pro forma disclosures increase visibility of these drivers1 1. Pro forma statements are unaudited and are created to illustrate the impact if Melio and Xero were combined from the start of Xero’s 2024 Financial Year. For definitions / details on these metrics refer to glossary on slide 40. Refer slide 39 for disclosure of these metrics on a half yearly basis; 2. Syndication revenue growth impacted by the exit of a syndication customer in the accounting software segment. NZ$ Pro forma US Revenue composition FY24 FY25 YoY % Subscription, invoicing & other revenue $83m $107m 28% Xero BillPay payments revenue $91m $158m 74% Syndication payments revenue2 $84m $90m 7% Payments revenue $175m $248m 42% Total Revenue $258m $355m 38% Total Xero BillPay TPV $19.0bn $31.7bn 67% Gross TPV take rate 0.48% 0.50% +2bps US Gross profit dollars $112m $136m 21% US Gross margin 43% 38% (5ppts) For personal use only
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Subscription + Payments delivers greater ARPU and GP$ expansion opportunities than subscription alone Focus of next pages TPV and take rate are key drivers we can influence Xero US revenue ($) Payments revenue ($)1 Xero BillPay Payments ($) BillPay TPV ($) Syndication ($) Gross take rate (%) Xero US GP ($) Subscription revenue ($) ARPU ($) Subs (#) SUBSCRIPTIONS + PAYMENTS = STRONGER BUSINESS MODEL1 ✖ 2 1 ✖ More transactions using premium methods 1. For definitions / details on these metrics refer to glossary on slide 40, for metrics themselves slide 26 and 39 27 More users, putting more volume through Melio.com & Xero For personal use only
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Illustrative TPV growth of real Melio customer cohort (indexed)1 1 AND EXPECT STRONG TPV GROWTH/CUSTOMERWE CAN DRIVE & INFLUENCE TPV GROWTH Customer education - driving adoption of features among SMBs and their ABs Product improvements - add payments to more workflows (e.g. payroll), and improve workflow tools to capture more TPV Organic growth - in payment frequency as customers realise value, and bill size grows (driven by both inflation and a customer’s growth) Mth 1 6 12 18 24 30 36+ 1. Illustrative cohort of Melio.com retained direct customers from Jan-22 to Jan-25 +75% +15% +10% Year 1 Year 2 Year 3 Multiple ways to grow TPV, cohort analysis illustrates typical TPV per customer growth over time 28 For personal use only
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MELIO OFFERS MULTIPLE METHODS FOR PAYERS & PAYEES… High volume revenue driver 2 …WHICH WE CAN INFLUENCE TO DRIVE PROFITABILITY TPV ($) Gross take rate Gross profit ($) ACH Card Premium ACH Card Premium (e.g. FX, instant) High High Low High-value transactions Illustrative contribution of payment methods to key metrics By using data and in-product experience (UI / UX) to optimise recommended method of payment By monetising both sides of the transaction (payer and payee) E.g. premium payments for businesses When offered, 17% of businesses expedite their payments Take rate: actively managing mix to drive absolute gross profit dollars 29 For personal use only
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Additional Melio breakeven guidance in support of existing aspirations OUR ASPIRATION (FROM JUNE 2025 ACQUISITION & CAPITAL RAISING) 1. Anticipated FY28 revenue synergies are expected to be ~US$70m, for more detail refer to page 27 of the Investor Presentation lodged with the ASX on 25 June 2025. Assuming constant currency conversion of NZ$/US$ 0.57, NZ$/AU$ 0.91 and NZ$/GBP 0.46; 2. FY25 revenue was NZ$2,103m. This statement applies to FY28 only and no implication should be made relating to any other financial year; 3. In the interim period prior to FY28, Xero expects to deliver below Rule of 40 outcomes on a pro forma basis (pro forma refers to adjusting for inorganic revenue growth benefits from the time of transaction completion by comparing to a prior year revenue base that fully incorporates Melio's revenue); 4. Assessed including both expected revenue and expected cost synergies outlined on page 27 of the Investor Presentation lodged with the ASX on 25 June 2025; 5. Rule of 40 is defined as the sum of annual revenue growth percentage in constant currency and FCF margin percentage (free cash flow as a percentage of revenue); 6. Melio Adj-EBITDA definition aligns with the Xero group definition, for further detail refer page 34 of Xero’s H1 FY26 Interim results Investor presentation. This guide aligns with Xero’s assumptions outlined in its FY28 aspiration statement and excludes synergies; 7. Run-rate breakeven refers to at least one month of positive Adj-EBITDA contribution to the Xero group during the referenced period; 8. Refer page 34 of Xero’s