ServiceSource analyst day_nov21_2013

ServiceSourceAnalyst Day

November 21, 2013

Important Information

• This presentation contains forward-looking statements within the meaning of the U.S. federal securities laws that involve risks,

uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ

materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact

could be deemed forward-looking, including, without limitation, statements regarding: predictions for future growth, our possible or

assumed future results of operations; estimates of service revenue opportunity under management and annual contract value; our ability

to improve our customers’ renewal rates, margins and profitability; our ability to increase our revenue and contribution margin over time

from new and existing customers; business strategies; technology and product development; competitive position; the effects of

competition; third party and company estimates of market sizes; our long term business model; economic, industry and market trends;

potential growth vectors and opportunities; comparative models; and statements about partnerships or acquisitions.

• Typically, these statements contain words such as “if,” "believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,”

“opportunity” and similar expressions. .

• You are cautioned that the forward-looking statements in this presentation are based on estimates and information available to us at the

time of this presentation. These statements are subject to risks and uncertainties that could cause actual results and events to differ

materially and are not guarantees of future performance. We undertake no obligation, and to not currently intend to update the forward-

looking statements to reflect subsequent events or circumstances. A detailed discussion of these and other risks and uncertainties that

could cause actual results and events to differ materially from such forward-looking statements is included in our periodic reports and

registration statements filed with the Securities and Exchange Commission, which can be accessed at http://www.sec.gov.

• The information contained in this presentation does not constitute an offer to sell or the solicitation of an offer to buy securities, or a

recommendation for investment in the Company’s securities.

1

12:00 – 1:00pm Arrival & Registration & Box Lunch

1:00 – 1:05pm Welcome & Agenda Walkthrough Anne Bawden

1:05 – 1:25pm CEO Keynote Mike Smerklo

1:25 – 2:10pm Market/GTM/Customers:- Market Capture Strategy (15 mins)- Legendary Customer Experience (15 mins)- Q&A (15 mins)

Tom BonosJay Ackerman

2:10 – 2:50pm Cloud & Data Services - Update (20 mins)- Renew Demo (10 mins)- Q&A (10 mins)

Richard CampioneJim Dunham

2:50 – 3:05pm Break

3:05 – 3:30pm Customer Panel- Blackboard- Workday

Moderated by Mike Smerklo

3:30 – 3:50pm Financials:- Key Metrics & Business Update- Long Term Model

Ashley F. Johnson

3:50 – 4:15pm Final Q&A SREV Mgmt

4:15pm Closing Remarks & Cocktail Reception

Agenda

CEO KeynoteMike Smerklo

ServiceSource Overview

Who We Are: Global Leader in Recurring Revenue Management

History: Founded in 2002, IPO in 2011

Customers: Over 70 Blue Chip Customers Across Five Verticals

Headquarters: San Francisco, CA

4

Solution: Renew OnDemand SaaS Application and Suite of Managed Services Offerings

The Market for Recurring Revenue Management

5

Consistent predictions for continued growth

It‟s Big Requirements for success are robust and evolving

Data Management

Analytics

Commerce

Sales Execution

Customer Success

“By 2015, 35% of Global 2000 Companies will generate revenue through subscription-based services and revenue models.” — Gartner

“The worldwide market for subscription-based software to be US$90 billion in 2015.” — IDC

"The global market for SaaS will grow from $21.2 billion in 2011 to more than $92.8 billion in 2016.” — Forrester Research

$310BTechnology and services

for managing mission-

critical, recurring

revenue streams across

HW, SW, SaaS/XaaS,

HCLS, and Industrials.

"Worldwide, software support service spending will achieve a five-year compound annual growth rate (CAGR) of 5.3%, hitting $75.2B in 2017." — Gartner

*Source: Hoovers and Gartner; existing verticals only.

