An Investment Banking Partnership

© Copyright 2015 Q Advisors LLC · All Rights Reserved www.qllc.com

June 2015 Presentation to the Cloud Communications Alliance

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Deep Cloud Communications Industry Knowledge & Client Base

Founded in 2001 to provide financial advisory services

Focused on technology and communications

Most active managed and cloud-based services bank in the industry, based on the number of active clients and deals closed

Significant experience in structuring and negotiating M&A and financing transactions for private and public companies:

- Sell-side and buy-side engagements

- Debt and equity financings

- Strategic financial advisory engagements

Serve clients globally

Closed over 140 transactions since inception

- Total transaction value of approximately $8.0 billion

- Average transaction size of approximately $60 million

Offices in Denver and San Francisco

Team of 15 professionals

November 2013

Firm Profile Cloud Transactions

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Market Observations

Looking Forward – Q4 2014 & 2015 The hosted PBX and UC market is projected to reach $13 billion in 2020 with 62.6 million seats in service¹

‒ BroadSoft alone has surpassed 10 million deployed business lines for its primary hosted UC product²

Hosted IP telephony and UCC services will reach 18.2% penetration of total business telephony users in North America by 2020³

‒ Between 2013 and 2020 market growth will hold steady with compound annual growth rates of 27.4% in terms of installed users³

Though voice services are the largest component of the UC bundle, the ability to offer contact center, UC applications and other managed services is key to gaining market share and limiting churn

» Contact Center:

‒ Contact center demand is greatest for multichannel solutions that allow scalability and real time mobile / social interactions

‒ The global cloud-based contact center market will grow to more than $10 billion in 2019

The need to offer incremental cloud computing capabilities and managed services is increasing as traditional voice services become commoditized

Source: (1) Infonetics Research (2) BroadSoft (3) Frost and Sullivan (4) Markets and Markets (5) 2015 Piper Jaffray CIO Survey

» Managed Security:

‒ According to a survey of over 100 CIOs, IT security is the top spending priority for 2015

‒ Organizations seek an optimal balance between protection and cost reduction in network security solutions

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Public Trading Comparables

Trading Multiples as of 6/19/2015; (US$ in Millions) Growth

Comparable Companies TEVMarket

Cap.LTM

RevenueLTM

EBITDACY 2015Revenue

CY 2015 EBITDA

Gross Profit (LTM)

EBITDA(CY 2015)

FWD Revenue

LTMRevenue

LTM EBITDA

CY 2015Revenue

CY 2015 EBITDA

Unified Communications-as-a-ServiceCitrix Systems, Inc. $11,751.3 $11,338.8 $3,152.8 $673.2 $3,230.5 $1,014.3 84.9% 31.4 % 2.5 % 3.7x 17.5x 3.6x 11.6xWest Corporation $6,041.1 $2,724.3 $2,248.9 $649.5 $2,304.2 $674.2 57.4% 29.3 % 2.5 % 2.7x 9.3x 2.6x 9.0xj2 Global, Inc. $3,431.7 $3,313.7 $626.2 $256.3 $701.7 $298.4 82.3% 42.5 % 12.1 % 5.5x 13.4x 4.9x 11.5xVonage Holdings Corporation $1,148.2 $1,027.4 $868.0 $91.7 $870.9 $133.7 68.8% 15.3 % 0.3 % 1.3x 12.5x 1.3x 8.6xRingCentral, Inc. $1,222.9 $1,336.5 $236.9 ($31.1) $286.1 $0.8 66.5% 0.3 % 20.8 % 5.2x NM 4.3x NMEnghouse Systems Limited $1,070.4 $1,143.0 $205.8 $43.3 $234.4 $68.0 69.0% 29.0 % 13.9 % 5.2x 24.7x 4.6x 15.7xBroadSoft, Inc. $1,040.3 $1,109.2 $228.6 $29.1 $264.9 $61.8 73.5% 23.3 % 15.9 % 4.6x 35.7x 3.9x 16.8xPremiere Global Services, Inc. $803.3 $474.9 $566.2 $74.4 $570.2 $104.7 59.3% 18.4 % 0.7 % 1.4x 10.8x 1.4x 7.7x8x8 Inc. $628.6 $805.7 $162.4 $8.7 $192.1 $19.3 71.9% 10.0 % 18.3 % 3.9x NM 3.3x 32.6x

Mean 70.4 % 22.2 % 9.6 % 3.7x 17.7x 3.3x 14.2xMedian 69.0 % 23.3 % 12.1 % 3.9x 13.4x 3.6x 11.5x

