Hello from Sydney, Australia, and welcome to Xero's 2020 Annual Meeting. My name is David Thode, and I am the Chair of Xero's Board of Directors. Before we begin, I'd like to acknowledge the traditional owners and custodians of the land, sea and waters from where I am joining you today. For me, that is the Gadigal people of the Eora nation. I also acknowledge the traditional owners and custodians of the various lands from which you're all joining this meeting today, and I wish to pay my respects to Elders past, present and emerging.
So thank you for joining today's meeting. And it's a new experience for us all as we will be completely online due to the COVID-nineteen and the related health concerns. I do hope you and those you care about are keeping safe and well in these challenging and uncertain times. Now while this online format may be familiar for some shareholders, I acknowledge that it may be less so for others. However, I want to assure you that you will have the same opportunity to participate today as you would at a physical meeting.
This includes being able to ask questions through the online platform and vote using an electronic voting card. Now I'm going to discuss these prices a little later, but I would encourage you to download the online portal guide from Xero's website if you haven't already done so. Now in the unfortunate situation, should we experience any technical issues that impact the meeting? I'll make an assessment of the circumstances and then communicate with you further. Now if this is impossible, you will be emailed instructions on how and when to rejoin the meeting.
So that's sort of the technical part of the introduction. But before we start the formal business of the meeting, I'd just like to take a moment to express my gratitude on behalf of the Board to Xero's former Chair, Graeme Smith. Now you remember Graeme stepped down as Chair on January 31 and then retired from the Board at the end of Xero's 2020 financial year. And he's been incredibly valuable in supporting a very smooth transition of the Chair role to myself. I'd like to personally thank Graham and on behalf of the Board formally thank him for his extensive contribution to Xero over the 5 years he was on the Board.
So I think it's now my great pleasure to formally, in accordance with the company's constitution and with the instructions from the company's secretary, a quorum is now present, and I can declare the meeting formally open. First of all, I'd like to start by introducing the Board who are participating today and we are going to pass to each one of them as I introduce you to them. So joining from Auckland are our non executive directors. Firstly, Mark Cross. Great.
Good morning, Mark. Susan Peterson. Good morning, Susan. And then from Wellington, we have Rod Drury. That's not Rod.
That's Steve. There's Rod. Good morning, Rod. And then joining from Melbourne, we have Craig Winkler. Morning, Craig.
And then in Sydney with me is Lee Hatton. And then a very special well, just about good morning to Dale Murray, it's just after midnight in London, so Dale Murray in London. Good morning, Dale. I can say good morning. So that's great.
So now I'd also like to say we have in Wellington, Xero's leadership team and I'm delighted to say that Steve Vamos is there, our CEO and Kirsty Godfrey Bell, our Chief Financial Officer. Also joining us from Melbourne is our Chief Legal Officer and Company Secretary, Chairman Sidhu. Good morning, Chairman. And of course, we're also joined by other members of Xero's leadership team and other Xero colleagues. Now representatives from the company's orders, Ernst and Young, are with us and are online through the whole meeting and we'll be able to answer any questions that apply to them.
Also I have here with me in Sydney, Toby Langley, Xero's Head of Investor Relations, and he will be reading out the questions that are submitted by shareholders today. So let me now turn to the agenda and the order of events. Firstly, I'm going to say a few words about the past year for Xero. We'll then hear from our CEO, Steve Amos and CFO, Kirsty Godfrey Bille. Then we'll turn to the formal business, and we have 4 resolutions for the meeting today.
After that, there will be an opportunity for any general shareholder questions to be answered before I will close the meeting. Now just before I go to give my presentation, I do just
want to run through a
little bit about the online platform. Now voting on the resolutions will be conducted by way of a poll using the electronic voting card you should receive after clicking the Get a Voting Card button. Shareholders can submit written questions during the meeting by clicking on Ask a Question button, and I do encourage shareholders who have questions to submit them as soon as possible at any time during the meeting. Now if you have any trouble using the platform, please check that online guide on Xero's website or please feel free to contact the helplines that are shown on the screen. Right.
With that administration behind us, let me now move on to my address. I'd like to start by acknowledging the very serious and worrying circumstances globally that we're holding this meeting in. We're in the midst of a worldwide health pandemic, which none of us have lived through before and which still has some way to run unfortunately before the full effects on people and economies become clear. COVID-nineteen is having a huge impact on businesses and communities around the world And this is unquestionably a very difficult time for many of our customers in terms of both their business, but critically their personal lives. In these circumstances, our focus at 0 is to maintain the quality and continuity of our cloud based products and services, but very importantly, to support people and businesses as they return to work safely and effectively.
The global economy continues to be highly volatile, and we've seen how quickly recovery can begin to take place. However, conditions are very fragile as recent developments seen in New Zealand over just the last few days have shown. Small businesses whose Xero serve continue to be at the heart of all these economies right around the world and their growing use of technology has become absolutely fundamental to the success of those nations. We are seeing that small businesses are showing resilience and innovation in these incredibly difficult times. They have been inevitably failures, but we've seen digitally enabled businesses demonstrate incredible ingenuity and entrepreneurship.
