SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSsoftwareequity.com/Reports/4Q13_Report_Draft_-MASTER_02042013_-_Copy.pdf · Software Equity Group is an investment bank and M&A advisory

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSAbout Software Equity Group

Leaders in Software M&A 4Extensive Global Reach 5

Software Industry MacroeconomicsGlobal GDP 8Global GDP 8U.S. GDP and Unemployment 9Global IT Spending 10E-Commerce and Digital Advertising Spend 11Stock Market Performance 12

Public Software Financial and Valuation PerformanceThe SEG Software Index 14The SEG Software Index: Financial Performance 15-19The SEG Software Index: Market Multiples 20-22The SEG Software Index by Product Category 23The SEG Software Index by Product Category: Financial Performance 24The SEG Software Index by Product Category: Market Multiples 25

Public SaaS Company Financial and Valuation PerformanceThe SEG SaaS Index 27The SEG SaaS Index: Financial Performance 28-32The SEG SaaS Index: Market Multiples 33-36Th SEG S S I d b P d t C t 37The SEG SaaS Index by Product Category 37The SEG SaaS Index by Product Category: Financial Performance 38The SEG SaaS Index by Product Category: Market Multiples 39

Public Internet Company Financial and Valuation PerformanceThe SEG Internet Index 41Th SEG I t t I d Fi i l P f 42 46The SEG Internet Index: Financial Performance 42-46The SEG Internet Index: Market Multiples 47-49The SEG Internet Index by Product Category 50The SEG Internet Index by Product Category: Financial Performance 51The SEG Internet Index by Product Category: Market Multiples 52

1 Q4 2013 Software Industry Financial ReportCopyright © 2014 by Software Equity Group, LLC

All Rights Reserved

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSSoftware/SaaS/Internet IPO

Annual Software IPO Trends 542013 Software IPO Data 55Venture Capital Activity: All Industry Sectors 56Venture Capital Activity: Software 57p y

The Buyers Speak: Software Equity Group’s 2014 Annual M&A SurveyResults Summary 59-60Results 61-62

Software Industry M&A Market UpdateSoftware/SaaS M&A Deal Volume and Spending 64-65p gSoftware M&A Exit Multiples 66Software M&A by Ownership Structure and Size 67Software M&A by Vertical and Horizontal Markets 68Software M&A Deal Volume by Product Category 69Software M&A Exit Valuations by Product Category 70SaaS M&A Deal Volume and Exit Multiples 71-72SaaS M&A by Product Category 73Internet M&A: Deal Volume and Exit Multiples 74Internet M&A: By Product Category 75

AppendixSEG S ft I d K M t iSEG Software Index Key MetricsSEG Software Index Key Metrics by Product CategorySEG SaaS Index Key MetricsSEG SaaS Index Key Metrics by Product CategorySEG Internet Index Key MetricsSEG Internet Index Key Metrics by Product Category

Appendix titles and numbers need update. Once SEG Internet Index Key Metrics by Product Category

2013 Select Public Sellers2013 Mega Deals2013 Most Active Buyers2013 Select SaaS Sellers

pupdated, need to update TOC for Exec Summary


All Rights Reserved

ABOUT SOFTWARE EQUITY GROUP

3

• Industry leading boutique investment bank founded in

LEADERS IN SOFTWARE M&AIndustry leading boutique investment bank, founded in 1992, representing public and private software and internet companies seeking:

• Strategic exit• Growth capital

We Do Deals.

Growth capital• Buyout • Inorganic growth via acquisition• Buy and sell-side mentoring• Fairness opinions and valuationsFairness opinions and valuations

• Sell-side client revenue range: $5 - 75 million• Buy-side clients include private equity firms and

NASDAQ, NYSE and foreign exchange listed companies• Clients span virtually every software technology, product

category, delivery model and vertical market• Global presence providing advice and guidance to more

th 2 000 i t d bli i th h t USthan 2,000 private and public companies throughout US, Canada, Europe, Asia-Pacific, Africa and Israel

• Strong cross-functional team leveraging transaction, operating, legal and engineering experience

• Unparalleled software industry reputation and track record.

• Highly referenceable base of past clients


All Rights Reserved

EXTENSIVE GLOBAL REACH

Current Sell-side Representation

• SEG currently represents software companies in the United States, Canada, France,

Recent Sell-side Representation

Germany, Australia & Saudi Arabia

• In addition to the countries listed above, SEG has recently represented software companies in the United Kingdom, France, Netherlands, Israel, and South Africa

SEG Research Distribution

• SEG’s Quarterly and Annual Software Industry Equity Reports and Monthly Flash Reports are q y p y pdistributed to an opt-in list of 50,000 public software company CEOs, software entrepreneurs, private equity managing directors, VCs, high tech corporate lawyers, public accountants, etc. in 76 countries.


All Rights Reserved

p ,

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, our firm has guided and

ABOUT SOFTWARE EQUITY GROUPq y p y g gy , g

advised companies on five continents, including privately-held software and technology companies in the United States, Canada, Europe, Asia Pacific, Africa and Israel. We have represented public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges. Software Equity Group also advises several of the world's leading private equity firms. We are ranked among the top ten investment banks worldwide for application software mergers and acquisitions.

Our value proposition is unique and compelling We are skilled and accomplished investment bankers with extraordinary software internet and technologyOur value proposition is unique and compelling. We are skilled and accomplished investment bankers with extraordinary software, internet and technology domain expertise. Our industry knowledge and experience span virtually every software product category, technology, market and delivery model, including Software-as-a-Service (Saas), software on-demand and perpetual license. We have profound understanding of software company finances, operations and valuation. We monitor and analyze every publicly disclosed software M&A transaction, as well as the market, economy and technology trends that impact these deals. We're formidable negotiators and savvy dealmakers who facilitate strategic combinations that enhance shareholder value.

P h t i t t th l ti hi ' b ilt d th i d t t ti j S ft E it G i k d t d b bli lPerhaps most important are the relationships we've built and the industry reputation we enjoy. Software Equity Group is known and respected by publicly traded and privately owned software and technology companies worldwide, and we speak with them often. Our Quarterly and Annual Software Industry Equity Reports are read and relied upon by more than thousands of industry executives, entrepreneurs and equity investors in sixty-one countries, and we have been quoted widely in such leading publications as The Wall Street Journal, Barrons, Information Week, The Daily Deal, The Street.com, U.S. News & World Report, Reuters, Mergers & Acquisitions, USA Today, Arizona Republic, Detroit Free Press, Entrepreneur Magazine, Softletter, Software Success, Software CEO Online and Software Business Magazine. g

To keep your finger on the pulse of the software equity markets, subscribe to our Annual and Quarterly Research Reports.

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. For a confidential consultation without obligation, [email protected] , 2800-509) 858Beible, Director, Business Development (Kris please contact

CONTACT INFORMATION:

Software Equity Group, L.L.C.12220 El Camino Real, Suite 320San Diego, CA 92130www softwareequity comwww.softwareequity.comp: (858) 509-2800

The information contained in this Report is obtained from sources we believe to be reliable, but no representation or guarantee is made about the accuracy or completeness of such information, or the opinions expressed herein. Nothing in this Report is intended to be a recommendation of a specific security or company or intended to constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any security. Software Equity Group LLC may have an interest in one or more of the securities or companies discussed herein. Financial data provided by Capital IQ.


All Rights Reserved

This Report may not be reproduced in whole or in part without the expressed prior written authorization of Software Equity Group, L.L.C.Software Equity Group registers each Report with the U.S. Copyright Office and vigorously enforces its intellectual property rights.

SOFTWARE INDUSTRY MACROECONOMICS

7

GLOBAL GDPGDP SizeGlobal GDP (% YoY Change)

• Globally the IMF forecasted last October GDP would grow 2 9% in 2013 a downward correction from their July forecast of 3 2%• Globally, the IMF forecasted last October GDP would grow 2.9% in 2013, a downward correction from their July forecast of 3.2%.

• According to the IMF, slower growth in major emerging markets (China, Russia, Brazil, India and Mexico) is constraining overallglobal expansion. This slowdown is in stark contract with 2008, when emerging markets were rapidly expanding in contrast tomajor Western economies that were reeling from the global economic crises they helped bring about.

• Economists predict global economic health will improve further in 2014. The IMF projects 3.6% growth in global GDP this year.Economists predict global economic health will improve further in 2014. The IMF projects 3.6% growth in global GDP this year.

• PIMCO has forecast global GDP growth of 2.5% - 3.0% in 2014, based upon continued improvement in the U.S., Eurozone andJapan economies and growth favoring monetary polices. PIMCO also expects China to benefit from increased demand fromdeveloped economies, helping to offset lower domestic demand.


All Rights Reserved

Sources: Worldbank, The Economist and PIMCO

U.S. GDP AND UNEMPLOYMENT

5.0%

3.7%4.1%

3 2%4%

6%

8%

10%GDP % GrowthUnemployment Rate

2.1%

-0.7%

1.5%

-0.7%

2.2%

3.7%

1.7%2.6% 3.1%

0.4%

2.5%

1.3%2.0%

1.3%

3.1%

0.4%

2.5%1.8% 2.2%

3.2%

-2%

0%

2%

4%

-2.7%

-5.4%

-6.4%-8%

-6%

-4%

-2%

4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13• In the United States, 2013 GDP growth was lackluster for most of 2013, before picking up steam in Q4. After faltering in 2Q13, the

economy eked out a marginal improvement in Q3, but surprised many by closing the year with a far more respectable 3.2% growthrate.

• The GDP’s lackluster performance in the first three quarters of 2013 was largely attributable to approximately $85 billion of• The GDP s lackluster performance in the first three quarters of 2013 was largely attributable to approximately $85 billion ofsequestration-related cuts in government spending, roughly $120 billion in additional taxes from restoration of the payroll taxesand $85 billion from the expiration of other tax cuts.

• 2014 is projected to be a much better year for U.S. GDP growth. The Conference Board forecasts domestic GDP growth will be3.0%, driven by reduced fiscal drag, improved consumer spending, and improved corporate spending due to higher corporateprofits. Risks to the forecast include the impact of reduced fiscal stimulus as the Federal Reserve begins tapering the quantitativeeasing (QE).

• In December 2013, the Labor Department reported the unemployment rate dropped to 6.7%, the lowest since 2008. Unfortunately,the perceived improvement in the unemployment rate was driven, in no small part by a sharp decline in the labor force participationrate which measures the proportion of working-age population in the labor force The rate fell to 62 8% in December the lowest


All Rights Reserved

rate, which measures the proportion of working-age population in the labor force. The rate fell to 62.8% in December, the lowestsince February 1978.

GLOBAL IT SPENDINGGlobal IT Spending by CategoryGlobal IT Spending (% YoY Change)

9.0%8 0%

6.0%

8.0%

6.0%

2.0% 2.0%3.4%

2007 2008 2009 2010 2011 2012 2013 2014 (F)

-10.0%

• Global IT spending inched up 2.0% in 2013, matching 2012 for the lowest spending pace since the financial crisis.

• Forrester estimated 26.0% of all IT capital spending in 2013 was on software, beating hardware and IT professional services.

• As in years past, spending varied widely by solution type. Gartner estimated capital spending on Enterprise Software grew 5.2% in2013, far greater than the other categories they track. Other IT spending categories did not fare nearly as well: Devices (-1.2%),Data Center Systems (-0.3%), IT Services (1.8%), Telecom Services (-0.5%).

• Enterprise Software growth is expected to accelerate to 6.8% in 2014.

• After two years of paltry spending growth, estimates for 2014 are promising, with an array of economists forecasting growth in ITcapital spending ranging from 2.5% - 5.0%. If actual growth comes at or above the low end of the range, it will exceed each of the


All Rights Reserved

Sources: IT spending numbers shown in charts are a blended average of Goldman Sachs, IDC, Forrester, Gartner forecasts. IT Spending by Category from Forrester.

last two years.

E-COMMERCE AND DIGITAL ADVERTISING SPENDDigital Advertising SpendE-Commerce Spend

25%

30%

$10

$12

($B)

Digital Advertising Spend ($B) YoY Percent Change20%

$50

$60

)

E-Commerce Spend ($B) YoY Percent Change

5%

10%

15%

20%

$4

$6

$8

YoY

Chan

ge

dver

tisin

g Re

venu

e

5%

10%

15%

$30

$40

$50

YoY

Cha

nge

mer

ce S

pend

ing

($B

)

-10%

-5%

0%

$0

$2

$4

Digi

tal A

d

-5%

0%

$0

$10

$20

Y

E-C

omm

• E-commerce retail sales in the U.S. totaled $53.2 billion in 3Q13 (the latest data available), up 13% YoY. The increase marks thesixteenth consecutive quarter of YoY growth, and the eleventh consecutive quarter of double digit growth.

• The Q3 total for E-Commerce spending accounted for 9 4% of all discretionary retail dollars spent the highest third quarter share on• The Q3 total for E-Commerce spending accounted for 9.4% of all discretionary retail dollars spent, the highest third quarter share onrecord.

• Mobile commerce accounted for $5.8B of the E-Commerce total, according to comScore. Although comScore doesn’t report the YoYgrowth in mobile commerce, eMarketer reports mCommerce grew an eye popping 68% in 2013.

• Interactive digital advertising is proving to be an extremely powerful channel for attracting and monetizing digital consumers. InternetInteractive digital advertising is proving to be an extremely powerful channel for attracting and monetizing digital consumers. Internetadvertising hit a record breaking high in 3Q13 (the latest quarter data was available) of $10.7 billion.

• According to eMarketer, mobile ad spending was $9.6 billion in 2013, accounting for 22% of all digital ad spending. In 2010, mobile adspending represented a mere 3.0% of the total digital ad spend. The stellar growth reflects the rapid adoption of smartphones, and thepotential of mobile to revolutionize ad-tech with new and compelling formats and real-time, location based advertising.


All Rights Reserved

Sources: comScore, IAB, IBD

STOCK MARKET PERFORMANCE

55.0%

65.0% DOW S&P NASDAQ SEG SW Index SEG SaaS SEG Internet Index

25.0%

35.0%

45.0%

5.0%

15.0%

• The stock market was on a tear for most of 2013 with all three major indices soaring to all-time highs by year end. Stocks surged onexpectations of higher corporate profits, continuing stimulus from the Federal Reserve, and expectations for accelerated GDP and IT

(5.0%)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

expectations of higher corporate profits, continuing stimulus from the Federal Reserve, and expectations for accelerated GDP and ITspending growth in 2014.

• The NASDAQ posted the best stock return of the three major stock indices in 2013, finishing up 38.3%. The S&P finished up 29.8%, itsbiggest jump since 1997. The DOW grew 26.5% in 2013, its best return since 1995.

• While the year-end returns of the three major indices were impressive, the returns of the SEG SaaS and the SEG Internet indices werey j p ,nothing short of spectacular. Led by a number of social media and content providers reinventing the way we interact with and consumemedia, the SEG Internet Index posted a median return of 54.1% in 2013. The SEG SaaS index was close behind, up 51.4% in 2013,driven by an array of rapidly growing SaaS companies that are displacing incumbent on-premise providers.

• As a sign of the times, the SEG Software lagged well behind all indices, returning 20.8% in 2013.


All Rights Reserved

.

THE SEG SOFTWARE INDEX

PUBLIC SOFTWARE COMPANY FINANCIAL ANDPUBLIC SOFTWARE COMPANY FINANCIAL AND VALUATION PERFORMANCE

13

THE SEG SOFTWARE INDEX

• The SEG Software Index tracks public software companies that primarily offer on-premise software under a perpetual license with contracted maintenance and support usually invoiced annually *contracted maintenance and support, usually invoiced annually.

• The SEG Software Index is currently comprised of 130 public software i **companies.**

* A number of on-premise software companies are transitioning to subscription based delivery and pricing models yet the contribution from SaaS isn’t material enough to move


All Rights Reserved

them into the SEG SaaS index. ** See appendix for a complete list of companies in The SEG Software Index and detailed financial and trading metrics

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCEMedian TTM Total Revenue ($M) - Annual Median Revenue Growth - Annual

$494 216.1%

$267.9 $285.4$239 8

$387.9

$449.0$494.2

tal R

even

ue

14.4%13.2%

9.9%

ue G

row

th

$239.8

TTM

Tot

4.2% 4.5%Reve

nu

• On an annualized basis, the median TTM revenue growth rate of on-premise providers was 9.9% in 2013, down from 13.2% in2012 and 16.1% in 2011.

2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013

• After experiencing anemic growth rates in 2009 and 2010 of (4.2% and 4.5% respectively), on-premise software providers sawrevenue growth return to near pre-recession levels in 2011 and 2012, but growth declined sharply to 9.9% in 2013. Consideringthe improved economic climate, the slower growth can largely be attributed to tight IT budgets, market share loss to SaaSproviders, as well as delayed revenue recognition when converting existing customers to subscription based pricing models.

• Despite the tepid growth rate, the median TTM revenue of the SEG Software Index reached $494.2M, the highest in history, andthe highest among our three tracking indices.


All Rights Reserved

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCEMedian Revenue Performance - Quarterly TTM Revenue Growth Rate Distribution – 4Q13

28%30%16%$600

TTM Total Revenue ($M) TTM Revenue Growth

22% 22%

12%15%

20%

25%

ompanies

8%

10%

12%

14%

$300

$400

$500

$

nue

Gro

wth

al R

even

ue

12%

6%

10%

0%

5%

10%% of C

o

0%

2%

4%

6%

8%

$0

$100

$200

$300

TTM

Rev

en

TTM

Tot

a

• On a quarterly basis, median TTM revenue growth in Q4declined for the fifth consecutive quarter, further indicationthat on premise software provider revenue growth will

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

0%$04Q12 1Q13 2Q13 3Q13 4Q13

that on-premise software provider revenue growth willcontinue to decelerate.

• 72% of public on-premise software companies reported TTMrevenue growth rates of 20% or below in 4Q13.

• Of the 16% of on-premise software providers with TTMOf the 16% of on premise software providers with TTMrevenue growth rates of 30% or more, most were focused onthree of the hottest product categories, mobility (NQ Mobile),security (Palo Alto Networks), and Big Data (Splunk).


All Rights Reserved

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCEMedian Gross Profit Margin - Annual Median EBITDA Margin - Annual

68.6%

66.0%66.5% 66.6%

65.8% 66.3%

67.5%

rofit

Mar

gin

13.7%

11.2%13.0%

15.3%17.4%

18.9% 19.5% 18.7%

DA M

argi

n

61.6%

Gro

ss P

r

EBIT

D

• Median gross margins at the end of 2013 were 67.5%, largely consistent with historic levels.

• The economic downturn caused on premise software providers to focus on EBITDA margins which improved each year from

2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013

• The economic downturn caused on-premise software providers to focus on EBITDA margins which improved each year from2007 to 2012, reaching a historic high of 19.5%.

• Unable to sustain that record level of profitability, the public software company median EBITDA margin declined to 18.7% in2013.

• We anticipate EBITDA margins will continue to experience modest decline in 2014 as on-premise providers increase spending• We anticipate EBITDA margins will continue to experience modest decline in 2014, as on-premise providers increase spendingon sales and marketing and invest more in R&D to update legacy products and expand their SaaS offerings.


All Rights Reserved

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCETTM EBITDA Margin Distribution – 4Q13Median EBITDA Margin Performance - Quarterly

31%35%

12%22%

EBITDA Margin TTM EBITDA Growth

15%

31%

24%

20%

25%

30%

ompanies

6%

8%

10%

12%

12%14%16%18%20%22%

DA Growth

Margin

13% 12%

6%

0%

5%

10%

15%

% of C

o

0%

2%

4%

6%

0%2%4%6%8%

10%

TTM EBITD

EBITDA

• The median EBITDA margin of public on-premise softwarecompanies remained relatively steady throughout 2013,

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

0%0%

4Q12 1Q13 2Q13 3Q13 4Q13

p y y g ,closing 4Q13 at 18.6%.

• 55% of public on-premise software providers posted EBITDAmargins between 10% - 30%.

• Only 6% of on-premise software companies achievedEBITDA margins of 40%+; most where large ITConglomerates, such as SAP, Oracle and Microsoft.


All Rights Reserved

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCEMedian Margin Performance - QuarterlyMedian Operating Ratios - Quarterly

25%

S&M (% of Revenue) R&D (% of Revenue) G&A (% of Revenue)80%

Gross Profit Margin EBITDA Margin Net Income Margin

15%

20%

even

ue

40%

50%

60%

70%

Margin

0%

5%

10%

% of R

e

0%

10%

20%

30%

% M

• Among public on-premise software companies, the medianoperating spend in Q4 was consistent with historic norms:

• In 4Q13, median gross profit, EBITDA and net incomemargins of public on-premise software companies were

0%

4Q12 1Q13 2Q13 3Q13 4Q13

0%

4Q12 1Q13 2Q13 3Q13 4Q13

p g p Q15.0% for Research & Development, 23.2% for Sales &Marketing, and 10.3% for General & Administrative.

• Over the past year, S&M, R&D and G&A expenses as apercent of revenue have remained flat.

g p p p65.3%, 18.6% and 8.6%, respectively.

• Several on-premise providers achieved gross profit marginsof 89% or greater, including Sage Group (94.2%); SolarWinds (92.3%); Progress Software (89.9%); and Splunk(89 1%)• Median S&M spending as a percent of total revenue among

on-premise public software companies lagged far behindtheir SaaS counterparts, which continued to invest heavily innew customer acquisition (39.2% for SaaS and 23.2% foron-premise).

(89.1%).

• As noted previously, we anticipate EBITDA margins and netincome margins will likely decline over the next severalquarters, as on-premise software companies increase theirinvestments in R&D to improve products/delivery models,


All Rights Reserved

and in sales & marketing to accelerate TTM revenue growth.

THE SEG SOFTWARE INDEX: MARKET MULTIPLESMedian EV/Revenue - Annual Median EV/EBITDA - Annual

3.1x14.6x 14.1x 14.1x

2.2x 2.3x

1.7x1.5x

2.3x

2.7x 2.8x

nue

Mul

tiple 11.7x

10.0x

12.4x 12.3x 11.7x

DA

Mul

tiple

EV/R

even

EV/

EBI

T

• Despite eroding financial performance, on-premise software providers were swept up by 2013’s strong stock market performance,reaching trading multiples at or near their seven year peak.

2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013

g g p y p

• After plunging to 1.5x in 2009, median EV/Revenue multiples for on-premise software providers climbed steadily to 3.1x by theclose of 2013.

• The higher median EV/Revenue multiples are most likely attributable to the revenue potential of their immense customer base asthe economy continues to improve, and greater recurring revenue from the slow but steady addition of hosted solutions licensedon a subscription basis.

• Adobe is an excellent example. As the company converts to a SaaS model, its revenue growth rate has rapidly decelerated (from29.0% in 2010, to 11.0% in 2011, to 4.4% in 2012, and to -7.9% in 2013) yet its EV/Revenue multiple has grown from 2.9x to 7.2xover the same period due to its steadily growing recurring revenue.


All Rights Reserved

THE SEG SOFTWARE INDEX: MARKET MULTIPLESEV/Revenue Multiples by Size (TTM Revenue) - QuarterlyMedian EV/Revenue and EV/EBITDA Multiples - Quarterly

4.0x

Revenue Greater Than $1 billion Revenue Between $500 million and $1 billion

Revenue Between $100 million and $500 million Revenue Less Than $100 million

14 6

EV/Revenue EV/EBITDA

2 0x

2.5x

3.0x

3.5x

4.0x

V/Re

venu

e11.7x12.8x 12.2x

13.7x14.6x

0 0x

0.5x

1.0x

1.5x

2.0x

Med

ian EV

2.6x 2.9x 2.8x 3.0x 3.2x

• The median EV/Revenue multiple for on-premise softwareproviders was 3.2x in the fourth quarter, up 23% from Q1.

Th 3 2 di EV/R lti l i 4Q13 k l th

• Investors in 4Q13 continued to place higher value on largerpublic software companies with revenues >$100 million.

Th h t 2013 th EV/R lti l f i

0.0x

4Q12 1Q13 2Q13 3Q13 4Q134Q12 1Q13 2Q13 3Q13 4Q13

• The 3.2x median EV/Revenue multiple in 4Q13 marks only thesecond time since 1Q06 that EV/Revenue multiples surpassed3.0x.

• Q4’s median EV/EBITDA multiple of 14.6x was the highest of anyquarter since 4Q07.

• Throughout 2013, the EV/Revenue multiples of on-premisesoftware companies with revenues <$100 million remainedmarkedly lower than their larger counterparts.

• SEG Software Index companies with TTM revenue between$100M and $1B successfully balanced TTM revenue growthq Q y g(median 16.0%) and profitability (median EBITDA of 15.3%),and were rewarded with the highest median EV/Revenuemultiples.


All Rights Reserved

THE SEG SOFTWARE INDEX: MARKET MULTIPLESEV/Revenue Multiples vs. TTM EBITDA Margins – 4Q13EV/Revenue Multiples vs. TTM Revenue Growth – 4Q13

6.2x7.0x 6.4x7.0x

3.2x3.6x 3.9x

3.5x

3 0

4.0x

5.0x

6.0x

EV/Reven

ue

3.7x 3.5x

3 0

4.0x

5.0x

6.0x

EV/Reven

ue

2.0x

0.0x

1.0x

2.0x

3.0x

Med

ian

2.0x2.4x 2.4x

0.0x

1.0x

2.0x

3.0x

Med

ian

• In a departure from prior quarters, market valuations did notvary widely by TTM revenue growth rate

• Investors in 4Q 2013 did take note of on-premise softwarecompanies’ bottom line rewarding those with TTM EBITDA

0 0

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

0.0x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

vary widely by TTM revenue growth rate.

• However, public on-premise software companies withrevenue growth rates greater than 40% were rewarded byinvestors with a median EV/Revenue multiple of 6.2x.

• Members of Q4’s 40%+ growth club included: Redknee

companies bottom line, rewarding those with TTM EBITDAmargins greater than 20% with a markedly higher medianEV/Revenue than their less profitable counterparts.

• Investors in Q4 took special note of on-premise providers withEBITDA margins greater than 40%, conferring a medianMembers of Q4 s 40%+ growth club included: Redknee

(149%), Stratasys (113%), NQ Mobile (113%), Qihoo 360(91.5%), Cyan (58.4%), Palo Alto Networks (54.4%),Pandora (53.5%), Splunk (51.4%), Gigamon (49.9%), SS&CCorp. (47.5%), Millennial Media (42.9%).

EV/Revenue multiple of 6.4x.


All Rights Reserved

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY

• The SEG Software Index is segmented into 17 product categories

• See Appendix for the complete list of companies within each product category

4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13EBITDA Margin

SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth

Billing & Service Management 1.5x 1.9x 1.9x 2.3x 2.6x 8.3x 8.7x 8.3x 9.0x 8.8x 10.4% 10.4% 8.9% 16.9% 7.7% 19.8% 20.7% 18.7% 18.4% 17.6%Business Intelligence 3.2x 3.4x 3.0x 3.3x 3.2x 17.5x 15.8x 16.5x 17.2x 19.1x 13.2% 11.8% 13.1% 14.2% 14.7% 14.7% 14.0% 13.6% 13.3% 14.0%Development Platforms 2.5x 2.5x 2.6x 2.6x 2.7x 9.6x 9.4x 10.2x 14.4x 16.1x 1.6% 3.0% 0.6% -0.3% 0.1% 23.5% 21.1% 20.3% 20.0% 19.7%Engineering & PLM 2.5x 2.7x 2.7x 2.8x 3.0x 12.7x 14.8x 14.2x 14.6x 14.6x 14.0% 13.1% 11.7% 8.4% 4.4% 20.6% 20.7% 19.8% 19.9% 20.1%

Enterprise Resource Planning 2.7x 2.9x 3.0x 3.0x 2.9x 9.1x 10.1x 11.4x 12.1x 12.5x 2.9% 2.0% 0.2% 1.6% 2.7% 28.5% 28.5% 28.5% 28.7% 29.0%Financial & Accounting 2.9x 3.1x 3.3x 3.3x 3.7x 10.0x 10.6x 11.1x 12.2x 13.6x 13.0% 8.6% 6.4% 9.5% 10.7% 28.5% 27.5% 26.6% 26.1% 26.7%G i 1 0 1 1 1 3 1 6 1 6 8 0 7 1 10 0 12 1 13 5 0 1% 7 4% 15 1% 15 2% 10 7% 16 6% 14 9% 14 8% 14 0% 13 4%Gaming 1.0x 1.1x 1.3x 1.6x 1.6x 8.0x 7.1x 10.0x 12.1x 13.5x 0.1% 7.4% 15.1% 15.2% 10.7% 16.6% 14.9% 14.8% 14.0% 13.4%Healthcare 2.0x 2.0x 2.1x 2.4x 2.5x 12.4x 15.0x 16.5x 17.1x 18.4x 17.7% 10.1% 9.0% 10.8% 8.0% 20.3% 18.4% 18.0% 17.9% 16.9%IT Conglomerates 2.5x 2.5x 2.9x 2.7x 3.0x 8.4x 9.3x 9.0x 8.4x 8.5x 1.4% 0.5% 0.2% 1.2% 0.9% 34.6% 33.8% 33.8% 34.3% 35.0%Mobile Solutions/Content 2.7x 3.0x 2.8x 3.4x 3.4x 11.4x 17.9x 13.2x 13.6x 19.4x 40.6% 46.7% 26.4% 20.3% 23.7% 5.7% 7.1% 8.7% 8.1% 7.9%Networking & Network Performance Management 3.0x 2.8x 2.7x 2.8x 2.7x 15.1x 15.4x 17.0x 17.0x 17.1x 13.9% 16.5% 11.0% 6.5% 4.6% 14.9% 14.9% 14.5% 14.1% 13.6%

Security 2.7x 3.3x 3.6x 4.0x 3.5x 11.1x 11.5x 10.7x 12.5x 13.2x 23.1% 23.4% 21.3% 19.6% 18.3% 17.8% 12.0% 8.8% 5.5% 4.4%Storage, Data Management & Integration 2.3x 2.4x 2.4x 2.7x 3.0x 8.4x 9.3x 9.0x 8.9x 8.7x 6.5% 4.8% 4.1% 3.3% 4.4% 21.8% 22.2% 21.9% 22.2% 23.3%

Supply Chain Management & Logistics 3.5x 3.8x 4.1x 4.5x 5.2x 13.6x 14.7x 15.6x 17.3x 19.5x 13.1% 12.8% 10.7% 13.6% 14.2% 19.6% 19.4% 19.1% 21.4% 24.1%

Systems Management 5.7x 5.6x 5.0x 5.4x 4.5x 24.4x 23.0x 20.9x 19.7x 16.5x 17.4% 17.2% 16.1% 16.4% 15.3% 25.1% 24.4% 23.8% 24.2% 24.2%Vertical - Finance 3.0x 3.4x 3.8x 3.7x 4.7x 9.4x 10.7x 11.4x 12.6x 13.3x 7.1% 6.7% 7.6% 7.4% 8.1% 26.3% 26.5% 27.3% 26.0% 26.3%

Vertical - Other 3.0x 3.2x 3.4x 3.7x 3.6x 21.5x 22.6x 24.6x 25.9x 30.0x 16.8% 20.6% 21.7% 22.3% 24.6% 14.0% 13.8% 13.5% 13.3% 12.3%


All Rights Reserved

Median 2.6x 2.9x 2.8x 3.0x 3.0x 11.7x 12.5x 12.0x 13.7x 14.6x 13.8% 12.5% 11.5% 10.2% 9.9% 19.5% 19.3% 18.8% 18.6% 18.6%

4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

4.6% (29.5%)

(68.5%)(6.4%)

Billing & Service ManagementBusiness Intelligence

Development PlatformsEngineering & PLM

Enterprise Resource Planning

4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth

11.0%9.3%

(0.5%)4.4%

2 7%



Enterprise Resource Planning

(131%)

( )(17.7%)

(54.5%)(39.7%)(41.5%)

(67.1%)

p gFinancial & Accounting

GamingHealthcare

IT ConglomeratesMobile Solutions/Content

Networking & Network Performance …

2.7%10.7%10.7%

8.0%0.9%

23.7%4.6%

Enterprise Resource PlanningFinancial & Accounting

GamingHealthcare


Networking & Network Performance …

7340%

(20.8%)(32.2%)

8.9% (11.9%)

14.0% 46.7%

SecurityStorage, Data Management & Integration

Supply Chain Management & LogisticsSystems Management

Vertical - FinanceVertical - Other

18.3%4.4%

14.2%15.3%

8.1%24.6%



Vertical - FinanceVertical - Other

4Q13 Median YoY Change EBITDA Margin4Q13 Median TTM EBITDA Margin

16.6%14.0%

20.0%


Development Platforms

(21.1%)(4.8%)

(14.6%)(2 3%)


Development PlatformsEngineering & PLM20.1%

29.0%26.7%

13.4%16.9%

35.0%7 9%

Engineering & PLMEnterprise Resource Planning

Financial & AccountingGaming

HealthcareIT Conglomerates

Mobile Solutions/Content

(2.3%)1.9%

(6.3%)(19.2%)(16.4%)

1.0% 37.5%




Mobile Solutions/Content7.9%

13.6%4.4%

23.3%24.1%24.2%

26.3%

Mobile Solutions/ContentNetworking & Network Performance …



Vertical - Finance

(8.8%)(75.1%)

6.8% 23.2%

(3.6%)0.2%

(12 1%)

Networking & Network Performance …Security

Storage, Data Management & IntegrationSupply Chain Management & Logistics

Systems ManagementVertical - Finance

Vertical - Other


All Rights Reserved

12.3%Vertical - Other(12.1%)Vertical Other

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:MARKET MULTIPLES

Median 4Q13 YoY Change in EV/Revenue Multiples4Q13 Median EV/Revenue Multiples Median 4Q13 YoY Change in EV/Revenue Multiples4Q13 Median EV/Revenue Multiples

3.6x3.3x

2.7x3 0x



110.8% 1.2%

8.0% 16 2%


Development PlatformsE i i & PLM3.0x

2.9x3.7x

1.6x2.5x

3.0x




16.2% 6.8%

28.0% 56.4%

24.5% 22.8%




3.4x2.7x

3.5x3.0x

5.2x

Mobile Solutions/ContentNetworking & Network Performance …


Supply Chain Management & Logistics

22.8% 26.1%

(7.5%)30.4%

26.4% 48.8%


Networking & Network Performance …Security

Storage, Data Management & IntegrationSupply Chain Management & Logistics

• In 4Q13, nine product categories achieved median EV/Revenue multiples above the SEG Software Index median of 3.2x, including Supply Chain Mgmt (5.2x), Vertical –Finance (4.7x), Systems Mgmt (4.5x), Financial & Accounting (3.7x), Vertical – Other (3.6x), Billing & Service Management (3.6x), Security (3.5x), Mobile Solutions

4.5x4.7x

3.6x


Vertical - Other

(22.1%)58.2%

20.7%


Vertical - Other

(3.4x), Business Intelligence (3.3x)

• Billing & Service Management (110.8%), Vertical – Finance (58.2%), Gaming (56.4%) and Supply Chain Management & Logistics (48.8%) achieved the highest YoYexpansion in median EV/Revenue multiples.

