This document summarizes key metrics and benchmarks for SaaS companies based on a survey by Pacific Crest Securities. It discusses the importance of metrics like lifetime value (LTV), customer acquisition cost (CAC), and churn for SaaS compared to traditional software. The median annual gross dollar churn among respondents was 6% and the median net dollar retention including upsells and expansions was 103%. Benchmark ranges provided for metrics like revenue growth, CAC, and LTV/CAC ratios. The discussion cautions against excessive spending on sales and marketing without regard to LTV and CAC.

1. 5 Tenets to Success SaaS
Metrics
February 25, 2015

2. Housekeeping
• Q&A panel on your right
• Recording for colleagues who can’t make it
• All attendees will receive slides
• Twitter hashtag #customersuccess

3. Our Speakers
Lincoln Murphy
Customer Success Evangelist
lmurphy@gainsight.com
@lincolnmurphy
David Spitz
Managing Director
Software Investment Banking
dspitz@pacific-crest.com
@dspitz

4. Disclosure
This document has been prepared by Pacific Crest Securities. Information contained herein has been obtained from
sources believed to be reliable, but the accuracy and completeness of the information, and that of the opinions based
thereon, are not guaranteed. This document is for information purposes only and is not an offer to buy or sell or a
solicitation of an offer to buy or sell the securities mentioned. Pacific Crest Securities and entities and persons associated
with it, including its analysts, may have long or short positions or effect transactions in the securities of companies
mentioned in this report, and may increase or decrease such holdings without notice. Pacific Crest Securities may make a
market in the shares of any such company. These markets may be changed at anytime without notice. Pacific Crest
Securities may have acted as lead or co-managing underwriter in one or more of such company’s U.S. equity offerings,
and it may perform or seek to perform other investment banking services for any company referenced in this document.
Pacific Crest’s specific disclosures can be seen here: http://www.pacific-crest.com/disclosures/
Pacific Crest’s privacy policy can be seen here: http://www.pacific-crest.com/privacy-policy/
Survey respondents participated anonymously and confidentially. Responses were received through online surveys taken
in June-July 2014. Pacific Crest cannot verify accuracy of responses. Observations and commentary contained herein
relate solely to the survey results and cannot necessarily be applied elsewhere.

6. Can
measure
churn
Can’t

7. 1. Why are metrics like LTV, CAC, and
Churn more important in SaaS?

8. Traditional Perpetual
License Software
SaaS
o “One and Done”
o Revenues minus costs
essentially tell the story
o LTV and CAC
o Dollar Retention
o Land and Expand
VS. John

9. LTV CAC
?
ARR  Gross Margin
Churn
$ Cost to Acquire
a Customer

10. Results from 2014 Pacific Crest Private SaaS Company Survey Results
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%

11. 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?”
Results from 2014 Pacific Crest Private SaaS Company Survey Results
# of Responses

12. Respondents: New ACV from New Customer: 159, Upsell to Existing Customer: 151, Renewals: 153
Note: Survey responses as of June / July 2014
Results from 2014 Pacific Crest Private SaaS Company Survey Results
Customer Acquisition Cost
“How much do you spend on a fully-loaded sales & marketing cost basis
to acquire $1 of ACV from a customer?”
$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

13. Source: SuccessFactors Roadshow Presentation
Cohort Analysis Example – SuccessFactors IPO Roadshow Slide

14. 2. Isn’t Customer Success more about a
“relationship?”

15. Relationship
thinking is
crucial

16. Relationship based on the customer’s success

19. Success Advocacy

20. http://www.saastr.com/its-not-just-cltv-its-your-trgcltv-that-matters-total-all-in-revenue-generated-by-your-customer/

21. 3. So I have benchmarks… How do I use
them? What are the implications for my
business?

22. 182 and 181 respondents, respectively
Note: Survey responses as of June / July 2014
Results from 2014 Pacific Crest Private SaaS Company Survey Results
2
23
32
37
18
14
17
6
9
24
2
13
36
32
28
19
10
16
10
15
0
5
10
15
20
25
30
35
40
<0% 0%-10% 10%-20% 20%-30% 30%-40% 40%-50% 50%-60% 60-80% 80-100% >100%
NumberofCompanies
2013 GAAP Revenue Growth 2014E GAAP Revenue Growth
Median 2013 GAAP Rev Growth ≈ 29%
Median 2014E GAAP Rev Growth ≈ 33%
GAAP Revenue Growth
“How fast did you grow GAAP revenues in 2013?
How fast will you grow GAAP revenues in 2014?”

23. WDAY
NOW
DWRE
VEEV
N
ZEN
PFPT
PCTY
TXTR
MKTO
CSOD
ULTI
BNFT
ATHN
CVT
CRM
QLYS
OPWR
SPSC
AMBR
QTWO
ECOM
EOPN
TWOU
PAYC
FLTX
LOGM
RNG
TRAK
FIVN
CTCT
SQI
MRIN
RALY
>34% Mean
24-34% Mean
18-24% Mean
<18% Mean
YDLE
HUBS
NEWR
BOX
WK
0.0x
4.0x
8.0x
12.0x
0% 10% 20% 30% 40% 50% 60%
EV/CY2016ERevenueMultiple
Projected CY2015E Revenue Growth
Source: Capital IQ and company filings
Note: Pricing as of February 23, 2015
Public SaaS Company Revenue Multiples as a Function of Growth
>34%24-34%18-24%<18%
’14-’15E Revenue Growth

24. Huge Impact to Sustained Differences in Churn
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
1 4 7 10 13 16 19 22 25 28 31 34 37 40
Month
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
1 4 7 10 13 16 19 22 25 28 31 34 37 40
Month
Cohort Performance with
+3% Monthly Churn
Cohort Performance with
-3% Monthly Churn
Source: www.forentrepreneurs.com “SaaS Metrics 2.0”

25. 4. How do we think about benchmarking customers?

31. 5. How do we get started?

32. Benchmarking Yourself Against Others
• Peers
• Investors
• Analysts
• Pacific Crest’s SaaS Survey
• SaaS Capital’s Survey
• Gainsight SuccessIndex

34. Benchmarking Your Customers
 Ensure you’re collecting the required data and
that it can be anonymized
 (Not a Lawyer, but…) Ensure you’re Terms of
Service, Privacy Policy, Contract, etc. is updated
 If opt-in is required, position is as a win-win-win
for all involved

35. 6. Bonus – what should I
NOT do?

36. Case Study: XYZ Corp.
Year 1 Year 2
Attractive Subscription
Revenue Growth
$54M
 $72M
(+33% growth)
Excellent Gross Margins 76%
 80%
Reasonable Monthly Churn 1.3%
 1.4%
Positive Trends in Customer
Count and Average ACV
1,150
$50K  1,450
$55K
Sales & Marketing Expense
Ratios Mirroring Many High
Growth Companies
63%
of revenues  83%
of revenues
Question: How attractive is this?

37. Year 1 Year 2
LTV
$50K x 76%
= $253K

$55K x 80%
= $254K
15% 17%
CAC
$34M
= $113K

$59M
= $118K
300 500
LTV / CAC 2.25x
 2.15x
Case Study: XYZ Corp. (cont’d)
Customer Detail
Customers (Beginning) 1,000 1,150
New Customers 300 500
Churn (150) (200)
Customers (End) 1,150 1,450
Annual Churn 15% 17%
ACV $50K $55K

38. Q&A
Lincoln Murphy
Customer Success Evangelist
lmurphy@gainsight.com
@lincolnmurphy
David Spitz
Managing Director
Software Investment Banking
dspitz@pacific-crest.com
@dspitz

39. Thank You!
February 25, 2015