Investor Presentation
May 2016
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Forward-Looking Statements
This presentation contains forward-looking statements, including statements regarding Demandware's future financial performance, market growth,
the demand for Demandware's solutions, and general business conditions. Any forward-looking statements contained in this presentation are based
upon Demandware's historical performance and its current plans, estimates and expectations and are not a representation that such plans,
estimates, or expectations will be achieved. These forward-looking statements represent Demandware's expectations as of the date of this
presentation. Subsequent events may cause these expectations to change, and Demandware disclaims any obligation to update the forwardlooking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual
results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include,
but are not limited to, our ability to attract new customers; the extent to which customers renew their contracts for our solution; the seasonality of our
business; our ability to manage our growth; the variance of our business from quarter to quarter; the continued growth of the market for digital
commerce and retail software; the timing and success of solutions offered by us or our competitors; unpredictable macro-economic conditions; the
loss of any of our key employees; the length of the sales and implementation cycles for our solutions; increased demands on our infrastructure and
costs associated with operating as a public company; inadequate protections on our intellectual property; changes in current tax or accounting rules;
and other risks and uncertainties. Further information on potential factors that could affect actual results is included in Demandware’s latest
quarterly or annual report filed with the Securities and Exchange Commission.
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Key Takeaways
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Delivering Value for Shareholders…
67.9
$ Millions
200
199.0
2012
(1)
18.8
7.1
2015
Operating Cash Flow (2)
20
14.8
15
10
5
3.1
2012
4
400
2015
EBITDA (Non-GAAP)
(1)
(2)
594.6
600
2012
25
20
15
10
5
-
800
201.0
$ Millions
250
200
150
100
50
-
Backlog
$ Millions
$ Millions
Subscription Revenue
2015
2012
Non-GAAP operating income plus depreciation
Net cash provided by operating activities
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
2015
…By Creating Value for Customers
Technical:
Commerce
Cloud
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Business:
Shared
Success
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Retailers Grow Faster with Demandware …
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Two Growth Vectors
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Leading Brands Choose Our Model
1,590
Apparel
General Merchandise
Sites
Footwear
Health & Beauty
Home & Garden
Live Customers
402
349
Sporting Goods
110
Other
2012
8
2013
2014
2015
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
High Quality, Growing Subscription Revenue
250
$ Millions
200
150
100
50
-
2011
9
2012
2013
2014
2015
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Customer Success Drives Growth
$1,000,000
$822K
$699K
$750,000
$552K
$500,000
$401K
$250,000
$300K
$351K
Year 1
Year 2
$413K
$519K
$0
Customer Expansion
Year 3
Base Subscription
Cohort analysis includes 75 customers all of which have been operating on Demandware’s digital platform for a minimum of four years as of October 30, 2015.
