Presentation [PDF]

WIX ANALYST AND INVESTOR DAY June 8, 2016

Safe Harbor Provision Forward-Looking Statements

This presentation contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements may include projections regarding our future performance and may be identified by words like “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek” and similar terms or phrases. The forward-looking statements contained in this presentation are based on management’s current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, our ability to grow our user base and premium subscriptions; our ability to maintain and enhance our brand and reputation; our ability to manage the growth of our infrastructure effectively; changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading “Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2015 filed with the Securities and Exchange Commission on April 13, 2016. Any forward-looking statement made by us in this presentation speaks only as of the date hereof. Factors or events that could cause our actual results to differ materially from such forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. Non-GAAP Financial Measures To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, Wix uses the following non-GAAP financial measures: collections, adjusted EBITDA, free cash flow, non-GAAP net loss and non-GAAP net loss per share (collectively the "non-GAAP financial measures"). Collections represents the total cash collected by us from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period. Adjusted EBITDA represents net loss excluding interest, bank charges and other financial expenses (income), net, unrealized losses (gains) on hedging transactions, other expenses, taxes on income, depreciation, amortization, share-based compensation expense and other unusual or non-recurring expenses, and including the effect of changes in deferred revenue and prepaid domain registration costs.. Free cash flow represents cash flow from operating activities minus capital expenditures. Non-GAAP net loss represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense and other non-GAAP adjustments. Non-GAAP net loss per share represents non-GAAP net loss divided by the weighted average number of shares used in computing GAAP loss per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. For more information and for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP” table in the Annex to this presentation. The company has not reconciled adjusted EBITDA guidance to net income because it does not provide guidance for net income. As items that impact net income are out of the company's control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort. Certain data in this presentation was obtained from various external sources, and the company has not verified such data with independent sources. Accordingly, the company makes no representation as to the accuracy or completeness of that data or to update such data after the date hereof. Such data involves risks and uncertainties and is subject to change based on various factors. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the company.

WELCOME AND INTRODUCTION Mark Tluszcz, Chairman

THE FUTURE IS HERE

Avishai Abrahami, Co-Founder & CEO

Today’s Takeaways 

Every 100,000 net premium subscriptions will generate ~$120 million in collections over the next 6 years at an 85%+ gross margin…without any additional marketing



Existing users represent ~$1.5 BILLION in future value



Our cohorts contain NEGATIVE churn



Everyday, Wix is becoming more of an OS for SMBs



Technology innovation is our core competency



Our marketing team is WORLD CLASS

The Wix Platform

Reuven Sherwin, VP Product

Key Takeaways: The Wix Platform 

An ecosystem of products seamlessly integrated enabling SMBs to go online



Rapidly growing platform with increasing integration



Easy experience and stunning presence



Simple and powerful front-end and back-end products



Technological strength, know-how and experience

1

4

new editor

new verticals

350+ new templates

5

new languages

86

new applications

150+ new features

18,000+

200,000

production deployments

code changes

Investment in Product Development Paying Off (Free version) WixTouch Get Subscribers

Contributors New Editor Launch

Smart Actions on

01

2015

02

03

04

05

06

Invoices

07

08

09

10

11

12

01

02

2016

03

04

05

SMB Online 101 – The Basic Requirements Stunning Website

Marketing

- Validation - Engagement - Desktop & Mobile

- Be Found - Promote - Communicate

Customer Management

- Maintain Records - Retain Business - Data Analysis

Workflow Management

- Sell - Schedule - Reserve - Order

Payments

- Multiple Options - Global - Streamlined

Centralized Dashboard for Easy Business Management Assists the user in managing and growing their business on Wix 

Context Aware Application Management



Notification Center



Personalized Tips & Recommendations

Stunning Easy-to-Use Marketing Tools

SEO Wizard

on

Easy and Intuitive Business Communications Contacts

Invoices Smart Actions

Tailored Front-end Interface + Back-end Management Software



Back Office Operations

SDK

Enables easy development and integration of applications to Wix platform

Media Platform

Connects data across applications on Wix platform

Easy setup of online for multiple payment methods and currencies

Cloud based repository for all digital media including images, videos and music

Complete Online Infrastructure  

Complete platform for online presence eliminates complication and integration for SMBs Unconstrained ability to scale with the business’ needs



  