*

We Are the Market Leader

6

Software Hardware SaaS/XaaSHealthcare & Life Science

Industrial Systems

$9B+Recurring Revenue under management

145+Engagements

10 OF THE TOP 15 F100 Technology-Based Companies

7 OF THE TOP 10 Software as a Service Companies

6 OF THE TOP 6 Enterprise Network Storage Companies

4 OF THE TOP 5 Integrated Systems Vendors

20%

*Based on internal studies, companies who worked with ServiceSource increased renewal rates by an average of 15 points.**ServiceSource internal study comparing sales productivity before and after using Renew OnDemand showed an average increase of 20%

15ptimprovement inrenewal rates*

increase in sales productivity**

$11B+

http://www.rockwellautomation.com/rockwellautomation/index.page?

http://www.google.com/url?sa=i&rct=j&q=workday&source=images&cd=&cad=rja&docid=hcvJ9gDmNT545M&tbnid=07N73MQVpQvIcM:&ved=0CAUQjRw&url=http://www.okta.com/blog/2012/09/workday-and-okta-disrupting-hr-driven-identity-management-in-the-cloud/&ei=kiP_UZ2YH8XiiALLkIHYBQ&bvm=bv.50165853,d.cGE&psig=AFQjCNG6bs4RfDC1gWctaN21ByUM-37fXw&ust=1375761667184083

http://www.google.com/url?sa=i&rct=j&q=intralinks&source=images&cd=&cad=rja&docid=g0BX_p-p2K6SuM&tbnid=R4QYoLfohQ1swM:&ved=0CAUQjRw&url=http://www.scawardseurope.com/sponsors-0&ei=Ovr-UfiBKqe7iwLbmYC4BA&bvm=bv.50165853,d.cGE&psig=AFQjCNFqxSkIXuNvV80dUWx5b0AD3xNqXg&ust=1375751080062979

Our Mission

7

A Complete Solution for Recurring Revenue Management, Creating Real Customer Value

Our Values

Do the Right Thing Deliver Results Win as a Team

Evolution ofServiceSource Solution

Cloud Application

The first purpose-built cloud application designed to increase recurring revenue

The only hybrid solution that includes selling & enablement services

Pay for Performance

Selling on behalf of customers, based on performance

Renewals Data and Technology

Support for the renewals process with applications, tools, and a data framework

Customer Success Management Solution and Best Practice Business Process

• Customer Success management solution offering

• Data Management and Opportunity Generation

• Sales Strategy & Execution

• Generate Insight and Optimize

we do it for you we enable you

Unbundling

SaaS• Renew OnDemand• Support• Training• Data Services• Config Services /

Integration

Managed Services• Enablement Services• Selling Services

8

Over 12 Years of Leadership in Managed Services

9

Value to Our Customers

People, process, supported by technology

Pay for Performance

Disciplined renewal sales methodology

Global scale and expertise

Tailored to industry verticals

Selling Services

Enablement Services

Managed Services“We Do It For You”

Best In Class, Purpose Built SaaS Application

10

Value to Our Customers

Renewal-ready Data

Actionable insight via metrics to view and increase business performance

Automation into sales, quoting, administration, and channel

Team of experts providing on going data cleansing and support

Cloud & Data Services“We Enable You”

Data Services

Professional Services

The Strength of the Combined Solution

11

• Profitability and growth funds investment in Renew

• Pre-eminent test laboratory fuels product innovation

• Drives automation and efficiencies

• Fuels evolution of differentiated MS offerings

• Increases value proposition for MS offering

Enhanced Customer Choice

Expanded Market Opportunity

Increased Shareholder Value

2013 Has Been an Important Year for ServiceSource

12

Challenges GoingInto the Year

Revenue GrowthDeceleration

Introduction of SaaS Offering as New Platform

for Growth

New Capabilities Required For Success

Five Key Initiatives to Reposition Ourselves for Reacceleration

Move to an “Unbundled Offering”

Improve Sales Execution

Product Scale & Standardization

Increase Capacity to Implement Renew OnDemand

Customer Retention

2013 Highlights

13

Spring Release:

Data

Summer Release:Channel

Winter Release:

Adoption

Our Growth Strategy

14

Strengthen the Power of Our People

ExtendGTM Reach

in S&M, Customer Success, Partner

Ecosystem

Expand Market

Leadership With

Renew

ReinforceMS

Leadership Position

FortifyThought

Leadershipand

Unlock Data as a

Strategic Asset

Our Guiding Light

15

Legendary Customer

Experience

Unbundleto Provide Choice

Renew OnDemandBuild Out to Enhance Customer Experience

Geographic Expansion to Provide CoverageData

Focus to Unlock Insights

Account CoverageInvestment Providing Dedicated

Voice of Customer

Summary

The market is large and wide open.

