INVESTOR PRESENTATION Q3FY17 - s2.q4cdn.coms2.q4cdn.com/618890407/files/doc_presentations/2016/Dec/Q3FY17... · INVESTOR PRESENTATION Q3FY17 ... events and trends that we believe

INVESTOR PRESENTATION Q3FY17

©2016 Xactly Corporation. All rights reserved.

This presentation and other items we publish, including through social media outlets, may contain “forward-looking” statements that are based on our management’s current

expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results and growth prospects. Forward-looking

statements include all statements other than statements of historical fact contained in this presentation, including information relating to future events or our future financial or

operating performance, such as our future product release dates. Forward-looking statements are subject to substantial risks, uncertainties and other factors, including: our future

financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, ability to generate cash flow and ability to

achieve and maintain positive cash flow from operations or future profitability; our ability to anticipate market needs and timely develop new and enhanced solutions and services to

meet those needs, and our ability to successfully monetize them; the evolution of technology affecting our solutions, services and markets; the impact of competition in our industry

and innovation by our competitors; the anticipated trends, growth rates and challenges in our business and in the markets in which we operate; the effects of seasonal trends on our

operating results; maintaining and expanding our customer base and our relationships with other companies; our liquidity and working capital requirements; our anticipated growth

and growth strategies and our ability to effectively manage that growth and effect these strategies; our ability to sell our solutions and expand internationally; our failure to anticipate

and adapt to future changes in our industry; our reliance on our third-party service providers; the impact of any failure of our solutions; our ability to hire and retain necessary

qualified employees to expand our operations; our ability to adequately protect our intellectual property; the anticipated effect on our business of litigation to which we are or may

become a party; our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the U.S. and internationally; the

increased expenses and administrative workload associated with being a public company; our ability to maintain an effective system of internal controls necessary to accurately report

our financial results and prevent fraud; the estimates and estimate methodologies used in preparing our consolidated financial statements; and the future trading prices of our

common stock and the impact of securities analysts’ reports on these prices. These factors, together with those that may be described in greater detail in the company’s filings with

the Securities and Exchange Commission (“SEC”), may cause our actual results, events, or circumstances to differ materially from those described in our forward-looking statements.

All such filings are available on the SEC Filings section of the Investor page of our website at http://investors.xactlycorp.com. You should not rely upon forward-looking statements as

predictions of future events. Our forward-looking statements relate only to events as of the date on which the statements are made. We undertake no obligation to update any

forward-looking statements 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. In addition to financial measures prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), this website and other

items we publish may include certain non-GAAP financial measures. We believe that these non-GAAP financial measures are useful as a supplement in evaluating our ongoing

operational performance and enhancing an overall understanding of our past financial performance. The non-GAAP financial measures included in this website and other items we

publish should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. A reconciliation between each non-GAAP

financial measure and its nearest GAAP equivalent is included.

SAFE HARBOR

2

© 2016 Xactly Corporation. All rights reserved. 3

COMPANY OVERVIEW

Leading provider of cloud-based incentive compensation solutions

for employee and sales performance management

Company founded in 2005

870 customers worldwide*

More than 450 employees

Locations in San Jose, Denver, Washington D.C., UK, and India

* As of January 31, 2016


4.5

©2016 Xactly Corporation. All rights reserved. 4©2016 Xactly Corporation. All rights reserved.


INVESTMENT HIGHLIGHTS

annual recurring total

addressable market 1

$7billion

revenue retention

for FY16

of empirical data

used to create

unique insights

basis points increase

in EBITDA margin

Q3FY17 over Q3FY16

cloud-based

multi-tenant SaaS

architecture

subscription

revenue CAGRsubscriber

CAGR

1,600 11 years 105%

35% 29% 100%

1: TAM for 2014. See slide 9 for full analysis.


©2016 Xactly Corporation. All rights reserved. 6

ANNUAL REVENUE SUMMARY

28% CAGR

Dollars in Millions

FY13 FY14 FY15 FY16

$36.3

$47.2

$61.1

$76.0

9%

91%

BY SEGMENT

10%

90%

BY GEOGRAPHY

ROW U.S.SMB Mid-Market/Enterprise

Segment and geography breakdowns are as of Jan 31, 2016.


ANNUAL SUBSCRIBERS SUMMARY

35% CAGR

1/31/13 1/31/14 1/31/15 1/31/16

108,000

140,000

194,000

266,000

31%

69%

BY GEOGRAPHY

26%

74%

BY EMPLOYEE TYPE

Non-Sales SalesROW U.S.

Segment and geography breakdowns are as of Jan 31, 2016.

As of:


THE CURRENT PARADIGM

29.6 million sales people in the U.S. and E.U.