• Mobile Solutions, a hot category which attracted widespread investor attention in 2013 saw its median EV/Revenue multiple grow from 2.7x to 3.4x, even though TTMrevenue growth declined from 46.7% to 23.7%

• Median TTM revenue growth of Engineering and PLM Software providers declined from 13.1% in Q1 to 4.4% in Q4, while median market multiples grew from 2.7xEV/Revenue to 3.0x during the same period.

• Supply Chain Mgmt garnered the highest median EV/Revenue multiple (5.2x) in 4Q13, driven, in part, by new supplier network business models, which drove strongrevenue growth (14.2%) and profitability (24.1%), both above the median for the Index.

• Systems Management providers focused on automating and monitoring network and cloud infrastructure ended 2013 with a median YoY EV/Revenue multiple 22 1%


All Rights Reserved

• Systems Management providers, focused on automating and monitoring network and cloud infrastructure, ended 2013 with a median YoY EV/Revenue multiple 22.1%lower, but still touted a very respectable 4.5x EV/Revenue multiple.

THE SEG SaaS INDEX

PUBLIC S S COMPANY FINANCIAL ANDPUBLIC SaaS COMPANY FINANCIAL AND VALUATION PERFORMANCE:

26

THE SEG SaaS INDEX

• The SEG SaaS Index tracks public companies that primarily offer hosted, on-demand software under a subscription and/or transaction based pricingmodel.

• The SEG SaaS Index is currently comprised of 43 public SaaS companies*,a 48% YoY increase, and a 291% net increase since 2006, when our SaaS, ,index was comprised of 11 companies.


All Rights Reserved

* See appendix for a complete list of companies in The SEG SaaS Index

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

$155.4$169.0 $163.5

Median TTM Total Revenue ($M) - Annual Median Revenue Growth - Annual

43.5%

$114.6$123.7

$104.7

tal R

even

ue

26.0% 26.9% 25.5% 26.0%

ue G

row

th

TTM

Tot

14.2%

Reve

nu

2008 2009 2010 2011 2012 2013

• Public SaaS companies continued to gain market share and grow revenue. Median TTM revenue in 2013 grew to $163.5M, up from $114.6M in2008.

• From the standpoint of size Salesforce continues to dominate the SaaS Sector with TTM revenue of $3 8B more than 7x greater than the next

2008 2009 2010 2011 2012 2013

• From the standpoint of size, Salesforce continues to dominate the SaaS Sector with TTM revenue of $3.8B, more than 7x greater than the nextlargest SaaS company. However, a good number of public SaaS Companies reached critical mass (>350 million) from a revenue standpoint in2013, a feat made more difficult by a revenue model that, for many, required deferring a large percentage of their revenue. Indeed, these $350M+SaaS providers can now be found among a wide variety of product categories and Industry sectors. Select examples include Concur (expensemanagement product category, $546M TTM revenue); Athenahealth (healthcare, $540M), DealerTrack (automotive, $457M); Workday(HCM/Financial, $409M); NetSuite (ERP, $385M), Service-Now (IT automation, $375M); and RealPage (real estate, $367M).( ) ( ) ( ) g ( )

• The economic downturn took its toll on public SaaS providers as exhibited by the three consecutive years of steep TTM revenue growthdeceleration (43.5%, 26.0%, 14.2%) from 2008 – 2010. However, public SaaS companies weathered the storm and reversed the trend in 2011,posting TTM revenue growth of 26.9%.

• Impressively, public SaaS companies have managed to maintain TTM revenue growth rates in the mid twenties for three consecutive years evenas their TTM revenue base has grown


All Rights Reserved

as their TTM revenue base has grown.

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

30%35%

TTM Revenue Growth Rate Distribution – 4Q13Revenue Performance - Quarterly

28.0%$180


18%

24%

30%

20%

25%

30%

ompanies

25 0%

26.0%

27.0%

28.0%

$100$120$140$160$180

nue

Gro

wth

l R

even

ue

3%6% 6%

12%

0%

5%

10%

15%

% of C

o

22 0%

23.0%

24.0%

25.0%

$0$20$40$60$80

TTM

Rev

en

TTM

Tot

al

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

TTM Revenue Growth• On a quarterly basis, the median TTM revenue of public SaaS companies was $170.0M in Q413, a YoY increase of almost 40% over

4Q12’s $103 8M

22.0%$04Q12 1Q13 2Q13 3Q13 4Q13

4Q12 s $103.8M.

• After four consecutive quarters of decelerating median TTM revenue growth, the SEG SaaS Index reversed course in the thirdquarter and ended 2013 with two consecutive quarters of improved quarterly growth. We expect the median TTM revenue growthrate of public SaaS companies will continue to improve in 2014, thanks to accelerating enterprise adoption with SaaS and increasedadoption of SaaS among small – medium businesses, but our forecast is highly dependent upon the continuing economic recovery.

• Looking at medians alone doesn’t capture the amazing performance of leading SaaS companies. Nearly one in five public SaaScompanies managed to generate TTM revenue growth of 40% or more. As yet another testament to the wide spread adoption ofSaaS, these outperformers come from a variety of categories including HCM, Construction, Real Estate and Supply Chain. Selectcompanies include: Workday (73.6%), Cornerstone OnDemand (60.5%), Textura (63.9%), Ellie Mae (41.2%), SPS-Commerce(40 3%)


All Rights Reserved

(40.3%).

THE SEG SaaS INDEX: FINANCIAL PERFORMANCEMedian Gross Profit Margin - Annual Median EBITDA Margin - Annual

9 6%

68 3% 68 6% 68 4%

70.9%70.0%

rofit

Mar

gin

7.5%

5.5%

6.7%

9.6%8.8%

8.1%

DA M

argi

n

68.0% 68.3% 68.6% 68.4%

Gro

ss P

1.0%

EBIT

D

• The median gross profit of public SaaS companies inched up to 70.0% in 2013 from 68.0% in 2008.

• The modest improvement in median gross margin over the past two years is testament to the ability of public SaaS companies to

2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

The modest improvement in median gross margin over the past two years is testament to the ability of public SaaS companies toscale without disproportionately increasing infrastructure and application delivery expenses. As important, the median SaaS grossmargin implies the annuity stream from multi-year subscriptions will remain profitable, and potentially become more so over time.

• When the economy began to stabilize, SaaS investors soon focused on TTM revenue growth, rather than operating profitability, andSaaS providers invested accordingly. After reaching a historical peak of 9.6% in 2010, EBITDA margins have declined for three

ti l i t 1 0% i 2013 f 8 1% liconsecutive years, plunging to 1.0% in 2013 from 8.1% a year earlier.

• However, don’t be fooled by GAAP P&L statements which seem to imply many of these public SaaS companies are sufferingsignificant losses and hemorrhaging cash. In truth, many are not only cash flow positive but flush with cash from prepaidsubscription fees. But since GAAP requires deferred recognition of most of this cash, many SaaS providers reported negativeoperating margins in 2013. As an example, Workday reported -$47.5M in net income, yet generated $7M of cash from operations


All Rights Reserved

p g g p y p y g pin 3Q13.

THE SEG SaaS INDEX: FINANCIAL PERFORMANCETTM EBITDA Margin Distribution – 4Q13Median EBITDA Margin Performance - Quarterly

60%25%8%


49%

26%30%

40%

50%

ompanies

15%

20%

25%

4%

6%

8%

DA Growth

Margin

13%

5%8%

0%

10%

20%% of C

o

0%

5%

10%

0%

2%

4%

TTM EBITD

EBITDA

• After peaking in 2010, the median EBITDA margin of publicSaaS companies has declined for thirteen consecutive

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

TTM EBITDA Margin

0%0%

4Q12 1Q13 2Q13 3Q13 4Q13

SaaS companies has declined for thirteen consecutivequarters.

• The trend continued in 4Q13, as the median EBITDA margindropped sharply to 0.4% from 7.3% in 4Q12.

• Nearly half (49%) of public SaaS companies are unprofitable,y ( ) p p pand roughly nine out of ten have EBITDA margins below the20% median of their on-premise software peers.

• And for the time being, that’s just what investors want if thesharp increase in market valuation (see slide 7) is anyindication


All Rights Reserved

indication.

THE SEG SaaS INDEX: FINANCIAL PERFORMANCEMedian Margin Performance - QuarterlyMedian Operating Ratios - Quarterly

45%

S&M (% of Revenue) R&D (% of Revenue) G&A (% of Revenue)

80%


25%

30%

35%

40%

5%

even

ue

40%

50%

60%

70%

Margin

0%

5%

10%

15%

20%

% of R

e

0%

10%

20%

30%

40%

% M

• As deployment and enterprise adaption of SaaS solutions has spread across nearly every product category, public SaaS companiescontinued to spend heavily on sales & marketing in order to build momentum and drive revenue growth.

0%

4Q12 1Q13 2Q13 3Q13 4Q13

0%

4Q12 1Q13 2Q13 3Q13 4Q13

• In 4Q13, public SaaS companies invested a median 39.2% of total revenue on sales & marketing, almost 70% more than their on-premise peers.

• R&D spending as a percent of revenue increased to 18.4% in 4Q13 from 17.1% in 4Q12. Public SaaS companies in 2013 spent3.4% more on R&D as a percent of revenue then their on-premise peers, suggesting some SaaS companies are struggling toremain robust and responsive to evolving customer requirements, particularly in the enterprise market.


All Rights Reserved

THE SEG SaaS INDEX: MARKET MULTIPLESMedian EV/Revenue - Annual Median EV/EBITDA - Annual

7.5x 7.3x 65.2x

3.3x 3.6x

4.5x5.0x

nue

Mul

tiple

36.9x31.4x 32.2x

35.2x 35.0x

48.2x

TDA

Mul

tiple

3.3x2.6x

EV/R

even

EV/E

BIT

• After plunging to 2.6x in 2009, the median EV/Revenue of public SaaS companies has made a stunning comeback, climbingsteadily for four consecutive years to finish 2013 at a whopping 7.3x.

2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

y y pp g

• Compared to this 180% increase in the SEG SaaS Index median EV/Revenue multiple, the median multiple of public on-premisesoftware companies grew 106%. At the close of 4Q13, the median EV/Revenue multiple of public SaaS companies is more thantwice that of their on-premise software counterparts.(7.3x vs. 3.1x).

• The stunning growth in median EV/Revenue of public SaaS companies reflects investors enthusiasm for 25%+ revenue growth,recurring revenue, immense market opportunities (enterprise and SMB), and an M&A feeding frenzy targeting rapidly growingSaaS providers.


All Rights Reserved

THE SEG SaaS INDEX: MARKET MULTIPLESEV/Revenue Multiple Distribution – 4Q13Median EV/Revenue and EV/EBITDA Multiples - Quarterly

51%60%

57.0x


30%

40%

50%

Companies

38.2x35.4x

30.2x

39.8x

0%3%

11%14%

3%6%

3% 3%6%

0%

10%

20%% of C

4.8x 5.4x 5.8x 7.1x 8.4x

• On a quarterly basis the SEG SaaS Index median EV/Revenue multiple grew 75% YoY

<= 1.0x > 1.0x<= 2.0x

> 2.0x<= 3.0x

> 3.0x <= 4.0x

> 4.0x<= 5.0x

> 5.0x<= 6.0x

> 6.0x<= 7.0x

> 7.0x<= 8.0x

> 8.0x<= 9.0x

> 9.0x

EV/Revenue

4Q12 1Q13 2Q13 3Q13 4Q13

• On a quarterly basis the SEG SaaS Index median EV/Revenue multiple grew 75% YoY.

• At the end of 4Q13, median EV/Revenue SaaS multiple reached an eye popping 8.4x, matching the previous record high set in4Q07.

• Investors are placing their bets on the next wave of SaaS category leaders, who are positioned to displace incumbent on-premiseproviders across multiple product categories, just as Salesforce did to Siebel in the CRM market. A whopping 51% of theproviders across multiple product categories, just as Salesforce did to Siebel in the CRM market. A whopping 51% of thecompanies in the SEG SaaS Index achieved a median EV/Revenue multiple of 9x or higher in 4Q13.


All Rights Reserved

THE SEG SaaS INDEX: MARKET MULTIPLES

• From the standpoint of market multiples, the top 25% of

4Q13 EV/Revenue Percentile Rank

Company Ticker EV (Median)TTM

Revenue

TTM Revenue

GrowthEV/

RevenueTTM

EBITDAEBITDA Margin

EV/EBITDA

FireEye, Inc. FEYE $4,472 $136 153.4% 32.9x -$108 -79.2% -Workday Inc WDAY $13 152 $409 73 6% 32 2x -$106 -26 0% - multiples, the top 25% of

companies in the SEG SaaS Index had a median EV/Revenue of 18.8x.

• These SaaS high flyers are market leaders in a diverse array of SaaS

Workday, Inc. WDAY $13,152 $409 73.6% 32.2x $106 26.0%Veeva Systems Inc. VEEV $4,619 $187 111.5% 24.7x $38 20.5% 120.1xTextura Corp. TXTR $841 $36 63.9% 23.7x -$31 -86.0% -Tableau Software DATA $3,649 $193 51.0% 18.9x -$2 -1.1% -Service-now.com NOW $7,043 $375 80.3% 18.8x -$36 -9.5% -Netsuite N $7,136 $385 33.5% 18.6x -$31 -8.1% -Demandware, Inc. DWRE $1,702 $95 31.7% 18.0x -$15 -15.8% -Cornerstone OnDemand CSOD $2,512 $167 60.5% 15.1x -$29 -17.3% -Marketo MKTO $1,104 $85 44.9% 13.1x -$36 -42.8% -

Top 25%leaders in a diverse array of SaaS categories including security (FireEye), HCM/Finance (Workday), business intelligence (Tableau), ERP (NetSuite), eCommerce (Demandware) and

Marketo MKTO $1,104 $85 44.9% 13.1x $36 42.8%Cvent NYSE:CVT $1,258 $104 24.6% 12.1x $6 5.3% 226.9xBenefitfocus, Inc. BNFT $1,152 $97 18.4% 11.9x -$18 -18.9% -ChannelAdvisors ECOM $734 $64 26.0% 11.6x -$5 -8.3% -Medidata Solutions MDSO $2,893 $261 26.1% 11.1x $43 16.3% 68.1xThe Ultimate Software Group, Inc ULTI $4,163 $391 24.9% 10.7x $56 14.5% 73.7xConcur CNQR $5,403 $546 24.1% 9.9x $48 8.8% 112.5xSPS Commerce SPSC $973 $99 40.3% 9.8x $9 9.4% 105.0xOpenTable, Inc. OPEN $1,716 $181 16.0% 9.5x $57 31.3% 30.3x eCommerce (Demandware), and

Marketing (Marketo).

• It’s noteworthy that all but one company (Cvent) in the top 25% had negative EBITDA margins as of

OpenTable, Inc. OPEN $1,716 $181 16.0% 9.5x $57 31.3% 30.3xAthenahealth, Inc ATHN $5,079 $540 35.4% 9.4x $48 8.9% 105.9xSalesforce.com CRM $33,755 $3,760 32.1% 9.0x -$19 -0.5% -E2open, Inc EOPN $584 $69 -6.6% 8.4x -$19 -26.8% -Fleetmatics FLTX $1,241 $163 38.8% 7.6x $43 26.6% 28.7xRingCentral, Inc. RNG $1,108 $148 29.5% 7.5x -$28 -18.6% -SciQuest SQI $572 $84 37.9% 6.8x $0 0.2% 4203.3xQualys, Inc. QLYS $595 $104 18.5% 5.7x $13 12.3% 46.8xZix Corporation ZIXI $248 $48 14.4% 5.5x $11 22.1% -

Bottom 25%

g g4Q13.

• In contrast, public SaaS companies comprising the bottom 25% of SaaS market multiples posted a median EV/Revenue of only 3 1x

pEllie Mae ELLI $701 $128 41.2% 5.5x $28 22.1% 24.8xRealPage RP $1,821 $367 19.4% 5.0x $57 15.5% 32.0xJive Software, Inc JIVE $652 $139 34.1% 4.7x -$54 -38.9% -Halogen Software, Inc. TSX:HGN $213 $46 19.9% 4.7x -$4 -8.0% -J2 Global JCOM $2,181 $485 36.8% 4.5x $202 41.7% 10.8xCallidus Software Inc. CALD $464 $107 16.4% 4.3x -$10 -9.8% -DealerTrack TRAK $1,826 $457 20.8% 4.0x $63 13.8% 29.0xResponsys MKTG $747 $194 25.1% 3.8x $13 6.9% 56.0x median EV/Revenue of only 3.1x.

Of these, all but three posted positive EBITDA margins.

p yTangoe TNGO $637 $183 30.8% 3.5x $16 9.0% 38.9xBazaarvoice, Inc BV $586 $176 32.1% 3.3x -$35 -20.0% -Marin Software MRIN $233 $73 34.5% 3.2x -$28 -39.2% -LivePerson LPSN $542 $173 14.5% 3.1x $9 5.4% 58.0xinContact, Inc. SAAS $374 $126 22.1% 3.0x $0 0.3% 1078.5xConstant Contact CTCT $720 $277 13.7% 2.6x $23 8.5% 30.8xEbix Inc. EBIX $533 $208 9.8% 2.6x $84 40.3% 6.4xIntraLinks Holdings IL $576 $229 8.0% 2.5x $0 -0.1% -

Median TTM Rev Growth Top 25% = 60.5%

Median TTM Rev Growth Bottom 25% = 21.0%


All Rights Reserved

Vocus VOCS $246 $187 21.0% 1.3x $1 0.6% 215.8x

THE SEG SaaS INDEX: MARKET MULTIPLESEV/Revenue Multiples vs. TTM EBITDA Margins – 4Q13EV/Revenue Multiples vs. TTM Revenue Growth Rates – 4Q13

21 2x25.0x

11 914.0x

21.2x

15.0x

20.0x

EV/Reven

ue

11.9x

5 3x 5.7x6.5x8.0x

10.0x

12.0x

EV/Reven

ue

0.0x2.5x

4.6x6.9x 7.2x 7.7x

0.0x

5.0x

10.0x

Med

ian 5.3x

4.5x

0.0x

2.0x

4.0x

6.0x

Med

ian E

• Throughout 2013 profitable SaaS companies were penalized with lower market multiples as investors perceived profitability to

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

TTM Revenue Growth

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

TTM EBITDA Margin

• Throughout 2013, profitable SaaS companies were penalized with lower market multiples, as investors perceived profitability tohave come at the expense of growth.

• As proof, note the very strong correlation between the median TTM revenue growth rate and median EV/Revenue multiple ofpublic SaaS companies. Public SaaS companies that grew TTM revenue in excess of 50% achieved a stellar medianEV/Revenue multiple of 21.2x in 2013.

• Conversely, there is an inverse correlation between EBITDA margins and median EV/Revenue multiples. Unprofitable, publicSaaS companies boasted a rather remarkable median EV/Revenue multiple of 11.9x in 4Q13, whereas those with EBITDAmargins above 30% earned a meager 4.5x.


All Rights Reserved

THE SEG SaaS INDEX BY PRODUCT CATEGORY• There were 43 publicly listed SaaS companies the SEG SaaS Index at year end, with a sufficient

number of players to perform trend analysis in four distinct SaaS product categories.• Representative companies in each SaaS category are referenced below.• See the appendix to this report for the complete list.

4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13CRM & Marketing 3.4x 2.7x 2.7x 4.0x 3.3x 2.4x 2.0x 2.8x 3.5x 3.7x 36.1% 37.2% 26.7% 27.3% 25.1% 1.1% 0.1% 1.4% 0.5% 0.6%

SEG SaaS Index

CategoryEV/Revenue Forward EV/Revenue TTM Revenue Growth EBITDA Margin

CRM & M k ti ERP & S l Ch i V ti ll F d W kf M tCRM & M k ti ERP & S l Ch i V ti ll F d W kf M t

ERP & Supply Chain 7.0x 6.6x 7.1x 9.3x 9.1x 5.7x 5.7x 6.7x 7.6x 7.9x 25.3% 31.8% 33.9% 37.7% 38.3% 7.2% 3.2% 0.2% -3.1% -4.0%Vertically Focused 4.7x 5.0x 5.0x 5.7x 7.4x 3.9x 4.2x 3.8x 5.1x 6.1x 30.1% 24.9% 21.5% 22.6% 26.1% 14.7% 16.5% 16.0% 15.9% 15.9%Workforce Management 10.5x 10.7x 8.5x 10.5x 10.7x 7.6x 8.0x 7.4x 8.8x 8.7x 29.1% 23.4% 43.1% 42.2% 42.7% -19.9% -20.6% -18.8% -17.1% -13.5%

Median: 4.9x 5.5x 6.2x 7.3x 8.3x 4.4x 5.0x 5.2x 5.7x 6.9x 26.8% 25.3% 25.0% 27.3% 26.1% 5.9% 3.2% 1.4% 1.2% 0.2%

CRM & Marketing ERP & Supply Chain Vertically Focused Workforce ManagementCRM & Marketing ERP & Supply Chain Vertically Focused Workforce Management


All Rights Reserved

THE SEG SaaS INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE

4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth 4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth

25.1%CRM &Marketing (30.7%)CRM &

Marketing

38.3%

26.1%

ERP &Supply Chain

VerticallyFocused

51.6%

(13.2%)

ERP &Supply Chain

VerticallyFocused

42.7%WorkforceManagement 46.7%

Focused

WorkforceManagement


0 6%CRM &(44.0%)CRM & Marketing

0.6%

(4.0%)

Marketing

ERP &Supply Chain

(155.4%)ERP & Supply Chain

15.9%

(13.5%)

VerticallyFocused

WorkforceManagement

8.3%

(32.2%)

Vertically Focused

Workforce Management


All Rights Reserved

THE SEG SaaS INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES

4Q13 Median YoY Change in EV/Revenue Multiples4Q13 Median EV/Revenue Multiples 4Q13 Median YoY Change in EV/Revenue Multiples4Q13 Median EV/Revenue Multiples

3.3xCRM &Marketing

(3.3%)CRM &Marketing

9.1xERP &Supply Chain

29.4% ERP &Supply Chain

7.4x

10.7x

VerticallyFocused

WorkforceManagement

57.4%

1.0%

VerticallyFocused

WorkforceManagement

• As in past quarters, Workforce Management renewed the most highly valued SaaS product category with a 10.7x medianEV/Revenue multiple at year end; SaaS providers focused on the ERP & Supply Chain category were a close second, touting a 9.1xmedian EV/Revenue multiple.

Management

p

• The stellar market valuations of both SaaS categories can be attributed to their breakneck TTM revenue growth in 2013 (median42.7% Workforce Management, 38.3% ERP/Supply Chain) which grew dramatically YoY (51.6% and 46.7%, respectively).

• Hosted ERP & Supply Chain apps, which lagged other categories in enterprise adoption, are now benefitting from growingacceptance among enterprise CIOs.

• The CRM & Marketing category lagged far behind the other three SaaS categories in median market valuation, perhaps because ithas been around longest and is less exciting. But a closer look reveals SaaS providers focused on leading edge marketing(marketing automation, business social marketing, etc.), such as Marketo (13.1x) and Salesforce (9.0x), are faring well in comparisonto SaaS providers in this category focused on less sexy (e.g. email marketing campaign management).


All Rights Reserved

THE SEG INTERNET INDEX

PUBLIC INTERNET COMPANY FINANCIAL ANDPUBLIC INTERNET COMPANY FINANCIAL AND VALUATION PERFORMANCE:

40

THE SEG INTERNET INDEX

• The SEG Internet Index tracks public companies that primarilyoffer B2C solutions over the Internet and employ a wide array ofpricing modelspricing models

• The SEG Internet Index is currently comprised of 95 publicy p pInternet companies*


All Rights Reserved

* See appendix for a complete list of companies in The SEG Internet Index

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCEMedian TTM Total Revenue ($M) - Annual Median Revenue Growth - Annual

$440.2 26.4%

$198 9 $216.2

$278.1

$333.0

$392.8

tal

Reve

nue

19.5%20.8%

17.1%

ue G

row

th

$198.9

TTM

Tot

2.9% 3.4%

Reve

nu

• We estimate approximately 62% of the companies comprising the SEG Internet Index offer online services and solutions that areespecially consumer spending dependant (Advertising, eCommerce, Gaming, Travel), which results in revenue volatility that

2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013

p y p g p ( g g ) yclosely parallels the state of the U.S. economy.

• When GDP contracted 10% in 2009, the median TTM revenue growth of the SEG Internet Index plummeted from 19.5% to 2.9%,the lowest among our three tracking indices that year. In 2011, GDP growth resumed, albeit very modestly, consumer confidenceimproved markedly, and the TTM revenue growth rate of the SEG Internet Index spiked from 3.4% to 26.4%.

• Although the financial performance of some Internet product categories was quite strong in 2013 (more on this later), most publicInternet companies were impacted by the economy’s failure to gain momentum in 2013 and by the concomitant decline inconsumer confidence. As a result, the median TTM revenue growth rate of the SEG Internet Index was a constrained 17.1%.

• While 2013’s median SEG Internet Index TTM revenue growth rate declined 18% YoY and was 35% lower then 2011, it wasnevertheless healthy especially considering the median TTM revenue of the SEG Internet Index is $440 2M compared to only


All Rights Reserved

nevertheless healthy, especially considering the median TTM revenue of the SEG Internet Index is $440.2M, compared to only$163.5M for the SEG SaaS Index.

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCETTM Revenue Growth Rate Distribution – 4Q13Median Revenue Performance - Quarterly

25.0%$500


24%25%

15.0%

20.0%

$250$300$350$400$450$

nue Grow

th

l Reven

ue

18%15% 15%

19%

15%

20%

ompanies

0 0%

5.0%

10.0%

$0$50$100$150$200$250

TTM Reven

TTM Tota 9%

0%

5%

10%

% of C

o

• Median TTM revenue growth of the SEG Internet Index droppedsequentially each of the last five quarters, closing 4Q13 at 16.4%,down from 22.2% in 4Q12.

0.0%$0

4Q12 1Q13 2Q13 3Q13 4Q13

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

• Demonstrating, once again, that the Internet ecosystem remainsone of unequals, one in five public Internet providers bucked thetrend and reported TTM revenue growth greater than 40% in 4Q13.

• Many of these high flyers became public companies within the pastthree years, offering innovative products services and businessmodels that allowed them to scale quickly. Representativeexamples include Trulia (93.3%), LinkedIn (65.6%), Yelp (67.7%),and Facebook (48.2%).

• 2013’s quarterly trajectory portends a continued decline in annual


All Rights Reserved

2013 s quarterly trajectory portends a continued decline in annualTTM revenue growth for most public Internet companies in 2014.

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCEMedian Gross Profit Margin - Annual Median EBITDA Margin - Annual

56 9% 59 1% 60.1% 60.9%66.2% 65.1% 64.8% 15.2% 14.4% 14.6%

13 1%

42.9%

56.9% 59.1%

rofit

Mar

gin

10.2%

12.2%13.1% 12.5%

11.0%

DA M

argi

n

Gro

ss P

r

EBIT

D

2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013

• The median gross margin of the SEG Internet Index improved measurably in 2011 as consumer spending improved and has since heldrelatively steady.

I t th h lth fit i f bli I t t i i tt ib t bl t i d h i idi i t t t• In part, the healthy gross profit margins of public Internet companies is attributable to an increased emphasis on providing proprietary contentand reducing reliance on margin depressing third party royalties.

• As an example, Yelp, a service that connects people with local businesses, boasts gross profit margins of 92.8%, much better than Pandora’s(37.0%), whose core business is streaming music licensed from publishers.

• Interestingly, as median gross profit margins for public Internet companies have mostly risen since 2006, EBITDA margins have declined dueg y, g p g p p y , gto the combined impact of:

• Public Internet companies attempting to drive top line growth to match the outperformers of the index who are achieving outsized multiples. In 4Q13,Sales & Marketing spend as a percent of total revenue was 23.1%, up from 17.1% only two years ago.