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Year 4
Long-Term Customer Relationships
Over 100% Dollar Renewal Rate and High Customer Retention
Dollar Renewal Rate >100%
Churn <5%
120%
20%
100%
15%
80%
10%
60%
40%
5%
20%
0%
0%
2011
11
2012
2013
2014
2015
2011
2012
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
2013
2014
2015
Massive Market Opportunity
12%
18%
CAGR
CAGR
(2015-18)
(2014-19)
4%
Sources:
eMarketer: eCommerce and Retail Markets 2015
Global Cloud: IDC (Worldwide SaaS and Cloud Software 2015–2019)
12
CAGR
(2015-18)
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Expanding Our Addressable Market
Source: IDC eCommerce Software Spending 2014-2018
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Expanding Our Addressable Market
Source: IDC eCommerce Software Spending 2014-2018
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
More Retailers Are Moving to Demandware
90
80
70
60
50
•
40
30
•
20
10
•
0
Demandware
IBM
Oracle
SAP (hybris)
Source: 2014 & 2015 NA IR500 and Europe IR500 Reports
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Exceptional Performance Growing and
Acquiring Large Enterprise Accounts
Number of Accounts
40
30
20
10
0
2010
Fast Growing
2011
2012
Land and Expand
2013
Signed as LEA
Note: excludes Neckermann
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
2014
2015
Signed as LEA (WIP)
Capitalizing on Our Market Opportunity
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Unified Commerce: The Next Frontier
•
•
•
•
•
•
•
•
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Retailers Want to Unify the Consumer
Experience
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Acquisitions Accelerate our Journey
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Competitive Barriers to Market Dominance
Sources: Forrester Wave™: B2C Commerce Suites Q1
2015 and Point of Service, Q3 2015
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Growth and Margin Framework
Objective: Maximize Growth with Profitability
Subscription Revenue (1)
Operating Margin Change
(Non-GAAP)
Operating Margin
(Non-GAAP)
(1)
22
> 30%
20%-30%
~20%
1% increase
per year
2% increase
per year
3% increase
per year
<10%
10%-20%
>20%
Constant currency basis
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Targeting 30%+ Sustainable Growth
Comparable Customer GMV Growth1 2
29%
25%
17%-19%
Mid to High
Teens
Subscription Bookings Growth1 3
28%
22%
25%-35%
>25%
Churn
<5%
<5%
<5%
<5%
Subscription Revenue Growth1
52%
43%
29%-34%
30%+
1 Constant
currency basis
growth from customers on the platform throughout the year presented and the immediately preceding year
3 Average Annual contract value of new committed minimum subscription fees
2 GMV
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
NYSE: DWRE
Questions? Contact Investor Relations:
Web: investors.demandware.com
Email: investor@demandware.com
Phone: (781) 425-7675
© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.
Non-GAAP Financial Measures
Demandware has provided in this presentation financial information that has not been prepared in accordance with GAAP. This information includes
non-GAAP gross margin, non-GAAP subscription gross margin, non-GAAP operating income (loss), non-GAAP operating expenses, non-GAAP net
income (loss) and non-GAAP net income (loss) per share. This presentation also presents subscription revenue and percent change in subscription
revenue on a GAAP and a “constant currency” basis as a well as other operating metrics on a constant currency basis so that revenue and other
operating metrics can be viewed without the impact of fluctuations in foreign currency exchange rates, allowing for period-to-period comparison of
underlying business performance. Demandware uses these non-GAAP financial measures internally in analyzing its financial results and believes
they are useful to investors, as a supplement to GAAP measures, in evaluating Demandware’s ongoing operational performance. Demandware
believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results
and trends and in comparing its financial measures with other companies in Demandware's industry, many of which present similar non-GAAP
financial measures to investors to help investors better understand the ongoing operating performance of the business. Non-GAAP gross margin,
non-GAAP subscription gross margin, non-GAAP operating income (loss), non-GAAP operating expenses, non-GAAP net income (loss) and nonGAAP net income (loss) per share exclude amortization expenses related to stock-based compensation, contingent compensation expense related
to acquisitions, amortization of intangible assets and the non-cash tax benefit related to our acquisitions. Demandware’s non-GAAP gross margin,
non-GAAP operating income and non-GAAP net income guidance for 2016 also exclude amortization expenses related to stock-based
compensation, contingent compensation expense related to acquisitions, amortization of intangible assets and the non-cash tax benefit related to
our acquisitions. Stock-based compensation is often difficult to predict and often excluded by other companies to help investors understand the
operational performance of their business. Subscription revenue as well as other operating metrics on a constant currency basis exclude the impact
of foreign currency exchange rates, which is calculated by applying the prior period’s foreign currency exchange rates to the current period’s foreign
currency revenue, because foreign currency exchange rates are subject to volatility and can obscure underlying performance. Non-GAAP financial
measures that Demandware uses may differ from measures that other companies may use. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the
reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP
financial measures has been provided in the Q4 Earnings Press Release on our website.
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© 2016 Demandware. All product and company names and logos are trademarks™ or registered® trademarks of their respective holders.