Xero Limited (XRO.AX) Earnings Call Transcript & Summary

Hello, everyone, and welcome to our investor briefing. We're really excited to share with you today some more detail on our AI strategy, our payment strategy and really have time to answer more of your questions. So with that, Claire, Diya, [ Matan ] and several of our product leaders are going to join me today, which I hope will make for a really informative session. So first, I want to start with the fundamentals. Why are we excited? I want to recap that 1 thing we're really proud of at 0 is our continued consistent high-quality growth and profitability and the focus we've had over the last 2 years on balancing that growth in profitability along with subscriber volume and value. That [ Plaza33 ] focus, we believe, have created a very solid, high-performing growth engine here at 0 that provides the foundation for these new investments. The second and most important thing, of course, is that we believe we have the opportunity to be a net winner in AI. We see ourselves as having many advantages, coupled with, of course, the need to drive strongly in this direction, but together, we believe there's an unprecedented opportunity with this technology to expand TAM and for us to serve customers better. The third and most important aspect of today's briefing is, of course, Milo. We know many of you want to go deeper on the Melia opportunity. We know you want to see demos. We're really excited along with AI demos to bring you more detail today and really to be able to answer some of your questions in this area. Okay. So what can you expect today? Well, first and foremost, the agenda will cover AI. Then we will go into the [ Melia ] opportunity, and then we will leave plenty of time for Q&A. All right. So why are we so excited about this AI opportunity? I think what we see is an opportunity for TAM expansion. And of course, this is the case with many disruptive technologies. Gartner forecast that there will be a 4x TAM expansion for SaaS companies. And indeed, my time in the Internet era, I wouldn't is both the rise of the Internet, the rise of mobile, the rise of cloud computing from desktop. And every time we see 1 of these shifts in technology, what happens is the expansion of the pie. Now what does this mean for our customers? How do we realize that value? Well, what it means is there are 4 key things that our customers are going to look to get done with AI, and we're already seeing this in truth, even in the consumer side of AI. #1, get help. If you look at the explosion of questions getting answered on Chat GPT or on Gemini or in Xero's customer support channels, it's all about getting your questions answered faster. #2, the promise of a genic AI is really getting time back. Having those manual tasks that took you a long time, including in workflows, really get reduced from weeks to hours to minutes or even having them all done for you. And that time saver is essential for small businesses. The third, of course, is the opportunity to get smarter now. Really, when we think about AI and the promise of advanced intelligence that keeps learning, we need to use that intelligence to really answer questions about your own business, again, thinking in the terms of our customers to get smarter now on their entire business operation. And then lastly, of course, the opportunity for any 1 of our customers is to unlock growth. And they will look to a disruptive technology like AI to help them not just get help, get time back, get smarter, but really get to growth. And that is the ultimate opportunity for any new technology to be able to enable. Now within this, of course, Xero's critical role to place starts with our positioning as a system of record. We are indeed a system of record for our customers. That means we hold their data. We actually process that data. We have a proprietary data set. But that comes with customer trust, privacy, security, many of the things we promised our customers over the last 20 years. But that positioning allows us to build context smarter and more accurate intelligence in our models, when combined with horizontal technologies and LOMs and of course, take more intelligent action on behalf of our customers. So we see this as, if you think about it, a triple threat. Really, it is the coming together of system of record evolving to be not just a system of action to give you time back, but a system of decision-making when combined with the intelligence of AI. Lastly, I want to talk about the other advantages that Xero brings to this equation. It's not just our data, first-party, third-party extraction, intelligence, accuracy, these are all things that we will seek to process in our data layer. But remember, we are also a domain-specific software platform and 2 words are key there, domain and platform. #1, we have been built on deep customer understanding of financial operations for our target segment, which is small businesses. And by the way, we have that domain out in multiple geographies around the world. #2, that domain-specific knowledge goes across multiple jobs within the financial operations stack. So we understand payroll, accounting, payments, bill pay invoicing tax preparation, analytics, expense management. These are all of the sub jobs within the Xero platform while sitting in that deep vertical domain. The third advantage, of course, is our GTM capabilities. If you think about Xero -- Xero has been built as a multichannel multisegment platform against across numerous domains of acquisition of customers, this includes PLG motion where we acquired directly, an increasing inside sales motion Certainly, we're outbound and we have a channel motion to accounts and bookkeepers. We have, of course, over 250,000 accountants and 4.5 million subscribers we acquire we've acquired over the years. And if you put that together with new and emerging distribution platforms, of which actually the LLM are 1, we have the ability to keep scaling efficiently our ability to acquire and retain subscribers. And that, in and of itself, is a value-added layer at Xero that helps us keep driving to scale. So now what I want to do is turn you over to Diya, who's going to go through and recap the pillars of our AI vision and how we're bringing them to life by showing you some demos.

Thanks a good. Now in addition to the advantages that Sukhinder talked about, we have a strong, clear and differentiated AI strategy that we know and meets the needs of our customers. And we know this because it is built on decades of experience working with them in the trenches on their accounting payments and payroll challenges. Our strategy is 4 pillars: First, we're using AI agents to automate actions and workflows across accounting, payments and payroll. So we can help our customers give them time back. For example, think about automating bank reconciliation or automatically closing their books, but that's not all we're doing. While the rest of the accounting industry is focused on building only automation agents, we're also building agents that provide actionable insights. This helps our customers run their business better. For example, imagine being able to run detailed scenarios for your cash flow and test out different assumptions without ever having to use Excel. How cool is that? Okay. Next, we're reimagining what a SaaS means in the world of AI. Traditional SaaS AP workflows were static and they were unintelligent. They were built to enable users to enter data and complete tasks. However, with agents our customers need an easy way to manage the army of agents at their disposal. They need these agents connected seamlessly to each other. So the workflows and experiences within SaaS apps have to shift to actually accommodate that. Additionally, SaaS's no longer need to be on intelligent they can intelligently surface to you what you need to pay the most attention to. We have already started down this journey, and you will see Lisa's demo how we are addressing this within our own product. Finally, finance, accounting and payments are not areas that you can have errors in. People need to be able to trust their financial management system, I'm sure you've heard LLM are notoriously bad at this. Most people think financial management systems is all about raw data and calculations, but that's wrong. It's actually about a series of decisions such as reconciling transactions accurately to close books. Closing books accurately to be able to calculate your tax. So each of these decisions build on top of 1 another and creates what we call decision data. You need layers of these decision data connected enables agents to understand how the data needs to be used to complete the task that they are trying to automate. This is crucial information, which LLMs do not have, and it gives us a strong advantage. To bring what I mean to life, let me talk about an example. Let's assume you have your raw transaction data and your bank feeds. You need an AI agent that can actually reconcile the transaction data with the bank feeds. That's called a bank reconciliation agent. You now need a books closing agent. It needs to understand what portion of the bank reconciliation data is required to be able to actually close the books and how to do the automation. Now when it comes on to taxes, you need to understand how the books are closed, what transactions to pick up to actually be able to do the taxes. So this is what I mean by saying you need lots of decision data at scale and you need context graphs at scale to actually be able to link everything together to help the agents give you consistent auditable and trustworthy answers. Now 1 of the reasons I'm so confident that we can execute on this strategy is because of the team we have. Xero has an extensive track record for building AI features. And over the last 3 years, we've deepened the AI experience we have by hiring top-tier talent from leading AI companies. Our team of AI and ML scientists have built self-service tools for our entire engineering team that allows them to build an experiment with AI features across our different products. This has helped us further accelerate our product delivery. Now I can talk about our strategy and team all I want, but we all know the proof is in whether this is actually delivering value to our customers. And I can confirm ours per month by using our automation introductions. Over 97% of help sessions are resolved with Xero Central. And equally importantly, we are seeing deepening engagement in usage. For example, the number of messages that a user sends to our JAKs chatbot has increased by 61% per user in the last 3 months. And we're seeing 12% of our customers that use Xero analytics use our AI insights features even though it's just recently been launched. Now this feedback we're getting is because of the momentum we have in building out the depth and the breadth of our AI offering. Through FY '26, AI has become ubiquitous across our platform because of the value it can deliver for our customers. You'll see that we are prioritizing using AI to automate the key jobs to be done that 90% of our users use and that are the most time consuming like automated bank reconciliation, AI invoicing, document ingestion, this means that our AI hits at the heart of our entire customer base and creates maximum value for them. Now beyond automation agents, we have also launched AI features to help our customers get answers to questions faster and more seamlessly enable smarter business decisions through financial insights and enable business growth opportunities for our AB customers via Jackson Partner Hub. Okay. Let's now hand it over to Lisa, who will now take you through a series of demos across some of the key AI capabilities we have launched.

