Welcome to Tāmaki Makaurau, Aotearoa. Ko Craig Hudson toku ingoa. Welcome to Auckland, New Zealand. My name is Craig Hudson, the Managing Director of Xero, New Zealand and the Pacific Islands. It is my pleasure and our pleasure to have you here with us today for Xero's annual meeting, and welcome our directors and leadership team who have traveled from all over the globe to be with us. Aotearoa is in our DNA. We're very proud of our Kiwi roots and the teams that are working here, and we remain a New Zealand company domiciled here. We're also incredibly proud to have an international presence with big global growth aspirations. It's pretty incredible to think of how far we've come, and I'd like to thank you, all of our shareholders, for supporting us on this incredible journey so far.
I'd like to hand over to our Chair, Mr. Graham Smith, to begin our 2019 annual meeting.
Thank you. Thanks, Craig, good morning and welcome to Xero's annual meeting for 2019. My name's Graham Smith. I'm the Chair of Xero's board of directors. I'm very pleased to be with you here today. This is my fifth Xero annual meeting and third as Chair of the board. It's great to bring this year's meeting back to Xero's home, New Zealand. Auckland is an important location for Xero and is where a significant proportion of our product development is undertaken for our customers and partners around the world. Firstly, I'd like to welcome shareholders who are attending the meeting in person and those joining us online. At the outset, I'd like to acknowledge what an amazing company Xero is. At its core, Xero exists to make life better for people in small business, their advisors, and communities around the world.
Since 2006, when Rod Drury founded the business in a Wellington apartment, we've scaled from a handful of small business subscribers in New Zealand to more than 1.8 million subscribers globally. Many of you here today have been on this journey with us, and your ongoing support has made our success possible. I'm informed by our company secretary that in accordance with the company's constitution, a quorum is present, and I now declare the meeting formally open. Now I'd like to introduce those with me on the stage today. To my left, your right, are non-executive directors Lee Hatton, David Thodey, Susan Peterson, Rod Drury, Dale Murray, and Craig Winkler. To my right, your left, is Xero's Chief Legal Officer and Company Secretary, Chaman Sidhu. Next to Chaman is Steve Vamos, Xero's CEO, and then we have Kirsty Godfrey-Billy, Xero's CFO.
We're also joined by members of Xero's leadership team and other Xero colleagues, together with representatives from Xero's auditors, Ernst & Young. Before we move to the agenda, I'd like to acknowledge Bill Veghte, who is unable to join us today. Bill will be retiring as a director of Xero Limited by rotation and will not be standing for re-election. Bill joined Xero's board more than five years ago in 2014. Since then, the business has expanded globally, and in this time, 1.5 million new subscribers have joined Xero. On behalf of the board, we are extremely grateful for Bill's directorship and contribution and wish him the very best for the future. Before we start the formal procedures, there are some brief housekeeping points to cover. Please make sure your phone is switched off or on silent.
If there is an emergency, please follow the emergency exit sign and instructions of the venue staff. The order of events for today's meeting will be as follows: I'll say a few words about the past year at Xero. We'll then turn to the formal business and resolutions of the meeting. This will be followed by CFO and CEO presentations from Kirsty and Steve, and then after these presentations, I will close the meeting and invite those attending here in Auckland to stay for refreshments with the Xero board and members of the leadership team. There'll also be opportunities for shareholders to ask specific questions as we address each resolution in the formal part of the meeting, and there'll also be an opportunity for shareholders to ask general questions after the CFO and CEO presentations. I'll move now to my address.
Firstly, we'd like to thank our shareholders for your ongoing support. This is a key element of Xero's continuing success. Xero achieved another record set of results in the year to the 31st of March 2019, delivering value to our customers, partners, and shareholders. The business made excellent progress against its financial and strategic objectives and continued to expand our community of small business customers and partners around the world. For the first time, Xero achieved positive free cash flow. More broadly, we have improved our financial and operating metrics while prioritizing investment and growth. In a moment, Steve and Kirsty will elaborate on Xero's business performance and how we're delivering on our strategic priorities. The board is pleased that the benefits we anticipated from consolidating Xero's listing on the ASX have been realized.
Liquidity in Xero's stock has more than doubled since announcing the move to a sole ASX listing in November 2017. Combined with Xero's inclusion in a range of additional equity market indices, such as the S&P/ASX 100, the increase in liquidity has been accompanied by significantly higher investor and analyst interest. A range of new investors have accumulated positions on our share register. In addition, during the year, Xero successfully completed a $300 million convertible notes issue. These funds provide the business with financial flexibility to enhance and extend Xero's small business platform and ecosystem capabilities through complementary targeted acquisitions. The debt issue structure has been used in other geographies, particularly in the U.S., but was the first of its kind for an Australian or a New Zealand company not listed in the U.S.
A capital allocation framework is now in place to support the review and pursuit of future organic and inorganic investment opportunities. This is aligned with our strategic priorities, while satisfying our strong focus on financial discipline. Steve Vamos became Xero's Chief Executive Officer in April last year, replacing founder Rod Drury. The board's delighted with the progress made by the company under Steve's stewardship this first year, and how the leadership team as a whole is performing to achieve these excellent results. Looking to our board, David Thodey joined us in June as a non-executive director. Welcome, David. A member of the People and Remuneration Committee and Nominations Committee. David brings deep experience and relevant skills to our board, with more than 30 years' experience in the global technology and telecommunications industries, including as CEO and director of ASX 100-listed companies.
David has a reputation for strong operational performance and a dedication to creating brand and shareholder value. As I previously mentioned, Bill Veghte will retire from Xero's board today. I'm confident we have a deeply experienced, highly qualified international board of directors, and I'd like to thank and acknowledge the valuable contribution of my fellow directors during the year. On behalf of the board, I'd like to thank the entire team of dedicated and talented Xero people for their commitment and contributions to our business. That brings me to the end of my address. We will now move to the formal business of today's meeting. The company secretary has confirmed to me that the notice of meeting has been sent to all shareholders and other persons entitled to receive it within the notice period required. For the purposes of the meeting, that the notice will be taken as read.
Xero's financial statements for the 2019 financial year, together with the auditor's report, are set out in our annual report, which is available on our website. The matters requiring consideration today are outlined in detail in the notice of meeting. Resolutions one to five are ordinary resolutions, meaning that to pass, they require more than 50% of votes cast by shareholders entitled to vote and voting on the resolution. Because this is a shareholders meeting and shareholders are attending today both in person and online, we will conduct the voting on each resolution by way of a poll. Xero's share registry, Link Market Services, will conduct the poll, and Ms Fran Kelly of Link will act as Returning Officer. Votes will be counted after the end of the meeting, and the results will be posted on the ASX Market Announcement Platform.
