The Software Industry Financial Report - Software … Software Industry Financial Report. SOFTWARE EQUITY GROUP | Q2 2016 SOFTWARE INDUSTRY FINANCIAL REPORT ... B2B enterprise software

Q2

20

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SEG Capital Advisors, L.L.C.

12220 El Camino Real

Suite 320

San Diego, CA 92130

[email protected]

(858) 509-2800

The Software Industry

Financial Report

SOFTWARE EQUITY GROUP | Q2 2016 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © SEG Capital Advisors, LLC, All Rights Reserved 2

About Software Equity GroupAbout SEG 5SEG’s 2016 Transaction Announcements 6Leaders in Software M&A 7

Public SaaS Company Financial and Valuation PerformanceThe SEG SaaS Index 9The SEG SaaS Index: Financial Performance 10-12The SEG SaaS Index: Public Market Multiples 13-15The SEG SaaS Index by Product Category: Financial Performance 16

Public Software Financial and Valuation PerformanceThe SEG Software Index 18The SEG Software Index: Financial Performance 19-21The SEG Software Index: Public Market Multiples 22-23The SEG Software Index by Product Category 24The SEG Software Index by Product Category: Financial Performance 25-26

Public Internet Company Financial and Valuation PerformanceThe SEG Internet Index 28The SEG Internet Index: Financial Performance 29-31The SEG Internet Index: Public Market Multiples 32-33The SEG Internet Index by Product Category 34The SEG Internet Index by Product Category: Financial Performance 35-36

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS


SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS

SaaS/Software Industry M&A Market UpdateSoftware/SaaS M&A Deal Volume and Spending 38SaaS M&A Deal Volume and Exit Multiples 39-41SaaS M&A by Product Category 42SaaS M&A 2Q16 Transactions 43-47Software M&A Exit Multiples 48Software M&A by Ownership Structure and Size 49Software M&A by Vertical and Horizontal Markets 50Software M&A Deal Volume by Product Category 51Software M&A Exit Multiples by Product Category 52About Software Equity Group 53

AppendixThe SEG SaaS Index: Public Market Multiples (Annual) 55The SEG SaaS Index: Financial Performance (Annual) 56The SEG Software Index: Public Market Multiples (Annual) 57The SEG Software Index: Financial Performance (Annual) 58The SEG Internet Index: Public Market Multiples (Annual) 59The SEG Internet Index: Financial Performance (Annual) 60SEG SaaS Index Key Metrics 61-62SEG SaaS Index Key Metrics by Product Category 63SEG Software Index Key Metrics 64-67SEG Software Index Key Metrics by Product Category 68-69SEG Internet Index Key Metrics 70-72SEG Internet Index Key Metrics by Product Category 732Q16 Select Public Sellers 742Q16 Mega Deals 752Q16 Most Active Buyers 76

SOFTWARE EQUITY GROUP | Q2 2016 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © SEG Capital Advisors, LLC, All Rights Reserved

ABOUT SOFTWARE EQUITY GROUP


About SEG

Focus on Advice

Multi-service

Multi-Industry

Focus on Software

Advisory Boutiques

Bulge Bracket Firms

IB Boutiques

Billions of dollars of lower market software deals, endless buyer and seller references, industry leading close rates, upper decile valuation results.

• Twenty-four year, exclusive focus on advisory services to B2B enterprise software companies in the lower middle market

• Advisory services encompass:

• Strategic exit

• Growth capital

• Buyout

• Inorganic growth via acquisition

• Fairness opinions and valuations

• Board advisory services

• Clients span virtually every technology, product category, delivery model and financial profile

• Global presence providing advice and guidance to more than 2,000 private and public companies throughout US, Canada, Europe, Asia-Pacific, Africa and Israel

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

• Unparalleled software industry reputation, track record and industry research

• Highly referenceable base of past clients and buyers / investors


SEG’s 1H 2016 Transaction Announcements


SEG: Leading Software Industry M&A Advisor


THE SEG SOFTWARE INDUSTRY FINANCIAL REPORT

PUBLIC SaaS COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


THE SEG SaaS INDEX

• The SEG SaaS Index tracks public companies that primarily offerhosted, on-demand software under a subscription and/or transactionbased pricing model. It is currently comprised of 65 publicly tradedpure-play SaaS companies.

• During 2Q16, seven companies in SEG’s SaaS Index announced anintent to be acquired. This, combined with a weak IPO market andadditional acquisition of our index companies, will lead to a smallerindex by year-end 2016.

• See appendix for SEG SaaS Index public market multiples andfinancial performance on an annual basis.

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

9

SEG - SaaS: Median Metrics

Measure 2Q15 3Q15 4Q15 1Q16 2Q16

EV/TTM Revenue 6.3x 6.3x 5.9x 4.0x 4.4x

EV/NTM Revenue 4.8x 4.5x 4.6x 3.4x 3.9x

EV/TTM EBITDA 51.0x 38.5x 30.5x 32.7x 38.9x

EV/TTM CFO 48.1x 39.3x 38.5x 29.6x 33.6x

Gross Profit Margin 64.4% 65.4% 66.2% 67.1% 66.6%

EBITDA Margin -11.9% -10.5% -8.1% -6.2% -6.8%

Net Income Margin -18.0% -17.9% -17.6% -16.8% -15.9%

TTM Revenue Growth 31.2% 29.0% 27.7% 28.9% 28.5%

TTM Total Revenue ($M) $149.4 $162.9 $176.1 $195.8 $202.7

TTM EBITDA Growth 12.3% 25.8% 29.5% 20.7% 24.1%

TTM Total EBITDA ($M) -$9.4 -$10.4 -$11.6 -$12.1 -$11.6

Cash & Eq ($M) $105.2 $110.4 $112.9 $107.2 $103.3

Debt / Equity Ratio 2.2% 2.2% 1.8% 1.7% 1.5%


THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

• The median TTM revenue growth rate of Public SaaS companies in2Q16 was 28.5%, down modestly from 31.2% YOY, but roughlyequivalent to 1Q16’s 28.9% median mark. While median TTM revenuegrowth has slowed YOY, the quarter’s median growth rate remainsimpressive when considering Q2’s larger revenue base. Median TTMrevenue of public SaaS companies was $202.7 million in 2Q16,compared to $149.4 million in 2Q15.

• Median growth rates alone do not capture the standout performancesof the most successful SaaS companies. In Q2, 30% of public SaaScompanies grew TTM revenue by 40% or more year over year,compared with only eight percent of public on-premise softwareproviders achieving growth of 40% or greater. As further testamentto the widespread and ramping adoption of SaaS, these outperformerscome from a variety of product categories including Healthcare,Human Capital Management, Life Sciences, Service Management,Security, CRM & Marketing, and Business Intelligence/Analytics.

10

TTM Revenue Growth Rate Distribution– 2Q16

2%

19%

8%

23%

19%

13%

17%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

% o

f C

om

pa

nie

s

TTM Revenue Growth

$149.4$162.9

$176.1$195.8 $202.7

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

$0

$50

$100

$150

$200

$250

2Q15 3Q15 4Q15 1Q16 2Q16

TT

M R

ev

en

ue

Gro

wthT

TM

To

tal

Re

ve

nu

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TTM Total Revenue ($M) TTM Revenue Growth

Median Revenue Performance - Quarterly



11

TTM EBITDA Margin Distribution– 2Q16Median EBITDA Margin Performance - Quarterly

58%

21%

12%

5% 4%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

% o

f C

om

pa

nie

s

TTM EBITDA Margin

(11.9%)

(10.5%)

(8.1%)

(6.2%) (6.8%)

2Q15 3Q15 4Q15 1Q16 2Q16

EB

ITD

A M

arg

in

• The median EBITDA margin in 2Q16 was -6.8%, roughly equivalentwith 1Q16 (-6.2%) and has been steadily trending toward positiveterritory since 4Q14.

• While the majority of public SaaS companies continue to post GAAPlosses (58% of our index in Q2), due to significant levels of deferredrevenue, approximately two thirds of public SaaS companiesgenerated positive cash flow from operations in Q2.

• Select Public SaaS companies posting negative EBITDA Margin whilegenerating positive cash flow from operations during Q2 include:Hubspot (-20.6% EBITDA Margin, $3.6M CFO); New Relic (-32.4%EBITDA Margin, $4.0M CFO); Q2 Holdings (-15.7% EBITDA Margin,$8.2M CFO); Shopify (-6.9% EBITDA Margin, $12.5M CFO); Workday(-15.5% EBITDA Margin, $327.9M CFO) and Zendesk (-31.6% EBITDAMargin, $15.1M CFO).



12

• Public SaaS companies continue to spend heavily on sales & marketing in order to drive revenue growth and capture market share. In 2Q16, public SaaScompanies invested a median 38.3% of total revenue on sales & marketing, almost double their on-premise counterparts. However, this represents amodest decline from the 40.6% S&M spend in 2Q15. R&D spend as a percent of revenue held relatively flat year over year (19.2% in 2Q16 vs. 19.7% in2Q15).

• Median EBITDA and Net Income margins have trended in a positive direction over the past year, along with a hike in median gross profit margin (66.6% in2Q16).

• I.e. - As the average company size in our Public SaaS Index grows larger ($202.7M in 2Q16 vs. $149.4M in 2Q15), some are beginning to see the benefits ofscale. A key example being Hubspot. Over the past three years, Hubspot has seen its gross profit margin increase from 62% in 1Q13 to 76% today. Whilethe company’s professional services related COGS (ie. cost to implement & train new customers) has stayed relatively flat as a percent of revenue (largelyfloating between 8-10%), its subscription support related COGS (ie. hosting and customer support costs) has declined from nearly 30% of revenue in 1Q13to approximately 15% today. Over the same time period, Hubspot has accelerated growth (greater than 50% YOY each of the past 7 quarters) whilematerially reducing its aggregate operational expenditures from 107% of revenue in 1Q13 to 93% today. These economies of scale allowed Hubspot togenerate positive cash flow from operations for the first time this past quarter.