• Increased competition within the Internet category driving up R&D spend.as companies race to keep their products highly innovative in an industrynotorious for non-sticky services. In 4Q13, R&D spend as a percent of total revenue was 12.4%, up from 10.6% only six quarters ago.

• A number of Internet IPOs with stellar revenue growth, but little, if any, profitability. Examples include Twitter (68.7%), Wix.com (57.4%), Rocket


All Rights Reserved

A number of Internet IPOs with stellar revenue growth, but little, if any, profitability. Examples include Twitter (68.7%), Wix.com (57.4%), RocketFuel (125%), and Xoom (52.9%).

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCETTM EBITDA Margin Distribution – 4Q13Median EBITDA Margin Performance – Quarterly

28%30%20%14%


21%23%

15%

20%

25%

ompanies

10%12%14%16%18%20%

8%

10%

12%

14%

DA Growth

Margin

11%

8%10%

0%

5%

10%% of C

o

0%2%4%6%8%10%

0%

2%

4%

6%

TTM EBITD

EBITDA

• If the quarterly trends are any indication, EBITDA marginsof public Internet companies appear set to stabilize for

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

0%0%

4Q12 1Q13 2Q13 3Q13 4Q13

2014.

• Over the past five quarters, public Internet companiesmaintained EBITDA margins within a few hundred basispoints of 11%.

A t t t t th th f f i th• As testament to the revenue growth focus of many in theSEG Internet Index, 21% of all companies had noprofitability.

• By contrast 10% achieved EBITDA margins above 40%, ledby Giant Interactive (63.6%), VeriSign (62.5%), ChangYou


All Rights Reserved

by G a e ac e (63 6%), e S g (6 5%), C a g ou(58.7%), SouFun Holdings (53.6%).

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCEMedian Margin Performance - QuarterlyMedian Operating Ratios - Quarterly

25%

S&M (% of Revenue) R&D (% of Revenue) G&A (% of Revenue)

70%


15%

20%

5%

even

ue

40%

50%

60%

0%

argin

0%

5%

10%

% of R

e

0%

10%

20%

30%% M

a

• In 4Q13, companies comprising the SEG Internet Index spent 23.1% of total revenue on sales and marketing (S&M), 12.4% onresearch development (R&D), and 11.2% on general and administrative.

0%

4Q12 1Q13 2Q13 3Q13 4Q13

0%

4Q12 1Q13 2Q13 3Q13 4Q13

p ( ), g

• The median S&M spend as a percent of revenue compares unfavorably to our SaaS Index which, at a median 39.2%,demonstrates a single minded focus on growth over profitability.

• The median R&D spend as a percent of total revenue (12.4%) was the lowest among our three tracking indices. Many Internetcompanies are able to spend less, relative to their on-premise and SaaS peers, on R&D by:

• Leveraging open source stacks and tool kits such as Hadoop and LAMP.• Avoiding development of expensive, complex and constantly evolving integration components that many on-premise, and

increasingly, SaaS companies selling to the enterprise must incur.• Avoiding R&D distractions and detours imposed by large enterprise customers with special needs.• Avoiding the inefficiencies caused by maintaining and supporting multiple releases.


All Rights Reserved

THE SEG INTERNET INDEX: MARKET MULTIPLESMedian EV/Revenue - Annual Median EV/EBITDA - Annual

2 9x

3.5x17.8x 18.3x

18 0x

20.0x

2.2x 2.1x

1 4x1.6x

2.9x

2.1x

2.5x

2.0x

2.5x

3.0x

nue

Mul

tiple

12.6x 11.9x

10.0x11.8x

15.2x

12.9x

10.0x

12.0x

14.0x

16.0x

18.0x

DA M

ultip

le

1.4x1.2x

0.5x

1.0x

1.5x

EV/R

even

2.0x

4.0x

6.0x

8.0x

EV/E

BITD

• Predictably, over the past 5 years the median market multiples of companies comprising the SEG Internet Index closely trackedthe performance of the U.S. economy. The median EV/Revenue multiple took a nose dive in 2008, sank further in 2009, began

0.0x2006 2007 2008 2009 2010 2011 2012 2013

0.0x2006 2007 2008 2009 2010 2011 2012 2013

p y p , , gto edge up as GDP growth turned positive, soared prematurely in 2011 upon wishful thinking the economy was sharplyrebounding, then sank in 2012 when consumer confidence dwindled. 2013’s median EV/Revenue of 2.5x reveals guardedoptimism about the economic growth and its impact on advertising spend and consumer spending.

• Consistent with our other tracking indices, the SEG Internet Index median EV/Revenue of 2.5x in 2013 exceeded the multiplesposted prior to the Global Financial Crisisposted prior to the Global Financial Crisis.

• The jump of 108% in median EV/Revenue from 2009’s 1.2x, is on par with the SEG Software Index ( 106%) but well below theSEG SaaS Index (180%), confirming SaaS is where investors are placing their bets.


All Rights Reserved

THE SEG INTERNET INDEX: MARKET MULTIPLESEV/Revenue Multiple Distribution - QuarterlyMedian EV/Revenue and EV/EBITDA Multiples – Quarterly

30%EV/Revenue EV/EBITDA

15%

25%

20%

15%

20%

25%

ompanies

13.4x 13.4x15.1x

18.5x

21.4x

10%

7%

11%

3%1%

5%3%

0%

5%

10%% of C

o

2.1x 2.0x 2.2x 2.6x 2.6x

• On a quarterly basis, the median market valuation of public Internet providers grew 23% YoY (2.1x grew to 2.6x). In part we see the

0%

<= 1.0x > 1.0x<= 2.0x

> 2.0x<= 3.0x

> 3.0x <= 4.0x

> 4.0x<= 5.0x

> 5.0x<= 6.0x

> 6.0x<= 7.0x

> 7.0x<= 8.0x

> 8.0x<= 9.0x

>= 9.0x

EV/Revenue

4Q12 1Q13 2Q13 3Q13 4Q13

On a quarterly basis, the median market valuation of public Internet providers grew 23% YoY (2.1x grew to 2.6x). In part we see theimprovement in the median EV/Revenue as a reflection of growing investor confidence in rapidly ramping consumer spending anddigital advertising spend, especially in Q4 and some restored confidence in a sustained economic recovery.

• More than any other of our tracking indices, the widely disparate financial performance of the 95 companies comprising the SEGInternet Index reveals an Internet ecosystem heavily bifurcated into “haves” and “have nots.” Virility, consumer fickleness, switchingease unlimited choice and fierce competition handsomely reward a select few and punish manyease, unlimited choice and fierce competition handsomely reward a select few and punish many.

• 4Q13 only served to further exemplify this trend: 40% of companies ended the quarter with an EV/Revenue multiple of 2.0x or less,28% closed the quarter with a market multiple of 7.0x EV/Revenue or higher.

• Among the Internet companies boasting the highest EV/Revenue market multiples were many new entrants into the public markets,some that created and dominated new Internet categories (e g Facebook); others that revolutionized older categories (Trulia/Zillow)


All Rights Reserved

some that created and dominated new Internet categories (e.g. Facebook); others that revolutionized older categories (Trulia/Zillow).

THE SEG INTERNET INDEX: MARKET MULTIPLESEV/Revenue Multiples vs. TTM EBITDA Margins – 4Q13EV/Revenue Multiples vs. TTM Revenue Growth Rates – 4Q13

10.1x10 0x

12.0x6.8x7.0x

8.0x

4.2x6.0x

8.0x

10.0x

an EV/

Revenu

e

2.6x

4.9x 5.0x

3.0x

4.0x

5.0x

6.0x

an EV/

Revenu

e

1.1x 1.5x2.2x 2.3x

0.0x

2.0x

4.0x

<= 0% > 0% > 10% > 20% > 30% > 40%

Med

ia

1.8x 2.0x

0.0x

1.0x

2.0x

3.0x

<= 0% > 0% > 10% > 20% > 30% > 40%

Med

i

• Expectedly, Public Internet companies with TTM revenue growth of 40% or higher were rewarded with median EV/Revenue multiples markedly greater thantheir slower growing peers. Among those growing 40%+ were: Trulia (93.3%), Qihoo 360 (91.5%), Zillow (69.5%), Yelp (67.7%), LinkedIn (65.6%).

• Unlike The SEG SaaS Index, where TTM EBITDA margins were inversely related to median EV/Revenue multiples, investors in public Internet companies kept

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

Unlike The SEG SaaS Index, where TTM EBITDA margins were inversely related to median EV/Revenue multiples, investors in public Internet companies kepta keen eye on margins, and rewarded more profitable performers with significantly higher market multiples.

• As testament, public Internet companies with EBITDA margins above 40% posted a median EV/Revenue multiple of 6.8x in 4Q13, 160% higher than the overallIndex median. By comparison, public SaaS companies with EBITDA margins above 30% (not enough companies with 40%+) posted a median EV/Revenuemultiple of 4.5x, 46% below the SaaS median market valuation.

• With few exceptions, many of the most profitable public Internet companies also reported stellar TTM revenue growth. Among them were SouFun HoldingsWith few exceptions, many of the most profitable public Internet companies also reported stellar TTM revenue growth. Among them were SouFun Holdings(43.2% revenue growth, 53.6% EBITDA margin), Facebook (48.2% revenue growth, 47.5% EBITDA margin), Baidu.com (40.7% revenue growth, 45.0%EBITDA margin), Mail.ru Group (32.2% revenue growth, 44.3% EBITDA margin).

• Implicit in the greater importance investors place on EBITDA in the Internet sector vs. the SaaS sector is the sustainability of the customer relationship and theresulting revenue; switching costs for SaaS subscribers are considerably higher than for most internet subscribers. Therefore, relinquishing short termprofitability in order to grab market share and ensure significant long term reoccurring revenue and healthy margins seems prudent for SaaS providers buti ibl f i t t i th t d t d t t th fi i l i bilit f th i b i d l Al dd d h f h lth i t i i


All Rights Reserved

irresponsible for internet companies that need to demonstrate the financial viability of their business model. Also, add a dash of healthy investor pessimismfrom lessons learned in 2000 by those who drank the Kool-Aid of “eyeballs” being all that mattered.

• The SEG Internet Index is segmented into eight product categories

THE SEG INTERNET INDEX BY PRODUCT CATEGORY• The SEG Internet Index is segmented into eight product categories. • Representative companies in each Internet category are referenced below.• See the appendix for the complete list of companies within each product category.

SEG Internet Index

4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13Ad Tech & Lead Generation 2.4x 1.7x 2.5x 2.5x 2.3x 12.1x 13.5x 14.9x 22.1x 26.4x 30.1% 32.4% 26.8% 24.1% 16.4% 12.4% 12.9% 12.1% 11.0% 10.2%Commerce 1.2x 0.9x 0.9x 1.1x 1.2x 13.4x 10.3x 15.1x 16.3x 18.9x 16.2% 20.0% 17.7% 15.4% 15.9% 5.7% 5.7% 6.2% 6.1% 5.6%Content & Media 1.4x 1.6x 2.3x 2.7x 3.2x 10.9x 15.4x 13.8x 20.8x 25.9x 10.5% 12.6% 12.1% 14.1% 10.8% 13.9% 14.8% 15.5% 15.9% 15.8%G i 2 4 2 7 2 7 2 8 3 2 4 3 5 8 5 9 7 7 8 0 24 8% 21 9% 21 9% 19 8% 15 7% 38 6% 36 3% 38 6% 36 6% 35 2%

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin

SEG Internet Index

Gaming 2.4x 2.7x 2.7x 2.8x 3.2x 4.3x 5.8x 5.9x 7.7x 8.0x 24.8% 21.9% 21.9% 19.8% 15.7% 38.6% 36.3% 38.6% 36.6% 35.2%Infrastructure 1.0x 1.7x 1.6x 1.4x 1.7x 10.8x 11.4x 13.6x 14.3x 14.6x 10.9% 9.2% 8.8% 5.6% 6.3% 7.4% 8.0% 7.2% 7.1% 6.3%Services 3.3x 3.5x 3.4x 4.3x 4.1x 14.8x 14.2x 19.7x 23.9x 22.5x 42.0% 42.2% 40.4% 38.1% 43.2% 8.7% 8.5% 6.6% 5.0% 6.5%Social 8.8x 9.1x 8.3x 11.9x 16.4x 39.6x 38.9x 37.1x 38.7x 37.9x 64.7% 65.2% 56.6% 54.0% 56.9% 12.4% 12.9% 13.5% 12.8% 12.1%Travel 2.0x 2.0x 1.8x 1.8x 2.1x 16.0x 16.2x 19.7x 26.4x 27.1x 18.6% 18.9% 19.5% 19.8% 19.6% 17.5% 18.1% 16.7% 16.3% 17.1%

Median 2.1x 2.0x 2.2x 2.6x 2.6x 13.4x 13.4x 15.1x 18.5x 21.4x 22.6% 21.3% 19.5% 17.7% 16.5% 11.2% 10.6% 10.6% 10.8% 10.9%

Ad Tech & Lead Gen Commerce Content & Media GamingAd Tech & Lead Gen Commerce Content & Media Gaming

Infrastructure Services Social Travel


All Rights Reserved

THE SEG INTERNET INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE

4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth 4Q13 Median YoY Change in Revenue Growth4Q13 Median TTM Revenue Growth

(45.8%)

(2.2%)

Ad Tech &Lead Generation

Commerce

16.4%

15.9%


Commerce

2.9%

(36.9%)

(41.8%)

2 8%

Content & Media

Gaming

Infrastructure

S i

10.8%

15.7%

6.3%

43 2%

Content & Media

Gaming

Infrastructure

S i 2.8%

(12.1%)

5.3%

Services

Social

Travel

43.2%56.9%

19.6%

Services

Social

Travel


(17.6%)

(2 2%)


C

10.2%Ad Tech &Lead Generation

(2.2%)

13.2%

(8.9%)

(15.7%)

Commerce

Content & Media

Gaming

Infrastructure

5.6%

15.8%

35.2%

6 3%

Commerce

Content & Media

Gaming

Infrastructure ( )

(24.8%)

(2.6%)

(2.0%)

Services

Social

Travel

6.3%

6.5%

12.1%

17.1%

Infrastructure

Services

Social

Travel


All Rights Reserved

THE SEG INTERNET INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES

4Q13 YoY Change in Median EV/Revenue Multiples4Q13 Median EV/Revenue Multiples

2.3xAd Tech &Lead Generation

12.5% Ad Tech &Lead Generation

1.2x

3.2x

3.2x

Commerce

Content & Media

Gaming

(0.3%)127.1%

32.8%

Commerce

Content & Media

Gaming

f1.7x

4.1x

16.4x

2 1x

Infrastructure

Services

Social

Travel

70.5%

26.9%

86.3%

7.3%

Infrastructure

Services

Social

Travel

• Public Internet Companies comprising the Social and Services product categories closed Q4 with revenue growth rates more than twice themedian (43.2%, 56.9%, respectively).

• Public Internet categories comprising the social category closed 4Q13 with the highest median EV/Revenue multiple 16 4x a 86 3% YoY

2.1xTravel

• Public Internet categories comprising the social category closed 4Q13 with the highest median EV/Revenue multiple, 16.4x, a 86.3% YoYimprovement. Facebook and LinkedIn led the ascent, proving social networking could be profitable.

• The success social media Internet providers have had monetizing their services, largely through advertising, is taking share away from many inthe Ad Tech & Lead Generation space, with marketers clearly attracted to the scalability and ROI of advertising in Facebook and LinkedIn.

• As a result of these shifting advertising budgets, the median TTM revenue growth of the Ad Tech & Lead Generation product category plunged45.8% YoY in 4Q13.

• The Commerce product category lagged all other Internet product categories, with a 1.2x EV/Revenue multiple, a tepid TTM revenue growth of15.9%, and a lackluster 5.6% EBITDA margin. Amazon, one of the most notable commerce companies, is aggressively diversifying its contentofferings and expanding its hardware offerings as a way of differentiating from competitors and driving more spend through its platform.


All Rights Reserved

SOFTWARE/SAAS/INTERNET IPO

53

ANNUAL SOFTWARE IPO TRENDS

$10,00030

Total Number of IPOs Total Net Proceeds

$1,40012

Number of SaaS IPOs Total Net Proceeds

SaaS IPOsSoftware/SaaS/Internet IPOs

1613

26

18

22

26 26

$5,000$6,000$7,000$8,000$9,000$ ,

15

20

25

t Pro

ceed

s

are/

SaaS

/Inte

rnet

O

s 67

10

$800

$1,000

$1,200

$1,400

6

8

10

12

t Pro

ceed

s

f Saa

S IP

Os

10

2

6

$0$1,000$2,000$3,000$4,000$ ,

0

5

10

Tota

l Net

Num

ber o

f Sof

twa

IPO

1

3

$0

$200

$400

$600

0

2

4

6

SaaS

Net

Num

ber o

f

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

N $

2009

2010

2011

2012

2013

• There were 26 total IPOs in 2013 spanning the on-premise software, SaaS and Internet sectors, a number achieved in only two of thepast ten years (2007 and 2012).

• In aggregate, these 26 IPOs had total net proceeds of $4.69B, substantially lower than 2012’s total, which included Facebook’smassive $6.7 billion IPO.

• SaaS IPO companies accounted for nearly 40% of the total, a marked increase from only two years ago. In aggregate 2013’s tenSaaS IPOs raised $1.2 billion.


All Rights Reserved

2013 SOFTWARE IPO DATACompany (Ticker) Category IPO Date Net Proceeds Enterprise Value EV / Rev EV / First Day Return YTD • The breakdown of 2013’s IPOs: Eight on-premiseCompany (Ticker) Category IPO Date Net Proceeds Enterprise Value EV / Rev EBITDA First Day Return Return

Sungy Mobile Limited (NasdaqGM:GOMO) Mobile Solutions/Content 11/22/13 $73,042,200 $412,871,080 8.7x 29.2x 19.0% 83.0%

Barracuda Networks, Inc. (NYSE:CUDA)

Networking & Network Performance Management 11/6/13 $70,059,600 $1,049,853,450 4.8x 433.1x 19.7% 120.4%

Gigamon Inc.(NYSE:GIMO)

Networking & Network Performance Management 6/13/13 $79,515,000 $746,202,100 7.1x 84.9x 37.4% 47.8%

Cyan, Inc.(NYSE:CYNI)

Networking & Network Performance Management 5/13/13 $81,840,000 $647,982,780 6.0x n/a 12.5% (51.9%)

Software Category

The breakdown of 2013 s IPOs: Eight on premisesoftware, ten SaaS, and eight Internet.

• Three of the eight on-premise software companiesprovide Networking & Networking PerformanceManagement software, a product category in demand asapplications are increasingly delivered from the clouddriving the need for real-time performance measurement(NYSE:CYNI) Performance Management

Qiwi plc(NasdaqGS:QIWI) Financial & Accounting 5/3/13 $477,700,000 $506,808,640 1.7x n/a 0.5% 229.4%

EVERTEC, Inc.(NYSE:EVTC) Financial & Accounting 4/12/13 $118,125,000 $2,227,097,180 6.4x n/a 2.2% 23.3%

Model N, Inc.(NYSE:MODN) Financial & Accounting 3/20/13 $25,200,000 $420,912,240 4.8x -128.1x 28.9% (23.9%)

Silver Spring Networks, Inc.(NYSE:SSNI) Vertical - Other 4/12/13 $58,032,000 $270,796,960 2.3x 5.9x 17.2% 23.5%

$76,278,600 $577,395,710 5.4x 29.2x 18.1% 35.7%Software Category Median:SaaS Category

driving the need for real-time performance measurement,application monitoring, network optimization, etc.

• In a year that saw a number of highly acclaimed IPOs,such as Twitter, FireEye, Marketo, Tableau and VeevaSystems. The newly listed company with the higheststock return by year end was Qiwi whose 2013 stockprice closed up 229 4% Qiwi provides various payment

Veeva Systems Inc.(NYSE:VEEV) Vertically Focused 10/16/13 $180,792,000 $4,490,025,670 26.7x 122.5x 85.8% 60.5%

RingCentral, Inc.(NYSE:RNG) Other SaaS 9/27/13 $89,707,800 $1,181,005,390 8.7x n/a 40.0% 41.3%

FireEye, Inc.(NasdaqGS:FEYE) Other SaaS 9/20/13 $282,255,000 $4,201,384,000 36.5x n/a 80.0% 118.1%

Benefitfocus, Inc.(NasdaqGM:BNFT) Other SaaS 9/18/13 $73,935,000 $1,296,563,600 14.2x n/a 102.1% 117.9%

Cvent, Inc.(NYSE CVT) CRM & Marketing 8/9/13 $109,368,000 $1,231,990,640 12.7x 159.6x 56.8% 73.3%

SaaS Category price closed up 229.4%. Qiwi provides various paymentservices worldwide, and powers Visa’s mobile walletinitiative.

• The median year end stock return for ten SaaS IPOs wasa breathtaking 108.7%, more than twice median for theSEG SaaS Index (51.4%), reflecting investorenthusiasm for emerging rapid growth SaaS companies(NYSE:CVT) g $ , , $ , , , % %

Textura Corporation(NYSE:TXTR) Vertically Focused 6/7/13 $69,750,000 $368,918,420 13.5x n/a 39.4% 99.6%

ChannelAdvisor Corporation(NYSE:ECOM) Other SaaS 5/23/13 $74,865,000 $379,520,680 6.7x n/a 31.7% 197.9%

Marketo, Inc.(NasdaqGS:MKTO) CRM & Marketing 5/20/13 $69,517,500 $838,088,720 12.7x n/a 87.2% 185.2%

Tableau Software, Inc.(NYSE:DATA) Other SaaS 5/20/13 $144,150,000 $3,033,670,450 21.2x 19958.4x 72.4% 122.4%

Marin Software Incorporated(NYSE MRIN) CRM & Marketing 3/22/13 $97,650,000 $481,887,860 8.1x n/a 16.1% (26.9%)

enthusiasm for emerging, rapid growth SaaS companiesthat provide disruptive solutions and services.

• Given the rapid, widespread adoption of new, SaaSdeployed marketing tools, it’s no surprise three of tenSaaS IPOs come from the CRM & Marketing productcategory. Marketo was the clear leader of the trio,

t i 185 2% i 2013 th t th f id(NYSE:MRIN) g $ , , $ , , ( )

$93,678,900 $1,206,498,015 13.1x 159.6x 64.6% 108.7%

Twitter, Inc.(NYSE:TWTR) Social 11/7/13 $1,760,850,000 $24,323,215,040 45.5x n/a 72.7% 144.8%

Wix.com Ltd.(NasdaqGM:WIX) Services 11/6/13 $87,657,480 $589,314,310 8.6x n/a (1.2%) 62.7%

58.com Inc.(NYSE:WUBA) Commerce 10/31/13 $173,910,000 $1,824,628,910 14.6x 283.4x 41.9% 125.5%

Criteo SA Ad Tech & Lead 10/30/13 $233 647 180 $1 912 053 660 3 6x 103 5x 14 2% 10 3%

SaaS Category Median:Internet Category

returning 185.2% in 2013 on the strength of rapidadoption of its marketing automation suite.

• Further evidence SaaS is gaining traction withintraditional on-premise categoires, are the successfulIPOs of FireEye, a provider of hosted security solutions,and RingCentral, a unified communications provider.

(NasdaqGS:CRTO) Generation 10/30/13 $233,647,180 $1,912,053,660 3.6x 103.5x 14.2% 10.3%

Rocket Fuel Inc.(NasdaqGS:FUEL)

Ad Tech & Lead Generation 9/20/13 $107,880,000 $1,822,781,400 11.4x n/a 93.4% 112.0%

YuMe, Inc.(NYSE:YUME)

Ad Tech & Lead Generation 8/7/13 $42,896,250 $260,358,000 2.0x 33.0x 0.0% (17.2%)

Tremor Video, Inc.(NYSE:TRMR)

Ad Tech & Lead Generation 6/27/13 $69,750,000 $394,582,560 3.5x n/a (15.0%) (42.0%)

Xoom Corporation(NasdaqGS:XOOM) Services 2/19/13 $77,686,890 $730,750,100 9.1x n/a 49.4% 71.1%

$97,768,740 $1,276,765,750 8.8x 103.5x 28.0% 66.9%Internet Category Median:

• The most anticipated IPO of 2013 was Twitter. Thesocial networking company went public with a seeminglyfrothy 45.5x EV/Revenue multiple, but offered investors a144.8% return by year end, thanks to its stellar revenuegrowth of 77%, and its efforts to monetize its massiveuser base.


All Rights Reserved

*Financial data is the latest available from Capital IQ.**First day return compares listed offering price to first day close.

$84,748,740 $792,145,410 8.6x 103.5x 34.5% 72.2%Total Median:

VENTURE CAPITAL ACTIVITY: ALL INDUSTRY SECTORS

4,500$35

Total VC Investment Dollars Number of VC Investments

$35

Seed Early Stage Expansion Later Stage

Overall VC Activity by Investment StageOverall VC Activity

2 000

2,500

3,000

3,500

4,000

$15

$20

$25

$30

VC In

vest

men

ts

ars

Inve

sted

($B

)

$20

$25

$30

rs In

vest

ed ($

B)

0

500

1,000

1,500

2,000

$0

$5

$10

$15

Num

ber o

f V

Tota

l VC

Dol

la

$0

$5

$10

$15

Tota

l VC

Dol

la

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

A di P i h C i li i d $29 4 billi i 3 99 i Y Y i i

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

• According to PricewaterhouseCoopers, venture capitalists invested $29.4 billion in 3,995 companies, a seven percent YoY increase indollars invested and a four percent improvement in the number of companies receiving funds.

• Early stage investments led the pack with 2,003 investments (up 15% YoY) aggregating $9.8 billion (up 17% YoY).

• Expansion stage investments also totaled $9.8 billion in 2013, beating the year prior by a modest at 4%; the number of recipients wasflatflat.

• Seed stage investments jumped 14% YoY to $943 million, but VCs were more circumspect in 2013, as the number of recipientsdeclined by 26%. The average Seed stage investment, $4.3 million, was the highest since 2009’s average investment of $4.6 million.


All Rights Reserved

VENTURE CAPITAL ACTIVITY: SOFTWARE

1,600$12

Total VC Investment Dollars Number of VC Investments

31%

37%

Software VC Dollars as a Percent of TotalSoftware VC Activity

800

1,000

1,200

1,400

$6

$8

$10

VC In

vest

men

ts

ars

Inve

sted

($B

)

15%

21%23% 22%

20%

24%27%

25% 25% 24%22%

20% 19% 20% 20%22%

26%

0

200

400

600

$0

$2

$4

Num

ber o

f V

Tota

l VC

Dol

la

$

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Th b f VC i t t i ft i l t d i “S ft i ti th ld”• The number of VC investments in software companies accelerated in2013 to 1,523. Since bottoming out in 2009, the number of recipientshas grown at a compounded annual growth rate (CAGR) of 17%.

• VC dollars invested in 2013 totaled $10.9 billion, a 44.1% YoYincrease. Since 2009, the aggregate capital invested has grown at a

“Software is eating the world”- Marc Andreessen

, gg g p g27% CAGR.

• As a percent of total VC dollars invested across all industry sectors,software now accounts for 37% of total, as compared to 20% in2009.


All Rights Reserved

THE BUYERS SPEAK SOFTWARE EQUITY GROUP’STHE BUYERS SPEAK: SOFTWARE EQUITY GROUP’S2014 M&A SURVEY

58

THE BUYER’S SPEAK: SOFTWARE EQUITY GROUP’S 2014 M&A SURVEY

In early January 2014, Software Equity Group conducted its seventh annual Survey of Software Company Buyers to provide ourreaders a better understanding of 2014’s software M&A ecosystem and buyer thinking. We polled over 300 of the largest softwarecompanies in the world, both public and private. Collectively, the buyers who responded to the survey spent over $7 billion acrossthe 42% of M&A transactions with ascertainable deal data in 2013. The vast majority (81%) of respondents were public software,SaaS or Internet companies and, in aggregate, their total enterprise value was $248 billion at the end of 2013. Needless to say,their plans and playbook will heavily influence the software M&A ecosystem in the year ahead.

In 2013, 93% of our respondents bought at least one software company. Looking ahead, 100% of our respondents expect toacquire at least one software company in 2014. Even more encouraging, 18% plan on acquiring six or more companies in 2014,up from 14% in 2013, and only 7% in 2012. Our Survey results also portend well for small, privately held software companiesconsidering an exit in 2014 A whopping 93% of respondents indicated they’d focus on transactions with price tags between $10Mconsidering an exit in 2014. A whopping 93% of respondents indicated they d focus on transactions with price tags between $10M- $99M. Additionally, software mega deals are set to accelerate, 19% of respondents indicated they anticipate focusing ontransactions of $500 million or more, up from only 4% last year. Exit valuations should rise as well, with 42% of respondentsexpecting to pay more for a company that was very similar to the one they acquired in 2013, up from only 18% in last year’ssurvey.

What’s driving these buyers to acquire? Enhancing/deepening a buyer’s offering with synergistic technologies and products wascited by 46% of our respondents as their primary acquisition motive. A distant second was consolidating a buyer’s current market(21%). Not far behind, were expanding/diversifying into new product categories (18%) and competitive differentiation (14%).Surprisingly, not one buyer cited improving financial performance as the number one factor for acquisition, and 50% cited it as theleast important motive. In a nutshell, buyers in 2014 will primarily focus on tuck-ins and logical extensions and enhancements totheir current offerings and, for the right company, will entertain a major deal to accomplish their strategic objectives.

And what’s most important to these buyers when sizing up a prospect and deciding how much to pay? 82% of buyers cited theseller’s products and technology as their first or second most important priority when evaluating a target in 2014, seeking toensure they are well executed, a great fit, and provide the strategic leverage/differentiation buyers seek.

I 2014 b lik l t d ti l ti d i th ti t l t d d i ti fIn 2014, buyers are likely to spend more time evaluating and assessing the executive talents and domain expertise ofmanagement than they did in 2013. This year, 18% of our respondents cited management as the primary reason for acquisition,up from only 4% in 2013. One possible explanation: Buyers found the knowledge transfer from prior acquisitions was more difficultor took longer than they anticipated, which imperiled their acquisition ROI when the target’s executives departed shortly afterclosing. If that’s the case, it may portend more earnouts, lockups and holdbacks in 2014.


All Rights Reserved

THE BUYER’S SPEAK: SOFTWARE EQUITY GROUP’S 2014 M&A SURVEY

Another explanation of the increased importance buyers indicate they’ll place on the quality of a target’s management team isthey’re contemplating a greater number of acquisitions outside their wheelhouse, where they’ll be more dependent than usual onpost-closing execution by the acquired company’s executives.

Given the market buzz surrounding Mobile and Big Data, we asked buyers to what degree they’ll consider each to be a “musthave” when evaluating targets in 2014 While our respondents confirmed Mobile and Big Data will continue to be two areas theyhave when evaluating targets in 2014. While our respondents confirmed Mobile and Big Data will continue to be two areas theytake into consideration in 2014, they did not express a heightened sense of urgency about them. In 2014, 33% of our respondentsdeemed it “very important” or “absolutely essential” their targets have a well executed mobile strategy, essentially unchanged from2013’s 35%. And 36% of buyers deemed it “very important” or “absolutely essential” that a target have the ability to capture andleverage big data in the markets they serve, again, essentially unchanged from last year’s 39%. Unchanged YoY interest inMobile and Big Data doesn’t necessarily imply the two major themes are set to lose momentum In our 2012 and 2013 Buyer’sMobile and Big Data doesn t necessarily imply the two major themes are set to lose momentum. In our 2012 and 2013 Buyer sSurvey, the percentage of respondents indicating SaaS as “very important” or “absolutely essential” was flat YoY, yet SaaSexploded in 2013.

