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Subscribed UK: CEO's Keynote

  1. WELCOME TO LONDON October 2012 1
  2. 2 “Zuora Receives £36m For European Expansion ” November 17th, 2011
  3. It all started with a simple idea That there is a shift from products to services 3
  4. The global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in ” 2020. Forrester 4
  5. Carsharing subscriber base to be 14 Million in EU by 2020; 32 ” Million worldwide Frost & Sullivan 5
  6. 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 6
  7. BUY NOW Subscribe The Past! The Future We  Call  this  Shi,  the  Subscrip2on  Economy™   7
  8. Why  the  Subscrip2on  Economy  ?   Technology  Trends   Demand   Business  Model   Smart  Money   Cloud Consumers want to It’s a better business Mobile subscribe to services model for growth Social Businesses want to subscribe to services Wall St. and Sand Hill Value Subscription-Based Companies Subscribe 8
  9. The    Subscrip2on  Economy    is  a    Green  Economy   “ The average car is idle ” 92% of the time 9
  10. The    Subscrip2on  Economy    is  about  Customer  Rela2onships   Product Focused Rela2onship  Focused   BUY NOW Subscribe 10
  11. The    Subscrip2on  Economy    Requires  a  Completely   Different  Approach  to  Building  Businesses   Product Economy Subscription Economy Sell  Units     Mone2zing  Customer  Rela2onships   Pay-­‐as-­‐you-­‐Go  Pricing  Plans   Price  Per  Unit   The image cannot be One-­‐Time  Orders   Mul2ple  Orders  Over  a  Life2me   Forced  to  Pick  a   B2Any:  Sell  to  Consumers  &   Customer  Segment   Businesses   Complex,  Interrelated  Bookings,   Simple  Financial   Metrics   Billings,  &  Revenue   11
  12. The Media Industry is Moving to the Subscription Economy 12
  13. The Tech Industry is Moving to the Subscription Economy 13
  14. The Telecom Industry is Moving to the Subscription Economy 14
  15. The Retail Industry is Moving to the Subscription Economy 15
  16. Craft Coffee SweetBox Steepster The Fruit Guys Kiwi Crate FabKids Coffee Chocolate Fine Teas Fruits & Veggies Crafts & Books Clothing BirchBox GuyHaus Focus N Fly Test Tube Wonder Sitter Spotify Beauty Guy Supplies Fitness Beauty Samples Baby Sitting Music Hoseanna Put This On Bag Borrow or Rent the Runway Babbaco Mystery Tackle Box Steal Hosiery Men’s Handbags Women’s Kids Toys/ Fishing Accessories Dresses Activities Equipment Sweet Petula McSweeneys Meundies Dollar Rubber Club Bespoke Post Spice Guides Soaps Shirts Underwear Condoms Luxury Items Date Idea Guide 16
  17. Making the Web’s Subscription Economy Hum “ As Web businesses embrace subscription business models, the benefits are clear: reduced customer acquisition costs and ” steady cash flow June 12, 2012 17
  18. 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 May 4, 2012 wave of economic efficiency that ” could fuel the next boom. 18
  19. Mar 4, 2012 “ 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 19 new era of cooperative capitalism ”
  20. 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 20
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  23. Customer Satisfaction Graph – pie chart of 95% customer satisfaction 23
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  25. Exponential Growth In Transaction Volume 25
  26. Strong Adoption in Large Enterprises Educa2on   Travel  Services   Cloud  Services   Media   Telecom   26
  27. 27 “ Q1'08   ARR Q2'08   Q3'08   Q4'08   Q1'09   Q2'09   Q3'09   subscription systems. Q4'09   Q1'10   ” Q2'10   Q3'10   Q4'10   In short order, Zuora has become Q1'11   the dominant player in cloud-based Q2'11   Q3'11   Q4'11   Q1'12   Q2'12   Q3'12   Q4'12   Q1'13   The Fastest Growing SaaS Company Q2'13  
  28. $12 25% Billion Europe Total  Invoice  Volume   Total  Invoice  Volume   28
  29. YOU Are The Subscription Economy 29
  30. One Year Later We are at the Tipping Point 30
  31. In 2008, We Launched Z-Billing In 2010, We Launched Z-Commerce 31
  32. Last month, we introduced our third major product 32
  33. 1494  A.D.     Luca  Bartolomeo   Pacioli       invents  the  system  of   Double  Entry   Bookkeeping   33
  34. For over 500 years, the system has worked… Double  entry  accoun=ng   To  the  CFOs  of     becomes  the  cornerstone   of  modern  accoun=ng   the  modern  era     34
  35. Until Now 35
  36. The Problem: You Need to Differentiate Between One-Time and Recurring Amounts A $100 is a $100 is a $100. The rules say it all goes in the same account. 36
  37. The Problem: You Want To Spread Revenue Over Time The rules don’t allow me to spread these amounts over time. Now you’re just being a rebel. 37
  38. The Problem: Your system doesn’t know what to do when subscriptions change I don’t have a rule for that. You’ve got yourself into quite a mess… 38
  39. The Result: Revenue managers are drowning in spreadsheets •  Revenue  Recogni2on   •  Subscrip2on  Metrics  (MRR,  ARR,  CLTV)   •  Changes,  Adjustments,  Credits   •  Complex  Recurring  Billing   39
  40. The Result: It takes Weeks for finance teams to close the books “We  need  more  2me”   - Finance Team 40
  41. The Result: CFOs are maintaining 2 sets of books “PwC  will  love  these.”   Debit   Credit   AR   600M   Revenue   600M   Appease  the  auditors  here.   Actually  run  the  business  here.   41
  42. The Result: CMOs are prevented from implementing new innovations 42
  43. The Result: CEOs have a hard time explaining their success to Wall Street Page 11 43
  44. The Result: 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. 44
  45. The world of Finance is broken… 45