H1 FY26 Interim results presentation for definition of Adj-EBITDA Melio is expected to reach Adj-EBITDA breakeven on a run-rate basis in H2 FY286,7 The combined business is expected to significantly accelerate US revenue growth and gives us the opportunity to more than double Xero’s FY25 group revenue in FY28 excluding anticipated revenue synergies1, 2 This outcome is expected to support our aspiration to deliver greater than Rule of 40 outcomes for the group in FY283, 4, 5 ADDITIONAL GUIDANCE At its FY26 results announcement in May 2026, Xero will transition to providing forward guidance on an Adj-EBITDA basis8. This will replace the existing OPEX ratio framework In addition, Xero will provide a one-off FY27 revenue growth range guide, to help bridge to the existing FY28 revenue aspiration NEW FORWARD GUIDANCE FRAMEWORK 30 For personal use only
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Strategic opportunity delivering growth & profitability MELIO: WORLD-CLASS TEAM & PLATFORM TOGETHER: COMPELLING VALUE CREATION POWERFUL STRATEGIC FIT SOLVES CRITICAL CUSTOMER NEED ✓ ✓ ✓ ✓ Clear disclosure on key metrics (including TPV/take rate) Credible path to Melio EBITDA breakeven 31 Multiple revenue drivers and ARPU expansion opportunities For personal use only
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Xero UK customer Rosette Ale, founder of Revival London and her designer Saabira Muhammad in London — revivalldn.com Claire Bramley Chief Financial Officer INTEGRATION UPDATE Xero UK team members in our London office 32 For personal use only
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Integrate critical systems and processes Enable upgrade path (Melio to Xero) Realise operational synergies Progress towards integrated back office Iterate on our leading Accounting + Payments offering Capture more SMBs in the US (direct + syndication) Melio CEO responsible for combined Xero and Melio US businesses (reporting to Xero CEO) Scale syndication opportunities in the US Integration progressing at pace Drive Melio velocity, integrate where needed Drive on Aspiration, realise synergy Drive future scale as combined entity GTM Plan FY27-28: 12-24 months Plan FY28+: 24 months+ Melio CEO responsible for combined Xero and Melio US businesses (reporting to Xero CEO) PRODUCT SYSTEMS & PROCESSES Plan FY26: 0-12 months INTEGRATION PLAN (JUNE 2025) FY26 PROGRESS UPDATE Note: slide updated from 25th June 2025 acquisition announcement GTM teams unified Use Xero capability & reach to increase GTM efficiency from Day-1 Melio v1 embed in Xero live with strong feedbackEmbed Melio Bill Pay inside Xero US M+X offices consolidated; shared services underway ✓ ✓ ✓ 33 For personal use only
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RECAP 01 AI OPPORTUNITY Xero AI strategy Product demonstration Proof points & FY27 plan 03 Q&A 02 XERO + MELIO Opportunity recap Product demonstration Growth & monetisation plan (incl. new disclosures) ✓ ✓ ✓ ✓ ✓ ✓ 34 For personal use only
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35 Q&A 35 Millie O'Neill, Bookkeeper at The Highlight Partnership and her client Oh Happy Creative in Leigh-on-Sea - ohhappycreative.com For personal use only
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APPENDIX 3636 Xero Australia customers Wayne & Sallina, owners of Cheol’s in Perth — cheols.com.au For personal use only
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● Pro forma balance sheet at H1 FY26 – ($0.5bn) net-debt vs. $3.2bn net cash on reported basis. This shift impacts net cash interest receipts ● P&L effective tax rate impacted by losses in entities not creating Deferred Tax Assets i.e Xero’s US operations ● NZ tax losses fully utilised, impacting cash taxes ● Xero has updated its regional disclosures to present the US separately ● From FY26 onwards the US will report Direct US customers, (see slide 39 for historical pro formas) which incorporates Melio’s direct payment customers Total operating expenses as a percentage of revenue expected to be around 70.5% in FY261,2 This ratio is expected to be lower in H2 FY26 vs. H1 FY26 and includes the Melio business3 1 This includes an expected ~$45m from the accounting treatment of option grants and sign on from new remuneration packages. The majority of this impact will not recur in FY27 2FY26 operating expense to revenue guidance excludes any impacts of transaction costs associated with the acquisition of Melio 3This reflects the phasing of the non-recurring remuneration impacts (described above), Xerocon Brisbane, and timing of other planned investment spend. In addition, Xero expects to generate more revenue in H2 compared to H1 following its typical trend ● Acquisition impacts