Hi, everyone. I'm excited to show you some of the AI experiences our team has built. -- including JAKKS, our financial super agent that orchestrates multiple AI agents behind the to get more done about -- how we're using AI to 1, automate actions and workloads to give time back to our customers; 2, provide actual insights to help them manage their business smarter, and three, reimagine what an AI first SaaS application looks like in a world of agents and chop bots to unlock new business growth. Let's start with reimagined experiences. We believe the SaaS of the future requires a completely new canvas, 1 designed for AI from the ground up. Last year, we reimagined our entire product with his vision, starting with the home page. We designed for a future where agents complete task end-to-end in the background, and SaaS applications become the space where humans oversee their agents and get the insights that matter. Previously, this homepage was a to-do list of tasks for humans. Now it's a control room for AI agents and insights, showing users what JAKKS has already done and surfacing dynamic rigids based on what matters most to each business. Here, we have the JAKKS chat interface, often a starting point for users to get help. When we first launched JAKKS last year, we started with an invoice creation agent to help small businesses with 1 of their most important tasks. Since then, we've added more agents into JAKKS, including 1 that answers help questions. and another that researches finance topics on the web through our partnership with OpenAI. Its control with it shows up here in the upper left. Bank reconciliation is the heart of bookkeeping. Without it, you can't close your books, pay your taxes or build your financial reports. Our bank reconciliation agent transforms us from a manual process into 1, where JAAKs completes the work automatically in the background. To appreciate what this agent does, all first show you a business that hasn't turned it off. This business has 118 items to reconcile, very typical for busy small businesses. Banker constellation was Xero's original magic. We use machine learning to suggest matches and streamline the process. But now we've reinvented it again for the AI era, and it's 100% agentic. Here is a business with the bank reconciliation agent turned on. You can immediately see that the agent has been working in the background. Only 3 items left to reconcile, not hundreds. This helps our customers get significant time back. When we reimagine experiences across Xero, we didn't just add an agent. We redesigned the entire workflow to be AI first. Click into the bank reconciliation widget and you get a new agent managed screen -- it's a live log of what the agent had done on your behalf, where you can review, override or change how it behaves over time. You can see that JAKs has already auto-reconciled 113 line items. And below, you can see details of each of those, including explanations of its reasoning. JAKs automates back reconciliation in 4 sophisticated ways. Following rules the user has sent matching documents in Xero are predicted to arrive based on our algorithms, remembering how the user has reconciled in the past and predicting reconciliation based on 4.5 million other users on our platform. All of this is possible because of Xero's proprietary data. We have more than a decade of transactions from millions of SMBs globally with nuances by industry, supplier, region and subregion. Plus each business is years of history on our platform. This is hard to replicate and helps our AI reconcile far more accurately than anyone without this data. Our accuracy is over 90-some percent and customers are raving about the quality and time savings. It's a powder you'll see across today's demos, deep transaction-level data, powering domain-specific models, delivering industry-leading accuracy. Now that Sam's done with his bookkeeping, he turns to reviewing his financials. First, he opens Xero analytics AI insights. Here's the income versus expenses graph. Sam can review this directly but for help understand what it means, he scrolls down to AI insights. These suggestion chips represent the top questions businesses have. He clicks -- how is my business performing? In seconds, he gets a clear explanation, key trends and a summary of what to pay attention to. We've integrated these AI insights chips throughout Xero with very positive feedback. Small businesses get immediate explanations to manage their business smarter, and accountants tell us these summaries save significant time. They can copy and send directly to their clients. This is a great overview. And San now has follow-up questions. So he opens up a JAKs Financial Insights agent for Interactive help. It's an AI analyst that helps businesses understand their data and make better decisions. Tim asked, can you give me a quick summary of my revenue for the past year, broken down by service. JAKs looks across Xero data and provides exactly what he needs. He suspects this transportation expenses are getting high and ask how much am I currently spending on transfer services. JAKs looks through the numbers and comes back with the answer, about 1,200 a month substantial. He's been thinking about buying event for some time. Maybe now is the time to do it. So he asks -- we're looking at a van that costs $20,000 in cash. Can I afford to buy it next month. Here's where JAKs really shines. It analyzes all the business data, looks at historical patterns and projects forward. JAKs flags that Sam's cash position typically drops to 30,000 in February due to annual orders. Spending 20,000 now would create a cash crunch, probably not the best idea. What about alone instead Sam asked Jacks to run the numbers. I'm considering getting a loan at market rate to finance event. Can I afford it? JAKKS analyzes profitability, liquidity and leverage, looks at current loan rates and calculates monthly payments. It projects that payments would be less than 5% of net profit and the debt-to-equity ratio stays healthy. This could be affordable. Small businesses face questions like these daily. Shy by van, raise prices, switch vendors previously answering them meant manually pulling data and building spreadsheet models. Now they can just ask Jack to understand the impact on their finances and make better decisions. And accountants can also leverage the JAKs agent to go deeper on analytics, helping them to move up into advisory and unlock new business growth. JAKs Insights agent is truly powerful. We're the first to bring this type of deep analysis agent to finance. The space requires high accuracy and general purpose LLMs struggle with accounting, tax and financial precision. Getting this right requires deep domain expertise and rich customer context. Financial insights are only valuable, when built on years of transaction-level data. The average Xero business has millions of data points on our platform that we leverage for high-quality experiences. We're seeing over 90% accuracy for the insight agent, a testament to our quality. You see the same pattern here as with automatic bankrupt community. We've reimagined their experience, too. This is Xero partner hub. Our new product for accountants and bookkeepers. We've consolidated all of our accounting tools into 1 integrated interface, redesigned from the ground up to be AI and insights first and support agentic workflows natively. Accountants serve hundreds or even thousands of clients. So they need features that help them manage across their entire client base. We've built a specialized JAKS agent in Xero partner hub that does exactly this. Say an accountant notices rising energy prices in the news and wants to check which clients might be impacted. They ask which of my clients had higher expenses this month compared to last month. Instead of digging across tabs and calculating manually, JAKs fetches the numbers and presented automatically. [ Jacoby ] Company has the highest increase of 22%. The counter wants to reach out to the client but needs to prepare first. They ask shown my most recent notes for [ Jay's ] Capcom. Jack returns that information in moments. Finally, to prepare for the meeting, they need everything in 1 place, generate a client summary for [ Jay's Cockle ] Company for a meeting tomorrow. In seconds, they have a snapshot of financials upcoming jobs and notes, all from a single prompt, say me what could have taken half an hour per client. We have received strong feedback from accountants that these features help them move into advisory services and build a new line of business. So that's an overview of some of our AI features. I can't show you everything we've launched, but hopefully, this gives you a sense of what we've built and where we're headed. Whether it's automating manual workflows to give time back, surfacing actual insights to help manage smarter or reimagining experiences to help small business -- and account unlock new business. [indiscernible] Impact of these features is to directly hear from our customers. So what you're going to see on this slide is a small selection of quotes from our customers. For small businesses, the biggest benefit you can often provide them is measured in the hours you can save them. One small business owner using Autobank reconciliation set, it saves about 4 hours per week. I went by last week and came back yesterday and only had a few transactions to reconcile, which was amazing. That's clear tangible evidence of how we help them get time back. For accountant and bookkeeper partners, the impact is meaningful. 1 AV using Xero AI analytics told us, it's usual things like this that make my job to my clients more of value. This is the impact of automation in our AV jobs. Our tools aren't just saving AV's time. They're actually helping them elevate their role as trusted advisers, allowing them to help their clients manage their business smarter and unlock new business growth opportunities. [indiscernible] Both our new and existing features like bankrupt suggestions and Hubdoc -- our GI momentum, our FY 2026 launches, including JAKS, auto bank, financial insights. This proven adoption curve gives us high conviction that our newest most advanced features will continue to scale rapidly across our base. A monetization that is simple personal and designed to deliver long-term returns. First, we know our customers appreciate and need simplicity. And we know that this is key to driving adoption of our AI capabilities. So we will aim to bundle features across plans to meet our customers' expectation without asking friction. Of course, as we bundle these features the value we are adding rises, allowing us to monetize it accordingly. Second, we will also widen access to our customer base across these features by providing add-ons. What do I mean here? What if they want AI features, but don't want the plan that has those AI features. Well, you can just buy an add-on and get all the bells and whistles of our AI features in that add-on. Finally, we want to better align our monetization to the value we are delivering. So we will experiment with consumption-based pricing. We've been thinking about this carefully to ensure to get the right balance across these 3 principles for our customers. This leaves us the flexibility to manage monetization across multiple business models, be it subscription, add-ons, consumption or a hybrid of these, it also allows us to continue to tie our monetization to the actual number of small businesses that we support and the value we provide them versus the traditional seat SaaS-based monetization model, followed by most other SaaS companies. Now as you can see, we are extremely strongly positioned to capture the additional TAM generated by AI. We have a winning strategy, a world-class team, very strong momentum and positive feedback. But we're not going to stop here. showing that more and more users can utilize our Gen AI features, whether it's automated features like auto bank reconciliation or actionable insight features like financial insights. We are going to we provide with the eye -- we will start by focusing with embedding AI features across our lineup and providing add-ons to widened access, and we will also experiment with usage-based monetization. Finally, we will broaden and deepen the value we are providing our customers by saving them even more time and helping them manage their business even better. with over a dozen new AI agents launched across accounting, payments and payroll in the coming year. I am very confident that throughout FY '27, you will see us continue to deliver more and more value for our customers. and leverage our advantaged place in the AI ecosystem. Now I'll pass it back to Sukhinder to take us through the U.S. payments opportunity with Melia & Xero.

Thank you, Diya and Lisa for all that coverage of our AI game plan. All right. Now we're going to turn our attention to the U.S. business opportunity by combining accounting and payments. Now the first and most important thing is our conviction in the strategic rationale behind the Melia acquisition remains as a long as ever. I want to remind you of the 4 key pillars of this deal for us. First and foremost, accounting plus payments is a critical need for U.S. SMBs. They have told us this in surveys, Noncustomers have told us this in surveys. We see it in customer behavior. We see it in the growth of our own payments opportunity outside the United States. What we really see is accounting bill pay, invoice creation. These are all things that customers expect to see in the same place. #2, the TIM of U.S. payments specifically is large with macro tailwinds. And what we mean by this, of course, is the digitization of U.S. payments, which is far behind some of the other countries around the globe and present a macro opportunity for SMBs to really digitize that workflow and the payment itself. The second thing, of course, is this powerful strategic fit. When you can combine payments plus accounting for fulfilling of that 3x3 strategy and better unit economics as we scale. The third and most important part of our decision to acquire Melio was really the team behind Melio and the platform they built is a well-loved platform for SMBs and AVs, it's easy to use. It has many features that are world-class. And of course, it's run by a world-class team of serial entrepreneurs led by Matan, who you're going to hear from today. And then lastly, I'm going to come back to that we are -- the fact that we are better together. When we think about Melio plus Xero, we see the opportunity to build a business model that is diversified that drives gross margin dollars at scale and in turn LTV, which allows us to keep investing in that U.S. customer. And at the group level, it is enhancing to the group level and really the opportunity to build a long-term customer value proposition that has those 33 jobs within it. Now I'm going to turn it over to Matan, who's going to take you through the opportunity in more detail.