  46. Introducing Z-Finance The World’s first finance application built for the Subscription Economy 46
  47. Z-Finance is built on a new foundation Mul2  dimensional  Ledgers   Spread  revenue  over  2me   Differen2ate  between  one  2me  and   Intelligent  Algorithms   recurring  revenue   Revolu2onary  Data  Model   Calculates  key  subscrip2on  metrics   Powerful  Rules  Engine   Adapts  to  subscrip2on  changes   47
  48. 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   Accounting Close Tools tools to accelerate your month end close 48
  49. 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   Revenue Recognition Tools that handle complex revenue rules 49
  50. 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     Chart of Accounts to track charges through the revenue lifecycle 50
  51. Generate  debit  and   credit    journal  entries  to   simplify  your  general   ledger  updates       ✔ Align  journal  entries  with   GL  accounts   Easy Accounting Integration to unburden your IT team 51
  52. ✔ Create  custom  user  roles   Reuse the audit     peace of mind Associate  roles  with  granular  user   screen shot from ✔ permissions     the website   Control  visibility  and  user  ac2ons  on   ✔ sensi2ve  financial  data   Tight Security Controls for audit peace of mind 52
  53. 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 53
  54. Unburdens your finance team, enabling your growth Unleash  your  growth  strategies  without   burdening  finance   “ …Z-Finance makes it easier for us to scale as our business grows ” Vince Zumbo, CFO of Autotask 54
  55. Gives you audit peace of mind Rapidly  review  details  of  any  transac2on   from  closed  accoun2ng  periods     “ …they have nailed it with Z-Finance, providing the next level of audit ” friendly automation … Bruce McFadyen, CFO of Firehost 55
  56. •  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 56
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  60. Subscribe 60
  61. Chasm   The Future The Present 61
  62. Why Can’t I Make My Processes Why is it so hard Why Can’t I Find FLOW to GROW my What I Need to business KNOW 62
  63. Product Relationships 63
  64. Goal: Goal: Ship More Units Build Valuable Relationships 64
  65. The Strategies Required to Grow a Subscription Business are Very Different 65
  66. Product Business Design Make Sell Product Product Product 66
  67. Subscription Business Increase the Value of Your Customers Acquire New Customers Reduce Churn 67
  68. Packaging  &  Pricing   Acquire  New   Increase  Value  Per   Reduce  Churn   Strategy   Customers   Customer   Launch  First  Product   X   Add-­‐on  Op2ons   X   Monthly  vs  Annual   X   X   X   Op2ons   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   68
  69. Your Existing Systems Can’t Support the Pricing & Packaging You Need to Grow 69
  70. The Processes Required to Make a Subscription Business Flow are Very Different 70
  71. Product Business Quote-To-Cash 71
  72. Subscription Business Quote-To-Cash Renewals Payment Failures Account Suspension Amendments Account Management 72
  73. Product Business Commerce   Billing   Finance               Book Order Invoice & Recognize & Ship It Collect For It It 73
  74. Subscription Business 74
  75. Subscription Business 75
  76. Subscription Business 76
  77. Subscription Business 77
  78. 78
  79. Subscription Business Billing Commerce Finance 79
  80. Your Existing Systems Can’t Support the Processes Needed To Make Your Business Flow 80
  81. What you Need to Know with a Subscription Business Model is Very Different 81
  82. Traditional Income Statement 82
  83. Revenue ARR $100 $0 83
  84. Subscription Economy Income Statement ARR $100 Churn (10) Retention Rate Net ARR 90 COGS (20) G&A (10) R&D (20) Recurring Profit 40 Recurring Profit Margin Growth (40) Growth Net New ARR 40 Efficiency Index Ending ARR $130 84
  85. The Three Key Metrics of the Subscription Economy Retention Recurring Growth Rate Profit Margin Efficiency How  much  of   ARR  less  Churn   How  much  does   your  ARR  you   less  Non-­‐Growth   it  cost  you  to   keep  every  year.   Spend   acquire  $1  of   ACV     “ The metrics for Cloud computing is fairly different ” from traditional enterprise software. Bessemer  Venture  Partners  –  Top  10  Laws  for  Cloud  Compu=ng   85
  86. Your Existing Systems Don’t Have the Metrics You Need to Know 86
  87. I Need a System That Helps me Grow , Flow and Know in the Subscription Economy 87
  88. Your Systems Today CRM   ERP   GL   88
  89. Products Relationships 89
  90. Goal: Build Goal: Ship Valuable More Units Relationships 90
  91. Enterprise Relationship Resource Business Planning Management 91
  92. We’re Here Today to Announce Z-Business, The World’s First Relationship Business Management System 92
  93. Z-­‐Business    Is  Built  On  a  Founda2on  For  the   Subscrip2on  Economy   93
  94. Z-­‐Business    Solves  Your  Rela2onship  Commerce   Needs   94
  95. Z-­‐Business    Automates  Your  Billing  and   Payment  Processes   95
  96. Z-­‐Business    Revolu2onizes  your  Finance   Opera2ons   96
  97. Z-­‐Business    Plugs  Into  Your  CRM  and  GL   97
  98. Z-­‐Business    Helps  You  Grow,  Flow  and  Know   Our  Mission:     Help  you  succeed  in  the  Subscrip2on  Economy     GROW:     FLOW:     KNOW:     Build  and  grow  your   Run  and  flow  your   Have  the  right  metrics   subscrip2on  business     subscrip2on  business   to  op2mize  your   and  revenue.     processes  efficiently.   subscrip2on  business.     98
  99. thank  you.   99