And just what did buyer’s say about the importance of SaaS this year? In 2014, a whopping 64% of respondents indicated it was“very important” or “absolutely essential” a target be all or substantially SaaS/subscription based. To put this in perspective, it wasj f h l 13% f d i di d i “ i ” “ b l l i l ” A i i 25%just four years ago, when only 13% of respondents indicated it was “very important” or “absolutely essential.” As interesting, 25%of respondents indicated it was “absolutely essential” a target be all or substantially SaaS/subscription based, up from only 14%last year. Bottom line, buyers are on the hunt for targets who are SaaS based in 2014 and those still operating in an on-premisemodel will be valued significantly lower than their SaaS peers.

What’s the bottom line for software M&A in 2014? It’s clear from the results of our latest Survey, buyers will be more acquisitiveat s t e botto e o so t a e & 0 t s c ea o t e esu ts o ou atest Su ey, buye s be o e acqu s t ethis year, will likely pay more than last year, and target transactions in the $10M - $99M range. Buyers will primarily seeksynergistic products and technology, and while Mobile and Big Data are important, SaaS deployment and pricing models are inhighest demand and will be highly valued.


All Rights Reserved

SOFTWARE EQUITY GROUP’S 2014 SOFTWARE M&A OUTLOOK SURVEY


All Rights Reserved

SOFTWARE EQUITY GROUP’S 2014 SOFTWARE M&A OUTLOOK SURVEY


All Rights Reserved

SOFTWARE INDUSTRY M&A MARKET UPDATE

63

SOFTWARE/SaaS M&A DEAL VOLUME AND SPENDINGU.S. Software Mergers & Acquisitions Activity - Quarterly

421 426 430454

456

432454

435406

394

429 431418

$21.3 $23.4 $23.1

$19.4 $20

$25

400

450

500

U.S. Software Mergers & Acquisitions Activity - Annual

$12.7 $13.1

$12.6

$15.8

$12.3

$15.8

$17.4

$20.2

$10

$15

$20

200

250

300

350

400

Value (BIllions)

Num

ber o

f Deals

$9.9

$0

$5

0

50

100

150

N

• There were 1,672 software M&A transactions in 2013, a modest decline from 1,727 transactions in 2012 and 2011’s tally of 1,766transactions.

• Software M&A spending aggregated $67 0 billion in 2013 on par with 2012’s total deal spend but slightly lower than the $70 4 billion

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

Deals Value

• Software M&A spending aggregated $67.0 billion in 2013, on par with 2012 s total deal spend, but slightly lower than the $70.4 billionaggregate amount paid in 2011.

• Deal volume was sluggish in 1Q13, the first quarter since 2Q10 not to surpass 400 transactions. The pace picked up in 2Q13 andtransactions per quarter exceeded the 400+ quarterly benchmark for each of the remaining quarters.

• With soaring stock prices health balance sheets and renewed confidence in the economy buyers in 2013 were less risk adverse andWith soaring stock prices, health balance sheets and renewed confidence in the economy, buyers in 2013 were less risk adverse andmore willing to engage in mega deals (EV> $500M). Mega deal activity started slowly, with only one such transaction in Q1, picked upspeed in Q2, accelerated to nine in Q3, and finished Q4 with a mega deal tally of twelve.

• Notable mega deals in the fourth quarter included: Oracle’s acquisition of Responsys ($1.6 billion, 8.2x EV/Revenue); Experian’sacquisition of Passport Health ($850 million, 7.0x EV/Revenue estimate); NCR’s acquisition of Digital Insight ($1.7 billion, 5.0xEV/R ) d Ad t I t ti l’ i iti f U it4 ($1 7 billi 2 6 EV/R )


All Rights Reserved

EV/Revenue) and Advent International’s acquisition of Unit4 ($1.7 billion, 2.6x EV/Revenue).

SOFTWARE/SaaS M&A DEAL VOLUME AND SPENDINGMedian EV/Revenue Exit Multiple DistributionMedian On-Premise Software EV/Revenue Exit Multiples

$40$42 $41 $41 $42

$39 $38 $40$45.0

27 5%30 0%

$33$37

$$36

$39$36 $35

$38 $

$25.0

$30.0

$35.0

$40.0

eal V

alue

(Millions) 27.5%

20.9% 19.8%

12.1%14.3%

15.0%

20.0%

25.0%

30.0%

013 TTM

$0 0

$5.0

$10.0

$15.0

$20.0

TTM A

verage

De

3.3% 2.2%

0.0%

5.0%

10.0%

<= 1.0x > 1.0x &<= 2.0x

> 2.0x &<= 3.0x

> 3.0x &<= 4.0x

> 4.0x &<= 5.0x

> 5.0x &<= 6.0x

> 6.0x

% of D

eals‐2

0

• The average software M&A purchase price rose slightlyin 4Q13 to $40M, a tad higher than 3Q13’s $38M

d l i d ll i hi hi i l

$0.0

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

TTM Revenue Exit Multiple Bins

• In 2013, 48.4% of all on-premise software targets wereacquired for less than 2.0x TTM revenue.

average deal size and well within historical norms.

• X % of 4Q’s software transactions had exit valuationsbetween $10M and $99M, affirming the results of our2013 Annual Buyer Surveys, in which 82% ofrespondents indicated they’d focus in the year ahead

• Targets with 3.0x or higher exit multiples were primarilyfound in product categories experiencing rapid, widespreadmarket adoptions, such as big data, storage and systemsmanagement, and security.

• Among the more noteworthy on-premise softwarerespondents indicated they d focus in the year aheadon deals in that price range.

Among the more noteworthy on premise softwareacquisitions in 2013: McAfee’s purchase of Stonesoft($375.3 million, 7.0x EV/Revenue), a provider of informationand network security software applications; and Solarwinds’acquisition of Confio Software ($103 million, 6.7xEV/Revenue), a provider of database performance


All Rights Reserved

EV/Revenue), a provider of database performancemanagement solutions.

SOFTWARE M&A EXIT MULTIPLESMedian Exit Multiples - Quarterly • The median exit multiple in 4Q13 was 2.3x TTM revenue, in

line with the prior quarter, and the highest since 2Q11’smedian exit multiple 2.5x.

O EBITDA b i th di it lti l i 4Q1312.7x 12.9x14.0x


• On a EBITDA basis, the median exit multiple in 4Q13 was12.9x TTM EBITDA, a marked increase over 3Q13’s 11.5xEBITDA multiple, and the highest since 4Q11 when themedian TTM EBIDTA exit multiple reached 13.4x.

11.8x 11.6x 11.5x

8.0x

10.0x

12.0x

• Since 2005, the median software industry M&A multiple hasconsistently hovered at 2x revenue, except for a modestdecline during the Great Recession and a slight uptick in2013.1.8x 1.6x 1.8x

2.3x 2.3x2.0x

4.0x

6.0x

Median EV/Revenue Exit Multiple - Annual

0.0x4Q12 1Q13 2Q13 3Q13 4Q13

3 0x

1.4x

1.7x2.0x 2.0x 2.1x

1.9x 1.8x2.0x 2.1x 2.0x

2.2x

2.0x

3.0x

0 0x

1.0x


All Rights Reserved

0.0x2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZEBy SizeBy Ownership Structure

Public Sellers 1.8x Median Multiple

25%

Buyer Less Than $200 million1.5x Median M lti l

Buyer Greater Than $200 million3 8 M di

Private Sellers2.2x Median Multiple

75%

25%

67%33%

Multiple3.8x Median Multiple

60%40%

Private Buyers1.6x Median Multiple

Seller LessSeller Less

Seller Greater Than $20 million: 1.5x


Seller LessSeller Less

Seller GreaterThan $20million: 1.7x


• In 2013, as in quarters past, large public buyers (greater than • Larger public buyers with deep pockets (greater than $200

Public Buyers2.7x Median Multiple

Seller Less Than $20 million: 2.4x



Seller Less Than $20

million

$200 million in revenue) flush with cash, paid more thanprivate acquirers (often private equity-backed portfoliocompanies).

• Public buyers in 2013 paid a median 2.7x TTM revenue fortheir targets (compared to 2 3x in 2012) while private buyers

million revenue) paid a median 3.8x TTM revenue for theirtargets in 2013, compared to only 1.5x paid by smallerpublic buyers.

• Whether public or private, buyers with revenue greater than$200 million paid the highest multiples for a target with lesstheir targets (compared to 2.3x in 2012), while private buyers

paid 1.6x TTM revenue (compared to 1.4x in 2012).$200 million paid the highest multiples for a target with lessthan $20 million revenue (median 4.4x EV/Revenue) overthe past twelve months.

million: 1.7xmillion: 2.7x


All Rights Reserved

Horizontal & Vertical M&A Median EV/Revenue Exit

SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

Horizontal & Vertical M&A Median EV/Revenue Exit MultiplesHorizontal & Vertical M&A Volume

80%

100%

2 0x 1 92.3x 2 2x 2.3x 2.3x

41% 37% 36% 33% 35%

59% 63% 64% 67% 65%

0%

20%

40%

60% 1.6x2.0x 1.9x

1.5x 1.5x1.7x

2.2x

0%2009 2010 2011 2012 2013

Horizontal Vertical

2009 2010 2011 2012 2013

Vertical Horizontal

• Horizontal Infrastructure software providers garnered the lion’s share of M&A transactions in 2013, as they have for the past fiveyears, accounting for 65% of all software M&A transactions.

• The median exit multiple for horizontal software companies was 2.3x TTM revenue in 2013, and has been flat since 2010.

• Noteworthy horizontal deals in 2013 included Vista Equity Partners’ acquisition of Websense for $971 million (2 7x revenue);• Noteworthy horizontal deals in 2013 included Vista Equity Partners acquisition of Websense for $971 million (2.7x revenue);Kofax’s acquisition of big data integration player Kapow Software for $47.5 million (3.0x revenue); and Cisco’ acquisition ofcybersecurity software provider Sourcefire for $2.2 billion (8.9x revenue).

• The median TTM revenue exit multiple for vertical software companies was 1.5x, on par with 2012, but down significantly from2010 and 2011.

• Select 2013 vertical deals included Davis+Henderson’s acquisition of Harland Financial Solutions ($1.6 billion, 5.8xEV/Revenue); IRESS Limited’s acquisition of financial services software provider Avelo for $320.4 million (3.8x revenue); SepuraPLC’s acquisition of public systems command and control software provider Portalify for $9.3 million (7.0x revenue); and YottaLimited’s acquisition of public sector software provider Mayrise for $9.1 million (3.1x revenue).


All Rights Reserved

SOFTWARE M&A DEAL VOLUME BY PRODUCT CATEGORY

• The Mobile product category again led allothers in 2013, accounting for 20.8% ofall software M&A transactions, comparedto 19.2% in 2012.

CRM, Marketing & Sales2.1% Data Mgmt & Integration

2.0%

Dev. Tools & IT Asset Mgmt2.7%

eCommerce0 3% EDA

Accounting & Finance0.8%

Asset Management0.4%

Billing & Service Provisioning0.8%

BI, Risk & Compliance3.1%

Content & Document Mgmt2.5%

• Other active M&A categories in 2013included Financial Services (6.7%),Healthcare (6.5%) and Engineering, PLM& CAD (4.3%).

0.3%0.4%

Engineering, PLM & CAD4.3%

Middleware0.3%

ERP1.8% EntertainmentPublic Sector

1 8%

Real Estate1.9%

Retail1.3%

Telcom0.6%

• Supply Chain Management & Logisticsaccounted for 3.9% of all software dealsin 2013, up from 2.2% in 2012.

• Indeed, there were 22 Supply ChainManagement and Logistics transactions

2.5%HR & Workforce Mgmt

1.5%

Messaging, Conferencing & Communications

2.5%Non‐Profit0.4%

Mining, Oil & Gas0.5%

Other Verticals7.9%

1.8%

als

Management and Logistics transactionsin 2013, compared with only 7 in 2012.As the economy at large continued torecover, and consumers embraced on-line shopping, buyers focused onsoftware companies with proven solutions

Multimedia, Graphics & Communications

3.1%Network Performance Mgmt

1.8%Healthcare

6.5%

Insurance1.2%

Legal0.5%

Manufacturing0.9%

Vertica

software companies with proven solutionsin supply chain transportation, logisticsand fleet management software M&Aactivity, 22 transactions in 2013 versusonly 7 in 2012

Security4.3%

Systems Mgmt2.5%

Supply Chain Mgmt & Construction

0.9%

Education2.3%

Energy & Utilities0.8%

Financial Services6.7%

Logistics3.9%

Mobile20.8%

Automotive1.1%


All Rights Reserved

SOFTWARE M&A EXIT VALUATIONS BY PRODUCT CATEGORY

Median EV/Revenue Exit Multiples by Software Product Category

3.1x 3.0x2.7x

2.3x 2.0x1.8x 1.7x 1.5x 1.5x

1.2x

Sys

tem

sM

anag

emen

t

Hea

lthca

re

Sec

urity

BI,

Ris

k &

Com

plia

nce

her V

ertic

als

&D

, Tel

co,

etai

l, et

c.)

P &

Sup

ply

Cha

in

g &

Ser

vice

Mgm

t Mob

ile

Edu

catio

n

ial S

ervi

ces

oftw

are

• While we continually track 32 on-premise software product categories, only ten had both sufficient deal activity and deal data toascertain a TTM revenue multiple in 2013

M C

Oth (A

&R

ER

P

Bill

in

Fina

nc So

ascertain a TTM revenue multiple in 2013.

• Among the ten product categories, systems management carved the highest median TTM revenue multiple (3.1x) for the year,boasted by Solarwind’s 4Q13 acquisition of database performance management software vendors Confio Software for $103million (6.7x EV/Revenue).

• Healthcare software application sellers were a close second commanding a median 3 0x TTM revenue including Qiagen’s 2Q13• Healthcare software application sellers were a close second, commanding a median 3.0x TTM revenue, including Qiagen s 2Q13acquisition of biological data informatics vendor, Ingenuity Systems, for $109.4 million (5.5x EV/Revenue)

• The Security software category also posted a strong 2.7x median EV/Revenue exit multiple in 2013. Select security dealsincluded Cisco’s acquisition of Sourcefire in Q3 ($2.2 billion, 8.9x revenue); Tyco’s 2Q13’s acquisition of Exacq Technologies($150 million, 2.7x revenue); and McAfee’s acquisition of Stonesoft ($375 million, 7.0x revenue) in 2Q13.


All Rights Reserved

SaaS M&A: DEAL VOLUME AND EXIT MULTIPLESSaaS M&A Volume - AnnualSaaS M&A Volume - Quarterly

30%120

SaaS M&A Deals SaaS as % of Software

450

SaaS M&A Deals

68 6559

94 9486

10497

103

15%

20%

25%

30%

60

80

100

120

s as a % of T

otal

M&A Deals

M&A Deals

200

312

390

250

300

350

400

450

M&A Deals

26

3945 48

0%

5%

10%

15%

0

20

40

60

SaaS M

&A Deals

Software M

# of SaaS M

50

105

200

50

100

150

200

# of SaaS M

• There were 103 SaaS M&A transactions in 4Q13 on par with 2Q13’s 104 SaaS M&A transactions 2Q13 3Q13 and 4Q13 SaaS

0%00

2009 2010 2011 2012 2013

• There were 103 SaaS M&A transactions in 4Q13, on par with 2Q13 s 104 SaaS M&A transactions. 2Q13, 3Q13 and 4Q13 SaaSM&A transaction volumes in 2Q13, 3Q13, and 4Q13 were each greater than any prior quarter on record.

• Average quarterly SaaS M&A transaction volume in 2013 was 680% higher than in 2009.

• In 2013, there were 390 SaaS M&A transactions, a 25% increase over 2012’s 312 transactions SaaS acquisitions.


All Rights Reserved

SaaS M&A: DEAL VOLUME AND EXIT MULTIPLESMedian SaaS EV/Revenue Exit Multiples - Quarterly

2 7x3.2x

3.7x 4.1x 4.1x

Median SaaS EV/Revenue Exit Multiples - Annual

4.1x 4.0x 4.0x 4.3x 4.1x

2.7x

2009 2010 2011 2012 20134Q12 1Q13 2Q13 3Q13 4Q13

• The median exit multiple for all SaaS transactions on a TTM revenue basis remained relatively constant throughout 2013, exceptfor a bump up in 3Q13 due to a number of lower multiple transactions in 3Q12 falling out of the TTM analysis.

• The 4.1x median SaaS exit multiple for all of 2013 was 86% greater than the 2.2x median on-premise exit multiple for 2013.

Median SaaS EV/Revenue By Size – Since 1Q10

4 44.7x

5.3x

5 0x

6.0x

le

• Seller revenue remains a very importantdeterminant of exit valuation for SaaS companies.

• Based upon SEG’s analysis of 1 007 SaaS M&A

3.2x3.5x

4.4x

2.0x

3.0x

4.0x

5.0x

EV/Reven

ue M

ultip

l Based upon SEG s analysis of 1,007 SaaS M&Atransactions since 2010, sellers with less than $10million revenue received a median 3.2x revenuemultiple, while companies with revenue greater than$100 million commanded a median 5.3x TTMrevenue exit valuation

0.0x

1.0x

<= 10M > 10M & <=20M

> 20M & <=50M

> 50M & <=100M

>100M

Med

ian revenue exit valuation.


All Rights Reserved

TTM Seller Revenue

SaaS M&A BY PRODUCT CATEGORY

• The 390 SaaS acquisitions in 2013 werespread across a wide number of productcategories and verticals.CRM, Marketing & Sales

15 1%Accounting & Finance

2 3%

Billing & Service Provisioning

1.3%

BI, Risk & Compliance6.7%

Content & Document Mgmt4.4%

• CRM and Marketing once again led allproduct categories in acquisition activity,accounting for 15.1% of deals in 2013,slightly lower than 17% in 2012.

• SaaS mega-deals in the CRM/Marketing

15.1%

Data Mgmt & Integration1.8%

Dev. Tools & IT Asset Mgmt1.0%

Real Estate

Retail2.8%

Telcom0.3%

2.3%

• SaaS mega-deals in the CRM/Marketingcategory, including Oracle’s acquisitionof Responsys, Adobe’s acquisition ofNeolane, and Salesforce’s acquisition ofExactTarget, helped drive M&A activityin the product category

eCommerce4.1%

Engineering, PLM & CAD1.8%

ERPNon‐Profit

0.8%

Other Verticals3.8%

Public Sector0.5%

Real Estate4.1%

cals

in the product category

• CRM/Marketing buyers are seekingtargets that can help garner a greatershare of IT capital in spending on onlinemarketing technology. According to

0.8%

HR & Workforce Mgmt6.4%

Messaging, Conferencing & Communications

Hospitality0.8%

Insurance2.1%

Legal0.5%Ve

rti

Gartner, by 2017 the CMO will purchasemore IT than the CIO.

• The Talent & Workforce Mgmt productcategory claimed only 6.4% of SaaStransactions in 2013, compared to 12%

6.2%Multimedia, Graphics &

Communications1.8%

Network Performance Mgmt0 5%

SecurityConstruction

1 0%

Education4.4%

Financial Services4.6%

Healthcare2.3%

transactions in 2013, compared to 12%in 2012. After a three-year period ofconsolidation by the large HR softwareproviders, the M&A window for manysmaller HR SaaS providers is rapidlyclosing.

0.5%3.8%Systems Mgmt

7.7%

Supply Chain Mgmt & Logistics4.9%

Automotive1.5%

1.0%


All Rights Reserved

closing.

INTERNET M&A: DEAL VOLUME AND EXIT MULTIPLESMedian EV/Revenue Exit Multiples - AnnualM&A Volume - Annual

1.5x 1.6x

2.7x

1.9x 1.9x452626

794978 876

2009 2010 2011 2012 20132009 2010 2011 2012 2013

• There were 876 Internet M&A transactions in 2013, 10% fewer than 2012’s tally of 978 Internet deals, but notably higher than thepost-recession totals for 2011 and 2010.

• In early 2012, a flurry of Internet acquisitions occurred amidst the hype of surrounding Facebook’s May IPO, as many sought tobulk up and ride Facebook’s coattails to the public markets. Following Facebook’s IPO debacle, buyers became far morecircumspect, and M&A volume plunged to 185 transactions in 1Q13, a marked decline from 273 transactions in 2Q12.

H ft 1Q13’ di l t t I t t t ti i d i b t t i ff th ith 256• However, after 1Q13’s dismal start, Internet transactions increased in number quarter over quarter, capping off the year with 256transactions in 4Q13.

• The median TTM EV/Revenue exit multiple of the SEG Internet Index has held steady at 1.9x for the past two years, after spikingin 2011. This remain an M&A ecosystem of haves and have-nots, with extraordinarily wide disparities in exit valuations.


All Rights Reserved

INTERNET M&A: BY PRODUCT CATEGORYM&A Volume - Quarterly2013 M&A Volume by Product Category

9.1%

33.9%16.3%

Ad‐Tech & Lead Gen

Commerce

Content & Media

Category 1Q 2013 2Q 2013 3Q 2013 4Q 2013 2013Ad-Tech & Lead Gen 58 60 85 94 297Commerce 34 39 44 49 166Content & Media 42 34 36 42 154Gaming 7 11 8 10 36

4.1%Gaming

Infrastructure

Social Tech

Infrastructure 24 41 39 39 143Social Tech 20 19 19 22 80Total 185 204 231 256 876

• Internet ad-tech remained the most active internet M&A category in 2013 accounting for over 1/3 of all sector transactions

18.9%17.6%

• Internet ad-tech remained the most active internet M&A category in 2013, accounting for over 1/3 of all sector transactions.

• Following a wave of social technology deals in 2011/2012, when deal volumes averaged 30 transactions per quarter, social techacquisition activity has fallen off, hovering around 20 transactions per quarter in 2013.

• The Ad-Tech and Infrastructure product categories were the only two categories in 2013 to post increased deal volumes over2012. Ad-Tech’s 297 transactions in 2013 represented a 7.2% increases over 2012’s 277 transactions, while 2013’s 1432012. Ad Tech s 297 transactions in 2013 represented a 7.2% increases over 2012 s 277 transactions, while 2013 s 143Infrastructure transactions were 10.8% greater than 2012’s 129 transactions.

• The remaining Internet categories M&A deal volumes measured year-over-year declined 4.5% for Commerce, 30% for Content &Media, 42.8% for Gaming, and 30.4% for Social Tech.


All Rights Reserved

APPENDIX

76

Measure 2011 2012 2013EV/Revenue 2.7x 2.8x 3.1xEV/EBITDA 12.3x 11.7x 14.1x

SEG - Software: Median MetricsMeasure 4Q12 1Q13 2Q13 3Q13 4Q13

EV/Revenue 2.6x 2.9x 2.8x 3.0x 3.2xEV/EBITDA 11.7x 12.8x 12.2x 13.7x 14.6x

SEG - Software: Median Metrics

EV/Earnings 23.5x 22.8x 25.5xCurrent Ratio 1.9 1.9 2.0Cash & Eq ($M) $158.5 $149.6 $184.7Gross Profit Margin 65.8% 66.3% 67.5%EBITDA Margin 18.9% 19.5% 18.7%Net Income Margin 10 8% 10 4% 9 0%

EV/Earnings 21.9x 23.9x 23.9x 27.2x 27.2xGross Profit Margin 66.0% 66.6% 67.1% 67.7% 67.5%EBITDA Margin 19.3% 19.1% 18.8% 18.6% 18.7%Net Income Margin 10.4% 9.1% 9.2% 8.6% 8.6%TTM Revenue Growth 13.5% 12.8% 11.5% 10.2% 9.9%TTM Total Revenue ($M) $452.3 $461.7 $471.9 $483.6 $542.7TTM EBITDA Growth 11 0% 8 0% 5 8% 6 4% 6 3%Net Income Margin 10.8% 10.4% 9.0%

TTM Revenue Growth 16.1% 13.2% 9.9%TTM Total Revenue ($M) $387.9 $449.0 $494.2TTM Total EBITDA ($M) $75.5 $82.7 $91.2Debt / Equity Ratio 22.3% 22.5% 25.7%

TTM EBITDA Growth 11.0% 8.0% 5.8% 6.4% 6.3%TTM Total EBITDA ($M) $75.1 $76.0 $82.7 $86.6 $89.0Cash & Eq ($M) $161.5 $169.3 $180.9 $175.9 $191.2Current Ratio 2.0 1.9 1.9 2.0 2.1Debt / Equity Ratio 22.5% 26.6% 26.6% 23.1% 25.9%

M 4Q12 1Q13 2Q13 3Q13 4Q13SEG - SaaS: Median Metrics

M 2011 2012 2013SEG - SaaS: Median Metrics

Measure 4Q12 1Q13 2Q13 3Q13 4Q13EV/Revenue 4.8x 5.4x 5.8x 7.1x 8.4xEV/EBITDA 38.2x 35.4x 30.2x 39.8x 57.0xEV/Earnings 40.2x 63.9x 106.1x 125.3x 123.6xGross Profit Margin 70.9% 70.7% 70.6% 70.1% 70.2%EBITDA Margin 7.3% 6.0% 3.1% 1.4% 0.4%N t I M i 0 1% 1 4% 3 3% 4 2% 4 0%

Measure 2011 2012 2013EV/Revenue 4.5x 5.0x 7.3xEV/EBITDA 35.2x 35.0x 48.2xEV/Earnings 53.1x 53.6x 97.7xCurrent Ratio 1.7 1.7 2.3Cash & Eq ($M) $56.5 $72.0 $99.1

Net Income Margin 0.1% -1.4% -3.3% -4.2% -4.0%TTM Revenue Growth 27.7% 25.6% 24.4% 24.9% 26.1%TTM Total Revenue ($M $103.8 $127.6 $140.5 $156.9 $170.0TTM EBITDA Growth 22.8% 9.5% 7.9% 13.8% 12.1%TTM Total EBITDA ($M $6.0 $6.8 $4.0 $2.2 $0.7Cash & Eq ($M) $60.1 $63.2 $73.2 $82.6 $107.5Current Ratio 1 5 1 8 1 5 2 1 2 7

Gross Profit Margin 68.4% 70.9% 70.0%EBITDA Margin 8.8% 8.1% 1.0%Net Income Margin 0.4% -0.1% -4.0%TTM Revenue Growth 26.9% 25.5% 26.0%TTM Total Revenue ($M) $86.5 $136.2 $163.5TTM Total EBITDA ($M) $6.7 $8.7 $1.4

Measure 2011 2012 2013EV/Revenue 2.6x 2.1x 2.6xEV/EBITDA 14.1x 12.9x 18.5xEV/E i 25 8 23 1 32 0

SEG - Internet: Median Metrics

Current Ratio 1.5 1.8 1.5 2.1 2.7Debt / Equity Ratio 5.7% 6.5% 6.4% 9.8% 11.9%

Measure 4Q12 1Q13 2Q13 3Q13 4Q13EV/Revenue 2.1x 2.0x 2.2x 2.6x 2.6xEV/EBITDA 13.4x 13.4x 15.1x 18.5x 21.4xEV/Earnings 22 3x 21 9x 28 0x 32 7x 38 8x

SEG - Internet: Median Metrics

TTM Total EBITDA ($M) $6.7 $8.7 $1.4Debt / Equity Ratio 6.8% 6.5% 10.7%

EV/Earnings 25.8x 23.1x 32.0xCurrent Ratio 2.5 2.4 2.4Cash & Eq ($M) $140.9 $145.3 $169.3Gross Profit Margin 66.2% 65.1% 64.8%EBITDA Margin 13.1% 12.5% 11.0%Net Income Margin 4.3% 4.0% 2.1%

EV/Earnings 22.3x 21.9x 28.0x 32.7x 38.8xGross Profit Margin 64.3% 64.5% 64.5% 64.5% 64.5%EBITDA Margin 11.3% 11.1% 11.7% 10.9% 10.9%Net Income Margin 3.9% 2.7% 2.2% 2.2% 2.0%TTM Revenue Growth 22.2% 21.1% 19.3% 17.3% 16.4%TTM Total Revenue ($M) $379.8 $386.4 $398.9 $436.0 $458.2TTM EBITDA Growth 18.8% 17.6% 11.6% 18.0% 16.6%


All Rights Reserved

TTM Revenue Growth 26.4% 20.8% 17.1%TTM Total Revenue ($M) $333.0 $392.8 $440.2TTM Total EBITDA ($M) $34.3 $38.4 $37.2Debt / Equity Ratio 15.5% 17.0% 20.5%

TTM EBITDA Growth 18.8% 17.6% 11.6% 18.0% 16.6%TTM Total EBITDA ($M) $32.7 $33.6 $34.0 $38.4 $42.9Cash & Eq ($M) $130.4 $142.9 $154.9 $169.4 $191.7Current Ratio 2.5 2.3 2.4 2.1 2.5Debt / Equity Ratio 19.2% 17.0% 19.5% 18.9% 21.8%

SEG S f O i M iMeasure 4Q12 1Q13 2Q13 3Q13 4Q13

R&D $55.4 $57.7 $62.5 $63.6 $67.0S&M $84.6 $86.5 $86.6 $83.6 $95.0G&A $41.6 $47.6 $49.1 $50.9 $53.3R&D (% of Revenue) 15.0% 14.9% 15.3% 15.0% 15.0%

SEG - Software: Operating Metrics

( )S&M (% of Revenue) 22.9% 23.5% 23.2% 22.1% 23.2%G&A (% of Revenue) 10.4% 10.6% 10.5% 10.1% 10.3%

Measure 4Q12 1Q13 2Q13 3Q13 4Q13SEG - SaaS: Operating Metrics

R&D $16.5 $18.9 $20.9 $22.7 $24.0S&M $32.6 $41.1 $43.8 $48.0 $52.4G&A $19.1 $23.3 $25.4 $29.0 $30.5R&D (% of Revenue) 17.1% 17.7% 17.8% 18.1% 18.4%S&M (% of Revenue) 39.3% 39.0% 39.9% 39.3% 39.2%G&A (% of Revenue) 15 8% 16 0% 16 1% 16 5% 17 3%G&A (% of Revenue) 15.8% 16.0% 16.1% 16.5% 17.3%

Measure 4Q12 1Q13 2Q13 3Q13 4Q13R&D $32.5 $36.2 $36.6 $39.4 $41.9S&M $63.2 $68.1 $76.2 $81.1 $85.8

SEG - Internet: Operating Metrics

G&A $33.5 $36.3 $38.6 $43.5 $45.5R&D (% of Revenue) 11.5% 12.0% 11.9% 12.1% 12.4%S&M (% of Revenue) 23.3% 22.7% 22.9% 23.2% 23.1%G&A (% of Revenue) 11.6% 11.3% 11.2% 11.2% 11.2%


All Rights Reserved

SEG Software Index

THE SEG SOFTWARE INDEX COMPANIES – KEY METRICSNeeds to be Updated

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13Accretive Health 0.9x 1.0x 1.0x 0.9x 0.8x 19.9x 32.8x 33.3x 29.5x 26.5x 43.5% 32.2% 32.2% 32.2% 32.2% 4.6% 2.9% 2.9% 2.9% 2.9%