The Board and management remain optimistic and very ambitious about the global market opportunity Xero as small businesses look for real time and scalable cloud based solutions to help them manage their businesses better. Xero is uniquely positioned to capitalize on this significant global trend, operating at this intersection between technology and finance with the opportunity to serve the entire global small business community. During the 2020 financial year, Xero made further progress on its ambitions for growth, and we are pleased to report that we surpassed 2,000,000 subscribers globally. Sierra also achieved strong top line growth, increasing our operating revenue by 30% to $718,000,000 We also achieved a first ever full year net profit after tax as well as another positive free cash flow performance. These are impressive milestones that demonstrate how we have executed on our financial and strategic objectives, while maintaining and building operating discipline that's needed to scale this business effectively on a global basis.
That is our global aspiration. Our capital allocation framework remains focused on enabling 0 to grow on 2 fronts. Firstly, we continue to pursue organic opportunities through investment and customer acquisition and product development. And where appropriate, we are also looking to drive growth through the pursuit of complementary targeted acquisitions that support our strategy and extension of the small business platform. Xero's vision is to be the most insightful and trusted platform for small business.
This vision drives every action we take and we'll continue to build and promote that small business platform. This means introducing many small businesses to the benefits of working in the cloud. And for those already using Xero, the benefits of extending their activities beyond just cloud accounting, something which the COVID-nineteen crisis has brought to light for many or emphasized for others. Now Steve and Kirsty are going to talk more about Xero's business performance and how we're delivering on our strategic priorities. Steve will also provide an update on our subscribers over the 1st 4 months of the 2021 financial year.
Just before I finish, I'd like to just turn back to the Board. I'd like to say how pleased we are to welcome Mark Cross as an Independent Non Executive Director, who joined us on the 1st April. Mark brings extensive international experience in Corporate Finance and Financial Markets to the Board and you'll hear from Mark later in the meeting. I'd also like to recognize and thank all my fellow directors for their contribution and commitment throughout the year. On behalf of the Board, I'd also like to thank our incredible team of people at Xero.
Their dedication, hard work and passion are fundamental to Xero's success and we hugely appreciate their dedication, energy and commitment. I'd also like to thank you, our shareholders, for your ongoing support, which has made Xero's journey to this day possible, and it's been a journey of growth and innovation. And that brings me now to the end of my address. So I'm now going to hand over to Steve and Kirsty and for them to give you an update. So thanks and over to you Steve.
Well, thanks, David, and hello, everyone, and kia ora from Wellington. I'm speaking to you from Ziro's town, which until earlier this week was one of the few locations where Xero people were not exclusively working from home. Unfortunately, the emergence of some new COVID-nineteen cases here in New Zealand have seen us return to a work from home model. It's one we're all familiar with and the transition this week has been managed really well by the team. COVID-nineteen has and continues to impact us all, so I'll start my presentation with how Xero is working in the current environment before moving to outline our strategy and the opportunities that lie ahead.
On the slide you see, we highlight some of the actions we've taken over the past 5 months to support our people, our customers and partners. When it comes to our people, we've remained fully operational working from home around the world. Despite the initial disruption of working remotely, productivity has remained high. The latest of our regular engagement surveys indicate that our people have found their rhythm in adapting to working remotely. On measures such as motivation, leadership and communication, our people remain highly engaged.
In terms of work life balance, our survey has shown that some of our people are finding it more challenging to work from home, particularly those with young children, living alone at home or finding it challenging to replicate the breaks in the day that commuting to work and being in the office naturally allow. For obvious reasons, we made the decision cancel this year's planned 0 cons in Sydney and in London. 0 con alongside our roadshows and other in person events are a key part of how we connect with partners and customers each year. Now to cater for the need to stay closely connected and to share new developments, we're holding a new event this year called 0 On Air. 0 On Air is a free to watch digital content series filmed across 15 different cities, totaling 30 episodes.
And in these episodes, we'll be inviting Xero's people and guest speakers to cover a range of topics on technology, accounting, small business, all topics which are important and relevant to the Xero community right now. We've also moved very quickly to support our customers and partners during this time through a number of really important initiatives. Now these include launching a business continuity hub, which is on 0 Central and has localized content for each of our regions, including help in how to access important government support. We've established a dedicated 20 fourseven customer response team, which supports customers who are facing hardship by ensuring they're able to downgrade, suspend or cancel their subscription and letting them know that when they're ready to return, their data we'll be there for them. We've provided webinars and educational material in collaboration with partners across our ecosystem to provide targeted assistance on topics such as accessing small business loans, online sales and marketing and returning to the workplace safely and effectively.
We also importantly launched numerous product updates and responded to the various changes to leave entitlements, wage subsidies and a number of government tax and payroll requirements around the world. Now one example was to rapidly enable Xero customers to access JobKeeper payments through Single Touch Payroll when it was first announced by the Australian government. Xero is the 1st major cloud accounting provider to become JobKeeper enabled for customers in Australia. We rolled out new business snapshot and short term cash flow features to business additions of customers. And these new features provide our customers and partners greater insight into the performance of their business through dashboarding and cash projections.
We also deferred a $2 to $3 price increase on most business edition subscriptions that was due to take effect in March. This coincided with the bundling of Hubdoc into our business edition Hub Dot and Xero still performed strongly in FY 'twenty. We're now and Xero still performed strongly in FY 'twenty. We're now just over 4 months into FY 'twenty one and I wanted to provide an update on our total subscribers. Total subscribers increased by 96,000 over the period from the 1st April to 31 July 2020, reaching 2,380,000 subscribers.
