1. An endless horizon ahead

Chair's review

Dear shareholder,

Xero is in a unique and enviable position to embark on its next chapter of global growth. My comments largely focus on strategy, as it has been a relentless commitment to executing a clear strategy that has driven us to this point in our journey. It will be the same, disciplined focus on strategy and execution that will allow Xero to realise its considerable potential as we enter the next chapter of growth.

As Rod Drury discusses in the CEO review, Xero’s future will be as a truly global, cloud-based business platform. You can expect to see this reflected not only in product development but also in our geographic market strategy, continuing our near term focus on English language markets.

Succession planning in action

One of the Board’s primary accountabilities is to appoint the Chief Executive. We have been privileged and fortunate to have had Xero’s founder Rod Drury in this role since he founded the company 12 years ago.

Steve Vamos took over as Xero’s Chief Executive on 1 April this year and the Board welcomes him to Xero. Steve has a leadership track record in some of the world’s most iconic technology companies, including Apple, IBM, and Microsoft. He also has a deep understanding of high-growth companies, having worked with start-ups, including ninemsn in Australia, which he grew into an industry leader.

Steve brings an invaluable skill set to lead Xero. He understands the Xero business and the scale of the opportunity.

In the 18 months before he was appointed CEO, Steve worked as a consultant alongside Xero's leadership team in developing management capability, and honing Xero's operating model.

Steve’s appointment underpins Xero’s evolution from a founder-led company to a business with worldwide scale. Steve has the experience, capability and commitment we need to grow Xero, and the Board is delighted to have secured somebody of his calibre for this critical role.

Rod Drury: The first Xero

At the same time, Xero will continue to benefit from Rod’s vision and deep commitment to developing beautiful business products and to Xero’s continued success, in his role as a non-executive director on the Board.

Rod’s achievement of building a global company and community from New Zealand is unmatched. Through passion, commitment and sheer hard work, Rod has turned a good idea into one of the world’s most innovative technology companies. He has worked tirelessly to build Xero and its culture so that we now have a solid base to begin our next phase.

Rod has made an enormous contribution to Xero, to New Zealand, and to international business. On behalf of the Board and the whole Xero team, I want to thank Rod and acknowledge his tremendous leadership since founding the company. Likewise, the Board looks forward to continuing to work with Rod in his role as a non-executive director.

Board update

We were also pleased to welcome Dale Murray, CBE, as a non-executive director to the Board in April. Recruiting a UK-based director is in line with our strategic focus on that market as one of Xero’s growth engines. To attract Dale to Xero's Board is testament to our growing reputation around the world.

Consolidation of our listing on the ASX

The recent consolidation of Xero’s listing solely on the Australian Securities Exchange (ASX) and de-listing from the New Zealand Stock Exchange (NZX) is a reflection of our strategy in action.

As Xero continues to grow, having enhanced access to deeper capital markets, increased trading liquidity, and a broader base of potential investors is critical to fulfilling our aspirations and improving our visibility as a listed company.

Between 5 February 2018 (the date of our sole ASX listing) and 29 March 2018, average daily liquidity has increased by more than 200% and we’ve seen an increase in international index-based investment. In addition, on 9 March 2018, Xero was included in the S&P/ASX 100 index.

The next two years

Over the next 18 – 24 months we will focus on delivering continued strong growth within the core business, and developing products, markets and capabilities that execute on our strategy.

We will do this while maintaining a nimble culture and environment that enables people to do the best work of their lives. This involves careful adherence to the right strategy and continuing to develop our people, products and partnerships.


Xero is uniquely positioned to forge ahead on its next chapter. It has the right people, the right strategy and significant opportunities ahead.

As a shareholder, you should expect our company to continue on our journey with exactly what has got us to this moment: passion, vision, innovation, beautiful products, and a relentless commitment to our customers through disciplined strategy and execution.

On behalf of the Xero Board, thank you for your continued support.

Graham Smith signature

Graham Smith

Dear shareholder,

The completion of Xero’s financial year to 31 March 2018 represents the beginning of the next chapter of Xero’s evolution as one of the world’s most innovative technology companies.

