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Investor Perspective: Why the Capital Markets Will

Reward Customer Success in 2016

©2015 Gainsight. All Rights Reserved.

Moderator and Panelists

TODD GARDNER SaaS Capital

TOMASZ TUNGUZ Redpoint Ventures

DAVID SPITZ Pacific Crest Securities

GREG GOLDFARB Summit Partners

DANIELLE MORRILL CEO, Mattermark

Moderator

Panelists

©2015 Gainsight. All Rights Reserved.

Selected SaaS Valuations, Growth and FCF Profiles – Jan ‘15

Market data as of 1/1/15; data for companies with 2015 IPOs as of first day of published research estimates

Expected Time to Break-Even / Profitability

Already FCF Positive

~FCF Break-Even

1-3 Quarters Out

3-6 Quarter Out

>6 Quarters Out

©2015 Gainsight. All Rights Reserved.

Selected SaaS Valuations, Growth and FCF Profiles – Today

Market data as of 4/29/16

Expected Time to Break-Even / Profitability

Already FCF Positive

~FCF Break-Even

1-3 Quarters Out

3-6 Quarter Out

>6 Quarters Out

©2015 Gainsight. All Rights Reserved.

Sensitivity of Valuation to Cost of Capital Conditions

Alpha Company - Starts at $10M revenue - Grows 75% annually for 7 years, 3% forever after - Burns cash until Year 7, starting at 60% net cash flow burn

Bravo Company - Starts at $10M revenue - Grows 35% annually for 7 years, 3% forever after - Generates 20% free cash flow margins that rise to 24% at Year 7

-­‐100%

-­‐80%

-­‐60%

-­‐40%

-­‐20%

0%

20%

40%

60%

80%

100%

-­‐200 -­‐100 0 100 200 300 400 500 600 700 800 900 1000

Change  in  Valuation  Based  on  Changes  in  Discount  Rate

Alpha Bravo

Change in  Discount  Rate  (basis  points)

©2015 Gainsight. All Rights Reserved.

©2015 Gainsight. All Rights Reserved.

©2015 Gainsight. All Rights Reserved.

Churn’s Impact on Revenue Over Time

After 5 years, revenue is 40% greater

Growth Rate is 50% higher

Addressable Market is actually “much” bigger

www.saas-capital.com

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KeyBanc  Capital  Markets  is  a  trade  name  under  which  corporate  and  investment  banking  products  and  services  of  KeyCorp  and  its  subsidiaries,  KeyBanc  Capital  Markets  Inc.,  Member  NYSE/FINRA/SIPC  (“KBCMI”),  and  KeyBank  NaLonal  AssociaLon  (“KeyBank  N.A.”),  are  marketed.  Pacific  Crest  SecuriLes  is  a  division  of  KBCMI.      This  document  has  been  prepared  by  Pacific  Crest  SecuriLes,  a  division  of  KeyBanc  Capital  Markets  Inc.,  herein  known  as  “PCS”.  The  material  contained  herein  is  based  on  data  from  sources  considered  to  be  reliable,  however  PCS  does  not  guarantee  or  warrant  the  accuracy  or  completeness  of  the  informaLon.  This  document  is  for  informaLonal  purposes  only.  Neither  the  informaLon  nor  any  opinion  expressed  consLtutes  an  offer,  or  the  solicitaLon  of  an  offer,  to  buy  or  sell  any  security.  This  document  may  contain  forward-­‐looking  statements,  which  involve  risk  and  uncertainty.  Actual  results  may  differ  significantly  from  the  forward-­‐looking  statements.  This  report  is  not  intended  to  provide  personal  investment  advice  and  it  does  not  take  into  account  the  specific  investment  objecLves,  financial  situaLon  and  the  specific  needs  of  any  person  or  enLty.    Individuals  associated  with  PCS  or  PCS  itself  may  have  a  posiLon  (long  or  short)  in  the  securiLes  covered  in  this  document  and  may  make  purchases  and/or  sales  of  those  securiLes  in  the  open  market  or  otherwise  without  noLce.    The  firm  does  not,  and  is  unable  to,  make  promises  about  research  coverage.  Research  will  be  iniLated,  updated  and  ceased  solely  at  the  discreLon  of  PCS  Research  Management.    This  communicaLon  is  intended  solely  for  the  use  by  the  recipient.  The  recipient  agrees  not  to  forward  or  copy  the  informaLon  to  any  other  person  outside  their  organizaLon  without  the  express  wriTen  consent  of  PCS.  

Pacific Crest Securities – Disclosures