The distribution of Xero subscriber base around the world means we've experienced different conditions in each of our markets and reflecting this, gross subscriber additions and churn have varied. However, all of Xero's geographies achieved positive net subscriber additions. Over those 4 months, we saw stronger net subscriber additions in Xero's Australia and New Zealand segment compared to the international segment with Australian and government sorry, with Australia and New Zealand governments easing lockdown restrictions at an earlier stage in other countries and seasonality within the Australian business due to the tax year ending in June. Overall, operating conditions do remain uncertain, we continue to anticipate an impact from COVID-nineteen on Xero's FY 'twenty one results. We will provide you with a full update on our financial performance over the first half of FY 'twenty one and our interim results on the 12th November.
This next slide shows some of the major trends that inform our strategic thinking with a 10 year lens. Now cloud adoption across the small business community is increasing with a growing proportion of small businesses using cloud based tools in their day to day operations. Digitization of tax and compliance is another strong trend observable in many markets. Governments are moving to online tax filing and record keeping that requires business to have secure digital connections. Indeed, during COVID-nineteen, we've seen small businesses apply for and access government stimulus through these digital connections.
A recent example of this trend is the UK government's Making Tax Digital initiative. Last month, the UK Government reconfirmed its commitment to implementation of the next stages of making tax digital for VAT and income tax. Ongoing innovation in financial services is contributing to an accelerating shift to digital payment platforms and facilitating new capital access models from both established lenders and FinTechs for a traditionally underserved small business sector. And finally, there's the effects of COVID-nineteen on the long term. The pandemic has presented many small businesses and their advisors with a real example of how cloud enables remote working and powers real time collaboration.
And we expect growing recognition of this to fuel the adoption of cloud platforms across the small business sector. I'll now move to outline how the main areas of strategic investment we've identified support our strategic priorities for the years ahead. The 3 strategic priorities outlined on this slide will be familiar to many of you. They are to drive the adoption of cloud accounting, to grow the small business platform and to build Xero for global scale and continued innovation. Of the 9 investment areas on the slide, I just want to touch on 4.
Firstly, extending access and distribution to serve all small businesses. This means increasing our product reach to serve customers with less complex needs in new and more efficient ways, as well as developing new distribution models and adapting our existing channels. Secondly, serving small businesses with multilingual additions as we look to our longer term aspirations to address an even greater global customer base beyond our current footprint. Thirdly, addressing small business needs outside of accounting and compliance by developing additional solutions and leveraging our application ecosystem more strongly to better meet small business operational needs. And finally, payments and helping our customers get access to capital, being better able to manage finances and cash flows pivotal to the success and growth of any small business.
The key to improving these processes, we believe, is empowering customers to use and take advantage of their accounting and related business data stored within Xero. When talking about our strategic priority of building Xero for global scale and innovation, we know that developing our people and recruiting great talent are critical to our future success. In FY 2020, we continue to invest significantly in developing our capabilities across areas such as technology, data, product management, strategy, M and A and sales and marketing. And during the year, we appointed Nicole Reed as Chief People Officer and Rachel Powell moved to the new role of Chief Customer Officer looking after our global sales, marketing and communications functions. So I want to finish my presentation by turning to social and environmental impact.
We call it SEI for short. This is an important part of our strategic thinking and something we have increasingly focused on. Our SEI framework is shown on the slide and outlines the main elements of our commitment to our people, diversity and inclusion, our community and the environment. During these times, the increased need for well-being and social support tools amongst our community is clear. In New Zealand, to support this need, we are offering the Zero Assistance Program or XAP, which provides free counseling to our people, now extended to our partners and customers.
We also recently announced a partnership with Beyond Blue in Australia to expand the range of well-being support available to our people and to co develop online learning programs for our partners and their clients. In November 2019, we announced our commitment to fully offset our carbon emissions each year, starting from fiscal year 2019. This is what we call net 0 at 0. As part of this, 0 helps fund projects that directly soak up carbon dioxide from the air like the Fisherman's Bay Conservation Project, which is where Craig Hudson, our New Zealand Managing Director and I are pictured on this slide. It's a farm near Akerowa on the Banks Peninsula focused on native forest recovery and other conservation activities.
We also have funded projects in India and Borneo. Finally, our most recent initiative this year is the Xero Community Appeal. This is our first ever public and global fundraiser to support charities across our regions. Xero's match donations from our Xero employees and open this up to our community to support during these challenging times if they're able to. I want to acknowledge and thank all our people for their hard work in delivering Xero's FY 2020 results and especially now as we navigate through the current uncertainty.
I also really want to thank our partners and customers for the trust they place in us and of course David and the Board for their great support and their hard work. And I'll also acknowledge our Founder, Rod, who's here with me in Wellington. Thank you for all your support. So that brings me to the end of my presentation. I'll now hand over to our CFO, Kirsty, to provide an overview of our FY 2020 financial performance.
Kirsty, over to you.
Thanks, Steve, and thanks to all of you for being part of our annual meeting today. I will now provide an overview of our financial and operating performance for the year ended 31st March 2020. And at the end of my presentation, I'll also cover an update on our outlook for the 2021 financial year. In FY 2020, Xero maintained strong top line trends versus the prior year with the business delivering growth across its global subscriber base. Free cash flow also improved demonstrating continuing operational discipline.