Storage grows with your business Sites “simply available” DDoS (and other protection) Worldwide availability

Storage

Security

Hosting

CDN

Wix User Stories

True Body Nutrition

True Body Nutrition Having a good website is crucial to establishing legitimacy when you're going out on your own. It’s professional and makes it look like a designer did it Rebecca Markway Lee

http://www.truebodynutritionllc.com/

True Body Nutrition Wix Bookings allows customers to reach her

True Body Nutrition Engagement with clients is important

True Body Nutrition Blogging keeps clients informed and engaged

Veue Beach Cabins

Veue Beach Cabins 

Located in Boliano, Philippines



WixHotels user since opening in 2015



90% of all reservations on Wix Hotels Using Wix has been one of the best decisions we've made and you will be glad to know that it is now an essential part of our business Dustin Andaya, Owner www.veue.ph

Veue Beach Cabins Wix SEO Wizard drives ability to be found

Veue Beach Cabins

Strong social network activity

Veue Beach Cabins 

Manages guests and interested parties via Wix Contacts



Utilizes Smart Actions to send auto-generated responses



Combines with Wix ShoutOut to maintain contact before trip

Tying it all Together

E-Commerce Leadership: WixStores

David Schwartz, VP of E-Commerce

Key Takeaways 

WixStores is the largest DIY e-commerce platform in the world by paying subscriptions, with over 280,000 paying subscriptions



WixStores is global with over 50% of subscriptions outside North America



We leverage Wix technology, brand and knowledge so that anyone can sell with WixStores

Over 280,000 Subscriptions Today 282,000

WixStores subscriptions were 19% of Wix Collections in 2015

3.7x

77,000

1

At IPO

Today

Note: 1WixStores subscriptions, At IPO as of September 30, 2013, Today, as of May 31, 2016

Global E-commerce Platform Subscriptions by Geography 

Localized backend



Localized store



Payment gateways



Local language support

Note: E-commerce subscriptions as of May 23, 2016

LATAM 12%

Europe 21%

N. America 49%

Asia + ROW 18%

Why Are We Winning?

Why Are We Winning?

Harnessing Wix Power  



Brand Expertise Technology

Why Are We Winning?

Anyone Can Sell Stunning

Easy

Effective

Stunning





Easy

Effective

Overcome the Trust Crisis The best way to gain buyers’ trust is to look like a pro

Stunning

Easy

Effective

Sawako Furuno - NYC 

Sawako designs and sells bicycle helmets for urban female cyclists



She started selling in 2006, and opened her Wix online store in 2013

Stunning

Easy

Effective

Marta, Ronaldo & Darlan - Bosavista, Brazil 

Develops, designs and sells specialized craft products for artists, designers and illustrators



Business started in 2012, and their online store has been up and running since 2015

Stunning

Easy

Effective

Easy is Part of Wix’s DNA Anyone can

build a website  

Create stunning store Make it Mobile

Anyone can

build an online store   

Build catalog Set shipping and tax Set payments

Anyone can

manage an online store   

Manage orders Manage inventory Marketing

Stunning

Easy

Effective

A Platform That is Just Like Having a Top Notch VP E-commerce at Your Side

Global Brand Performance Marketing Omer Shai, CMO

Highly Committed Global Branding

Over 50

Over 280 Million

Over 480 Million

Branding Activities Internationally

Offline Impressions Worldwide

Online Impressions Worldwide

Heidi Klum Campaign - US Roland Garros France Global Co-working Conference Wix Meetup: Chicago

05

06

“Ich Bin Ein Wixer” Campaign Germany Wix Meetup: Recife

Wix Meetup: NYC

Wix Music Karmin Partnership

Sergio Aguero TV Campaign

Wix Music SF Tech Summit Sponsorship

Wix Music SXSW Showcase, hosting Randy Jackson, Steve Aoki, Bun B and more

Launch Wix Music Content Hub

Minds Behind The Music

Wix Hotels Rio Olympics Campaign

Wix Meetup: LA

NYC.gov Partnership

Wix Meetup: Paris

07

08

09

10

11

2015

12

Wix.com Billboards NY, SF, LA

01

02

03

04

2016

Wix Meetup: Atlanta

Wix Meetup: Sao Paulo

NYC Fashion Week

Wix New School Career Expo Wix Meetup: Rio

Wix Music Launch & #OpeningAct - US Wix Meetup: Creating Killer Content Meetup with Shutterstock Phoenix Arts Festival

Localized TV France

Awards Event for Wix #SelfMade Wix Meetup: NYC

#StartStunning Super Bowl with Dreamworks’ Kung Fu Panda - Global

Hip Hop Hacks Music Hackathon

Manchester City Football Club Partnership

Wix Meetup: Moscow

Music 101 College Tour

SUPER BOWL 50 CAMPAIGN

Super Bowl Spot ‘15

2016

HOW IT ALL BEGAN

DreamWorks watched our first Super Bowl campaign and loved it v

Why DreamWorks?

