Cloud computing continues to gain momentum and according to this state of the cloud report from Bessemer Venture Partners, the total market cap for the 42 public cloud companies indexed will pass $500 billion by 2020.

1. State of the Cloud Report
2015Byron Deeter
www.bvp.com/cloud
@bdeeter

2. AGENDA
• State of the Cloud Industry: Where are we today?
• Metrics that matter: How are we doing?
• The outlook ahead: What does it mean for me as a cloud CEO?
2

3. WE’VE HAD SOME SKEPTICS ABOUT CLOUD COMPUTING
THROUGH THE YEARS…
“Mice Nuts”
Vacation time
=
The Innovator’s Dilemma
“Water Vapor” & “Nonsense” “It will be gone in two years”
3

4. BVP’s CLOUD INVESTMENTS
1997 2000 2010
ASP Delivery
+
Recurring Rev
Cloud
Computing
(SaaS + PaaS)
SaaS
2015 4

5. 5
THEN…
<$25bn
Total Cloud Market Cap
2008 - Top 10 Public Cloud Companies
($ in mm)
Count Company MarketCap
1 Salesforce $7,404
2 Netsuite $2,332
3 Concur $1,590
4 DealerTrack $1,317
5 blackbaud $1,247
6 AthenaHealth $1,161
7 Ariba $805
8 The Ultimate Software $777
9 Taleo $749
10 Constant Contact $594
Source: Public company data per CapIQ. 2008 as of 1/1/2008. Today as of 5/29/2015

6. …NOW!
Today - Top 10 Public Cloud Companies
($ in mm)
Count Company MarketCap
1 Salesforce $50,537
2 LinkedIn $26,285
3 Workday $16,915
4 ServiceNow $13,517
5 NetSuite $7,728
6 The Ultimate Software Group $4,924
7 Athenahealth $4,819
8 Veeva $4,186
9 Medidata Solutions $3,302
10 Proofpoint $2,847
6
THEN…
Source: Public company data per CapIQ. 2008 as of 1/1/2008. Today as of 5/29/2015
<$25bn
Total Cloud Market Cap
~$180bn
Total Cloud Market Cap
2008 - Top 10 Public Cloud Companies
($ in mm)
Count Company MarketCap
1 Salesforce $7,404
2 Netsuite $2,332
3 Concur $1,590
4 DealerTrack $1,317
5 blackbaud $1,247
6 AthenaHealth $1,161
7 Ariba $805
8 The Ultimate Software $777
9 Taleo $749
10 Constant Contact $594

7. CLOUD REVENUE
Source: Market size IDC, 2014. Public company data per CapIQ. Legacy software cloud revenue per AppsRunTheCloud survey on 2013 revenue and
assumed growth cut in half for 2014. Private cloud unicorn data assuming average 20x rev multiple. 2008 market size from Forrester.
2008
7
$5.6bn

8. CLOUD REVENUE UP 10X IN LAST SIX YEARS
Source: Market size IDC, 2014. Public company data per CapIQ. Legacy software cloud revenue per AppsRunTheCloud survey on 2013
revenue and assumed half’d growth for 2014. Private cloud unicorn data assuming average 20x rev multiple. 2008 market size from
Forrester.
8
$18bn
$9bn
$3bn
$26bn
$56.6bn
Public Pure Play
Cloud
Legacy Software
Cloud Revenue
Private Cloud
Unicorns
Private Cloud
2008 2014
$5.6bn

9. CLOUD REVENUE UP 10X IN LAST SIX YEARS
PROJECTED TO GROW OVER 2X IN NEXT FOUR
$18bn
$9bn
$3bn
$26bn
$56.6bn
% of
Total
Number of
Companies
47%
5%
17%
32%
thousands
28
11
42
Source: Market size IDC, 2014. Public company data per CapIQ. Legacy software cloud revenue per AppsRunTheCloud survey on 2013
revenue and assumed half’d growth for 2014. Private cloud unicorn data assuming average 20x rev multiple. 2008 market size from
Forrester.
Public Pure Play
Cloud
Legacy Software
Cloud Revenue
Private Cloud
Unicorns
Private Cloud
2008 20182014
$5.6bn
$127.5bn
9

