subscribed sydney: ceo's keynote

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S Y D N E YNovember 2012

W E L C O M E T O

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Zuora Receives £36m For International Expansion“ ” November 17th, 2011

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It all started with a simple idea

That there is a shift from products to services

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The global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020.

“” Forreste

r

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Carsharing subscriber base to be 14 Million in EU by 2020; 32 Million worldwide

“”

Frost & Sullivan

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“By 2015, more than 40 percent of media and digital-products companies around the world will use subscription services for their fulfillment, billing, and renewalsGartner

”

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The Past The Future

BUY NOW

We Call this Shift the Subscription Economy™

Subscribe

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Why the Subscription Economy ?

Technology Trends Smart MoneyBusiness ModelDemand

Mobile

SocialBusinesses want to

subscribe to services

Consumers want to subscribe to services

Wall St. and Sand Hill Value Subscription-Based

Companies

It’s a better business model for growth

Cloud

Subscribe

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The Subscription Economy is a Green Economy

“The average car is idle 92% of the time

”

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Build It

Manufacturer

Pack It

Wholesaler

Ship It

Distributor

Sell It

Retailer Customer

20th Century Distribution Model

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Today’s Model is Different

Customers, Prospects, Friends,

& Family Customer

YOU

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Product Focused Relationship Focused

BUY NOW Subscribe

The Subscription Economy is about Customer Relationships

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The Media Industry is Moving to the Subscription Economy

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The Tech Industry is Moving to the Subscription Economy

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The Telecom Industry is Moving to the Subscription Economy

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The Retail Industry is Moving to the Subscription Economy

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Dollar Rubber Club

Condoms

Craft Coffee

Coffee

Steepster

Fine Teas

SweetBox

Chocolate

The Fruit Guys

Fruits & Veggies

BirchBox

Beauty

GuyHaus

Guy Supplies

Focus N Fly

Fitness

Test Tube

Beauty Samples

Wonder Sitter

Baby Sitting

Babbaco

Kids Toys/Activities

Crafts & Books

Kiwi Crate

Hoseanna

Hosiery

Put This On

Men’s Accessories

Bag Borrow or Steal

Handbags

Rent the Runway

Women’s Dresses

Bespoke Post

Luxury Items

Sweet Petula

Soaps

McSweeneys

Shirts

Meundies

Underwear

Mystery Tackle Box

Fishing Equipment

Spice Guides

Date Idea Guide

Clothing

FabKids

Spotify

Music

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As Web businesses embrace subscription business models, the benefits are clear: reduced customer acquisition costs and steady cash flow

“”

June 12, 2012

Making the Web’s Subscription Economy Hum

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The new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to what might be called a Rentership Society, far from being a drag, will unleash a wave of economic efficiency that could fuel the next boom.

“

”May 4, 2012

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“

”

Consumerism is being redefined for the mobile age, and the model is spreading among professionals and families in ways that were little anticipated, even by the venture capitalists funding this new era of cooperative capitalism

Mar 4, 2012

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C.E.O.’s are beginning to appreciate the value of recurring revenue in a way never before … the software industry adopted it, which caught people’s attention. Now you’re seeing companies in just about every kind of industry embracing it

“

”Mar 7, 2012

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Customer Satisfaction Graph – pie chart of 95% customer satisfaction

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Exponential Growth In Transaction Volume

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Education

Travel Services

Cloud Services

Media

Strong Adoption in Large Enterprises

Telecom

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Q1'08

Q2'08

Q3'08

Q4'08

Q1'09

Q2'09

Q3'09

Q4'09

Q1'10

Q2'10

Q3'10

Q4'10

Q1'11

Q2'11

Q3'11

Q4'11

Q1'12

Q2'12

Q3'12

Q4'12

Q1'13

Q2'13

ARR

“”

In short order, Zuora has become the dominant player in cloud-based subscription systems.

The Fastest Growing SaaS Company

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$12BillionTotal Invoice Volume

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YOU Are The Subscription Economy

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One Year LaterWe are at the Tipping Point

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In 2008, We Launched Z-Billing

In 2010, We Launched Z-Commerce

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Last month, we introduced our third major product

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1494 A.D.

Luca Bartolomeo Pacioli

invents the system of

Double Entry Bookkeeping

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To the CFOs of the modern era

Double entry accounting becomes the cornerstone

of modern accounting

For over 500 years, the system has worked…

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Until Now

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A $100 is a $100 is a $100. The rules say it all goes in the same account.

You Need to Differentiate Between One-Time and Recurring Amounts

The Problem:

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The rules don’t allow me to spread these amounts over time. Now you’re just being a rebel.