Median Margin PerformanceMedian Operating Ratios

64.4% 65.4% 66.2% 67.1% 66.6%

-11.9% -10.5%-8.1% -6.2% -6.8%

-18.0% -17.9% -17.6% -16.8% -15.9%-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

2Q15 3Q15 4Q15 1Q16 2Q16

% M

arg

in

Gross Profit Margin EBITDA Margin Net Income Margin

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2Q15 3Q15 4Q15 1Q16 2Q16

% o

f R

ev

en

ue

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


THE SEG SaaS INDEX: PUBLIC MARKET MULTIPLES

• At the close of 2Q16, the median market multiple of public SaaS companies was4.4x EV/Revenue, up from last quarter’s median multiple of 4.0x, but stillsignificantly below recent years past.

• In 2Q16, 11% of public SaaS companies achieved a median EV/Revenue multipleof 9x or higher, significantly higher than 1Q16 when only five percent of ourpublic SaaS index was valued at 9.0x or higher. The markets have rebounded fromQ1’s precipitous drop, but Public SaaS company “high fliers” are few and farbetween compared with our 2Q15 and 2Q14 Quarterly Reports, when 36% and25% of our Public SaaS Index traded at 9.0x EV/Revenue or higher, respectively.

• Investors and larger strategic buyers have clearly taken note of softeningvaluations for public SaaS companies. During Q2, seven public SaaS companies(over 10 percent of our index) announced an intent to be acquired by eitherprivate equity firms or strategic buyers. The list includes: Demandware’sacquisition by Salesforce; OPOWER & Textura each being acquired by Oracle;InContact’s acquisition by Nice Systems; Cvent & Marketo each being takenprivate by Vista Equity Partners and Sciquest being taken private by Accel-KKR.Please reference slides 39-42 for additional SaaS M&A transaction detail.

13

EV/Revenue Multiple Distribution– 2Q16Median EV/Revenue and EV/EBITDA - Quarterly

6%

11%

13% 13%

11% 11%

8% 8%

6%

11%

<= 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

% o

f C

om

pa

nie

s

EV/Revenue

6.3x 6.3x 5.9x 4.0x 4.4x

51.0x

38.5x

30.5x32.7x

38.9x

2Q15 3Q15 4Q15 1Q16 2Q16

EV/TTM Revenue EV/EBITDA



• The highest growth SaaS companies received a median 7.2x EV/Revenue multiple in 2Q16, a healthy increase over 1Q16’s 6.3x median multiple and a 63% premium overSEG’s 2Q16 median EV/Revenue multiple of 4.4x for all publicly traded SaaS companies. In comparison, those generating revenue growth greater than 50% in 2Q15received a median 11.9x EV/Revenue multiple and 98% premium to 2Q15’s 6.0x EV/Revenue median multiple across all public SaaS companies.

• The steep YOY decline in median EV/Revenue for this high growth cohort can be attributed to:

• 1) A general decline in public SaaS valuations year over year as macro economic concerns and an election year have some investors fleeing high growth small capSaaS stocks;

• 2) Those companies posting significant growth at any cost have fallen out of favor with investors. As an example, Hortonworks posted a median 14.1x TTMrevenue multiple in 2Q15 on the back of 95% revenue growth, but negative 314% EBITDA margin and negative $104 million CFO. During 2Q16, the companygrew revenue 136%, generated negative 140% EBITDA margin and negative $106 million CFO, and posted median 3.8x EV/Revenue.

• 3) 50%+ growth SaaS businesses from 2Q15 that have seen revenue growth fall under 50% in 2Q16 due, predominantly, to either size (Workday & ServiceNow)or increased competitive pressure. Tableau has seen its revenue growth and multiple fall from 75% and 15.5x EV/Revenue in 2Q15, respectively, to 48% and 4.1xEV/Revenue, in 2Q16 respectively, as competitive pressures across business intelligence, analytics and big data heat up.

• The most profitable SaaS companies posted a median 5.3x EV/Revenue multiple during 2Q16, a 20% premium over the Index median 4.4x EV/Revenue. In comparison, thesame cohort received a 5.5x EV/Revenue multiple in 2Q15, which equated to an eight percent discount to that quarters 6.0x Index median.

14

EV/Revenue Multiples vs. TTM EBITDA Margins – 2Q16EV/Revenue Multiples vs. TTM Revenue Growth – 2Q16

0.5x

1.3x

2.5x

4.4x

5.4x

7.3x 7.2x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

Me

dia

n E

V/

Re

ve

nu

e

TTM Revenue Growth

4.2x 4.0x 4.0x

4.6x

5.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

Me

dia

n E

V/

Re

ve

nu

e

TTM EBITDA Margin


Company TickerEV

(Median)TTM

Revenue

TTM Revenue Growth

EV/Revenue

TTM EBITDA

EBITDA Margin

EV/EBITDA

NantHealth, Inc. NH $1,823.3 $66.0 70.9% 27.6x -$81.9 -124.0% -

Twilio, Inc. TWLO $2,549.6 $192.9 86.6% 13.2x -$30.5 -15.8% -

Workday WDAY $13,536.4 $1,256.8 43.0% 10.8x -$194.4 -15.5% -

Atlassian Corp TEAM $4,322.0 $421.3 - 10.3x $13.8 3.3% 313.6x

Service-now.com NOW $11,003.9 $1,099.4 45.5% 10.0x -$102.3 -9.3% -

Shopify SHOP $2,221.3 $240.6 94.7% 9.2x -$16.7 -6.9% -

Ellie Mae ELLI $2,482.4 $273.4 48.9% 9.1x $47.4 17.3% 52.4x

Paycom Software PAYC $2,327.2 $259.6 53.4% 9.0x $61.0 23.5% 38.2x

Paylocity Holding PCTY $1,838.5 $210.9 49.2% 8.7x $4.9 2.3% 374.4x

Ultimate Software Group ULTI $5,567.4 $660.4 24.7% 8.4x $64.4 9.7% 86.5x

Zendesk ZEN $1,920.9 $235.0 63.0% 8.2x -$74.2 -31.6% -

Veeva Systems VEEV $3,399.3 $439.1 30.5% 7.7x $87.4 19.9% 38.9x

Netsuite N $6,130.5 $792.9 32.6% 7.7x -$62.9 -7.9% -

Salesforce.com CRM $52,960.0 $7,072.7 25.0% 7.5x $522.3 7.4% 101.4x

HubSpot HUBS $1,455.0 $202.7 56.1% 7.2x -$41.9 -20.6% -

Q2 Holdings QTWO $847.6 $118.5 37.0% 7.2x -$18.6 -15.7% -

inContact SAAS $608.7 $233.0 25.2% 2.6x $1.5 0.6% 403.9x

Mimecast MIME $367.9 $141.8 22.2% 2.6x $8.0 5.6% 46.3x

ChannelAdvisors ECOM $261.3 $104.3 18.4% 2.5x -$7.0 -6.7% -

SciQuest SQI $255.5 $106.3 3.7% 2.4x $9.4 8.9% 27.1x

Amber Road AMBR $144.5 $68.9 5.9% 2.1x -$20.6 -30.0% -

Upland Software UPLD $138.0 $70.0 5.2% 2.0x $1.7 2.4% 81.8x

TrueCar TRUE $477.5 $263.1 18.9% 1.8x -$38.0 -14.4% -

IntraLinks Holdings IL $485.3 $280.6 6.7% 1.7x $11.1 4.0% 43.7x

Halogen Software TSX:HGN $110.2 $67.4 14.2% 1.6x -$3.0 -4.4% -

LivePerson LPSN $309.8 $234.7 5.8% 1.3x $16.4 7.0% 18.9x

Tangoe TNGO $279.8 $219.4 5.7% 1.3x $9.6 4.4% 29.0x

Bazaarvoice BV $230.4 $199.8 4.5% 1.2x -$15.0 -7.5% -

Jive Software JIVE $191.3 $199.3 7.9% 1.0x -$19.1 -9.6% -

Marin Software MRIN $58.8 $109.3 6.2% 0.5x -$15.7 -14.4% -

Medical Transcript MTBC $11.4 $22.1 0.8% 0.5x -$1.3 -5.9% -

Covisint COVS $36.8 $76.0 -14.1% 0.5x -$11.3 -14.9% -


Top 25%

Bottom 25%

• When the SEG SaaS Index is segmented on the basis ofmedian EV/Revenue multiple, the top 25% boasted animpressive median 8.8x in 2Q16, up from 1Q16’s 7.9xmultiple, but down significantly year over year whencompared to 2Q15’s 12.0x mark.

• These SaaS high flyers are market leaders in a widearray of SaaS categories including Healthcare(NantHealth); Communications (Twilio); DevelopmentTools (Atlassian); ERP (Workday); ServiceManagement (ServiceNow); Human CapitalManagement (Paycom); Marketing Automation(Hubspot); eCommerce (Shopify); and CRM &Marketing (HubSpot).

• The median TTM revenue growth rate of those in thetop 25% percentile was 48.9%. Additionally, whileonly seven companies in the top rank generatedpositive EBITDA margin in 2Q16, 14 of the 16companies generated positive cash flow fromoperations. Only NantHealth and Twilio, which bothIPO’d during the quarter, posted negative CFO.

• In contrast, the median TTM revenue growth rate ofthose comprising the bottom 25% of EV/Revenuemultiples was a meager 6.0%. In addition to laggingrevenue growth, the bottom quartile posted medianEBITDA margin of negative 5.1% and only eight of 16companies generated positive CFO. MedianEV/Revenue for the group was 1.7x in 2Q16.