Thank you, Sukhinder. The U.S. SMB payments market is massive. It represents a $29 billion total addressable market. Within that, accounts payable alone is a $14 billion opportunity today and it's expected to grow to $19 billion by 2030. Today, 90% of U.S. small businesses are still not using software for their accounts payable needs. That leaves a lot of white space still up for grabs. One of the core reasons this opportunity remains so large is the friction embedded in the U.S. payment system. As you will see shortly, Melio has built the tools to remove that friction, playing a critical role in modernizing and digitizing how payments actually move. This creates a powerful digitization tailwind ahead of us. So now let me show you just how extensive that friction really is because the U.S. payment system is truly unique and complex. To understand our conviction in the U.S. payments opportunity, we first need to look at the immense friction that exists in the market. Unlike the digital-first environment in ANZ, the U.S. still relies heavily on legacy payment systems. Today, 20% of U.S. accounts payable volume is still processed through paper checks and cash. And when you combine paper checks with standard ACH 72% of the market experiences long settlement times of 2 to 10 business days, but the challenge is in just speed. It's also data legacy methods, especially checks and ACH provide little to no remittance information, forcing SMBs into manual time-consuming reconciliation. On top of that, payment fragmentation remains a major hurdle, where every business is required to send different types of payments to different vendors based on various preferences. To truly empower SMBs, platforms must support a broad range of payment and acceptance methods. So businesses can pay vendors exactly how they choose domestically and internationally. Taken together, friction in workflows, fragmented payment options and slow settlement, solving these create a powerful catalyst for digitization and opens up significant new opportunities for monetization. Xero and Melio are extremely well positioned to solve this problem for small businesses Melio provides simple AI-powered bill capture and approval workflows that give business owners control without the manual work or operational complexity. A key advantage is that many of these workflows are fully self-serve, making it easy for customers to onboard to adopt and scale. Melio is also a category leader in flexibility and choice. [ Part ] pays can each choose their preferred payment method across domestic payments and cross-border payments, helping small businesses better manage cash flow and hers from self-employed -- they now experience to growing and midsized businesses that require multiuser approvals and controls. Melio also serves the accountant and bouqueper channel, enabling professionals to manage payments across their entire client base, whether they service small or medium-sized clients Melio, enables their CAS practice seamlessly. Melio reaches SMBs in 2 main ways: directly through melio.com, its stand-alone experience and through syndication, Melio's embedded partnerships, expanding the network with more customers, more vendors and more total payment volume. So in summary, we see a large and highly attractive payments opportunity where Melio has a clear right to win and strong momentum in digitizing how small businesses pay and get paid. Now let me show you exactly how this works through 3 [indiscernible] core experience; second, the significant opportunity created by syndication, driving cost of acquisition efficiency by embedding media into the platforms, where SMBs already operate. And finally, our focused approach to deep embedding within Xero making Melio a seamlessly integrated offering for 0 small business customers and their advisers. This is the Holy Grail for SMBs. Paying a bill directly from the accounting software, where the bill was first entered, -- no manual data entry, no reconciliation errors and full cash flow flexibility, all from 1 place, all from Xero. And with that, I'll hand it over to Ilan.

Thanks, Matan. Everyone, I'm Ilan, I'm the Co-Founder and CTO of Melio. I lead our product engineering teams. I'm going to walk you through today on a quick demo of our bill pay flow and overall customer experience on melio.com, designed for small and midsized businesses. Let's start with how easy is to onboard to Melio. I can sign up using my e-mail or connect with Google, Xero or even into it because media is agnostic to accounting software. I sign up with my e-mail and verified. Next, I choose my role. I can join as an accountant or bookkeeper or as a business owner is Melio supports both firms that manage clients and businesses managing their own payments. I'll add a few details about myself, my business for KYC and KYB purposes I started with the 330 days trial, which let me explore all the media features and capabilities. Once I onboarded, Ilanna pay dashboard. This is where everything comes together. Here, a business can see outstanding bills scheduled payments, their current statuses and deals that have been already been paid. In the vendor tab, I manage all of the vendors and contractors they pay along with the bills associated with each of them. In the Bill tab, I can see all of my outstanding bills that are ready to be scheduled or paid. And in the payment tab, I can track all outgoing payments and easily see their status from schedule to in progress to complete it. Most businesses start a payment by first adding a bill. In Melio, there are 5 simple way to do that. And everything is fully self-serve so he can choose what works best for you and to your workflows. First, I can connect Melio my Gmail account. Once it's connected, Melio's AI securely scan for vendors e-mails and deals attachment, pull them in and prepare them as a ready to be paid bills, waiting for me in the right place on the build-out. Second, if I didn't use Gmail or don't want to grant inbox access, I can use Bill's inbox e-mail address that has been created for me on the onboarding phase and can forward invoices there. or ask my vendors and contractors to send them directly to this address. And then Melio automatically prepares them for a ready-to-be-paid bills. My third option, I can connect Melio to my accounting system, like Xero 0 any be created there is automatically think into Melia, keeping everything aligned without extra work. My fourth option, if I receive a paper invoice, I can open Mediamobile app take a photo of it and me magically extract the bill details directly from the image. And finally, I can upload the bills straight for my desktop. Once the upload finish, Melio automatically extract all key information like the vendor name, total amount, due date, remittance details and the line items information. So there is nothing I need to enter manually. Now that all of the invoice data has been extracted, there is another piece of magic powered by Melio's AI. The invoice and even the individual line items are automatically categorized making reconciliation workflow effortless in accounting system like Xero. That means cleaner books, less manual work and a much smoother hand off to accounting. Let me show you now how easy is to pay this bill. Going back to the Bill's tab, I can see the bill I just added. In the bills table or click pay on the first bill. After clicking pay, I see all the ways I can fund this payment. I can use my credit card, which let me defer the cash for outflow even beyond the delivery date for a 2.9% fee or I can fund it directly from my bank account. Also, I can use the BNPL option and divide my payment into up to 12 equal installments. This is our choice and flexibility pillar in action. By offering options like credit card funding and BNPL, we empower businesses to optimize cash flow by deferring outflow, while still paying vendor instantly and on time. I choose to pay this bill using my credit card. Even that my vendor is not accepting cards. Melio led businesses pay using their preferred method of choice regardless of what vendors choose to accept. Next, I decide how my vendor will receive the payment, since this is a domestic vendor, I can send a payment by ACH transfer wire transfer or paper check. For international vendors, Melio also support international payments. So U.S. businesses can pay vendors in dollars or in their local currency across in more than 80 countries worldwide. This is the first time I'm paying this vendor. -- and the invoice indicates that prefer to get via ACH, so select that. I'll add a vendor ACH details the bank account number and the routing number and save it. Now I'll choose to deliver its fleet. I can set a standard ACH that takes 2 to 3 business days as same ACH or even an instant payment via real-time payments. I'll choose real-time payments and continue to the confirmation page. I confirm the payment and just like that, the bill is paid -- that entire experience is intentionally simple and streamlined. And when you are paying an existing vendor, not for the first time, it's even faster as all vendor details are in the system. So as the vendor network grows, it's become even easier. Once the payment is submitted and processed and email notification is automatically sent to the vendor, letting them know the funds are on the way. The e-mail includes the estimated delivery time so the vendor knows exactly when the money will land in their account. If a vendor wants to get paid sooner, they can join the media vendor network and expedite payment moving from a standard 3 days ACH to getting paid instantly for a fee. The real-time wheel here is vendor can also expedite the payments or change how they wish to get paid without needing to sign up or create an account. Now let me show you how business payments can be managed by an accountant or bookkeeper while final approval can stay with the business owner. So everyone works together seamlessly. First, let me show you our accountants and bookkeeper manage their business clients in Melio in a very simple way. From the client's dashboard and accountant or bookkeeper can see all of the business clients are managed in 1 place. along with a task that need attention for each client. Now as a bookkeeper, I'll select 1 of my clients with an outstanding bill follow the same quick and simple payment flow I just show you and submit the payments. Based on the approval rules set by the business owner, these payments are now waiting for an approval by the client. The client business owner received a notification on their mobile device letting them know there are bills that needs approval. Opening the app, they can review the bills and with a simple swipe to approve the payments. And just like that, it's beautifully done and the payments are underway. The last 1 I'd like to cover today is an important 1 for both businesses and their accountants. 1099 filing, within the pay Dashboard, Melio is a dedicated tax tab where I can manage all of my 1099 in 1 place. I can click into a vendor and mark them as a 1099 vendor. There, I can select multiple vendor and within 1 click send them a request to upload a W9 form. Minerscan those files, validate the information and let me know when everything is accurate and ready. When tech season arrives, I can connect to Text 1099 and file my 1099s online directly from media. Let's wrap up the core flows I wanted to show you today on melio.com. This gives you a feel familiar experience for small and midsized businesses. simple, flexible workflows, multiple ways to pay and faster reliable payments that keeps businesses real control over their cash flow. One of Melio's key strengths is that it's built on a true platform. Designed to support thousands of partners. The workflows and differentiated money movement capabilities you've seen today can be embedded, configure and integrated across a wide range of channels. from leading financial institution like U.S. Bank and Capital One to vertical SaaS platforms such as PayPal, Shopify and ADP. Now I'll hand it over to Eli, who will show you how Media platform powers Z.com users and enable accounts payable for Xero 0 customer across the U.S.