You Want To Spread Revenue Over Time

The Problem:

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I don’t have a rule for that. You’ve got yourself into quite a mess…

Your system doesn’t know what to do when subscriptions change

The Problem:

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• Revenue Recognition

• Complex Recurring Billing• Changes, Adjustments, Credits

Revenue managers are drowning in spreadsheets

The Result:

• Subscription Metrics (MRR, ARR, CLTV)

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“We need more time”

The Result: It takes Weeks for finance teams to close the books

- Finance Team

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Actually run the business here.Appease the auditors here.

AR

Revenue

600M

600M

Debit Credit

CFOs are maintaining 2 sets of books

“PwC will love these.”

The Result:

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CMOs are prevented from implementing new innovations

The Result:

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CEOs have a hard time explaining their success to Wall Street

Page 11

The Result:

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And Wall Street fails to value Subscription Businesses correctly

“CRM shares look heavily overvalued because rising revenue growth has actually translated to falling net income.

“ Maybe CEO Marc Benioff will one day be able to translate all of this low-margin selling into huge profits, but for now it kind of looks more like the Napster model than the iTunes model, and that concerns us.

The Result:

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The world of Finance is broken…

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It’s Time to Fix It …

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Introducing Z-Finance

The World’s first finance application built

for the Subscription Economy

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Z-Finance is built on a new foundation

Multi dimensional Ledgers

Intelligent Algorithms

Revolutionary Data Model

Spread revenue over time

Powerful Rules Engine

Differentiate between one time and recurring revenue

Calculates key subscription metrics

Adapts to subscription changes

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Accounting Close Tools tools to accelerate your month end close

Define rules to manage complex revenue recognition policies

Tag charges with revenue revenue and deferred revenue GL accounts

Tag charges with with revenue recognition rules

Control revenue recognition trigger dates

View earned and deferred revenue reports

✔

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Revenue Recognition Tools that handle complex revenue rules

Define rules to manage complex revenue recognition policies

Tag charges with revenue revenue and deferred revenue GL accounts

Tag charges with with revenue recognition rules

Control revenue recognition trigger dates

View earned and deferred revenue reports

✔

✔

✔

✔

✔

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Chart of Accountsto track charges through the revenue lifecycle

Create or import your chart of accounts

Tag charges with GL account codes

Tag transactions such as payments, credits, refunds, adjustments etc with GL account codes

✔

✔

✔

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Easy Accounting Integrationto unburden your IT team

Generate debit and credit journal entries to simplify your general ledger updates

Align journal entries with GL accounts

✔

✔

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Tight Security Controlsfor audit peace of mind

Create custom user roles

Associate roles with granular user permissions

Control visibility and user actions on sensitive financial data

✔

✔

✔

Reuse the audit peace of mind screen shot from the website

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Tames your revenue recognition processes

Upgrades, downgrades, cancellations, refunds etc. are all taken care of!

We use SAP. We run our broadband business on Zuora … we get all our journal entries from Zuora … without time consuming and expensive customization

“”Vignessa Moorthy, CEO of ViewQwest

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Unburdens your finance team, enabling your growth

Unleash your growth strategies without burdening finance

Vince Zumbo, CFO of Autotask

…Z-Finance makes it easier for us to scale as our business grows“ ”

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Gives you audit peace of mind

Rapidly review details of any transaction from closed accounting periods

Bruce McFadyen, CFO of Firehost

…they have nailed it with Z-Finance, providing the next level of audit friendly automation …

“”

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• 300 accounting periods created

• Over 5 million financial transactions analyzed

• 207 accounting periods closed

Get up close and personal with Z-Finance Join Z-Finance PMs at 3pm in the Colonnade

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Subscribe

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Chasm

The Present

The Future

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Why is it so hard to GROW my business

Why Can’t I Make My Processes FLOW Why Can’t I Find

What I Need to KNOW

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Product Relationships

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Goal:Ship More Units

Goal: Build Valuable Relationships

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The Strategies Required to Grow a Subscription Businessare Very Different

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DesignProduct

MakeProduct

SellProduct

Product Business

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Acquire New Customers

Increase the Value of Your Customers

Reduce Churn

Subscription Business

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Packaging & Pricing Strategy

Acquire New Customers

Increase Value Per Customer

Reduce Churn

Launch First Product X

Add-on Options X

Monthly vs Annual Options

X X X

Higher Editions X X

Lower Editions X X

Product Bundles X

Pricing Tiers X X

Usage & Overage X X X

Multiple Currencies X X

Renewals X

Pricing Changes X X

Regional Pricing X

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Can’t Support the Pricing & Packaging StrategiesYou Need to Grow

Your Existing Systems

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The Processes Required to Make a Subscription Business Flow are Very Different

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Quote-To-Cash

Product Business

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Quote-To-CashRenewalsPayment FailuresAccount SuspensionAmendmentsAccount Management

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Commerce Billing Finance

Book Order & Ship It

Invoice &Collect For It

Recognize It

Product Business

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Commerce

Billing

Finance

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Can’t Support the Processes Needed To Make Your Business Flow


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What you Need to Know with a Subscription Business Modelis Very Different

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Traditional Income Statement

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Revenue ARR

$0

$100

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Subscription Economy Income Statement

ARR $100 Churn (10)Net ARR 90 COGS (20) G&A (10) R&D (20)Recurring Profit 40

Growth (40) Net New ARR 40 Ending ARR $130

Retention Rate

GrowthEfficiency Index

Recurring Profit Margin

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The Three Key Metrics of the Subscription Economy

ARR less Churn less Non-Growth

Spend

Recurring Profit Margin

How much of your ARR you

keep every year.

