Jefferies Conference First-Quarter PDF Free Download

Forward-Looking Statements This presentation includes forward-looking statements. Demandware, Inc. ( Demandware or the Company ) has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting its business. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the date of this presentation and management s good faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: the Company s ability to attract new clients to enter into subscriptions for its solution; the Company s ability to service those clients effectively and induce them to renew and upgrade their deployments of the Company s solution; the Company s ability to expand its sales organization to address effectively the new industries, geographies and types of organizations the Company intends to target; the Company s ability to accurately forecast revenue and appropriately plan its expenses; continued acceptance of SaaS as an effective method for delivering software solutions; the Company s ability to protect and defend its intellectual property; costs associated with defending intellectual property infringement and other claims; events in the markets for the Company s solution and alternatives to the Company s solution, as well as in the United States and global markets generally; changes in the competitive environment in the Company s industry and the markets in which the Company operates; and other factors discussed under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in periodic filings with the Securities and Exchange Commission (the SEC ). In addition, in this presentation, the words believe, may, will, estimate, continue, anticipate, intend, expect, predict, potential and similar expressions, as they relate to the Company, business and management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the future events and circumstances discussed in this presentation may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Forward-looking statements speak only as of the date of this presentation. You should not put undue reliance on any forward-looking statement. The Company assumes no obligation to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting future performance or results, except to the extent required by applicable laws. If the Company updates one or more forwardlooking statements, no inference should be drawn that it will make additional updates with respect to those or other forwardlooking statements. 9 May 2013 2

Key Investment Highlights Large Addressable Market with Strong Macro Tailwinds Leading On-Demand ecommerce Platform with Large Partner Ecosystem Differentiated, Proprietary SaaS Technology Creates Strong Barriers to Entry Multiple Avenues to Drive Future Growth Powerful SaaS Financial Model Experienced and Deep Management Team 9 May 2013 3

Significant Momentum: On-Demand is In Demand! Mar. 31, 2009 $2.5M 100% SaaS Mar. 31, 2013 $18.9M 66% CAGR 156 28 630 60 $487K $260K 79% 50% 9 May 2013 4

Demandware Is at the Confluence of Three Significant Markets 10% CAGR ( 11 16) 20% CAGR ( 11 16) Global ecommerce $327 Billion Global Saas $14 Billion Global Retail $12 Trillion Data Reflects 2011 Source: Forrester (US Online Retail) and Euromonitor (Global Retail and Global ecommerce) 9 May 2013 5

Global Retail Market Shifting from Offline to Online ecommerce: An Essential Requirement for Retailers / Brands Today Consumers Connected, In Control Always On, Always Consuming Buying and Selling Across Multiple Touch Points Retailers / Brands Deliver Exceptional Online Experience 2004 PRESENT FUTURE Laptop / Desktop QR Enabled Print Ads Call Center Tablet Content Web Sites Ad Networks Digital TV Mobile Social Media Endless Aisle NFC Geolocation Services Clienteling mpos Check Out On Smart Phone 9 May 2013 6

Traditional ecommerce Solutions Have Been Limited Build and Run Internally User Interface The Pros: Control Customization The Cons: Costly IT-Constrained Performance/Security Responsibility Slow Pace of Innovation Store Front Portal Business Rules Catalog Management Order Management ecommerce Infrastructure Customer Management Scheduling Shopping Cart Promotion & Pricing Security Admin Portal Accounting Warehouse Manageme nt Content Management POS Connectors 9 May 2013 7

Traditional ecommerce Solutions Have Been Limited Build and Run Internally The Pros: Control Customization The Cons: Costly IT-Constrained Performance/Security Responsibility Slow Pace of Innovation Outsource / ASP The Pros: Less Hassle No Infrastructure The Cons: Inflexible No Merchant Control of Merchandising Limited Customization 9 May 2013 8

Demandware Delivers The Best of Both Worlds Build and Run Internally Outsource / ASP The Pros: Control Customization The Cons: Costly IT-Constrained Performance/Security Responsibility Slow Pace of Innovation The Best of Both Worlds The Pros: Less Hassle No Infrastructure The Cons: Inflexible No Merchant Control of Merchandising Limited Customization A Unique and Better Approach to Digital Commerce 9 May 2013 9