Our U.S. bill pay products, and in particular, our new Milio-embedded BillPay solution. This is a brand-new experience that seamlessly adds bill payment capabilities to the Xero platform and streamlines the entire accounts payable workflow. With bill payments and accounting in 1 platform, small businesses save time, control spending and gain real-time visibility into their cash flow. So let's jump in. For the purposes of this demo, let's say, I own an agency business called Foxglove Studios, and I want to pay some recent bills. Xero has many ways to help customers easily ingest bills into the system and streamline the accounting and recordkeeping process. You can upload the bill file, take a picture of it or even forward an e-mail to a personalized Xero e-mail address. In each of these cases, our AI will analyze the file and extract the relevant information, saving businesses time on data entry. Now let's say I just opened my e-mail, and I saw that I have some bills to pay. The easiest thing for me to do is to select my 3 new bills and forward them to Xero's magic e-mail address. So I'll go ahead and do that and Xero is going to take care of the rest. Now that I've sent my bills to Xero, I'll open up my Xero count and get started. This is our new homepage dashboard where I can get a complete 360-degree overview of my business, as you heard about in Lisa's session. As a business owner, cash flow is always top of mind for me, and I basically live in my cash in, cash out widget. But right now, I've got some bills to pay. So I'm going to use the bills widget to get me to where I need to go real quick. I'll click on view all bills, which takes me over to the Bill's tab. Here, I can see the 3 bills that I just forwarded to zero. The bill's experience is where I can manage all of my company's accounts payables needs. You can see bills throughout their full life cycle, including drafts, bills waiting for approval or waiting to be paid and of course, those that have already been paid. So I'm going to go over to the awaiting approval tab. And from here, I can see the 3 new bills to pay. Xero's roles and permissions ensure that only authorized users in my account can approve the bills to be paid. These users could be the business owner, which is me, for this demo, I'm going to move them over to the awaiting payments tab. Now that these bills are ready to pay, I can get started with our embedded bill pay solution. I'll start with the streamlined onboarding flow and click setup online bill payments. Here, I can read more about our new embedded bill payment solution, all powered by Melio. Okay. Now I'm going to click on setup to bill payments. From here, I can sent to share my data with Melio, so that Melio can process my payments and my data. And because I have some users in my Xero account and helping you with my business, I'm going to assign them permission to make online bill payments as well. When I feel good about the permissions I've set, I can click confirm and continue. Now I need to add a few details about my business so that Melio can perform a KYB or know your business check. Any information that I've already provided in Xero will be prepopulated here so that I don't need to enter it again. And that really streamlines the onboarding process. When everything looks good, I'll quick continue, and now I'm all set to make online bill payments. I'll go back to the bills tab now to finish up that payments workflow. So let's select those outstanding goals to pay, and I'll go ahead and click make payment. When I do, I'm prompted to add my bank account because this is the first bill payment that I'm making. I'm going to select my Chase bank account and then I can log in via [ plad ] to connect it. And while I'm going through and logging in, just as a quick aside, [ Platt ] is our newest bank feeds aggregator partner, and they give us a huge upgrade in feeds, quality and coverage. With [ Plad ], we gain access to over 1,600 new high-quality direct OA feeds and more than 3,100 new aggregator or screen scrape feeds. This triples the number of high-quality direct feeds available to U.S. customers and add thousands of new connections for smaller financial institutions that previously had no feed options in Xero. Now that I've gone through and linked to my account I can pay those bills. This is the preparation screen, where I can view the bills that I'm going to pay and confirm delivery details around the payments. Again, you can see those 3 bills I need to pay to each of my suppliers. Now if these bills were all going to the same supplier, I could combine them and send them all in 1 payment. But we're sending to separate suppliers, so that option is great out right now. With Melio, I can select the bank account that I'm going to use to fund this payment. I'll click the payment method drop-down, and you can see the bank account that I just added as well as an option to pay by credit card, which is coming soon. Now I need to choose how my suppliers are going to receive their payments using the delivery method drop-down. So I'll click out of method. And as you heard from an, Melio decouples payers and pays so I can fund this payment in 1 way, for example, bank ACH and my supplier can receive the payment differently, for example, as a virtual card. I can choose to pay instantly to avoid late fees or schedule payments if I need to smooth out my cash flow this month. I'll choose the ACH option. And from here, I can enter my suppliers bank details. Everything looks good from here. So I will go ahead and click confirm and pay, and that's it. I just pay my bills. This screen is effectively the receipt for my payment that I can come back to at any time. Customers already using Melio for bill payments are saving an average of 5 hours per month on their workflows. Without Melio embedded bill pay, customers have to pay and record each bill individually. They may have to log into separate supplier portals to pay individual bills and they might even have to physically write and mail out individual paper checks. And finally, I will come on back to the homepage to wrap up our tour of the new Melio embedded bill pay experience. again, as you heard from Elan, Melio is deeply embedded in this core Xero experience, and here is a perfect example of this in action. Once the payment is made, Autobank rat kicks in, and as you heard from Lisa, JAKs will automatically reconciled the bill to the payment and magically keep your books up to date. That means that key charts like my cash in, cash out widget have the latest data so I can make the best decisions for my business. This is 1 of the clearest examples of why payments and accounting fit so well together. A small business can now fully manage their cash flow and get a real-time 360-degree view of their business all in 1 place. This is something that a stand-alone payments or stand-alone accounting provider wouldn't be able to do on their own. I don't just take it from me. Our early adopters are loving it as well. One of our small business users literally told us, "I love it, it is easy to use. It is efficient, it is effective and is a great value add to my Xero membership." Now the Xero and Melio teams joined forces just 2 months ago, and we've already done so much together. In the future, we'll continue to improve the experience and build even more cash flow management capabilities, and we are just getting started. So with that, I'm going to turn things over to Matan.

Thanks, Elan and Eli. From these demos, you can clearly see the strength of the Xero and Melio products in addressing payments friction, helping customers digitize save time and optimize cash flow. When we compare Melio to the alternatives, it uniquely solves both cash flow management and workflow improvements for small businesses. It does this by offering choice and flexibility through simple, self-serve workflows. Melio also delivers easy onboarding, a superior vendor network and multichannel embeddable offering and a modern scalable technology stack and most importantly, our customers love Melio. Melio's strong NPS scores and proven growth track records are clear evidence of that.

Ever. So very real pain points for small businesses in the intoeconomics, how this opportunity shows up in our P&L, how we're going to measure progress and why we're confident in the value creation path. I'll start with the unit economics of a Xero a media customer in the U.S. then step through the new disclosures we're introducing and finally show how we think about the key growth levers, TPV and take rate. and the path this gives us to our fiscal '28 aspirations. Let me start with unit economics. On the left-hand side of this slide, we show an illustrative view of average gross profit dollars per user in the U.S. Accounting provides steady gross profit dollar growth and drives engagement, while payments scales materially as accounts payable volume is digitized and vanitized. Together, accounting and payments deliver a significantly large gross profit dollar expansion opportunity than accounting alone, underpinning long-term value creation. That differential is what really matters for the business. It gives us a powerful flywheel, higher ARPU and gross profit dollar per customer increased lifetime value, higher LTV in turn, gives us more room to invest in customer acquisition and scale. As the syndication network grows, we can bring in additional users at lower acquisition cost further reinforcing that flywheel. So when we talk about Melio changing our U.S. economics, this is what we mean. We're not just adding revenue, we're actually improving the gross profit dollar we earn per customer. Turning to the U.S. P&L. This table shows our pro forma U.S. revenue composition and profitability -- and within that, syndication versus Xero direct payments. A few points to call out. First, payments are a material part of the U.S. business. On a pro forma basis, total U.S. revenue is growing strongly, with the payments being the largest and fastest-growing component. Second, we're introducing new disclosures. So you can track this opportunity over time. We will provide bill payment revenue within our U.S. business, split between syndication and direct customer revenue. Will also disclose total TPV and gross TPV take rate for our direct customers. These are the key inputs for our direct revenue opportunity, which is the biggest part of the U.S. business. And because we think about the business as a combined payments and subscription engine, we will give you U.S. gross margin and U.S. gross profit. So you can see both the scale and the profitability of the combined U.S. business. Current gross profit reflects existing payments mix, the current scale of the business and the early stage of syndication. Over time, as we improve mix and optimize take rate, scale TPV and expand syndication, we expect this to translate into stronger gross profit dollars, which ultimately funds further U.S. growth. If you look at the payments business in the U.S., there are 2 primary economic drivers we focus on. Total payment volume, or TPV, which is how many dollars are flowing across our network and growth take rate, which is the average economics we earn on that volume. To grow TPV, we need more customers putting more of their spend through our rails. To improve take rate, we need to influence the mix of payment methods towards higher value options. A key point here is that neither of these is a passive outcome. Melio already has a strong track record of influencing both TPV and take rate through product design, workflow, pricing and education. We're bringing that capability into Xero's U.S. base. Let me unpack TPB first. This chart shows an illustrative cohort of Melia customers over time. What you see is that once a small business starts using Medio, TPV doesn't stay flat, it ramps. On average, TPV increases around 75% in the first 12 months as customers gain confidence and migrate more of their bills and cash flow management onto the platform. Beyond year 1, TPV continues to grow at double-digit rates as Melio drives deeper penetration and adoption of more bills in that platform. There are multiple ways to unlock that. adding more payment workflows and use cases, improving existing tools, so it's easier and more intuitive for customers to move more spend onto the platform. We then see the benefit of consolidating more of their payments with us. So the opportunity is not just to win a customer wants. But to go create value of that customer over time as we digitize more of their payments. As this scale expands payments adoption becomes a more powerful driver of long-term growth than just subscription growth alone. On the other side of the equation is take rate. As TPV per customer grows, Melio has multiple monetization paths on each transaction. depending on what the customer needs engagement, cards liver, large transaction volume but a lower reported margin due to the accounting treatment. In contrast, are the premium methods such as instant or FX payments, generate higher-margin revenue that further scales gross profit. Each method [indiscernible] the option to expedite payments for a fee. The takeaway is that take rate is controllable through design, data and experience. We can guide both payers and payees towards higher-value methods that work for them and for us. When you bring TPV and -- take rate together, you can see why we have strong conviction in the financial opportunity. When we announced the Melio acquisition in June of 2025, we set out clear aspirations for the combined business. All of the dynamics we've just walked through. richer unit economics, TPV expansion and an actively managed take rate underpin those aspirations. As a reminder, we said we see an opportunity for the combined business to more than double Xero's fiscal '25 group revenue by fiscal '28. That supports our goal of delivering greater than the role 40 outcome for the group in fiscal '28. And for MELIO specifically, this pathway, scaling TPV, improving mix and expanding margin provides a clear line of sight to EBITDA breakeven, which we expect to occur on a run rate basis, continue to manage this with disciplined execution across the group, focusing on revenue scale and incremental margin expansion, underpinned by ongoing efficiency improvements strong cost control and disciplined capital allocation, including targeted investments in AI to drive both productivity and long-term growth. So to summarize. the key takeaways. Melio is a powerful strategic fit for Zero. It solves a critical customer need in U.S. accounts payable. It brings a world-class team and modern platform with deep capability in B2B payments, and it creates material value for Zero through improved U.S. unit economics. That value is delivered by improving the 2 key revenue drivers we've discussed, TPV and take rates, which together provide a clear path to Milo and to the fiscal '28 aspirations we've outlined for the whole group. Importantly, we already see strong momentum in the combined business. in both the financials and the operating metrics, which is why we are confident that the growth and monetization pathway is not just theoretical, it's underway. Before I hand back, I want to briefly touch on integration. Integration is progressing at pace and we are really pleased with where we are. We have seen great progress, as you've seen with regard to the product and the product embed and the availability of all of the functionality of Melio in Xero, as we look at our go-to-market, those teams are coming together and working together to really drive the best outcome for our customers. So as far as integration goes, as you can see on this slide, some really great progress across products, across go-to-market, but also areas like customer experience has been progressing as well as some of our systems and processes. So as a reminder, we see great value creation opportunities as we bring Zero and Melimo together. It will accelerate our growth. It's going to really improve our U.S. economics. -- it's offering a diversified portfolio for our U.S. business, like we have globally in our other regions. And this is the value of Xero and Melio together. We can accelerate our growth, we can drive profit. On both the stand-alone and embedded product and then, of course, some of the new disclosures we're providing around this business to help you understand it better. And now, of course, we'll head right into Q&A.