85% of businesses use spreadsheets or

homegrown systems to calculate incentives

$800B paid annually to sales people in

the U.S. alone

Significant error rates associated with

spreadsheets

Lost productivity due to lack of

visibility and rep shadow accounting

Rep turnover due to lack of trust in

the system

RESULTS IN


1: Sales and related occupations in the US in 2013 2: Source: U.S. Bureau of Labor Statistics in 2013 3: Source: ICF and Cedefop for the European Commission 4: Average subscription revenue per subscriber in

FY15

SIGNIFICANT MARKET OPPORTUNITY

Does not include non-sales professional services and ROW



LEADING COMPANIES TRUST XACTLY


Xactly Big Data PlatformMBOs

Compensation Benchmarks

Quota Coaching

Analytics

11©2016 Xactly Corporation. All rights reserved.


AUTOMATE

MITIGATE ERRORSSignificantly reduce costly errors associated with

manual processes.

REDUCE ADMINAlleviate pressure on resource constrained

compensation team and allow them to be more

strategic.

REDUCE RISKEnable traceability, audit, forecast, accruals and single

source of truth for data.

Business Case Impact

Automate

Compensation Big Data PlatformROI


MOTIVATE

MOBILEKeep reps engaged with their incentives in real-time.

ALIGNMENTEnsure your incentives align with your business goals

and improve rep quota attainment.

REDUCE SHADOW ACCOUNTINGBy eliminating reps’ mistrust in their commissions

system, they can spend more time selling.


Motivate



OPTIMIZE

COMPAREUse industry benchmarks to reveal the truth about how comp

plans stack up compared to peer companies. Pay

competitively.

PERFORMANCEDiscover how reps perform compared to the rest of the

industry.

ATTRACT AND RETAINLearn how incentives are tied to attracting and retaining top

sales performers.

Optimize




WORLD-CLASS PARTNERS

Platform Partners

Referral Partners

Consulting and Implementation Partners

https://login.salesforce.com/


https://us.intacct.com/press/intacct-grows-fourth-quarter-bookings-94-percent

https://us.intacct.com/press/intacct-grows-fourth-quarter-bookings-94-percent




Longest standing customer

Invested in 2010

Xactly is an AppExchange Customer Choice

Award winner

>50% of our customer base uses Salesforce



PayrollCeridian, ADP, Paychex

MobileReal-time Visibility for Reps

Xactly Insights™Benchmarks & Best Practices

17

BENCHMARKS AND INSIGHTS DERIVED FROM RICH

DATA SOURCES



Xactly Insights™

Unique and Growing Empirical Data

~8 BILLIONTransactions

per Quarter

11 YEARSof Data from a

Cross Section of

Industries

Anonymized

and

Aggregated

$20 BILLIONin Incentive

Payments in the

Last Two Years



Team Mix

Best performing companies have

only 5 people credited per deal

Most successful team mix

• 1 Account Executive

• 1 Solutions Consultant

• 2 Sales Managers

• 1 Sales Executive

HOW DATA HELPS YOU PAY PRECISELY



GARTNER RECOGNIZES XACTLY AS A LEADER IN SPM FOR THE

THIRD TIME IN A ROW

“Xactly received the highest customer

satisfaction scores of the leading SPM vendors

in terms of revenue.”

“Clients commended the quality of its customer

support, customer advisory board and

commitment to deploying enhancements

submitted by customers.”

“By deploying new functions every month, Xactly

has one of the strongest product release

schedules in the SPM market.”


GROWTH DRIVERS

Acquire new customers

Sell more subscriptions and modules to

our existing customer base

Enhance existing offerings and develop

new solutions

Expand internationally

Grow our partner ecosystem

Monetize big data insights



EXPERIENCED MANAGEMENT TEAM

Christopher W. Cabrera

Founder & CEOL. Evan Ellis Jr.

President & COOJoe Consul

CFO

Desta Price

SVP, Products

& Education

Ron Rasmussen

CTO & SVP Engineering

Colleen Pouliot

General Counsel &

Secretary

Nitin Mathur

VP, Professional Services

Sean Murray

VP, General Business

Sales

Robert Blohm

VP, Strategic Services

Steve De Marco

VP, Worldwide

Sales & Alliances

Dan Welch

VP, Enterprise Sales

Steve Giusti

VP, Corporate Controller

Leanne Bernhardt

VP, Human Resources

Erik Charles

VP, Product Marketing

Bernie Kassar

Chief Customer Officer

Micheline Nijmeh

Chief Marketing Officer

100+ Years in the Compensation Automation Space



FINANCIAL HIGHLIGHTS

• Strong topline growth

• Highly visible and recurring subscription revenue

• Revenue retention rates consistently 100%+

• Gross margin improving with scale

• Investing in growth

• No significant customer concentration


STRONG TOPLINE GROWTH

Subscription services revenue

Professional services revenue

FY13 FY14 FY15

$76.028% CAGR

$36.3

$47.2

$61.1

8.8

27.5

35.9

11.3

47.3

13.8

59.2

16.8

FY16

Note: Values in millions; Fiscal year-end January 31

Q3 FY16

3.9

15.2

$19.1

Q3 FY17

5.5

18.5

$23.9

+25%


STRONG CALCULATED BILLINGS1 GROWTH

35.9


1 Calculated billings defined as revenue plus the change in deferred revenue in the period; Refer to appendix for reconciliation