Brand fit Technology first, innovative, positive and friendly, visually stunning

Strength in numbers Partnering with a strong partner makes us stronger

Global recognition We get a world renowned celebrity

Worldwide content We get commercials that can be used in all Wix geographies

2015

#ItsThatEasy

vs

2016

#StartStunning

All about the story

All about Wix

Over 20 videos

6 videos

10 different social channels

Wix.com & DWA channels

The Easiest Way to Create A Stunning Website

1st Teaser - Sky Writing

Super Bowl Spot ‘16

Brand Campaign Approach ONLINE Search

Facebook

Youtube

OFFLINE Display

New Users

Social

TV

PR

Radio

Podcasts

Billboards

Partnerships

Current Users

Events

Total Campaign Performance v

Half a Billion

IMPRESSIONS 250M online (YT & FB) 260M TV (Teaser + Game Day)

TV Spot - Day After

International Spot - KO

Marketing Culture

140 18 Employees

Different countries of origin

11 Languages

1,000s of content pieces generated each month: banners, Facebook posts, landing pages, videos, TV and radio spots and more

Diverse team thinking globally from day one

Goal Encourage Creativity

v

Participants Entire Marketing Department Original Marketing Initiatives for - Brand awareness - Increasing market share, verticals and geographies - Guerilla marketing

Owning The Joke

Making our disadvantage work for us by creating short commercials under the motto Ich bin ein Wixer (“I am a Wixer”) v

Natural PR potential Viral potential

TV Spot

Response

Wix knows how to make fun of themselves. One of the best marketing acts of the year.“

New brand name? No, rather shooting Wix Videos. The result is: Funny!“

T3N Magazine

Dr. Web

Wixing is not a word people expect in a German marketing campaign. But Wix's campaign shows how they hit the mark."

Absatzwirtschaft

A company is made fun of for their name. Now they strike back with a genius commercial.“ Huffington Post Germany

Wix is turning the tables and makes a virtue of necessity." Werbewoche

Organic Performance

Ranked #1 for “homepage erstellen” (create homepage) Weekly Google Organic Search Ranking 1

2

3 Organic Listings Wix is #1 4 May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Vertical Launch Campaign Your Music. Your Way.

Launch Goals

Increase Brand Awareness & Adoption v while Target new audiences simultaneously promoting existing Wix users alongside the brand

Wix Music Online #OpeningAct For 1 week, our users took over the biggest stage in the world - YouTube Over 3,000 users submitted their music videos Wix generated over 100 Million views for Wix Music branded user videos Google created an internal case study based on this campaign

#OpeningAct Recap

Wix Music Press Coverage

Wix Music Player Installs during activity 6

Oct 21st Opening Act Launch

5

Oct 6th New Wix Homepage

4 3

Aug 10th New Templates

2 1

0 May-15

Jun-15

Jul-15

Note: Data Indexed To May 15th, 2015; All GEOs 14-Day rolling average

Aug-15

Sep-15

Oct-15

Wix Music SXSW Thousands of Musicians Attend SXSW …but Millions Stay Home

User Showcase Event

Leverage offline event for a few via online activation for many

Connect Wix Music users around the world to a single location

Generate Online buildup prior to event & online buzz during event

Promote Wix users alongside the brand via UGC

SXSW Showcase Live showcases each night in Austin Over 2,000 user videos played live Mentorship by Randy Jackson for users 24 hour Website & EPK creation Over 4,000 attendees

SXSW User Story

Wix Music SXSW Press Coverage

Manchester City Football Club Brand Partnership

Why Soccer? Why MC FC? Build global awareness of Wix.com as the easiest way to create a stunning website yourself

Sport has the biggest & most engaged following & fans

Soccer is the biggest & most popular sport internationally

Premier League teams have beloved players from around the world

MC FC Align Wix.com with a winning team

Partnership Launch

Aguero - Fan Activity

Aguero - Fan Activity Created Sergio Aguero’s Official website Asked fans to send videos that show they’re Aguero’s biggest fan Showcased the best videos on the official website & give prizes (tickets, etc.)

