David Gee

WELCOME TO SUBSCRIBED SYDNEY

WELCOME TO OUR THIRD SUBSCRIBED SYDNEYIm so excited to be here today with all of you in Sydney to talk about the future of business.This is our biggest event here ever.So what is the one major thing that brought us all to this room today?...

David GeeChief Marketing Officer, Zuora

David enters from downstage, energetic.

WE NOW LIVE IN A SUBSCRIPTION ECONOMY

#shifthappens

WE NOW LIVE IN A SUBSCRIPTION ECONOMYThis is what weve been talking about for the past 8 years the arrival of the subscription economyA better way of doing businessAt the heart of the Subscription Economy is the idea that customers are happier subscribing to outcomes they want, when they want them, rather than purchasing a product with the burden of ownershipThose of you in SaaS, you got this from the beginning but now everyone else is moving this way too

YOU SEE IT IN THE HEADLINES

YOU SEE IT IN THE HEADLINESNot a week passes without someone sending me news about a new subscription serviceForbes, NYT, Fortune, Mad MoneyAnnouncements form huge brands: Spotify, PlayStation, Adidas, even completely new airlines like SurfAir.

Unilever Buys Dollar Shave ClubEuropean giant to pay $1 billion for startup in challenge to P&G

Plus, Dollar Shave Club acquired by Unilever for $1B.Dollar Shave Club (which isnt profitable) has signed up 3.2 million members for its mail-order service that ships out disposable razors and other grooming products for a flat monthly fee.

A GLOBAL PHENOMENON80%Of customers are demanding new consumption models The Economist 201450%Of people in France are moving away from traditional ownership - Institut Franais Dopinion Publique (IFOP)80%Of German companies have dealt with the issue of subscription business models.- IDG Research Services$420BSpent on subscriptions in the US in 2015; up from $215B in 2000.- Credit Suisse

THIS IS A GLOBAL PHENOMENONThe Subscription Economy is not something that is limited to a few regions, we see this change happening around the worldStudies have been done by the Economist, by independent research groups across the globeIn this last year weve been asked to hold our Subscribed events in London, Paris, Tokyo, Stockholm, Tel Aviv, and San Francisco, and now our first third one in Australia

6

4/5 people in the UK have a subscription service76% of younger consumers (16-24) have subscriptions and place significant important on the convenience of not having to regularly buy products and having instant access to what they needAnd while millennials are helping drive widespread adoption of subscription services, data shows that more mature audiences rely on the automatic and recurring delivery of products and services in their daily lives.This is a global phenomenon that is only getting started. In fact

THE BEST COMPANIES HAVE REINVENTED THEMSELVESAWAY FROM PRODUCTS#nogutsnoglory

THE BEST COMPANIES HAVE REINVENTED THEMSELVES AWAY FROM PRODUCTSCompletely rethinking their value propositionAdopting new business modelsBuilding new kinds of relationshipsJust take a look at the fortune 500

IN THE LAST 15 YEARS, 52% OF THE FORTUNE 500 COMPANIES HAVE DISAPPEARED

Average life expectancy 15 years20151955Average life expectancy 75 yearsvs.

IN THE LAST 15 YEARS, 52% THE FORTUNE 500 COMPANIES HAVE DISAPPEAREEDSince 2000, 52 percent of the names on the Fortune 500 list are gone, either as a result of mergers, acquisitions or bankruptcies50 years ago the life expectancy of a Fortune 500 firm was around 75 years. -- Now its less than 15 years and declining all the time

Who survived the mass extinction?