[Operator Instructions] investor education.

You've given us lots of information on strengths and advantages. So I just had a couple of follow-ups. I was just wondering how to plan to protect its data in an AI world, and -- and I wondered if you could comment on media-specific moats against AI disruption as well. So on Slide 8, you said you're going to do distribution partnerships with LOM. So I was just wondering, does that look something like what ensued an open AI or do we -- and if so, how does Xero protect its data in such a scenario? And then on Slide 19, suggests B2B payments is quite underpenetrated more so than B2C. Just thinking for Melio, are there quite a few things that have made it hard for competitors that will earn I think that things like regulatory licenses, KYC, physical check infrastructure, and those sorts of things.

If you could talk through that, that would be helpful. . Thanks, Eric, for the question. So why don't I start on the first question? And I think Diya and Matan, I'm sure we'll both comment on the second question. Do may comment on the first as well. So -- it's important to remember, obviously, that our customers' data is protected by our commitments to them. This is why we have a responsible AI framework that commits to them, how we will protect their data because it's 1 of the things they look to us for. Now when you think about our relationships with any new potential distribution channels, they can range from a deep integration with a biz dev deal, they can look like ads. We know that OpenAI is already talked also about its own desire to have ads or can look like a self-serve integration. Many of these channels will open up what's called an MCP server, where we could go agent to agent and allow certain outputs from Xero to be published into that framework. But again, the most important thing is regardless of how we think about the upstream distribution opportunities with the bigger, I'd say, consumer like chatbots -- the most important thing for us is that we take a responsible AI framework, and we embed that framework in any way that we integrate any customer data into any third party. And we do look to that. So that will constrain we might do a self-service integration, for example, because we have a responsibility to protect. And I think that if we do a deeper deal, we may see custom terms in order to protect our customers' data. It is important to note that many of the terms of service of some of these LMs themselves protect customer data, but I think our customers expect us to go above and beyond and ensure that's the case in any way we seek to take advantage of those new distribution channels. Diya anything to add before we talk about?

Yes. What I'll add there Sukhinder's absolutely right, Eric. What -- the thing to think about here is it's not the output that is important. As we talked about -- when we talked about what makes our data unique, it's the layers of decision data. None of that data will ever leave our system. So it's not like you can actually reproduce the output in any way. So that's 1 thing. The second thing is Today, most of these LLM actually do say if you connect to them through their developer APIs, they do not use your data for training, and that is well known and well understood. And then what I'd add on top there is -- they will work with us through our MCP servers, which then limits the type of data they can get from us. They can get direct output from us. They cannot get anything deeper than that. And do you want to pick up on the second question? I think Eric was also asking about payments, payments AI, payment moats in the world of AI, do you want to start and then over to Matan. So payments in the world of payments, I think when you think about payments, what's really important is for us to be able to enable our customers to speed up their cash, right? The cash they get in their pocket and be able to manage their cash flow. If you think about AI agents, it is -- they will absolutely play a critical role here. think about being able to chase your customers to pay you, right? That today is done manually. at an agent and will be done with an automatic agent. Think about making that AI agent intelligent in terms of what kind of late fee to apply based on your customers' lifetime value and relationship with you. On the other side, think about an AI enterprises have this where you have tons of people figuring out when you should pay your accounts payable, right? You do deep analysis on terms, conditions, what will maximize our cash flow. Again, applying AI agents to these, you can do that. So you can manage both sides of the equation, including workflows like approvals, et cetera. So we believe Matan strongly believe and I'll let him speak here. But -- we strongly believe AI does have a strong value to play in payments as well as long as you ensure that before any money moves out of a bank account, you get final approval from the user.

I agree with everything Di mentioned, and I'll just add on both the user experience and the infrastructure that we've built AI used across the user journey from saving time on data in workflows like taking a photo of a bill and automatically capturing the details of this bill to automating the risk and compliance engine that powers all the money movement that we enable small businesses across our different partners and with our stand-alone experience. AI serves a critical role in making sure that we keep the money movement fast as Di mentioned, secured and protect from risk and comply with the different regulations. So across the user journey, from the infrastructure to the user experience, we embed AI to make sure that our user experience is competitive and answers our customers' needs. I'll have 1 last point that is very obvious in payments, but I'm going to make it anyway. Payments is a consumption business model. So as the world thinks about business models that are both fixed and variable, payments is not only something that I think users want a lot of oversight of regardless of how we use AI functionality. It is already a consumption-oriented business model.

Excellent. Can I just do 1 quick follow-up with Clear. Very hopeful that you've given us that Melio breakeven on a run rate basis by second half FY '28 guess the natural question from investors and sell side will be -- not the target, how do you mechanically get there. And I was just wondering if you could just entertain my logic because it seems fairly easy to build a bridge to get there. So -- if we look at Melio OpEx, it was $175 million in FY '25, that probably grows. So let's say, mill OpEx could be circa $200 million by FY '20. So obviously, familiar to be breakeven, you need gross margin dollars to be close to 200 by FY '28. So let's say, you guys are forecasting gross margin dollars to get to $150 million to $200 million by FY '20. And then we also know the gross margin percentage is 20% to 25%. So if you gross that 150 to 200 up, you're basically implying in FY '28 revenue familiar of 700 plus call it, $700 to $750. -- maybe be better if you do better. But what does that all mean? Like if you look at first half 2016, you did $75 million of mill revenue. So you're annualizing $150 million and you're going to wind up at, call it, circa 400 or 40 plus in FY '26. So to get from $400 million to $700 million plus in FY '28, you're basically saying you need to deliver the same nominal amount of revenue growth in 27 and 28. -- that you did in FY '26. And arguably, there might be more positive revenue drivers in '27 and '28 that you've seen in 2016. So that was very long-winded. I'm just trying to make a point that you can kind of get that extrapolating current Melio revenue trends.

I think thanks, Eric. And I like the way that you're thinking about it. I think the fact that you've zoned in on gross profit dollars, for example, and the strength that we have from that revenue scale as Milo continues to grow, -- we've seen really strong growth historically as we've already disclosed. And then as we talked about in the prepared remarks, the value of those customers does build over time. So that's obviously a growth opportunity. In addition, the growth that we foresee to get from syndication over time as well. So as you said, a lot of opportunity coming from that revenue growth and revenue scale, which that then does drop through to gross profit dollars, and to your point, from an OpEx standpoint, I think we've said from day 1, the announcement of this great acquisition that we do see operating leverage. So a lot of the investments from an OpEx standpoint have been made upfront. So we don't anticipate OpEx to grow at the same pace as revenue, giving -- definitely giving us an operating leverage. So as you say, if you look at that revenue growth, if you consider the profit -- gross profit dollars that, that contributes and the operating leverage that we get from OpEx -- that's how we get to our fiscal '28 run rate of EBITDA breakeven from.

Awesome. Thanks for the answer on the update today. .

Thank you. SP-13 Your next question comes from Lucy Huang from UBS. SP407107096 I've got a couple of questions. So firstly, I think, Clay, you mentioned you think the take rates are quite controllable. -- moving forward in terms of the ability to kind of grow and direct customers to a higher payment type. Just trying to think through kind of, let's say, FY '28, what do you think is the optimal mix is, say, the premium payment types relative to kind of pad versus ACH. I think you've got -- given us a pretty interesting graph there. Like where do you think premium payment type could become in terms of the proportion of the base there?

