Bowery Capital AGM - March 2024

Perspectives on SaaS + AI presented at Bowery Capital's March 2024 Annual Meeting

Bowery Capital AGM March 2024

PRESENTED BY

About Us

QUADRANTS

ROI STUDIES

INDICES

MEDIA NEWSLETTER

SAAS DEMAND INDEX

SAAS EMPLOYMENT INDEX

OPERATOR PODCAST

B2B AI INTEREST INDEX

INVESTOR PODCAST

A Maturing Growth Industry

2010 2021 Change CAGR Heatmap

Net Revenue Retention 106% 109% 3% Gross Churn as % ACV 5% 14% 9% % Revenue From Expansion 19% 46% 27% New Logo CAC $0.93 $1.78

2010 to 2021 Benchmarks: An Industry Maturing

91% 6% 118% 7% 107% 7% 56% 4% 1% 0% 38% 3%

Expansion CAC $0.28 $0.61 Field Sales CAC $1.00 $2.07 Inside Sales CAC $0.90 $1.40

2022 + 2023 Metrics Show Further Weakness

Revenue Per Employee ($k) *

$142 $143

Years To $5m ARR * Margins: Gross Margin

3.25

4.5

71% 73% 2% Sales + Marketing 32% 40% 8% R+D 23% 25% 2% G+A 14% 19% 5% EBITDA 1% -10% -11% Revenue Growth 45% 28% -17% Rule of 40 46% 18% -28%

But...

34% Average Growth Rate Is A Material Offset To “Only” MSD CAGR Metric Declines

Category Level Views

GRID EXAMPLE

SDR View: Effort Up, Results Down

# Attempts In A Cadence Quality Conversations Per Day

12.0

10.0

Attempts: 11.3

QC's: 8

8.0

6.0

Attempts: 7.3

4.0

QC's: 3.6

2.0

0.0

2014

2016

2018

2020

2022

AE View: Missed Quota, Slower Ramps

Quota Attainment

Ramp > 5 Months

80.0

80%

5+ Mo Ramp: 63%

60.0

60%

Quota: 74%

Quota: 51%

39%-46%

40.0

40%

20%

20.0

5+ Mo Ramp: 17%

0.0

2012

2015

2017

2020

2022

2024

Product + NPS: Be So Good They Can’t Ignore You FACTOR VS GRID RANK

Grid Rank:

Leaders

High Performers

Contenders

Niche

High Performers Leaders

Meets Requirements

Niche Contenders

High Performers Leaders

Ease of Use

Niche Contenders

High Performers Leaders

Ease of Set Up

Niche Contenders

High Performers Leaders

Ease of Admin

Niche Contenders

Modest differences in user experience factors...

Emerging, younger High Performers need outsized NPS to break through

High Performers Leaders

Ease of Doing Business

Niche Contenders

High Performers Leaders

add up to a large NPS gap

Quality of Support

Niche Contenders

High Performers Leaders

Product Direction

Niche Contenders

High Performers Leaders

NPS

Niche Contenders

-30%

-20%

-10%

0%

10%

20%

Leaders High Performers Contenders Niche

Contenders Niche

Winners Take Most + Win Efficiently GRID RANK VS FACTOR

Leaders High Performers Contenders Niche

5.0000

Efficiency mirrors G2 Grid rankings

70

25

4.0000

60

20

50

3.0000

40

15

2.0000

30

10

20

1.0000

5

10

0.0000

0

0

Effciency

G2 Market Presence

Years Old

Winners Beware: Satisfaction Scales + Ages Poorly

Source: “Martech in 2024”

It All Comes Back to ROI

Can Buying AI Yield A ~15% Risk-Adjusted Return?

55% Median Gain From AI

COMPANIES DISCLOSING AI RESULTS

Missing Claims Data Hours Saved Quality Control Defect Reduction GAIN TYPE + PERCENTAGE:

COMPANIES:

Scheduling Times Data False Positives Reduced Processing Time Customer Satisifaction Resolution Rate Uplift Journal Post Increases Code Whisperer Software Development DevOps Security Time Reduction Automated Inspection Supply Chain Time Reskilling Customer Service Share Shift Coding Creative Sales To New Logos Customer Service Time Spent on Platform Sales Uplift

0.00 0.20 0.40 0.60 0.80 1.00 20% 40% 60% 80% 100%

AI TAM = All OpEx?

CREDIT SUISSE (2021): ROBOTIC PROCESS AUTOMATION

MY AI TAM VARIABLES

Framing THE Work

SaaS In 2024

Doing THE Work

SaaS PLUS AI

Key Messages A Maturing Growth Industry Best Seen At “Tip of Spear”

Opportunities = “Be So Good” + Aging Winners Leave Openings

It All Comes Back To ROI

AI TAM Expansion = From Frameworks to Doing The Work

Matt Harney matt.harney@cloudratings.com saasletter.com

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