Investor Presentation Q4 2015 Earnings Safe Harbor This - - PowerPoint PPT Presentation

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Investor Presentation Q4 2015 Earnings Safe Harbor This - - PowerPoint PPT Presentation

Investor Presentation Q4 2015 Earnings Safe Harbor This presentation contains forward-looking statements, including, among other things, statements regarding our growth prospects; our ability to attract and retain customers to use our platform;


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Investor Presentation

Q4 2015 Earnings

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Safe Harbor

This presentation contains forward-looking statements, including, among other things, statements regarding our growth prospects; our ability to attract and retain customers to use our platform; our ability to innovate and provide a superior customer experience; our ability to successfully expand in our existing markets and into new markets; and

  • ur ability to effectively manage our growth and future expenses. The words such as “may,” “should,” “will,” “believe,” “expect,” “anticipate,” “target,” “project,” and similar

phrases that denote future expectation or intent regarding our financial results, operations and other matters are intended to identify forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to differ materially, including (i) adverse changes in general economic or market conditions; (ii) our ability to adapt our customer service platform to changing market dynamics and customer preferences or achieve increased market acceptance of our platform; (iii) our expectation that the future growth rate of

  • ur revenues will decline, and that as our costs increase, we may not be able to generate sufficient revenues to achieve or sustain profitability; (iv) our limited operating history,

which makes it difficult to evaluate our prospects and future operating results; (v) our ability to effectively manage our growth and organizational change; (vi) our ability to compete effectively in the intensely competitive market in which we participate; (vii) the development of the market for software as a service business software applications; (viii) our ability to sell our live chat software as a standalone service and more fully integrate our live chat software with our customer service platform; (ix) our ability to sell

  • ur analytics software as a standalone service and to integrate our analytics software with our customer service platform; (x) breaches in our security measures or

unauthorized access to our customers’ data; (xi) service interruptions or performance problems associated with our technology and infrastructure; (xii) real or perceived errors, failures, or bugs in our products; (xiii) our substantial reliance on our customers renewing their subscriptions and purchasing additional subscriptions from us; and (xiv)

  • ur ability to effectively expand our sales capabilities.

The forward-looking statements contained in this presentation are also subject to additional risks, uncertainties, and factors, including those more fully described in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2015. Further information on potential risks that could affect actual results will be included in the subsequent periodic and current reports and other filings that we make with the Securities and Exchange Commission from time to time. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, except as required by law.

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Growth Drivers

EXPLOIT DATA 
 AND ANALYTICS 
 OPPORTUNITY BROADEN PLATFORM 
 AND PARTNERSHIPS INTRODUCE 
 NEW PRODUCTS 
 AND FEATURES EXTEND GLOBAL CUSTOMER 
 FOOTPRINT EXPAND ENTERPRISE CUSTOMER BASE EXTEND SMB 
 MARKET LEADERSHIP DRIVE 
 ORGANIC GROWTH 
 THROUGH 
 BRAND DEVELOPMENT

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Key Accomplishments

4 Jan 
 2014 Jan 
 2015

IPO

$ZEN

Zopim

40,000 50,000 60,000

Singapore London Melbourne

500 800 1,000

Gartner MQ 
 Visionary German Data Center Virginia Data Center New Pricing 
 and Packaging Forrester 
 Wave Multi- currency

GBP + EUR

fb

Businesses on Messenger

Facebook

Premium Live Chat BIME 
 Analytics Relate Live

bime

by zendesk

Advanced 
 Voice Satisfaction Prediction

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Embeddables 25 CTI Integrations NPS Insights “Sexiest Startup” Crunchies

Manila Dublin San Francisco Madison

Office 
 Openings

Customer accounts Employee count

Dec 2015

1,200

Startupland

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Large Global and Loyal Customer Base (as of December 31, 2015)

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1000+ seats 500-999 seats 100-499 seats <100 seats

>69,000

FREEMIUM 
 CUSTOMER ACCOUNTS PAID CUSTOMER 
 ACCOUNTS WORLDWIDE

>120,000

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Revenue by Geographic Area (as of and for the quarter ended December 31, 2015)

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28%

EMEA

1 6%

Other

56%

US

Revenue 


by geographic area

Monthly 
 Recurring Revenue

distribution from accounts

68%

<100 
 Seats

32%

100+ 
 Seats

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Annual Revenue ($ in Millions)