10. SAAS APPROACHING 30% OF APPLICATION SPEND
0%
20%
40%
60%
80%
100%
2013 2014 2015 2016 2017 2018
On Prem SaaS
Source: IDC, Worldwide Enterprise Application Spend by SaaS and On-Prem, 2013-2018.
2013 -2018 CAGR
(2.8%)
17.6%
SaaS vs On Prem Penetration into Total Application Spend
10

11. THE FIRST CATEGORY HAS FALLEN:
CLOUD CRM IS AT A TIPPING POINT
2013 -2018
CAGR
19.6%
(3.9%)
65%
50% 38%
35%
50% 62%
0%
20%
40%
60%
80%
100%
120%
2013 2016 2018
On-Prem Cloud
Source: IDC, Worldwide Enterprise Application Spend by SaaS and On-Prem,
2013-2018. Gartner Worldwide CRM Spending By Vendor, 2013.
16%
13%
10%
7%4%
50%
Salesforce SAP Oracle Microsoft IBM Other
Source: IDC, Worldwide Enterprise Application Spend by SaaS and On-Prem,
2013-2018. Gartner Worldwide CRM Spending By Vendor, 2013.
Over 50% of CRM revenue will be cloud In 2016… …and Salesforce is already the market share leader!
11

12. 2015 CRM BATTLE - CLOUD 1 : ON PREM 0

13. WE’RE JUST SEEING THE TIP OF THE ICEBERG!
42 Public Pure Play
Cloud Companies
28 Private Cloud
Unicorns
thousands Existing Private Cloud
Companies
? New Cloud Companies Yet To Be
Formed!
Only 3 % Penetrated
in IT Spend
Source: Gartner, estimates per 2013. Cloud spend of $39bn includes SaaS, PaaS and IaaS. Overall IT spend of $1.428tn
includes Data Center Systems, Enterprise Software and IT Services

14. 300 UP AND COMERS IDENTIFIED IN THE CLOUDSCAPE…
14
Originally published in 2014. Updated versions will be available at www.bvp.com/cloud

15. ...28 OF WHICH HAVE GROWN INTO
PRIVATE CLOUD $1B+ BUSINESSES …
$10
$5
$5 $4
$3 $3 $3 $3
$2 $2 $2 $2 $2 $2 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
Private Cloud
Companies Valued at $1bn
$ in bn
15Source: Valuation estimates based on publically reported press releases.

16. THE CLOUD INDUSTRY HAS OUTPERFORMED
Growth
~160%
69% above the Nasdaq in
same time period
Exits
32
IPOs in BVP Cloud
Index
Market Cap
+$140bn
Of new market cap: from
$40bn to ~$180bn
9
Public cloud acquisitions totaling
$18.8bn in value
10
Cloud IPOs
Public Cloud Market
Cap
~$40bnRepresenting
BVP Cloud Index Performance In the Last 3 Years
BVP Has Funded…
16
Of the 42 Public Cloud
Companies
~1 /4Representing
Source: BVP Cloud Index and Capital IQ.

17. STRONG BVP CLOUD INDEX PERFORMANCE IN
THE LAST YEAR
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ. Legacy software includes Microsoft, IBM, Oracle, Cisco, SAP, HP, EMC, Adobe, Citrix, ADP
Welcome Shopify to
the BVP Cloud Index!
42 Pure Play Public
Cloud companies
100%
260%
80%
100%
120%
140%
160%
180%
200%
220%
240%
260%
280%
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015
BVP Cloud Computing Index
42 Publicly Traded Cloud Companies
Indexed as of Jan. 2011 | @ 5/29/15
BVP Cloud Index Nasdaq Index S&P Index Dow Jones
17

18. BVP CLOUD INDEX EXPECTED TO 3X IN 5 YEARS
Public Cloud Market Cap
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
6/2/2010 10/15/2011 2/26/2013 7/11/2014 11/23/2015 4/6/2017 8/19/2018 1/1/2020
~$1tn
~$500bn
~$300bn
We predict the BVP
Cloud Index will Hit
$500bn market cap
by 2020
18
Source: BVP Cloud Index and Capital IQ.