Managed/ IT ServicesCognizant Technology Solutions Corporation $36,340.4 $38,615.2 $10,751.8 $2,162.1 $12,333.7 $2,446.9 40.1% 19.8 % 20.2 % 3.4x 16.8x 2.9x 14.9xEquinix, Inc. $19,309.9 $15,702.3 $2,506.9 $1,034.4 $2,659.3 $1,245.6 51.8% 46.8 % 8.8 % 7.7x 18.7x 7.3x 15.5xComputer Sciences Corporation $9,924.1 $9,325.1 $12,173.0 $1,087.0 $11,617.0 $2,104.1 21.7% 18.1 % (3.8)% 0.8x 9.1x 0.9x 4.7xRackspace Hosting, Inc. $5,323.1 $5,441.4 $1,853.6 $486.1 $2,011.4 $680.1 67.5% 33.8 % 12.1 % 2.9x 11.0x 2.6x 7.8xInterxion Holding NV $2,572.6 $2,036.0 $399.4 $154.4 $435.3 $191.0 59.5% 43.9 % 12.6 % 6.4x 16.7x 5.9x 13.5xTelecity Group plc $3,875.5 $3,367.7 $543.4 $255.2 $607.2 $290.6 58.0% 47.9 % 9.7 % 7.1x 15.2x 6.4x 13.3xInternap Corporation $850.1 $495.1 $333.8 $59.7 $332.7 $87.9 46.2% 26.4 % (0.7)% 2.5x 14.2x 2.6x 9.7x

Mean 49.2 % 33.8 % 8.4 % 4.4x 14.5x 4.1x 11.3xMedian 51.8 % 33.8 % 9.7 % 3.4x 15.2x 2.9x 13.3x

Cloud Contact Center SolutionsInteractive Intelligence $937.6 $998.0 $351.3 $0.9 $385.0 $13.1 60.0% 3.4 % 9.6 % 2.7x NM 2.4x NMinContact $605.5 $643.8 $186.1 ($9.0) $211.7 $10.2 49.1% 4.8 % 13.8 % 3.3x NM 2.9x NMFive9 $269.1 $293.0 $109.1 ($27.3) $121.9 ($15.5) 48.4% (12.7)% 11.8 % 2.5x NM 2.2x NM

Sources: Capital IQ, SEC Filings, Press Releases and Q Advisors LLC Estimates Mean 52.5 % (1.5)% 11.7 % 2.8x NM 2.5x NMMedian 49.1 % 3.4 % 11.8 % 2.7x NM 2.4x NM

Operating Metrics Margins TEV Multiple

4

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

Relative Value of Cloud UC Providers

LTM TEV / Rev Multiple

Players with a proprietary platform (8x8, RingCentral, and BroadSoft) continue to receive premium valuations Vonage steadily increased performance with its acquisitions of Telesphere in December 2014 and SimpleSignal

in April 2015

Relative Performance

S&P 500 Index (^SPX) RingCentral, Inc. (NYSE:RNG)8x8 Inc. (NasdaqGS:EGHT) BroadSoft, Inc. (NasdaqGS:BSFT)Vonage Holdings Corporation (NYSE:VG)

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Private Equity & Venture Capital Activity in Cloud & Managed Services Sector

Fund(s) Platform Investment Notes

$22 million minority investment in September 2013

$30 million minority investment in December 2014

Raised approximately $90 million to date

Most recent Series D round of $57 million led by TCV closed in December 2014

Acquisition in Q1 2014

Actively looking for add-on acquisitions

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Recent M&A Trends and Activity

Consolidation activity in the UCaaS sector continues to gain momentum

Recent deal volume for the broader technology and telecom industries outpaced most industries

- Technology focused acquirers were the most active in the U.S. market by deal volume

- Select players in the cloud-based managed services sector executed successful inorganic growth strategies

2014 - YTD 2015 M&A Activity Recap

Vonage – gUnify (N/A)

Vonage – SimpleSignal (1.9x LTM Rev.)

Vonage – Telesphere (2.9x LTM Rev.)

Fusion – Pingtone (1.3x LTM Rev.)

Notable Recent Transactions

Masergy – Global DataGuard (N/A)

GTT – MegaPath, Managed Services Business (1.2x LTM Rev.)

Evolve IP – Webcore Technologies (N/A)

8x8 – DXI Limited (2.0x LTM Rev.)

inContact – Uptivity (2.4x LTM Rev.)