15


THE SEG SaaS INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE (YOY COMPARISON)

16

2Q16 vs. 2Q15 Median TTM EBITDA Margin2Q16 vs. 2Q15 Median TTM Revenue Growth

(11.0%)

(7.9%)

7.8%

(2.2%)

(18.8%)

(8.3%)

6.6%

(11.3%)

CRM & MarketingERP & SupplyChain

Vertically FocusedHuman CapitalManagement

2Q16

2Q15

28.0%

22.9%

37.0%

29.1% 28.5%26.3%

36.3%33.9%

CRM & MarketingERP & Supply ChainVertically FocusedHuman CapitalManagement

2Q16

2Q15

2Q16 vs. 2Q15 Median EV/Revenue Multiples 2Q16 vs. 2Q15 Median EV/EBITDA Multiples

5.8x

4.6x

5.5x5.4x

6.3x6.7x

8.2x

7.2x



2Q16

2Q15

195.5x

55.7x45.8x

65.7x

101.4x

27.1x34.3x

62.3x



2Q15

2Q16


THE SEG SOFTWARE INDEX

PUBLIC SOFTWARE COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


SEG - Software: Median Metrics

Measure 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 17.0x 15.6x 16.0x 15.7x 16.7x


EBITDA Margin 16.6% 17.4% 17.2% 17.3% 16.8%

Net Income Margin 7.3% 7.7% 6.8% 7.5% 6.1%




TTM Total EBITDA ($M) $80.9 $86.8 $87.1 $93.4 $90.2

Cash & Eq ($M) $220.6 $243.3 $250.5 $255.4 $227.0


18

THE SEG SOFTWARE INDEX

• The SEG Software Index tracks public software companies thatprimarily offer on-premise software under a perpetual license withannual M&S.

• The SEG Software Index is currently comprised of 128 publicsoftware companies*, down from 218 in 1Q08 (the quarter in whichwe began publishing individual Software, SaaS and Internet indices).

• The number of public companies comprising the SEG Software Indexhas declined steadily over the past ten years, as many on premiseproviders have been acquired, taken private or migrated to a SaaSbusiness model.

• See appendix for SEG Software Index public market multiples andfinancial performance on an annual basis

* A number of on-premise software companies are transitioning to subscription based delivery and pricing models; however their SaaS revenue contribution is insufficient for them to be deemed primarily SaaS. ** See appendix for a complete list of companies in The SEG Software Index and detailed financial and trading metrics


THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

• The median TTM revenue growth rate of public on-premise softwarecompanies decreased modestly to 7.3% in 2Q16 from 7.6% in 1Q16and 8% in 2Q15. With 57% of public on-premise software providersposting revenue growth of less than 10% in 2Q16, SEG’s SoftwareIndex has now experienced single digit median TTM revenue growthsince 3Q13.

• The few public on-premise software companies growing revenue30%+ were focused on two of IT’s hottest product categories: security(Palo Alto Networks, 53.4% and CyberArk, 47.5%) and mobility(Momo, 141.6%).

• Median TTM revenue for the publicly traded on-premise softwareproviders was $680.1 million in 2Q16, an increase of 14.6% from2Q15’s $593.6 million. In comparison, median TTM revenue for ourSaaS Index grew 35.7% over the same period ($202.7 million in 2Q16vs. 149.4 million in 2Q15).

19

TTM Revenue Growth Rate Distribution - 2Q16Median Revenue Performance - Quarterly

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

$0

$100

$200

$300

$400

$500

$600

$700

$800

2Q15 3Q15 4Q15 1Q16 2Q16

TT

M R

ev

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Gro

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TT

M T

ota

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27%

30%

22%

8%

5%

8%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

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pa

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s

TTM Revenue Growth



• Median TTM EBITDA margin for the SEG Software Index has hoveredaround 17% for the past five quarters. Buoyed by high marginmaintenance and support streams from long tenured customers, many on-premise providers have been able to maintain healthy profits whileattempting to fend off cloud competition.

• As an example, Microstrategy, a provider of on-premise businessintelligence software, posted negative 7.2% growth in 2Q16while maintaining 27.4% EBITDA margin, as it counts over 50%of its revenue from highly profitable maintenance and supportcontracts. Over its three most recent fiscal years, Microstrategyhas seen net revenue from license sales decline by $28 million toreach $119 million, net revenue from subscription sales increaseby $16 million to reach $28 million, net revenue from servicesdecrease $37 million to reach $101 million and net revenue frommaintenance contracts increase $4 million to reach $282 million.Microstrategy has a tough road ahead as the market has beenflooded with new cloud BI and analytics vendors in recent years.

20

TTM EBITDA Margin Distribution - 2Q16Median EBITDA Performance - Quarterly

18% 17%

23%

25%

12%

5%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

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pa

nie

s

TTM EBITDA Margin

16.6%17.4% 17.2% 17.3% 16.8%

2Q15 3Q15 4Q15 1Q16 2Q16

EB

ITD

A M

arg

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21

• As a percent of revenue, on-premise software companies spent a median 22.8% on sales and marketing activities, 15.8% on research anddevelopment and 10.5% on general and administrative functions in 2Q16. This represents a slight year over year increase from 2Q15’s 21.7%, 15.4%and 10.4% expense contributions, respectively.

• In aggregate, median operating expenses totaled 49.1% during 2Q16, a modest increase over 2Q15’s 47.5% aggregate number. Comparatively,publicly traded SaaS companies spent 75.8% of revenue on operational expenses in 2Q16, a modest decline from 2Q15’s 78.9% aggregate spend.


0%

5%

10%

15%

20%

25%

2Q15 3Q15 4Q15 1Q16 2Q16

% o

f R

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64.6% 63.5% 63.8% 63.4% 63.7%

16.6% 17.4% 17.2% 17.3% 16.8%

7.3% 7.7% 6.8% 7.5% 6.1%

0%

10%

20%

30%

40%

50%

60%

70%

2Q15 3Q15 4Q15 1Q16 2Q16

% M

arg

in



• During 2Q16, the median EV/Revenue multiple for on-premisesoftware providers increased across all size cohorts as the softwareindustry rebounded from Q1’s stock market turmoil. As in quarterspast, however, scale and profitability played a significant role inascribing value to slower growth software companies:

• $1 billion+ TTM revenue companies received a median 3.3xTTM revenue and posted median 24.3% EBITDA margin;

• $500-$1 billion revenue companies were valued at median2.8x TTM revenue and posted median 15.8% EBITDA margin;

• $100-$500 million revenue companies were valued atmedian 2.5x TTM revenue and posted median 8.4% EBITDAmargin

• Companies generating revenue of less than $100 millionwere valued at median 2.2x TTM revenue and posted median2.7% EBITDA margin

THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• The median EV/Revenue market multiple for public on-premisesoftware providers was 2.7x in 2Q16.

• The 2.5-3.5x median EV/Revenue multiple that’s prevailed over thepast five quarters, despite lackluster growth, reflects the importanceof stability and profitability to investors in the current market.

• For the remainder of 2016, we believe investors will continue to findcomfort in the many profitable and large companies comprising SEG’sSoftware Index as a hedge against global economic concerns, slowerprojected IT spend and an election year.

• Over 80% of companies in SEG’s Software Index generatedpositive EBITDA margin in Q2, along with nearly half ofcompanies in the index generating revenue greater than onebillion dollars.

22

EV/Revenue Multiples by Size (TTM Revenue) - QuarterlyMedian EV/Revenue and EV/EBITDA Multiples- Quarterly

3.3x 3.2x 2.8x 2.5x 2.7x

16.7x15.6x 15.0x

14.4x15.7x

2Q15 3Q15 4Q15 1Q16 2Q16

Me

dia

n M

ult

ipe

EV/TTM Revenue EV/EBITDA

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

2Q15 3Q15 4Q15 1Q16 2Q16

Me

dia

n E

V/

Re

ve

nu

e

Revenue Greater Than $1 billionRevenue Between $500 million & $1 billionRevenue Between $100 million & $500 millionRevenue Less Than $100 million


THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• While market performance of on-premise public software companiesremains closely correlated with their ability to sustainably driveprofits, a select group of companies able to generate significantrevenue growth in Q2 were rewarded by the street with a median4.3x EV/Revenue multiple.

• Members of Q2’s 30%+ growth club that rewarded investorshandsomely during the quarter came from a number of productcategories, including Business Intelligence, Security and NetworkPerformance Management: Splunk (48.5% TTM revenue growth, 8.0xEV/Revenue), Palo Alto Networks (53.4% TTM revenue growth, 9.5xEV/Revenue), and Proofpoint (36.1% TTM revenue growth, 8.0xEV/Revenue).

• As in quarters past, the median market multiples of on-premisesoftware companies generally reflected their median operatingmargins.

• On-premise providers with EBITDA margins greater than 40% can befound in product categories requiring high technical barriers to entryor provide products difficult to deploy via the cloud.

• As an example, engineering simulation and optimizationsolutions developed by Aspen Technology are highlytechnical and not easily deployed through a browser. Thecompany has consistently maintained double digit revenuegrowth and 40%+ EBITDA margin each of the last 5 quarters,posting 10.5% growth and 46.4% EBITDA margin in 2Q16.

23


1.3x

1.9x2.2x

3.0x

4.4x

7.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM EBITDA Margin

2.2x

3.0x

2.5x

3.3x

1.5x

4.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM Revenue Growth


THE SOFTWARE INDEX BY PRODUCT CATEGORY

*The SEG Software Index is segmented into 16 product categories.

*Among these product categories, market multiples, TTM growth rates and EBITDA margins fluctuate considerably from quarter to quarter due to public market conditions and investor sentiment.