For those here in person, you can vote by filling out the yellow card that you should have received at the registration desk on the way in. If you hold a yellow card, please ensure you complete it, and it's ready for collection during the formal part of the meeting. For those attending the meeting online, you will be able to cast your vote by clicking Get Voting Card. You can find further instructions in the online portal guide that is available on Xero's website. Shareholders can also vote using a mobile phone through the Link Vote app. If you plan to use a mobile phone to vote, you should have already downloaded the Link Vote app and received the PIN to log in to the meeting from the registration desk on your way in.
You can find further instructions in the mobile app guide that is also available on Xero's website and from the registration desk. If you intend to vote using the Link Vote app, you should also have received a white card that you will only need to use if we encounter a problem with the app. I'll let you know if you need to complete your white card. If you did not receive a yellow or a white card on registration, you may have received a blue card if you are attending as a non-voting shareholder, or a red card if you are a visitor. If you believe that you do not receive the correct card on registration, please go to the registration desk, where a representative of the share registry will assist you.
The proxy votes that have been submitted for each resolution will be set out on the slides that will be shown for each resolution. To give some context to these numbers, the current number of Xero shares on issue is approximately 141.3 million. Shareholders have appointed the chair of today's meeting, that's me, as a proxy in respect of approximately 81.6 million shares, voting either for or against or with discretion for resolutions one to five. As indicated on the proxy form, my intention as chair is to vote all discretionary proxies held by me in favor of each resolution. There'll be the opportunity for shareholders and proxies here in Auckland to ask questions on each resolution before it is considered. If you are attending the meeting online, you're also able to ask questions by clicking on Ask a Question.
Further information on this is set out in the online portal guide. To ensure that questions on the resolutions that are asked online reach me in time, I ask that shareholders and proxies attending the meeting online submit those questions now. We ask that general questions for the board or management are asked after Kirsty and Steve have made their presentations. General questions received online during the meeting will also be addressed then. If we're unable to get through all the questions today, or if there are specific questions that would be better addressed on an individual basis, we'll respond after the meeting. Please note that questions may be asked by anyone holding a yellow, blue, or white card. Please raise your card when asking a question. Visitors holding a red card may only observe the meeting. All right.
We're going to move on to resolution number one, which relates to the authorization of the board to fix the remuneration of Xero's auditors, Ernst & Young. To ensure our external auditor remains independent at all times, non-audit work is reviewed and authorized by the Audit and Risk Management Committee. The Audit and Risk Management Committee has reviewed expected fees for fiscal 2020, and expects the proportion of non-audit fees to audit fees to be substantially lower in fiscal 2020 and future periods compared with fiscal 2019. Are there any questions regarding this resolution? Okay. Don't appear to be any questions online. I now propose resolution one as set out in the notice of meeting and put the motion to a vote. Please now cast your vote. Okay. We now turn to the election and re-election of directors.
The next resolution concerns the re-election of Susan Peterson as a director of Xero. Susan retires at this meeting by rotation in accordance with Xero's constitution and offers herself for re-election. The board, other than Susan, recommends Susan to you as a Xero director and unanimously supports her re-election. I'll now ask Susan to say a few words about herself and her role on the board.
Thank you, Graham. Thank you everybody for giving me the opportunity to present my credentials for re-election. I've been a director on the Xero board now for two and a half years, alongside my Xero board role, I'm also a director of Vista Group, Trustpower, Property for Industry, and ASB Bank. I'm also a co-chair and founder of a fast-growing small startup company, I recently joined the board of Global Women. These roles sort of span across a number of sectors, a number of industries, utilities, technology, financial services, industrial property, and small companies. I think a brief of that experience is kind of relevant to the conversations we have around the Xero board table every day.
I'm also a member of all of those companies' remuneration committees. This gives me a perspective in a time where remuneration is becoming an increasingly hot topic in Australasia and across the world to see what emerging trends and expectations are happening around that environment, and what we need to do to delicately balance the needs of all of those stakeholders as we move forward. Not forgetting that our job here is to attract, retain, and motivate the best talent we can possibly grab for this company across the globe. I also serve as a member of the New Zealand Markets Disciplinary Tribunal. That gives me some insight, I guess, to emerging corporate governance in our market here in New Zealand from a perspective of leadership.
More particularly to Xero and moving forward, I've led the payment strategy for a large financial services institution, which is a growing area of focus for this company. This has given me a clear understanding of the opportunities that lie ahead of us, and what we can do if we remove customers' barriers and materially increase our relevance to our partners and customers. I've talked briefly about Organic Initiative, which is a fast-growing startup company, but what's relevant to Xero about that experience is that's a company where we sit on Monday morning and we think about cash flow, inventory, and survival, and also think about taking our products across the world and the pressures that come from that. The relevance here is I know what it feels like to be a customer of Xero, and I know which parts work well and which parts we could work on.
Most relevantly to this room, through the two and a half years as a director of Xero, I've been, one, excited and privileged to be part of the group, but I'm also incredibly proud of some of the things the company's achieved over that time through a big team effort. First and foremost, performance. Xero's share price has gone from NZD 15 or NZD 17 to, I think this morning would've been about AUD 62. Subscriber numbers have more than doubled, 700,000 to 1.8 million, as Graham said. Xero's obviously delivered its first free cash flow positive result, and also it's made a profit in the second half of the year. I think the leadership piece is really important here, too. We've successfully transitioned what incredibly difficult and delicate to do from a genius founder to a fabulous CEO in Steve Vamos.
Now we work forward to make the business globally scalable. We've had some acquisitions, but I'm most proud of our ongoing commitment to build a really strong purpose-led culture for Xero, which allows our teams to successfully collaborate globally, and be a very serious global player. Look, it's been a real privilege to be part of this board for the last two and a half years, and I'd really be honored to have your ongoing support to remain on my role on the board and see Xero realize its opportunities that lie ahead.
All right. Thank you, Susan. Are there any questions regarding this resolution? Okay, no questions online. I now propose resolution 2 as set out in the notice of the meeting and put the motion to a vote. Please now cast your vote. All right. Moving on. David Thodey was appointed by the board as a director on June 27th this year, and is now required to stand for election. The board, other than David, recommends David to you as a Xero director and unanimously supports his election. I'll now ask David to say a few words about himself.
Very well. Thank you, Graham, and good morning everybody. It's a real pleasure to be here. I should quickly say I live in Sydney, but I have a long family history in New Zealand and both a long involvement, actually, in New Zealand. I went to school here, but all my family still reside in New Zealand, so it's nice to be back in the land of the long white cloud. I went to university in Dunedin and then ended up working in Australia with IBM. I've had now, what? 40 years experience in tech and telecommunications, and it's actually been my passion through that whole time, even though I did a degree in anthropology and English, of all things, at the time.
10 years of that 40-year career has been a CEO, and one as IBM, which was really a branch office, and then as CEO of Telstra, an ASX-listed company. That gave me a good perspective of running large, complex companies. The other part of that is that a lot of my time has been spent in the region and globally. I think about 20 years of my career I've had global responsibility. Of course, as I think about Xero and the aspirations globally, that is so important. Some of that has been in China and managing investments in China, investments in the U.S., the U.K. A broad sort of experiences, some good and some not so good, I should quickly add, because it is not always easy. I do think that the aspiration and commitment is really what you need.
