subscribed uk: ceo's keynote

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L O N D O N October 2012

W E L C O M E T O

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Zuora Receives £36m For European 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.

“ ”

Is there a way to convey that it started with Salesforce, and then led to this huge industry. Same with the others, it started with

Zipcar/whipcar, and now it’s changed the world. It

started with Spo=fy, and now it’s changed the world.

Fist Dominoe, Race Start Gun, Star=ng Blocks,

Timeline, ripples from first drop

Forrester

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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 renewals

Gartner ”

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The Past! The Future

BUY NOW

We Call this Shi, the Subscrip2on Economy™

Subscribe

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Why the Subscrip2on Economy ?

Technology Trends Smart Money Business Model Demand

Mobile

Social Businesses 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 Subscrip2on Economy is a Green Economy

“ The average car is idle 92% of the time ”

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Product Focused Rela2onship Focused

BUY NOW Subscribe

The Subscrip2on Economy is about Customer Rela2onships

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The Subscrip2on Economy Requires a Completely Different Approach to Building Businesses

Subscription Economy

Mone2zing Customer Rela2onships

Pay-‐as-‐you-‐Go Pricing Plans

Mul2ple Orders Over a Life2me

B2Any: Sell to Consumers & Businesses

Complex, Interrelated Bookings, Billings, & Revenue

The image cannot be

Sell Units

Forced to Pick a Customer Segment

Price Per Unit

One-‐Time Orders

Simple Financial Metrics

Product Economy

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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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Educa2on

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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$12 Billion Total Invoice Volume

25% Europe Total Invoice Volume

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YOU Are The Subscription Economy

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One Year Later We 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 accoun=ng becomes the cornerstone of modern accoun=ng

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 Recogni2on

•  Complex Recurring Billing •  Changes, Adjustments, Credits

Revenue managers are drowning in spreadsheets

The Result:

•  Subscrip2on Metrics (MRR, ARR, CLTV)

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“We need more 2me”

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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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

Mul2 dimensional Ledgers

Intelligent Algorithms

Revolu2onary Data Model

Spread revenue over 2me

Powerful Rules Engine

Differen2ate between one 2me and recurring revenue

Calculates key subscrip2on metrics

Adapts to subscrip2on changes

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Accounting Close Tools tools to accelerate your month end close

Define rules to manage complex revenue recogni2on policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogni2on rules Control revenue recogni2on 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 recogni2on policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogni2on rules Control revenue recogni2on trigger dates View earned and deferred revenue reports

✔

✔

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Chart of Accounts to track charges through the revenue lifecycle

Create or import your chart of accounts Tag charges with GL account codes Tag transac2ons such as payments, credits, refunds, adjustments etc with GL account codes

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✔

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Easy Accounting Integration to 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 Controls for audit peace of mind

Create custom user roles Associate roles with granular user permissions Control visibility and user ac2ons on sensi2ve financial data

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Reuse the audit peace of mind screen shot from the website

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Tames your revenue recognition processes

Upgrades, downgrades, cancella2ons, 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 transac2on from closed accoun2ng 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 Business are Very Different

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Design Product

Make Product

Sell Product

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 Op2ons X

Monthly vs Annual Op2ons

X X X

Higher Edi2ons X X

Lower Edi2ons X X

Product Bundles X

Pricing Tiers X X

Usage & Overage X X X

Mul2ple Currencies X X

Renewals X

Pricing Changes X X

Regional Pricing X

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

Your Existing Systems Spacing feels all off on this, and the other “Can’t” slides.

Also feels too high up

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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-Cash Renewals Payment Failures Account Suspension Amendments Account 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

Your Existing Systems

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What you Need to Know with a Subscription Business Model is 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

Growth Efficiency 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

Retention Rate

Growth Efficiency

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

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Don’t Have the Metrics You Need to Know

Your Existing Systems

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I Need a System That Helps me 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: Ship More Units

Goal: Build Valuable

Relationships

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Enterprise Resource Planning

Relationship Business

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 Founda2on For the Subscrip2on Economy

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Z-‐Business Solves Your Rela2onship Commerce Needs

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Z-‐Business Automates Your Billing and Payment Processes

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Z-‐Business Revolu2onizes your Finance Opera2ons

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Z-‐Business Plugs Into Your CRM and GL

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Our Mission: Help you succeed in the Subscrip2on Economy

FLOW: Run and flow your subscrip2on business processes efficiently.

GROW: Build and grow your subscrip2on business and revenue.

KNOW: Have the right metrics to op2mize your subscrip2on business.

Z-‐Business Helps You Grow, Flow and Know

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thank you.

subscribed uk: ceo's keynote

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