ACI Worldwide, Inc. 3.7x 3.4x 3.2x 3.4x 3.3x 18.0x 17.2x 13.8x 16.1x 15.2x 17.2% 22.5% 43.3% 38.7% 39.7% 20.4% 19.7% 23.6% 21.1% 21.9%

Activision Blizzard 2.2x 2.0x 2.3x 2.4x 2.9x 9.1x 8.0x 7.1x 7.1x 7.7x -7.6% -5.9% 2.1% 11.8% 13.1% 24.6% 25.5% 32.4% 33.3% 37.6%

Actuate Corporation 1.8x 1.4x 1.6x 1.7x 2.0x 8.2x 7.0x 9.2x 11.5x 16.0x 1.6% 5.0% 2.9% 0.9% -1.9% 22.4% 19.7% 17.2% 14.9% 12.6%

Adobe Systems Incorporated 3.3x 3.4x 3.9x 4.7x 5.1x 9.5x 10.0x 13.3x 17.7x 22.1x 8.1% 4.4% 3.1% -1.9% -5.3% 34.2% 33.5% 29.7% 26.6% 23.3%

Advent Software Inc 3 3x 2 9x 3 5x 4 1x 3 7x 17 0x 14 5x 16 3x 17 9x 19 0x 14 7% 11 9% 10 0% 7 9% 6 7% 19 6% 19 9% 21 2% 22 7% 19 3%

EV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin Company

Advent Software, Inc. 3.3x 2.9x 3.5x 4.1x 3.7x 17.0x 14.5x 16.3x 17.9x 19.0x 14.7% 11.9% 10.0% 7.9% 6.7% 19.6% 19.9% 21.2% 22.7% 19.3%

Allot Communications Ltd. 7.1x 5.4x 2.8x 2.4x 2.9x 44.2x 35.1x 22.8x 32.3x 336.0x 39.4% 39.6% 34.7% 23.4% 7.2% 16.2% 15.5% 12.3% 7.5% 0.9%Allscripts Healthcare Solutions Inc. 1.5x 1.7x 1.6x 1.9x 2.2x 9.3x 10.9x 18.4x 26.3x 40.2x 19.9% 9.0% 0.2% -3.0% -5.6% 15.9% 15.3% 8.6% 7.4% 5.6%

Amdocs Limited 1.4x 1.4x 1.5x 1.5x 1.5x 7.4x 7.5x 8.0x 7.8x 8.1x 3.5% 2.2% 1.8% 1.9% 2.6% 18.4% 18.5% 18.5% 18.6% 18.7%

American Software, Inc. 1.6x 1.5x 1.7x 1.7x 1.7x 9.2x 9.0x 10.6x 11.4x 12.2x 16.2% 11.2% 3.3% -2.1% -6.6% 17.1% 16.6% 16.0% 15.3% 14.3%

ANSYS, Inc. 7.6x 7.5x 8.2x 7.9x 8.7x 16.1x 15.8x 17.2x 16.8x 18.6x 19.9% 17.5% 15.4% 12.8% 10.5% 47.3% 47.5% 47.6% 47.1% 46.7%

Aruba Networks, Inc. 3.0x 3.5x 4.0x 2.7x 2.6x 52.3x 55.4x 55.6x 43.8x 61.0x 30.3% 25.2% 22.8% 19.3% 16.1% 5.8% 6.3% 7.1% 6.1% 4.3%

AsiaInfo Holdings Inc 1 2x 1 0x 1 0x 1 0x 0 9x 7 5x 7 7x 7 9x 8 2x 8 1x 9 8% 10 5% 13 9% 15 7% 16 2% 16 0% 13 0% 12 2% 11 7% 11 5%AsiaInfo Holdings, Inc. 1.2x 1.0x 1.0x 1.0x 0.9x 7.5x 7.7x 7.9x 8.2x 8.1x 9.8% 10.5% 13.9% 15.7% 16.2% 16.0% 13.0% 12.2% 11.7% 11.5%

Aspen Technology, Inc. 8.4x 8.6x 9.7x 9.1x 9.4x - 173.7x 127.2x 65.7x 49.1x 22.7% 27.7% 22.9% 26.1% 28.1% -5.5% 4.9% 7.6% 13.8% 19.2%

Autodesk, Inc. 2.7x 2.6x 3.2x 3.1x 3.0x 12.6x 12.7x 15.7x 15.1x 14.8x 10.5% 6.8% 4.4% 0.8% -0.5% 21.2% 20.6% 20.7% 20.5% 20.3%

AVG Technologies N.V. 2.1x 2.2x 2.3x 2.5x 3.0x 7.7x 7.4x 7.5x 8.1x 8.8x - 31.1% 30.7% 28.2% 27.2% 26.8% 29.3% 30.1% 31.4% 34.1%

Bango PLC 4.6x 5.3x 8.2x 8.8x 8.5x - - - - - -19.3% -19.3% - - - -6.1% -6.1% -26.0% -29.0% -32.4%

Blackbaud, Inc. 3.4x 2.9x 3.2x 3.4x 3.7x 22.1x 21.3x 22.0x 22.1x 20.8x 12.9% 16.6% 20.6% 23.6% 22.3% 15.2% 13.8% 14.5% 15.3% 17.8%

Bottomline Technologies 3.2x 3.4x 3.7x 3.3x 3.4x 22.7x 27.2x 40.9x 38.3x 35.0x 18.4% 16.9% 14.9% 15.7% 13.6% 14.0% 12.5% 9.1% 8.7% 9.8%

Broadridge Financial 1.3x 1.3x 1.4x 1.5x 1.6x 7.9x 7.9x 7.9x 8.5x 8.5x 6.3% 4.5% 3.4% 3.8% 5.5% 16.8% 16.9% 17.1% 17.4% 18.6%

Brocade Communications Systems, Inc. 1.2x 1.1x 1.2x 1.1x 1.4x 5.4x 5.3x 5.5x 5.2x 6.2x 3.0% 4.2% 4.8% 4.8% 1.5% 21.2% 21.0% 21.8% 21.9% 22.2%

BSQUARE Corporation 0.1x 0.1x 0.2x 0.1x 0.1x - 9.4x 7.8x 8.8x 12.9x -4.8% -2.1% 4.7% 0.3% -3.5% -0.3% 1.4% 2.1% 1.5% 1.0%

CA Technologies 2.3x 2.0x 2.2x 2.4x 2.7x 6.5x 5.9x 6.5x 6.6x 7.4x 6.0% 2.4% -1.6% -3.6% -3.5% 35.4% 33.6% 33.9% 36.1% 36.4%

Cadence Design Systems, Inc 2.6x 2.5x 2.7x 2.6x 2.8x 12.1x 11.3x 11.9x 11.3x 12.3x 19.9% 18.2% 15.4% 13.8% 12.7% 21.1% 22.6% 22.7% 23.0% 22.4%

Cerner Corporation 4.9x 4.9x 5.4x 5.9x 5.9x 17.9x 18.1x 20.0x 21.0x 20.4x 24.5% 23.1% 20.9% 14.7% 12.3% 27.2% 27.3% 27.3% 28.2% 28.8%Check Point Software Tech Ltd. 6.5x 6.0x 6.5x 6.0x 7.2x 11.5x 10.5x 11.5x 10.7x 12.9x 11.4% 10.1% 7.7% 5.7% 4.4% 56.6% 56.6% 56.7% 56.4% 56.1%

Cimatron Ltd. 0.5x 0.7x 1.3x 1.3x 1.3x 3.1x 4.5x 8.7x 8.5x 8.9x 9.6% 6.8% 3.9% 2.1% 1.6% 16.0% 14.9% 15.2% 14.7% 14.4%

Cisco Systems, Inc. 1.4x 1.5x 1.7x 1.8x 2.0x 4.9x 5.1x 6.0x 6.3x 7.2x 6.6% 6.8% 5.4% 5.1% 5.5% 27.6% 28.8% 28.7% 28.1% 28.2%

Citrix Systems, Inc. 5.5x 4.5x 4.8x 4.3x 4.6x 22.3x 18.9x 20.5x 19.0x 20.8x 18.1% 16.5% 17.2% 15.8% 16.5% 24.9% 23.7% 23.6% 22.5% 21.9%

Commtouch Software Ltd. 2.0x 2.0x 3.0x 2.7x 2.4x 9.5x 11.9x 37.6x 182.2x - 10.3% 2.8% 3.9% 10.9% 21.2% 21.3% 17.1% 8.1% 1.5% -2.3%

CommVault Systems, Inc. 4.7x 5.6x 6.6x 6.0x 6.7x 32.9x 36.3x 39.9x 34.7x 38.3x 25.4% 23.4% 23.4% 21.9% 21.7% 14.1% 15.6% 16.5% 17.3% 17.6%

Computer Programs and Sys, Inc.

3.1x 3.1x 3.0x 2.9x 3.1x 12.8x 12.8x 12.5x 12.0x 12.5x 0.7% 1.9% 5.7% 6.1% 12.3% 24.1% 23.9% 24.2% 24.2% 24.9%

Compuware Corporation 2.0x 2.1x 2.6x 2.5x 2.4x 12.5x 13.0x 15.3x 18.3x 17.4x 5.6% -2.2% -2.3% -6.5% -6.0% 16.3% 16.0% 16.8% 13.9% 13.9%

Constellation 2.5x 3.0x 2.9x 3.1x 3.5x 11.9x 14.4x 13.9x 15.6x 17.5x 13.6% 10.9% 15.2% 20.4% 29.4% 20.7% 20.7% 20.7% 19.7% 19.7%

CSG Systems International, Inc. 1.0x 0.9x 1.0x 1.0x 1.1x 4.6x 4.5x 4.9x 5.8x 6.6x 13.3% 6.4% 3.0% 2.2% 2.1% 21.5% 21.0% 19.3% 17.8% 17.1%

Cyan, Inc. - - - 6.0x 3.3x - - - - - 72.1% - 137.2% - - -35.7% -10.9% -9.8% -11.9% -17.1%

Dassault Systèmes 4.3x 4.6x 4.6x 5.0x 5.3x 13.6x 14.7x 14.8x 16.0x 17.2x 12.1% 14.0% 13.8% 11.7% 8.4% 31.3% 31.1% 31.3% 31.0% 31.0%

DST Systems, Inc. 1.3x 1.3x 1.4x 1.4x 1.4x 9.2x 9.4x 9.7x 9.4x 9.2x 7.7% 8.3% 7.9% 6.4% 5.2% 14.4% 14.2% 14.5% 14.7% 14.9%

Electronic Arts Inc. 0.8x 0.8x 1.1x 1.4x 1.9x 11.8x 12.4x 10.5x 16.6x 20.2x 8.6% 6.2% 2.4% -8.4% -7.5% 6.6% 6.8% 10.2% 8.6% 9.5%

EMC 2.5x 2.3x 2.2x 2.1x 2.3x 10.5x 9.9x 9.3x 8.8x 9.7x 13.0% 10.0% 8.5% 7.4% 6.4% 23.9% 23.8% 23.9% 23.8% 23.9%


All Rights Reserved

EPIQ Systems, Inc. 2.2x 2.1x 2.0x 1.9x 1.9x 9.6x 9.0x 9.1x 9.2x 9.9x 32.2% 28.5% 32.0% 25.9% 22.2% 22.9% 23.1% 21.6% 20.5% 19.1%

SEG Software Index


3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13Evertec - - - 6.7x 7.6x - - - 14.9x 20.7x - - 6.4% 6.2% 5.4% 33.8% 42.3% 37.2% 44.9% 36.7%

Evolving Systems, Inc. 2.7x 2.5x 2.4x 2.3x 3.1x 26.6x 14.0x 10.1x 8.3x 11.6x 6.1% 25.9% 38.0% 38.2% 20.2% 10.3% 18.2% 23.8% 27.5% 27.0%

F5 Networks, Inc. 5.5x 5.0x 5.0x 3.8x 4.3x 16.5x 14.9x 14.9x 11.7x 13.7x 21.8% 19.6% 17.8% 12.9% 9.0% 33.4% 33.5% 33.4% 32.4% 31.6%

Fair Isaac Corporation 2.8x 2.8x 2.9x 2.9x 3.0x 9.8x 9.6x 10.5x 10.7x 11.4x 5.9% 9.2% 9.8% 11.7% 13.6% 29.0% 28.8% 27.5% 26.6% 26.1%

FalconStor Software, Inc. 0.8x 1.0x 1.3x 0.6x 0.4x - - - - - -4.7% -6.6% -9.0% -14.4% -14.1% -11.0% -12.1% -13.5% -15.1% -14.5%


Fidessa 1.7x 1.7x 2.0x 2.3x 2.7x 8.5x 8.2x 10.2x 11.5x 13.5x 4.3% 2.2% 0.1% -1.0% -2.1% 20.1% 20.1% 20.0% 19.9% 19.8%

Fiserv 2.9x 3.0x 3.1x 3.4x 3.5x 9.9x 10.0x 10.4x 11.3x 11.9x 4.6% 4.9% 3.3% 3.4% 5.4% 29.5% 29.8% 29.8% 29.7% 29.7%

Fortinet Inc. 7.3x 5.6x 6.2x 4.5x 4.9x 35.3x 27.2x 29.9x 22.8x 27.3x 29.0% 23.9% 23.1% 20.7% 18.0% 20.8% 20.5% 20.9% 19.8% 18.1%

GameLoft SA 1.7x 2.0x 1.8x 1.7x 2.0x 15.0x 13.3x 11.6x 10.4x 12.4x 21.1% 21.5% 26.7% 18.6% 16.6% 11.6% 14.9% 15.3% 16.4% 16.3%

Gigamon, LLC - - - 7.1x 8.2x - - - 85.5x - - - 42.0% 41.6% 41.8% 17.3% 13.0% 9.3% 8.3% -22.3%

Glu Mobile, Inc. 3.2x 1.4x 1.2x 1.5x 1.5x - - - - - 46.7% 50.2% 46.1% 26.4% 6.0% -12.8% -7.2% -8.1% -9.9% -12.7%

Gree 1.7x 1.7x 1.5x 1.5x 1.1x 3.3x 3.3x 3.2x 3.7x 3.1x 146.6% 101.6% 49.5% 11.5% -3.8% 53.4% 50.7% 47.1% 40.4% 36.1%Greenway MedicalGreenway Medical Technologies, Inc 3.3x 3.7x 3.2x 2.6x 2.6x 58.7x 63.7x 67.5x 183.2x - 38.0% 32.5% 27.4% 15.9% 8.7% 5.6% 5.8% 4.8% 1.4% -2.2%

GSE Systems Inc. 0.5x 0.3x 0.4x 0.2x 0.2x 6.7x 4.7x 5.8x 6.6x - 13.2% 12.6% 2.2% -1.8% -9.3% 6.8% 7.3% 6.2% 3.3% -0.4%

Guidance Software, Inc. 2.1x 2.1x 1.9x 1.8x 1.8x 38.0x 34.1x 34.3x 108.0x - 17.4% 22.3% 23.8% 21.8% 10.9% 5.5% 6.0% 5.5% 1.6% -2.3%

Guidewire Software, Inc. 5.4x 6.0x 6.3x 7.9x 8.0x 47.3x 77.9x 88.0x 241.2x 110.7x 34.5% 27.8% 28.2% 25.9% 29.6% 11.4% 7.7% 7.2% 3.3% 7.2%

Hewlett Packard 0.5x 0.4x 0.4x 0.5x 0.6x 4.2x 3.2x 3.5x 4.2x 4.6x -4.6% -5.4% -5.0% -6.8% -7.7% 11.4% 12.2% 12.1% 12.1% 12.0%

IBM 2.3x 2.3x 2.4x 2.4x 2.3x 9.4x 9.1x 9.3x 9.4x 8.9x 1.5% -1.7% -2.3% -3.5% -3.5% 24.8% 25.0% 25.7% 25.6% 25.6%

Imperva 6.8x 6.8x 7.2x 7.6x 9.0x - - - - - 35.3% 33.0% 33.1% 33.5% 32.5% -7.9% -6.3% -5.0% -7.1% -10.1%

Informatica Corporation 3.5x 3.0x 4.1x 3.8x 4.1x 14.3x 12.4x 18.5x 18.8x 20.9x 12.4% 6.5% 3.5% 2.2% 6.5% 24.8% 23.8% 22.2% 20.4% 19.5%

Intuit Inc 4.3x 4.2x 4.5x 3.9x 4.2x 11.7x 12.4x 14.2x 11.6x 12.0x 10.4% 10.7% 6.5% 10.7% 9.5% 37.0% 33.5% 31.3% 33.8% 35.1%

Jack Henry & Associates, Inc. 3.1x 3.1x 3.4x 3.6x 3.7x 9.6x 9.5x 10.8x 11.3x 11.6x 6.2% 7.1% 7.9% 8.7% 10.0% 32.2% 32.5% 31.7% 31.9% 32.2%

Juniper Networks, Inc. 1.6x 1.6x 2.0x 1.7x 1.9x 11.2x 11.6x 14.6x 11.1x 12.2x -2.1% -3.8% -1.9% 0.3% 3.1% 14.3% 13.7% 13.7% 15.0% 15.9%

Konami Corporation 0.9x 0.9x 0.9x 1.2x 1.3x 4.7x 5.5x 6.5x 8.3x 10.3x 0.1% -6.0% -12.4% -15.0% -14.4% 18.1% 16.5% 14.4% 14.3% 12.8%Magic Software Enterprises Ltd.

1.1x 1.0x 1.2x 1.2x 1.5x 5.9x 5.7x 6.1x 6.5x 7.7x 18.2% 12.3% 11.5% 10.1% 15.1% 18.1% 17.9% 18.9% 19.2% 18.9%

Manhattan Associates Inc 2 5x 2 9x 3 3x 3 4x 4 1x 11 1x 12 7x 14 5x 15 0x 17 4x 15 9% 14 9% 14 3% 9 3% 10 2% 22 1% 22 7% 22 8% 23 0% 23 7%Manhattan Associates, Inc. 2.5x 2.9x 3.3x 3.4x 4.1x 11.1x 12.7x 14.5x 15.0x 17.4x 15.9% 14.9% 14.3% 9.3% 10.2% 22.1% 22.7% 22.8% 23.0% 23.7%

MedAssets 3.1x 3.0x 3.2x 3.0x 3.3x 10.4x 9.9x 10.4x 9.3x 10.5x 27.6% 19.8% 10.7% 11.0% 9.4% 29.7% 30.6% 30.5% 31.7% 31.6%

Mentor Graphics Corp 1.7x 1.7x 1.8x 1.9x 2.2x 9.0x 8.5x 9.2x 11.0x 12.2x 7.0% 7.6% 7.3% 3.4% 1.9% 19.0% 19.8% 19.7% 17.6% 18.2%

Merge Healthcare 2.1x 2.0x 1.8x 2.0x 2.0x 9.9x 10.8x 14.8x 17.6x 18.4x 24.2% 15.8% 7.1% 4.5% -0.9% 20.6% 18.5% 12.4% 11.5% 11.0%

Micros Systems 2.9x 2.6x 2.5x 2.2x 2.5x 12.6x 11.8x 11.4x 10.4x 12.6x 9.9% 11.6% 14.3% 15.1% 14.5% 22.8% 21.9% 21.7% 21.4% 19.9%

Microsoft Corporation 2.8x 2.5x 2.5x 2.9x 2.7x 6.7x 6.2x 6.2x 7.3x 7.1x 5.4% 1.7% 1.2% 4.1% 5.6% 41.7% 39.8% 39.6% 40.0% 38.7%

MicroStrategy Incorporated 2.0x 1.5x 1.5x 1.2x 1.3x 31.8x 19.1x 18.4x 17.4x 26.2x 12.0% 6.7% 5.8% 1.4% 2.3% 6.5% 7.7% 8.4% 6.9% 5.0%

Millennial Media Inc 6 6x 6 2x 4 4x 2 4x 2 4x - - - - - - 75 6% 71 4% 68 7% 60 3% -2 9% -3 6% -1 0% -0 9% -0 6%Millennial Media Inc 6.6x 6.2x 4.4x 2.4x 2.4x 75.6% 71.4% 68.7% 60.3% 2.9% 3.6% 1.0% 0.9% 0.6%

MIND C.T.I. Ltd. 0.7x 1.0x 1.1x 0.7x 0.8x 3.5x 4.4x 4.9x 4.0x 4.4x 9.2% 10.2% 6.9% -1.6% -9.4% 21.1% 21.7% 23.0% 18.8% 18.2%

Model N, Inc - - 4.7x 4.2x 3.1x - - 275.9x 90.9x 41.8x 29.2% 29.3% - - - 5.9% 2.8% 1.7% 4.7% 7.3%

MSCI, Inc. 5.2x 4.1x 4.8x 4.8x 5.0x 11.6x 9.2x 10.6x 10.6x 11.1x - - 5.5% 7.3% 8.0% 45.0% 44.7% 45.1% 45.0% 45.0%

Myriad Group AG 2.7x 2.9x 2.7x 2.9x 3.0x - - - - - -34.6% -22.8% -7.8% -2.9% 3.0% -18.7% -16.2% -18.6% -17.4% -16.2%

NetApp, Inc. 1.3x 1.1x 1.2x 1.3x 1.6x 9.2x 8.4x 9.2x 10.4x 11.6x 14.6% 10.0% 6.0% 1.6% 3.0% 13.8% 13.0% 13.6% 13.0% 13.9%

Netscout Systems, Inc. 2.6x 2.6x 2.8x 2.4x 2.6x 12.0x 11.2x 12.1x 10.3x 11.3x 12.1% 15.0% 15.1% 13.6% 10.6% 21.9% 23.1% 23.0% 22.9% 23.1%

NetSol Technologies Inc. 0.6x 0.7x 0.6x 0.8x 1.2x 1.3x 1.5x 1.3x 1.5x 2.3x 21.4% 28.6% 40.8% 61.5% 61.5% 47.1% 48.1% 51.5% 52.6% 52.6%


All Rights Reserved

g

NeuStar, Inc 3.8x 3.8x 3.9x 3.9x 4.2x 8.6x 8.6x 8.7x 8.8x 9.3x 30.8% 35.7% 34.0% 25.9% 17.7% 44.1% 43.9% 44.5% 44.6% 44.8%

SEG Software Index


3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13NQ Mobile Inc. 3.6x 2.2x 1.9x 2.8x 5.8x 30.2x 37.7x 46.9x 52.9x 129.9x 113.4% 118.6% 125.6% 122.4% 117.0% 11.9% 5.9% 4.0% 5.3% 4.5%

Omnicell, Inc. 1.6x 1.5x 1.7x 1.7x 2.0x 13.5x 11.3x 12.5x 12.0x 13.8x 15.2% 19.6% 27.9% 33.5% 33.1% 11.5% 13.6% 13.4% 14.1% 14.3%

Opera 4.1x 3.1x 3.2x 3.6x 3.8x 13.8x 10.8x 11.7x 13.2x 13.5x 25.6% 33.1% 35.2% 35.9% 38.0% 29.5% 28.5% 27.8% 27.2% 27.8%

Oracle Corporation 3.8x 3.6x 4.1x 3.9x 3.7x 8.4x 8.0x 9.0x 8.7x 8.3x 1.2% 1.4% 0.5% 0.2% 1.2% 44.7% 45.1% 45.3% 44.7% 44.0%

Palo Alto Networks, Inc 15.9x 12.0x 10.7x 9.1x 7.6x 403.9x 3808.6x - - - 115.1% 86.7% 74.8% 63.6% 55.3% 3.9% 0.3% -0.4% -1.9% -2.2%

P d M di 4 8 3 6 4 5 5 4 6 3 66 4% 59 3% 55 7% 55 2% 56 0% 7 9% 6 5% 7 2% 8 2% 7 5%


Pandora Media 4.8x 3.6x 4.5x 5.4x 6.3x - - - - - 66.4% 59.3% 55.7% 55.2% 56.0% -7.9% -6.5% -7.2% -8.2% -7.5%Parametric Technology Corporation 1.9x 1.9x 2.3x 2.3x 2.6x 11.1x 10.7x 13.0x 12.4x 12.9x 15.9% 7.6% 3.2% 1.5% 0.3% 17.4% 17.8% 17.9% 18.8% 19.9%

PDF Solutions Inc 3.3x 4.2x 4.5x 5.1x 5.7x 18.1x 19.4x 18.5x 19.3x 20.4x 22.9% 27.5% 34.2% 28.6% 22.6% 18.3% 21.5% 24.5% 26.3% 27.7%

Pegasystems Inc. 2.3x 1.7x 1.7x 2.1x 2.6x 42.6x 29.1x 16.1x 16.9x 18.3x 10.9% 10.9% 10.8% 9.7% 12.2% 5.4% 5.9% 10.8% 12.2% 14.0%

Progress Software Corporation 3.9x 2.8x 3.0x 2.7x 3.2x 6.8x 10.3x 13.6x 13.5x 15.5x -55.2% -7.1% 8.9% 34.7% 45.8% 56.6% 26.7% 21.9% 20.4% 20.5%

Proofpoint, Inc. 4.2x 3.1x 3.5x 4.8x 7.9x - - - - - - 30.0% 29.9% 28.2% 26.2% -12.2% -12.1% -11.3% -12.4% -12.1%

PROS Holdings 3 5x 3 7x 5 3x 5 6x 6 3x 33 1x 38 6x 59 9x 74 0x 96 1x 31 5% 22 9% 21 9% 21 7% 23 6% 10 6% 9 6% 8 8% 7 6% 6 5%PROS Holdings 3.5x 3.7x 5.3x 5.6x 6.3x 33.1x 38.6x 59.9x 74.0x 96.1x 31.5% 22.9% 21.9% 21.7% 23.6% 10.6% 9.6% 8.8% 7.6% 6.5%

QAD Inc. 0.6x 0.6x 0.6x 0.5x 0.5x 7.5x 7.7x 9.4x 12.7x 12.8x 4.7% 2.9% 2.0% -0.5% 1.6% 8.1% 7.5% 6.4% 4.3% 4.2%

Qihoo 360 Technology Co. Ltd 7.0x 8.4x 10.3x 12.2x 18.3x 30.1x 38.9x 50.8x 68.2x 81.9x 169.9% 130.1% 96.0% 72.6% 78.1% 23.1% 21.7% 20.3% 17.9% 22.3%

Qiwi plc - - - 1.7x 4.3x - - - 7.9x 19.3x 32.5% 32.5% 9.2% - - 13.0% 13.0% 19.4% 20.8% 22.4%

Qlik Technologies 4.8x 4.2x 4.8x 5.5x 6.1x 66.7x 75.0x 94.4x 192.7x 475.6x 29.7% 22.2% 21.2% 20.5% 22.8% 7.2% 5.6% 5.1% 2.8% 1.3%

Quality Systems, Inc. 2.2x 2.1x 2.1x 2.1x 2.5x 7.9x 8.1x 9.1x 9.6x 11.6x 20.7% 14.9% 9.6% 7.1% 0.8% 27.2% 25.3% 23.5% 21.9% 21.6%

Radware Ltd. 3.3x 3.2x 3.8x 3.2x 3.2x 16.4x 15.2x 17.5x 15.6x 17.0x 15.1% 14.6% 13.3% 9.1% 5.7% 20.1% 21.3% 21.6% 20.4% 18.6%

Red Hat, Inc. 8.3x 7.0x 7.2x 6.1x 6.2x 38.9x 33.7x 35.2x 30.2x 30.5x 19.3% 18.2% 17.3% 16.4% 16.7% 21.3% 20.6% 20.4% 20.1% 20.2%

Redknee Solutions 1.1x 1.7x 3.4x 3.9x 3.3x 10.4x 14.8x 34.3x 82.9x 44.7x -0.7% -2.5% -0.6% -1.4% 74.4% 10.8% 11.5% 10.0% 4.7% 7.4%

Riverbed Technology, Inc. 3.4x 3.0x 3.2x 2.9x 2.8x 21.8x 18.1x 19.8x 19.1x 19.8x 19.5% 16.4% 15.2% 20.8% 23.1% 15.6% 16.4% 16.1% 15.3% 14.3%

Sage Group plc 2.7x 2.7x 2.9x 3.0x 3.1x 9.2x 9.2x 9.7x 10.3x 10.3x - 0.5% 1.7% 2.9% 2.9% 29.3% 29.6% 29.6% 29.6% 29.6%

SAP AG 4.0x 4.3x 4.6x 4.5x 4.2x 11.1x 12.5x 13.7x 13.2x 12.2x 13.2% 13.8% 14.0% 13.2% 9.8% 36.1% 34.6% 33.8% 33.8% 34.3%

Sapiens International 1.2x 1.0x 1.4x 1.5x 1.6x 9.1x 7.1x 9.9x 11.4x 12.1x 72.4% 78.9% 62.9% 44.6% 31.2% 13.4% 14.3% 13.8% 13.5% 13.3%

Silver Spring Networks, Inc. - - 4.5x 4.0x 3.7x - - - - - 39.4% 4.0% -17.0% -20.7% 8.0% -34.0% -38.0% -41.5% -51.1% -27.3%

S ft AG 2 1 2 6 2 5 2 2 2 1 7 9 9 8 8 9 8 3 8 2 4 4% 5 9% 4 6% 5 8% 7 9% 27 0% 26 3% 27 5% 26 2% 26 0%Software AG 2.1x 2.6x 2.5x 2.2x 2.1x 7.9x 9.8x 8.9x 8.3x 8.2x -4.4% -5.9% -4.6% -5.8% -7.9% 27.0% 26.3% 27.5% 26.2% 26.0%

SolarWinds, Inc. 16.7x 15.1x 14.7x 11.2x 9.1x 34.4x 30.8x 29.9x 22.9x 18.6x 36.1% 36.3% 35.6% 31.2% 26.8% 48.5% 48.9% 49.0% 49.0% 49.0%

Sourcefire, Inc. 6.7x 5.9x 5.3x 6.4x 8.8x 63.0x 55.2x 65.9x 87.2x 117.7x 38.2% 38.9% 34.7% 28.6% 26.7% 10.7% 10.6% 8.1% 7.3% 7.5%

Splunk, Inc. 17.2x 14.3x 15.8x 19.0x 20.6x - - - - - - 76.0% 64.5% 59.2% 54.7% -6.8% -7.0% -8.7% -12.0% -14.4%

SS&C Corporation 6.8x 6.0x 5.1x 5.6x 5.6x 18.3x 15.8x 13.3x 14.6x 14.3x 15.6% 31.7% 48.8% 68.1% 70.1% 37.4% 37.8% 38.6% 38.5% 38.8%

Stratasys, Inc. 7.2x 7.4x 12.6x 11.3x 11.6x 27.5x 28.6x 52.9x 57.1x 58.3x 29.7% 27.8% 38.1% 60.9% 82.4% 26.1% 25.7% 23.7% 19.8% 19.9%

Symantec Corporation 1.7x 1.7x 2.1x 2.2x 2.3x 6.3x 6.5x 7.9x 8.0x 8.4x 2.3% 2.3% 1.7% 2.6% 3.0% 26.6% 26.6% 26.5% 27.3% 27.4%Synchronoss TechnologiesSynchronoss Technologies, Inc. 3.0x 2.5x 4.0x 3.9x 4.2x 15.6x 11.9x 17.9x 17.8x 20.4x 25.6% 21.5% 19.5% 19.4% 20.3% 19.2% 21.4% 22.2% 21.8% 20.7%

Synopsys Inc 2.4x 2.3x 2.6x 2.7x 2.7x 11.5x 11.8x 13.4x 12.0x 12.1x 11.3% 14.4% 13.1% 14.5% 13.0% 20.5% 19.6% 19.4% 22.2% 21.9%