Just in terms of my current responsibilities, because that's really important in terms of just my ability to contribute to Xero. At the moment, I only have one other listed company board, which is Ramsay Health Care, which is a private hospital operator. They now have about 600 hospitals. Interestingly, more in Europe than in Australia as the whole health industry is changing. Xero, which I'm obviously up for election today, and then it has been announced that I will join the Vodafone International Board out of the U.K. in September. That's the three. I have an unlisted company, which is Tyro, which is payments. Again, a disruptive player in Australia. Of course, everyone taps now, and so payments has been a big part of their success.
The other responsibility I have is in a government agency, which is CSIRO, which is the Australian nationally funded science and research institution, which has about 5,000 wonderfully intelligent scientists trying to change the world, which is always a pleasure to be with. In terms of Xero, I've got to say, I've always been inspired by what Rod and the whole team have achieved. All my years working at IBM and then at Telstra, I've always wondered, why hasn't there been a great Australian, New Zealand company in the tech space? We've had many international companies, and I really think that Xero has the opportunity to become a truly global technology platform for small and medium business, and that gets me excited. I think it's important for New Zealand and the region.
I think it's an exciting opportunity and it won't be easy, but I think it's an incredible opportunity. Look, I trust that some of my CEO skills and technology skills will be of value to the board and to you. In the end of the day, we represent you on this board. Thank you for considering me, and I trust to be involved going forward. Thank you, Graham.
All right. Thank you, David. Are there any questions regarding this resolution? Okay, no questions online. I'll move on. I now propose resolution 3 as set out in the notice of the meeting and put the motion to a vote. Please now cast your vote. Okay. We now move to resolution concerning the remuneration of non-executive directors. For the purposes of this resolution, any reference to currency is made in New Zealand dollars. Resolution 4 proposes that the maximum annual remuneration that can be paid to all of the non-executive directors will be increased by NZD 800,000 from NZD 1.4 million to NZD 2.2 million with immediate effect. The proposed new remuneration cap reflects the significant growth in the size, value, and complexity of Xero's business, the resulting increase in director workloads and responsibilities, and the need to attract top director talent worldwide.
Earlier this year, Xero completed a review of non-executive director remuneration that was based on a benchmarking process for director fees in our key geographies. Targets for director fees were decided by the board based on the research of an external remuneration consultant. The slide on the screen, which I recognize you may not be able to read, but it is available on the ASX website, so if you'd like to study it in more detail, please feel free to do so, shows the new target director fees that apply by region, both for fiscal 2020 and 2021. The proposed new remuneration cap reflects the findings of this benchmarking exercise. It's worth noting that not all of the increased remuneration cap will be used at the current time. If shareholders approve Resolution 4, the total fees for eight Xero directors would increase from the current total of NZD 1,399,000 to NZD 1,622,000.
That's an increase of 16%. Could you just move to the next slide? This slide on the screen shows the breakdown of the total of NZD 1,622,000 by individual director. So the 1,622 number is at the very bottom right. Assuming that the director who succeeds Bill Veghte will also be located in the U.S. We've made that sort of assumption given the background of the person that we're seeking for that role. There's no intention for any further increases in non-executive director fees to be made before April 2021. The remainder of the proposed increase in the remuneration cap provides a buffer that will, among other things, allow Xero to appoint highly qualified directors in the future. The board is currently actively recruiting two directors, one with a digital product technologist skill set, and one with a finance, audit, risk, and governance skill set.
Other reasons for the buffer in the remuneration cap include flexibility in structuring board committees as Xero grows, and a potential remuneration review for directors that, if it occurs, would apply from the 1st of April 2021. I note that voting exclusions apply in relation to Resolution 4 as set out in the notice of meeting. Xero will disregard any votes cast by non-executive directors or their associates unless they are voting as proxy for a person who is entitled to vote and they vote in accordance with the direction on the proxy form. Are there any questions regarding this resolution? Okay. Gentleman here, can we have a microphone?
Thank you. Tony Mitchell, the chair of the New Zealand Shareholders' Association, and also proxy holder for the New Zealand shareholders, but also the Australian Shareholders' Association as well. Thank you very much for the opportunity to talk, and congratulations on your results to date. Look, first of all, I'd like to say that representing the shareholders, we understand the importance of having the right director talent on the board. The shareholders see that as a key tool and a key opportunity to be able to get the most out of the organization for a return for everyone, for the shareholders, but also for the organization, for the employees, and for other stakeholders as well. We don't take this decision lightly. We understand that it's a key tool for the appointments panel to be able to get the right people.
We also understand that with what Xero's trying to achieve with global growth, getting the right people overseas is paramount for you to be able to achieve that. We also believe that having the information for the shareholders to be able to make an informed decision is very important as well. Over the years in New Zealand, over the last five years in particular, we've been able to have good engagement with most companies, listed companies in New Zealand, to be able to talk through the remuneration and be able to get a greater understanding and insights into some of the detailed report behind. We'd note that we have had this in the past with Xero as well.
Our concern is that with Xero now being listed on Australia and with different norms over there and with the growth to go overseas, we're not getting, or we did not get the same amount of detail that we would have expected and that we do get from other companies. Xero is proud to call itself a New Zealand company still. We're hosting the AGM here today. We have seen a change in the amount of disclosure that we have had, that we have enjoyed. We have tried very hard with Susan to be able to work on that, and you have provided information since. We thank you for that. We're still not at the same level of understanding the detail so our shareholders can make an informed decision. This is not about the size of payments that are chosen to be put forward here today.
It is about the process of disclosure that allows the shareholders to be able to make an informed decision. For that reason, the New Zealand Shareholders' Association has voted our proxies and the Australian shareholders' proxies against this resolution. I'd like to give Susan, obviously, the opportunity to share more information if there is, to help enlighten the situation on the decision for not disclosing as much information as we used to. Thank you.
All right. Thank you. Susan, would you like to-
What do you think, or would you like to?
Well, I think I'm going to respond to that and then, if Susan wants to weigh in as well, that's great. Obviously, we note your comments, and, clearly, you're absolutely entitled to your view, and we take all the comments and views of our shareholders to heart, so we will definitely have a discussion about it. I think our sense was we've been through a very robust benchmarking process. Obviously, a little more complexity than most companies because we're benchmarking in many jurisdictions, if you like, including North America and Europe. A lot of work went into it. When we arrived at our final targets for the directors, we felt that they were all very reasonable, middle-of-the-road kind of numbers for each of the geographies that we're seeking to recruit in. Indeed, obviously, have sitting directors now.