We are the clear leader.

We have the only comprehensive solution.

Renew OnDemand is gaining significant momentum.

We have the right strategy, right team, right solution.

16

Market/GTM/CustomersJay AckermanChief Renewals Officer & EVP Customer Success

What‟s Good for Our Customers is Good For Us

19

Legendary

Customer Experience

Gain Business Up the Stack

Deliver Extended Solution Offerings to Installed Base

Capture New Logos

Extend Across Business Lines

and Geographies

Organically Grow in our

Installed Base

Market Capture StrategyTom BonosSVP Global Sales Execution and Solution Design

Market Capture Strategy

21

$310B TAM We Intend to Capture It

Customers Want Choice

We‟ve Unbundled our Solution

Cloud Changes Everything

We are Repositioning in the Market

Execution is KeyGrowing Pipeline

Driving Conversion Rates Up

Large TAM for Recurring Revenue

22

Recurring Revenue Management (RRM)

encompasses technology and services

for managing

$310Bof mission-critical, recurring revenue streams

$99

$66

$21

$53

$71

Hardware Software XaaS HCLS Industrials

Estimated Recurring Revenue Streams ($B)

Source: Hoovers and Gartner

Large Portion of Our TAM We Already Know

23

$186B additional

opportunity

$115Bopportunity within the install base

$11B+ under

management On Average < 20% Penetration

Unbundling Creates Opportunity for Renew in our Install Base

Unbundling to Give Customers Choice

24

Cloud & Data Services“We Enable You”

Data Services


Selling Services

Enablement Services

Managed Services“We Do It For You”

Or

Repositioning ServiceSource as SaaS Provider

Local Cloud Leadership#CloudCorridor

2X

Blog Visitors

Can a Cloud Corridor in SF Compete with Silicon Valley?

Coverage Driving the Recurring Revenue Discussion

“Recurring Revenue” Share of Voice

SubscriptionEconomy (37%)

RecurringRevenue (63%)

25

Making a Statement at Dreamforce

26

30 accounts scheduled Face-to-Face Demo’s

25 SVP/C-Level contacts engaged in exec. meetings

Sharing Thought Leadership:

• “Engage with Intelligence to Retain for Life” (Richard & Dell)

• “Breaking Baldwin: The Art and Business of Transformation”

• “Don’t Be the One-Hit Wonder: Five Steps to Lower Churn”

• “Where Art and Science Collide: From New Sales to Renew Sales”

Sold Out

Sold Out

1000’s of attendees visiting SREV booth in the DF cloud pavilion

Building Pipeline:

100’s of attendees engaged in meaningful interactions

Extending Our Solution, Reach and Influence With Market Leaders

27

Aria Partnership Extends Solution Footprint For companies with subscription products & services

28

Recurring Revenue Sales

Commerce & Automation

• Broaden Solution for companies with SaaSofferings

• Accelerate & increase market capture for high volume business

• Creates a solution that is more complete for cloud solutions

Monetization Models

Invoicing & Payments

Process Orchestration

Customer Success

Renewals

X-Sell & Up-Sell

28

Accenture GTM Alliance Extends Our Reach

29

• Preferred provider for renewals software and managed services

• Increase revenue velocity and penetration in Fortune 100

• Market validation for Renew OnDemand

• Creates 1st ever “Recurring Revenue Blueprint”

System Integration

Sales Transformation

Renew OnDemand

Selling + Enablement

Momentum

30

Industrials

SaaS

HCLS

Software

Hardware

+300% vs Q3‟12

75% of all opportunities

through 1st half of 2014, include

Renew OnDemand subscription

Renew Penetration Across Verticals

Number of Renew Demos Growing

More than 130over last 4 quarters

aaaaa

Subscription $ Bookings Renew Pipeline

Our Strategy is Working

31

Solution Options:

Customerteam

ServiceSourceteam

Hybridteam

(foundational)


32

Solution Options:

Customerteam

ServiceSourceteam

Hybridteam

(foundational)


33

Solution Options:

Customerteam

ServiceSourceteam

Hybridteam

(foundational)


34

Solution Options:

Customerteam

ServiceSourceteam

Hybridteam

(foundational)