Take-Two Interactive 1.1x 1.1x 1.2x 1.1x 1.4x - - - 58.4x 15.9x -34.5% -7.8% 23.6% 47.1% 57.6% -23.2% -14.7% -6.4% 1.9% 8.8%

Tangoe, Inc. 5.5x 3.2x 3.3x 2.8x 3.8x 70.3x 41.7x 38.9x 32.9x 41.3x 50.8% 48.1% 47.2% 41.5% 38.1% 7.8% 7.6% 8.5% 8.7% 9.1%

TeleCommunication Systems 0.4x 0.5x 0.5x 0.5x 0.5x 5.7x 7.9x 6.5x 6.2x 6.7x 13.3% 17.4% 14.6% 10.8% 2.5% 6.5% 6.4% 7.9% 7.9% 8.0%

TeleNav 0.2x 0.4x 0.5x 0.1x 0.2x 0.9x 2.2x 3.1x 0.8x 2.4x 3.2% -0.2% -1.1% 0.4% -6.7% 25.3% 19.9% 14.7% 11.3% 8.1%

Teradata 4.7x 3.9x 3.8x 3.2x 3.4x 19.4x 15.9x 15.2x 13.6x 14.9x 20.2% 16.1% 12.8% 6.9% 3.6% 24.3% 24.3% 24.8% 23.3% 23.0%


All Rights Reserved

The Active Network, Inc. 1.7x 0.6x 0.6x 0.6x 1.1x 114.8x 25.5x 58.0x 24.5x 37.7x 24.6% 24.2% 24.2% 19.9% 15.6% 1.5% 2.3% 1.0% 2.6% 3.0%

SEG Software Index


3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13The Descartes Systems Group Inc. 4.0x 4.1x 4.3x 4.7x 4.9x 14.0x 14.5x 14.9x 16.2x 17.1x 9.1% 10.2% 11.3% 12.2% 17.1% 28.5% 28.4% 28.9% 29.1% 28.4%

TIBCO Software Inc. 4.6x 3.9x 3.3x 3.0x 3.5x 21.2x 18.5x 16.4x 16.4x 18.9x 16.7% 11.3% 7.9% 4.4% 3.3% 21.5% 20.9% 20.3% 18.6% 18.7%

Trend Micro 2.0x 1.8x 2.3x 2.7x 3.3x 5.9x 5.6x 7.3x 8.2x 9.8x -2.8% -3.1% -2.6% 2.1% 7.7% 33.3% 32.6% 31.9% 32.8% 33.0%

Tyler Technologies, Inc. 3.8x 4.2x 4.7x 5.5x 6.2x 21.2x 21.7x 24.6x 28.0x 31.2x 12.5% 16.8% 17.4% 18.1% 16.4% 18.2% 19.2% 19.1% 19.6% 19.8%

Ubisoft Entertainment 0.4x 0.8x 0.8x 0.7x 0.8x 1.3x 2.5x 2.2x 2.0x 2.3x 4.3% 6.4% 12.5% 18.4% 18.4% 31.6% 31.5% 34.4% 36.8% 36.8%


Unit 4 1.5x 1.6x 1.8x 2.0x 1.9x 9.8x 12.3x 12.7x 13.4x 12.9x 2.3% 3.8% 5.4% 5.4% 5.4% 15.2% 13.2% 14.3% 14.6% 14.8%VASCO Data Security International 1.6x 1.2x 1.3x 1.4x 1.5x 8.7x 6.3x 8.4x 8.7x 12.5x 22.8% 7.3% -8.4% -4.3% -12.5% 18.4% 18.5% 16.0% 16.0% 12.3%

Velti Plc 1.7x 1.4x 0.9x 0.6x 0.5x 13.3x 11.9x 27.4x - - 66.0% 62.9% 42.9% 22.8% -1.6% 13.1% 11.6% 3.2% -1.9% -58.8%

Verisk 6.5x 6.5x 6.9x 7.1x 7.2x 14.8x 14.6x 15.5x 16.0x 15.4x 15.6% 15.5% 15.2% 16.5% 16.1% 44.2% 44.7% 44.8% 44.5% 46.5%

VMWare, Inc. 8.3x 7.9x 6.4x 5.7x 6.4x 30.9x 30.2x 25.5x 22.9x 25.3x 26.1% 23.4% 22.2% 19.2% 16.3% 26.9% 26.2% 25.2% 24.7% 25.3%

Zynga, Inc 0.9x 0.5x 1.0x 1.1x 1.2x - - 23.2x 9.5x 7.8x 43.1% 25.1% 12.4% 0.5% -11.8% -36.0% -37.0% 4.5% 11.7% 15.0%


All Rights Reserved

SEG SaaS Index

THE SEG SaaS INDEX COMPANIES – KEY METRICSNeeds to be Updated

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13Athenahealth, Inc 8.2x 6.1x 7.2x 7.2x 8.6x 62.8x 48.9x 59.9x 78.6x 99.8x 34.2% 32.4% 30.3% 28.7% 31.3% 13.1% 12.6% 12.1% 9.1% 8.6%

Bazaarvoice, Inc 7.2x 4.3x 2.7x 2.7x 4.0x - - - - - 62.6% 59.3% 57.9% 51.0% 41.3% -17.3% -17.4% -17.8% -28.1% -27.4%

Benefitfocus, Inc. - - - - 12.9x - - - - - 2.5% 2.5% 18.8% - 24.0% -10.3% -10.3% -9.5% -10.2% -16.2%

Callidus Software Inc. 2.0x 2.0x 2.1x 2.5x 3.1x - - - - - 15.0% 14.9% 13.3% 14.5% 12.6% -15.0% -16.2% -17.8% -16.1% -14.4%

ChannelAdvisors - - - 5.8x 9.0x - - - - - 18.8% - 23.0% - 29.0% -2.6% -1.5% -1.8% -3.7% -5.1%

C 8 7 7 8 7 9 8 7 10 3 69 2 67 5 81 7 113 9 112 0 25 7% 25 8% 25 1% 22 3% 21 5% 12 6% 11 5% 9 7% 7 7% 9 2%


Concur 8.7x 7.8x 7.9x 8.7x 10.3x 69.2x 67.5x 81.7x 113.9x 112.0x 25.7% 25.8% 25.1% 22.3% 21.5% 12.6% 11.5% 9.7% 7.7% 9.2%

Constant Contact 2.0x 1.3x 1.4x 1.3x 1.7x 19.6x 14.2x 17.9x 18.5x 23.5x 20.0% 19.1% 17.6% 16.1% 14.8% 10.4% 9.3% 7.8% 7.3% 7.3%

Cornerstone OnDemand 12.9x 13.1x 13.4x 14.6x 17.1x - - - - - 72.2% 68.1% 61.5% 61.9% 60.2% -21.9% -24.6% -23.4% -21.5% -19.5%

Cvent - - - - 14.1x - - - - 176.2x - - 37.2% - 36.0% 6.9% 6.9% 13.6% 10.7% 8.0%

DealerTrack 2.9x 2.9x 3.3x 3.3x 4.0x 19.2x 19.9x 23.9x 24.0x 28.6x 28.7% 16.8% 10.1% 10.5% 15.1% 15.3% 14.4% 13.8% 13.8% 14.1%

Demandware, Inc. 9.8x 10.0x 8.9x 9.5x 14.2x - - - - - 45.0% 42.3% 40.5% 37.5% 33.4% -3.5% -5.9% -4.8% -10.7% -13.5%

E2open, Inc 4.6x 4.5x 5.9x 4.5x 6.5x 92.6x 76.6x 754.0x - - - 22.2% 25.6% 17.4% 17.4% 5.0% 5.9% 0.8% -3.4% -3.4%

Ebix Inc 5 2x 3 7x 3 4x 3 7x 2 1x 12 2x 8 6x 7 9x 8 8x 5 4x 18 2% 18 4% 18 0% 20 5% 18 6% 42 8% 42 8% 42 4% 41 8% 39 2%Ebix Inc. 5.2x 3.7x 3.4x 3.7x 2.1x 12.2x 8.6x 7.9x 8.8x 5.4x 18.2% 18.4% 18.0% 20.5% 18.6% 42.8% 42.8% 42.4% 41.8% 39.2%

Ellie Mae 7.8x 6.0x 5.0x 5.0x 5.7x 37.9x 24.6x 19.5x 19.9x 24.2x 67.0% 83.5% 83.5% 69.9% 57.2% 20.6% 24.4% 25.5% 24.8% 23.6%

FireEye, Inc. - - - - 38.6x - - - - - 186.1% 186.1% 147.5% - 109.0% -37.0% -37.0% -31.6% -43.9% -61.9%

Fleetmatics - 7.5x 6.9x 5.6x 8.9x - 45.1x 37.0x 27.8x 36.1x - - 38.1% 39.6% 38.7% 16.8% 16.6% 18.6% 20.3% 24.7%

Halogen Software, Inc. - - - 8.0x 5.7x - - - - - 36.4% 36.4% 22.5% - 23.0% -8.0% -8.0% -10.4% -11.1% -8.2%

inContact, Inc. 2.5x 2.4x 2.7x 3.2x 3.4x - - 458.2x 236.3x 243.8x 16.0% 20.2% 24.6% 25.5% 24.9% -4.9% -2.2% 0.6% 1.4% 1.4%

IntraLinks Holdings 1.4x 1.6x 1.6x 1.5x 2.1x 20.5x 48.8x 51.1x 66.2x 170.2x 2.9% 0.1% 1.8% 4.6% 6.2% 6.9% 3.4% 3.2% 2.3% 1.2%

J2 Global 3.3x 3.4x 4.1x 4.5x 4.8x 6.7x 6.7x 8.3x 9.8x 10.9x 18.6% 12.1% 12.5% 16.0% 29.7% 49.7% 50.5% 49.6% 46.1% 44.5%J2 Global 3.3x 3.4x 4.1x 4.5x 4.8x 6.7x 6.7x 8.3x 9.8x 10.9x 18.6% 12.1% 12.5% 16.0% 29.7% 49.7% 50.5% 49.6% 46.1% 44.5%

Jive Software, Inc 8.7x 6.9x 7.6x 7.0x 5.9x - - - - - 56.8% 49.3% 47.1% 41.2% 36.5% -38.3% -34.9% -32.2% -35.4% -37.0%

LivePerson 6.0x 4.3x 4.3x 2.6x 2.7x 37.1x 30.3x 35.4x 29.8x 35.5x 21.4% 19.7% 18.3% 17.0% 14.9% 16.3% 14.1% 12.1% 8.7% 7.5%

Marin Software - - 8.2x 4.2x 4.2x - - - - - 90.1% - 64.9% - 30.0% -42.4% -37.2% -38.0% -39.9% -41.4%

Marketo - - - 11.5x 15.1x - - - - - 130.8% 130.8% 80.3% - 62.0% -67.9% -67.9% -56.2% -53.2% -49.4%

Medidata Solutions 4.0x 4.4x 5.3x 7.3x 9.0x 23.0x 26.5x 31.8x 45.6x 55.8x 10.0% 12.1% 18.4% 19.2% 24.5% 17.6% 16.5% 16.6% 16.0% 16.1%

Netsuite 14.2x 14.6x 15.4x 18.7x 19.7x - - - - - 26.3% 28.4% 30.7% 31.3% 32.8% -5.8% -5.4% -5.2% -6.3% -7.8%

OpenTable, Inc. 5.9x 6.1x 7.1x 7.9x 8.8x 20.7x 20.3x 25.0x 27.2x 28.1x 22.0% 17.1% 15.9% 15.6% 15.5% 28.5% 29.8% 28.5% 29.2% 31.2%

Qualys, Inc. 4.8x 4.8x 3.1x 3.4x 4.9x 57.4x 50.5x 27.7x 30.2x 39.8x - - 20.0% 19.3% 18.9% 8.4% 9.5% 11.3% 11.1% 12.3%

RealPage 6.1x 5.1x 5.0x 4.4x 4.4x 45.1x 34.8x 30.6x 27.3x 28.1x 32.0% 27.7% 24.9% 22.5% 20.7% 13.6% 14.6% 16.4% 16.0% 15.8%

Responsys 2.7x 1.4x 1.7x 2.1x 3.4x 20.6x 11.4x 14.0x 19.0x 36.7x 27.2% 21.1% 20.7% 21.3% 23.2% 12.9% 12.1% 11.8% 11.2% 9.2%

Salesforce.com 7.4x 7.4x 8.2x 7.4x 7.4x 168.0x 235.9x 298.6x 331.3x 352.7x 36.5% 36.1% 34.6% 32.1% 31.4% 4.4% 3.1% 2.8% 2.2% 2.1%

SciQuest 5.4x 4.7x 5.5x 6.6x 6.0x 47.1x 50.7x 96.2x 167.3x 273.9x 22.0% 21.4% 24.4% 31.5% 36.7% 11.6% 9.4% 5.7% 3.9% 2.2%

Service-now.com 20.3x 17.7x 14.9x 17.0x 17.6x - - - - - - - 90.3% 87.8% 84.5% -6.1% -9.2% -8.9% -9.4% -10.3%

SPS Commerce 5.6x 6.6x 6.4x 7.7x 9.6x 67.2x 78.0x 73.9x 86.7x 108.3x 31.5% 30.4% 33.0% 36.3% 40.2% 8.4% 8.5% 8.7% 8.9% 8.9%

Tableau Software - - - 21.4x 22.1x - - - 20132.4x - 82.5% 82.5% 104.8% - 71.0% 9.6% 9.6% 6.3% 0.1% -2.7%

Tangoe 5.5x 3.2x 3.3x 2.8x 3.8x 70.3x 41.7x 38.9x 32.9x 41.3x 50.8% 48.1% 47.2% 41.5% 38.1% 7.8% 7.6% 8.5% 8.7% 9.1%

Textura Corp. - - - 18.7x 23.2x - - - - - 74.7% 106.2% - - 65.0% -102.3% -68.0% -62.6% -55.1% -93.0%The Ultimate Software Group, Inc. 8.3x 8.0x 7.9x 8.5x 10.4x 80.0x 69.4x 63.7x 61.9x 72.9x 21.0% 21.8% 23.4% 24.4% 24.2% 10.4% 11.6% 12.5% 13.8% 14.3%

Vocus 3.3x 2.6x 2.1x 1.3x 1.4x 258.9x 170.1x - 92.0x 286.5x 29.9% 39.7% 48.7% 48.4% 34.3% 1.3% 1.5% -0.2% 1.4% 0.5%

Workday, Inc. - 33.2x 29.9x 32.0x 33.7x - - - - - - - 103.6% 88.3% 77.4% -38.1% -35.7% -32.5% -31.9% -28.4%

Zix Corporation 3.5x 3.6x 4.2x 4.7x 5.4x 11.3x 12.7x 15.3x 21.1x 27.1x 11.1% 12.0% 13.7% 14.4% 15.5% 30.7% 28.1% 27.6% 22.2% 19.9%


All Rights Reserved

p

Median: 5.5x 4.8x 5.3x 5.7x 6.5x 41.5x 41.7x 35.4x 31.5x 40.6x 28.7% 26.8% 25.3% 25.0% 30.0% 6.9% 6.9% 5.7% 2.3% 2.1%

SEG Internet Index

THE SEG INTERNET INDEX COMPANIES – KEY METRICSNeeds to be Updated

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q131-800-FLOWERS.COM, Inc. 0.3x 0.4x 0.4x 0.5x 0.5x 6.2x 6.5x 7.2x 8.4x 8.8x 7.0% 4.8% 5.0% 3.8% 4.0% 5.6% 5.5% 5.6% 6.0% 6.1%

8x8, Inc. 4.1x 4.2x 4.3x 4.6x 5.5x 35.0x 31.7x 32.3x 33.8x 39.9x 28.8% 33.4% 29.3% 25.4% 21.4% 11.7% 13.4% 13.4% 13.5% 13.8%

Akamai Technologies, Inc. 4.8x 4.8x 4.5x 5.0x 5.3x 13.6x 13.5x 12.4x 13.6x 14.3x 15.1% 17.9% 18.6% 18.3% 17.0% 35.3% 35.3% 36.5% 36.6% 37.0%

Amazon.com, Inc. 1.9x 1.8x 1.9x 1.8x 2.0x 52.8x 50.6x 45.4x 42.8x 44.9x 34.9% 31.3% 27.1% 24.5% 23.0% 3.6% 3.6% 4.1% 4.2% 4.4%

Angie's List, Inc. 5.3x 4.1x 5.7x 7.5x 6.5x - - - - - 69.7% 74.2% 73.0% 70.9% 67.6% -44.8% -41.0% -31.3% -24.3% -17.2%


AOL, Inc. 0.8x 0.9x 1.1x 1.2x 1.1x 4.4x 4.9x 5.1x 5.3x 4.8x -3.8% -2.4% -0.5% 0.9% 1.9% 19.1% 19.1% 21.5% 21.9% 22.4%

Baidu.com, Inc. 13.1x 9.9x 8.4x 7.5x 10.3x 22.3x 17.2x 14.9x 14.1x 20.4x 74.0% 63.9% 53.8% 47.1% 42.2% 58.5% 57.8% 56.3% 53.5% 50.7%

Bankrate, Inc. 3.9x 2.7x 2.9x 3.4x 4.3x 13.3x 9.7x 11.8x 14.2x 19.7x 37.2% 23.2% 7.8% -2.1% -10.5% 29.6% 28.1% 24.9% 23.8% 21.9%

Bitauto Holdings Limited 0.8x 1.2x 1.7x 1.9x 2.4x 5.7x 8.8x 9.6x 11.4x 13.7x 52.3% 54.7% 57.8% 51.5% 45.6% 13.7% 13.6% 17.5% 17.0% 17.7%

BlueNile 1.1x 1.2x 0.9x 0.9x 1.0x 29.3x 34.0x 26.1x 24.8x 28.0x 5.4% 7.4% 14.9% 18.0% 19.3% 3.7% 3.5% 3.4% 3.5% 3.6%

Brightcove Inc. 3.9x 3.1x 1.7x 2.0x 2.6x - - - - - 48.3% 43.2% 38.4% 31.7% 27.7% -13.4% -11.8% -11.2% -9.9% -8.2%

BroadSoft, Inc. 6.1x 5.4x 5.3x 4.1x 4.9x 28.1x 27.2x 28.0x 29.7x 53.8x 29.4% 19.7% 19.4% 13.2% 9.4% 21.5% 19.9% 18.8% 13.8% 9.2%

Carbonite, Inc. 1.8x 2.1x 2.4x 2.5x 3.1x - - - - - 46.7% 42.0% 38.9% 35.9% 33.2% -22.7% -15.0% -8.1% -6.0% -3.0%

ChangYou.com 1.5x 2.0x 2.4x 2.2x 2.2x 2.3x 3.1x 3.7x 3.5x 3.5x 47.2% 34.3% 28.7% 28.6% 25.2% 64.7% 65.8% 63.3% 63.0% 61.4%

Ctrip 2.5x 3.5x 3.6x 4.6x 6.8x 9.9x 16.0x 20.0x 27.6x 41.6x 18.4% 18.6% 18.9% 21.0% 23.6% 25.7% 21.7% 18.1% 16.7% 16.3%

DangDang 0.3x 0.2x 0.2x 0.4x 0.6x - - - - - 58.5% 55.3% 43.5% 35.6% 29.3% -9.9% -9.5% -8.6% -7.7% -6.4%

DemandMedia 2.4x 1.9x 1.6x 1.6x 1.3x 14.1x 10.3x 8.9x 8.8x 7.1x 15.9% 15.2% 17.1% 19.1% 16.7% 16.9% 18.0% 18.0% 17.9% 17.9%

Digital Generation, Inc. 1.8x 1.7x 1.6x 1.4x 1.7x 6.1x 6.1x 6.3x 5.5x 6.5x 45.7% 34.4% 19.2% 9.1% 1.0% 30.2% 28.7% 26.0% 26.1% 26.7%

Digital River Inc. 0.7x 0.5x 0.3x 0.6x 0.8x 5.0x 3.6x 3.3x 6.8x 11.6x 7.3% 3.4% -3.0% -1.2% -0.4% 14.4% 13.3% 9.7% 9.0% 7.3%

eBay Inc. 4.2x 4.4x 4.6x 4.5x 4.2x 14.7x 15.1x 15.8x 15.1x 14.3x 29.6% 25.0% 20.8% 17.4% 15.4% 28.8% 29.2% 29.3% 29.6% 29.4%

eHealth, Inc. 1.5x 2.4x 2.0x 2.0x 2.6x 11.8x 18.5x 15.2x 15.2x 22.1x -7.0% -3.7% 2.5% 6.9% 10.2% 12.5% 12.7% 13.0% 13.1% 11.6%

Envivio, Inc. 1.3x - - - 0.6x - - - - - - - -22.8% -38.8% -36.5% -4.8% -17.3% -35.7% -49.8% -43.4%

Expedia 1.7x 1.8x 2.0x 1.8x 1.5x 10.0x 11.0x 12.4x 11.8x 10.5x 17.3% 21.8% 16.9% 19.5% 19.8% 16.8% 16.5% 15.9% 15.2% 13.8%

Facebook 8.3x 8.6x 11.3x 10.0x 14.0x 34.3x 36.4x 48.6x 41.7x 30.9x - - 37.1% 35.9% 41.4% 24.2% 23.5% 23.3% 23.9% 45.2%

FriendFinder Networks Inc 25.7x 25.2x 30.4x 31.2x 33.1x - - - - - 1.3% -0.4% -1.8% -3.1% -3.1% - - - - -

GeekNet 0.9x 0.6x 0.5x 0.3x 0.4x - - - - 61.4x 11.3% 14.0% 20.0% 25.2% 19.4% -2.8% -2.3% -0.5% -0.4% 0.7%

Giant Interactive 2.7x 2.7x 3.2x 3.8x 3.8x 4.1x 4.3x 5.0x 5.9x 5.9x 28.7% 24.6% 20.1% 16.8% 14.4% 65.2% 64.6% 64.3% 64.9% 65.0%

Google Inc. 4.3x 4.0x 4.4x 4.6x 4.5x 11.9x 12.0x 13.5x 14.6x 14.7x 28.3% 31.8% 32.4% 33.8% 30.5% 36.3% 33.6% 32.4% 31.4% 30.5%

Groupon 1.1x 0.8x 1.0x 1.4x 2.2x 21.9x 12.0x 15.2x 22.9x 40.0x 117.6% 69.6% 45.0% 26.8% 17.9% 5.1% 6.7% 6.5% 6.0% 5.5%

Harmonic Inc 0.7x 0.7x 0.8x 0.8x 1.2x 9.3x 9.1x 12.6x 14.4x 20.3x -4.6% -4.6% -3.4% -3.2% -2.0% 7.1% 7.1% 6.6% 5.9% 5.8%

HomeAway 6.8x 5.8x 6.5x 7.7x 7.6x 37.4x 33.2x 35.8x 40.1x 41.4x 27.2% 23.0% 21.8% 22.0% 21.7% 18.1% 17.5% 18.1% 19.1% 18.3%

Interactive Intelligence, Inc. 2.3x 2.4x 3.1x 3.6x 4.0x 28.7x 40.3x 65.6x 61.8x 57.9x 13.1% 10.9% 13.3% 20.2% 28.5% 7.9% 5.9% 4.7% 5.8% 6.9%

InterActiveCorp 1.6x 1.4x 1.2x 1.4x 1.4x 10.8x 9.9x 8.3x 9.0x 8.8x 34.5% 37.6% 36.0% 29.6% 24.1% 14.4% 14.1% 15.0% 15.5% 15.9%

LifeLock, Inc. - 3.8x 3.5x 2.4x 2.8x - 49.4x 47.5x 33.9x 51.2x - - 42.5% 44.9% 41.2% 5.0% 7.7% 7.5% 7.1% 5.6%

Limelight Networks, Inc. 0.7x 0.5x 0.5x 0.4x 0.5x 106.0x - - - - 6.7% 6.8% 5.2% 4.3% 1.7% 0.7% -0.5% -2.8% -1.9% -4.0%

LinkedIn 14.5x 13.1x 16.8x 16.8x 20.3x 115.5x 105.1x 130.2x 124.6x 159.0x 101.9% 91.8% 86.2% 79.8% 71.9% 12.6% 12.4% 12.9% 13.5% 12.8%

Liquidity Services, Inc. 3.2x 2.5x 2.1x 2.0x 1.8x 15.1x 12.2x 10.5x 10.5x 10.3x 40.6% 45.2% 37.3% 25.8% 15.4% 21.1% 20.6% 19.9% 19.3% 17.9%

Mail.ru Group 11.9x 9.3x 8.9x 6.7x 8.2x 26.4x 21.2x 20.7x 15.4x 18.5x 60.9% 44.9% 40.2% 35.8% 32.2% 44.9% 43.7% 42.8% 43.6% 44.3%

MakeMyTrip 2.3x 2.0x 2.0x 1.8x 1.8x 123.0x 3995.2x - - - 45.9% 29.2% 21.9% 16.4% 15.9% 1.9% 0.0% -3.2% -6.6% -8.2%

Marchex Inc. 0.6x 0.8x 0.8x 1.4x 1.6x 17.4x 29.4x 78.4x 84.1x 73.7x 23.6% 5.6% -5.7% -9.2% -2.9% 3.6% 2.8% 1.1% 1.6% 2.1%


All Rights Reserved

Mecox Lane Limited - - - 0.1x 0.3x - - - - - -17.3% -24.1% -30.3% -34.4% -36.7% -15.8% -13.7% -13.3% -14.2% -16.5%

SEG Internet Index


3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13Mercadolibre, Inc. 10.0x 9.2x 9.8x 11.8x 12.4x 27.4x 25.8x 26.5x 32.4x 35.1x 36.8% 29.7% 25.0% 22.2% 22.1% 36.3% 35.9% 37.1% 36.4% 35.4%

Mitel Networks Corp. 0.7x 0.6x 0.7x 0.7x 0.8x 5.2x 4.8x 5.2x 5.1x 5.4x 3.9% -1.3% -3.8% -5.7% -3.5% 12.8% 13.5% 13.9% 13.8% 15.1%

Monster Worldwide, Inc. 0.9x 0.8x 0.7x 0.7x 0.7x 4.6x 4.3x 4.4x 4.5x 4.4x -5.7% -10.2% -10.4% -10.1% -10.1% 19.2% 17.9% 16.0% 15.6% 15.8%

NCSoft 7.9x 4.8x 3.0x 3.2x 3.4x - 32.5x 12.1x - 10.2x -9.8% -3.1% 23.8% 34.1% 46.6% - 14.8% 25.0% - 33.8%

Netease 3.7x 3.1x 3.2x 3.7x 4.4x 7.5x 6.5x 6.7x 7.9x 9.2x 27.4% 17.6% 12.5% 8.1% 8.8% 49.6% 47.9% 47.5% 47.4% 47.6%


Netflix 0.8x 1.1x 2.7x 3.3x 3.8x 12.9x 27.6x 102.9x 94.2x 86.7x 30.1% 21.0% 12.6% 12.1% 14.1% 6.6% 4.1% 2.6% 3.5% 4.4%

Orbitz 0.8x 0.7x 0.8x 1.3x 1.6x 5.5x 5.3x 6.1x 9.6x 11.6x 0.9% -0.8% 1.6% 2.6% 6.0% 13.8% 13.2% 13.6% 13.4% 13.5%

Overstock.com, Inc. 0.1x 0.3x 0.2x 0.4x 0.5x 18.8x 15.7x 7.2x 15.7x 16.9x -3.6% -1.6% 4.3% 9.3% 13.9% 0.8% 1.7% 2.6% 2.9% 3.1%

Pandora 4.8x 3.6x 4.5x 5.4x 6.3x - - - - - 66.4% 59.3% 55.7% 55.2% 56.0% -7.9% -6.5% -7.2% -8.2% -7.5%

Perfect World 0.8x 0.9x 0.8x 0.8x 1.6x 2.4x 2.7x 2.8x 3.3x 7.5x 4.7% 2.5% -7.1% -10.3% -6.0% 35.2% 33.2% 27.3% 24.6% 21.2%

PetMed Express, Inc. 0.5x 0.6x 0.9x 0.9x 1.1x 4.9x 5.6x 7.5x 7.7x 8.8x 1.2% 2.5% -0.3% -4.4% -0.2% 11.2% 11.2% 11.7% 12.3% 12.6%

Polycom, Inc. 0.8x 0.8x 0.9x 0.9x 0.8x 6.1x 7.4x 10.1x 11.1x 11.3x 10.5% 5.2% -0.7% -2.9% -5.1% 13.6% 11.5% 8.9% 8.0% 7.4%

Priceline 6.1x 5.6x 5.9x 6.5x 7.6x 17.4x 15.3x 16.2x 18.2x 21.2x 31.9% 23.6% 20.8% 20.6% 22.3% 35.0% 36.3% 36.4% 35.9% 35.8%

Qihoo 7.0x 8.4x 10.3x 12.2x 18.3x 30.1x 38.9x 50.8x 68.2x 81.9x 169.9% 130.1% 96.0% 72.6% 78.1% 23.1% 21.7% 20.3% 17.9% 22.3%

QuinStreet 1.0x 0.8x 0.8x 0.9x 1.2x 6.6x 5.4x 5.8x 7.5x 10.9x -8.1% -13.2% -16.4% -16.8% -17.6% 15.8% 14.5% 13.0% 12.1% 11.0%

ReachLocal, Inc. 0.6x 0.6x 0.6x 0.7x 0.5x 47.1x 31.5x 38.0x 35.1x 28.0x 24.0% 22.2% 21.3% 19.7% 17.7% 1.3% 1.8% 1.7% 1.9% 1.9%

Renren Inc 4.2x 2.4x 1.8x 1.2x 2.3x - - - - - 53.7% 50.9% 49.3% 47.2% 35.8% -39.4% -44.0% -42.9% -42.3% -46.7%

Rocket Fuel - - - - 11.6x - - - - - - - 138.7% - - -7.5% -7.5% -6.1% -8.5% -7.7%

Rovi Corporation 3.3x 3.4x 3.8x 4.7x 4.1x 8.5x 8.9x 10.5x 13.7x 12.2x 10.4% 1.1% -4.5% -9.1% -7.0% 38.5% 38.5% 36.2% 34.2% 33.8%

SeaChange International Inc. 1.0x 1.3x 1.8x 1.6x 1.7x 14.7x 21.4x 21.6x 21.7x 15.9x -8.3% -7.1% -4.6% -3.2% -1.8% 7.1% 6.0% 8.1% 7.3% 10.8%

ShoreTel, Inc. 0.9x 0.9x 0.7x 0.7x 0.8x - - - - - 23.2% 27.7% 29.3% 36.4% 27.1% -2.5% -2.6% -4.3% -3.1% -2.2%

Shutterfly 1.9x 1.7x 2.0x 2.5x 2.8x 19.5x 17.7x 15.3x 19.7x 23.9x 52.4% 47.1% 35.4% 31.3% 32.0% 9.6% 9.4% 12.9% 12.5% 11.8%

Shutterstock, Inc. - 5.2x 5.3x 7.8x 8.9x - 29.5x 28.1x 37.0x 40.8x - - 41.0% 38.4% 38.4% 16.7% 17.6% 18.8% 21.0% 21.8%

SINA Corporation 5.7x 5.3x 5.3x 5.6x 7.8x 134.0x 163.2x 132.9x 98.1x 297.3x 14.7% 14.0% 9.6% 12.3% 14.7% 4.2% 3.3% 4.0% 5.7% 2.6%