But what is interesting to look at is:WHO SURVIVED THIS MASS EXTINCTION?Lets look at the companies that are still around, and thriving

GENERAL ELECTRICFrom light bulbs to digital services

The digital company. That is also an industrial company

GENERAL ELECTRIC (GE)GE started out by making and selling light bulbs in the days of Thomas Edison. But today GE has transformed into a diverse conglomerate with 300,000 employees that generates most of their revenue from services, not products.The digital company. That is also an industrial companyBut in commercials during the Oscars, GE ran commercials with the tagline The digital company. That is also an industrial company. (People are starting to realize that GE is an exciting digital company solving the worlds problems now everyone wants to work there. Employees keep getting ambushed by friends for jobs)This message shows the value GE is placing on digital this adaptation and focus is what allowed them to survive and remain on the F500 list

IBMFrom punch card tabulators to cognitive data services

Bob Dylan + IBM Watson

IBMIBM was #61 in 1955 and #24 on the 2015 Fortune 500 list. IBM originally sold commercial scales and punch card tabulators and they now sell IT services. IBM has completely transformed from a product manufacturer to a business services giant.IBM is now working on Watson a technology platform that uses natural language processing and machine learning to reveal insights from large amounts of unstructured data. They are now in the business of cognitive services a pretty exciting departure from where they startedTalk about HP. Theyve gone from A to B. Why are they facing these strategic headwinds?

AMAZON, GOOGLE, APPLE, FACEBOOK, SALESFORCE The relationship-makers

AMAZON, GOOGLE, APPLE, FACEBOOK, SALESFORCEThese guys are the relationship-makersThese are some of the top brands on the Fortune 500 list, all whom were not yet thought of 75 years agoThese brands rose to the risen to the top so quickly multi blillion dollar comapnies by focusing on defining relationshipsThink about it: You have an ID or a personal profile that you use in all your ongoing interactions with these brands: Apple, Amazon, Gmail/Google+, Facebook, Salesforce Chatter, etc.They know your purchase history, your account usage, your preferences, your friends, - they can provide personalized recommendations and a tailored experience based on this knowledge THAT is what sets them apart from the Wal-marts of the world. And look at whats happening to their business:Google earnings: 21% year-over-year increase in revenue. $4.88 billion in net income on $21.5 billion in revenue during the second quarter of 2016.Facebook earnings: Total revenue grew by 59% year-over-year to $6.4 billion, and advertising revenue was up 63% to $6.2 billion. $2.05 billion in net income during the second quarter of 2016.Amazon earnings: $857 million in the second quarter on $30.4 billion in revenue; Amazon web services revenue was up to $2.57 billion ahead of the $2.53 billion that analysts were expecting. Thats up from $1.57 billion in the same quarter a year ago, a jump of about 64%.

UBER, NETFLIX, BOX, AIRBNBThe new disruptors

UBER, NETFLIX, AIRBNB, BOXThen you have companies like Uber, Netflix, Spotify, Box --- the new disruptors with a new value propositionThese companies came in and took everyone by storm they invented completely new markets, new services, new business models, new technology platforms.Leaving many established companies trying to play catch-up As consumers we love these brand, we love these services, we love the value they provide us. Value that goes way beyond what a single product could ever giveMy guess is that it wont t be long before they are topping the F500 list

WHAT IS THE COMMON THREAD?

WHAT IS THE COMMON THREAD?Whether you are GE, Amazon or Uber --- all these companies are succeeding because they recognized that customers in the digital world are different. Delivering services; customer value They realized: You cant get comfortable in your established businessYou have to deliver value to your customers beyond a singular productThe one-size fits all approach isnt going to cut it anymoreAll these companies understand that.

OUTCOMESNot OwnershipCUSTOMIZATIONNot GeneralizationCONSTANT IMPROVEMENTNot Planned Obsolescence

THE WAY PEOPLE BUY HAS CHANGED FOR GOODWe have new expectations

THE WAY PEOPLE BUY HAS CHANGED FOR GOODThe world is changing because customers have changed in this digital age. You and I, we, have new expectations as consumers1. Outcomes, not ownership.2. Customization not generalization. 3. Constant improvement, not planned obsolescence.We want a new way to engage with businesses... The subscription market in Australia is boomingEntertainment: Spotify, Foxtel, Stan, Presto, and NetflixAutomotive: GoGetFood: Harvest Box and Hello FreshBeauty: BellaboxTechnology: Atlassian and design tool Canva