In the past financial year, 467,000 subscribers joined Xero, taking subscriber numbers to 2,285,000 at the end of March. As Steve has already mentioned, net subscriber additions in the first 4 months of FY 'twenty one mean this number now sits at 2,380,000. Annualized monthly recurring revenue or AMRR grew 29% in FY 2020 to 821,000,000. The majority of this increase came from growth in subscribers across the business plus a slight increase in ARPU. Operating revenue increased by 30% to CHF718,200,000 with EBITDA almost doubling to £137,700,000 We were also pleased to have reported for the first time a positive full year net profit after tax of $3,300,000 We maintained a positive free cash flow profile, delivering an uplift of more than €20,000,000 in FY 2020 to just over €27,000,000 This is equivalent to 3.8 percent of Xero's FY 'twenty operating revenues and reflects some conservatism in spending as COVID-nineteen took hold balanced with our continued appetite to reinvest in growth and product development.
So with that in mind, it's useful to consider how our FY 'twenty performance stacks up against the progress we've made on our 3 strategic priorities that Steve has already mentioned. Continuing to drive cloud accounting adoption is a core focus for Xero. And while we made good progress in FY 2020, it's important to remember that we're still early in our journey. The majority of small businesses around the world are yet to unlock the benefit of cloud accounting and the additional small business tools and services it can support. We monitor adoption rates really closely and estimate that cloud accounting penetration currently sits at less than 20% globally, while in Australia and New Zealand penetration is above 50%.
These penetration rates demonstrate the success we've had in the ANZ region, but more importantly, they also point to the potential for significant growth in future periods even across ANZ. In FY 2020, Australia and New Zealand subscriber numbers grew by 21% to exceed 1,300,000. Across our international markets, we saw rates of growth in FY 2020 stronger than Australia and New Zealand. This reflects the growing geographic spread of our subscriber base. Collectively, these regions saw subscriber growth of 32% year on year to nearly 1,000,000 subscribers.
As we look to drive cloud accounting, we are also working hard to grow Xero's small business platform. And in FY 'twenty, we made good progress. You can see on the left hand chart how our platform strategy continued to drive growth and Shift 0's revenue composition. Platform and other non core accounting revenues were 11% of total operating revenue in FY 'twenty, rising from 9% in FY 2019. The chart on the right hand side breaks down our revenue growth over the last year.
Platform revenues grew 82% year on year and includes 0 add ons such as expenses, projects, payroll and adjacent products like Hubdoc as well as invoice and bill payments. As our business evolves, so will these new revenue streams and the way we present them to you in the future. Specifically, our decision to bundle Huddock for all of our business edition subscribers around the world is a major step towards our vision of code free accounting and changes our revenue composition is made up and therefore how it should be presented. Going forward, Hubdoc will be incorporated into our core accounting revenues now that we have successfully integrated and launched Hubdoc as a key component of Xero's core offering. Moving now to Xero's performance across key SaaS metrics including LTV or lifetime value.
These metrics are important to highlight as they demonstrate how the underlying elements of our SaaS business model continue to contribute to value creation over time as well as illustrating the benefits of continuing to invest for growth. As I have mentioned in the past, LTV is used across our business at 0 to track performance and helps inform our tactical and strategic decision making. It is representative of the value created that is not captured elsewhere in our financial statements. On this slide, you can see the total LTV of Xero subscriber base in FY 2020 was 5,500,000,000, an increase of 27% on the prior year with more than RMB1.1 billion added. On a per subscriber basis, LTV was effectively unchanged in FY20 at $2,422 with increased gross margin and ARPU offset by some modest deterioration in churn.
Moving on to CAC or customer acquisition cost measures. CAC months indicate the time it takes to recover upfront acquisition costs of a new subscriber through subscription payments. This increased slightly from 13.6 months to 14 months year on year driven by market mix as higher growth markets increased this year of new subscriber additions. Finally, an LTV to CAC ratio of 5 0.8 remains a very strong indicator of the significant value created by adding a customer to the Xero platform. It means we've added almost $6 of lifetime value for every dollar we spend on CAC.
This measure declined slightly in the year with slightly better trends in our international segment offset by a small reduction in our Australia and New Zealand segment. Now before I move on to the outlook, I wanted to reemphasize how we're building 0 for the future by looking at our balance sheet. The progress 0 made on free cash flow contributed to total cash and short term deposits at the 31st March of 536,000,000. Deducting our term debt liability of 425,000,000 arising from the US300 $1,000,000 convertible notes we issued in FY 'nineteen, our net cash position was $111,000,000 at the end of FY 'twenty. Total liquid resources of $686,000,000 comprised cash and cash equivalents, short term deposits including proceeds from convertible notes and undrawn committed debt facilities.
Our standby debt facility was also refinanced during the year with a 3 year term and upsized by 50% to RMB150 1,000,000. This remains undrawn. COVID-nineteen does create uncertainty that is difficult to avoid. However, we take a level of comfort amid this uncertainty from the cash we have on hand, additional liquidity we have access to and also Xero's underlying capacity to generate free cash. At this time, we remain committed to realizing our strategic ambitions and will invest accordingly.