Case Study: Our Strategy at Work The Google Land and Expand Story

Initial Engagement

Dec 2011 Sep 2012 Feb 2013 Oct 2013 Oct 2013

4 deals

signed in

past 21months

Initial Engagement

Initial Engagement

Initial Engagement

Expanded Relationship 1


Expanded Relationship

2


3

35



2

Attacking the Market Opportunity

36

North America

Sales & SD

Global Strategic AccountsSales & SD

Inside Sales &Sales Operations

International

Sales & SD

DNA of Our Sales Team Enterprise Software Sales

Experience Solution Oriented Supported by Subject

Matter Experts - Solution Design (SD)

Global Data & Application Specialists

The Path Forward

37

The Path Forward

38

Pipeline

Repositioning,Driving Awareness

Unbundling Provides Choice

Increasing Ecosystem

The Path Forward

39

Close Rates

Pipeline




The Path Forward

40

Buy Process 2.0 Repositioning,Driving Awareness



Close Rates

Pipeline

The Path Forward

41

Buy Process 2.0

Leveraging Renew Referenceabilty

Close Rates

Pipeline




The Path Forward

42

Buy Process 2.0

Leveraging Renew Referenceability

Improved Sales Comp

Close Rates

Pipeline




The Path Forward

43

Buy Process 2.0


Improved Sales Comp

Close Rates

Pipeline

Unleash Renew on our Install Base




The Path Forward

44

Close Rates

Buy Process 2.0

PipelineACV

GrowthX =


Improved Sales Comp

Unleash Renew on our Install Base




Legendary Customer ExperienceJay AckermanChief Renewals Officer & EVP Customer Success

Our Commitment to Our Customers

46

OWN

EXECUTE

EVOLVEGROW

INNOVATE

Legendary

Customer Experience

Engagement Leadership & Valued Partner

ROI / Business Case Realization

Roadmap & Forward Planning

Standardization & Efficiency

Thought Leadership & Extending Our Solution

Customer Facing Investments

47

Centralized Organization

Standard offerings

PreSales

Customer workshops, and methodologies

Training/adoption

Accenture Partnership

Central Voice to Our Customers

Consistent interface and engagement plays

Global leadership

Voice and advocacy

Renew deployment internally


Customer Success Management

Managed Services

Improved Visibility to Customer Expectations

Role specialization

Elevated focus on employee engagement

Customer sales management integration

Customer Community

48

Programmatic Engagement Targeted Consistent Pulsing

Quarterly Referenceability

Assessment

Annual Customer Survey

Partner Value Assessment (PVA)

Product Council(Q4 launch)

Active Management of Customer Value

49

95%

88%90%

2011 2012 2013 est

BOP $ACV-LOSSES –NET CONTRACTIONS

BOP $ACV

Retention Rate

Business case attainment

Executive engagement

Renewal pipeline

Strategic innovation, including Renew

=

Retention Rate Customer Health

Legendary Customer Experience Focus Areas

50

Business Case Achievement

Track, Deliver, Confirm

Renew OnDemand Adoption

Get the Most Out of Renew OnDemand

Journey to Best in Class

Leverage Data to Evolve and Innovate

Easy to Do BusinessStreamline and Analyze Key Touch Points

Case Study: Blue CoatDelivering a Legendary Experience

51

Provided strategic guidance on performance growth given new PE priorities

Channel Management benchmarking led to new Partner Program approaches

Realigned Partnership goals and focus; introduced Renew OnDemand

Increased Renewal Rate Performance

Implemented Renew OnDemand

Enabling greater Recurring Revenue Growth and reporting visibility

ServiceSource Role Outcomes

ServiceSource and Blue Coat in a five + year partnership

ServiceSource manages Blue Coat’s global service renewal business

Blue Coat was acquired by a PE firm and taken private

Relationship ServiceSource Role

Heard at Dreamforce

52

GTM and Customer Q&A

Cloud & Data ServicesUpdate & Demonstration

Richard CampionePresident, Cloud & Data ServicesMember, Board of Directors

Customer data reflects the customer journey –not organised for engagement & renewal

Market Sell Implement Finance Support Renewal

SFA

Web

Marketing Automation Project Mgt

Billing

Accounting

Usage

Service ?