$40.4

$55.5

$65.7

$86.3

FY13 FY14 FY15 FY16

29% CAGR

$21.5

$25.8

Q3FY16 Q3FY17

+20%


RECURRING REVENUE MODEL WITH HIGH VISIBILITY

SUBSCRIPTION REVENUE REVENUE RETENTION RATE

FY13 FY14 FY15 FY13 FY14 FY15FY16

$27.5

$35.9

$47.3

$59.2

29% CAGR

FY16

102% 102%

104%105%



LAND AND EXPANDRepresentative examples of ARR growth after initial purchase.

LARGE SOFTWARE COMPANY

YR 1 YR 2 YR 3 YR 4 YR 5 YR 1 YR 2 YR 3 YR 4 YR 5

$122K

$235K

$477K

$888K

$1,170K

LEADING MEDIA COMPANY

LARGE SOFTWARE COMPANYLARGE IT COMPANY

$90K

$254K$305K

$550K

$795K

YR 1 YR 2 YR 3 YR 4 YR 5

$156K

$242K

$402K$422K

$447K

YR 1 YR 2 YR 3 YR 4 YR 5

$352K

$458K

$590K$610K

$730K


STRONG SUBSCRIBER GROWTH

JAN 31,

2013

JAN 31,

2014

JAN 31,

2015

JAN 31,

2016

108,000

140,000

194,000

266,000

35% CAGR

Note: Subscribers rounded to nearest thousand

+22%

OCT 31,

2015OCT 31,

2016

235,000

287,000


ATTRACTIVE LONG-TERM OPERATING MODEL

Note: Metrics are Non-GAAP and exclude stock-based compensation, litigation expenses and other items; Fiscal year-end January 31;

Refer to appendix for GAAP to Non-GAAP reconciliation

FY13 FY14 FY15 FY16 FY17 TTM Long-term Model

Revenue Mix

Subscription services 76% 76% 77% 78% 76% 80 – 85%

Professional services 24% 24% 23% 22% 24% 15 – 20%

Gross Margin 53% 59% 60% 60% 62% 65 – 70%

Subscription services 68% 74% 76% 74% 77%

Professional services 4% 12% 4% 9% 11%

% of Revenue

Research and development 18% 19% 19% 19% 17% 11 – 13%

Sales and marketing 42% 43% 47% 45% 42% 25 – 30%

General and administrative 14% 16% 15% 17% 14% 7 – 9%

Operating margin (22%) (19%) (21%) (21%) (12%) 18 – 22%

EBITDA margin (18%) (16%) (18%) (17%) (8%) 22 – 26%


INVESTMENT HIGHLIGHTS

• 1,600 basis points increase in EBITDA

margin Q3FY17 over Q3FY16

• Unique insights based on 11 years of

empirical data

• 105% revenue retention for FY16

• Subscriber CAGR of 35%

• Subscription revenue CAGR of 29%

• Cloud-based 100% multi-tenant SaaS

architecture

30©2016 Xactly Corporation. All rights reserved.

Appendix


GAAP TO NON-GAAP RECONCILIATION

Twelve months ended

October 31,

(in $ thousands) 2013 2014 2015 2016 2015 2016 2016

Subscription services $27,519 $35,893 $47,309 $59,211 $15,157 $18,455 $70,249

Professional services 8,806 11,327 13,802 16,763 3,940 5,490 21,616

Total revenue 36,325 47,220 61,111 75,974 19,097 23,945 91,865

Gross profit – Subscription services

Gross profit (GAAP) 18,778 26,332 35,592 43,489 11,184 14,213 53,701

Stock-based compensation 61 74 237 456 133 146 568

Gross profit (Non-GAAP) 18,839 26,406 35,829 43,945 11,317 14,359 54,269

Gross margin % (Non-GAAP) 68.5% 73.6% 75.7% 74.2% 74.7% 77.8% 77.3%

Gross profit – Professional services

Gross profit (GAAP) 296 1,337 477 1,083 63 532 1,578

Stock-based compensation 33 43 61 454 154 276 882

Gross profit (Non-GAAP) 329 1,380 538 1,537 217 808 2,460


Gross profit – Total

Gross profit (GAAP) 19,074 27,669 36,069 44,572 11,247 14,745 55,279

Stock-based compensation 94 117 298 910 287 422 1,450

Gross profit (Non-GAAP) $19,168 $27,786 $36,367 $45,482 $11,534 $15,167 $56,729


Three months ended

October 31,

Fiscal year ended

January 31,


GAAP TO NON-GAAP RECONCILIATION (CONT’D)Twelve months ended

October 31,

(in $ thousands) 2013 2014 2015 2016 2015 2016 2016

Research and development

Research and development (GAAP) $6,567 $9,114 $11,867 $15,650 $4,130 $4,622 $17,664