19. AGENDA
• State of the Cloud Industry: Where are we today?
• Metrics that matter: How are we doing?
• The outlook ahead: What does it mean for me as a cloud CEO?
19

20. PROFITS & CASH FLOW ARE ULTIMATELY KING
For All Types of Businesses…
Oil Producer Retailer Cloud Company
20

21. SIX KEY CLOUD VALUATION METRICS
ARR % ARR Growth Retention / Upsell
CAC Payback % Gross Margin Burn Rate / FCF
21

22. ARR AND ARR GROWTH ARE BEST LEADING INDICATORS
0%
20%
40%
60%
80%
100%
120%
140%
160%
T-4 T-2 T+0 T+2 T+4 T+6 T+8 T+10 T+12
$201
$253
$124
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
T-4 T-2 T+0 T+2 T+4 T+6 T+8 T+10 T+12
Pre IPO Post IPO
1 Yr IPO 1 Yr 2 Yrs 3 Yrs
Top Quartile 91% 61% 42% 36% 33%
Median 72% 47% 35% 34% 24%
Bottom Quartile 42% 34% 26% 28% 22%
Inevitably growth decelerates with scale
Public Cloud Company Runrate Revenue Public Cloud Company YoY Growth
(Starting From Four Quarters Prior to IPO, $ in m) (Starting From Four Quarters Prior to IPO)
Source: SEC fillings. BVP Cloud Index public companies.
T = Quarter 22

23. 23
$10 $15
$23
$34
$51
($16)
($24)
($36)
($54)
($81)
($8)
($12) ($18)
($27)
($41)
Year 1 Year 2 Year 3 Year 4 Year 5
CAC PAYBACK
Resulting P&L for 3 companies growing at 50% new bookings with different CAC paybacks
Total cash burn: $106M
New Bookings
S&M Costs
Cash Flows (Gross Profit – S&M)
1 Yr CAC Payback 1.5 Yr CAC Payback 2 Yr CAC Payback
$10 $15
$23
$34
$51
($8) ($12) ($18)
($27)
($41)
Year 1 Year 2 Year 3 Year 4 Year 5
$10 $15
$23
$34
$51
($12)
($18)
($27)
($41)
($61)
($4) ($6) ($9) ($14)
($20)
Year 1 Year 2 Year 3 Year 4 Year 5
Total cash burn: $0M Total cash burn: $53M
Note: Assumed 50% growth in new bookings every year, 80% gross margin, and no other expenses. 23

24. RETENTION / UPSELL
1% churn results in ~$20m ARR loss after 4 years
~$20m ARR
delta
between 1%
and 2%
monthly
churn
1% net
upsell churn
drives
additional
$35mm ARR
Note: Assumes monthly new bookings increases by $10k per month.
24

25. $10 $10 $10 $10
$0
$8
$16
$24
($8)
Year 1 Year 2 Year 3 Year 4
CAC PAYBACK
CAC payback and retention are inter-related - strong upsell can counteract high churn
Revenue
S&M Costs
Cash Flows (Gross Profit – S&M)
1 Yr CAC Payback, 100% Retention 2 Yr CAC Payback, 115% Retention
Note: Assumed 80% gross margin, and no other expenses.
$10 $12 $13
$15
($8)
$1
$12
$24
($16)
Year 1 Year 2 Year 3 Year 4
Results in same cash flow
after 4 years
25