16

WE WANT THE SUBSCRIPTION EXPERIENCE

Ongoing Value

On-demandFulfillment

Personalized Service

Anywhere, Real-time

Memorable Experiences

WE WANT THE SUBSCRIOPTION EXPERIENCEWe want to subscribe to services because subscription services meet our demands and deliver our desired outcomes better than a singular productOn going valueOn-demand FulfillmentAnywhere, real time Memorable experiences that are consistent across all channels and interactionsPersonalized offers tailored for our unique needsWe may be the last generation who needs a car and/or learns to drive17

A NEW ERA WITH A NEW IMPERATIVETurn Customers Into Subscribers

#allaboutrelationships

The Subscription Economy is: A NEW ERA WITH A NEW IMPERATIVE FOR ALL COMPANIES : TURN YOUR CUSTOMERS INTO SUBSCRIBERSbuilding long term subsriber relationships is the only thing that can set you apaprt to day.This is your key to successThis is what were here to talk about today

18

A NEW WAY OF THINKINGcustomer

productchannels

vs.

servicechannels

experience

subscriber

HAVING SUBSCRIBERS MEANS A NEW WAY OF THINKINGIts no longer about a product-first mindset or single transactions - That was the old worldIn the new world its about starting with the subscriber first and developing multi-channel experiences to meet them wherever they are

ProductGrowthFinanceROLES ARE TRANSFORMINGIT

Leadership

This new way of thinking effects every single department, every single person in your company Its creating a new set of roles and is transforming roles and reinventing careersWhether you are in: Product, Sales, Marketing, Finance, IT, etc.THE CHALLENGE IS: old, legacy systems werent built for this new world, this new mindset, these new roles

THE NEW VP PRODUCTFrom one-time products to continuous innovation

#alwaysinbeta

THE NEW VP PRODUCTFrom one-time products to continuous innovationA CPO used to design individual products, but is now focused on delivering outcomes and on-going value through designing service-based experiences. To design products that people truly love, today's CPO has to have a deep understanding of individual customer needs and expectationsSubscribers = ongoing relationship ; constant opportunities to interact with them, every interaction is a chance to know them better interaction

21

More than food

HELLOFRESHHealthy meal delivery serviceChef-created, easy to prepare recipes. Meals are interesting yet simple. Fresh food for a balanced and varied diet.Subscribers = ongoing relationship ; constant opportunities to interact with them, every interaction is a chance to know them better interaction.That understanding comes from building a relationship and leveraging the data they are collecting

22

SUBSCRIBER IDENTITY

Demographic dataBehavioral dataFinancial data

#dataisgold

NameEmailTwitterTRADITIONAL RECORD

PhoneCompanyFacebookSUBSCRIBER IDENTITY RECORDPurchasesProductsLocal PricingPromotionsAdjustments

Customer MomentsUsage metricsAdd-OnsPayment historyRefund historyLifetime ValueRenewal ValueAging balanceNew world:Old world:

IT STARTS WITH YOUR SUBSCRIBER IDENTITYTraditional record vs Subscriber identity recordDemographic data+ Behaviorial dataFinancial Data all combinedYour data is gold

23

Know your subscribers Innovate constantlyDeliver experiences The New Product Imperative

THE NEW PRODUCT IMPERATIVEKnow your subscribersInnovate constantlyDeliver experiencesTo give you more insight into how this is playing out in Australia, it is my pleasure to introduce Mike Addison, Group Manager at Energy Australia

Mike AddisonGroup Manager, The Embedded Networks Company

Mike enters from downstage, energetic.

A Changing LandscapeSocial change driving shift in housing demandsUrban LivingAging populationTechnology disrupting energy industryEnergy efficiencySolar & StorageElectric vehiclesDigital meters & dataRegulatory changes challenging the norm

The Embedded Networks CompanyWorking with developers, builders and property managers to deliver energy services to the customers in multi-tenanted buildingsEvolving Business Model disrupts the status quoCustomers subscribe to a range of energy products & services that we manageApproach: Launch => Learn => Evolve

Why Zuora?SaaS based platform rapid delivery, digital customer experience, agile scaling cost effective (ROI & TCO)Best in Class subscription principles and processesFeature rich capabilities and strong roadmap (i.e.: reporting engine)Alignment to compliance needs (e.g.: ISO 2700x, PCI-DSS & Australian Privacy Policy

THE NEW VP GROWTHFrom selling things to monetizing outcomes

#morevalue

THE NEW VP GROWTHFrom selling things to monetizing outcomesGrowth has changed. Its not about units and margins.