were a $27m benefit to headline EBITDA in H1 FY26 from: ○ ($51m) in acquisition costs, in OPEX ○ $78m in non-cash FX revaluation gains, in Other income ● The benefit was adjusted out in H1 FY26 Adj-EBITDA, and will also be adjusted out in the FY26 accounts GUIDANCE UNCHANGED FROM H1 FY26 Balance sheet changes & tax accounting ● Melio’s acquired intangible assets are approximated at NZ$350-490 million, and will be amortised over a useful life of 5-8 years on average. This commences in H2 FY26 ● Xero will provide additional disclosure on earnings excluding this amortisation impact at the FY26 result H1 FY26 Adj-EBITDA impacts Acquired intangible amortisation US Subscriber reporting moves to Customers; includes Melio direct customers 1 PREVIOUSLY DISCLOSED MELIO IMPACTS ON XERO’S FY26 DISCLOSURES – FOUR KEY CONSIDERATIONS 2 3 4 Xero reiterates its FY26 guidance + reiterates FY26 disclosure impacts 37 For personal use only
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04 WE ARE ALREADY DRIVING ADOPTION (P. 14) 03 OUR STRATEGY DIFFERENTIATES US (P. 9) 02 WE HAVE MULTIPLE AREAS OF ADVANTAGES AGAINST COMPETITORS (P. 8) Information drawn from other pages in this Presentation, refer to source pages for footnotes Xero is well positioned to capitalise on the AI TAM expansion opportunity, leveraging our advantages as a system of record 01 XERO IS A CORE SYSTEM OF RECORD (P. 7) 38 For personal use only
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New pro forma disclosure detail1 US Revenue composition (NZ$) Units H1 FY24 H2 FY24 H1 FY25 H2 FY25 H1 FY26 Subscription, invoicing & other revenue $m 39 44 49 58 66 Xero BillPay payments revenue $m 36 55 68 90 109 Syndication payments revenue2 $m 39 45 41 49 66 Payments revenue $m 75 100 109 139 175 Total Revenue $m 114 144 158 197 241 US Gross margin % 44% 43% 41% 36% 34% US Gross profit $m 50 62 65 71 83 Total Xero BillPay TPV $bn 8.1 10.9 15.4 16.3 16.5 Gross TPV take rate % 0.45% 0.50% 0.44% 0.55% 0.66% Xero BillPay payments revenue $m 36 55 68 90 109 Total US direct customer revenue $m 75 99 117 148 175 Direct US customers #000s 342 377 353 368 382 Direct US customer ARPU $/mth 41 48 56 78 84 39 D E ED 1. Pro forma statements are unaudited and are created to illustrate the impact if Melio and Xero were combined from the start of Xero’s 2024 Financial Year. For definitions / details on these metrics refer to glossary on slide 40. Refer slide 26 for disclosure of these metrics on a yearly basis; 2. Syndication revenue growth between FY24 and FY25 was impacted by the exit of a syndication customer in the accounting software segment. A B B A REFER NEXT SLIDE FOR DEFINITIONS OF NEW DISCLOSURE METRICS C CB For personal use only
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40 New US disclosure definitions & FX rates Subscription, invoicing & other revenue Includes all direct subscription revenue across both Melio and Xero, Invoicing (A/R) related revenue (incl. Float revenue) across Xero and Melio, and any other non-BillPay related revenue (such as Xerocon revenue) Syndication payments revenue Refers to all revenue generated from Melio’s agreements / relationships with syndication partners to both process payments and provide Melio’s product / solutions Xero BillPay payments revenue Refers to transaction and float revenue generated from the processing of BillPay payments completed by both Xero and Melio’s direct customers using Melio’s payments capabilities Payments revenue The sum of Xero BillPay payments revenue and Syndication payments revenue Total Xero BillPay TPV Refers to the Total Payment Volume by direct customers (both Xero and Melio) for BillPay transactions processed using Melio’s payments capabilities. This metric does not include TPV associated with syndication partners or for Melio’s accounts receivable (A/R) capabilities Gross TPV take rate The average gross revenue percentage take rate across Total Xero BillPay TPV. When multiplied by TPV this output equates to Xero BillPay payments revenue in the given period Total US direct customer revenue The sum of Subscription, Invoicing & other revenue, and Xero BillPay payments revenue during the period. This is a subset of Total US revenue that excludes Melio’s syndication revenue which is generated through partnerships with third parties Direct US customers The total number of both Xero Subscribers, and Melio’s direct payments customers. Xero Subscribers are as defined on slide 41 of this presentation, Melio direct payments customer number is a Quarterly Active User metric, defined as a user either made a payment or was a subscribed customer during the final quarter of the reporting period. Melio’s direct payments customer metric does not include any