Speakers:
David Spitz, Managing Director at Pacific Crest
Marc Linden, CFO at Intacct
Kathy Lord, VP Sales & CSM at Intacct
Dave Kellogg, CEO at Host Analytics
Alison Homlund, VP CSM at Host Analytics
Presented at Pulse Conference 2015.
3. LTV vs. CAC
3
LTV CAC
?
ARR Gross Margin
Churn
$ Cost to Acquire
a Customer
4. COMPANY METRIC METRIC FORMULA
Recurring
revenue
retention rate
Retention rate
(net dollar
retention rate)
Annual dollar
retention rate
Recurring dollar
retention rate
Net churn
Note: Includes only customers with >$5k ACV and
annual / multi-year contracts
$ implied ACV
customers t-1 end
t end
$ implied ACV
customers t-1 end
t-1 end
Selected Public SaaS Company Churn Reporting Methodologies
Source: Company filings
COMPANY METRIC METRIC FORMULA
Subscription
revenue
retention rate
Revenue
retention rate
Renewal rate
Annual
subscription
revenue
retention rate
Dollar-based net
expansion rate
Note: Excludes commissions owed and customers with
sidekick-only subscriptions
$ sub revenue
customers q-4
q
$ sub revenue
customers q-4
q-4
( )Trailing 4
Qtr. Avg.
$ implied MRR
customers t-1 end
t end
$ implied MRR
customers t-1 end
t-1 end
$ recurring revenue
customers t-1
t
$ recurring revenue
customers t-1
t-1
# vehicles added
customers t beg
t
-
# vehicles customers t beg
t beg
# vehicles lost
customers t beg
t
)(
$ recurring rev
customers t-1 end
t
$ recurring rev
customers t-1 end
t-1
$ ACV non-renewing
$ ACV expiring
100% -
t
t
$ annualized sub revenue
customers t-1 end
t end
$ annualized sub revenuet-1 end
customers t-1 end
$ agg. MRR
customers t-1 end
t end
$ agg. MRR
customers t-1 end
t-1 end
$ contracted MRR
customers m beg
m end
( )Wtd
Avg. $ contracted MRR
customers m beg
m beg
* 12
4
5. Apples & Oranges!
5
Source: Company filings
Company Name Value at IPO
Q2 128.0%
Q2 3.5%
Rally Software 127.0%
Responsys >100%
RingCentral ~99%
SciQuest 100.0%
ServiceNow 96.0%
SuccessFactors >90%
The Ultimate Software Group 96.0%
Veeva 187.0%
Workiva 97.3%
Workiva 108.4%
Yodlee 123.0%
Zendesk 120.0%
Zendesk 122.0%
Company Name Value at IPO
2U 144.4%
Amber Road 102.0%
athenahealth 97.0%
Bazaarvoice 89.7% / 91.9% (9 mo.)
Benefitfocus >95.0%
Box 130.0%
Brightcove 93.0%
Carbonite 82.0%
Carbonite 85.0%
Castlight 109.0%
ChannelAdvisor >100%
Constant Contact 97.4%
Cornerstone OnDemand 95.8%
Cvent
97% Subscription
115% Marketing
Demandware >100%
Company Name Value at IPO
Eloqua >100%
ExactTarget 110.0%
Five9 100.0%
Fleetmatics 1.8%
HubSpot 90.3%
Jive Software
95.3%, excluding upsells
113.6%, including upsells
Kenexa 89.6%
LifeLock 85.4%
LogMeIn ~80%
Marin Software >100%
Marketo ~100%
New Relic 115.0%
Paycom 91.0%
Paylocity >92%
Proofpoint 90.0%
6. Key Factors to Question
6
Source: Company filings
• External vs. internal?
• Gross vs. net?
• GAAP vs. ACV / ARR?
• What is the base period?
• Dollar vs. unit / customer?
• Pure subscription vs. inclusion of other potentially recurring business?
• Bonus: Costs to acquire / support upsells & expansions?
7. 156 respondents
Note: Survey responses as of June / July 2014
Annual Gross Dollar Churn
“What percentage of total ACV on a dollar basis churns in a given year (excluding upsells)?”
# of Responses
AnnualGrossDollarChurn
Median ≈6%
59
48
20
13
16
0 10 20 30 40 50 60 70
<5%
5-10%
10-15%
15-20%
>20%
7
Results from 2014 Pacific Crest Private SaaS Company Survey Results
8. 243 respondents
Note: Survey responses as of June / July 2014
30
15
15
39
34
35
75
0 20 40 60 80
<90%
90-95%
95-100%
~100%
100-105%
105-110%
>110%
Median ≈ 103%
100%+NetRetention
(Upsellsgreater
thanchurn)
NetChurn
(Churngreater
thanupsells)
Net Dollar Retention (Including Upsells and Expansions)
“How much do you expect your ACV from existing customers to change,
including the effect of both churn and upsells?”
# of Responses
Results from 2014 Pacific Crest Private SaaS Company Survey Results
8
9. CAC on New Customers vs. Upsells vs. Renewals
9
“How much do you spend on a fully-loaded sales & marketing cost basis
to acquire $1 of ACV from a customer?”
Source: 2014 Pacific Crest Private SaaS Company Survey
Note: Survey responses as of June / July 2014
Respondents: New ACV from New Customer: 159, Upsell to Existing Customer: 151, Renewals: 153
$0.60
$0.10 $0.06
$1.44
$0.46
$0.26
$1.07
$0.18
$0.12
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
New ACV from New
Customer
Upsell to Existing
Customer
Renewals
75th percentile
25th percentile
Median
10. 10
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subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC (“KBCMI”), and KeyBank National Association (“KeyBank
N.A.”), are marketed. Pacific Crest Securities is a division of KBCMI.