This will be in the form of targeted acquisitions and investments that extend and enhance our small business platform and ecosystem. It will also come through investment in product and technology development that we believe is necessary to best position Xero for the post COVID-nineteen economy. So having reviewed Xero's performance for FY 2020 and with Steve's comments earlier about how we've progressed through FY 'twenty one to the 31st July, I want to give an update on Xero's outlook for FY 'twenty one. It's important to remember that we are only 1 third of the way through the FY 'twenty one financial year and we will provide a full update in November 20 20 when we report on our half year results for the 6 months ending the 30th September 2020. The continuing uncertainty surrounding the COVID-nineteen environment means it remains speculative to comment further on the potential impact on our expected performance for FY 2021.
Xero's ambition is to be a long term orientated high growth business. We continue to operate with disciplined cost management and targeted allocation of capital. This allows us to remain agile so we continue to innovate, invest, support our customers and respond to opportunities and changes in our operating environment. Before I finish, I'd also like to thank you, our shareholders, for your ongoing support of Xero. Now I'll hand back to David to conduct the formal business of today's meeting before we move to the Q and A.
Thanks.
Thanks, Kirsty and Steve for your presentation. That was very helpful. We're now going to move to the formal business of today's meeting. After this, we'll address any general shareholder questions for the Board or Steve, Kirsty or any other member of your leadership team in the general Q and A session. For resolution specific questions, we're going to answer those as we move through each of the resolutions shortly.
Now our company secretary has confirmed that the notice of meeting has been sent to all shareholders and other persons entitled to receive it within the notice period. The matters requiring consideration today are outlined in detail in the notice of meeting. The notice will be taken as read. Xero's financial statements for the 2020 financial year together with the auditors report in our annual report, which is available on our website. All resolutions 1 through 4 are ordinary resolutions.
So this means that to pass, they require more than 50% of votes cast by shareholders entitled to vote and voting on the resolution. Now I'd just like to quickly go through the voting process proxies in Q and A. Firstly, voting. 0 share registry provider Link Market Services will conduct the voting by way of poll and Ms. Emma Jones of Link will act as returning officer.
Shareholders can cast their vote using the electronic voting card received after validating your online registration. To validate registration, you'll be asked to enter your security holder reference number, that's the SRN, and you need to also enter your postcode if you're in Australia or country if you're outside of Australia. To then cast your vote, click that getting get voting card button. If you are intending to vote, you'll be able to finalize and submit votes up until 5 minutes after the meeting ends. I'll remind you of that near the end of the meeting.
Now to proxies. The proxy votes that we've been submitted will be set out on the slide shown on each resolution. For some context, the current number of Xero shares on issue is approximately 142,300,000. Shareholders have appointed the chair of today's meeting, that's me, as proxy for approximately 102,900,000 shares, voting either for, against or with discretion for all resolutions. As indicated on the proxy form and in the notice of meeting, my intention as chair is to vote all discretionary or undirected proxies held by me in favor of each resolution.
And then back to questions. As I said, shareholders can submit written questions during the meeting by clicking on the Ask a Question button. To ensure questions reach us in time, again, I just remind you, please put them in as soon as you can. Right. Again, any of those questions that are submitted online will be addressed after the formal business is completed.
If we aren't able to get through all of them today or if there are specific questions that might be better addressed on an individual basis, we're going to make sure we respond to all of them after the meeting. Now if we do receive a number of questions on a similar topic, we're going to try to amalgamate them into 1 or choose to answer the broadest question, which will cover all the others. So I think it's now time to move to the first resolution and that relates to the authorization of the Board to fix the remuneration of Xero's auditors, Ernst and Young. If not already submitted, I'd like to invite shareholders to submit any questions regarding this resolution. And I'm going to pause for about 10 seconds to allow enough time to receive them from you and to check whether any questions have already been received.
So I will pause now for roughly 10 seconds. So I think that's probably enough time. Toby, are there any questions regarding Resolution 1?
Thanks, David. At this time, we haven't received any questions with regard to Resolution 1.
Well, if there's no further questions, I now propose Resolution 1 as set out in the no submitting and put the motion to a vote. Can you please cast your vote? And then I'll pause again for about 5 or 10 seconds, and then we'll move on to the next resolution. Okay. Now we're going to move on to the election and reelection of directors.
And Resolution 2 is concerning the reelection of Lee Hatton as a Director of Xero. Lee retires at this meeting and offers herself for reelection. The Board, other than Lee that is, recommends Lee to you as a SIRO Director and unanimously supports her reelection. So let me now ask Lee to say a few words about herself and her role on the Board. Over to you, Lee.
Thank you, David. Good morning, everybody, and thanks for the opportunity to discuss my credentials for reelection as an independent Director of Xero. I have been a director of Xero for the past 6 years. In this time, I've been the chair of the People and Remuneration Committee, and I'm currently the Chair of the Audit and Risk Management Committee. Alongside my role on the Xero Board, I'm a member of the Chief Executive Women's Group, supporting and encouraging women in leadership.
And I'm part of the global executive team at Afterpay, an Australian financial technology company. Prior to this role, I was the Chief Executive of Viewbank, a digital bank in Australia. I believe I can bring some key strengths to the Board. I have more than 20 years experience internationally in the financial services industry, And I have spent many of these years in senior executive roles across distribution, marketing, strategy and of course, risk, all of these in large scale customer facing businesses. I believe a clear strategy alongside engagement is critical to a thriving and achieving a high performance culture.