2011 2012 2013 2014 2015

$209 $127 $72 $38 $16

9 1 % C A G R

7 7

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

$63 $56 $48 $42 $39 $34 $30 $25 $23 $19 $16 $14 $12 $10 $9 $7

Quarterly Revenue ($ in Millions)

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2012 2013 2014

63% 


Y/Y

2015

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$0 $10 $20 $30 $40 $50 $60 $70

Quarterly Revenue & Cash Flow from Operating Activities ($ in Millions)

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Revenue Cash Flow from Operating Activities

Q1

Q2 Q3 Q4 Q1 Q2

Q3

Q4 Q1 Q2 Q3 Q4

2014 2015

$5.33M

FY15

Cash Flow from Operating Activities

$2.09M

FY14

$4.01M

FY13

2013

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Financial Metrics: Total Number of Paid Customer Accounts

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December 31, 
 2014 March 31, 
 2015 June 30, 
 2015 September 30, 
 2015 December 31 , 
 2015

27,600 24,900 29,500 27,500 31,100 29,600 32,700 31,600 35,700 33,400 52,500 57,000 60,700 64,300 69,100

Paid Customer Accounts on 
 Customer Engagement Platform (approx.) Paid Customer Accounts on 
 Live Chat Platform (approx.)

+

Approximate Number of 
 Paid Customer Accounts

=

Freemium customers represent an additional >120,000 customer accounts

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Financial Metrics: Dollar-based Net Expansion Rate December 31, 
 2014 March 31, 
 2015 June 30, 
 2015 September 30, 
 2015 December 31, 
 2015

120% 119% 122% 125% 123%

Dollar-based net expansion rate does not currently incorporate operating metrics associated with our live chat software, analytics software, or advanced voice

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About Our Metrics

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Monthly Recurring Revenue (MRR) for a paid customer account is a legal and contractual determination made by assessing the contractual terms of each paid customer account, as of the date of determination, as to the revenue we expect to receive in the next monthly period for that paid customer account, assuming no changes to the subscription and without taking into account one-time discounts or any platform usage above the subscription base, if any, that may be applicable to such subscription. Monthly recurring revenue is not determined by reference to historical revenue, deferred revenue or any other GAAP financial measure over any period. It is forward-looking and contractually derived as of the date of determination. Zendesk’s freemium plans include its Starter plan for its customer service platform, its Lite plan for its live chat software, and its Inbox service for facilitating and simplifying email collaboration on group email aliases. Zendesk believes these services provide exposure to its brand and establish a relationship that can facilitate further adoption of its customer service platform and live chat software as organizations grow in size and their service needs grow more complex. A customer account on Zendesk’s freemium plans is considered active based on whether functionality of the service has been utilized within the 90-day period preceding the measurement date. A single consolidated

  • rganization or customer may have multiple freemium customer accounts across each of Zendesk’s customer service platform, live chat software, and Inbox service. Each of

these accounts is treated as a separate customer account on our freemium products. Number of Paid Customer Accounts - We define the number of paid customer accounts as the sum of the number of accounts on our customer service platform, exclusive of

  • ur Starter plan, free trials or other free services, and the number of accounts using our live chat software, exclusive of free trials or other free services, each as of the end of

the period and as identified by a unique account identifier. Use of our customer service platform and live chat software requires separate subscriptions and each of these accounts are treated as separate paid customer account. Existing customers may also expand their utilization of our customer service platform or live chat software by adding new accounts and a single consolidated organization or customer may have multiple accounts across each of our customer service platform and live chat software to service separate subsidiaries, divisions, or work processes. Each of these accounts is also treated as a separate paid customer account. An increase in the number of paid customer accounts generally correlates to an increase in the number of authorized agents licensed to use our platform, which directly affects our revenue and results of operations. We view growth in this metric as a measure of our success in converting new sales opportunities. In the quarter ended December 31, 2015, we introduced our Essential plan for our customer service platform. This plan replaced our Starter plan as the least expensive plan

  • n our customer service platform. Following the introduction of our Essential plan, we no longer made our Starter plan available for new accounts. Accounts that subscribe to
  • ur Essential plan are included in the determination of the number of paid customer accounts.
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