This document has been prepared by Pacific Crest Securities, a division of KeyBanc Capital Markets Inc., herein known as “PCS”.
The material contained herein is based on data from sources considered to be reliable, however PCS does not guarantee or
warrant the accuracy or completeness of the information. This document is for informational purposes only. Neither the
information nor any opinion expressed constitutes an offer, or the solicitation of an offer, to buy or sell any security. This
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the forward-looking statements. This report is not intended to provide personal investment advice and it does not take into
account the specific investment objectives, financial situation and the specific needs of any person or entity.
Individuals associated with PCS or PCS itself may have a position (long or short) in the securities covered in this document and
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solely at the discretion of PCS Research Management.
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any other person outside their organization without the express written consent of PCS.
10
Disclosures
When
Tuesday, May 12, 2015 2:20 PM - 3:10 PM
(arrive 30 minutes before scheduled time to allow for logistics and microphones)
Where
Pulse 2015 - Pier 48, San Francisco, CA
(when you arrive, speaker host will tell you room location)
Who
Moderator: David Spitz, MD, Software & Security, Pacific Crest Securities <dspitz@pacific-crest.com>
Panelist: Marc Linden, CFO, Intacct <mlinden@intacct.com>
Panelist: Kathy Lord, VP, Sales & Customer Success, Intacct <klord@intacct.com>
Panelist: Dave Kellogg, CEO, Host Analytics <dkellogg@hostanalytics.com>
Panelist: Alison Holmlund, VP, Customers for Life, Host Analytics <aholmlund@hostanalytics.com>
Audience: Expect several hundred CEOs, VPs/Directors of CSM from private and public tech companies
What
Metrics: Talking About Churn And Retention In The Board Room
Why
Give audience practical takeaways on how to calculate CSM metrics and report to board.
How
2:20 PM - 2:30 PM: David Spitz - slides
* Gainsight will provide intro slide with speaker photos / names / titles
* Welcome and introductions
* How public companies calculate and report on churn / retention
* How public companies calculate and report on customer success costs
* What analysts look for in assessing these metrics
2:30 PM - 2:40 PM: Marc Linden and Kathy Lord - slides
* How Intacct calculates churn / retention (consider early renewals, late renewals, up-sell in period, price increases, price decreases, etc.)
* How Intacct accounts for Customer Success costs
* What metrics Intacct reports to board regarding Customer Success (sample slides are great)
2:40 PM - 2:50 PM: Dave Kellogg and Alison Holmlund - slides
* How HA calculates churn / retention (consider early renewals, late renewals, up-sell in period, price increases, price decreases, etc.)
* How HA accounts for Customer Success costs
* What metrics HA reports to board regarding Customer Success (sample slides are great)
2:50 PM - 3:10 PM: Q&A
* Moderator questions
* Audience questions
Please stay on time as to allow for positive experience for attendees.
Slide template here: https://gainsight.app.box.com/s/1pr9ksdknnzo64jufu68iq81yerra3ce
Email slides to moderator and moderator will email slides to swheatley@gainsight.com by 5/5/2015
When
Tuesday, May 12, 2015 2:20 PM - 3:10 PM
(arrive 30 minutes before scheduled time to allow for logistics and microphones)
Where
Pulse 2015 - Pier 48, San Francisco, CA
(when you arrive, speaker host will tell you room location)
Who
Moderator: David Spitz, MD, Software & Security, Pacific Crest Securities <dspitz@pacific-crest.com>
Panelist: Marc Linden, CFO, Intacct <mlinden@intacct.com>
Panelist: Kathy Lord, VP, Sales & Customer Success, Intacct <klord@intacct.com>
Panelist: Dave Kellogg, CEO, Host Analytics <dkellogg@hostanalytics.com>
Panelist: Alison Holmlund, VP, Customers for Life, Host Analytics <aholmlund@hostanalytics.com>
Audience: Expect several hundred CEOs, VPs/Directors of CSM from private and public tech companies
What
Metrics: Talking About Churn And Retention In The Board Room
Why
Give audience practical takeaways on how to calculate CSM metrics and report to board.
How
2:20 PM - 2:30 PM: David Spitz - slides
* Gainsight will provide intro slide with speaker photos / names / titles
* Welcome and introductions
* How public companies calculate and report on churn / retention
* How public companies calculate and report on customer success costs
* What analysts look for in assessing these metrics
2:30 PM - 2:40 PM: Marc Linden and Kathy Lord - slides
* How Intacct calculates churn / retention (consider early renewals, late renewals, up-sell in period, price increases, price decreases, etc.)
* How Intacct accounts for Customer Success costs
* What metrics Intacct reports to board regarding Customer Success (sample slides are great)
2:40 PM - 2:50 PM: Dave Kellogg and Alison Holmlund - slides
* How HA calculates churn / retention (consider early renewals, late renewals, up-sell in period, price increases, price decreases, etc.)
* How HA accounts for Customer Success costs
* What metrics HA reports to board regarding Customer Success (sample slides are great)
2:50 PM - 3:10 PM: Q&A
* Moderator questions
* Audience questions
Please stay on time as to allow for positive experience for attendees.
Slide template here: https://gainsight.app.box.com/s/1pr9ksdknnzo64jufu68iq81yerra3ce
Email slides to moderator and moderator will email slides to swheatley@gainsight.com by 5/5/2015