26. ARR % ARR Growth Retention / Upsell
CAC Payback % Gross Margin Burn Rate / FCF
CLOUD METRICS THAT PUBLIC AND PRIVATE INVESTORS
ARE VALUING TODAY
26

27. GROWTH IS THE BIGGEST DRIVER OF CLOUD VALUATION
y = 15.89x + 1.756
R² = 0.3945
0x
2x
4x
6x
8x
10x
12x
14x
16x
18x
0% 20% 40% 60% 80%
2015RevenueMultiple
% '14-'15 Revenue Growth
'14-'15 Rev Growth vs 2015 Rev Mult
y = 6.612x + 3.034
R² = 0.450
0x
5x
10x
15x
20x
25x
30x
35x
40x
45x
0% 100% 200% 300% 400% 500%
ARRMultiple
% 1 Yr Forward Growth
1 Yr Forward Growth vs ARR Mult
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ Source: 55 private company transactions
Private Cloud CompaniesPublic Cloud Companies
+10% Growth Results in +1.5x Rev Mult +10% Growth Results in +0.6x Rev Mult
27

28. RETENTION IS TYPICALLY THE 2ND MAJOR DRIVER ON
VALUATION
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ
2015 - Public Cloud Companies
y = 5.8057x1.5288
R² = 0.1819
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
50% 75% 100% 125% 150% 175% 200%
% Retention vs 2015 Rev Mult
28

29. PRIVATE MARKETS ARE LESS FOCUSED ON RETENTION
RATES IN CURRENT ENVIRONMENT
2015 – Private Cloud Companies2013 – Private Cloud Companies
y = 5.9847x + 2.185
R² = 0.1954
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
0% 50% 100% 150% 200%
ARRMultiple
Retention
Retention vs ARR Multiple
Source: 17 private company transactions
y = 1.4953x + 11.845
R² = 0.0019
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
45.0x
0% 50% 100% 150% 200%
ARRMultiple Retention
Retention vs ARR Multiple
Source: 55 private company transactions
29

30. STRONG BVP CLOUD INDEX PERFORMANCE IN
THE LAST YEAR
100%
260%
80%
100%
120%
140%
160%
180%
200%
220%
240%
260%
280%
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015
BVP Cloud Computing Index
42 Publicly Traded Cloud Companies
Indexed as of Jan. 2011 | @ 5/29/15
BVP Cloud Index Nasdaq Index S&P Index Dow Jones
BVP Cloud Index up ~40% in the last year…
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ. Legacy software includes Microsoft, IBM, Oracle, Cisco, SAP, HP, EMC, Adobe, Citrix, ADP.
NTM represents next twelve months.
30

31. BVP CLOUD INDEX GROWTH DRIVEN FROM ORGANIC
GROWTH NOT MULTIPLE EXPANSION
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ. Legacy software includes Microsoft, IBM, Oracle, Cisco, SAP, HP, EMC, Adobe, Citrix, ADP.
NTM represents next twelve months.
5.7x
3.4x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015
NTM Multiples Over Time
BVP Cloud Index Legacy Software
Peak - Jan 2014
9.5x
…Cloud multiples back down to historical averagesBVP Cloud Index up ~40% in the last year…
100%
260%
80%
100%
120%
140%
160%
180%
200%
220%
240%
260%
280%
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015
BVP Cloud Computing Index
42 Publicly Traded Cloud Companies
Indexed as of Jan. 2011 | @ 5/29/15
BVP Cloud Index Nasdaq Index S&P Index Dow Jones 31

32. PRIVATE CLOUD MULTIPLES ARE TRADING AT A PREMIUM
TO PUBLIC CLOUD MULTIPLES
5.7x
3.4x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015
NTM Multiples Over Time
BVP Cloud Index Legacy Software
11.8x
Private Cloud Transactions
Source: 42 companies in BVP Cloud Index as of 5/29/2015. CapIQ.
Note: Private cloud transactions based on 55 private transactions in the last 6 months where 11.8x is average ARR run rate multiple. BVP Cloud Index
multiple and Legacy software multiples are both NTM GAAP revenue.
32
Valuation
Gap
Revenue Multiples