Sohu.com Inc. 1.0x 1.0x 1.3x 1.7x 1.7x 2.7x 2.9x 3.9x 5.2x 5.7x 35.3% 30.1% 25.2% 27.0% 28.1% 37.4% 35.0% 32.7% 32.1% 30.4%

Sonus Networks, Inc 0.7x 0.7x 1.7x 1.9x 2.9x - - - - - -5.6% -5.6% -2.1% -1.4% 0.8% -3.0% -3.0% -8.1% -9.8% -5.8%, % % % % % % % % % %

SouFun Holdings Ltd. 3.1x 4.1x 5.4x 4.9x 6.2x 7.3x 9.1x 11.2x 9.8x 12.2x 36.1% 20.6% 25.1% 28.0% 34.9% 42.9% 44.9% 47.9% 49.7% 50.7%

Stamps.com 2.9x 3.2x 3.1x 4.3x 4.8x 15.7x 15.3x 13.8x 17.3x 18.3x 17.1% 16.2% 13.9% 11.6% 13.5% 18.7% 20.6% 22.3% 24.7% 26.3%

Synacor, Inc 1.7x 1.0x 0.9x 0.4x 0.4x 20.6x 13.1x 10.9x 6.0x 6.8x - 47.9% 34.0% 16.9% 1.7% 8.4% 7.6% 7.9% 7.0% 5.3%

Tencent Holdings 9.4x 9.2x 8.7x 8.1x 9.8x 21.6x 21.9x 21.8x 21.0x 26.5x 49.4% 52.0% 54.0% 50.3% 45.1% 43.4% 42.1% 40.0% 38.6% 37.0%

TheStreet.com, Inc. 0.2x 0.3x 0.4x 0.4x 0.4x - - - - - -7.3% -12.1% -12.2% -10.6% -4.5% -6.0% -4.8% -4.5% -2.6% -3.3%

Travelzoo 2.0x 1.5x 1.8x 2.2x 2.4x 7.9x 6.7x 8.6x 11.7x 13.8x 16.7% 5.4% 1.9% 2.2% 2.3% 25.9% 23.0% 20.5% 19.2% 17.4%

Tree.Com, Inc. 1.5x 1.4x 1.4x 1.6x 1.5x - - - 80.9x 33.1x -6.9% 14.9% 41.8% 71.1% 108.9% -21.9% -14.7% -6.0% 1.9% 4.5%,

Tremor Video, Inc. - - - 3.7x 3.8x - - - - - - - 16.5% - - -15.3% -15.3% -9.6% -5.5% -1.4%

TripAdvisor Inc 7.1x 6.9x 8.4x 10.3x 12.1x 17.0x 16.3x 20.8x 25.6x 31.1x 24.0% 17.6% 19.8% 20.5% 22.8% 41.9% 42.1% 40.6% 40.1% 39.0%

Trulia, Inc. 11.4x 6.7x 8.9x 10.1x 13.3x - - - - - - - 76.8% 87.8% 81.1% -15.6% -12.6% -10.3% -5.3% -0.7%

Tucows Inc. 0.5x 0.5x 0.6x 0.7x 0.8x 7.1x 7.4x 9.5x 11.9x 15.1x 20.5% 20.0% 18.2% 14.8% 12.2% 7.1% 7.3% 6.4% 5.5% 5.0%

ValueClick, Inc. 2.2x 2.2x 3.0x 2.9x 2.3x 7.6x 7.7x 9.9x 9.4x 7.3x 31.0% 32.1% 25.0% 21.7% 13.6% 28.4% 28.8% 30.3% 31.1% 31.8%

VeriSign 8.1x 6.5x 7.0x 6.8x 6.8x 14.8x 11.7x 11.9x 11.1x 11.0x 13.6% 13.4% 13.2% 13.6% 13.3% 54.6% 55.6% 58.5% 60.7% 61.9%

VistaPrint 1.4x 1.2x 1.3x 1.5x 1.7x 12.6x 12.5x 13.1x 15.6x 18.4x 24.9% 23.3% 19.8% 16.3% 14.4% 10.9% 9.8% 9.6% 9.5% 9.1%


All Rights Reserved

WebMD Health Corp. 1.1x 1.1x 1.4x 2.3x 2.7x 8.0x 11.6x 28.8x 27.0x 25.1x -12.4% -15.4% -15.9% -10.9% -3.4% 14.1% 9.4% 4.9% 8.5% 10.9%

SEG Internet Index


3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13XO Group 1.1x 1.0x 1.2x 1.5x 1.7x 8.2x 7.0x 8.0x 8.8x 10.0x 8.7% 5.8% 3.9% 2.5% 3.1% 13.2% 14.3% 14.8% 16.5% 17.4%

Xoom - - 8.8x 6.3x 8.4x - - - - 195.2x 52.3% - 60.0% - - -7.1% -4.5% -3.5% -2.3% 4.3%

Yahoo! Inc. 3.4x 2.9x 4.1x 5.0x 5.5x 13.0x 10.9x 15.4x 18.6x 20.8x -10.6% -4.2% 0.0% -1.7% -3.1% 26.2% 26.6% 26.4% 27.1% 26.6%

Yandex 8.6x 8.1x 8.0x 8.4x 10.3x 19.7x 18.5x 18.5x 19.1x 23.4x 54.7% 48.9% 43.6% 40.3% 37.1% 43.7% 44.0% 43.1% 43.8% 44.2%

Yelp, Inc. 12.3x 9.0x 9.3x 11.6x 18.2x - - - - - - 64.7% 65.2% 66.0% 66.6% -12.6% -9.3% -8.3% -2.8% -1.2%


Youku 8.4x 10.6x 9.6x 7.9x 8.4x - 696.0x 504.1x - 342.4x 107.3% 98.3% 100.0% 96.3% 95.8% -0.9% 1.5% 1.9% -0.5% 2.5%

YuMe, Inc. - - - - 2.4x - - - - 40.8x 32.2% 32.2% 70.3% - - -12.7% -12.7% 8.5% 7.1% 6.0%

YY, Inc. - 5.7x 4.8x 6.5x 9.8x - 42.7x 29.1x 32.6x 46.3x - - 156.5% 151.5% 132.1% 3.7% 13.3% 16.5% 20.0% 21.1%

Zillow 12.3x 6.6x 9.7x 12.8x 19.5x 123.8x 62.1x 91.4x 210.1x - 99.4% 83.7% 76.9% 71.3% 69.9% 9.9% 10.7% 10.6% 6.1% -1.6%

Zynga, Inc. 0.9x 0.5x 1.0x 1.1x 1.2x - - 23.2x 9.5x 7.8x 43.1% 25.1% 12.4% 0.5% -11.8% -36.0% -37.0% 4.5% 11.7% 15.0%


All Rights Reserved

C Ti k P d t C t

THE SEG SOFTWARE INDEX COMPANIESNeeds to be Updated

Company Ticker Product Category

Amdocs Limited DOX Billing & Service ManagementAsiaInfo Holdings, Inc. ASIA Billing & Service ManagementCSG Systems International, Inc. CSGS Billing & Service ManagementEvolving Systems, Inc. EVOL Billing & Service ManagementMIND C T I Ltd MNDO Billing & Service ManagementMIND C.T.I. Ltd. MNDO Billing & Service ManagementNeuStar, Inc NSR Billing & Service ManagementRedknee Solutions TSX:RKN Billing & Service ManagementSynchronoss Technologies, Inc. SNCR Billing & Service ManagementActuate Corporation BIRT Business IntelligenceMicroStrategy Incorporated MSTR Business IntelligencePegasystems Inc PEGA Business IntelligencePegasystems Inc. PEGA Business IntelligenceProgress Software Corporation PRGS Business IntelligencePROS Holdings PRO Business IntelligenceQlik Technologies QLIK Business IntelligenceTeradata NYSE:TDC Business IntelligenceVerisk VRSK Business IntelligenceActuate Corporation BIRT Development Platformsp pAdobe Systems Incorporated ADBE Development PlatformsBSQUARE Corporation BSQR Development PlatformsCompuware Corporation CPWR Development PlatformsMagic Software Enterprises Ltd. MGIC Development PlatformsMicrosoft Corporation MSFT Development PlatformsOracle Corporation ORCL Development PlatformsProgress Software Corporation PRGS Development PlatformsRed Hat, Inc. RHT Development PlatformsSoftware AG XTRA:SOW Development PlatformsANSYS, Inc. ANSS Engineering & PLMAutodesk, Inc. ADSK Engineering & PLMCadence Design Systems, Inc CDNS Engineering & PLMCimatron Ltd CIMT Engineering & PLMCimatron Ltd. CIMT Engineering & PLMDassault Systèmes DSY Engineering & PLMGSE Systems Inc. GVP Engineering & PLMMentor Graphics Corp MENT Engineering & PLMParametric Technology Corporation PMTC Engineering & PLMPDF Solutions Inc PDFS Engineering & PLMStratasys Inc SSYS Engineering & PLM


All Rights Reserved

Stratasys, Inc. SSYS Engineering & PLMSynopsys Inc SNPS Engineering & PLM

C Ti k P d t C t

THE SEG SOFTWARE INDEX COMPANIES (CON’T)Needs to be Updated


American Software, Inc. AMSW.A Enterprise Resource PlanningOracle Corporation ORCL Enterprise Resource PlanningQAD Inc. QADA Enterprise Resource PlanningSage Group plc LSE:SGE Enterprise Resource PlanningSAP AG SAP E t i R Pl iSAP AG SAP Enterprise Resource PlanningUnit 4 ENXTAM:U Enterprise Resource PlanningACI Worldwide, Inc. ACIW Financial & AccountingBottomline Technologies EPAY Financial & AccountingDST Systems, Inc. DST Financial & AccountingEvertec EVTC Financial & AccountingFair Isaac Corporation FICO Financial & AccountingFair Isaac Corporation FICO Financial & AccountingFiserv FISV Financial & AccountingIntuit Inc INTU Financial & AccountingModel N, Inc MODN Financial & AccountingNetSol Technologies Inc. KASE:NET Financial & AccountingSage Group plc LSE:SGE Financial & AccountingQiwi plc QIWI Financial & AccountingQiwi plc QIWI Financial & AccountingActivision Blizzard ATVI GamingElectronic Arts Inc. EA GamingGameLoft SA ENXTPA:G GamingKonami Corporation TSE: 9766 GamingTake-Two Interactive TTWO GamingUbisoft Entertainment ENXTPA:U GaminggAccretive Health AH HealthcareAllscripts Healthcare Solutions Inc. MDRX HealthcareCerner Corporation CERN HealthcareComputer Programs and Sys, Inc. CPSI HealthcareGreenway Medical Technologies, Inc GWAY HealthcareMedAssets MDAS HealthcareMerge Healthcare MRGE HealthcareOmnicell, Inc. OMCL HealthcareQuality Systems, Inc. QSII HealthcareHewlett Packard HPQ IT ConglomeratesIBM IBM IT ConglomeratesMicrosoft Corporation MSFT IT ConglomeratesOracle Corporation ORCL IT Conglomerates


All Rights Reserved

Oracle Corporation ORCL IT ConglomeratesSAP AG SAP IT Conglomerates

C Ti k P d t C t



Bango PLC BGO Mobile Solutions/ContentGlu Mobile, Inc. GLUU Mobile Solutions/ContentGree TSE:3632 Mobile Solutions/ContentMillennial Media Inc MM Mobile Solutions/ContentM i d G AG MYRN M bil S l ti /C t tMyriad Group AG MYRN Mobile Solutions/ContentNQ Mobile Inc. NQ Mobile Solutions/ContentOpera OB:OPERA Mobile Solutions/ContentQihoo 360 Technology Co. Ltd QIHU Mobile Solutions/ContentPandora Media P Mobile Solutions/ContentSynchronoss Technologies, Inc. SNCR Mobile Solutions/ContentTangoe, Inc. TNGO Mobile Solutions/ContentTangoe, Inc. TNGO Mobile Solutions/ContentTeleCommunication Systems TSYS Mobile Solutions/ContentTeleNav TNAV Mobile Solutions/ContentVelti Plc VELT Mobile Solutions/ContentZynga, Inc ZNGA Mobile Solutions/ContentAllot Communications Ltd. ALLT Networking & Network Performance Aruba Networks, Inc. ARUN Networking & Network Performance Brocade Communications Systems, BRCD Networking & Network Performance Cisco Systems, Inc. CSCO Networking & Network Performance Compuware Corporation CPWR Networking & Network Performance Cyan, Inc. CYNI Networking & Network Performance F5 Networks, Inc. FFIV Networking & Network Performance Gigamon, LLC GIMO Networking & Network Performance Juniper Networks Inc JNPR Networking & Network PerformanceJuniper Networks, Inc. JNPR Networking & Network Performance Radware Ltd. RDWR Networking & Network Performance Riverbed Technology, Inc. RVBD Networking & Network Performance AVG Technologies N.V. AVG SecurityCheck Point Software Tech Ltd. CHKP SecurityCommtouch Software Ltd. CTCH SecurityFortinet Inc. FTNT SecurityGuidance Software, Inc. GUID SecurityImperva IMPV SecurityPalo Alto Networks, Inc PANW SecurityProofpoint, Inc. PFPT SecuritySourcefire, Inc. FIRE SecuritySymantec Corporation SYMC SecurityTrend Micro TSE:4704 Secuity


All Rights Reserved

Trend Micro TSE:4704 SecuityVASCO Data Security International VDSI Security

C Ti k P d t C t



Brocade Communications Systems, BRCD Storage, Data Management & IntegrationCA, Inc. CA Storage, Data Management & IntegrationCisco Systems, Inc. CSCO Storage, Data Management & IntegrationCommVault Systems, Inc. CVLT Storage, Data Management & IntegrationEMC EMC Storage, Data Management & IntegrationEMC EMC Storage, Data Management & IntegrationFalconStor Software, Inc. FALC Storage, Data Management & IntegrationIBM IBM Storage, Data Management & IntegrationInformatica Corporation INFA Storage, Data Management & IntegrationMicrosoft Corporation MSFT Storage, Data Management & IntegrationNetApp, Inc. NTAP Storage, Data Management & IntegrationOracle Corporation ORCL Storage, Data Management & IntegrationSplunk Inc SPLK Storage Data Management & IntegrationSplunk, Inc. SPLK Storage, Data Management & IntegrationTIBCO Software Inc. TIBX Storage, Data Management & IntegrationAmerican Software, Inc. AMSW.A Supply Chain Management & LogisticsAspen Technology, Inc. AZPN Supply Chain Management & LogisticsManhattan Associates, Inc. MANH Supply Chain Management & LogisticsThe Descartes Systems Group Inc. TSX:DSG Supply Chain Management & LogisticsUnit 4 ENXTAM:U Supply Chain Management & LogisticsCA T h l i CA S t M tCA Technologies CA Systems ManagementCitrix Systems, Inc. CTXS Systems ManagementNetscout Systems, Inc. NTCT Systems ManagementRed Hat, Inc. RHT Systems ManagementSolarWinds, Inc. SWI Systems ManagementVMWare, Inc. VMW Systems ManagementAdvent Software, Inc. ADVS Vertical - FinanceBroadridge Financial BR Vertical - FinanceFidessa LSE:FDSA Vertical - FinanceJack Henry & Associates, Inc. JKHY Vertical - FinanceMSCI, Inc. MSCI Vertical - FinanceSS&C Corporation SSNC Vertical - FinanceBlackbaud, Inc. BLKB Vertical - OtherConstellation TSX:CSU Vertical - OtherConstellation TSX:CSU Vertical OtherEPIQ Systems, Inc. EPIQ Vertical - OtherGuidewire Software, Inc. GWRE Vertical - OtherMicros Systems MCRS Vertical - OtherPROS Holdings PRO Vertical - OtherSapiens International SPNS Vertical - OtherSilver Spring Networks, Inc. SSNI Vertical - OtherThe Active Network Inc ACTV Vertical Other


All Rights Reserved

The Active Network, Inc. ACTV Vertical - OtherTyler Technologies, Inc. TYL Vertical - Other

C Ti k P d t C t

THE SEG SaaS INDEX COMPANIESNeeds to be Updated


Bazaarvoice, Inc BV CRM & MarketingConstant Contact CTCT CRM & MarketingCvent NYSE:CVT CRM & MarketingLivePerson LPSN CRM & MarketingMarketo MKTO CRM & MarketinggMarin Software MRIN CRM & MarketingResponsys MKTG CRM & MarketingSalesforce.com CRM CRM & MarketingVocus VOCS CRM & MarketingE2open, Inc EOPN ERP & Supply ChainFleetmatics FLTX ERP & Supply ChainNetsuite N ERP & Supply ChainSciQuest SQI ERP & Supply ChainSPS Commerce SPSC ERP & Supply ChainWorkday, Inc. WDAY ERP & Supply ChainAthenahealth, Inc ATHN Vertically FocusedDealerTrack TRAK Vertically FocusedEbix Inc. EBIX Vertically FocusedEllie Mae ELLI Vertically FocusedMedidata Solutions MDSO Vertically FocusedRealPage RP Vertically FocusedTextura Corp. TXTR Vertically FocusedCallidus Software Inc. CALD Workforce ManagementCornerstone OnDemand CSOD Workforce ManagementHalogen Software, Inc. TSX:HGN Workforce ManagementThe Ultimate Software Group, Inc. ULTI Workforce ManagementWorkday, Inc. WDAY Workforce ManagementBenefitfocus, Inc. BNFT Other SaaSChannelAdvisors ECOM Other SaaSConcur CNQR Other SaaSDemandware, Inc. DWRE Other SaaSFireEye, Inc. FEYE Other SaaSinContact, Inc. SAAS Other SaaSI t Li k H ldi IL Oth S SIntraLinks Holdings IL Other SaaSJ2 Global JCOM Other SaaSJive Software, Inc JIVE Other SaaSOpenTable, Inc. OPEN Other SaaSQualys, Inc. QLYS Other SaaSService-now.com NOW Other SaaSTableau Software DATA Other SaaST TNGO Oth S S


All Rights Reserved

Tangoe TNGO Other SaaSZix Corporation ZIXI Other SaaS

C Ti k P d t C t

THE SEG INTERNET INDEX COMPANIESNeeds to be Updated


Angie's List, Inc. ANGI Ad Tech & Lead GenerationBaidu.com, Inc. BIDU Ad Tech & Lead GenerationBankrate, Inc. RATE Ad Tech & Lead GenerationDigital Generation, Inc. DGIT Ad Tech & Lead GenerationeHealth, Inc. EHTH Ad Tech & Lead GenerationGoogle Inc. GOOG Ad Tech & Lead GenerationGroupon GRPN Ad Tech & Lead GenerationInterActiveCorp IACI Ad Tech & Lead GenerationLinkedIn LNKD Ad Tech & Lead GenerationMarchex Inc. MCHX Ad Tech & Lead GenerationMarchex Inc. MCHX Ad Tech & Lead GenerationQuinStreet QNST Ad Tech & Lead GenerationReachLocal, Inc. RLOC Ad Tech & Lead GenerationRocket Fuel FUEL Ad Tech & Lead GenerationSINA Corporation SINA Ad Tech & Lead GenerationSohu.com Inc. SOHU Ad Tech & Lead GenerationTree Com Inc TREE Ad Tech & Lead GenerationTree.Com, Inc. TREE Ad Tech & Lead GenerationTremor Video, Inc. TRMR Ad Tech & Lead GenerationValueClick, Inc. VCLK Ad Tech & Lead GenerationYandex YNDX Ad Tech & Lead GenerationYuMe, Inc. YUME Ad Tech & Lead Generation1-800-FLOWERS.COM, Inc. FLWS CommerceA I AMZN CAmazon.com, Inc. AMZN CommerceBitauto Holdings Limited BITA CommerceBlueNile NILE CommerceDangDang DANG CommerceDigital River Inc. DRIV CommerceeBay Inc. EBAY CommerceyGeekNet GKNT CommerceLiquidity Services, Inc. LQDT CommerceMecox Lane Limited MCOX CommerceMercadolibre, Inc. MELI CommerceOverstock.com, Inc. OSTK CommercePetMed Express Inc PETS Commerce


All Rights Reserved

PetMed Express, Inc. PETS CommerceStamps.com STMP Commerce

C Ti k P d t C t

THE SEG INTERNET INDEX COMPANIES (CON’T)Needs to be Updated


AOL, Inc. AOL Content & MediaDemandMedia DMD Content & MediaInterActiveCorp IACI Content & MediaNetflix NFLX Content & MediaP d P C t t & M diPandora P Content & MediaShutterstock, Inc. SSTK Content & MediaTheStreet.com, Inc. TST Content & MediaWebMD Health Corp. WBMD Content & MediaXO Group XOXO Content & MediaYahoo! Inc. YHOO Content & MediaYouku YOKU Content & MediaYouku YOKU Content & MediaChangYou.com CYOU GamingGiant Interactive GA GamingNetease NTES GamingNCSoft KOSE:A036 GamingPerfect World PWRD GamingSohu.com Inc. SOHU GaminggTencent Holdings SEHK:700 GamingZynga, Inc. ZNGA Gaming8x8, Inc. EGHT InfrastructureAkamai Technologies, Inc. AKAM InfrastructureBrightcove Inc. BCOV InfrastructureBroadSoft, Inc. BSFT InfrastructureDigital River Inc. DRIV InfrastructureEnvivio, Inc. ENVI InfrastructureHarmonic Inc HLIT InfrastructureInteractive Intelligence, Inc. ININ InfrastructureLimelight Networks, Inc. LLNW InfrastructureMitel Networks Corp. MITL InfrastructureP l I PLCM I f t tPolycom, Inc. PLCM InfrastructureRovi Corporation ROVI InfrastructureSeaChange International Inc. SEAC InfrastructureShoreTel, Inc. SHOR InfrastructureSonus Networks, Inc SONS InfrastructureSynacor, Inc SYNC InfrastructureTucows Inc TCX Infrastructure


All Rights Reserved

Tucows Inc. TCX InfrastructureVeriSign VRSN Infrastructure

C Ti k P d t C t

THE SEG INTERNET INDEX COMPANIES (CON’T)Needs to be Updated


Angie's List, Inc. ANGI ServicesBankrate, Inc. RATE ServicesCarbonite, Inc. CARB ServicesLifeLock, Inc. LOCK ServicesMonster Worldwide, Inc. MWW ServicesQihoo QIHU ServicesShutterfly SFLY ServicesSouFun Holdings Ltd. SFUN ServicesTree.Com, Inc. TREE ServicesTrulia, Inc. TRLA ServicesTrulia, Inc. TRLA ServicesVistaPrint VPRT ServicesXoom XOOM ServicesZillow Z ServicesFacebook FB SocialLinkedIn LNKD SocialMail ru Group LSE:MAIL SocialMail.ru Group LSE:MAIL SocialRenren Inc RENN SocialYelp, Inc. YELP SocialYY, Inc. YY SocialCtrip CTRP TravelExpedia EXPE TravelH A AWAY T lHomeAway AWAY TravelMakeMyTrip MMYT TravelOrbitz OWW TravelPriceline PCLN TravelTravelzoo TZOO TravelTripAdvisor Inc TRIP Travel


All Rights Reserved

THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORYNeeds to be Updated

Billing & Service Management 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 1.3x 1.5x 1.9x 1.9x 2.3xEV/EBITDA 8.0x 8.2x 8.4x 8.3x 8.7xEV/Earnings 15.9x 17.1x 15.4x 14.2x 17.2xGross Profit Margin 58.0% 58.3% 59.4% 58.4% 58.3%EBITDA Margin 18.8% 19.8% 20.7% 18.7% 18.4%Net Income Margin 11.7% 12.1% 11.0% 9.9% 9.8%TTM Revenue Growth (YoY) 9.5% 10.4% 10.4% 8.9% 16.9%TTM EBITDA Growth (YoY) 10.2% 15.7% 14.5% 9.8% 11.6%TTM E i G th (Y Y) 4 9% 5 6% 7 6% 6 7% 24 5%

Enterprise Resource Planning 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.1x 2.2x 2.3x 2.5x 2.5xEV/EBITDA 9.2x 9.1x 10.1x 12.1x 12.2xEV/Earnings 15.2x 15.7x 22.9x 30.7x 28.7xGross Profit Margin 75.4% 75.6% 75.8% 76.2% 76.6%EBITDA Margin 23.2% 23.1% 22.8% 22.4% 22.2%Net Income Margin 15.6% 14.6% 11.5% 7.9% 7.7%TTM Revenue Growth (YoY) 4.7% 3.4% 2.6% 1.5% 2.2%TTM EBITDA Growth (YoY) 5.5% 8.2% 4.2% 0.3% 0.1%TTM E i G th (Y Y) 20 9% 24 7% 10 4% 12 3% 1 8%

IT Conglomerates 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.8x 2.5x 2.5x 2.9x 2.7xEV/EBITDA 8.4x 8.0x 9.0x 8.7x 8.3xEV/Earnings 14.4x 13.7x 14.7x 14.2x 13.5xGross Profit Margin 71.6% 71.4% 71.2% 71.6% 71.9%EBITDA Margin 36.1% 34.6% 33.8% 33.8% 34.3%Net Income Margin 23.0% 18.6% 17.4% 17.6% 17.8%TTM Revenue Growth (YoY) 1.5% 1.4% 0.5% 0.2% 1.2%TTM EBITDA Growth (YoY) 0.5% -0.6% 0.9% 2.4% -0.3%TTM E i G th (Y Y) 4 1% 20 0% 24 9% 16 9% 7 9%TTM Earnings Growth (YoY) 4.9% -5.6% -7.6% 6.7% 24.5%

Current Ratio 2.4 2.7 3.0 2.7 2.8Cash as Percent of Market Cap 21.6% 21.8% 16.0% 17.8% 19.2%Enterprise Value Growth (YoY) -5.0% 13.9% 10.2% 21.5% 22.6%

Business Intelligence 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 3.7x 3.2x 3.4x 3.0x 3.3xEV/EBITDA 25.6x 17.5x 15.8x 16.5x 17.1xEV/Earnings 47.0x 30.9x 34.6x 25.2x 34.0xGross Profit Margin 73 9% 73 4% 72 8% 72 3% 71 8%

TTM Earnings Growth (YoY) -20.9% -24.7% -10.4% -12.3% -1.8%Current Ratio 1.1 1.1 1.1 1.1 1.0Cash as Percent of Market Cap 13.1% 13.8% 12.7% 13.2% 15.6%Enterprise Value Growth (YoY) 3.2% 2.7% 9.7% 18.3% 8.7%

Financial & Accounting 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.9x 2.9x 3.1x 3.3x 3.3xEV/EBITDA 9.8x 9.8x 10.5x 11.3x 12.0xEV/Earnings 20.1x 20.3x 22.8x 24.4x 28.0xGross Profit Margin 58 7% 55 3% 54 6% 55 7% 56 7%

TTM Earnings Growth (YoY) -4.1% 20.0% 24.9% 16.9% -7.9%Current Ratio 1.2 1.2 1.1 1.2 1.2Cash as Percent of Market Cap 19.6% 20.9% 19.2% 21.6% 26.1%Enterprise Value Growth (YoY) 9.4% 2.4% 1.6% 1.7% 4.1%

Mobile Solutions/Content 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 3.2x 2.5x 2.7x 2.8x 3.0xEV/EBITDA 13.8x 11.9x 20.6x 13.2x 13.5xEV/Earnings 22.2x 21.4x 40.1x 50.5x 62.9xGross Profit Margin 56 0% 57 1% 55 1% 54 2% 54 4%Gross Profit Margin 73.9% 73.4% 72.8% 72.3% 71.8%

EBITDA Margin 16.5% 14.7% 14.0% 13.6% 13.3%Net Income Margin 7.9% 7.8% 6.1% 9.5% 8.9%TTM Revenue Growth (YoY) 13.8% 13.2% 11.8% 13.1% 14.2%TTM EBITDA Growth (YoY) 8.4% 0.6% 3.0% -8.7% -22.8%TTM Earnings Growth (YoY) -14.0% 1.8% -7.5% -6.1% -75.4%Current Ratio 2.0 2.2 1.9 2.0 2.0Cash as Percent of Market Cap 13.2% 18.8% 15.7% 13.4% 11.2%Enterprise Value Growth (YoY) 1.5% -9.3% -7.2% -9.1% 21.0%

Gross Profit Margin 58.7% 55.3% 54.6% 55.7% 56.7%EBITDA Margin 29.0% 28.8% 27.5% 26.6% 26.1%Net Income Margin 11.0% 12.8% 12.6% 12.6% 11.2%TTM Revenue Growth (YoY) 17.2% 13.8% 8.6% 10.7% 9.5%TTM EBITDA Growth (YoY) 6.6% 4.1% 2.9% 5.3% 8.2%TTM Earnings Growth (YoY) -22.6% -22.2% -17.4% -7.0% -0.8%Current Ratio 1.2 1.2 1.3 1.5 1.4Cash as Percent of Market Cap 9.4% 6.5% 5.8% 7.9% 8.0%Enterprise Value Growth (YoY) 14.6% 19.8% 12.0% 20.9% 22.9%

Gross Profit Margin 56.0% 57.1% 55.1% 54.2% 54.4%EBITDA Margin 7.8% 6.4% 4.5% 7.9% 8.0%Net Income Margin -0.4% -5.1% -3.1% -2.7% 2.3%TTM Revenue Growth (YoY) 44.9% 48.1% 44.5% 24.6% 13.2%TTM EBITDA Growth (YoY) -1.6% -20.3% 13.7% 13.9% 10.7%TTM Earnings Growth (YoY) 27.0% 31.4% 33.7% 17.5% 70.5%Current Ratio 1.9 2.0 1.9 2.1 2.1Cash as Percent of Market Cap 13.3% 10.7% 8.2% 10.5% 10.9%Enterprise Value Growth (YoY) -20.9% -9.1% -18.9% -20.8% 8.6%

Development Platforms 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.5x 2.5x 2.5x 2.6x 2.6xEV/EBITDA 8.2x 9.6x 9.1x 10.1x 14.2xEV/Earnings 13.6x 16.6x 17.1x 14.2x 13.6xGross Profit Margin 77.8% 77.6% 77.9% 78.1% 77.7%EBITDA Margin 24.7% 23.5% 21.1% 20.3% 20.4%Net Income Margin 13.7% 13.8% 14.3% 12.6% 11.2%TTM Revenue Growth (YoY) 3.5% 1.6% 3.0% 0.6% -0.3%TTM EBITDA Growth (YoY) 3.0% -0.6% -3.0% -2.7% -5.5%

Gaming 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 1.0x 1.0x 1.1x 1.3x 1.7xEV/EBITDA 9.1x 8.0x 7.1x 9.4x 11.3xEV/Earnings 12.1x 20.2x 16.8x 20.5x 43.6xGross Profit Margin 61.6% 61.9% 64.7% 65.3% 66.5%EBITDA Margin 14.9% 15.7% 14.9% 15.4% 14.6%Net Income Margin 6.0% 5.4% 4.5% 4.4% 4.1%TTM Revenue Growth (YoY) 2.2% 0.1% 7.4% 15.1% 14.9%TTM EBITDA Growth (YoY) -26.8% -12.5% 6.3% 57.8% 52.8%

