Ann: H1 FY23 Investor Presentation, page-68

According NZ Govt MBIE Small businesses in New Zealand New Zealand is a nation of small businesses. Of the approximately 535,000 businesses1 in New Zealand, an estimated: • 401,000 (70.5%) have no employees • 101,000 (19%) have 1-5 employees • 40,000 (7.5%) have 6-19 employees • 10,000 (2%) have 20-49 employees • 5,000 (1%) have 50 or more employees Note these figures don’t even add up. Typical NZ Govt. HRY more recently put the figure for sole traders alone at 540,000 to plus 150,000 small business with more than 1 employee and less than 50 employees gives a total of 690,000 SME’s in NZ. What ever the figure is Xero already having 536K subscribers is an impressive performance. In Australia 2.6M SME and Xero have 1.47M subscribers.

Looking at the UK 5.5M USA 32.5M Canada1.2M let alone figures for SE Asia and other markets, its really clear Xero is only scratching the surface and experiencing severe head winds in customer acquisition compared to Aus and NZ.

For shareholder value this metric of customer acquisition has to be improved if Xero is to meets its potential as a global leader as a platform for small businesses.

Their two biggest error in strategy have been, firstly to go to USA with 50 ununited states of accounting plat form requirements and no GST system where Xero has a major advantage, before going to other markets which it could growth faster. And secondly moving to the ASX rather than Nasdaq. Trying to win hearts and minds of USA businesses as an alien (foreign) upstart against the America Made incumbent player was a massive mistake which could have been overcome by becoming a USA company.

The report at the end of this next half is going to be telling. The commentary is for improved growth in subscription, however, if this does not materialize Xero are going to be caned on the market as the metrics are showing a company not able to combat the head winds in customer acquisition.

Was an early shareholder and rode the growth wave from $2.5 to $100 but started to see the above noted errors eroding growth potential. Considered the stock heading into over priced territory so exited. Have watched the metrics which see the company back at fair value. Have been considering re-entering but its now a big gamble on the subscriber growth metric. IF they get this right, the great things will follow, if they can’t turn this round, could likely halve my money. AIMHO DYOR