Yes. So thank you, Lucy. So what I would say is, I think it's about the combination of everything. So it's a combination of that mix of the more premium high-margin products, but also the scale and the volume we get from of the other transactions as well. So we are looking at a combination and a solid mix to be able to drive those gross profit dollars. And as we talked about -- we do think that there is an opportunity to influence the margin and the product mix over time. but we are not just reliant on gross margin expansion from a gross margin rate standpoint. We're definitely finding that right balance between volume, scale high transactions, high volume as well as margin expansion through scale, through syndication and through product mix. So I don't know, Matan, if you want to add anything about our ability to influence. But SP-14 As to you? .

Yes. And obviously, I agree with what Claire mentioned, I will just say sometimes it's true for the payments ecosystem in general with scale, there are opportunities to improve margin. And in addition, Melio's business is diverse. We have our stand-alone experience, and we have our syndication partnerships that will also help us improve the margin. As a business, the payments business, we care about serving our customers, increasing our revenue, increasing our gross profit dollars. And we will continue to enable, as you've seen in the deck, many types of payments because that's what our customers require when they pay their vendors, they send virtual cards, they do international payments. They pay by car, they do ACH, they do instant payments and -- the portfolio of payment methods is 1 that we're going to enable, continue to optimize. And due to all the friction that we've talked about in the presentation, -- these create many monetization opportunities that we're capitalizing on, have been capitalizing on in the past, and we'll continue to capitalize on in the future.

One last thing, Lucy, just to point out, which is probably obvious, but I'm going to say it anyway. -- we are very focused on gross profit dollars. I think this is very critical. Like you can focus only on margin percentage and miss the dollar opportunity. For example, let's say you drop lower-margin payment types. -- and thus, you don't get the TPV per user. That would be a miss, right? So Matane's point on coverage, on payment coverage is as important as the individual mix and having higher margin products in the mix. You want to capture the full wallet. And as Clare showed you, per active user is a key metric for a payments business. And for us, it's about the gross profit dollar accretiveness of this business to our core business. Any color on what proportion of Sara customers in the U.S. that are now switching on Melio within the software and processing payments now just so we can get a gauge of what the ramp-up would look like.

In the agent? Yes, I think it's very early. I mean I think that to give you a sense, I think we launched the experience in December Jan, it went even we went GA and Jan. So we've had 30 days of data. What I will say is the data is very encouraging. I think we're really excited to see what users are taking advantage of -- and obviously, Matan has points of comparison not to be shared on this call, but points of comparison with other partners, so he can compare how Zero is doing relative to other partners. And I think we're encouraged by the features we've been able to turn on fast that are very useful and beyond what we had in our bill functionality. And our qualitative feedback also is extremely strong from our customers.

Yes. And sorry to a 1 from me. Just the 2 million cells you think JAKs on AI within her now? Like are you able to give us some qualitative feedback on how extensively they're using it and also just in terms of kind of the monetization strategy. You talked about kind of the 3 options that do you think overall this will drive a step change in ARPU growth for the business longer term?

I can take that is going to take it -- so for the first question, Jackson AI, yes. So when we think about JAKs, JAKKS is our super agent. So when you think about our product service area, there are multiple agents. There's a bank reconciliation agent there's a financial incitation that you saw there is an invoice agent, et cetera. The way we use JAK is JAKKS is our super agent that orchestrates all these agents. Yes, it has a chatbot interface, but it also works in the back across the UI to ensure all these agents work seamlessly together and connect to the UI in an intelligent way. And the real reason behind this is that we believe that SaaS apps will transform over time, right? You will move from having UIs where users input information to having users manage agents. And instead of having to manage multiple agents, you can imagine if you buy different pieces of software or if you try to build your own agents, we want make it easy and convenient for users to be able to have the ability to talk to 1 agent think of it as a manager of agents, right, that you can talk to, to be able to get all your work done across your financial platform. So that's why we use JAKs and AI interchangeably. Now your second question was on monetization. So the way we think about monetization is threefold. 1 is we know we have to keep things simple. Because if you start throwing different agents, different ways of monetizing, et cetera, at customers, they're going to get confused. The second principle for our monetization is driving adoption. -- which is -- 1 of it is obviously making things simple, but the other is also increasing access. So where are certain features available if they are available in certain plans, but not in other plans, but people want to use it, can we provide some kind of add-ons and then the third thing is actually future-proofing it with different business models. We all know SaaS business models are going to change in the era of AI and they're going to move more towards usage-based consumption based, et cetera. And so how do we future-proof this? So what we do with our monetization efforts is try to balance these keeping it simple, driving adoption at the same time being able to future proof it so that as people use more and more and as more and more values delivered, we have the right models in place to be able to business models in place to be able to capture that value.

I think, Lucy, I want to pick up on 1 thing we're going with you said and answer 1 more question that you asked. So first of all, when you ask is there a step function change in ARPU, look, we hope to grow ARPU over time. We talked about that 4x expander of TAM that Gartner talks about when they talk about the opportunity for SaaS companies and particularly companies, in our case, that are vertical domain experts and systems of record. I want to come back to that core principle. That's what gives us the right to play to be a system of decision and a system of action and an orchestrator of multiple agents across multiple jobs to be done. So that's important. But our goal is to make sure our customers get value. So we are playing the short, medium and long-term game here. If we're going to drive adoption, you're not going to try and just capture all the ARPU games upfront because what you really want customers getting utility from the product. You also want to, as Desai, look to some of those principles. So we don't need JAKs. We don't need JAKs to get a onetime step change in ARPU. What we need to do is keep delivering value and keep orchestrating multiple agents -- and really, I'd say, future proof our own ARPU growth by making sure we're not trying to take it all in 1 lump sum. So you can see we've already been pretty measured relative to our competition and being thoughtful about how we monetize and when we monetize -- this year, we went all through the year with effectively in beta. And I said to the market and said to all of you, we're going to look to monetize in 27, but we're not going to try and take it all now before our customers see the value or we can show them the value. I think it's important. Last point, I want to come back to the $2 million you asked about. So remember, what we gave you is $2 million is the number using traditional AI -- and I think this is very important because we have long had AI in our product. We have it in data ingestion. We have an OCR. By the way, we have it in auto bank reconciliation suggestions. Many of our competitors count things like suggestions in their overall AI number. We've chosen to disclose our traditional AI and then our newer features. So we're proud of the $2 million, and we're really proud of the 300,000 because that 300,000 is excluding customer service, on the features launched in 26 under JAKs in that new AI Genii banner. So we're trying to give you a view for our traditional AI strength. -- including things that others may count as AI that we count as historic AI plus our newer Gen AI adoption. So hopefully, that becomes clear now in the disclosures. SP407107096 Your next question comes from Bob Chen from JPMorgan.

Just 2 questions for me. Maybe first 1 on AI and the ask. I understand could see some lift in overall ARPU. How does the input cost of tokens and staff come into play? Like how should we be thinking about the gross margin of the software business? I mean, historically, it's been in the high 80s. -- does the AI monetization pathway pain, how we should be thinking about the gross margin of your business? .

Do you want to take this, Clear? Yes, sure, absolutely. So I think what we're looking at -- and the whole industry is looking at is how does this evolve over time? And I think we're not anticipating significant changes in the gross margin profile of our 0 core subscription business. We obviously will be monitoring the impact of additional costs that gets factored into the way that we do pricing, the way that we do the monetization and how that scales. And I think as Di said, very much focused on adoption first to make sure that we're bringing that value to customers. But from a cost standpoint, that is all managed in that kind of value proposition. So not expecting material changes over the medium term to our subscription gross margin. numbers. It's also on the reasons that we do want to make sure that the model is at least future-proofed in so much as consumption will affect costs cost of tokens coming down rapidly, but then different features have different compute. And so it's 1 of the reasons you want to be able to have at least the readiness for consumption. -- and starting to message that, that's something we want to weave into our business model.

Okay. Great. And then maybe a question on Melia. I think there's a couple of mentions around syndication sort of ramping up and becoming more important. We did see Capital One make an acquisition recently of Brex. I'm interested to understand, does that impact sort of any relationships there -- and then also sort of long term, like how important is syndication for you to get to your 28 sort of implied numbers? .

Yes. Yes, maybe I'll just do a kind of a high-level view in terms of assumptions of syndication, then I'll pass to you, Matan. To follow up. So I think the way to think about syndication and increase over time. But as you've seen, our direct business also is growing at a rapid pace. So I would say the proportion of the syndication as a percentage of the overall business isn't expected to materially change over time. But on both melio.com and the syndication business, we obviously anticipate really strong growth and future opportunity ahead. specifically on Capital One. And Bret, do you want to make a high-level comment on that?

Yes, sure. So Capital One and 0 now have a very strong partnership the Brex acquisition was in order for Capital One to have capabilities to target corporate clients with corporate card spend control solutions. The media partnership is targeting a completely different segment with a completely different product. We're targeting small businesses with cash flow needs across the Spark Capital One card business unit and the Capital One Bank unit. And so Capital One have reassured us again and again that our partnership has been very successful and in more resources to make it even more successful in the future. we see no risk due to the Brexit acquisition, and we're happy for Capital One for doing this great acquisition to target yet another segment that they were less active.

Your next question comes from Nick Basile from CLSA.