Strategy delivers growth, results

We are pleased to announce Xero’s first positive annual EBITDA result of $26.0 million and Annualised Monthly Recurring Revenue (AMRR) growth of 33 percent to $484.4 million for the financial year ended 31 March 2018, which we have achieved while driving significant subscriber growth. This represents a profound milestone for our company, and is a result the Xero team and our shareholders can be proud of.

These results have taken more than a decade of strategy execution and responsible investment of shareholder funds into research and development, and channel development, to balance extraordinary growth, operating metrics, and long-term value creation. As we signalled at our half year result, Xero’s organic growth will soon be funded from our own free cash flows – the next stage of our journey will be one in which we are self-funding and focussed on realising the long-term opportunities that we are well positioned to secure.

Our focus on people, culture and capabilities, product innovation, and our unique relationship with customers and partners has created an exciting, active and passionate small business ecosystem whose momentum is driving our expansion around the world.

We entered the cloud-based software-as-a-service (SaaS) sector at the right time and have designed and built a beautiful business platform, brand, and community that our customers and partners love.

Xero was born in the cloud and is built on a single code base, and, as such, our business has no legacy ‘desktop’ installations that require migration to the cloud. We now stand on the foundations of a robust, highly defensible business with a proven track record. We have earned the right to manage the key system of record for millions of small businesses and to be the technology platform for accountants and bookkeepers to manage their relationships with their valued customers.

To understand the scale of the Xero platform, as at 31 March 2018, Xero:

- had 1.386 million subscribers in 180+ countries

- recorded $2.15 trillion in transactions across the platform in the year to 31 March 2018*

*Incoming and outgoing transactions, 12 month period

While we’ve built the platform and the business for long-term success, we’ve also delivered strong results - growing from $134,000 of revenue in 2008 to now more than $100 million a quarter.

The scale of the opportunity: Rewiring the small business economy

To understand how Xero thinks about its future, it starts with our mission: “Xero’s mission is to rewire the small business economy, connecting millions of businesses to their banks, advisors and each other.”

Xero is at the forefront of what promises to be a significant change in the relationships between banks, financial institutions, financial advisory services, and accountants. This change will help to drive the global growth of small businesses.

Beautiful business

Xero is evolving from a back-office accounting platform to a small business platform. There is significant potential in terms of products, services and solutions that we are able to create and extend to small businesses to help them more effectively manage their businesses. Likewise, we have an enormous opportunity to supply more services and value to our Xero partners.

Reflecting this evolution to a small business platform, and consistent with beginning the next chapter, customers will soon see a refreshed Xero brand position in the market. This will be ‘beautiful business’ - a recognition of the role small businesses, our partners and Xero play in building a better world. It will also portray Xero’s commitment to continue providing a powerful business platform that makes doing business easier.

My new role on Xero’s Board

Xero plans relentlessly for success. This includes planning for succession and ensuring the right people are in the right roles to execute the company’s strategy.

In March this year, I announced my intention to step down as Xero’s Chief Executive at the end of the financial year. This was a carefully considered step made possible by the strength of the leadership team we have developed over the past few years as we transition from a founder-led company to a globally distributed, world class technology business scaling on multiple fronts. I’m excited to continue my contribution to strategy and passion for innovation as a non-executive director on the Xero Board while our strong leadership team focuses on the global operational disciplines and a distributed operating model that will drive our next chapter. I have loved every day of my journey as Xero’s leader and I’m so proud that we have built an amazing team of people and a passionate community.

Our new CEO Steve Vamos has the global operational experience to lead Xero as CEO through this next exciting period. Our company has everything it needs to succeed. The right people, the right strategy, the right vision, and unbounded opportunity.  

To everybody who has been a part of this journey with us over the past decade, thank you for your contribution to Xero, and for your friendship, commitment and support.

To our valued customers, staff, shareholders, and partners, thank you for your support of Xero in reaching this point. We look forward to embarking on this next chapter together.

Rod Drury signature

Rod Drury

All chapters:

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