Winner - 7 year old Braydon Bent

Wix MC FC Press Coverage

Branding

Branding is a Long Term Effort…usually

While always keeping 7-9 months to ROI v We can already see our branding efforts’ impact in the short term – which is almost unheard of…

Billboards

Super Bowl

Events

Podcasts

Partnerships

Social

v

Search

Radio

TV

Display

YouTube

Facebook

Branding Mix We are able to determine the winning mix between the different marketing channels

Billboards

Super Bowl

Events

Podcasts

Partnerships

Social

X15

Languages

v

Search

Radio

TV

Display

YouTube

Facebook

X 191 Countries

Branding Success #WinningTeam Wix is the top growing brand in its industry in the US and globally

Fastest Growing Brand Globally  

Wix search queries grew 37% Y/Y – more than any other competitor Wix had with 1.7x more queries than “website builder” in February 2016

+37%

Source: Google; desktop only, globally. YoY based on December - February, 2015-2016. Figures/estimates are based on historical information

World Class Marketing + Product Development Leadership Nir Zohar, President & COO

Key Takeaways 

We focus on data to drive conversion at every stage



Our cohorts have NEGATIVE churn



Existing cohorts represent ~$1.5 BILLION in future value and require no additional marketing investment



Every 100,000 subscriptions will generate ~$120 MILLION in collections over 6 years at an 85% gross margin

Breaking Down the Wix Funnel Anonymous Site Visit Marketing

User Registration Editor Engagement

Product

Site Creation / Published Premium Subscription

Retain / repeat

Focus on Conversion

Constant Optimization 

Localized by geography



Increases offering rate of vertical applications



Gets visitors to the right starting place



Constant A/B testing and design refresh to optimize conversion

Data Informs All Decisions ~300 A-B tests running simultaneously DAILY 

Marketing



Home page



Templates

67%



Payments



App Market



Editor

Testv2

Test 1

Old

66%

New

21%

Old

Test 3

21%

New

(Sample A/B test outcome)

3%

Old

3%

New

Product Makes The Biggest Impact

New Editor Drove Conversion 30%+ conversion improvement

May-15

Jun-15

Jul-15

Note: Conversion improvement measured as increase in average rate of May 2015 and August 2015

Aug-15

Conversion Impact on TROI Increased Conversion

Increased Collections

Increased Users

Quantifying the Value of Wix Cohorts

Consistent Behavior

Active Premium Subscriptions from Q1 User Cohorts New Registered Users 153,423

1Q16 5,305,726 1Q15 4,568,323 1Q14 4,089,253 1Q13 3,714,472 1Q12 2,651,656 1Q11 1,833,897 1Q10 919,221

126,962

123,985

102,980 92,019

80,818

62,071 35,326

33,747 29,612 18,513

27,397

1

2

3

Note: Data as of March 31, 2016

4

5

6

7

8

9

10

11

12

13

14

15

16

Number of Quarters Passed

17

18

19

20

21

22

23

18,940

24

25

Subscription Retention: Q1’12 Cohort New Registered Users 153,423

1Q16 5,305,726 1Q15 4,568,323 1Q14 4,089,253 1Q13 3,714,472

126,962

123,985

102,980 92,019

1Q12 2,651,656

62,071

1Q11 1,833,897

33,747

1Q10 919,221

18,513

104% Retention after 4+ years

80,818

35,326

27,397

29,612

1

2

3

Note: Data as of March 31, 2016

4

5

6

7

8

9

10

11

12

13

14

15

16

Number of Quarters Passed

17

18

19

20

21

22

23

18,940 24

25

Historically Strong Cohort Retention Subscriptions: Creation Quarter

Subscriptions: Current Quarter (Q1 ’16)