57

Recurring revenue is presents challenges different from first time “new” revenue

New revenue Recurring revenue

58

• Discovery driven process

• Handful of opportunities per quarter

• Timeline is open ended

• Can’t even start without data

• Hundreds of opportunities per quarter

• Perishable: driven by expiration

Companies address this gap with people and .xls

Recurring Revenue Gap

Marketing

Service

Channel

SFA

Commerce

CRM

CPQ

Accounting

HR

Entitlement

Manufacturing

Supply Chain

Billing

Order Mgt

ERP

CPQ

59

Admin: >50%

Selling to Customers: <50%

SERVICEPRMSFA (n)

ERPCRM

QUOTE ORDER ENTITLEMENT

ASSETS

Renewal reps spend more time finding and organising data than talking to customers

60

And when they do talk to customers, the focus is often on renewing a specific contract

61

Current State (unoptimised)

• Simple processing of contracts: FIFO or sort by total dollar$

• Renewals assumed to “just happen” – no optimising timing for quarter results

• Data is frequently inaccurate and incomplete

62

A Better Way (Optimised)

• Accurate data and guided selling

• Renewals managed as perishable assets

• Group based on what we know about customer

• Optimise grouping at asset level for upsell and cross sell

• Accelerate timing: pull forward into present quarter for improved results

Up Sell: A → A’

Cross Sell: A → A + B

Accelerate: A + B → C

COTERMINATE

Drive superior results: optimise timing and grouping of opportunites with customer insight

Instead of addressing this gap with people and .xls

Recurring Revenue Gap

Marketing

Service

Channel

SFA

Commerce

CRM

CPQ

Accounting

HR

Entitlement

Manufacturing

Supply Chain

Billing

Order Mgt

ERP

CPQ

63

New class of cloud application designed for recurring revenue management

Enabling Data-Driven Optimization for Recurring Revenue

Renewal Ready Data

Actionable Insight

Sales Execution

Marketing

Service

Channel

SFA

Commerce

CRM

CPQ

Accounting

HR

Entitlement

Manufacturing

Supply Chain

Billing

Order Mgt

ERP

CPQ

Enabling Data-Driven Optimisation for Recurring Revenue

64

Functional approach: Market-leading end-to-end solution for recurring revenue management

65

Current Enhancements

Future Enhancements

Data & Data Science E2E Customer Lifecycle Management Financial Closure

Admin/Config

Action-Ready Data

Oppty & Task

Generation

Revenue Planning

Account Mgmt

Direct Renewal MgmtHigh Vol/

Self ServiceChannel Mgmt

Quote and Booking

Integration

Order and Billing

Integration

Complete recurring revenue process contains 13 necessary sub-processes

Customer Success Management

Sales Enablement & Sales Ops

Booking & Asset Collector

It’s harder than you think!

Baking in 14 years experience driving renewals into Renew OnDemand

66

Architectural approach: Next generation, cutting edge architecture

Transactional

Real Time Analytics

Record Lookup

Historical Analytics Exploratory Analytics

Analytics

Data

Valu

e

Ap

plicati

on

Co

mp

lexit

y

Interactive

Data Value Chain

AnalyticsRules Reporting

Scheduling

Renew Data Fabric

Big, fast & complex

Workflow

DataWarehouse

Hadoop

NewSQL

NoSQL

Graph Database

Event

Application Fabric

Small, slow &simple

Infrastructure approach: Scalable, redundant, and elastic

67

PhysicalLogical

Nginx / HAproxy

ELB-WEB

Nginx / HAproxy

mongoDB

RS-3mongo

DBRS-2

mongoDBRS-3

SHARD 1

mongoDB

RS-3mongo

DBRS-2

mongoDBRS-3

SHARD 2

mongoDB-C

mongoDB-C

mongoDB-C

APP

NodeJSMongoS

APP

NodeJSMongoS

Amazon - East

NAT NAT

SSH SSH

ELB-WEB

APPAPP APP APPAPP APP

DBC DBC

Nginx Nginx

MASTER MASTER

LOGS LOGS

DB S1 RS1DB S2 RS1 DB S2 RS2

DB S1 RS2

Amazon - West

Inbound/outbound traffic

Taking data to the next level – Strategic Asset

68

New Chief Data Officer

Consolidation of the data organization

Cutting edge data architecture with enterprise integration framework

Investing in productizing data science

World class data services and sales ops

69

Building a competitive moat based on IP

Domain IP

Architectural IP

Data as a Strategic Asset

8 Patents Pending

Delivering results for our customers

Enough Talk, Let‟s See ItThe Renew OnDemand Demo

Jim DunhamSVP Product Management

Renew OnDemand demo

LOCATIONS WORLDWIDE

Scale

71

$11B+ Recurring Revenue under management

47 secondsA renewal is closed

145+Engagements worldwide

Maturity

Next Best

Action

Before customer contact

During Contact

After contact

Difference

Admin: >50%

Selling to Customers: <50%

SERVICEPRMSFA (n)