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

SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin

2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16

Billing & Service Management 2.0x 1.8x 1.7x 2.0x 2.0x 9.1x 10.0x 9.6x 8.8x 10.9x 7.6% 3.1% -0.4% 0.2% 0.6% 27.1% 27.2% 23.9% 21.2% 22.1%

Business Intelligence 3.8x 3.1x 3.3x 2.8x 3.0x 18.9x 16.9x 16.5x 14.9x 14.3x 9.7% 11.4% 10.1% 10.0% 11.4% 12.4% 18.5% 17.2% 14.9% 15.2%

Development Platforms 2.5x 2.4x 2.3x 2.7x 2.8x 9.6x 9.3x 8.2x 9.1x 9.1x 7.2% 10.6% 11.5% 11.1% 10.2% 18.9% 19.0% 18.6% 18.0% 17.5%

Engineering & PLM 3.3x 3.4x 3.5x 3.3x 3.9x 16.4x 17.0x 16.3x 15.6x 17.0x 8.7% 8.4% 7.5% 0.7% 1.3% 21.5% 22.9% 22.4% 19.3% 17.6%

Enterprise Resource Planning 4.1x 3.9x 3.9x 3.9x 4.1x 16.3x 15.8x 15.3x 16.0x 14.8x 6.8% 4.8% 6.1% 4.8% 3.6% 26.9% 26.7% 27.1% 26.9% 26.7%

Financial & Accounting 4.1x 4.1x 4.1x 3.3x 3.0x 16.4x 16.1x 15.6x 15.9x 16.6x 5.5% 5.4% 4.7% 4.8% 4.0% 22.2% 22.3% 22.6% 24.9% 24.2%

Gaming 1.6x 2.0x 2.2x 2.1x 2.4x 14.4x 18.6x 17.3x 17.9x 18.8x 2.6% 5.9% 4.4% 8.4% 9.3% 13.0% 9.2% 9.8% 16.7% 25.6%

Healthcare 2.4x 2.3x 2.4x 2.0x 2.3x 15.2x 14.9x 15.3x 14.8x 17.0x 8.0% 10.0% 9.9% 6.6% 8.2% 12.9% 12.6% 13.0% 12.5% 11.8%

IT Conglomerates 3.1x 3.9x 3.9x 3.9x 4.0x 8.8x 9.5x 9.5x 9.6x 10.5x -0.1% -1.1% -3.5% -4.3% -3.1% 30.8% 30.2% 30.1% 27.5% 27.7%

Mobile Solutions/Content 1.9x 1.7x 1.9x 1.7x 1.8x 18.5x 19.7x 16.2x 20.7x 17.1x 30.4% 25.5% 19.4% 21.7% 14.4% 1.0% -3.7% 1.3% 2.5% -0.5%

Networking & Network Performance Management

2.2x 2.5x 2.3x 1.9x 1.8x 13.1x 12.6x 10.9x 9.8x 10.9x 14.7% 4.3% 4.9% 5.0% 6.4% 18.4% 19.5% 18.0% 14.2% 9.3%

Security 4.1x 3.6x 3.6x 3.3x 3.0x 16.0x 12.7x 13.1x 12.4x 13.3x 12.6% 8.8% 16.2% 29.5% 17.4% 2.2% 1.6% 1.1% 2.6% 2.6%

Storage, Data Management & Integration

2.1x 2.1x 2.1x 2.0x 2.1x 8.3x 8.4x 9.0x 9.5x 8.6x 3.1% 1.5% 2.8% 1.7% 0.0% 15.7% 12.1% 11.3% 10.7% 11.4%

Systems Management 4.8x 3.9x 3.7x 2.9x 3.1x 19.0x 16.7x 16.4x 13.3x 13.9x 14.4% 5.6% 11.4% 10.1% 8.7% 24.9% 23.7% 22.7% 25.9% 26.1%

Vertical - Finance 4.5x 4.9x 4.9x 4.9x 5.0x 14.2x 14.0x 13.8x 14.1x 16.0x 8.6% 7.1% 6.6% 7.4% 7.4% 34.4% 34.8% 32.7% 32.9% 32.7%

Vertical - Other 5.0x 5.2x 5.1x 4.5x 4.5x 32.3x 31.3x 28.8x 19.4x 19.4x 13.3% 14.1% 12.5% 13.9% 18.2% 12.9% 13.8% 14.9% 16.4% 15.2%

Median 3.3x 3.2x 2.8x 2.5x 2.7x 16.7x 15.6x 15.0x 14.4x 15.7x 8.6% 8.0% 7.4% 7.6% 7.3% 16.6% 17.4% 17.2% 17.3% 16.8%


THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE (YoY COMPARISON)

2Q16 vs. 2Q15 Median TTM Revenue Growth

0.6%

11.4%10.2%

1.3%3.6% 4.0%

9.3%8.2%

(3.1%)

14.4%

6.4%

17.4%

0.0%

8.7%7.4%

18.2%

7.6%9.7%

7.2%8.7%

6.8%5.5%

2.6%

8.0%

(0.1%)

30.4%

14.7%12.6%

3.1%

14.4%

8.6%

13.3%

Billing & ServiceManagement

BusinessIntelligence

DevelopmentPlatforms

Engineering &PLM

EnterpriseResource Planning

Financial &Accounting

Gaming Healthcare IT Conglomerates MobileSolutions/Content

Networking &Network

PerformanceManagement

Security Storage, DataManagement &

Integration

SystemsManagement

Vertical - Finance Vertical - Other

2Q16

2Q15

2.0x

3.0x

2.8x

3.9x 4.1x

3.0x

2.4x2.3x

4.0x

1.8x 1.8x

3.0x

2.1x

3.1x

5.0x

4.5x

2.0x

3.8x

2.5x

3.3x

4.1x 4.1x

1.6x

2.4x

3.1x

1.9x2.2x

4.1x

2.1x

4.8x4.5x

5.0x




Engineering &PLM

EnterpriseResourcePlanning



Networking &Network



Integration

SystemsManagement


2Q16

2Q15

2Q16 vs. 2Q15 Median EV/Revenue Multiples


THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE (YoY COMPARISON)

2Q16 vs. 2Q15 Median EV/EBITDA

2Q16 vs. 2Q15 Median TTM EBITDA Margin

22.1%

15.2%

17.5% 17.6%

26.7%

24.2%25.6%

11.8%

27.7%

(0.5%)

9.3%

2.6%

11.4%

26.1%

32.7%

15.2%

27.1%

12.4%

18.9%

21.5%

26.9%

22.2%

13.0% 12.9%

30.8%

1.0%

18.4%

2.2%

15.7%

24.9%

34.4%

12.9%




Engineering &PLM




Networking &Network



Integration

SystemsManagement


2Q16

2Q15

9.1x

18.9x

9.6x

16.4x 16.3x 16.4x

14.4x 15.2x

8.8x

18.5x

13.1x

16.0x

8.3x

19.0x

14.2x

32.3x

10.9x

14.3x

9.1x

17.0x

14.8x16.6x

18.8x17.0x

10.5x

17.1x

10.9x

13.3x

8.6x

13.9x

16.0x

19.4x




Engineering &PLM




Networking &Network



Integration

SystemsManagement


2Q15

2Q16


THE SEG INTERNET INDEX

PUBLIC INTERNET COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


SEG - Internet: Median Metrics

Measure 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 18.8x 17.6x 18.5x 17.0x 17.2x


EBITDA Margin 7.1% 6.6% 6.9% 7.3% 7.1%

Net Income Margin 0.5% 0.1% -0.2% 0.1% 0.8%




TTM Total EBITDA ($M) $27.8 $27.1 $25.6 $30.6 $28.4

Cash & Eq ($M) $197.9 $189.8 $174.9 $207.3 $183.3


THE SEG INTERNET INDEX

• The SEG Internet Index tracks public companies that primarily offerB2C services or predominantly generate revenue via advertising overthe internet.

• The SEG Internet Index is currently comprised of 95 public Internetcompanies*.

• See appendix for SEG Internet Index public market multiples andfinancial performance on an annual basis

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

28


THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

• After declining considerably from 17.7% in 2Q15 to 13.9% in 1Q16,the median TTM revenue growth of the SEG Internet Index roseslightly in 2Q16 to 14.5%.

• Once again demonstrating the Internet is an ecosystem of unequals,16% of public Internet providers far outpaced the pack, posting TTMrevenue growth greater than 40% in 2Q16. These high flyersincluded 58.com (182.7%), Netease (108.0%), and YY (53.7%).

• Conversely, 43% of public Internet companies struggled to advance,reporting TTM revenue growth of 10% or less in 2Q16. The slowgrowers included Synacor, Yahoo!, Limelight Networks, Brightcove,and Monster Worldwide.

29

TTM Revenue Growth Rate Distribution - 2Q16Median Revenue Performance - Quarterly

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

$400

$420

$440

$460

$480

$500

$520

$540

2Q15 3Q15 4Q15 1Q16 2Q16

TT

M R

ev

en

ue

Gro

wth

Me

dia

n T

TM

Re

ve

nu

e


15%

28%

18%

16%

7%

16%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

om

pa

nie

s

TTM Revenue Growth



• After rising from 6.9% in 4Q15 to 7.3% in 1Q16, the median EBITDAmargin of the SEG Internet Index declined to 7.1% in 2Q16.Additionally, roughly 30% of SEG Internet Index companies wereunprofitable during the quarter.

• At the other end of the spectrum, 3% of public Internet companies,mostly those with significant transaction or advertising revenue,achieved EBITDA margins above 40%, led by VeriSign (63.6%),Facebook (47.7%) and Tencent Holdings (42.1%).

• With few exceptions, many of the most profitable public Internetcompanies reported stellar TTM revenue growth. Among them wereTencent Holdings (42.1% EBITDA margin, 35.6% revenue growth);Facebook (47.7% EBITDA margin, 46.3% revenue growth) andBaidu.com (25.6% EBITDA margin, 32.9% revenue growth).