33. TAKEAWAY: GUARDRAILS FOR VALUATION
Representative SaaS Business ($20mm ARR)
50% 50-100% 100%+
85% 85-95% 95%+
24 mos 12-24mos <12 mos
minimal 100-125% 125%+
50-60% 60-75% 75%+
Key Factors
1 Yr Fwd Growth
CAC Payback
Gross $
Retention
Upsell Retention
Gross Margin
Team Product
Competitive
Dynamics
TAM
Good Better Best
33

34. AGENDA
• State of the Cloud Industry: Where are we today?
• Metrics that matter: How are we doing?
• The outlook ahead: What does it mean for me as a cloud CEO?
34

35. THE OUTLOOK AHEAD
• The Cloud Wins
– First category (CRM) goes over 50% cloud in 2016
– Now at 42 public cloud companies in BVP Cloud Index – Welcome Shopify!
– BVP Cloud Index crosses $500bn by 2020
• Major Trends & Coming Disruptions
– Industry cloud comes of age
– Cyber security a threat and an opportunity
– B2D opportunity for developers and entrepreneurs
– Further commoditization of IaaS
– Cornered animals: More M&A from legacy vendors ahead
– The dawn of enterprise mobile
35

36. INDUSTRY CLOUD ON THE RISE
1
2
3
Software adoption moved from “nice to have” to
“table stakes”
Winner take most dynamic – can win 50% of a
market
Mobile expands the non-desk workforce by 80%$0.0
$1.5
$23.2
$0
$10
$20
$30
2005 2010 2015
Market Cap ($ in bn)
# of Companies 0 2 12
Source: Capital IQ
Note: Public vertical SaaS companies include 2U, Athenahealth, Benefitfocus, Dealertrack Technologies,
Fleetmatics Group, RealPage, Textura, Veeva, Q2 Holdings, Opower, Guidewire, Shopify
Public Industry Cloud Companies
Notable Private Industry Cloud Companies
Drivers of Industry Cloud
36

37. CYBER SECURITY: A HOT MARKET AND A KEY
THREAT
37

38. B2D MARKET TAKING OFF
38

39. FURTHER GROWTH OF IAAS - GREAT FOR SAAS
$2.8
$4.3
$6.0
$8.2
$11.2
$0
$2
$4
$6
$8
$10
$12
2013 2014 2015E 2016E 2017E
AWS Revenue ($ bn)
Source: Robert Baird & Co, 2015. Monthly uniques per Comscore, Feb 2015.
39
~80mm unique visitors a month
50 billion "pins" on Pinterest

40. MORE M&A AHEAD
40
• Classic Innovator’s Dilemma allowed
cloud entrants to thrive
• Too late to build
• Too expensive to buy
• Will be fatal to many
Legacy Software vendors are cornered animals today

41. MOBILE IS A GAME CHANGER FOR THE ENTERPRISE
85%
Americans between 18-29
50%
Internet usage on mobile vs desktop
80%
Workforce are non-desk workers
EVERYONE IN ENTERPRISE B2B
NOW HAS A SMARTPHONE
INTERNET USAGE TIPPED TO
MOBILE
REACHES AN UNTOUCHED
WORKFORCE
Source: Pew Research Center, April, 2015, “The Smartphone Difference”. Source: eMarketer 9/14 (2008-2010), eMarketer 4/15 (2011-2015). Note: Other
connected devices include OTT and game consoles. Mobile includes smartphone and tablet. Usage includes both
home and work. Ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking. KPCB Internet trends, 2015
Global Mobile Penetration 1995 - 2014
GLOBAL PENETRATION
1 –> 73%
41