It didn't feel like there was anything, let's say, outside the normal bell curve of director fees. Secondly, we took the opportunity when people did ask us for more information, we did actually provide these two slides that literally shows, A, the targets, the changes from the previous targets for each director in each location, and then also added that additional information about exactly what each director was paid for the previous period and what they will be paid going forward. It's a pretty normal increase at 16% over two years. We've committed to not increasing any further for another two years. With all that, we felt it wasn't necessary to provide the actual benchmarking information. However, we obviously are mindful of the comments you've made, and we'll consider that. We'll certainly have a good discussion about it.
I'm sure the RemCo, the people in the remuneration committee, will have a good discussion about it. Susan, anything you want to add to that?
I'd say thanks, Tony. I think I really do value the input and the conversations we do have. That's the starting position. In terms of our own process and how we look at this, our job around this table is to sort of weigh up all the stakeholders' viewpoints, then land on a decision in the end. Graham's talked a little bit about the process we followed. Being ASX listed, we did look through what is market expectation for the ASX 100 companies. Ironically, we even looked at the ASX itself in terms of how it disclosed this information and its notice of meeting. We also looked at the practice across the ditch here in terms of composition of company shareholding base and what expectations they might otherwise have. The other piece I'd factor in too is engaging a global company to produce a benchmarking report.
I think for the rest of the room, there's two issues here. One was our notice of meeting clear enough? The second one was the Shareholder Association was keen to see the actual benchmarking report. In terms of the notice of meeting content, hopefully I've given you a little bit of guidance as to how we looked at bearing in mind the resolution is for increasing the share pool. The information which we've released today is more detailed than the pool. It's about individual remuneration, but we're comfortable doing that. The second point is a global benchmarking report. Do we release the whole report? Many of you in the room will know that some people's lives and wellbeing survive on producing expert opinions and reports around the globe. That is their IP. That's what they do.
At the end of the day, we're not at liberty when you engage a report without consent to release it. The other issue too you've got to think about is treating all your stakeholders fairly and equitably. We have large proxy holders sitting within our register now, and we've got to make sure we release the same sort of information. We believe that we are elected here to take all of the stakeholders' interests. You try, but you can't keep everybody happy all the time. Look carefully to make sure you've provided reasonable information to pass the resolution, but not compromise the legal rights of others that sit within that framework as well. I think we felt we had reached a nice balance there.
The fact we've got Tony standing up saying, "Look, I'm still uncomfortable," probably means we need more of a conversation, and we're open-minded to that. I guess also looking at the support for this resolution, albeit on 40% at 99.61%, it does send us a message that many of our stakeholders were relatively comfortable with our process on this. Yeah. As I say, Tony, let's keep talking.
All right. Any other questions? There are no questions online. I now propose resolution 4 as set out in the notice of meeting and put the motion to vote. Please now cast your vote. We now move to resolution 5, which seeks shareholder approval under the ASX listing rules for the issue of shares to Lee Hatton in lieu of receipt of her director's fees in cash. ASX listing rule 10.11 requires shareholder approval for share issues to directors as related parties of the company. In the board's view, allowing directors to receive their remuneration in the form of Xero shares can motivate and reward long-term decision-making through the aim of creating and maximizing shareholder value. The value of shares issued to Lee at the time of issue, taken together with all director remuneration, will not exceed the board remuneration cap.
I note that voting exclusions again apply in relation to resolution five as set out in the notice of meeting. Xero will disregard any votes cast by Lee or her associates unless they are voting as proxy for a person who is entitled to vote and they vote in accordance with the direction on the proxy form. Are there any questions regarding resolution five? Okay, no questions online. I now propose resolution five as set out in the notice of meeting and put the motion to vote. Please now cast your vote. All right. That concludes the formal business of the meeting. We'll now move to the presentations from Kirsty and Steve. Following these presentations and shareholder questions, the meeting will be formally closed. Thank you, and over to you, Kirsty.
Thanks, Graham, and thanks to all of you in the room and on the webcast for being part of our annual meeting today. While Xero's global reach is extending, it's great to be here in New Zealand, where we began. To be discussed, we'll be going through the financial and operating performance for the year ended the 31st of March 2019. As the charts on this slide show, there are a number of clear proof points in our FY 2019 performance that validate Xero's business model. Firstly, Annualized Monthly Recurring Revenue, or AMRR, is an important indicator of how our business is performing and the value of our customer relationships. In FY 2019, AMRR grew by 32% to NZD 638 million. That's an increase in AMRR of NZD 154 million over the prior year.
To put the scale of Xero's growth in FY 2019 into perspective, incremental revenues added in FY 2019 equate to the entire size of Xero just four years ago. Back in 2015, total AMRR of the business was just NZD 159 million. Looking to the second chart. Over recent years, our progress on free cash flow, comprising operating and investing cash flows, excluding M&A, has been and remains an important and improving indicator of our ability to fund our own growth. In the past four years, Xero has made significant and positive strides with our first ever positive free cash flow result of NZD 6.5 million in FY 2019, equivalent to 1.2% of operating revenues. The 31% growth seen in our subscriber numbers over FY 2019 reflects the business's continued strong traction, with particularly strong progress in international markets.
A net 432,000 subscribers joined Xero in FY 2019, taking overall subscriber numbers to more than 1.8 million. These are strong numbers, but with an eye on our global ambitions, FY 2019 was more pleasing in the international net subscriber additions with 239,000, and for the first time exceeded those from the ANZ region of 193,000. Other financial highlights in FY 2019 provide further evidence of Xero's continued progress in a number of areas. I'm not going to revisit the metrics already mentioned, but I do want to call out that while we had great subscriber numbers, we also held our average revenue per user trends. Operating revenue for the year increased 36% to reach NZD 552.8 million, and the EBITDA result, excluding the impact of impairments, increased by NZD 42 million to NZD 91.8 million, also demonstrating great progress. Lifetime value, or LTV, is a key metric used across our business.
LTV guides decision making on where and how to invest. It also measures the success of the business by quantifying the value created in the period that isn't captured in any other place in the financial statements. Overall, LTV per subscriber climbed 3% in FY 2019 to NZD 2,398. This was driven by a move up in both ARPU and gross margin, while churn trends were consistent with the prior year. With the increase in lifetime value per subscriber and a 31% increase in subscriber numbers over FY 2019, total lifetime value added in the year was over NZD 1.1 billion. This took total lifetime value to NZD 4.4 billion, up 36% on the prior year. Reported EBITDA in FY 2019 increased by 52% to NZD 73.2 million, including impairments of NZD 18.6 million and acquisition-related costs.
Excluding both share-based payments and impairment charges, EBITDA improved by NZD 54 million to NZD 120.7 million year-on-year, an increase of 81%. As you can see from the slide, EBITDA margin, excluding share-based payments and impairments, improved by five percentage points to 22%. Underpinning the FY 2019 financial performance were a number of favorable operating trends that demonstrate Xero's increasing scale. Gross margin of 84% improved by two percentage points over the period. This was driven by the launch of Xero Central, which utilizes machine learning to drive lower customer services costs, and also efficiencies in our cloud hosting costs. Customer acquisition costs, or CAC, also improved by two percentage points to 45% as a percentage of revenue, despite significant growth investment in both new and existing markets. Product investment spend, including OpEx and CapEx, reduced to 31% of revenues, down from 35% in FY 2018.