GROW RELATIONSHIPS NOT TRANSACTIONSGrowth in the old worldSelling more unitsLowering per-unit costIncreasing pricesGrowth in the new worldAcquiring more customersLowering churnIncreasing value per customer

FOCUSED ON GROWING RELATIONSHIPS NOT TRANSACTIONSGrowth in the OLD WORLDSelling more unitsLowering per-unit costIncreasing pricesGrowth in the NEW WORLDAcquiring more customersLowering churnIncreasing value per customer

Acquire customers for a new serviceExpand into a new geographyMove into a new segmentLaunch new pricing modelCross-sell or upsell new offeringsReduce churnGrow your sales team Acquire or spin-off business

8 STRATEGIES FOR GROWTH

8 STRATEGIES FOR GROWTH after talking to hundreds/thousands of subscription companies CHANCES ARE YOU ARE THINKING ABOUT:One or more of these things:Acquire customers for a new serviceExpand into a new geographyMove into a new segmentLaunch new pricing modelCross-sell or upsell new offeringsReduce churnGrow your sales team Acquire or spin-off business31

PRICING & PACKAGING IS YOUR STRATEGIC WEAPON#getgrowing

THIS MEANS PRICING & PACKAGING IS YOUR STRATEGIC WEAPONThis goes way beyond CPQThis is about usage based, experimentations, you need to test and iterateIts about flexibility and agilityGives you the ability to price by cohortYou can identify your highest and lowest value customers

Build relationshipsTie pricing to valueMonetize anythingThe New Growth Imperative

THE NEW GROWTH IMPERATIVEDigital transformationBuild relationshipsMonetize anything

THE NEW CFOFrom cost-accountant to business-model architect

#financeissexy

THE NEW CFO:From cost-accountant to business model architectFinance is a changing. Moving from reporting to guiding and predicting and leveraging new analytics

Old World:COGSR&DG&ASales & MarketingNew World:CACLTVARRARPU

A NEW INCOME STATEMENTRecurring RevenueChurnRecurring Profit MarginGrowth EfficiencyAnnual Recurring Revenue$100Churn(10)Net ARR90COGS(20)G&A(10)R&D(20)Recurring Profit40Recurring Profit Margin40%S&M(40)New ARR40Ending ARR$130

NEW CFO NEEDS A NEW INCOME STATEMENTRecurring revenueChurnRecurring Profit MarginGrowth Efficiency

36

Own the modelGuide the businessCustomer-centric metricsThe New Finance Imperative

THE NEW FINANCE IMPERATIVEOwn the modeladopt subscription financials New metrics 3 that matterMRR, ACV, Growth Efficiency Index

THE NEW CIOFrom rigid standards to enabling agility

#ERPisdead

The NEW CIOFrom rigid standards to enabling agilityMonolithic ERPTo be a contrarian, we can make the case today that ERP is dead. Thats Oracle + Netsuite.New world: systems that support growth and flexibilityAnd relationships not transactions

FROM SYSTEMS OF RECORD TO SYSTEMS OF INNOVATION- Gartner

Gartner: FROM SYSTEMSO OF RECORD TO SYSTEMS OF INNOVATIONNot the rearview mirror vs. looking out the front of the carOR history channel vs discovery channel

Deliver agilityUnlock innovationflexibility, speedThe New IT Imperative

THE NEW RULE FOR ITDeliver agility to your business Unlocking innovation flexibility, speed.Key is new ecosystem is centered around subscriberTo tell us more about how this is taking place in Australia today, Ive invited Danny Gravell, CIO of Sensis to join me today.He has extensive experience as an IT leader having worked across the telecommunications, media and advertising, and financial services sectors.He joined Sensis in June 2011, and was appointed CIO in 2012 and leads the Product and IT teams at Sensis.Please join me in welcomingDanny Gravell.