42. THE MOST EXPENSIVE REAL ESTATE IN THE WORLD
$ / Sq Ft $5k $10k $20k
The Penthouse @ One
Hyde Park, London $15k
17 Upper Phillimore
Gardens $6k
Buckingham Palace $6k
Kennsington Palace $4k
$2mm+
Note: Assume each mobile icon is ½” (so 1 sq ft is equal to 576 mobile icons). Assume MAU is equal to mobile app installs.
Uber - 450k WAU, 900k MAU (assume WAU x 2 = MAU) as of 12/2013. Valuation of $3.5bn as of 08/2013
Snapchat – 30m MAU at $10bn valuation as of 08/2014
Whatsapp – 450m MAU at $19bn valuation as of 02/2014
Instagram – 30m MAU at $1bn valuation as of 04/2014
42

43. THE MOST EXPENSIVE REAL ESTATE IN THE WORLD
$ / Sq Ft $5k $10k $20k
The Penthouse @ One
Hyde Park, London $15k
17 Upper Phillimore
Gardens $6k
Buckingham Palace $6k
Kennsington Palace $4k
$2mm+
$2.2m
$192k
$24k
$19k
Note: Assume each mobile icon is ½” (so 1 sq ft is equal to 576 mobile icons). Assume MAU is equal to mobile app installs.
Uber - 450k WAU, 900k MAU (assume WAU x 2 = MAU) as of 12/2013. Valuation of $3.5bn as of 08/2013
Snapchat – 30m MAU at $10bn valuation as of 08/2014
Whatsapp – 450m MAU at $19bn valuation as of 02/2014
Instagram – 30m MAU at $1bn valuation as of 04/2014
43

44. ENTERPRISE MOBILE HAS MORE MONETIZATION
POTENTIAL THAN CONSUMER MOBILE
 …but enterprise apps are exploding
 # of enterprise mobile apps growing over 210% in 2014
 20% of all developers globally are targeting enterprises,
up from 16% just six months ago
1
2
1,258
142
Consumer Enterprise
# of Apps in IOS
(units in 000s)
Enterprise 10% of
IOS apps
Source: Appfigures, Statista (May 2015), Vision Mobile
 …and enterprise apps have higher
monetization potential
3
31%
56%
26%
25%
25%
12%
9%
4%
9%
3%
0% 20% 40% 60% 80% 100%
Enterprise
Consumer
$0-$1k $1-$10k $10k-$100k $100k-$500k $500K+
43% of enterprise apps make >$10k /
mo vs 19% for consumer apps
44
 There are 10x more consumer apps than
enterprise…

45. ENTERPRISE MOBILE WILL DISRUPT CLOUD
45
Become great on mobile, or your next challenger will!

46. A SPECIAL THANK YOU TO…
• Kristina Shen - great effort and insights in building this report
• Peter, Umair, Adam, Alex, Bob, Brian, Cecilia, David, Ethan, Felda, Jeff, Jeremy, Kent, Mark,
Steve, Sunil & Sunil, Thea, Tiffany, Trevor, Vishal, and the rest of Bessemer’s cloud team
• The amazing cloud founders and executive teams we’ve had the privilege of working with and
learning from
• Our awesome partners @ Bessemer Venture Partners, Salesforce Ventures, & Salesforce.com
• To download BVP content: www.bvp.com/cloud
– BVP Cloud Industry Report www.bvp.com/cloudreport
– BVP Cloud Index @ www.bvp.com/cloud/comps
– BVP Cloudscape @ www.bvp.com/cloud
– BVP Industry Software Revolution @ www.bvp.com/cloud
– BVP Security for Startups – 10 Step Cybersecurity Plan @ www.bvp.com/cyber
46

47. Presented at Bessemer Venture Partners & Salesforce Ventures
Cloud CEO Summit, June 2015
For more information visit www.bvp.com/cloud
@bdeeter @kshenster & @ bessemervp©2015 Bessemer Venture Partners