30

TTM EBITDA Margin Distribution - 2Q16Median EBITDA Performance - Quarterly

7.1%6.6%

6.9%7.3% 7.1%

2Q15 3Q15 4Q15 1Q16 2Q16

EB

ITD

A M

arg

in

32%

25%

18%

10%12%

3%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

om

pa

nie

s

TTM EBITDA Margin



31

• Median spending on operations by public Internet companies in 2Q16 was consistent with historic norms: 13.3% for research & development, 24.9%for sales & marketing, and 12.7% for general & administrative.

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

• The median R&D spend as a percent of total revenue was the lowest among our three tracking indices.

• Public Internet companies have kept their cost structures in line, resulting in a median EBITDA margin of 7.1% in 2Q16. For the past year, medianEBITDA margin for the Internet Index has hovered around 6-7%.


0%

5%

10%

15%

20%

25%

30%

2Q15 3Q15 4Q15 1Q16 2Q16

% o

f R

ev

en

ue


62.7% 62.4% 62.5% 61.9% 61.8%

7.1% 6.6% 6.9% 7.3% 7.1%

0.5% 0.1% 0.1% 0.8%

0%

10%

20%

30%

40%

50%

60%

70%

2Q15 3Q15 4Q15 1Q16 2Q16

% M

arg

in



THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• The median public market EV/Revenue multiple of Internetproviders closed 2Q16 at 2.0x, slightly higher than 1Q16 and 4Q15.Roughly 51% of public Internet companies closed Q2 with anEV/Revenue multiple of 2.0x or less.

• That said, investors in Q1 continued to richly reward the mostrapidly growing and most promising Internet providers, especiallythose that generated significant revenue from online advertisingand ecommerce. 10% of companies closed the quarter with amarket multiple of 7.0x EV/Revenue or higher, including Alibaba(12.2x EV/Rev), Facebook (15.9x EV/Rev), 58.com (8.3x EV/Rev)and RenRen (20.5x EV/Rev).

32

EV/Revenue Multiples by Size (TTM Revenue) - QuarterlyMedian EV/Revenue and EV/EBITDA Multiples- Quarterly

2.3x 2.0x 1.9x 1.9x 2.0x

20.4x

18.2x19.6x

17.9x 18.2x

2Q15 3Q15 4Q15 1Q16 2Q16

EV/TTM Revenue EV/EBITDA 30%

21%

13%

5%

10%

5%4%

1%

4%5%

<= 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

% o

f C

om

pa

nie

s

EV/Revenue


THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• Here, too, investors favored growth, albeit not to the extent of software and SaaS vendors. Public Internet companies with TTM revenue growth of 40% orhigher had a median EV/Revenue multiple of 4.8x in Q2. The outperformers included GrubHub (36.1%, 4.9x EV/Revenue); Twitter (49.6%, 3.6 xEV/Revenue); 58.com (182.7%, 8.3x EV/Revenue); and Facebook (46.3%, 15.9x EV/Revenue).

• Investors in public Internet companies kept a keen eye on margins, and rewarded more profitable performers with significantly higher public marketmultiples. Public Internet companies with EBITDA margins above 40% posted a median EV/Revenue multiple of 6.8x in 2Q16, over 4.5x higher than theoverall Index median.

33


0.6x0.9x

2.2x

2.8x

5.1x

4.8x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM Revenue Growth

1.3x 1.2x1.7x

4.9x4.6x

6.8x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM EBITDA Margin


• The SEG Internet Index is segmented into nine product categories.

• Representative companies in each Internet category are referenced below.

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

THE SEG INTERNET INDEX BY PRODUCT CATEGORY

34

Ad Tech Commerce Content and Media Gaming

Infrastructure Search Services TravelSocial


THE SEG INTERNET INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE (YoY COMPARISON)

35

2Q16 vs. 2Q15 Median TTM Revenue Growth

11.1%14.6%

5.2%8.0%

6.2%

18.7%22.7%

39.0%

11.8%

22.1%

17.5%

10.0%

17.0%

5.2%

20.1% 21.1%

51.5%

20.4%

Ad Tech Commerce Content & Media Gaming Infrastructure Search Services Social Travel

2Q16

2Q15

2Q16 vs. 2Q15 Median EV/Revenue Multiples

1.0x 1.3x

2.5x3.0x

1.3x

5.3x

1.7x

4.4x 4.3x

1.6x1.2x

2.1x2.8x

1.3x

5.0x

2.1x

9.8x

5.1x


2Q16

2Q15


THE SEG INTERNET INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE (YoY COMPARISON)

36

2Q16 vs. 2Q15 Median TTM EBITDA Margin

2.0% 2.5%5.1%

32.7%

6.6%

27.5%

9.2%

15.6%

9.1%

(0.4%)

6.2%

12.6%

28.9%

6.8%

32.3%

6.4%

17.9%

9.1%


2Q16

2Q15

2Q16 vs. 2Q15 Median EV/EBITDA Multiples

18.9x 18.9x 17.7x

10.2x

18.0x16.1x

20.2x

39.6x

20.8x19.5x

33.7x

17.6x

12.4x 13.7x

18.5x16.1x

22.9x20.8x


2Q15

2Q16


SOFTWARE INDUSTRY M&A MARKET UPDATE


• Software industry M&A transaction volume continued to impress in 2Q16, with the quarter tallying 536 deals. We’d expect the second quarter tally willlikely increase by approximately 15 – 20 transactions as unpublicized deals are added. 2Q16 marks the seventh consecutive quarter in which transactionvolume has surpassed 500 deals.

• On a TTM basis, average quarterly deal volume reached 575 transactions in 2Q16, representing an 18% increase in transaction activity over this pastdecade’s pre-recession high in 2Q08 (487 TTM quarterly average). Even more impressive, TTM average quarterly deal volume has increased every quartersince 3Q13 and has posted quarter over quarter increases in 20 of 26 quarters since bottoming out at 325 deals in 4Q09 (325 TTM quarterly average).

• Software M&A spending in 2Q16 totaled $68 billion, a significant increase from Q1’s $43 billion aggregate price tag. The substantial increase was driven, inlarge part, by Microsoft’s announced acquisition of LinkedIn ($26.1 billion EV, 8.2x TTM revenue). In addition to Microsoft’s massive acquisition, therewere 19 additional mega deals (EV > $500 million). In comparison, twelve mega deals were announced in both 1Q16 and the same quarter last year.

2Q16 SOFTWARE INDUSTRY M&A DEAL VOLUME AND SPENDING

38

TTM Average Quarterly Deal VolumeU.S. Software Mergers & Acquisitions Activity

536

$21

$20$23

$31

$27

$44

$18 $18

$35

$46

$34

$43

$68

$0

$10

$20

$30

$40

$50

$60

$70

$80

0

100

200

300

400

500

600

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Va

lue

(BIllio

ns)

Nu

mb

er

of

De

als

Deals Value

575

0

100

200

300

400

500

600


• 2Q16’s 190 SaaS M&A transactions marks the 11th consecutive quarter of ramping deal volume and represents a 5% quarter over quarter increase over1Q16’s 180 transactions and 27% year over year increase when compared to 2Q15’s 150 transactions.

• On an annual basis, SEG is projecting 740 SaaS M&A transactions during 2016, a 23% increase over 2015’s 601 deals and nearly double the 390transactions announced just three years ago.

• Multiple tailwinds continue to drive strong SaaS deal volume growth:

• A secular shift toward cloud computing applications and a need for legacy on-premise vendors to acquire cloud computing expertise.

• An extremely active private equity market that continues to be attracted to high margin subscription-based software business models.

• Cheap credit available for transaction financing.

SaaS M&A: DEAL VOLUME AND MEDIAN EXIT MULTIPLES

39

Annual SaaS M&A VolumeQuarterly SaaS M&A Volume

10497

103 104 108118

132 134

150 157 160

180190

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

20

40

60

80

100

120

140

160

180

200

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Sa

aS

M&

A D

ea

ls as a

% o

f To

tal S

oftw

are

M

&A

De

als

# o

f S

aa

S M

&A

De

als

SaaS M&A Deals SaaS as % of Software

50

105

200

312

390

462

601

740

0

100

200

300

400

500

600

700

800

# o

f S

aa

S M

&A

De

als


SaaS M&A: MEDIAN EXIT MULTIPLES

40

Median SaaS EV/Revenue Exit Multiples

3.7x 3.7x

4.2x

4.6x 4.5x

2Q15 3Q15 4Q15 1Q16 2Q16

• For the 12 months ending June 2016, SaaS companies were purchasedfor a median 4.5x TTM revenue, on par with recent quarters. Afterdipping below 4.0x TTM revenue from 4Q14 through 3Q15, themedian exit multiple for SaaS businesses has held firmly above 4.0xfor the past three quarters.

• Select 2Q TTM SaaS transactions posting exit multiples well above themedian included Wolters Kluwer’s 2Q16 acquisition of Enablon ($364million, 5.6x TTM revenue); Visma’s 1Q16 acquisition of Fortnox($163 million, 9.4x TTM revenue); PTC’s 4Q15 acquisition of KepwareTechnologies ($118 million, 5.9x TTM revenue) and Blackbaud’s 3Q15acquisition of Smart Tuition ($190 million, 5.9x TTM revenue).

• In addition, a number of publicly traded SaaS companies wereacquisition targets in Q2, with several of those receiving offersmaterially higher than our median exit multiple.

Q2 Public SaaS Sellers

10.5x

7.5x7.1x

6.5x

3.8x 3.6x 3.2x

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• Led by Salesforce’s strategic acquisition of enterprise eCommercevendor, Demandware ($2.6 billion EV, 10.5x TTM Revenue), sevenpublicly traded SaaS companies announced an intent to be acquiredduring the second quarter. The tally represents over 10% of allpublicly traded SaaS providers.

