diversity.net.nz

	Dear shareholder, We thought you would be interested to read Xero’s latest market announcement, which is included below. It was released to the NZX today. As always we appreciate your feedback – if you’d like to make contact please email us at investor@xero.com . Best regards, Rod Drury CEO & Founder 24 August 2007 Xero moves to General Release Xero Live Limited (“XRO”) today announced the move to a General Release of its small business accounting software. General Release means Xero now has systems and processes in place for expected future growth, including streamlined customer sign-up and the introduction of a Xero “demo” for prospects wishing to trial the software. Xero has been releasing software approximately every three weeks, in line with its schedule. This frequent release of functionality is underpinned by Xero’s unique Software as a Service business model, where software updates are delivered over the Internet at no additional cost to the end user. Xero’s move to General Release confirms the company’s goal set out in its Offer Document that it would have the operational capability required in August to move from Limited to General Release. Xero Chief Executive Rod Drury said the company had achieved another key milestone. “Since we listed 11 weeks ago we’ve had our heads down building a platform for growth in three key areas – building our team, delivering software and forming partnerships with accountants.” Mr Drury said the company had continued to hire the best people in a very tight labour market. Xero now has a core team of 41 people across its Wellington headquarters and Auckland offices. Xero has also made significant investment in its back office management systems, which are fundamental to building a scalable business. Xero’s marketing activities since listing have primarily concentrated on accountants. Xero’s national roadshow in August introduced Xero to the New Zealand accounting community. “Accountants are key advisors for our target market. Their input helps us refine out product roadmap so we can create the most compelling offer for all small businesses,” Mr Drury said. Xero’s Partner Programme for accountants includes a listing on Xero’s “Find An Expert” section of its website, training, and joint marketing to small businesses. As Xero moves into General Release its sales focus will initially be on a small segment of the overall target market. “We are confident we have a great product for start-up and professional services businesses. This is where we’ll be focussing our initial customer acquisition activity while we continue to create a more comprehensive offering for the broader market,” Mr Drury said. “These are early steps in a long journey. We are pleased with the progress we are making, executing our plan.”