This is while we've continued to launch new products and features. Some of these have included Making Tax Digital features for VAT in the U.K., email to bills, profit and loss at a glance on mobile, and a new global bank API. Coming back to cash flow. As I've mentioned, we passed an incredibly significant milestone for Xero in the FY 2019 results by delivering a first positive free cash flow result. Free cash flow of NZD 6.5 million was an improvement of NZD 35 million from last year's negative NZD 28.5 million. Total operating and investing outflows for the year were NZD 26.2 million, with operating cash flows up NZD 53 million or 87% from the prior year of NZD 114.2 million. We finished FY 2019 with a capital structure optimized for Xero's future strategic and financial needs.
The combination of the $300 million convertible note and positive free cash flow will support both organic and/or inorganic growth opportunities. Total cash and short-term deposits at the 31st of March 2019 were NZD 458 million. Deducting the liability associated with our $300 million convertible note, net cash at the end of the period was NZD 101 million, an increase of NZD 21 million from FY 2018. Alongside these resources, we continue to maintain our existing undrawn NZD 100 million standby debt facility. The underlying elements of our SaaS business model continue to drive a strong track record of value creation. We anticipate our focus on the metrics that matter, particularly CAC months, LTV to CAC, ARPU, gross margin, and churn will continue to power further significant long-term value in coming periods.
I'd like to explore a couple of these metrics a little further as they provide strong justification for us to continue investing in the growth of our business. In FY 2019, CAC months of 13.6 indicate the time it takes for us to recover the cost of acquiring a new subscriber through monthly subscription payments. Essentially, the payback on capital deployed is really quick, currently taking just over 1 year. An LTV to CAC ratio of 6 is a very strong indicator of the value created by adding a customer to the platform. Effectively, we add NZD 6 of lifetime value for every NZD 1 we spend on CAC. Lastly, as I mentioned at last year's meeting, we adopted 3 new accounting standards in FY 2019. We restated our FY 2018 comparatives to reflect these changes.
On a restated basis, FY 2018 EBITDA benefited by just over NZD 22 million, NZD 11 million of that related to the deferral of commission costs under IFRS 15. The other NZD 11 million was due to the changes made to operating lease costs under IFRS 16. IFRS 9 was also adopted, but this didn't have material impact. Overall, the introduction of the new standards resulted in a small improvement of NZD 3 million on our restated FY 2018 net loss of NZD 24.9 million. With that, I will hand over to Steve for his update. Thank you.
Well, thank you, Kirsty, and good morning, everyone. It's great to see you all here. Thanks for joining us, whether you're here physically or virtually. It's great to have the opportunity to talk more about Xero and our vision for the future. As Kirsty very articulately just took you through, it was a great year, fiscal year 2019, with great progress on top-line revenue, cash generation, and clear signs of increasing profitability. It is the kind of result that only happens when you have employees, when you have people in your business, partners and customers, who truly believe and appreciate the value that we can and do deliver. I really want to start by acknowledging and adding to Graham's acknowledgement of our people around the world, we call them Xeros, for the strong results that they produced during fiscal year 2019.
I also do want to thank our partners and customers for the trust they place in us and the commitment they show to our company and the community that we are building around the world together. I want to also make a special thanks to our board. We have a world-class board with great passion for our company who work very hard. I want to thank Graham, our Chairman, and to the whole board for their support during my first year as CEO. Special thanks also to Rod for his support during that transition, and David, great to have you join, and Susan, congrats on your very well-deserved re-election. That's great to have you guys with us. It's been a big year, and each day the opportunities for Xero are clear to see. We are not short of many opportunities.
Over the past year, I've had the chance to really get to know what I know Graham and others have referred to as a very rare and special organization. It really does start with our purpose. It's interesting, Susan referred to it, Graham referred to it. It is about this purpose that we are very convicted about, around making life better for people in small business, their advisors, and their communities around the world. Small business is family, small business is community, we are very fortunate to be very focused on the contribution we can make to them in improving and helping, contributing to their lives. This is not something we make up. This is the feedback we get. We had a board management dinner with a nice group of customers and partners last night, small business customers and accounting and bookkeeping partners.
At the same time as getting very constructive feedback on the things that we can do better, and that's really the key purpose of those meetings. We also were told many stories of how Xero has contributed and changed the lives of the people that we connect with. It's very, very important to us. I think also in reflecting on our mission, given the pace of change in our business, it's really important that we constantly test and retest the value that we're bringing to our customers and partners. We need to stay relevant in every respect. Recently, as part of our strategy process, we refreshed our mission statement, which you can see there is about rewiring the world of small business, making it seamless, simpler and smarter.
We do this by helping to better connect small businesses to their key stakeholders, to take the friction out of running a small business, and to allow them to focus on what's really important to them, which is doing what they love doing and obviously delivering to their customers. Anything we can do to help them save time, to provide insights, to make their business more successful, is key to where our current and future value lies. This is, in a broad sense, represented in the repositioning when we talk about Xero from beautiful accounting software, which is still very much in our heart and soul, through to beautiful business, which is a much broader ability to connect and extend what we do to deliver value to our customers. Beautiful business also means being a good corporate citizen.
We have reached a level of maturity as a company and recognize and appreciate the responsibilities that are associated with that. It's really important for us to understand and support the expectations of the communities in which we operate around the world. This is why we've increased our focus in the area of Social and Environmental Impact. We've appointed Anne Ascharsobi as our Head of Social and Environmental Impact to steward our strategy and programs. We're handling this important initiative as a key priority of our strategy and our operations that flow from that. Our efforts are focused from the inside out, recognizing the integrated nature of Social and Environmental Impact on why we do what we do and how we do it.
Already in place are programs to improve our carbon footprint with offsets for air travel, along with waste management, recycling, and energy use initiatives across our offices. In talking about Xero's strategic priorities, it's worth just reflecting briefly on some of the significant trends and drivers that really impact and also support our business going forward. These touch on industry, regulatory, and technology shifts. We're seeing, obviously, an increasing trend in the use of cloud technology across the world in all contexts. Particularly, we can see the relevance of that in the small business segment.
We're seeing governments increasingly driving the digitization of tax systems and compliance systems, including the moves in the U.K., for example, in Making Tax Digital and similar actions around open banking, Single Touch Payroll, and payday filing, as two examples in Australia and New Zealand, where governments connecting with business digitally is a very strong driving trend. We're also seeing new opportunities in innovation and disruption in financial services, which does present new ways for businesses to get access to capital and manage their funds. Who knows? We may be truly heading towards a cashless society at some stage in the future. For us, being born in the cloud means these trends are at the heart of what we do. It's at the heart of our vision and provide a tremendous opportunity and context for our priorities.