• Growth, more so than buyer type, was a key determinant to eachtarget’s revenue multiple:

• Demandware’s (42.5% TTM revenue growth) strategicpurchase by Salesforce; Marketo (38.1%) and Cvent(30.9%) both purchased by private equity firm Vista EquityPartners; Textura’s (34.8%) strategic purchase by Oracle;inContact’s (25.2%) strategic sale to Nice Systems;SciQuest’s (3.7%) purchase by private equity firm Accel-KKR and OPOWER’s (14.0%) strategic sale to Oracle.

EV

/R

ev

en

ue

EV

/R

ev

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SaaS M&A: MEDIAN EXIT MULTIPLES

41

• Over the past three years, approximately one third of all SaaS targetswere acquired for 5.0x TTM or greater.

o Many of these targets were growing quickly, served largemarkets and attracted deep pocketed buyers (ie. Zillow’sacquisition of real estate software provider, Dotloop, which wasrumored to growing revenue north of 100% at the time of saleand sold for approximately 7.2x TTM revenue).

• Conversely, approximately 30% of all SaaS targets were acquired for3.0x revenue or less.

o Many of these targets showed modest growth and operated incommoditized markets with little product differentiation (ie.Endurance International Group’s purchase of SaaS emailmarketing provider Constant Contact for 2.6x TTM revenue(10.8% TTM revenue growth)

Median EV/Revenue Exit Multiple Distribution (Last 3 Years)

Seller Revenue ($)

EV

/R

ev

en

ue

• To calculate exit multiples by seller size, we analyzed the past threeyears worth of SaaS deals to drive a meaningful data set.

• Those sellers with revenue greater than $100M were acquired for amedian 4.7x TTM revenue over the time period, while thosegenerating revenues of less than $5M received a median 2.9x TTMrevenue multiple. Buyers continue to reward those SaaS businessesexhibiting significant scale.

• While target size remains an important driver of value, buyers assessa great many factors in assessing what they will pay for an acquisitiontarget, including historical and projected growth, recurring revenuecontribution, customer and revenue retention rates, organizationalscalability, customer acquisition cost vs. customer lifetime value, totaladdressable market, product differentiation and a host of additionalcompany attributes.

EV/Revenue by Seller Size (Last 3 Years)

5.0% 5.0%

20.2% 20.2%

16.8%

10.1%

22.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

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

> 2.0x & <=3.0x

> 3.0x & <=4.0x

> 4.0x & <=5.0x

> 5.0x & <=6.0x

> 6.0x

TTM Revenue Exit Multiple Bins

% o

f D

ea

ls

2.9x

3.5x3.7x

4.5x 4.4x4.7x

< 5M 5M-10M 10M-20M 20M-50M 50M-100M 100M+


BI, Risk & Compliance9.0%

Content & Document Mgmt1.1%

CRM, Marketing & Sales15.4%

Data Mgmt/Integration0.5%

Dev. Tools & IT Asset Mgmt3.2%

eCommerce5.3%

ERP1.1%

HR & Workforce Mgmt9.0%Messaging,

Conferencing & Communications

7.4%Multimedia, Graphics &

Communications4.3%

Network Performance Mgmt1.1%

Security3.2%

Systems Mgmt4.3%

Supply Chain Mgmt & Logistics

2.7%

Education3.7%

Financial Services1.1%

Healthcare2.7%

Hospitality2.1%

Insurance1.6%

Other Verticals 8.5%

Public Sector 1.6%

Real Estate6.4%

Accounting & Finance2.1%

Asset Management1.6% Billing & Service

Provisioning1.1%

• As has been the trend for years, the CRM,Marketing & Sales product category ledall others in terms of SaaS transactionvolume (15.4%) in 2Q16.

• The HR and Workforce Managementproduct category tied with BI, Risk &Compliance for the second most SaaSM&A transactions in 2Q16, eachaccounting for 9.0% of total deal volume.

• Other notable product categorycontributors included MessagingConferencing & Communications (7.4%)and Real Estate (6.4%).

• The most notable quarter over quartercategory increases included:

• eCommerce increasing from3.9% of SaaS transactionvolume in 1Q16 to 5.3% ofdeal volume in 2Q16.

• Multimedia, Graphics &Communications increasingfrom 2.2% in 1Q16 to 4.3% in2Q16.

• Security increasing from 0.6%in 1Q16 to 3.2% in 2Q16.

SaaS M&A BY PRODUCT CATEGORY – 2Q16

42

Ve

rtic

al


2Q16 SaaS M&A TRANSACTIONS

43

Date Buyer SellerEnterprise Value

(mm) TTM Revenue EV/Rev06/28/16 Global Scanning A/S Real Awesomesauce S.A. $3.0 - -06/28/16 Cisco Systems, Inc. (NasdaqGS:CSCO) CloudLock, Inc. - - -06/27/16 SEB Asset Management S.A. Accedo Broadband AB - - -06/24/16 Callidus Software Inc. (NasdaqGM:CALD) Badgeville, Inc. $7.5 - -06/23/16 SnagAJob.com, Inc. PMW Technologies Inc. - - -06/23/16 Real Capital Analytics, Inc. SiiLA Investors, LLC - - -06/22/16 Mitratech Holdings, Inc. CMO Software Limited - - -06/22/16 Purch, Inc. Business.com Media, Inc. - - -06/22/16 Red Hat, Inc. (NYSE:RHT) 3Scale Networks, S.L. - - -06/22/16 Santander UK plc, Investment Arm Socure Inc. - - -06/21/16 Space Time Insight, Inc. GOFACTORY Inc. - - -06/21/16 Verizon Communications Inc. (NYSE:VZ) Telogis, Inc. - - -06/21/16 Koninklijke Philips N.V (ENXTAM:PHIA) PathXL Ltd. - - -06/16/16 Stamps.com Inc. (NasdaqGS:STMP) ShippingEasy, Inc. $55.0 - -06/20/16 Next Gear Solutions, Inc. ClientRunner Software, Inc. - - -06/20/16 Enviance, Inc. Actio Software Corporation - - -06/20/16 Bayerische Motoren Werke Aktiengesellschaft (DB:BMW) Parkmobile Group B.V. - - -06/17/16 TeamSystem Holding S.p.A. e-conomic international a/s - - -06/17/16 McorpCX, Inc. (OTCPK:MCCX) PersonaDrive Inc. - - -06/17/16 Ricoh Innovations Corporation Eye-Fi, Inc, Eyefi Cloud - - -06/16/16 Sare S.A. (WSE:SAR) MailPro sp. z o.o. - - -06/16/16 GTCR, LLC Optimal Blue LLC - - -06/15/16 Bain Capital Private Equity Navicure, Inc. - - -06/15/16 GCI Network Solutions Limited Outsourcery Hosting Limited - - -06/14/16 EXEM Co., Ltd. (KOSDAQ:A205100) Cloudine Co., Ltd. - - -06/14/16 Impact Radius, Inc. Forensiq LLC - - -06/14/16 CenturyLink, Inc. (NYSE:CTL) ElasticBox Inc. - - -06/13/16 Rise Art Limited Artfetch - - -06/13/16 OneLogin, Inc. Portadi, Inc. - - -06/12/16 Gaia Smart Cities Solutions Private Limited netCORE Solutions Pvt. Ltd, Internet of Things Business - - -06/12/16 HiT-Health in Technology GmbH COURSIKA UG - - -06/10/16 Digital Tomorrow Today Ltd Tweetchup.com - - -06/09/16 WorkForce Software, LLC WorkPlace Systems International plc - - -06/09/16 Scaleworks Associates FollowUp.cc - - -06/08/16 Sovos Compliance, LLC Invoiceware International LLC - - -06/08/16 HR Path SAS Cinéthic, SAS - - -06/07/16 Connecture, Inc. (NasdaqGM:CNXR) ConnectedHealth, LLC $6.6 - -06/07/16 MercadoLivre.com Atividades de Internet ltda. Axado, Informação e Tecnologia S/A $7.5 - -06/07/16 Institut für Fußballmanagement nextsocial GmbH - - -06/07/16 Elsevier Ltd. SHAZINO SAS, Hivebench - - -


2Q16 SaaS M&A TRANSACTIONS (CON’T)