Quarters Since Creation

Subscription Retention

Q1'16

126,962

126,962

1

Q1'15

102,980

153,423

5

149%

Q1'14

92,019

123,985

9

134%

Q1'13

62,071

80,818

13

129%

Q1'12

33,747

35,326

17

104%

Q1'11

29,612

27,397

21

92%

Q1'10

18,513

18,940

25

102%

Why we have NEGATIVE churn

Existing Cohorts Drive Growth

80:20 Ratio New-toExisting Net Addition

Growth from New Cohorts

Beginning Subscriptions

Net Additions from PRIOR Cohorts

Ending Subscription before Marketing

Net Additions from New Cohorts

Ending Subscriptions

Existing Cohorts Drive Growth • Requires NO additional marketing • Benefits from NEGATIVE Churn

~10-14% 

10-14% annual growth in 80:20 Ratio without any marketing New-toinvestment Existing Net

Growth from New Cohorts subscriptions

Addition






Existing Cohorts Drive Growth Additional growth from marketing

~10-14% Growth from New Cohorts

Annual Subscription Growth w/o any Marketing






New Cohorts Drive Additional Growth Additional growth from marketing








New Cohorts Drive Additional Growth Additional growth from marketing








Cohort Lifetime Value

Significant Value Creation: Q1’12 Cohort 153,423

126,962

123,985

102,980 92,019 80,818

Marketing investment: $4.6 million

62,071

33,747 29,612 18,513

35,326

27,397

18,940

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Quarters Since Creation

Q1 ‘12

Cumulative Collections as of Q1’16: $23 million (5x ROI)

Significant Value Creation: Q1’12 Cohort 153,423

126,962

123,985

102,980 92,019 80,818

Marketing investment: $4.6 million

62,071

33,747 29,612 18,513

35,326

27,397

18,940


Q1 ‘12

Early Stages of Value Creation: Q1’16 Cohort 153,423

126,962

123,985

102,980 92,019 80,818

Marketing investment: $25 million

62,071

35,326

33,747 29,612 18,513

27,397

18,940

Cumulative Collections as of Q1’16: $14 million


Q1 ‘16

Total Projected Collections (6 years): $149 million

Consistency Supports Forecast of Future Value Creation 153,423

126,962

123,985

102,980 92,019 80,818

Marketing investment: $25 million

62,071

35,326

33,747 29,612 18,513

27,397

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Quarters Since Creation

18,940

Q1 ‘16

Significant Future Value in Existing Cohorts Forecasted 6 year aggregate collections for Q1 user cohorts Quarters Since Creation

Collections Since Creation ($ in millions)

Projected Collections Over Next 6 Years ($ in millions)

Cumulative Collections Through 2022 ($ in millions)

Q1'16

1

$14

$135

$149

Q1’15

5

$32

$111

$143

Q1'14

9

$46

$100

$146

Q1'13

13

$41

$64

$105

Q1'12

17

$23

$28

$42

Q1'11

21

$21

$21

$42

Q1'10

25

$14

$13

$27

Demonstrated Monetization of Cohorts $650 Million

2010

2011

2012

2013

2014

2015

Q1 '16

Note: Data represents actual Collections from Q1’10 – Q1’16 Cohorts since creation

Q1'16

Q4'15

Q3'15

Q2'15

Q1'15

Q4'14

Q3'14

Q2'14

Q1'14

Q4'13

Q3'13

Q2'13

Q1'13

Q4'12

Q3'12

Q2'12

Q1'12

Q4'11

Q3'11

Q2'11

Q1'11

Q4'10

Q3'10

Q2'10

Q1'10

Cumulative collections to date from current cohorts

Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21

Two Sources Of Future Collections Collections from New Cohorts

Collections from Current Cohorts

2010 2011 2012 2013 2014 2015 Q1 '16

Future Collections From Current Cohorts Actual and Potential Future Collections From Q1’10 – Q1’16 Cohorts



2010

2011

2012

2013

2014

2015

Q1 '16

Note: Data represents actual Collections from Q1’10 – Q1’16 Cohorts since creation and forecasted future cumulative collections through 2021


$1.5 Billion Future collections from current cohorts



2010

2011

2012

2013

2014

2015

Q1 '16


Every 100,000 Subscriptions =

$120 Million

in Collections over 6 years at an 85% Gross Margin

Roadmap to Sustained Growth and Profitability Lior Shemesh, CFO

Key Takeaways 

Unique combination of growth, scale and positive cash flow



Consistent financial performance



Increasing monetization



Improving margins and cash flow



Clear path to achieve long term model

Multiple Drivers of Growth

Key Drivers of Collections

Investment Focus

New Markets

New Cohorts

Sources of Collections

User Growth

Marketing

Geographic Expansion

Conversion

ARPS

Product Development

TAM Growth

Existing Cohorts

Maintain and Improve Product Experience

Significant Growth Since IPO Registered Users (000’s)

