Investor Presentation Q1 2013 Barclays

7/28/2019 Investor Presentation Q1 2013 Barclays

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Copyright 2013 Demandware, Inc20 May 2013 1

Copyright 2013 Demandware, Inc. All other rights reserved.20 May 2013 1

First-Quarter 2013

Scott Dussault

Chief Financial Officer


2/22


Forward-Looking Statements

This presentation includes forward-looking statements. Demandware, Inc. (Demandware or the Company) has based theseforward-looking statements largely on its current expectations and projections about future events and financial trends affecting itsbusiness. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarilybe accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements arebased on information available at the date of this presentation and managements good faith belief as of such date with respe ct tofuture events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially fromthose expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include,but are not limited to:the Companys ability to attract new clients to enter into subscriptions for its solution; the Companys ability to service those clientseffectively and induce them to renew and upgrade their deployments of the Companys solution; the Companys ability to expandits sales organization to address effectively the new industries, geographies and types of organizations the Company intends to

target; the Companys ability to accurately forecast revenue and appropriately plan its expenses; continued acceptance of SaaSas an effective method for delivering software solutions; the Companys ability to protect and defend its intellectual property;costs associated with defending intellectual property infringement and other claims; events in the markets for the Companyssolution and alternatives to the Companys solution, as well as in the United States and global markets generally; changes in thecompetitive environment in the Companys industry and the markets in which the Company operates; and other factors discussedunder Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in periodic filings with the Securities and Exchange Commission (the SEC). In addition, in this presentation, the words believe, may,

will, estimate, continue, anticipate, intend, expect, predict, potential and similar expressions, as they relate to theCompany, business and management, are intended to identify forward-looking statements. In light of these risks and uncertainties,the future events and circumstances discussed in this presentation may not occur, and actual results could differ materially from

those anticipated or implied in the forward-looking statements. Forward-looking statements speak only as of the date of thispresentation. You should not put undue reliance on any forward-looking statement. The Company assumes no obligation toupdate any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affectingfuture performance or results, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.


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Key Investment Highlights

Large Addressable Market with Strong Macro Tailwinds

Leading On-Demand eCommerce Platformwith Large Partner Ecosystem

Differentiated, Proprietary SaaS TechnologyCreates Strong Barriers to Entry

Multiple Avenues to Drive Future Growth

Powerful SaaS Financial Model

Experienced and Deep Management Team


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Significant Momentum: On-Demand isIn Demand!

Mar. 31, 2009

$260K

60

28

$2.5M

50%

Mar. 31, 2013

$487K

630

156

$18.9M66% CAGR

79%

100% SaaS


5/22


$327 Billion

Global ecommerce

Demandware Is at the Confluence ofThree Significant Markets

Data Reflects 2011Source: Forrester (US Online Retail) andEuromonitor (Global Retail and GlobaleCommerce)

10%

CAGR(11 16)

20%

CAGR(11 16)

$14 Billion

Global Saas

$12 Trillion

Global Retail


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Global Retail Market Shifting fromOffline to Online

Digital TVContentWebSites

Ad Networks

NFCGeolocation

Services

Check OutOn Smart

Phone

mPOSClientelingMobile EndlessAisle

SocialMedia

TabletCall CenterQREnabledPrint Ads

Laptop /Desktop

eCommerce: An Essential Requirement for Retailers / Brands Today

2004 PRESENT FUTURE

Buying and Selling AcrossMultiple Touch PointsConnected, In Control

Always On, AlwaysConsuming

Consumers

Deliver ExceptionalOnline Experience

Retailers /Brands


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Traditional ecommerce Solutions HaveBeen Limited

Build and Run InternallyStore Front

Portal

Shopping

Cart

Admin Portal

User Interface

CatalogManagement

Order

Management Promotion &

Pricing

BusinessRules

Accounting Content

Management

CustomerManagement

Scheduling

Security

eCommerceInfrastructure

Warehouse

Manageme

nt

POSConnectors

The Pros: Control

Customization

The Cons: Costly

IT-Constrained

Performance/Security Responsibility

Slow Pace of Innovation


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Build and Run Internally Outsource / ASP

Traditional ecommerce Solutions HaveBeen Limited

The Pros: Less Hassle

No Infrastructure

The Cons: Inflexible

No Merchant Control ofMerchandising

Limited Customization

The Pros: Control

Customization

The Cons: Costly

IT-Constrained

Performance/Security Responsibility



9/22


Build and Run Internally Outsource / ASP

Demandware Delivers The Best ofBoth Worlds

A Unique and Better Approach to Digital Commerce

The Pros:

Control

Customization

The Cons:

Costly

IT-Constrained

Performance/Security

Responsibility


The Pros:

Less Hassle

No Infrastructure

The Cons:

Inflexible

No Merchant Control ofMerchandising

Limited Customization

The Best of

Both Worlds


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The Demandware SaaS Model

Significant Barriers to Entry

MerchantEmpowerment

Provides Full Control

Ease ofDevelopment

Open Development Environment;Flexible, Extensible

Cutting EdgeAccess to Steady Stream of New,

InnovativeFunctionality as Soon as it

Becomes Available

EasySimplifies Complex eCommerceFunctionality

FastTime-to-Market Only 6 Months

No Infrastructure Cloud Solution

Todays DifferentiatorsInitial Table Stakes

Reliable andProven99.99%

Platform Availability

FullyCustomizable+


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Allowing Retailers to Focus onInnovation and Growth