The Demandware SaaS Model Initial Table Stakes Today s Differentiators Reliable and Proven 99.98% Platform Availability + Fully Customizable Merchant Empowerment Ease of Development Cutting Edge Easy Fast Provides Full Control Open Development Environment; Flexible, Extensible Access to Steady Stream of New, InnovativeFunctionality as Soon as it Becomes Available Simplifies Complex ecommerce Functionality Time-to-Market Only 6 Months No Infrastructure SaaS Solution Significant Barriers to Entry 9 May 2013 10

Allowing Retailers to Focus on Innovation and Growth The Payoff to Customers Ability to Innovate at the Pace of Consumer Expectations: Speed to Utilize New Technologies/Techniques Enablement of Merchandising Goals Increased Revenues Enables Seamless Omnichannel Brand Launching and Managing Ease of $ Experience for Multiple ecommerce Sites Consumers Globally 9 May 2013 11

Leading Brands Choose Our Model 630 579 175 95 104 123 143 60 70 253 215 237 28 32 38 40 46 53 60 69 75 78 321 361 402 445 91 101110124 517 Websites Customers 137 151 156 09 10 11 12 13 9 May 2013 12

Key Financial Highlights Growth Visibility Operating Leverage Growth in Customers and Sites 87% Revenue CAGR (2006-12) Customer Lifetime Value 100% SaaS Model Highly Visible and Predictable High Dollar-Value and Customer Retention Highly Leverageable Margins Capital Efficient Long-Term Scale and Profitability 9 May 2013 14

Revenue Growth Momentum Annual Revenue Growth $ in Millions 44% $79.5 Pro-Forma* Three Month Revenue Growth $ in Millions 55% $20.5 $14.2 $18.9 64% $56.5 79% $36.7 $47.2 $67.9 $12.2 $21.4 $28.7 $16.1 2009 2010 2011 2012 3 Month 2012 3 Month 2013 * Pro-forma excludes $1.4 mm from Neckermann GmbH Services Subscription 9 May 2013 15 Copyright 2012 Demandware, Inc. CONFIDENTIAL 15

Significant Growth in Customers and Sites 517 579 630 321 361 402 445 Websites 237 253 215 175 104 123 143 16 17 19 23 28 32 38 40 46 53 60 69 75 78 39 39 50 43 60 95 70 91 101 110 124 137 Customers 151 156 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 2012 13 9 May 2013 16

Driving Significant Revenue Momentum Subscription Revenue: Base vs. Overage Base Subscription Revenue Overage Subscription Revenue $16.3 $13.6 $15.2 $16.3 $22.9 $18.9 Average Overage Fees Represent 31%* of Subscription Revenue $10.2 $9.3 $10.4 $11.2 $3.7 $4.3 $6.3 $5.5 $6.1 $6.9 $1.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 13 * Average for 2009, 2010, 2011 and 2012 9 May 2013 17

Land and Expand Drives Shared Success Model Average Subscription Revenue by Quarter (Cohort Analysis) $200,000 Quarterly Revenue $160,000 $120,000 $80,000 Customer Expansion Base Subscription $40,000 $0 Q1 Q2 Q3 Q4 Year 1 Q1 Q2 Q3 Q4 Year 2 Q1 Q2 Q3 Q4 Year 3 Cohort analysis includes a family of third-party solution partner customers who share a minimum level of subscription revenue and 32 customers all of which have been operating on Demandware s platform for a minimum of three years as of December 31, 2012. Analysis excludes two customers operating on the platform for three years one invoiced through a third party and Neckermann. 9 May 2013 18

High Quality Revenue: Diversified, Predictable and Sticky Diversified Customer Variety International Scope Apparel General Merchandise U.S. International 59% 41% Customers with Sites in 20+ Countries Health & Beauty and Sticky Home & Garden Sporting Goods Other Subscription Dollar Retention Rate* Typical Contract: 3 Years 100+% 100+% 100+% 2010 2011 2012 * Subscription Dollar Retention Rate Defined on Page 39 of the S-1. 9 May 2013 19

Path to Profitability and High Operating Leverage Operating Margin: Annual $2.0M $0.7M $(0.1)M $(24.3)M $(9.6)M 2008 2009 2010 2011 2012 Non-GAAP Operating Margin* Non-GAAP Operating Margin %* Operating Margin: Quarterly $0.3 $2.1 $3.4 $5.6 ($0.1) ($0.4) ($0.5) ($0.9) ($1.2) ($1.5) (2.8) ($1.4) ($3.3) 2010 2011 2012 2013 *Non-GAAP excludes stock-based compensation expense 9 May 2013 20

Jefferies Conference First-Quarter 2013