44


(mm) TTM Revenue EV/Rev06/07/16 Wasserstein & Co.; John Hancock Advisers, LLC Northstar Travel Group, LLC - - -06/06/16 PowerSchool Group LLC Haiku Learning Systems, Inc. - - -06/06/16 Cameo Global, Inc. InfoReach, Inc. - - -06/03/16 NeuLion, Limited Saffron Digital Ltd. - - -06/03/16 Helios and Matheson Analytics Inc. (NasdaqCM:HMNY) Zone Technologies, Inc. - - -06/01/16 Condeco Software Inc. Interactive Ideas LLC - - -06/03/16 MRI Software LLC Integratec Services LLC - - -06/02/16 Open Text Corporation (NasdaqGS:OTEX) Recommind, Inc. $163.0 - -06/02/16 CopperHill Consulting, LLC Omega Data, LLC - - -06/02/16 Surface Ink Ltd. GPIO Inc. - - -06/02/16 A Medium Corporation Superfeedr - - -06/02/16 Market Track, LLC OnRamp Technologies LLC - - -06/02/16 Augeo Affinity Marketing Inc. Incentive Logic, Inc. - - -05/31/16 salesforce.com, inc. (NYSE:CRM) Demandware, Inc. (NYSE:DWRE) $2,661.9 $254.0 10.5x06/01/16 Tax Compliance, Inc. Appealtrack, LLC - - -06/01/16 Tyler Technologies, Inc. (NYSE:TYL) ExecuTime Software, LLC - - -06/01/16 eTouches, Inc. Zentila, Inc. - - -05/27/16 Vista Equity Partners Ping Identity Corporation - - -06/01/16 SolarWinds Worldwide, LLC LogicNow Limited - - -06/01/16 eFolder, Inc. Replibit LLC - - -06/01/16 Apax Partners LLP Agencyport Software Ltd. - - -05/30/16 Accel-KKR LLC SciQuest, Inc. (NasdaqGS:SQI) $378.0 $106.2 3.6x05/31/16 Wolters Kluwer Law & Business Group Enablon SA $363.9 $65.5 5.6x05/27/16 Vista Equity Partners Marketo, Inc. (NasdaqGS:MKTO) $1,700.4 $226.1 7.5x05/31/16 The Carlyle Group LP (NasdaqGS:CG) Ion Investment Group Limited - - -05/31/16 BroadSoft, Inc. (NasdaqGS:BSFT) Intellinote, Inc. - - -05/31/16 Pragma Capital Sarl PROPRIETES-PRIVEES - - -05/27/16 Enghouse Systems Limited (TSX:ESL) NetBoss Technologies, Inc. $7.2 - -05/24/16 PT Muara Anugerah Abadi PT Solusi Integrasi Transportasi Utama $0.0 - -05/26/16 TERN plc (AIM:TERN) Flexiant Limited $4.8 - -05/26/16 MGT Cybersecurity, Inc. Demonsaw, LLC $44.8 - -05/26/16 Qualtrics, LLC Statwing, Inc. - - -05/26/16 EdCast, Incorporated Sales-University - - -05/26/16 Envysion, Inc. Next Wave - - -05/25/16 LDC (Managers) Limited Giacom World Networks Limited - - -05/24/16 PeopleAdmin, Inc. TeacherMatch LLC - - -05/24/16 LDC (Managers) Limited Computers In Personnel Ltd. - - -05/24/16 Bravo Store Systems, LLC Vertical Computer Systems, Inc. - - -05/24/16 Brasil/CT - Comercio e Turismo S.A. Unico Sistemas e Consultoria Ltda. - - -05/20/16 Genstar Capital, LLC IHS Inc., Operational Excellence & Risk Management Business - - -



45


(mm) TTM Revenue EV/Rev05/20/16 The Ultimate Software Group, Inc. (NasdaqGS:ULTI) Vestrics, Inc. - - -05/19/16 Mediaocean LLC ColSpace Corporation - - -05/19/16 CIMA Group, Inc. Knetik Media, LLC - - -05/19/16 Trans Cosmos, Inc. (TSE:9715) SOCIAL GEAR PTE LTD - - -05/19/16 Smartling, Inc. VerbalizeIt, Inc. - - -05/17/16 NICE Ltd. (TASE:NICE) inContact, Inc. (NasdaqCM:SAAS) $881.2 $233.1 3.8x05/18/16 Shapiro + Raj MutualMind Inc. - - -05/18/16 Awesome Commerce, LLC LaGarde Incorporated - - -05/18/16 Easypark AB Parko Tlv, Ltd. - - -05/18/16 Genstar Capital, LLC Accruent, LLC - - -05/17/16 RealPage, Inc. (NasdaqGS:RP) Portfolio Asset Management $4.8 - -05/16/16 Black Knight Financial Services, Inc. (NYSE:BKFS) eLynx, Ltd. $115.0 - -05/16/16 First Line Software Inc. Solaris Development, Inc. - - -05/16/16 AT&T, Inc. (NYSE:T) QuickPlay Media Inc. - - -05/16/16 Blue Star Sports GOALLINE Sports Administration Systems - - -05/13/16 VigLink, Inc. Prosperent, Inc. - - -05/12/16 Optiv Security Inc. Evantix GRC, LLC - - -05/06/16 American Leisure Holdings, Inc. (OTCPK:AMLH) Digital Airo Inc. - - -05/12/16 Output Services Group, Inc. ClickSpark LLC - - -05/12/16 salesforce.com, inc. (NYSE:CRM) Implisit Insights Ltd. - - -05/12/16 TrackMaven, Inc. 10Stories, Inc. - - -05/12/16 Zalando SE (XTRA:ZAL) Tradebyte Software GmbH - - -05/12/16 Nielsen Holdings plc (NYSE:NLSN) Repucom Pty. Ltd. - - -05/10/16 Confirmation.com India Private Limited VeriFirm Services Private Limited - - -05/10/16 Indiegogo, Inc. Airbrite, Inc. - - -05/06/16 FreeWheel Media, Inc. StickyADStv SAS $114.0 - -05/08/16 Mercer (Australia) Pty Ltd. InterTextual Pty Ltd, ExtraTextual - - -05/09/16 Knowlarity Communications Pvt. Ltd. Smartwards Services Pvt. Ltd. - - -05/09/16 Upserve, Inc. Pospitality LLC - - -05/05/16 Vonage Holdings Corporation (NYSE:VG) Nexmo Inc. $249.5 $99.8 2.5x05/05/16 eBay Inc. (NasdaqGS:EBAY) Expertmaker AB - - -05/05/16 Jasper Infotech Private Limited Insightful Labs Pvt. Ltd. - - -05/04/16 BGH TechPartner Latinware S.A. - - -05/04/16 Blue Software, LLC Kodak Design2Launch Solutions - - -05/04/16 Adloop Media, Inc. MerchantAtlas, Inc. - - -05/04/16 Wayin, Inc. Engage Software Limited - - -05/04/16 Warburg Pincus LLC DocuTAP, Inc. - - -05/04/16 Airtime Media, Inc. vline, inc. - - -05/03/16 Adobe Systems Incorporated (NasdaqGS:ADBE) Livefyre, Inc. - - -05/03/16 SISTRIX GmbH SEOlytics GmbH - - -



46


(mm) TTM Revenue EV/Rev05/03/16 SmartBear Software Inc. CrossBrowserTesting.com, LLC - - -05/03/16 Microsoft Corporation (NasdaqGS:MSFT) Solair Srl - - -05/01/16 Oracle Corporation (NYSE:ORCL) OPOWER, Inc. $490.8 - 3.2x05/02/16 Kewill plc LeanLogistics, Inc. $115.0 - -05/02/16 Kompass Incubateur, SAS ByPath SAS - - -05/02/16 infoWAN Datenkommunikation GmbH DrVis Software GmbH - - -05/02/16 Vimeo, LLC VHX Corporation - - -05/02/16 Vista Equity Partners; Bain Capital Private Equity Vertafore, Inc. - - -04/28/16 Rovi Corporation (NasdaqGS:ROVI) TiVo Inc. (NasdaqGS:TIVO) $1,235.3 $490.2 2.5x04/29/16 The Descartes Systems Group Inc (TSX:DSG) pixi* Software GmbH $10.5 - -04/29/16 You & Mr Jones Inc Reach Labs, Inc. - - -04/29/16 STEMhero, LLC MPSP, LLC - - -04/28/16 Oracle Corporation (NYSE:ORCL) Textura Corporation $600.3 $92.2 6.5x04/28/16 Goyo Intex Co., Ltd. (JASDAQ:7519) ReCI Inc $1.2 - -04/28/16 Girnar Software Pvt. Ltd. ThoughtFabrics Solutions Private Limited - - -04/04/16 - Petrichor Corp. (OTCPK:PTRR) $0.4 - -04/26/16 crealytics GmbH Deltamethod GmbH - - -04/26/16 Cranberry News Marketing, LLC Cranberry Radio - - -04/26/16 HGGC, LLC FPX, LLC - - -04/26/16 OnlineFaxes.com Solidfax.com - - -04/25/16 CRYPTAS IT-Security GmbH PrimeSign GmbH - - -04/21/16 Pocket Games, Inc. (OTCPK:PKGM) Receivd, Inc. - - -04/22/16 Brandspots We Are Pop Up $0.2 - -04/21/16 PayScale, Inc. MarketPay Associates, LLC - - -04/20/16 - Qwikon, Inc. - - -04/19/16 Zoopla Property Group Plc (LSE:ZPLA) The Property Software Group $108.0 $22.9 4.7x04/19/16 Cascade Human Resources Limited Beaumont Solutions Limited - - -04/19/16 CallTower Inc. ConnectSolutions LLC, Skype For Business Assets - - -04/19/16 Placester, Inc. The WebMart Network Pty Limited - - -04/17/16 Vista Equity Partners Cvent, Inc. (NYSE:CVT) $1,413.6 $198.8 7.1x04/18/16 i3 Verticals, LLC Bill & Pay and Esber Cash Register - - -04/18/16 IndiQus Technologies Private Limited Amicus Technologies Pvt. Ltd. - - -04/18/16 24/7 Inc. EngageClick, Inc. - - -04/18/16 SuperCom Ltd. (NasdaqCM:SPCB) Powa Technologies Limited - - -04/18/16 Broadcast Pix, Inc. ioGates ApS - - -04/18/16 Gary Jonas Computing Ltd. Multi-Systems, Inc. - - -04/16/16 Blue Diamond Solutions, Inc. SKYLINE Cloud Services, Inc. - - -04/15/16 F24 AG (DB:F2Y) Dolphin Systems AG - - -04/14/16 BuildingIQ, Inc. (ASX:BIQ) NorthWrite Incorporated, Energy WorkSite and Facility WorkSite

Software Applications$3.0 - -

04/14/16 XING AG (XTRA:O1BC) BuddyBroker AG $8.3 - -



47


(mm) TTM Revenue EV/Rev04/14/16 ShopAdvisor, Inc. Retailigence Corporation - - -

04/14/16 Navihealth, Inc. Curaspan Health Group, Inc. - - -

04/13/16 Shopify Inc. (NYSE:SHOP) Kit CRM Inc. $0.0 - -

04/13/16 OpenGov, Inc. Ontodia, Inc. - - -

04/13/16 Freshdesk Inc. MemeticLabs Technologies Pvt. Ltd. - - -

04/13/16 Intergraph Process, Power & Marine, Inc. HostSure Ltd. - - -

04/13/16 USA Foods, Inc. Food Genius, Inc. - - -

04/11/16 Pegasystems Inc. (NasdaqGS:PEGA) OpenSpan, Inc. $52.3 - -

04/12/16 bmp Holding AG (DB:BTBA) sleepz GmbH - - -

04/01/16 Fortum Oyj (HLSE:FUM1V) Info24 AB - - -

04/12/16 OneMove Technologies Inc. Easy Convey Ltd. - - -

04/11/16 TIVIT Terceirização de Tecnologia e Serviços S/A One Cloud Tecnologia Ltda - - -