And this is an area in which I'm deeply focused. In addition, after spending a number of years across the globe in financial services, I can really bring broad networks and valuable dialogue around not just Financial Services, but FinTech to the XeroBoard table. I really enjoy my role as an independent director, And I always like to hand the camera to David when he likes it. No, I always enjoy my role as an Independent Director of Xero. And I'm very proud of the progress we've made during my time with the company.
A number of highlights for me are things like, well, firstly, our focus on customers. As a New Zealand dairy farmer's daughter, I'm very proud. I'm a very passionate person about small business and the small business community and the role it plays in fueling the local economy it serves. As Xero has grown, we have used Beautiful as our North Star and the Xero team always have our customers at the heart of their decisions. Secondly, I'm so proud of our successful performance.
Over the past 6 years, subs have increased as you've heard today, but 6 years ago we were sitting around 475,000 and now we're over 2,000,000. I mean it's just fantastic. During the same time, Xero has successfully entered new international markets and there's been exceptional growth rates in that space. Thirdly, leadership and innovation. The Xero board works so well as a team, And I think we've seen this play out throughout COVID-nineteen, which has been such a huge challenge.
The risk management skills and the supporting frameworks we've implemented
over the last couple of
years has just helped the board and the Xero leadership team effectively implement not just traditional, but innovative ways of scenario planning to make sure we have robust but really fit for purpose risk management framework and function. So it has been an absolute privilege to be part of the team responsible for overseeing Xero's governance and performance over the last 6 years. And you can continue to expect from me ambition for our company, healthy and at times difficult challenge of management and of course care for the customers and the Xero management team that we serve as a board. So thank you for your support to continue to let me serve on the board, and I remain committed to doing my very, very best to see Xero realize the next chapter of exciting opportunities ahead. So thank you.
And now I will hand back to David.
Thank you, Lee. And let me just reinforce what a great contributor you've been over the last 6 years. And for the board, your continuity and your contribution to energy has been incredibly valued. So thank you. So again, I'd like to invite shareholders to submit any questions regarding this resolution.
Once again, I'll pause for roughly 10 seconds and allow time to receive any questions. So I will pause now. Okay. Toby, have we received any questions concerning Resolution 2?
Thank you, David. On Resolution 2, we do not have any
questions at this time, I now propose Resolution 2 as set out in the notice of meeting and put the motion to vote. Can you please cast your vote? And I'll wait for 5 seconds and then we'll move on to the next resolution. Okay. We now come to Resolution 3, which concerns the reelection of Rod Drury, our Founder and innovator and incredible contributor to be a Director of Xero.
Rod retires this meeting and offers himself for reelection. The Board, other than Rod, recommends Rod choose a 0 Director and again unanimously supports his reelection and are grateful for his contribution. And I'm going to ask Rod now to say a few words about himself if actually he needs to introduce himself and about his role at the Board. So Rod, over to you.
Thank you, David. Really sad not to be with our shareholders this year. It's something we all really look forward to, the chance to say thank you, because we get so many shareholders that have been pretty much at all about must be 13 odd meetings now and it's a nice time to check-in. But it's also nice just seeing through Kirsty's presentation that long term view that you as shareholders have given us the ability to execute and be in such a strong financial position. And what I'm super proud of now is with 0 looking, we weathered the GFC.
We haven't seen this sort of situation before, but we are in a strong position. And when I engage with our people around the world, the focus we have on making sure we're using our resources to help our own staff, our partner ecosystem and our nZERO customers. That feels incredibly purposeful and very, very proud of that. You don't get the chance to speak too much since I left us over 2 years ago now. So I thought I'd just give you some impressions that I have of the business with the opportunity of not being here a daily basis.
The thing that really comes through me is scale. When we started this business, you guys have most of you would have heard the story that's just put 4 or 5 founding staff in a small apartment. And to see just the sheer numbers that we're dealing with now, 2,300,000 customers. And even if we didn't add any new customers, the amount of work that we need to do to keep the machines going as each customer has adds on more staff or the next year's worth of data. It really is that example I've used before of changing the engines while you're flying the passenger jet.
And what I'm proud of all the stuff that Steve's doing, but what he's really been doing over the last 2 years, which I absolutely love, is building this incredible global executive team and not just the people that you see, but the few layers below that. We've gone from in a really short amount of time and now over 3,000 people and putting that infrastructure in place so that we have this amazing platform to do more exciting things in the future is absolutely huge. And we all get excited about all the new things we're doing, but I have a huge appreciation just for that infrastructure and that team building that's in place that puts us in a fantastic position for the future to respond to events like we're seeing, but also what happens in the world in the future as everybody moves online. So it's incredibly exciting. Remain each day at 0 seemed even better than the last and just so excited about all the things that we can do in the future.
Thanks, David.
Yes. Thanks, Rod. And I'd just like to really just recognize your contribution. It's not easy sometimes being a founder to come on the Board, but you've played an outstanding role and we're delighted to have you on the Board. So with that, we've got to go back to the resolution.
I'd like to invite shareholders to submit any questions regarding this resolution. Once again, I'll pause again to allow enough time to receive your questions. So I'll wait for 10 seconds. So on Resolution 3, concerning Rod Drury's reelection, Toby, do we have any questions?