Those priorities are really three things: To drive cloud accounting growth, to grow the small business platform, and to build Xero for global scale and innovation. These three anchors are what we really reflect on regularly as we look at our business and how we develop it. Starting with the adoption of cloud accounting, I think this is a really important one to reflect on and to discuss the progress that we're making. Our biggest immediate opportunity is really to keep driving the growth of our core accounting offering in our existing markets, as well as looking to further opportunities in other geographies. The opportunities here are significant because you consider the current level of adoption of small business cloud accounting globally is estimated to be less than 20% of the total potential market in the English-speaking countries in which we operate.
The level of adoption in Australia and New Zealand is much higher. It's around 50%, as you can see. That's a testament to the product innovation Xero has pioneered over the past decade, and also the fact that those mega trends and conditions I mentioned have been very positive in supporting the growth of our business in Australia and New Zealand. In terms of what we delivered in fiscal year 2019, our progress was strong, with a net 432,000 subscribers joining Xero over the year, growing our overall subscriber numbers to more than 1.8 million at the end of March. That's growth of 31% on the prior year. As Kirsty mentioned, we're very pleased with the progress we made outside Australia and New Zealand, which underscores the increasingly global makeup of our business, and the standout result there for the year was in the U.K.
We see that strength continuing as the U.K. Making Tax Digital initiative continues to encourage more and more businesses to be digitally connected. We added 151,000 subscribers in the U.K. in fiscal year 2019, with 108,000 subscribers added in the second half of fiscal year 2019. We see this continuing with compliance-driven demands for Xero's cloud accounting products being a continuing and strong trend. Moving on to the second area, which is about our small business platform. This is central to our future and core to our strategy. Xero's birth in the cloud established us as a platform for collaboration between advisors and small businesses. It's from these origins, we're able to extend the platform beyond bank feed connections that provide even better data and information regarding the financial performance and health of small businesses to many other applications that connect with Xero on the Xero platform.
We now have over 200 connections to banks and financial services providers around the world, and our near-term focus on continued platform growth is about driving workflows and deeper partnerships with financial service providers, especially in the area of payments, where we've extended our partnership recently with Stripe, a leading payment provider, to deliver a seamless payment service integration into Xero's core invoicing workflow. We're also pursuing opportunities to better leverage our ecosystem of more than 700 application solution providers. As we've increased our focus on the growth opportunities, it's become clear that our platform strategy is embedded in every aspect of what Xero does in our core technology, product, partner, and corporate strategy functions.
Essentially, as time goes on, the distinction between core accounting or cloud accounting and Xero as a platform becomes very much unclear because the two are one and the same or extend from one to the other. In terms of the performance of the small business platform and the new revenue streams we see around that, we've continued to progress in commercializing this opportunity. Platform and other non-core accounting revenues grew 63% year-on-year, and from 7% to 9% of our total revenues. In the form of add-ons such as expenses, payroll, adjacent products, also Hubdoc and our financial transaction revenues, those all collectively grew by over 100%. Finally, building on for global scale innovation. This is our third strategic priority, and it's incredibly important.
In FY 2019, we took a number of strategic steps to build the foundations of a business that in three or four years will be significantly bigger than Xero today. During fiscal year 2019, these steps included our acquisition of Hubdoc back in August of 2018, as an important step towards our vision of code-free accounting. We're very pleased with the performance of Hubdoc since we acquired the business, and we're excited about how we can further leverage this technology to better serve our customers and partners and improve the workflows they care about. While smaller by comparison, the acquisition of Instafile in the U.K. helps us accelerate the adoption of cloud accounting in the U.K. This is because we're building the acquired capability into our U.K. Xero tax offer, which we expect to see having the same acceleration of adoption that similar functionality provided us in Australia and New Zealand.
Making those workflows that accountants and bookkeepers and small businesses require to execute as efficient as possible. Graham touched on the convertible note issue, as did Kirsty. We raised USD 300 million in capital. That has given us financial flexibility to support our platform strategy. We're continually evaluating a range of potential M&A opportunities that we screen based on how they support our strategic priorities. As Xero continues to grow, investing to build capabilities to support global scale and innovation includes a significant focus on growing talent and improving our business processes, all our business processes for operational excellence and scale. During the year, we focused on continuing to develop our capabilities across technology, product management, strategy, and M&A. We have also brought a number of senior people into Xero to strengthen our capabilities in those areas and our leadership team.
In the first few months of fiscal year 2020, we made two further key appointments to our team. Tony Ward joined us as President of the Americas, responsible for leading our business across the U.S., Canada, and South America. Tony brings tremendous technology industry sales, marketing, and product management skills to Xero, having held senior positions at Microsoft, LinkedIn, and most recently, Dropbox. Tony's Canadian born and bred and also has lived for many years in New Zealand and Australia. We also appointed Damien Tampling as our Chief Strategy and Corporate Development Officer in May. Damien joined us from Deloitte and brings deep technology and digital experience from a consulting, business management, and investment perspective across many industries, including financial services.
How we partner and what we acquire are critical to realizing the long-term value of our small business platform strategy, and Damien does lead these strategically significant areas of the business. We're also announcing this week that Keri Gohman has decided to leave Xero after three years with us to take up another career opportunity. We're extremely grateful to Keri for the contribution to Xero in her roles, leading the realignment of our business in the Americas, and more recently, in leading our small business platform team. As I mentioned earlier, our platform is core to everything we do. Going forward, we're building on Keri's work by aligning deeply into the core technology, product, and corporate management and corporate development functions, while maintaining specific focus on payments and the development of our application ecosystem under the specialist executive leadership and business units we have in place.
We wish Keri well in all her new endeavors. Pardon me. Lastly, the outlook for fiscal year 2020, which is unchanged. Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated subject to investment criteria and market conditions to drive long-term shareholder value. Free cash flow in the financial year to 31 March 2020 is expected to be similar, proportional to total operating revenue to that reported in the financial year to 31 March 2019. I started today by saying how excited I am by the opportunities we have, and the value that Xero can bring and is bringing to small businesses and their advisors around the world. We have a unique opportunity to bring greater value to a segment of industry and our community that has for far too long been underserved.
On behalf of our whole team here today, we are proud and privileged to be in a position to make life better for people in small business and their advisors, and we'll continue to seek and to deliver value to them, and to you, our shareholders. Thank you to all of you. On that note, I will hand over to Graham before he opens the floor to questions. Thank you very much.
All right. Thank you, Kirsty, and thank you, Steve. All right. We get to the point of the meeting now. Are there any general questions that you might want to ask either the board or management? Gentleman here, row three. Yes. No red cards.
Yes. Good morning. I'm Colin Upchurch, shareholder. Just a couple of comments and a little bit of feedback. First of all, I'd like to say I'm pleased that the company is still growing. I think you deserve some congratulations for the ethic you're putting in there. Of course, we're all looking forward to further growth in the future. This is just the beginning, I feel.