82,271

Premium Subscriptions (000’s)

2.1x

LTM Collections ($000’s)

$261,512

3.1x

2.7x $84,892

38,800

At IPO

1,938

707 Q1 '16

Improvement in Conversion

Note: At IPO as of September 30, 2013

At IPO

Q1 '16

At IPO

Improvement in ARPS

Q1 '16

Improvement in Profit and Cash Flow Since IPO LTM Adj. EBITDA ($000’s)

$17,878

LTM Free Cash Flow ($000’s) $15,062

23.5x $641 ($1,222) At IPO

Note: At IPO as of September 30, 2013

Q1 '16

At IPO

Q1 '16

Combination of Growth and Scale (in 000s)

2,500 WIX

2,000

Subscriptions

~2 Million Subscriptions ~40% Y/Y Subscriptions Growth

1,500 ETSY 1,000 MB

500

PAYC DWRE

BOX

0 0%

10%

20%

30%

HUBS

SHOP

ZEN 40%

50%

60%

70%

Subscriptions Growth Y/Y Note: Data as of Q1’16; PAYC subscription growth not available for Q1’16 - based on clients as of December 31, 2015

80%

Combination of Growth and Positive Cash Flow (in $ Mn)

Free Cash Flow - LTM

$40

PAYC

$30

WIX

$20

Re-investment Drives Growth and Cash Flow Improvement

$10 $0 ETSY

($10)

DWRE HUBS

SHOP

ZEN

($20) MB

($30) 0%

20%

40%

60%

Subscriptions Growth Y/Y Note: Data as of Q1’16; PAYC subscription growth not available for Q1’16 - based on clients as of December 31, 2015

80%

Growing Base of Cohort Collections 112%

($ Millions)

Renewals + Conversion of Existing Cohorts

$80

New Subscriptions

$76

107% 102%

$56

$60

97% $38

92% $40 87%

82% $20 77% 72%

$20 74%

$22 77%

$26 79%

$40

$31 80%

77%

80%

$45 80%

$57

$62

$49 82%

80%

83%

83%

$67

85%

% Total 82% collections from renewals and existing cohorts

$0

Q1 '13 Q2 '13 Q3 '13 Q4 ' 13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16

Improving Collections per New Subscription $141

+22% Improvement Since IPO $131 $123

$132

$133

$133

$132

$132

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

$126

$116

Q4 13

Q1 14

Q2 14

Q3 14

Avg. Collection per New Annual Subscription

Note: Based on New Annual Subscriptions In the US; IPO period Q4’13

Q1 16

Expanding Gross Profit Margin Gross margin as a % of collections

~100bp Improvement in 2015 86%

86-88%



Increasing scale



Low cost to serve



Continued growth in margin over time

85% 83%

2013

84%

2014

2015

Q1'16

Target Model

Consistent Sales and Marketing Leverage Sales and marketing as a % of collections

De-leverage as TROI increased from 5-7 to 7-9 months

53%

~800bp Y/Y Improvement in 2015

56% 48%

43-45% ~30%

2013

2014

2015

2016 Guidance

Target Model

Increasing R&D Leverage R&D as a % of collections

~200bp Y/Y Improvement in 2015

30% 28%

27%

26%

18-20%

2013

2014

2015

Q1'16

Target Model

Target Model Revisited

% of Collections

2013

2014

2015

2016 Guidance

Gross Margin

83%

84%

85%

R&D

27%

30%

28%

28%*

S&M

53%

56%

48%

43-45%

G&A

6%

7%

6%

Adj. EBITDA Margin

(2%)

(7%)

6%

Target Model Achieved Target

Scale and Efficiencies

Note: *R&D would be approximately 26% of Collections in 2016 excluding investment in new products