Thank you, David. At this time, we have not received any questions on Resolution 3.
Okay. Then with no further questions, I now propose Resolution 3 as set out in the notice of meeting and put the motion to vote. Can you please cast your vote? And we'll just pause for 5 seconds before we go on to the next resolution. Okay.
We now move to Resolution 4, the final resolution, and it's concerning Mark Cross, who we appointed to the Board as a Director on the 1st April this year, and he is now required to stand for election. The Board, other than Mark, recommends Mark to you as the CRO Director and unanimously supports his election. And I'd just like to say that Mark, even in the few months he's been on the Board, has made a significant contribution and we're very pleased to have him. So let me now ask Mark to say a few words about himself.
Thanks, David. I had expected to be in the 0 Wellington office for this, but instead, I'm coming to you from my home in Auckland. Thank you for the opportunity to seek your support for my election as an independent director of Xero. Xero is recognized as the world leader in cloud accounting and has a huge opportunity ahead of it. So it was a privilege to be invited to join the Board.
As a new Director, I'd like to briefly address today how I got here, why I'm here and what I believe I can contribute as a Director of your company. Having identified the skill set required for this Board appointment, the Board undertook a director search through an external search firm. And after what seemed like a pretty thorough process, I was selected as the preferred candidate and started as a Director on the Board in April. Now why do I want to join the Board of Xero? Xero is an iconic global company founded in New Zealand and presents a rare opportunity for a Director to get involved in a company with such exciting long term growth prospects.
Xero has come a very long way since it was founded and I'd love to play a valuable part in this next chapter. A question I ask myself when I join a new board is whether the inside matches the outside when it comes to culture and values. And I have to say, I'll be very impressed how the commitment of Xero's people to the purpose, vision and values of the company genuinely drives the business from the inside out. Running a growth company like Xero takes a huge amount of skill and a relentless drive, and I've seen those qualities in abundance in the time I've been around. Lastly, what can I bring to the 0?
I've had more than 20 years of corporate finance experience in New Zealand and internationally, mainly in Australia and the U. K. This experience enables me to support and challenge management in assessing the strategy, financial performance and capital structure of the company and to contribute to making the right investment decisions. My experience spans mergers and acquisitions, equity capital markets and debt restructurings. In my view, realizing Xero's potential will require real focus on capital allocation to make smart decisions about which there are many great options to pursue and how and to invest in a disciplined way to deliver long term value.
As a former M and A banker, I've seen the good, the bad and the ugly when it comes to acquisitions. So it's an area that requires real discipline in the buying and a clear plan in the integration. I've also now built a broad base of governance experience across a range of industries in my executive career. My current core role is fully dual listed, NZX, ASX Companies, Chorus and Z Energy and I also am a general for asset management, an independent OSC related fund manager. Having an appreciation of what drives institutional investors has been incredibly useful in my governance career so far.
I'm a member of Xero's Audit and Risk Management Committee to which I bring my experience from chairing the same committees for both Chorus and Z Energy. In addition to the insights this gives me into reporting, it allows me to bring a deep understanding of risk, which is a fundamental part of strategy. Also Director and shareholder of an early stage enterprise SaaS company, which although significantly smaller than 0, has given me insights into the special dynamics of a SaaS business and the realities of juggling growth, cash burn and cash runway. I have the drive and capacity to commit myself to being a high performing Director of Xero on your behalf, rest assured that my primary focus as a Director is aligned with yours as owners. Xero would be the most insight from the trusted small business platform and to see Xero create value for its shareholders over time as the business delivers on a significant potential.
So with your support, I look forward to working with my fellow directors and all of the Xero team to achieve these objectives. Thank you. Back to you, David.
Thank you, Mark. And I hope you all can see the great skills that Mark brings to the Board and we're very glad to have him. So on this final resolution, I'd like to invite shareholders to once again submit any questions and I will pause now for again for about 10 seconds to allow you to submit any questions. I think I'll take that as 10 seconds. Toby, are there any questions on Resolution 4?
Thank you, David. We haven't received any questions on Resolution 4 at this time.
Okay. Then with no further questions, I now propose Resolution 4 as set out in the notice of meeting and put the motion to vote. Can you please cast your votes now? And again, I'll wait for 5 seconds to allow you to cast your vote. Okay.
Well, Resolution 4 was that final resolution. So that concludes the formal business of the meeting. I do want to stress, I mean, just listening to the 3 directors, I think that the caliber and the capability of the Board is growing each year, and it's a delight to work with them all. So thank you to all my fellow directors. So now I'd like to move to Q and A and it's time to address any general questions that have been asked by shareholders of the Board or the Xero leadership team.
Toby, could you please read out the first question?
Thank you, David. The first general question that we have today is when are we going to start buying back 0 shares?
Well, thank you for that question. I want to stress Xero is a high growth company and we see enormous opportunity for this company going forward. So any pre cash we have at the moment, we will invest back into the business. 0 shares. But I do want to stress, we continue to look at the options we have.
But at the moment, we definitely think the best outcome for shareholders is us to reinvest in the business. Back to you, Toby.
Thank you, David. The next question we've had submitted is, is the Board aware of and concerned with the recent provision of service outages across the Xero platform?