How much does it cost you to acquire $1 of

ACV

RetentionRate

Growth Efficiency

“ The metrics for Cloud computing is fairly different from traditional enterprise software. ”Bessemer Venture Partners – Top 10 Laws for Cloud Computing

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Don’t Have the Metrics You Need to Know


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How do you run acustomer focused company…

…with systems meant for the old world?

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You Need a System That Helps You Grow , Flow and Know in the Subscription Economy

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Your Systems Today

CRM ERP GL

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Products Relationships

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Goal: ShipMore Units

Goal: BuildValuable

Relationships

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EnterpriseResourcePlanning

RelationshipBusiness

Management

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We’re Here Today to Announce Z-Business,

The World’s First Relationship Business Management System

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Z-Business Is Built On a Foundation For the Subscription Economy

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Z-Business Solves Your Relationship Commerce Needs

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Z-Business Automates Your Billing and Payment Processes

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Z-Business Revolutionizes your Finance Operations

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Z-Business Plugs Into Your CRM and GL

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Our Mission: Help you succeed in the Subscription Economy

FLOW: Run and flow your subscription business processes efficiently.

GROW: Build and grow your subscription business and revenue.

KNOW: Have the right metrics to optimize your subscription business.

Z-Business Helps You Grow, Flow and Know

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Let’s Take a Look at The Future of theSubscription Economy

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Zuora Product Demo

INTRODUCING

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Process And Systems Landscape For A Subscription Business

Sales Reps &Account Managers

Website user

Payment GatewaysBilling Ops

CRM

E-Commerce

General Ledgers

Billing

Finance

Commerce

Accounting & Finance

Product Marketing

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Today’s Demo Centers Around The Story Of Zimple Backup Services Ltd.

B A C K U P S E R V I C E S L T D .

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‘s Opportunities

B2B and B2C business is in 2 different disparate systems

Each channel is a silo

Can’t handle global currency and tax

Can’t manage multiple payment types at scale

Taking longer (17 days) to close the books

No proper finance and audit controls

‘s Challenges

Sells backup solutions to businesses and consumers

Sells through multiple channels (web, assisted, partners etc)

Gaining popularity in Asia and US

Multiple payment choices can win additional market share

Transaction volume doubling every quarter

Want to go public in 18 months

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Today You’ll See How

A Flexible Pricing Engine Supports Multiple Market Segments

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2

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A Single System Supports Multi-Channel Commerce

Rating, Billing, Taxation and Collections Are Automated Across Geographies

The Accounting Close Process Is Accelerated While Still Maintaining Tight Financial Controls

5 Key Subscription Metrics Give You Unique Insights Into The Health Of Your Business

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Z-Business: A Complete And Integrated System To Manage All Your Subscription Processes

Sales Reps &Account Managers

Website user

Payment GatewaysBilling Ops

CRM

E-Commerce

General Ledgers

Billing

Finance

Commerce

Accounting & Finance

Product Marketing

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The World’s First Integrated Relationship Business Management

System

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W E L C O M E T O

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Welcome.

Zuora will donate

to CanTeen.org.au

For every tweet tagged with theSubscribed hashtag

$5

Don’t forget to tweet!#SubscribedAUS

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Welcome.

Get Your Guidebook

Go to your mobile App Store.

Search “Guidebook” & install.

Click on "download guide” (bottom left corner)

Redeem Code: SubscribedAUyou can text it to yourself here: http://guidebook.com/getit/

Get all the Subscribed info you need – on your phone

1)

2)

3)

4)

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Fairfax

Welcome.

9:00 - 10:30am

10:30 – 11:00am

11:00 – 11:15am

11:45 – 12:15pm Servcorp

Morning Break

Zuora Keynote

11:15 – 11:45am

Salesforce.com

12:15 – 1:45pm Networking Lunch

8:00 – 9:00am Check-In / Coffee

1:45 – 2:45pm Guest Keynote

2:45 – 3:00pm Closing Remarks

Agenda

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Sponsors.

www.scoutanalytics.com

www.bluewolf.comwww.proquestit.com

Thank you to our sponsors: Bluewolf, Scout Analytics and ProQuest If you didn't have a chance to visit their demo stations this morning,

please do so during lunch.

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subscribed sydney: ceo's keynote

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