Ease ofLaunching and Managing

Multiple ecommerce Sites

Speed toUtilize New

Technologies/Techniques

Enablement ofMerchandising Goals

The Payoff to Customers

Ability to Innovate atthe Pace of ConsumerExpectations:

EnablesSeamless Omni-channel BrandExperience forConsumers Globally

$

IncreasedRevenues


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Leading Brands Choose Our Model

28 32 3840

46 53 60 6975 78

91 101110

124137

151 156

6070

95 104123

143

175

215237

253

321

361

402

445

517

579

630

Customers

Sites

09 10 11 12 13
http://www.google.com/imgres?imgurl=http://i.bnet.com/blogs/crocs_logo.jpg&imgrefurl=http://www.bnet.com/blog/secdocuments/crocs-footwear-loses-novelty/152&usg=__oJfzhKbM4XwgKQv6ooT5lFIZZ_c=&h=377&w=328&sz=24&hl=en&start=2&zoom=1&tbnid=04ndiMJtLrzj0M:&tbnh=122&tbnw=106&ei=yGCiTbf_ErCN0QHxmOyMBQ&prev=/images?q=crocs+logo&hl=en&biw=1276&bih=813&gbv=2&tbm=isch&itbs=1


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13Copyright 2012 Demandware, Inc. CONFIDENTIAL |


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Key Financial Highlights

Growth VisibilityOperatingLeverage

Growth in Customersand Sites

87% Revenue CAGR

(2006-12) Customer Lifetime

Value

100% Cloud Model

Highly Visible andPredictable

High Dollar-Valueand CustomerRetention

Highly LeverageableMargins

Capital Efficient

Long-Term Scale andProfitability


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15Copyright 2012 Demandware, Inc. CONFIDENTIAL |

2009 2010 2011 2012 3 Month 2012 3 Month 2013

Revenue Growth Momentum

79%

64%

Annual Revenue Growth

$ in Millions

Pro-Forma* Three MonthRevenue Growth

$ in Millions

Services Subscription

$16.1

$28.7

$21.4

$36.7

$14.2

$12.2

$18.9

$20.555%

$47.2

$56.5

44%$79.5

$67.9

* Pro-forma excludes $1.9 mm from Neckermann GmbH


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Significant Growth in Customers and Sites

2008

16 17 19 23 2832 38

40 46 5360 69

75 7891 101

110124 137

151 156

39 39 4350 60

7095

104123

143175

215237

253

321361

402

445

517

579

630

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Customers

Sites

2009 2010 2011 2012 13


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Driving Significant Revenue Momentum

$1.8

$3.7$4.3

$6.3$5.5

$6.1$6.9

$10.2$9.3

$10.4$11.2

$16.3

$13.6

$15.2$16.3

$22.9

$18.9

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Overage Subscription Revenue

* Average for 2009, 2010, 2011 and 2012

Subscription Revenue: Base vs. Overage AverageOverage Fees

Represent

31%* of

Subscription

Revenue

Base Subscription Revenue

2009 2010 2011 2012 13


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Land and Expand Drives Shared SuccessModel

Q1 Q2 Q3 Q4

Year 2

Q1 Q2 Q3 Q4

Year 3

Q1 Q2 Q3 Q4

Year 1

Cohort analysis includes a family of third-party solution partner customers who share a minimum level of subscription revenue and 32 customers all of which have beenoperating on Demandwares platform for a minimum of three years as of December 31, 2012. Analysis excludes two customers operating on the platform for three years oneinvoiced through a third party and Neckermann.

QuarterlyR

evenue

BaseSubscription

CustomerExpansion

$0

$40,000

$80,000

$120,000

$160,000

$200,000Average Subscription Revenue by Quarter (Cohort Analysis)


19/22


High Quality Revenue:Diversified, Predictable and Sticky

* Subscription Dollar Retention Rate Defined on page 42 of the Form 10-K.

International Scope

International41%

U.S.59% Customers

with Sites in20+ Countries

Customer Variety

Diversified

and Sticky

TypicalContract:3 Years

2010 2011 2012

100+% 100+% 100+%SubscriptionDollar

RetentionRate*

Other

Sporting Goods

Home & Garden

Health & Beauty

GeneralMerchandise

Apparel


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Non-GAAP Operating Margin:Quarterly

Path to Profitability and High OperatingLeverage

$(24.3)M $(9.6)M

$2.0M $0.7M

$(0.1)M

2008 2009 2010 2011 2012

$0.3

($0.1) ($0.4)

$2.1

($0.5)($0.9)

($1.2)

$3.4

($1.5) (2.8) ($1.4)

$5.6

($3.3)

Non-GAAP Operating Margin:

Annual

2010

Non-GAAPOperatingMargin*

Non-GAAPOperatingMargin %*

2011 2012

*Non-GAAP excludes stock-based compensation expense.

2013


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Key Investment Highlights

Large Addressable Market with Strong Macro Tailwinds

Leading On-Demand eCommerce Platformwith Large Partner Ecosystem

Differentiated, Proprietary SaaS TechnologyCreates Strong Barriers to Entry

Multiple Avenues to Drive Future Growth

Powerful SaaS Financial Model

Experienced and Deep Management Team


22/22

Copyright 2013 Demandware, Inc20 May 2013 22 Copyright 2013 Demandware, Inc. All other rights reserved.20 May 2013 22

First-Quarter 2013

Scott Dussault

Chief Financial Officer

Documents

Investor Presentation Q1 2013 Barclays