Danny GravellChief Information Officer, Sensis

Danny enters from downstage, energetic.

Sensis #1 Marketing Services Company in Australia

Before

After

THE NEW CEOBreak down the silos, build a subscription culture

#oneteamonedream

The final role that is transforming is the CEO

Break down the silos, build a subscription culture

You are leading the charge of turning customers into subscribers - a whole new vision for your company and you need to help everyone get on board

MarketingProductSalesFinance ITOpsA productTHIS IS HOW YOU OPERATE TODAY

??

THIS IS HOW YOU OPERATE TODAY

Siloed departments

MarketingProductSalesFinanceITOperations

MktgFinanceSalesITProductOps

THE NEW RULE FOR CULTUREWrap your org around your subscribers

THE NEW RULE FOR CULTURE

Subscribers are now at the center of your business

Wrap your entire org around them

ProductGrowthFinanceTHE PROBLEM STATEMENTSIT

Leadership

Fragmented view of subscribersSystems cant support your pricing and packagingOutdated view of your businessDisparate systemswith rigid architectures No single view of your subscription business

This new way of thinking effects every single department, every single person in your company Its creating a new set of roles and is transforming roles and reinventing careersWhether you are in: Product, Sales, Marketing, Finance, IT, etc.THE CHALLENGE IS: old, legacy systems werent built for this new world, this new mindset, these new roles

THATS WHY WE BUILT ZUORAA unified platform for the subscription economy Platform

Integration Scalability Reliability Security Compliance Extensibility Pricing & PackagingBillingAnalyticsPaymentsRevenueSubscriber ManagementQuoting

PricingBundlingEntitlements

RatingTaxationBillingCollections DashboardsSub. Identity, Report BuilderSegmentationTriggersCreditsAdjustmentsOnline Payments Offline Payments

GL IntegrationRevenue RecognitionAccounting CloseRoll-UpCross-sells UpsellsRenewals360 SyncConfigurationGuided SellingRules Engine

THIS IS WHY WE BUILT ZUORA A unified platform for the Subscription EconomyA system specifically designed to needs of modern subscriber-centric and service-based companiesZuora helps companies:Keep customers consistently engaged in long-term relationships, Experiment with new business modelsAchieve their growth goalsBuild a subscription cultureSet the foundation for a better, healthier, more predictable business49

BUILD YOUR ENTIRE BUSINESS UNDER ONE ROOF AND AROUND YOUR SUBSCRIBERS

BRING YOUR ENTIRE BUSINESS UNDER ONE ROOF AND AROUND YOUR SUBSCRIBERSA single view of your subscribers.A modern cash ecosystem.Price and bill for anythingAll your revenue in one place Tee Up Toms SessionThis afternoon, Tom, our SVP of Product will show you how Zuora helps you turn your customers into subscribersThrough a live demonstration, youll get to see exactly what it looks like when every department in your organization focuses on the customer relationshipThese are the outcomes youll want to optimize your subscription business

WHAT DOES IT LOOK LIKE WHEN YOURE DOING IT RIGHT?#subscriptionbliss

WHAT DOES IT LOOK LIKE ACROSS AUSTRALIA, NEW ZEALAND, AND SOUTHEAST ASIA WHEN YOURE DOING IT RIGHT?

THE FUTURE IS BRIGHTTransformation is the opportunity

THE FUTURE IS BRIGHT

Transformation is the opportunity

WE HAVE RESOURCES TO HELPwww.zuora.com/academy

In addition, we have an amazing wealth of information on line at the Subscribed AcademyTop Assets:9 Keys to Building a Successful Subscription BusinessDefining a Winning Subscription Price ModelGuide to Innovative Subscription Pricing Strategies

54

TURN YOUR CUSTOMERS INTO SUBSCRIBERS

TURN YOUR CUSTOMERS INTO SUBSCRIBERS

The End.

Thank you!