Well, we are definitely aware of the outages and we are always concerned. I want to stress that whenever there is an outage, there's an escalation process within the management team and the board is informed. And while we are very concerned around the outages we've had, I do want to stress there's been enormous investment in the platform over the last 12 to 18 months and the availability of the platform is running 99.9%. So we've been very pleased with the performance of the platform. But unfortunately, technology issues do ventuate, but it's how you respond.
And I do want to stress that particular issue that we had has already been reviewed at the Board. There's been action taken to make sure that will not happen again. But I can't guarantee there won't be other outages, but we are going to manage to a very high level of availability. So back to you, Toby.
Thank you, David. The next question is, given 0 Practice Manager or XPM is such a critical part of practicing accounting firms, could you please give an update on its road map and further the future of its integration with 3rd party platforms?
I think on this one, I'm going to ask Steve to maybe address that in terms of our product plan. We have a very extensive product plan and we've just reviewed a number of capital allocations around that roadmap. So Steve, could I ask you maybe to address that specific question?
Yes. Thank you, David, and thank you for the question. I can say very confidently that this is an area of tremendous focus for us. Our Chief Product Officer, Anna Kurzon, and her team and the executives involved have actually been working for some time now on something that you are going to hear about at 0 On Air. So we're really looking forward to 0 on Air next month to reveal the next chapter of our practice vision and we're expecting really positive reaction to that.
But certainly appreciate the importance and I can promise you we have great focus on this and we'll tell you more about it soon.
Thanks, Steve. Back to you, Toby.
Thank you, David. The next question is what is the next target geographic market for 0 to enter? And what factors will drive the timing of entry?
Well, again, thank you very much for that question. I'll get Steve to say a few comments, but let me just make a few comments from the Board. I mean, we have been focused on English speaking markets predominantly, and we still have enormous market opportunity in those English speaking markets. Market entry, I mean, one of the things of platforms is that they're available to anybody, whether you're in the market or not. And you've seen that through the growth in South Africa and other countries like that.
However, we do think about geographic expansion, and we are going to continue to look at non English speaking. And let me ask Steve now maybe to say a few more words about our geographic expansion plans. Over to you, Steve.
Yes. Thanks, David. Yes, great question. And I think it's important to remember that really our entry into South Africa, Canada and Singapore are only recent. So it's only been in the last 2 years that we've been opening up and operating in those markets directly.
0 is used in well over 100 countries around the world and we have done plenty of work to identify markets and their relative attractiveness. At this point, we're really focused on the markets we recently entered, but we do have a road map and some clear ideas about the future. There's a whole range of criteria around our choices, the choices that we make in entering various markets. Clearly, when you look at our success to date, we really do look for opportunities where the accounting and the bookkeeping profession is very well and strongly aligned with small business customers. So that's an example of one of the indicators we look for.
But as we expand, we'll certainly consider how we evolve the criteria for market entry around the world. Thank you. Back to David.
Yes. Thanks, Steve. And I would just like to reinforce that's a continued review item for the Board working with Steve. And we see enormous opportunity for this platform going forward. So, Toby, any other questions?
Thank you, David. There are no further questions outstanding at this time.
Okay. Let me just I'll just wait for a few seconds in case are any other questions. Anything else, Toby?
We do have a question.
Okay.
So the question we have is businesses in trouble are being given relief from being placed into administration and going out of business, at least in Australia. Even when business closures ramp up, assuming that they do, I am thinking that these businesses will stay as subscribers while they work through until fully closed. Can you comment on the timing of subscriptions for businesses that close and when this might happen in various countries? Probably too hard to comment on expected numbers.
Well, thank you for the question. It's actually a very good question and it's something we do think about. You're right, probably too hard to comment on expected numbers. But that is one of the unique value propositions of this business is that accounting is fundamental to every business. And even when you're going through hard times, of course, we're doing everything we can to help businesses through this period.
We allow them to downgrade, etcetera. So we want to do everything we can to support them, but some will go into receivership and then we will have to work through them through that process with them. Steve, do you want to make some comments because I know you and the team have given a lot of thought to this?
I think that the question really does outline a dynamic that is real. I think it's also important to reflect on the other dynamics that we are experiencing, which is that more and more businesses, more and more accounting practices are realizing that being in the cloud has tremendous benefits. So whilst there are definitely trends that are concerning, there are also those opportunities that are emerging. Thanks. David, back to you.
Yes. Thanks, Steve. And we will continue to be opportunity driven, which is I think a point well made. Okay. Well, I think that does bring us to the end of the annual meeting for 2020.
In a moment, I'm formally going to close the meeting. If you're intending to vote on the formal business of the meeting, you should now finalize and submit your votes as voting will close in 5 minutes' time. As mentioned earlier, the results of voting will be released on the ASX once the votes have been counted after this meeting. I'd also just like to add to Rod's words as I close the meeting. I mean, it's unfortunate we can't be together, and I do want to thank the many very committed and faithful shareholders who have come to meetings over the And we do hope that we're all back together again next year, but it's uncertain and we just don't know.
So we felt this was the best way to have our meeting. I'd like to thank all the team who has put so much effort into preparing today's meeting and also to thank you, our shareholders, for your support and for attending the meeting today. I now formally declare the meeting closed. Thank you very much.