customers associated with syndication partnerships as these are third party relationships Direct US customer ARPU Refers to the average revenue per user (ARPU) for Direct US customers. Contribution from Xero direct customers is calculated in line with previous disclosures, as AMRR at period end divided by subscribers at that time (and divided by 12 to provide a monthly view). Melio direct customer subscription revenue contribution is calculated using period end revenue divided by subscribers at that time. Melio payments revenue contribution is calculated as the average Payments revenue for the last 3 months to the period end divided by the quarterly active users who made at least one transaction in this quarter NZD / USD Average rate H1 FY24 0.612 H2 FY24 0.608 H1 FY25 0.608 H2 FY25 0.580 H1 FY26 0.593 FY24 0.610 FY25 0.594 For personal use only
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General glossary Pro forma Pro forma statements are unaudited and are created to illustrate the impact if Melio and Xero were combined from the start of Xero’s 2024 Financial Year. Financial information contained in this Presentation on a pro forma basis is unaudited, other than information relating only to Xero or the Group, or unless otherwise stated Rule of 40 Rule of 40 is defined as the sum of annual revenue growth percentage in constant currency and free cash flow margin percentage (Free cash flow as a percentage of revenue) SMBs Small and Medium-Sized Businesses Subscribers Subscriber means each unique subscription to a Xero-offered product that is purchased by a user (eg a small business or accounting partner) and 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 Syndication Syndication refers to the business model whereby Melio offers financial institutions and other SaaS platforms embedded, white-labelled A/P solutions. These partnerships can be under a revenue-share agreement, or fixed fee/cost agreement TAM Total Addressable Market (TAM) is estimated using available government statistics, public market data, internal Xero data and commercial assumptions 3x3 strategy A key strategic priority for Xero in FY25-27, "Win the 3x3" refers to our focus on completing the 3 core jobs to be done (Accounting, Payments and Payroll) across our 3 primary markets (Australia, UK & US) AB Accountant and Bookkeepers ACH The Automated Clearing House (ACH) is a US nationwide network which enables electronic movement of money between bank accounts, commonly used for non-urgent direct deposits and bill payments Adjusted EBITDA Adjusted EBITDA (a non-GAAP financial measure) is provided as Xero believes it provides useful information for users to understand and analyse the underlying business performance. Adjusted EBITDA is calculated by adding back net finance expense, depreciation and amortisation, and income tax expense, as well as certain non-cash, revaluation and other accounting adjustments and charges to net profit/(loss) AMRR Annualised monthly recurring revenue (AMRR) represents monthly recurring revenue at 30 September, 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 A/R and A/P Accounts receivable (A/R) and accounts payable (A/P) ARPU Average revenue per user (ARPU) is calculated as AMRR at 30 September divided by subscribers at that time (and divided by 12 to get a monthly view) CAGR Compound annual growth rate Free cash flow (FCF) Free cash flow (FCF) 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 GAAP Generally accepted accounting practice GTM A go-to-market (GTM) strategy details the action plan for reaching target customers and achieving competitive advantage for specific products or services. It encompasses strategies for sales, marketing, distribution, pricing and customer engagement JAX ‘ Just Ask Xero’, Xero’s GenAI powered smart business companion JTBD Jobs to be done (JTBD) reflect the jobs that are most important to current customers and possible future customers of Xero from their perspective, and agnostic of Xero. It reflects the awareness among customers of what it takes to ensure a business survives and thrives LLMs Refers to Large Language Models ML Refers to Machine Learning NPS Net promoter score (NPS) is a customer experience metric that measures customer loyalty and satisfaction by gauging their likelihood of recommending a company, product, or service to others. Customers respond on a scale of 0 to 10, where 0-6 are Detractors, 7-8 are Passives and 9-10 are Promoters. NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Passives are not included in the calculation Payments Platform functionality that enables SMBs to manage and execute accounts receivable and accounts payable P&L Profit and loss statement 41 For personal use only