ERPCRM

QUOTE ORDER ENTITLEMENT

ASSETS

Where do you want your reps to spend time?

72

Entering information into a CRM system or XLS?

73

There is a better way

Go to Renew OnDemand Demo

74

Renew OnDemand Q&A

Customer PanelModerator: Mike Smerklo

Customer Panel

Bill DavisCFO

Stan SweteCTO

77

FinancialsAshley F. JohnsonCFO

Consistently Profitable Managed Services Business

Financial Highlights

80

Revenue Accelerating

Strong Bookings Growth in Renew onDemand Subscriptions

Attractive Long Term Model

Strong Balance Sheet for Growth Investments

Q3 Results and FY Guidance

81

• Total Revenue: $66.5M

• Non-GAAP Gross Margin: 43%

• Adjusted EBITDA: $5.3M

• Renew Bookings: $30.0M

• Total Cash: $278.3M

Recent Quarterly Performance*

GAAP to non-GAAP Reconciliation tables can be found on the IR portion of our website: http://files.shareholder.com/downloads/ABEA-5LUUYL/2737661982x0x703535/f135076d-0b6f-4991-a169-2f792dcbfb1c/Guidance_Tables_v2.pdf*As presented on SREV Q3’13 Earnings Call, Nov 5, 2013.

• Total Revenue: $271-$275M12% yoy growth

• Non-GAAP Gross Margin: 43% - 44%

• Adjusted EBITDA: $16-$19M

• Free Cash Flow: $7-$9M

FY Guidance Estimates*

http://files.shareholder.com/downloads/ABEA-5LUUYL/2737661982x0x703535/f135076d-0b6f-4991-a169-2f792dcbfb1c/Guidance_Tables_v2.pdf












Revenue Accelerating on a Growing Base

• Strong H1 ACV ramping to revenue in H2

• Managed Services Business execution

• Cloud & Data Services Business momentum

YOY Quarterly Growth

*FY‟13 Guidance at Midpoint of range: $75.5-$79.5M.

82

$58 $60 $59 $67 $61 $68 $67 $78

25%23%

18%

11%

6%

13% 13%

16%

0%

5%

10%

15%

20%

25%

30%

0

10

20

30

40

50

60

70

80

90

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413G

Series1 Series2Qtr Revenue YOY Growth

Consistent Profitability in Managed Services…

83

Managed ServicesMargin Growth

$65

$98 $110 $84

2010 2011 2012 2013 YTD

(1)

(1) Estimated non-GAAP Managed Services margin

$65

$98 $110

$84

2010 2011 2012 2013 YTD

…Fuels Our Investments in Innovation

84

Managed ServicesMargin Growth

$12

$21

$27 $27

2010 2011 2012 2013 YTD

Cloud & Data ServicesInvestment

(1) (2)

(1) Estimated non-GAAP Managed Services margin (2) Estimated investment in Product, Engineering & Professional Services

Investments Starting to Pay Off

85

Subscription Bookings*$Millions

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct 13

$7M

Subscription ARR*$Millions

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct 13

$6M

$30M$15M

313% YoY Growth

144% YoY Growth

* Cumulative since the beginning of 2012.

Investments Starting to Pay Off

86

Subscription Bookings*$Millions

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct 13

$33M

$7M

Subscription ARR*$Millions

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct 13

$16M

$6M

* Cumulative since the beginning of 2012.

Understanding Near Term Margins and Growth

87


For illustrative purposes only…let’s do some scenario modeling.

88

Note:The scenario modeling in the slides that follow is presented for discussion purposes only and does not represent management’s belief or prediction about future growth.