Yes.
The second thing I'd like to just say, I'm very grateful for the choice of the venue for the annual general meeting.
All right.
I wasn't at all confident that I would ever have the chance to attend an AGM of Xero ever again once the company moved to the ASX. I'm very pleased to say that that was a really good move. Let's hope that most of the AGMs can be here. I'll leave that for the board to discover. A couple of other things. One is, I was absolutely flabbergasted at the first AGM I've been to of a public company where there are no annual reports available when you arrive.
Okay.
I found that most unacceptable.
All right.
I know we're a digital company. I know you can get it online. When you come to a meeting, it's not too hard to just pick up a report at the door and check out IFRS 19 and whether or not we've had a benefit or a cost for implementing new rules.
Do you mean noted?
That would be really great if you could.
Yep
conform to the norms. The other thing is, this is a very fast-moving company. Let's hope that that speed continues. I'll just ask the board to consider, is four and a half months a good timing between the end of the financial year and when the AGM is? I know there are a lot of factors that go into that because we're a public company, but I think that's really quite slow to have the annual general meeting at this time when the results relate to March. I'd ask you to just consider that, and if there's any possibility of speeding it up, I think that would be beneficial.
Yeah, I can respond to that. First, thanks very much for your comments. I'm glad we have made you happy by having the AGM here. It's certainly great to be in Xero's home country. We will certainly have some annual reports available next year. Yeah, no issue with that. The reason why the timing is driven really by board meetings because we have directors coming in. The directors all like to be here at the meeting. Just the cycle of meetings that we have that matches with the company, we would be hard pushed to have the AGM in our May meeting because it would be really quite close to the year-end. We will note your comments.
We'll see if there's some other things we can do, but it's largely just not wanting to request primarily Dale and myself to making another big long-haul flight just for the AGM. We'll look at it, but that's unfortunately the reality of why there's a substantial amount of time between the end of the year and the meeting. Thank you. Any other questions? Yes, gentleman here in row three.
Tony Sullivan, shareholder. It's now, as the previous gentleman said, four and a half months since the end of the financial year. I wonder if Steve could give us an update of where the subscriber numbers are sitting now.
All right, Steve, I don't think you can.
No, unfortunately, I'd love to, but I can't. I really can't. Thanks for the question, but I would be getting in a lot of trouble if I did.
No, it would be a selective disclosure issue. Obviously, we have a twice-a-year reporting cycle, and we will update you at the next appropriate time. Gentleman there.
My question may be in the similar category, but to Steve, the cash you've raised to make purchases, is there anything you can reveal? Obviously, payments is one strategic line you're pursuing. Is there anything you can reveal at this meeting in terms of what your other strategic?
channels that you're looking at with that cash?
Yeah. Look, unfortunately, I can't say anything specific. Obviously, when there's news, you'll be the first to know. There's certainly a tremendous amount of work going on. There's also, by virtue of the opportunities we have, many different dimensions to what we might do. We're doing some really thorough work around this, considering a number of different potential pathways. We'll be sure to let you know once we land with a very clear and specific outcome there.
All right. We have a question actually online. I know there's other questions here. I'll come to you in a second. There's an online question. I think, Steve, you should take this. Can you talk about your strategy and progress in the U.S. market specifically, please?
Look, I'd say overall with the U.S. market, it's very much about the focus we now have on executing the strategies and the actions that worked for us elsewhere. We repositioned the business almost two years ago to really orient it towards executing what we call the playbook, and that playbook has three elements to it. The first is about really driving the connection and relationships with accountants and bookkeepers. We just recently had XeroCon, in San Diego. We had 1,000 people turn up. Tremendous enthusiasm for what we are doing, and accountants and bookkeepers there who have been with Xero on the journey for a while, but also many new ones. We see, in a sense, that there is that interest and opportunity in that market.
The second is the bank feeds and connections with banks, which takes time in these newer markets, and particularly in countries where perhaps the banking systems aren't quite as progressive as they have been in Australia, New Zealand, and the U.K. The U.K.'s financial services is definitely moving into very strong innovation. That's the second element. We have to be patient, work hard to execute to get those connections. The third then is the different things we have to do to address the local compliance requirements in that market. For example, in payroll, we were trying to build a payroll solution. We changed strategy because the U.S. is many different markets within one. We have to be very clever about where we invest to meet the market and to meet the needs of our customers around tax and other compliance needs.
We're definitely working on that, and we just have to be patient. We've got a really great bunch of people over there working hard, and I would just say we are patient and watching the progress very carefully.
All right. Gentleman down there.
Peter Pan, shareholder. I'm interested in just focusing on Australia and New Zealand for a moment. You mentioned that approximately 50% of small businesses have moved to the cloud. I'm interested in two things here. One, at some point, we could expect the number of subscribers to start to plateau as we reach saturation point. Also, if you could give us a picture of where the market share lies with other cloud providers for small businesses.
Yeah. Sorry, Chair.
Yeah, no. Go ahead, Steve. Yeah.
Well, you make a good observation that at some stage you get a penetration in number of subscribers that might I hate using the word saturation because I think that is the last word we should be using at Xero. The truth is, we do have connections to many, many small businesses in Australia and New Zealand, but there's tremendous opportunity for us to upgrade the depth of their subscription. My friend Craig Hudson here, who opened the meeting, is leading a lot of our strategic thinking around this in New Zealand. That's really about upgrading subscriptions to be using subscriptions that have more functionality. There's the ability to buy additional products today, payroll, expenses, projects. We have more in the portfolio. We'll also partner more with our app ecosystem over time to put more solutions in place.
In fact, Craig and the New Zealand team are focused on segments of the market now, agricultural customers, and they're moving into other verticals as well. There's enormous opportunity for us to go beyond the base subscriptions to providing those customers with more value, and also the benefit of financial transactions like payments and services like that. In no way, whilst we might see the numbers at 50%, we don't relate that to the total revenue opportunity for Xero because there's subscription revenue, but there's also services opportunities that are evolving. In terms of market share versus our competitors, look, I can throw numbers out there. I'm not sure that we have I don't think there's an official referee on this. It's not an industry that has a third party that can tell you.
I'd feel a lot more comfortable, by the way, if it was a third-party source. Clearly, we do have significant market share in Australia and New Zealand. The truth is, by no means do we take that for granted. This is a competitive industry and one that's changing all the time. Our focus is on the customer, and I know that Craig in New Zealand and Trent in Australia are really focused on how do we provide our customers with more of the benefit that comes from being connected in the cloud. Thanks for your question.
Gentleman in row two.