Golden Gate Capital – LiveVox (N/A)

LiveOps, Genesys, and two other Q Advisors cloud contact center providers are currently in the market

UCaaS Managed / IT Services Contact Center

The average TEV / LTM revenue multiple for UCaaS deals has declined slightly over the last three years, while transactions in the Managed Services and Contact Center sectors have generally been north of 2.0x LTM revenue

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Recent M&A Trends and Activity—Active Strategic Acquirers

Scale due to difficulty of organic growth

Differentiated cloud services and products to cross sell into their embedded client bases

Margin enhancement

Contact center solutions

Managed security

Cloud computing solutions

What These Acquirers Are Looking For:

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Recent M&A Trends and Activity—Drivers for Premium Cloud Valuations

Quality of Service

Network and Quality (QoS)

Automation (Self Service

Portals)

Business Model

Scalability

Differentiated Platform

Reseller

Proprietary

Integration (APIs)

Robust Capabilities

Mobile Capabilities

Customization (Vertical Focus)

Product Innovation

Enterprise Customer

Base

Size (SMB, Enterprise)

Loyalty (Churn)

1. 2. 3. 4. 5.

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Recent M&A Trends and Activity—Differentiated Platform & APIs

The most important trend in UCaaS is the adoption of APIs—and the related plug-ins, connectors, and software development kits (SDKs)—to integrate UCaaS with a cross section of IT services1

‒ UCaaS providers often support a core set of UC services and then tie-in with other vendors for additional capabilities

APIs enable UCaaS users to "plug and play" UCaaS with the "best-of-breed" IT applications

Source: (1) Gartner

Fully integrated proprietary components can enhance value, even without a proprietary core platform

‒ The ability to create a “proprietary solution” through integration of cloud UC platform into other embedded enterprise solutions drives valuation premiums

Application Programming Interfaces

Proprietary Technology & Solutions

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Evolution of Cloud UC—Cloud Communications to Cloud Computing

Enterprises and SMEs prefer “one back to pat” for all of their IT, data and communications needs, including cloud services

‒ Significant demand and opportunity to create a bundled solution of traditional communications services combined with a robust suite of advanced cloud services

Traditional voice and data combined with additional cloud-based services such as storage and backup

‒ Over the top solutions are gaining traction

Positive value impact seen in the market from additional exposure to cloud services through acquisitions

‒ Vonage, Mitel, NTT, Windstream, West, CenturyLink and ShoreTel experienced positive stock price impact after cloud acquisitions

Emerging unified communications technologies are experiencing rapid uptake and are redefining the Cloud UC market, shifting focus from cloud communications to cloud computing

“You can expect that you will see more competition and price compression as the market becomes more

saturated and that's one of the reasons why we did this small acquisition of gUnify this past month. What

gUnify is a cloud-to-cloud piece of connected tissue that forward integrates with business applications that are

part of your workflow like Google for work, salesforce, and Office365. As we can embed our solution through

something like gUnify into the existing business applications that run your business every day, that gives us

more and more of a differentiated solution.” Alan Masarek, Vonage CEO, on competition and differentiation

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What’s Next—Cloud Contact Center

Growth in cloud contact center

‒ 8x8, RNG, West and others looking for cloud contact center solutions with multichannel routing, powerful integration and greater flexibility and scalability

‒ Why?

BroadSoft platform is not as well-equipped for large scale enterprise deployments and can be costly for smaller deployments

Huge demand and need for cloud contact center

Technology is rapidly moving to the cloud due to cost and workflow efficiencies

‒ Hosted and hybrid solutions

0

100

200

300

400

500

600

700

800

900

1,000

2011 2012 2013 2014 2015 2016

Revenue ($M) Agents (000)

CCaaS Market Size²

Source: (1) Forrester: Vendors Battle For The Heart Of The Contact Center (2) Gartner : Contact Center as a Service Market Forecast 2012

Forrester data shows that 16% of contact center buyers indicate they will move their contact center systems to the cloud in the future¹

Enterprises getting more comfortable with Cloud OTT solutions on existing broadband infrastructure

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Key Takeaways

Continual cloud adoption for both SMBs and Enterprise markets is driven by both those new to cloud services and companies investing in greater functionality

‒ Enterprise computing and data storage held in the cloud is forecasted to more than double over the next decade¹

Proprietary technology drives greater value

‒ Integrated proprietary “solutions” increase valuation potential to a lesser extent than proprietary platforms, but still drive meaningful value premiums

Bigger is better: Greater capabilities, greater appeal

‒ Convergence of traditional service providers all seeking to be a single source solution

The emergence of market leaders to occur over coming year as market consolidation continues

‒ A once highly fragmented market is now divided between large and small providers, with acquisitions furthering the division

Companies with the ability to provide the following on a unified platform have a distinct market advantage moving into the second half of 2015 and beyond:

‒ Cloud Computing

‒ Unified Communications

‒ Key Individual Differentiators:

Managed Network

Managed Security

Hosted Contact Center

Customized cloud deployments

Social and mobile integration

Source: (1) Tata Communications, Cloud Global Survey 2015

An Investment Banking Partnership

© Copyright 2015 Q Advisors LLC · All Rights Reserved www.qllc.com

June 2015 Presentation to the Cloud Communications Alliance