WDAY revenue excludes one-month stub for Jan 2011

2008 2009 2010 2011 2012

Revenue ($M) $6 $25 $68 $134 $274

YoY Growth 295% 170% 98% 104%

GM % -77% 19% 41% 51% 57%

89


Renew onDemand Similar to WDAY ca. „08-‟09

2008 2009 2010 2011 2012

Revenue ($M) $6 $25 $68 $134 $274

YoY Growth 295% 170% 98% 104%

GM % -77% 19% 41% 51% 57%

2013 G

Subs + PS Rev ($M) ~$16

YoY Growth 226%

GM % *

2013G number based on the midpoint of full year SREV guidance of $271 – $275M

90

Illustrative Only



What if Renew followed similar growth and profitability to Workday…

2008 2009 2010 2011 2012

Revenue ($M) $6 $25 $68 $134 $274

YoY Growth 295% 170% 98% 104%

GM % -77% 19% 41% 51% 57%

2013 G 2014 2015 2016

Subs + PS Rev ($M) ~$16 $43 $85 $173

YoY Growth 226% 170% 98% 104%

GM % * 41% 51% 57%

PRO FORMA

2013G number based on the midpoint of full year SREV guidance of $271 – $275M

91

Illustrative Only



Scenario Math…

2013 G 2014 2015 2016

Subs + PS Rev ($M) ~$16 $43 $85 $173

YoY Growth 226% 170% 98% 104%

GM % * 41% 51% 57%

PRO FORMA Scenario: Renew closely follows WDAY

growth/profits

Scenario: Managed Services resumes 10% growth, and maintains Non-GAAP

gross margins 40 - 45%

2013 G 2014 2015 2016

Mgd Svs Rev ($M) ~$257 $283 $311 $342

YoY Growth 8% 10% 10% 10%

GM % ~45% 43% 43% 43%

PRO FORMA

92

Illustrative Only

2013G number based on the midpoint of full year SREV guidance of $271 – $275M.

Even in a hyper-growth scenario…

2013 G 2014 2015 2016

Subs + PS Rev ($M) ~$16 $43 $85 $173

YoY Growth 226% 170% 98% 104%

GM % * 41% 51% 57%

PRO FORMA

2013 G 2014 2015 2016

Mgd Svs Rev ($M) ~$257 $283 $311 $342

YoY Growth 8% 10% 10% 10%

GM % ~45% 43% 43% 43%

PRO FORMA

2013 G 2014 2015 2016

Total Rev ($M) $273 $326 $396 $516

YoY Growth 12% 19% 22% 30%

GM % ~43% 42% 44% 48%

PRO FORMA

… the impact on our total business takes time.

Steady margin improvement and growth acceleration as SaaS business scales

93

Illustrative Only

2013G number based on the midpoint of full year SREV guidance of $271 – $275M.

Attractive Long-Term Business Model

Non-Linear Progression as we invest

in growth

Today

MS Revenue > 90%C&DS Revenue < 10%

Gross Margin 43-44%

Sales & Marketing 18-20%

R&D 7-9%

G&A 12-14%

EBITDA 6-7%

Long-Term Model

MS Revenue 60-70%C&DS Revenue 30-40%

Gross Margin 48-53%

Sales & Marketing 16-18%

R&D 8-10%

G&A 10-12%

EBITDA 15-20%

94

Inorganic Opportunities Could Accelerate our Path

95

Recurring Revenue Management

Data & Data Science

End to End Customer Lifecycle Management

Financial Closure

Sales Transformation

Enterprise Systems Integration

Data Analytics

Guiding Principles to CBD Strategy:• Partnerships to augment revenue and market capture• Acquisitions to accelerate revenue/growth and expand market opportunity

Strong Balance Sheet to Pursue Growth

96

12/‟10 12/‟11 12/‟12 09/‟13

Total Cash $23M $109M $109M $278M

• Improving FCF profile

• Raised $136M

• Overall profitability

Key Benefits

• Invest in growth opportunities

• Increase strategic options

• Provide business flexibility

Path to Growth

97

$100 $111

$153

$206

$244

2008 2009 2010 2011 2012

REVENUE ($M)

$271-$275

2013G

Pursue Inorganic Opportunities

Invest in Renew and Expand Market Leadership

Reinforce MS Leadership Position and Profitability

$1.0B

Final Q&A