Thank you. Tony Mitchell, New Zealand Shareholders' Association. I'd just like to firstly congratulate management on the reports that we've seen and the achievements today. Not only does it show there, I actually work very close to where you are in New Zealand. In fact, my office is the old office above La Cigale, and you've left it very well kitted out for us, so thank you very much. What I see is Red Rabbit Cafe. It's a favorite cafe for all the Xero people. There's a lot of happy people having great conversations, nothing confidential, by the way, just to everyone's rest assured. What I see matches what you actually say up here as well, with the people and the energy. Congratulations on that.
My question is not to management, it is to the board, and it is to the directors. We've talked a lot about the growth opportunities, but as we know, part of the board's responsibility is to really navigate their way through the big risks as well. I'd like to know what you see as the three big risks, and not just what they are, but I'd also like to know how you're measuring them, and then also how you're checking what management are telling you that they're doing to negate them as well. Those three things would be much appreciated. Management can have a rest for this question. Thank you.
Okay. Well, I'll start maybe on that, and then Lee, I think you can certainly contribute. I think clearly the board fundamentally is there to sort of judge the strategy of the company. I think strategic risk, by definition almost, is the most important activity that the board addresses. The way that I think about that, and again, other directors can weigh in after this, is to really try and make sure, A, that the company is focused on the big opportunities. Secondly, that they're allocating capital. I don't just mean cash, I mean potentially cash, but also resources, people, on those big opportunities, and that we're measuring those initiatives that the company's undertaking.
I think over the last year, one of the great things that Steve and the team have done is really get a lot crisper about what are the opportunities the company is pursuing and what are the resources that are being brought to bear. Again, unfortunately, what are some of the things that we can't prioritize because there's too much to do. I think that's a lot of strategy as well, is deciding what not to do. To answer your question on the measures, clearly each of those, so one of them might be, I'll tell you, win in the U.K. That's one of our strategic initiatives. That would have very clear sort of revenue, new recurring revenue sort of measures. It would have some market share information. It would have product ARPU.
A whole set of measures around our activities in the U.K., but we see that as a very competitive market, but a very big and important market. The second largest risk, I think, fundamentally that any cloud company faces is, and it's a reputational risk as well as a customer risk, which is around security. Data security, network security. It's not just security, it's availability and scalability of the platform. We've gone from, you've already heard, a few hundred thousand subscribers a year ago to close to 2 million, and clearly still growing at a very rapid pace. We owe it to our customers and partners to continue to invest in all of those three things. To say, what are the measures?
Ultimately, there are obvious measures, things like uptime and bugs, all those sort of traditional software measures that we have that relate to software performance. In terms of security, the audit and risk management committee specifically meets with both the CTO and the head of security, at least twice a year to sort of review what their activities are, what they're working on. Clearly you don't have a website or a business as big as Xero's and not have people trying to do bad things to you. We take that very seriously. I think probably the third thing, that once you get to number 3, it gets a little more a matter of opinion, I think. I certainly think availability long-term of talent for the company. We have to really think about how the company grows.
We love being headquartered in New Zealand, but there are obviously a limited number of technologists in the country. Over time, we'll seek to add other centers to continue to build out our product and services. There are others that I could mention, ultimately, that's about really availability of talent is sort of the measure there and how we're doing on thinking long-term about those centers. Lee, anything you want to add to what I answered?
No. That was a very good answer. I have chaired the Risk and Audit Committee now for a couple of years. I think we have continued to really build our maturity in this space, because I think we're such a fast-growing company, it's very easy to quickly focus on technical risk. What we really wanted to do was to make sure that we had a really robust framework in place so that we can categorize our risks, but see it at a strategic level, not just at a technical level. We kind of split it into kind of 4 key areas. We have the legal and compliance risk, do no harm. Financial, operational, and then strategic. Actually, we use it as a way to kind of play war games in a sense, which is scenario planning. We take the opportunity to have management.
They sit in the room, they really look at what are all the worst case scenarios that could occur for us, and how do we think about them. The flip side of that, what are the most amazing scenarios that could happen, and how do we measure against those? In Risk and Audit, we have them come back. I think last we saw, we took it down from like 100, if you took the long list. We kind of stripped it back to, I think, it got to roughly 48. We categorized them, and we made sure we put some values against them. I think every day the culture of the organization needs to be do no harm and make sure that you're focusing on the right things. I think culture really leads the risk appetite.
Having said that, we do have a process in place, and a formal process in place, that we test and push into regularly to make sure that we're adhering to our appetite.
Any other directors feel they want to add to that? Okay. Question at the back.
Yes, Ross Stevenson, a shareholder. First of all, congratulations on the results. I think growth and all that sort of stuff has been very impressive. I'm wondering about the opportunities that exist in other areas. We've seen fantastic growth in the U.K., and the emphasis obviously has been on English-speaking sort of areas of the world. Does the company have any plans about opportunities in other areas, like throughout Europe and other places? I imagine some of the difficulties might involve state-by-state stuff like in the U.S., but what plans might there be for that?
Steve, would you like to take that?
Look, it's a great question. Thank you for that. What I would say is that we're well aware of the opportunities outside the English-speaking markets. At the same time as knowing there's tremendous opportunity there for us and plenty to do because our entry into Canada was recent, entry into South Africa was recent, Asia, recent. We've only recently moved into a whole bunch of new markets in a substantive way. I would say it's sort of like a midterm strategic view. I'd say it's not something I'd expect in the short term, but it's definitely something we've got our eyes on sort of in the midterm of our strategic thinking. Thank you.
No more questions online. Any more questions in the room? Sorry, gentleman there. Yes.
My question is along the same lines, basically. In view of Halloween coming up and Brexit, do you think the U.K. is really a good market to concentrate on? Whether you might be concentrating on other places in Europe like Netherlands, Dublin, Frankfurt?
Steve, I'll let you take that.
Okay. Ireland is a market that we have our eyes, we're actually active in Ireland. The short answer, U.K. is a great opportunity for us. I think you have to look long term when you make that assessment. While obviously the challenge is there, I'm not sure I should throw this at my dear director friend, Dale, but we can't sort of frame our whole view of the future of the U.K. based on the current sort of back and forth on Brexit. We still are very committed to the U.K. The opportunity there, conditions are excellent for us. Our progress is very strong. Yeah, we've got to be concerned about what's happening there in the short term, but longer term, this is a very, very important market for Xero.
All right. Any more questions? Doesn't look like it. Okay. That brings us to the end of Xero's annual meeting for 2019. In a moment, I'll formally close the meeting. If you are intending to vote on the formal business of the meeting, please use the online platform or the LinkVote app. Equally, you should now finalize and submit your votes as voting will close in five minutes' time. If you hold a yellow voting card, please make sure you have marked your votes on that card now and hold it up for collection by a representative from our share registry. Okay, there's a few to collect. As mentioned earlier, the results of the voting will be released on the ASX platform once the votes have been counted following this meeting. I want to thank you all again, both here in the room and online.
It's just been obviously a great year and we're so excited about what's to come. Look forward, hopefully, to seeing you all next year. I now declare the meeting closed.
Thank you.