Networking & Network Perf Mgmt 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 3.0x 3.0x 2.8x 2.7x 2.8xEV/EBITDA 16.4x 14.9x 15.3x 17.0x 17.0xEV/Earnings 25.8x 26.9x 29.8x 21.0x 22.9xGross Profit Margin 70.7% 70.7% 70.4% 70.5% 70.6%EBITDA Margin 16.3% 16.0% 16.1% 15.0% 14.3%Net Income Margin 8.3% 8.7% 6.5% 5.4% 0.5%TTM Revenue Growth (YoY) 17.3% 14.6% 15.2% 11.0% 6.5%TTM EBITDA Growth (YoY) 17.9% 22.6% 15.6% 8.2% -2.0%

TTM Earnings Growth (YoY) 3.9% 3.0% 7.1% 9.5% 15.7%Current Ratio 2.1 2.2 2.3 2.3 2.1Cash as Percent of Market Cap 21.5% 22.1% 19.8% 20.2% 17.4%Enterprise Value Growth (YoY) 6.5% -1.7% 0.1% -3.0% 6.2%

Engineering & PLM 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.6x 2.5x 2.7x 2.7x 2.8xEV/EBITDA 12.1x 11.8x 13.4x 12.4x 13.8xEV/Earnings 23.3x 23.2x 20.0x 19.6x 23.0x

TTM Earnings Growth (YoY) -29.2% -24.8% -24.5% -14.8% -9.5%Current Ratio 2.8 2.4 2.5 2.6 2.4Cash as Percent of Market Cap 31.4% 29.9% 28.7% 22.1% 19.4%Enterprise Value Growth (YoY) -10.5% -12.3% -1.3% 27.1% 65.7%

Healthcare 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.2x 2.1x 2.1x 2.1x 2.5xEV/EBITDA 12.8x 11.3x 14.8x 17.6x 16.1xEV/Earnings 37.9x 41.7x 34.2x 37.3x 34.4x

( )TTM Earnings Growth (YoY) -19.6% 16.9% 27.9% 27.1% 2.3%Current Ratio 2.7 2.5 1.9 1.9 2.4Cash as Percent of Market Cap 17.9% 16.9% 14.4% 17.2% 20.4%Enterprise Value Growth (YoY) 7.1% -7.2% -4.3% 2.2% 8.7%

Security 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 4.2x 3.1x 3.5x 4.5x 4.9xEV/EBITDA 11.5x 11.9x 20.7x 16.7x 12.7xEV/Earnings 18.1x 14.2x 17.6x 18.0x 20.7x

Gross Profit Margin 84.1% 83.4% 83.3% 83.4% 83.6%EBITDA Margin 20.5% 20.6% 20.7% 20.5% 20.3%Net Income Margin 11.4% 10.6% 10.8% 10.4% 10.8%TTM Revenue Growth (YoY) 13.2% 14.0% 13.1% 11.7% 8.4%TTM EBITDA Growth (YoY) 20.8% 17.3% 10.5% 11.3% 10.1%TTM Earnings Growth (YoY) -38.8% -14.9% -9.0% -11.3% 0.1%Current Ratio 1.8 1.8 1.9 2.2 2.2Cash as Percent of Market Cap 16.3% 14.6% 13.9% 14.9% 15.5%Enterprise Value Growth (YoY) 29.0% 31.1% 21.1% 27.4% 32.9%

Gross Profit Margin 55.1% 55.4% 55.7% 54.5% 53.6%EBITDA Margin 20.6% 18.5% 13.4% 14.1% 14.3%Net Income Margin 4.0% 3.3% 1.9% 1.7% 1.7%TTM Revenue Growth (YoY) 24.2% 19.6% 10.7% 11.0% 9.4%TTM EBITDA Growth (YoY) 7.0% 13.7% -0.2% -16.8% -19.9%TTM Earnings Growth (YoY) -24.0% -16.2% -10.8% 22.5% 229.5%Current Ratio 2.1 2.1 2.2 2.2 2.2Cash as Percent of Market Cap 8.1% 7.2% 7.1% 5.8% 5.6%Enterprise Value Growth (YoY) -25.5% -17.3% -10.0% 0.4% 9.3%

Gross Profit Margin 77.0% 77.0% 76.7% 76.7% 76.9%EBITDA Margin 18.4% 17.1% 8.1% 7.3% 7.5%Net Income Margin 9.4% 12.3% 6.2% 2.1% 2.4%TTM Revenue Growth (YoY) 22.8% 23.9% 23.8% 21.8% 21.2%TTM EBITDA Growth (YoY) 8.4% 8.7% 4.6% -18.6% -25.4%TTM Earnings Growth (YoY) -7.5% 1.1% 6.5% 21.1% 33.0%Current Ratio 2.2 2.3 1.8 1.8 1.7Cash as Percent of Market Cap 14.7% 14.6% 12.8% 12.1% 9.4%Enterprise Value Growth (YoY) 9.1% 0.7% 7.7% 10.3% 46.7%


All Rights Reserved

THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORYNeeds to be Updated

Storage, Data Mgmt & Integration 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.5x 2.3x 2.4x 2.4x 2.7xEV/EBITDA 9.2x 8.4x 9.2x 8.8x 8.9xEV/Earnings 15.2x 14.5x 15.4x 16.9x 15.5xGross Profit Margin 73.7% 72.4% 72.6% 72.3% 72.8%EBITDA Margin 23.9% 23.8% 22.2% 21.9% 22.2%Net Income Margin 12.8% 12.7% 11.5% 10.7% 10.9%TTM Revenue Growth (YoY) 6.3% 6.5% 4.8% 4.1% 3.3%TTM EBITDA Growth (YoY) 8.0% 3.8% 3.9% 3.4% -0.3%TTM E i G th (Y Y) 11 4% 9 9% 8 0% 5 7% 0 4%

Vertical - Other 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.9x 2.9x 3.0x 3.2x 3.6xEV/EBITDA 21.2x 21.3x 22.0x 22.1x 20.8xEV/Earnings 47.5x 39.8x 40.9x 45.5x 51.8xGross Profit Margin 54.6% 54.2% 53.8% 53.5% 53.2%EBITDA Margin 14.3% 14.0% 14.1% 14.4% 15.5%Net Income Margin 6.2% 5.7% 5.7% 5.5% 5.5%TTM Revenue Growth (YoY) 28.0% 19.8% 21.3% 21.0% 22.2%TTM EBITDA Growth (YoY) 9.0% 6.5% 1.1% 11.2% 18.1%TTM E i G th (Y Y) 14 5% 12 5% 22 4% 0 5% 21 9%TTM Earnings Growth (YoY) -11.4% -9.9% -8.0% -5.7% 0.4%

Current Ratio 2.1 2.3 2.2 2.2 2.4Cash as Percent of Market Cap 19.6% 20.9% 22.1% 21.7% 20.6%Enterprise Value Growth (YoY) 7.8% -1.1% -9.1% -0.8% 13.0%

Supply Chain Mgmt & Logistics 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.5x 2.9x 3.3x 3.4x 4.1xEV/EBITDA 10.5x 12.7x 14.5x 15.0x 17.1xEV/Earnings 24.8x 33.1x 34.1x 36.0x 33.9xGross Profit Margin 65 6% 66 0% 66 6% 67 7% 67 7%

TTM Earnings Growth (YoY) -14.5% 12.5% 22.4% -0.5% 21.9%Current Ratio 1.3 1.4 1.4 1.4 1.4Cash as Percent of Market Cap 10.3% 11.2% 11.3% 9.4% 7.9%Enterprise Value Growth (YoY) 15.6% 7.5% 8.4% 50.5% 68.0%

Gross Profit Margin 65.6% 66.0% 66.6% 67.7% 67.7%EBITDA Margin 17.1% 16.6% 16.0% 15.3% 19.2%Net Income Margin 10.4% 10.4% 10.5% 10.4% 11.1%TTM Revenue Growth (YoY) 15.9% 11.2% 11.3% 9.3% 10.2%TTM EBITDA Growth (YoY) 31.6% 36.0% 27.4% 12.0% 16.8%TTM Earnings Growth (YoY) -18.2% -4.0% -8.7% -10.6% 19.7%Current Ratio 2.0 2.0 2.0 2.0 2.1Cash as Percent of Market Cap 10.8% 9.3% 8.1% 6.2% 6.1%Enterprise Value Growth (YoY) 40.9% 38.4% 28.9% 31.7% 40.4%

Systems Management 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 6.9x 5.7x 5.6x 5.0x 5.4xEV/EBITDA 26.6x 24.6x 23.0x 20.9x 19.7xEV/Earnings 41.2x 39.3x 37.6x 34.7x 34.8xGross Profit Margin 85.8% 85.8% 85.6% 85.5% 85.6%EBITDA Margin 25.9% 25.0% 24.4% 23.8% 24.2%Net Income Margin 16.7% 15.5% 14.9% 14.1% 13.8%TTM Revenue Growth (YoY) 18.7% 17.4% 17.2% 16.1% 16.4%TTM EBITDA Growth (YoY) 13.3% 16.0% 18.2% 15.1% 10.1%TTM Earnings Growth (YoY) -15.8% -8.0% -8.8% -8.8% 0.4%Current Ratio 1.9 1.8 1.5 1.5 1.5Cash as Percent of Market Cap 9.3% 10.5% 11.0% 13.2% 11.5%Enterprise Value Growth (YoY) 33.2% 7.8% 4.1% -10.3% -9.0%

Vertical - Finance 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 3.2x 3.0x 3.4x 3.8x 3.7xEV/EBITDA 10.6x 9.4x 10.7x 11.4x 12.6xEV/Earnings 26.0x 23.3x 24.1x 23.2x 24.3xGross Profit Margin 45.4% 44.3% 43.8% 43.3% 43.2%EBITDA Margin 26.2% 26.3% 26.5% 27.3% 26.0%Net Income Margin 10.4% 10.0% 9.7% 10.3% 11.3%TTM Revenue Growth (YoY) 6.3% 7.1% 6.7% 7.6% 7.4%TTM EBITDA Growth (YoY) 7.9% 11.2% 8.8% 9.0% 8.9%TTM Earnings Growth (YoY) 1.3% -3.3% -0.9% -2.6% -8.4%Current Ratio 1.3 1.4 1.3 1.4 1.3Cash as Percent of Market Cap 9.0% 7.6% 7.0% 7.7% 6.9%Enterprise Value Growth (YoY) 2.7% -4.4% 0.9% 20.9% 29.0%


All Rights Reserved

THE SEG SaaS INDEX METRICS BY PRODUCT CATEGORYNeeds to be Updated

CRM & Marketing 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 4.7x 3.4x 2.7x 2.7x 4.0xEV/EBITDA 37.1x 30.3x 26.6x 29.8x 106.5xEV/Earnings 71.9x 28.4x 35.6x 52.7x 273.3xGross Profit Margin 71.1% 71.0% 70.8% 70.9% 71.0%EBITDA Margin 4.4% 3.1% 2.8% 2.2% 2.1%Net Income Margin -1.4% -8.9% -8.9% -9.8% -6.7%TTM Revenue Growth (YoY) 33.2% 36.1% 37.2% 26.7% 27.3%TTM EBITDA Growth (YoY) -9.4% -11.1% -34.4% -29.3% -47.3%TTM E i G th (Y Y) 52 5% 34 3% 80 3% 71 7% 76 6%

Other SaaS 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 4.8x 4.8x 4.1x 5.8x 8.8xEV/EBITDA 20.5x 20.3x 26.4x 30.2x 33.9xEV/Earnings 5.0x 9.9x 12.5x 15.6x 18.0xGross Profit Margin 71.5% 71.2% 71.2% 71.7% 72.2%EBITDA Margin 0.0% 0.0% 0.0% 0.0% 0.0%Net Income Margin -7.7% -8.0% -4.9% -4.4% -4.9%TTM Revenue Growth (YoY) 18.8% 18.6% 23.0% 19.3% 21.5%TTM EBITDA Growth (YoY) 0.0% 0.0% 2.8% 0.0% -31.9%TTM E i G th (Y Y) 9 6% 13 8% 5 9% 10 9% 5 0%TTM Earnings Growth (YoY) 52.5% 34.3% 80.3% 71.7% 76.6%

Current Ratio 1.5 1.9 1.9 1.5 1.9Cash as Percent of Market Cap 9.1% 14.7% 21.9% 19.3% 14.1%Enterprise Value Growth (YoY) 7.5% 23.3% -20.1% -29.1% -8.4%

ERP & Supply Chain 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 5.5x 7.0x 6.6x 7.1x 9.3xEV/EBITDA 67.2x 63.6x 85.0x 86.7x 108.3xEV/Earnings 131.3x 118.6x 283.7x 331.2x 478.1xGross Profit Margin 70 0% 70 2% 69 3% 68 6% 68 1%

TTM Earnings Growth (YoY) 9.6% 13.8% 5.9% 10.9% 5.0%Current Ratio 1.6 1.6 1.9 1.7 1.8Cash as Percent of Market Cap 12.5% 13.2% 13.0% 12.1% 8.1%Enterprise Value Growth (YoY) 0.0% 1.6% 0.0% 28.6% 61.0%

Gross Profit Margin 70.0% 70.2% 69.3% 68.6% 68.1%EBITDA Margin 6.7% 7.2% 3.2% 0.2% -0.6%Net Income Margin 1.8% 2.7% -1.4% -3.8% -4.3%TTM Revenue Growth (YoY) 26.3% 25.3% 31.8% 33.9% 37.7%TTM EBITDA Growth (YoY) 1.1% -4.8% 19.0% 0.3% -53.2%TTM Earnings Growth (YoY) 7.2% 179.4% 126.5% 110.2% 41.8%Current Ratio 1.4 1.4 2.4 2.1 2.8Cash as Percent of Market Cap 8.5% 8.7% 7.5% 9.4% 7.6%Enterprise Value Growth (YoY) 76.3% 66.7% 64.8% 94.4% 68.1%

Vertically Focused 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 5.7x 4.7x 5.0x 5.0x 5.7xEV/EBITDA 30.4x 25.5x 27.3x 25.7x 28.3xEV/Earnings 23.7x 30.7x 63.2x 137.6x 119.5xGross Profit Margin 61.1% 71.4% 71.3% 71.8% 67.7%EBITDA Margin 15.3% 14.6% 16.4% 16.0% 15.8%Net Income Margin 16.3% 14.0% 5.3% 3.8% 3.3%TTM Revenue Growth (YoY) 32.0% 27.7% 21.6% 21.5% 22.6%TTM EBITDA Growth (YoY) 4.0% 2.9% 6.5% 10.2% 8.5%TTM Earnings Growth (YoY) -38.6% 1.1% 3.4% 28.2% -36.1%Current Ratio 2.2 2.4 2.5 1.6 2.6Cash as Percent of Market Cap 9.7% 7.8% 8.3% 5.4% 8.8%Enterprise Value Growth (YoY) 58.5% 25.7% 26.3% 21.5% 26.9%

Workforce Management 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 8.3x 10.5x 10.7x 8.5x 10.4xEV/EBITDA 80.0x 69.4x 63.7x 61.9x 72.9xEV/Earnings 368.3x 243.2x 180.5x 165.7x 189.8xGross Profit Margin 56.5% 56.6% 57.4% 58.5% 60.2%EBITDA Margin -15.0% -16.2% -17.8% -16.1% -14.4%Net Income Margin -27.5% -27.9% -29.2% -27.7% -28.2%TTM Revenue Growth (YoY) 28.7% 29.1% 23.4% 43.1% 42.2%TTM EBITDA Growth (YoY) -16.6% -42.8% -32.9% -17.9% -32.3%TTM Earnings Growth (YoY) -63.6% 17.9% 25.4% 24.0% 27.0%Current Ratio 1.2 1.2 1.1 1.1 2.2Cash as Percent of Market Cap 5.0% 4.2% 3.8% 13.7% 10.3%Enterprise Value Growth (YoY) 87.1% 62.3% 49.2% 42.8% 75.3%


All Rights Reserved

THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORYNeeds to be Updated

Ad Tech & Lead Generation 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 1.8x 2.2x 2.0x 2.5x 2.5xEV/EBITDA 13.3x 12.0x 14.9x 14.9x 22.1xEV/Earnings 29.6x 28.0x 21.9x 25.4x 25.7xGross Profit Margin 65.1% 64.8% 64.5% 64.5% 63.5%EBITDA Margin 12.5% 12.6% 12.9% 12.6% 11.3%Net Income Margin 2.7% 3.3% 5.0% 4.1% 1.7%TTM Revenue Growth (YoY) 33.4% 31.9% 28.8% 26.8% 17.9%TTM EBITDA Growth (YoY) 4.9% 4.3% 10.0% 22.2% 26.6%TTM E i G th (Y Y) 9 3% 17 8% 11 5% 4 6% 129 3%

Infrastructure 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 1.1x 1.0x 1.7x 1.6x 1.4xEV/EBITDA 14.2x 10.4x 11.9x 13.6x 14.3xEV/Earnings 18.2x 20.5x 23.3x 35.3x 50.4xGross Profit Margin 63.7% 63.1% 61.6% 61.2% 62.2%EBITDA Margin 8.1% 7.5% 8.0% 7.2% 7.1%Net Income Margin 3.4% 1.8% -0.8% 0.4% 0.3%TTM Revenue Growth (YoY) 11.8% 10.9% 9.2% 8.8% 1.7%TTM EBITDA Growth (YoY) 1.0% -0.9% -18.7% -16.2% -19.5%TTM E i G th (Y Y) 23 1% 59 7% 51 9% 64 6% 25 4%TTM Earnings Growth (YoY) -9.3% -17.8% -11.5% 4.6% 129.3%

Current Ratio 2.7 2.7 2.4 2.4 2.2Cash as Percent of Market Cap 20.8% 16.4% 19.1% 18.3% 14.3%Enterprise Value Growth (YoY) -3.6% 2.7% 8.8% 39.1% 41.0%

Commerce 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 0.9x 1.2x 0.9x 0.9x 1.1xEV/EBITDA 14.9x 13.6x 10.5x 15.1x 15.6xEV/Earnings 17.1x 18.8x 13.9x 23.8x 24.5xGross Profit Margin 37 4% 38 6% 38 4% 38 5% 38 9%

TTM Earnings Growth (YoY) 23.1% 59.7% 51.9% 64.6% -25.4%Current Ratio 3.3 3.1 3.0 3.1 3.1Cash as Percent of Market Cap 24.8% 27.3% 28.4% 27.5% 22.1%Enterprise Value Growth (YoY) -12.7% 1.6% -2.8% -1.6% 19.5%

Services 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 3.1x 3.3x 3.5x 3.4x 4.3xEV/EBITDA 13.3x 15.1x 14.2x 19.7x 23.9xEV/Earnings 34.6x 40.9x 50.2x 74.6x 117.8xGross Profit Margin 69 6% 70 5% 71 1% 71 8% 71 8%Gross Profit Margin 37.4% 38.6% 38.4% 38.5% 38.9%

EBITDA Margin 8.4% 8.4% 7.6% 7.5% 6.7%Net Income Margin 3.1% 4.5% 4.6% 4.9% 4.8%TTM Revenue Growth (YoY) 14.2% 15.1% 17.5% 17.7% 15.4%TTM EBITDA Growth (YoY) 12.8% 19.1% 25.7% 30.0% 18.5%TTM Earnings Growth (YoY) -38.1% -28.0% -8.4% -12.4% 1.5%Current Ratio 2.0 1.9 1.8 1.6 1.7Cash as Percent of Market Cap 20.6% 20.3% 18.5% 15.5% 13.5%Enterprise Value Growth (YoY) -14.4% 6.2% -6.3% 28.0% 39.8%

Gross Profit Margin 69.6% 70.5% 71.1% 71.8% 71.8%EBITDA Margin 9.6% 9.4% 9.6% 7.1% 5.6%Net Income Margin 4.3% 3.2% 3.6% 0.4% 1.0%TTM Revenue Growth (YoY) 46.7% 32.7% 41.8% 40.4% 38.1%TTM EBITDA Growth (YoY) 7.9% 10.9% 23.5% 30.6% 59.7%TTM Earnings Growth (YoY) -4.9% -33.1% -7.8% 46.5% 76.0%Current Ratio 1.4 2.2 2.1 2.2 2.2Cash as Percent of Market Cap 15.1% 17.0% 13.2% 14.0% 14.1%Enterprise Value Growth (YoY) -3.6% -10.8% 16.1% 65.8% 102.8%

Content & Media 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 1.3x 1.4x 1.6x 2.3x 2.7xEV/EBITDA 10.8x 10.9x 15.4x 13.8x 20.8xEV/Earnings 19.2x 22.0x 18.9x 22.6x 21.8xGross Profit Margin 53.9% 52.5% 52.4% 52.4% 52.3%EBITDA Margin 14.1% 14.1% 14.8% 15.5% 15.9%Net Income Margin 4.0% 1.3% 1.6% 2.2% 2.4%TTM Revenue Growth (YoY) 12.3% 10.5% 12.6% 12.1% 14.1%TTM EBITDA Growth (YoY) -1.2% 4.8% 19.5% 16.6% 23.1%

Social 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 12.1x 9.0x 9.3x 10.0x 14.0xEV/EBITDA 34.3x 39.6x 38.9x 37.1x 38.6xEV/Earnings 98.0x 62.9x 44.2x 43.6x 53.1xGross Profit Margin 74.0% 73.8% 73.2% 72.7% 74.9%EBITDA Margin 8.2% 12.9% 14.7% 16.8% 17.0%Net Income Margin 1.8% 6.3% 2.2% 3.5% 9.1%TTM Revenue Growth (YoY) 57.3% 50.9% 49.3% 47.2% 41.4%TTM EBITDA Growth (YoY) -9.3% -2.2% 18.4% 45.1% 79.2%

TTM Earnings Growth (YoY) 34.3% 9.4% 0.4% -0.9% 70.5%Current Ratio 2.1 1.6 1.8 1.8 2.0Cash as Percent of Market Cap 26.9% 16.2% 17.2% 16.8% 14.4%Enterprise Value Growth (YoY) -21.9% -11.6% 12.8% 23.5% 69.5%

Gaming 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.1x 2.4x 2.7x 2.7x 2.8xEV/EBITDA 3.4x 4.3x 5.8x 5.9x 7.7xEV/Earnings 8.4x 7.1x 7.1x 8.4x 11.2x

TTM Earnings Growth (YoY) -39.4% -44.9% -62.2% -67.3% -65.3%Current Ratio 7.2 5.4 5.2 4.2 3.8Cash as Percent of Market Cap 17.1% 18.7% 14.5% 16.6% 11.5%Enterprise Value Growth (YoY) n/a n/a n/a -3.8% 56.7%

Travel 3Q12 4Q12 1Q13 2Q13 3Q13EV/Revenue 2.4x 2.7x 2.8x 3.4x 4.6xEV/EBITDA 13.5x 15.7x 16.2x 18.2x 21.2xEV/Earnings 23.7x 20.7x 25.2x 35.3x 44.3x

Gross Profit Margin 71.9% 69.4% 71.2% 71.3% 72.5%EBITDA Margin 43.4% 38.6% 36.3% 38.6% 35.4%Net Income Margin 28.9% 27.3% 24.8% 26.7% 27.7%TTM Revenue Growth (YoY) 32.0% 24.8% 21.9% 21.9% 19.8%TTM EBITDA Growth (YoY) 9.7% 4.2% 13.9% 13.4% 18.0%TTM Earnings Growth (YoY) 1.1% -12.8% -13.5% -12.6% -13.2%Current Ratio 2.4 2.2 2.5 2.4 2.4Cash as Percent of Market Cap 33.3% 40.5% 36.7% 33.5% 29.8%Enterprise Value Growth (YoY) -30.8% 9.0% -6.3% 22.8% 63.0%

Gross Profit Margin 79.8% 79.6% 79.4% 79.7% 80.7%EBITDA Margin 21.9% 19.6% 18.1% 17.9% 16.8%Net Income Margin 12.9% 11.5% 9.5% 9.5% 9.1%TTM Revenue Growth (YoY) 21.2% 20.2% 19.3% 20.0% 20.8%TTM EBITDA Growth (YoY) 2.8% -1.4% -0.6% 2.1% 1.0%TTM Earnings Growth (YoY) -40.7% -17.0% -4.7% 29.2% 601.0%Current Ratio 2.1 2.0 1.9 1.9 1.9Cash as Percent of Market Cap 15.5% 20.0% 19.4% 18.7% 15.3%Enterprise Value Growth (YoY) -30.5% -23.5% 1.0% 38.8% 45.0%


All Rights Reserved

2Q13 PUBLIC SELLERSNeeds to be Updated

Buyer SellerPurchase Price

(mm)Enterprise Value

(mm) EV/Rev EV/EBITDATTM Rev Growth

Private Equity Consortium BMC Softw are Inc. (NasdaqGS:BMC) $8,376.8 $6,866.4 3.1x 11.2x 1.4%Salesforce.com, Inc (NYSE:CRM) ExactTarget, Inc. (NYSE:ET) $2,350.6 $2,249.6 7.1x - 39.4%Vista Equity Partners Websense Inc $1 054 8 $971 1 2 7x 17 9x 1 5%Vista Equity Partners Websense, Inc. $1,054.8 $971.1 2.7x 17.9x -1.5%McAfee, Inc. Stonesoft Oyj (HLSE:SFT1V) $371.6 $378.7 7.0x - 27.1%Thoma Bravo, LLC Keynote Systems, Inc. (NasdaqGS:KEYN) $398.7 $340.8 2.8x 23.1x 5.2%Trulia, Inc. (NYSE:TRLA) Market Leader, Inc. (NasdaqGS:LEDR) $336.3 $314.3 6.6x - 29.1%The Carlyle Group LP (NasdaqGS:CG) Simplex Holdings Inc. (TSE:4340) $283.6 $216.2 1.2x 7.1x 4.0%DPA Group NV (ENXTAM:DPA) ICT Automatisering NV (ENXTAM:ICT) $43 2 $46 3 0 4x 14 2x 3 0%DPA Group NV (ENXTAM:DPA) ICT Automatisering NV (ENXTAM:ICT) $43.2 $46.3 0.4x 14.2x -3.0%P2 Energy Solutions Incorporated ISS Group Limited (ASX:ISS) $43.3 $36.8 1.8x 26.6x 9.3%


All Rights Reserved

2Q13 MEGA DEALSNeeds to be Updated



(mm) EV/Rev EV/EBITDATTM Rev Growth

Private Equity Consortium BMC Softw are Inc. (NasdaqGS:BMC) $8,376.8 $6,866.4 3.1x 11.2x 1.4%Salesforce.com, Inc (NYSE:CRM) ExactTarget, Inc. (NYSE:ET) $2,350.6 $2,249.6 7.1x - 39.4%Adobe Systems Inc (NasdaqGS:ADBE) Neolane SA $600 0 $600 0 10 3x -Adobe Systems Inc. (NasdaqGS:ADBE) Neolane SA $600.0 $600.0 10.3x - -OMERS Private Equity Civica plc $607.8 $607.8 1.9x 10.3x -Vista Equity Partners Websense, Inc. $1,054.8 $971.1 2.7x 17.9x -1.5%Yahoo! Inc. (NasdaqGS:YHOO) Tumblr, Inc. $1,100.0 $1,100.0 84.6x - -International Business Machines C ( S )

SoftLayer Technologies, Inc. $2,000.0 $2,000.0 5.0x - -


All Rights Reserved

2Q13 MOST ACTIVE BUYERSNeeds to be Updated



(mm)TTM Revenue

(mm)EV /

RevenueConstellation Softw are, Inc. (TSX:CSU) 123Signup AMS Inc - - - -, ( ) 123Signup AMS, Inc.

Metalogic Holdings Limited - - - -

Quadramed, Inc. - - - -

Quantitative Medical Systems, Inc. - - - -Dassault Systemes SA (ENXTPA:DSY) Apriso Corporation $205.0 $205.0 - -

Archividéo SARL - - - -FE-DESIGN GmbH - - - -SIMPOE SAS - - - -

Google Inc. (NasdaqGS:GOOG) Behavio, Inc. - - - -Wavii, Inc. - - - -Waze Ltd. - - - -

Intel Corporation (NasdaqGS:INTC) Aepona Ltd - - - -Mashery, Inc. - - - -ST-Ericsson, Navigation Satellite Business - - - -

Tw itter, Inc. Lucky Sort Inc. - - - -Spindle Labs, Inc. - - - -p ,Ubalo, Inc. - - - -

Yahoo! Inc. (NasdaqGS:YHOO) GhostBird Softw are Inc. - - - -Go Poll Go, Inc. - - - -Loki Studios, Inc. - - - -PlayerScale, Inc. - - - -y ,Rondee, Inc. - - - -Todoroo, Inc. - - - -Tumblr, Inc. $1,100.0 $1,100.0 $13.0 84.6x


All Rights Reserved

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, our firm has guided and

ABOUT SOFTWARE EQUITY GROUPq y p y g gy , g

advised companies on five continents, including privately-held software and technology companies in the United States, Canada, Europe, Asia Pacific, Africa and Israel. We have represented public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges. Software Equity Group also advises several of the world's leading private equity firms. We are ranked among the top ten investment banks worldwide for application software mergers and acquisitions.

Our value proposition is unique and compelling We are skilled and accomplished investment bankers with extraordinary software internet and technologyOur value proposition is unique and compelling. We are skilled and accomplished investment bankers with extraordinary software, internet and technology domain expertise. Our industry knowledge and experience span virtually every software product category, technology, market and delivery model, including Software-as-a-Service (Saas), software on-demand and perpetual license. We have profound understanding of software company finances, operations and valuation. We monitor and analyze every publicly disclosed software M&A transaction, as well as the market, economy and technology trends that impact these deals. We're formidable negotiators and savvy dealmakers who facilitate strategic combinations that enhance shareholder value.

P h t i t t th l ti hi ' b ilt d th i d t t ti j S ft E it G i k d t d b bli lPerhaps most important are the relationships we've built and the industry reputation we enjoy. Software Equity Group is known and respected by publicly traded and privately owned software and technology companies worldwide, and we speak with them often. Our Quarterly and Annual Software Industry Equity Reports are read and relied upon by more than thousands of industry executives, entrepreneurs and equity investors in sixty-one countries, and we have been quoted widely in such leading publications as The Wall Street Journal, Barrons, Information Week, The Daily Deal, The Street.com, U.S. News & World Report, Reuters, Mergers & Acquisitions, USA Today, Arizona Republic, Detroit Free Press, Entrepreneur Magazine, Softletter, Software Success, Software CEO Online and Software Business Magazine. g

To keep your finger on the pulse of the software equity markets, subscribe to our Annual and Quarterly Research Reports.

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. For a confidential consultation without obligation, [email protected] , 2800-509) 858Beible, Director, Business Development (Kris please contact

CONTACT INFORMATION:

Software Equity Group, L.L.C.12220 El Camino Real, Suite 320San Diego, CA 92130www softwareequity comwww.softwareequity.comp: (858) 509-2800

The information contained in this Report is obtained from sources we believe to be reliable, but no representation or guarantee is made about the accuracy or completeness of such information, or the opinions expressed herein. Nothing in this Report is intended to be a recommendation of a specific security or company or intended to constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any security. Software Equity Group LLC may have an interest in one or more of the securities or companies discussed herein. Financial data provided by Capital IQ.


All Rights Reserved

This Report may not be reproduced in whole or in part without the expressed prior written authorization of Software Equity Group, L.L.C.Software Equity Group registers each Report with the U.S. Copyright Office and vigorously enforces its intellectual property rights.

Documents

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSsoftwareequity.com/Reports/4Q13_Report_Draft_-MASTER_02042013_-_Copy.pdf · Software Equity Group is an investment bank and M&A advisory