~18-20% ~30%

Achieved Target

~10%

~86-88%

~6-7% ~30%+


$1.5 Billion Future collections from current cohorts



2010

2011

2012

2013

2014

2015

Q1 '16


Existing Cohorts Drive Target Model Confidence Annual RunRate Target

Upside Opportunities 

Further APRS improvement ~50%



Retention rate increase



Significant improvements in conversion

$500-600M Collections

Collections ($mm) ~50%

$320-324 $99 2013

$171

2014

$242

2015

2016E

Target

Exhisting Cohorts Existing

Cohorts

NewNew Cohorts

Cohorts

Note: Existing is Collections from Cohorts Created from Q1’10 – Q1’16; New is projected collections from new Cohorts created beyond Q1’16

Annual Run-Rate Target in 2018 or 2019

APPENDIX

Reconciliation of Revenue to Collections Revenue Change in deferred revenue Collections

2013

Full Year 2014

LTM 2015

Q3'13

Q1'16

80,473 18,200 98,673

141,841 29,414 171,255

203,518 38,169 241,687

68,827 16,065 84,892

220,580 40,932 261,512

Reconciliation of GAAP to Non-GAAP 2013

Full Year 2014

2015

Q3'13

Cost of revenues (GAAP) Options compensation Cost of sales (non-GAAP)

15,257 490 14,767

26,108 1,005 25,103

34,970 1,353 33,617

13,415 314 13,101

37,665 1,486 36,179

Gross profit (non-GAAP)

65,706

116,738

174,902

55,726

189,401

Research and development (GAAP) Options compensation Acquisition related expenses Amortization Research and development (non-GAAP)

29,660 3,149 26,511

57,832 6,594 117 51,122

77,647 9,234 436 67,978

23,908 1,640 22,268

84,672 10,386 1,183 468 72,635

Selling and marketing (GAAP) Options compensation Amortization Selling and marketing (non-GAAP)

53,776 1,185 52,591

97,742 2,533 36 95,173

120,010 3,077 200 116,732

45,741 586 45,155

128,458 3,459 200 124,799

General and administrative (GAAP) Options compensation Withdrawn secondary offering expenses Acquisition related expenses General and administrative (non-GAAP)

8,307 2,230 6,077

15,803 3,805 365 65 11,568

19,526 5,069 14,457

6,165 1,076 5,089

20,860 5,491 15,369

603 273 330

(2,144) (2,144)

(77) (77)

(410) 273 (683)

864 273 591

1,572 440 1,132

3,052 1,799 1,253

2,765 611 2,154

1,235 413 822

2,858 674 2,184

% of revenue

Gross margin % (non-GAAP)

% of revenue

% of revenue

% of revenue

Financial expense (income) , net (GAAP) Compensation expenses related to warrants Financial expense (income) , net (non-GAAP)

Tax expenses (GAAP) Tax benefit related to exercise of options Tax expenses (non-GAAP)

18%

82%

33%

65%

8%

18%

82%

36%

67%

8%

17%

86%

33%

57%

7%

19%

81%

32%

66%

7%

LTM

Q1'16

16%

86%

33%

57%

7%

Reconciliation of GAAP to Non-GAAP GAAP Net Loss Adjustments: Interest, bank charges & other financial expenses (income), net Unrealized losses (gains) on hedging transactions Other expenses Taxes on income Depreciation Amortization Withdrawn secondary offering expenses Acquisition related expenses Stock-based compensation Change in deferred revenue Change in prepaid domain registration costs Adjusted EBITDA

2013

Full Year 2014

LTM 2015

Q3'13

Q1'16

(28,720)

(56,566)

(51,334)

(21,247)

(55,220)

(18)

262

2,172

(732)

1,253

469 18 1,572 1,229 7,054 18,200 (1,701) (1,897)

(2,124) 14 3,052 2,662 153 365 65 13,937 29,414 (2,494) (11,260)

1,243 11 2,765 4,999 636 18,733 38,169 (2,673) 14,721

282 (4,792) 1,235 1,125 0 0 0 3,616 16,065 (1,586) (1,222)

2,705 12 2,858 5,318 668 0 1,183 20,822 40,932 (2,653) 17,878

Reconciliation of GAAP to Non-GAAP Net cash provided by (used in) operating activities Capital expenditures Free cash flow

2013

Full Year 2014

LTM 2015

Q3'13

Q1'16

4,243 (3,070) 1,173

(803) (5,619) (6,422)

20,876 (6,342) 14,534

2,541 (1,900) 641

20,532 (5,470) 15,062