Research and development (Non-GAAP) 6,483 8,980 11,595 14,752 3,822 4,052 15,900

Research and development % of revenue (Non-GAAP) 17.8% 19.0% 19.0% 19.4% 20.0% 16.9% 17.3%

Sales and marketing

Sales and marketing (GAAP) 15,410 20,532 28,877 34,836 9,319 10,440 40,106


Sales and marketing (Non-GAAP) 15,254 20,367 28,565 33,943 9,053 9,873 38,318

Sales and marketing % of revenue (Non-GAAP) 42.0% 43.1% 46.7% 44.7% 47.4% 41.2% 41.7%

General and administrative

General and administrative (GAAP) 5,424 7,901 10,087 14,502 3,330 3,725 15,462

Stock-based compensation 181 280 776 1,156 304 692 2,223

XactlyOne Stock Donation – – – 498 – – –

General and administrative (Non-GAAP) 5,243 7,621 9,311 12,848 3,026 3,033 13,239

General and administrative % of revenue (Non-GAAP) 14.4% 16.1% 15.2% 16.9% 15.8% 12.7% 14.4%

Operating margin

Operating loss (GAAP) (9,052) (12,603) (15,469) (20,416) (5,532) (4,042) (17,953)

Stock-based compensation 515 696 1,658 3,857 1,165 2,251 7,225

Legal settlement – 2,000 – – – – –

Amortization of intangibles 725 725 707 – – – –

XactlyOne Stock Donation – – – 498 – – –

Operating loss (Non-GAAP) ($7,812) ($9,182) ($13,104) ($16,061) ($4,367) ($1,791) ($10,728)

Operating margin % (Non-GAAP) (21.5)% (19.4)% (21.4)% (21.1)% (22.9)% (7.5)% (11.7)%

Three months ended

October 31,

Fiscal year ended

January 31,


GAAP TO NON-GAAP RECONCILIATION (CONT’D)

Twelve months ended

October 31,

(in $ thousands) 2013 2014 2015 2016 2015 2016 2016

Net loss ($9,372) ($14,543) ($18,532) ($24,719) ($10,357) ($4,220) ($18,752)

Non-GAAP adjustments:

Interest expense 176 1,518 3,087 6,021 3,227 124 530

Provision for income taxes 147 24 265 299 62 74 341

Depreciation and amortization 1,096 1,427 1,972 3,133 831 976 3,594

Amortization of intangibles 725 725 707 – - - –

Loss on debt extinguishment – – – 1,524 1,524 - –

Stock-based compensation 515 696 1,658 3,857 1,165 2,251 7,225

Increase (decrease) in fair value of convertible preferred stock warrant liabilities (8) 415 (309) (3,542) - - –

Other (income) expense, net 5 (17) 20 1 12 (50) (103)

Loss on disposal of fixed assets – – – 245 - 30 31

Legal settlement – 2,000 – – - - –

XactlyOne Stock Donation – – – 498 - - –

Adjusted EBITDA ($6,716) ($7,755) ($11,132) ($12,683) ($3,536) ($815) ($7,134)

Adjusted EBITDA margin % (18.5)% (16.4)% (18.2)% (16.7)% (18.5)% (3.4)% (7.8)%

Three months ended

October 31,

Fiscal year ended

January 31,


NON-GAAP RECONCILIATION – CALCULATED BILLINGS

(in $ thousands) 2013 2014 2015 2016 2015 2016

Total revenue $36,325 $47,220 $61,111 $75,974 $19,097 $23,945

Deferred revenue, end of period 21,286 29,531 34,143 44,510 39,781 50,208

Less: deferred revenue, beginning of period 17,227 21,286 29,531 34,143 37,397 48,366

Calculated Billings $40,384 $55,465 $65,723 $86,341 $21,481 $25,787

Calculated billings % growth 37.3% 18.5% 31.4% 20.0%

Three months ended

October 31,

Fiscal year ended

January 31,

©2016 Xactly Corporation. All rights reserved. Xactly’s vision is to change the world of incentive compensation.For more information, visit www.xactlycorp.com

Documents

INVESTOR PRESENTATION Q3FY17 - s2.q4cdn.coms2.q4cdn.com/618890407/files/doc_presentations/2016/Dec/Q3FY17... · INVESTOR PRESENTATION Q3FY17 ... events and trends that we believe