Kind and Tim. Just 2 questions from me. The first one, I guess, just tries to strike at, I think, at the heart of what you're presenting in terms of when you're showing us the time saving and potential automation benefits of for customers of as AI assistant for bank reconciliation and then the link at the end to MELIO's-embedded BillPay product. What sort of percentage of new users do you think will look to combine your bill pay and accounting suite within the Xero ecosystem. And can you give us a bit more of a guide on, I guess, current attach rates or any sort of targets you may have as part of your go-to-market in the future. And I'll ask the second 1 as well to give you some time to sort of think about the answer, but it sort of goes to Slide 39. There's a few moving parts in the business, of course. But -- on the 1 hand, we see TPV volume for bill pay slow a little bit sequentially, but at the same time, you've seen your gross GPV take rate improved. So that kind of speaks to the controllability aspect. And of course, then your revenue is also sequentially sort of 1 of the best periods. So -- with that said, I'm just trying to get a better sense of what kind of drivers we think are going to be the biggest part of the story to hit your 28 aspirations from a revenue and, of course, the EBITDA run rate perspective, like how much should we be focusing on improving take rates versus maybe the bill pay volume TPV also expanding and just the balance?

Sure. Why don't I take the attached question and then Claire and Matan may take the second question. So if you think about the attach rate -- first of all, you have the attach rate of AI, I think you asked about the attach rate of MELI and then the attach rate of products like Sift I think it's important to realize that when we did the business case for Melio is a customer base. I think at the business case time it was around 80,000. We had about 408,000 subscribers. But relatively speaking, we were very clear that the synergies from this deal actually come less. We do have cross-sell synergies, but they can far more from like winning the white space customer, so while we do intend deeply to drive attached, that's why we embedded Melio on Xero, and we, I think, are on a goal to increase utilization across all these products, including AI. I think it's important to just remember that the catch rates on Milo specifically to the U.S. business is only a just winning the marginal new customer faster than Xero alone could. That is the vast majority of the synergies, now over time, of course, the number -- the sheer number of customers, who attach, we hope, increases well beyond the aspiration period, but within the aspiration period specifically, more synergies are actually driven by winning net new customers, even though we will continue to drive attach on Xero. Sure. And I'll take the second part of your question. So with regards to how to think about what -- how to see the mix between TPV take rate, et cetera, when it comes to our fiscal '28 aspirations and media breakeven goal and the run rate as we exit fiscal '20 -- we talked about scale, and I think it is important to remember that. We can see the really strong growth, and therefore, the growth in TPV that we expect over time. Existing customers as we expect them to grow over time, but also new customers that are coming on board. And then I think with the leverage of the go-to-market support from Xero as well, there's lots of opportunities, as we've talked about in terms of synergies over time. So I think definitely think about scale, think about that kind of TPV value and how we can get value from customers as well as new customers coming on board. We do anticipate improvements in overall take rate. We do anticipate improvement in margin rate expansion, as we've talked about, coming from scale but also from improved product mix and as Matan and I both mentioned earlier, from syndication as well, which will help from a margin expansion standpoint. So I think focus on the scale element of that and then the contribution of gross profit dollars, as kind mentioned earlier, in terms of how that helps us drive the EBITDA as well as the operating leverage that we talked about from an EBITDA standpoint.

Yes. And if I can add from a customer perspective and as to Kinder always say, customers expect Xero to shift from being a system of record to be in a system of record and a system of action. And that means embedding more capabilities into the Xero product, bill pay, obviously, 1 invoicing, gastro partnership payroll. All these products have different margin profiles, margin percentages. But at the end of the day, -- this is what customers expect from us to do. And at the end, we're going to provide more value, and we're going to capture and capitalize and monetize this value, increasing revenue, increasing gross profit dollars, but each of these capabilities have a different profile. But that's what customers want, and that's what Diya and the media team are delivering.

Thank you. Your next question comes from Garry Sherriff from Royal Bank of Canada.

Good update 3 questions. 1 for Claire on the different payment options. Another 1 on synergies and a final 1 for Matan. If I start with the payment options, Just trying to get a sense around who takes the credit risk as an example for BNPL or other payment options versus getting paid immediately?

Sure. So I think in terms of as we look at our product portfolio, there is some credit risk, and we've had that factored into our financials when it's with us when it's on our rails, and we're offering that. We're obviously not providing like a bank funding, but there is obviously some loss risk factored into that. So just to remind you that it isn't a kind of a credit risk as such, it's more of a loss risk, like an operational risk. So just think about it not in terms of bank credit but more in terms of operational loss risk. So that -- the operational loss risk to us, there isn't a credit or bank risk that we're taking in any of these payment methods.

Yes. Any if I can add -- so Milo or with the embedded solution, we don't provide any loans in terms of our own balance sheet or underwriting. We have partnerships that are enabling us to do that. But we do -- as Claire mentioned, we have payments and money movement, and that is the risk and compliance capabilities that we're very proud of and these are the ones that we built in-house and monitor all the money movement from both a risk standpoint and the compliance standpoint. But in terms of credit, as Claire mentioned, it's not pure credit where we provide loans. This is just payment, money movement, risk and compliant operations.

Okay. No, that's clear. Matan, while I've got you. If I had to go back to ground Xero, I mean if you had access to the AI coating power that's available now and continues to accelerate, how long do you think it would take you to replicate the Melio software platform as it is?

I think the infrastructure that Melio has built is 1 that requires a lot of investment, both across our infrastructure to do money movement at scale. And also in terms of the workflows and platform to enable all these partners and the stand-alone experience that we power today. I will say that Melio is benefiting greatly by leveraging a becoming better and better every day, every week, every month by getting more data on our customers on payments across risk and compliance. And so our infrastructure today, because of AI is significantly better than what it was in the past. And so our competitive advantage is becoming stronger and stronger, not weaker and weaker.

One thing I think is important and I mean I think this goes across both Melio and Xero, so I think it's worth highlighting, Gary. Remember that at Xero as an example, our wiring is to thousands of banks, right? We have plumbing. Milo has a tremendous amount of planning. We have data plumbing, Milo has compliance plumbing, payment rails plumbing, if you think about the infrastructure to support the payment types into multiple other payment rails, this is not like just a workflow software. I think this is quite important. -- we are -- both have deep infrastructure and plumbing. So I don't think, let's say, let's say you -- I don't know, went to an agentic platform and you coded the simple workflow of like, I don't know, the first screen of Xero. Great. I tried doing that on cloncode because I play with all these tools. At the end of the day, you're still going to need to hook up thousands of bank feeds. You still need to process the data. That data is proprietary. We use it to train our models. That is the infra that makes us, I'd say, much stronger than just the workflow software, which we also are very proud of. It's very elegant. We're going to keep reimagining that software with AI. But I think the plumbing of payments and the plumbing of financial operations and the financial data that sits in our system, this is not something that I don't know, you're not going to knock on JPMorgan store with an agent and say, let me please. So I think it is important that the infra of our businesses are substantial value adds to our customers.

Yes, elegant don't disagree, elegant response -- and the last question just around synergies. Around the cost side, I mean, you did flag the consolidating of offices is done. -- and that you're also looking to do integration of shared services that's underway. Can we get a sense of the annualized savings on both of those and maybe the timing would be great.

Yes. I'm not going to share the exact details from each of those. What I would say though, compared to the plans that we set out when we did the announcement. We're very much on track to where we expect it to be. At this point, from an integration standpoint, end-to-end, including cost synergies. To your point, offices was 1 example, customer support alignment. I think as we bring the go-to-market teams together, as we bring a lot of the support functions together over time, we'll continue to see ongoing benefits -- but we're on track. I'm not going to share the exact numbers, but we're on track to where we said would be we're going to continue to see those benefits come through in fiscal '27 and into '28 as well.

Your next question comes from Siraj Ahmed from Citi.

Just first one, maybe for Spine and Matan. On the overall U.S. growth was Xero, right, both accounting and payments -- now that you have Melo, you have the scale in the unit economics, like when should we expect a pickup in the U.S. growth Matan are there some stage gates that we should be looking at? Is it us still as it the brand spend we have discussed before business pick up from our perspective. When should we think about that?

So first of all, the underlying business is growing faster every half year. I'll remind you that the business -- when I arrived as CEO compared to last half where we grew 33% on an underlying basis. we're really proud of. And that growth is steady. That's because we think of ourselves as, although this business is money losing, and we've been very clear on that because we're in an investment mode, we still want to be disciplined allocators of capital. So I think we're very happy with the U.S. growth rate on an organic basis. And what we said is we expect that to accelerate with Melio. That's because Melio itself is a high-growth story, of course, it's very high growth. We don't need them to be higher growth, quite frankly. They're already growing really well. But on the U.S. side, we've said that those revenue synergies imply that there would be accelerated growth because we think we can pick up more new customers from white space together versus a part with a fuller value proposition. So that implies we see acceleration of U.S. growth, but the way we think about it is steady as she goes. and accelerating. So I mean I think that is our expectation. We don't believe that you need to believe in hockey sticks. You need to believe in steady acceleration of this business, and that's what the business model with Melio was predicated on. And then the last thing I've said before is when you want to get those hockey stick type growth rates, I think we want them to be sustainable, which guides everything from how we invest in product to even when we decide to put the pedal on the gas and if we want to make a brand investment as an example, which would be a substantially further investment in U.S. CAC over -- but that would be a multiyear investment. So that's how we think about making these investments.

Yes. And I have to say someone Yes. Just to add a quick comment. As Melio has joined Xero officially 3.5 months ago. And I have to say like we've launched is coming -- some of that's coming from the outside, the velocity in which we launched the pilot and then reaching GA was beyond any of our expectations. We were a start-up that is moving fast, joining a bigger company. And so we had some expectation that maybe things would move slower, but the speed was pretty incredible. And so we're very proud at the velocity and quality of the product that we've launched to our customers. And as Diya mentioned, it's reflected already with customer feedback that love the combination between accounting and financial services. Again, we were very confident always about the hypothesis of combining the 2 together. -- what customers want. That's what they say, but it's so great to see it live and so quickly after joining.

So Siraj, you had a clarifying question.

