The document discusses the shift from a manufacturing economy to a subscription economy and the challenges this poses for business software. Specifically: 1) Traditional on-premise software and ERP systems were built for the manufacturing economy and do not work for the subscription economy, which involves recurring billing, usage-based pricing, and flexible plans. 2) A new type of software is needed to manage the complexities of subscriptions, including product catalogs, flexible pricing, billing, usage tracking, and integration with CRM and finance systems. 3) Zuora was founded to build subscription management software to help businesses manage this transition to the subscription economy. It has experienced rapid growth, signing $1 billion in committed transactions in one quarter

1. The move to a Subscription EconomyLessons from taking Salesforce.com from zero to $1 Billion and trying to do it again with Zuora tientzuo, ceo, zuora Life in Industry Seminar 2010 June 26 www.zuora.com 1

2. 2 Brief Introduction to Today’s Speaker

3. Key Message for TodayThe Essence of Silicon ValleyisTransformation 3

4. Key Question for Anyone in Silicon Valley:What is the Change That is Happening ?And What Does It Mean ? 4

5. A Technique to Visualizing Change 5 Visualize both what’s there and what’s not there

6. Dialing Up The Contrast What’s There What’s Not There 6

7. What’s In Scope What’s Not In Scope 7

8. What Do We Do What Won’t We Do 8

9. Before After 9

10. Where We Were Where We Need To Be 10

11. Example: Zuora Product Team in 2008 Past World 7 developers 1 PM 1 product 0 live customers Future World 20 developers 2 PM’s 3 products 10 live customers 11 The things that made us successful in the old world no longer apply What does it take to succeed in the new world?

12. 12 Change: Question: Existence of a Ubiquitous Network What Happens to Business Software ??

13. Everything Changes 13

14. On Premise On Demand Client Server Client / Service Software No Software 14

15. 15 Change: Question: Everything is Moving Online What Happens to Business Software ??

16. 16 Digital Economy Manufacturing Economy

17. 17 Services Products

18. 18

19. 19 Initial Subscription Promotion: Free Trial Subscription Customer 1 Product Monthly Recurring Usage Monthly Billing Term 12 Months 1 Month Free Trial Change Order #1 (Add Product) Renewal Order (+ Upgrade) Add 2nd Product Co-Term Renew 3 years Upgrade to New Plan Change Order #2 (Upgrade)

20. 20 “CMRR” Committed Monthly Recurring Revenue “Cash Flow” “Churn” “CAC” Customer Acquisition Cost “CTLV” Customer Total Lifetime Value

21. 21 ERP SYSTEMS: Unit X Price SKU-based No concept of product catalog No rate plans, no charge models Single Order No recurring element No concept of change orders No concept of terms No Usage No concept of usage No concept of rating/billing No concept of bill cycles for usage ERP Systems were built for a Manufacturing Economy!

23. One-Time Pricing

24. Recurring Pricing

25. Volume Pricing

26. Tiered Pricing

27. Overage Pricing

28. Billing Frequency

29. Billing Triggers

30. Billing Notifications

31. Rating & Billing

32. Usage

33. Proration

34. Taxation

35. Multiple Currency

36. Invoice Calculation

37. Invoice Templates

38. Invoice Generation

39. Credit Card Processing

40. ACH Support

41. Wire Transfer Support

42. Debit Card Support

43. PCI Compliance

44. Credits

45. Refunds

46. Adjustments

47. Revenue Recognition

48. CRM Integration

49. Financials Integration

50. Localization

51. Quoting

52. Custom Fields

53. Search

54. Unit of Measurement

55. User Interface

56. Gateway Support

57. Provisioning Support

58. Metering Support

59. ISO Compliance

60. Post & Lock Capabilities

61. APIs

62. Online Portal

63. Self Service

64. Renewals

65. Upgrades

66. Change Orders Hardware Software Consultants Infrastructure Dedicated Staff Upgrades Charlie Peters, CFO Redhat Pacific Crest Securities Conference, August 4, 2008

67. 23 Website Website Order Self Service Account Created Website Order Quote Subscriptions Payment Processed Provisioning Usage Data Internal Systems

68. 24 Customization (Configuration, Custom Fields, Custom Templates) Pricing & Packaging Account Management Billing Operations API Layer (Create/Read/Update/Delete, SubscribeNow, Provisioning, Usage) Out-of-the-Box Payment Gateway Integration Quote to Cash Subscription Management Payment Operations Multi-Tenancy PCI Level 1 Compliance Security Redundancy Billing Operations Bill Runs Usage Proration Billing Triggers Taxation Multi-Currency Product Catalog Products Price Plans Charge Models Volume & Tiers Offers Quotes Account Management Bill-to / Sold-to Payment Methods Subscriptions Invoices Payments Adjustments Metrics Payment Operations Payment Runs Usage Batch or Real Time Payment Methods Gateway Integration Payment Exceptions Subscription & Amendments Subscription Change Orders Renewals Auto-Renewals Add-on Orders Audit Trail Out-of-the-Box Salesforce Integration Taxation Module Hosted PCI Storefront

69. 25

71. Cash Flow Positive

72. Fastest Privately Held SaaS Company

73. Global Enterprise Clients – EMC, Ricoh, Thomson Reuters, Reed Elsevier, Concur, Tata, Adaptive Marketing

74. Pandora Media – 45 million Registered Users

75. Proven Scalability with EMC – 9 million transactions/day

77. Thank You! 28