Yes. Just in -- I mean you are -- so you're sort of saying the big step up in brand spend, which is a gap in the U.S., that's not sort of there in the 2 sort of aspiration. You still will have I mean, you have more dollar gross profit dollars now to invest, but there's no step-up in the pack that you're thinking at this stage.

Well, what I'm saying is the U.S. -- I think the way to think about it is when we made the Milo announcement, it was predicated at it on steady acceleration of organic U.S. growth with our stand-alone business because of the synergies of adding the payments job and appealing to more customers and then, of course, Melio's own growth rate, but you didn't need to think about astronomical growth rates -- and that aspiration was without the expectation -- or let's put say, the commitment to U.S. brand spend. Now as I've always said, U.S. brand spend is a choice for us. And as we are generating more efficiency in the core business, I think we will update you when we're ready to talk about U.S. brand spend. My point is simply the '28 aspiration was done without it. We want to be disciplined allocators but -- we didn't need to hockey stick our own organic growth model because we have been steadily accelerating think Melo accelerates the appeal of xero.com to U.S. users, independent of brand spend even further. But again, I don't think we're chasing hockey sticks on a 1-year basis.

I just have 2 more. So second one, I mean, all the AI destruction stuff, let's talk about going on offense on AI, right? I mean, like Diya said, this accelerating a product development you're hiring for a GM for mid-market. You could actually do your own payroll in the U.S. as well, but potentially with the new codevelopment and stuff like that. So -- how do you think about that? Like is it 0 in 3 years' time more -- does it need more app ecosystem if you can actually devitmore? But do you still think you used to work with partners or you can actually -- just kind on how you think about that?

Well, first of all, I'm very happy to talk about playing offense. This is when we talk about all the time at Xero I'd when say that's the mode we're in. I mean we are still playing offense. We are playing offense on the need to go after the U.S. opportunity is 1 of the largest SMB markets in the world. That is what led us to acquire Melia. We can all sit back and wait. But accounting plus payments plus payroll, we've been very clear. This is key to what U.S. -- not just SMBs worldwide expect and it led us to make a nonlinear move within the last 12 months. Sift was an example of playing offense that predated but was a precursor to our AI investment. We were very clear that analytics and analytics cloud by AI would be in our future. And we moved fast to make that acquisition. On JAKs, we have moved very fast, not just to get invoice creation out the door, but as you've seen, to keep adding multiple agents orchestrating on the platform. And I think you can count on us to not sit still, like we consider all of these disciplined but offensive moves to go capture the TAM available to Xero, which is immense. So I love that you're identifying even future moves we can make. Our job, of course, is to stay aggressive, stay offensive keep thinking about what drives customer value for this segment, we know and love deeply, whether that's a medium segment opportunity, whether that's payroll in the U.S., these are all opportunities for us. Our goal is, of course, to do that in a disciplined way. So we're going to stay aggressive. We're going to keep trying to make the right moves for our customers. Of course, that all needs to fit into our capital envelope. We need to take measured risk and smart and thoughtful risk, and we're going to be stayed very lean for it on AI because we think we have the capabilities to be a net winner in this equation.

Just last quick one. Just on syndicated Director was indicated. I know that Claire mentioned syndicate a little bit similar in proportion but it does seem like there's a bit more focus on direct just wondering, has something changed on the syndicated side, like with maybe with is I know they're going to change is, as that onboarding been a bit slower -- and also no mention about embedded accounting as well, just keen to understand how you're thinking about syndicated whether something has really changed there?

Yes. I will -- I'll just kick off. What I would say is no change. So don't interpret any change in terms of the opportunity that we see for syndication over time. We always anticipated both the direct and this indication to grow fast, and that's why it's a great opportunity ahead. So no concerns on the syndication things are moving well as we look forward, lots of opportunity ahead. And we haven't -- specifically, we've always had in future opportunities about the syndication opportunity with accounting. So as Matan said, we think we're 3.5 months in. So that's still on the table. It's just not necessarily a focus in the immediate term, but we are very excited about the scale revenue and gross profit dollars that we can get from syndication and just as excited now as we were 3 or 4 months ago. So yes, nothing changed and both give us a lot of opportunity ahead.

Yes. I think on embedded accounting specifically, if you call it the announcement, we said embedded accounting of Xero into Melio is syndication partners was future upside that we did not size into the aspiration because the syndication of bill pay is getting delivered and deployed now. And that is Melio's core focus, and we do not want to take their core focus off of first and foremost, delivering on that bill pay promise across bank and software partners. That is the basis on which we would, I think, get the benefit of that distribution if we want to embed accounting. Separately, I think we announced at the half, if you recall, or we shared at the half, of course, that we at Xero, did an embedded accounting deal with BlueVine, we're really excited. It's our first embedded accounting deal. So while our, I would say, our subsidiary, melio.com, is deploying bill-pay syndication at Xero, we want to learn -- so that's very much an early learning deal for us where we have to build anyway, the connectivity and APIs to be able to do syndication at scale of embedded accounting. So we've always said we are very open to embedding accounting in other stacks. But first Melio needs to build its bill pay syndication base and deploy it. Mean the 0 side. We're learning with our first partner, BlueVine, and that puts us in a good position. When Million its partners are ready and want to take embedded accounting or any version of it, we will always -- already have our first learnings. But that is very much a speculative bet. We said it at the announcement, and we said it was not included in the aspirations.

Your next question comes from Roger Samuel from Jefferies.

Just a very quick question on AI. If you look at your U.S. software comps, the revenue that they derive from AI is still pretty vile -- and you mentioned about being flexible in how you monetize AI. I'm just wondering, from FY '27 onwards, I mean, when can we start to see a material contribution from AI in the business? And what sort of percentage of revenue do you expect coming from AI over time?

So I think I'm going to hark into Diya's guidance. First of all, we will monetize AI. But our question is how do we keep it simple while future-proofing it. If you think about that and what our customers expect they'll expect if you think about simplicity and adoption, we'll have to think about what's bundled, what's consumption, what's not. So I think, again, we're going to keep looking at AI as a TAM expander over the next number of years. not a kind of 1 shot and done. Some of that you might be able to see directly if we choose to monetize a portion of a consumption-oriented and some of you may see bundled in to our different subscriptions with different features. So that's the way to think about it. I don't know that I would offer any further guidance now on '27, then we've said that we will monetize.

Yes, I definitely think about this as a medium, longer-term play. It's about doing the right thing for the customers. We -- all of our pricing, including whether it's AI monetization or pricing in general is always focused on value to our customers, and that strategy in terms of approach hasn't changed. So making it simple, making it value-based, making sure that it gives customers the opportunity to -- for that adoption as Diya talked about, is definitely our priorities as we continue forward and think about the benefit that we can get from AR monetization but over, I would say, the medium to longer term.

Your next question comes from Andrew Gillies from Macquarie.

Most of my questions have been asked, but I'll just have a crack at. Sort of on Slide 25, it is my first question. Just the average gross profit per direct user there's obviously been a fair bit of growth historically. There's some good detail on TPV per customer as well. But it has seemed like historically, take rate has been a pretty material driver of that GP dollar figure that you mentioned, Sukhinder Skin -- can you maybe provide a little bit of additional color because that includes subscription as well. Like how much of it is mix shift? And what are some of the other drivers of take rate expansion that potentially are not reflected in that number that in your initiatives that we might see over the next few years?

Yes, sure. So yes, I think what we'd say, to your point, definitely an opportunity that we've seen in terms of improved take rate over time. But we continue to see that a future opportunity as well. So -- and I think we talked about the value that a customer has with us over time. And Matan talked about we have available all of the different payment methods. And we can, and we do see people adopting more of those options over time. So I think the way that I would think about it though is TPV and scale and revenue, as I mentioned before, is key ultimately to our aspirations. It is key to that Milo EBITDA breakeven aspiration that we have towards the end of 2018. However, we do see that opportunity to continue that gross take rate opportunity over time, which does help us from a margin expansion standpoint as well.

I want to make sure that we answered your question. So something else on the slide specifically, you were looking to get answered. I just want to make sure if we missed the specifics of your question.

I'm just trying to understand the subscription is included in that. Obviously, this is kind of the last 3 years. So I'm presuming there's more upside. Like what does that sort of gross profit dollars per user actually look like as a percentage of the yes. indirect. As a percentage of sale of the serviceable addressable market, just trying to understand how you get that confidence in getting to '28 because there are some pretty material drivers there.

Okay. All right. So I think just to separate them out, obviously, and I'll just make sure -- and if I'm not doing justice to your question, I apologize, and we'll take another crack, so if you just think about our subscription gross profit dollars, those are going to be driven over time by 3 things, and I think you hit it. price rises, mix shift mix shift itself is driven by whether customers choose to take a product or additional products in a bundle or add-on setting, right? So we have pricing and packaging choices as Diya talks about AI, shift, bill pay on Xero, we can choose whether we put that bundled or unbundled. But I think price rises and then increasing attach and that attach can come, again, you can choose to -- do you do it through a mix shift or you might choose to take something that also has a consumption basis, like payroll or is going to be consumption-based in the U.S. or payments in fact, is consumption-based. So I think subscription gross profits are really driven by increased product utilization as expressed by you're on the same package and you get a price rise for the added value or you step up a package and take more features or you take more add-ons. That literally will be the way I think we express the dollar expansion in subscription. And then as we talked about on the payment side of the business, there's a whole payments driver slide, as you know. And in that slide, we really talk about you want to deepen the TPV per Melio, how much per customer you're getting, I mean, as customers do more with you, it is a business of depth. -- where you're getting more TPV per user, right? So that's like more users, certainly, and then payment mix type is your take rate on any given transaction. So that is the way I would think about kind of the combination. The importance of context for LLMs. [This call length has exceeded streaming capabilities – Please refer to the preliminary transcript that will be posted shortly.]