04/11/16 Black Box Corporation (NasdaqGS:BBOX) Cloudium Systems Ltd. - - -

04/11/16 NetPlus Inc. Amtel, Inc. - - -

04/10/16 Six Degrees Technology Group Ltd Carrenza Limited - - -

04/07/16 Callidus Software Inc. (NasdaqGM:CALD) ViewCentral, LLC $4.0 - -

04/06/16 CrownPeak Technology, Inc. Magus Research Ltd. - - -

04/06/16 Macmillan Learning KEYS2Engage, WriterKEY - - -

04/06/16 AGDATA LP Focus Technology Group, Inc. - - -

04/05/16 CPX Interactive Holdings LLC Sweigh, Inc. - - -

04/05/16 Experticity, Inc. Social Yantra, Inc. - - -

04/05/16 ServiceNow, Inc. (NYSE:NOW) ITapp Inc. - - -

04/05/16 Reward Gateway (UK) Ltd. Perkz Limited - - -

04/04/16 NYX Gaming Group Limited (TSXV:NYX) OpenBet Technologies Limited $385.4 - 4.2x

04/04/16 salesforce.com, inc. (NYSE:CRM) MetaMind Inc. $48.0 - -

04/04/16 Dimension Data Holdings plc Ceryx Inc. - - -

04/04/16 Ingram Micro Inc. (NYSE:IM) Ensim Corporation - - -

04/04/16 Uniguest Inc. Ascension Software, Inc. - - -

04/01/16 EQT Partners AB Sitecore A/S $1,136.3 $227.3 5.0x


• In 2Q16, on-premise software providers posted a median 2.1x TTMrevenue multiple, less than half the median 4.5x TTM multiple postedby SaaS sellers in 2Q16.

• With the exception of 4Q15’s 2.6x TTM revenue, median exit multipleshave floated between 2.0x and 2.5x TTM revenue since 3Q13 for on-premise software providers.

• The median EV/EBITDA exit multiple for public on-premise softwarecompanies was 15.0x TTM EBITDA in 2Q16, decreasing by 54% fromthe prior quarter.

ON-PREMISE SOFTWARE M&A EXIT MULTIPLES

• On a TTM basis, 52.0% of all on-premise software targets in 2Q16were acquired for 2.0x TTM or less, and 71.8% for 3.0x or less. Incomparison, 46.9% were acquired for 2.0x TTM revenue or less and63.7% for 3.0x or less in 1Q16.

• Notable on-premise software transactions significantly exceedingmedian exit multiples include Symantec’s acquisition of networkingand security software provider, Blue Coat Systems, for $4.7 billion(7.9x TTM revenue) and private equity firm Thoma Bravo’sacquisition of business intelligence and analytics provider, QlikTechnologies, for $2.6 billion (4.2x TTM revenue).

48

*Note - EV/EBITDA multiples comprised public sellers only

Median EV/Revenue Exit Multiple DistributionMedian Exit Multiples

26.0% 26.0%

19.8%

11.5%

7.3%

3.1%

6.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

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

> 2.0x & <=3.0x

> 3.0x & <=4.0x

> 4.0x & <=5.0x

> 5.0x & <=6.0x

> 6.0x

TTM Revenue Exit Multiple Bins

% o

f D

ea

ls-

2Q

16

TT

M

2.5x 2.5x 2.6x 2.2x 2.1x

17.3x 18.1x

24.7x23.2x

15.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

2Q15 3Q15 4Q15 1Q16 2Q16

EV/Revenue


ON-PREMISE SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZE

• Of the TTM deals announced with an ascertainable EV/Rev exitmultiple, approximately 70% of software M&A transactions featuredprivately-held targets.

• The median TTM exit multiple was significantly higher for public on-premise software sellers (2.6x TTM revenue) than for their privatecounterparts (1.8x TTM revenue).

• Over the last 12 months, public buyers paid a median 1.9x TTMrevenue for their targets, compared to a median of 2.5x paid byprivate buyers.

• Buyers with revenue greater than $200 million paid a median 2.3xTTM revenue for their targets, compared to a median 1.7x TTMrevenue paid by sub-$200 million revenue buyers.

• On a TTM basis, software M&A transactions with the highest exitmultiples featured a large public or private buyer (greater than $200million in revenue) acquiring a small target (less than $20 million).For the last 12 months, this match-up produced a median 2.8xEV/Revenue exit multiple.

49

Seller Less

Than $20

million: 2.4x

Seller Less

Than $20

million: 2.8x

Seller Greater

Than $20

million: 1.5x

Seller Greater

Than $20

million: 0.8x

Seller Less

Than $20

million: 1.7x

Seller Less

Seller Greater

Than $20

million: 1.7x

Seller Greater

Than $20

million: 2.3x

Buyer Less Than $200

million1.7x Median Multiple

Buyer Greater Than

$200 million2.3x Median Multiple

Large vs. Smaller BuyerPublic vs. Private Target


35% 34% 36% 31% 35%

65% 66% 64% 69% 65%

2Q15 3Q15 4Q15 1Q16 2Q16

Vertical Horizontal

2.5x2.4x 2.4x

2.5x

2.3x2.3x

2.1x 2.1x 2.1x2.2x

2Q15 3Q15 4Q15 1Q16 2Q16

Vertical Horizontal

ON-PREMISE SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

• The median exit valuation of horizontal software companies was 2.2x TTM revenue in 2Q16, a slight increase from the 2.1x TTM revenue mark the priorthree consecutive quarters. Representative Q2 horizontal transactions included private equity firm Thoma Bravo’s acquisition business intelligence andanalytics provider, Qlik Technologies, for $2.6 billion (4.2x TTM revenue); private equity firm SliverLake’s acquisition of European-based ERP provider,Cegid Group, for $714 million (2.3x TTM revenue) and private equity firm Siris Capital’s acquisition of digital communications solutions provider, Xura, for$691 million (2.6x TTM revenue).

• The median exit valuation of vertical software companies was 2.3x TTM revenue in 2Q16, a slight decrease from the oscillation between 2.4x and 2.5x TTMin recent quarters. Vertical software targets have fetched a higher median EV/Revenue exit multiple than their horizontal software counterparts for thepast eight quarters. That represents a marked turnaround for vertical software median exit valuations after a dismal 2012 and 2013 (1.5x). The verticalexit recovery began in 2014 when the median multiple advanced to 2.2x.

• Q2’s more noteworthy vertical software deals included Broadridge Financial Solutions’ acquisition of 4Sight Financial Software, a provider of securitiesfinancing and collateral management solutions, for $40 million (3.3x TTM revenue) and private equity firm, Francisco Partners acquisition of SintecMedia,a provider of broadcast and media asset management tools, for $400 million.

50

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


CRM, Marketing & Sales1.4%

Data Mgmt/Integration2.3% Dev. Tools & IT Asset

Mgmt2.0%

eCommerce0.3%

EDA0.9%

Engineering & PLM3.1%

Middleware0.3%

ERP2.0%

Entertainment2.8%

HR & Workforce Mgmt1.7%

Messaging, Conferencing & Communications

2.3%

Multimedia, Graphics & Communications

5.1%

Network Performance Mgmt0.9%

Security6.6%Systems Mgmt

1.1%

Supply Chain Mgmt & Logistics

1.4%

Mobile23.6%

Education3.7%

Financial Services8.3%

Healthcare5.7%

Insurance1.1%

Manufacturing1.1%

Mining, Oil & Gas1.1%

Other Verticals 9.1%

Public Sector 1.4%

Retail2.3%

Accounting & Finance0.6%

Asset Management2.3%

Billing & Service Provisioning

0.3%

BI, Risk & Compliance3.1%

Content & Document Mgmt2.0%

ON-PREMISE SOFTWARE M&A ACTIVITY BY PRODUCT CATEGORY

• Mobile was the most active productcategory by far in the second quarter,accounting for 23.6% of all softwareM&A transactions. Distant runner-upswere Financial Services (8.3%),Security (6.6%), Healthcare (5.7%),and Multimedia, Graphics &Communications (5.1%).

• Historically, deal activity in any givenproduct category varies widely fromyear to year, based upon evolvingmarket adoption, changing technologyplatforms, economic cycles, etc.Examples include:

• Enterprise Resource Planning dealsaccounted for 2.0% of all softwareM&A activity in 2Q16 comparedwith 0.7% in 2Q15.

• Asset Management dealsrepresented 2.3% of all softwareM&A activity in 2Q16, comparedwith only 0.7% in 2Q15.

• Entertainment deals were 2.8% ofsoftware M&A activity in 2Q16,compared with 1.0% in 2Q15.

51

Ve

rtic

al


ON-PREMISE SOFTWARE M&A EXIT VALUATIONS BY PRODUCT CATEGORY

• Among the 36 on-premise software product categories we track, eleven had both sufficient deal activity and deal data to ascertain a category TTM revenuemultiple in 2Q16.

• On a TTM basis, the Healthcare category was rewarded with the highest median exit multiple (4.0x TTM revenue), followed by Financial Services with amedian exit multiple of 3.2x TTM revenue.

• Notable Healthcare transactions include IBM’s 1Q16 acquisition of healthcare analytics provider, Truven Holding ($3.6 billion, 5.8x TTM revenue); IBM’s3Q15 acquisition of Merge Healthcare ($1.0 billion, 4.3x TTM revenue) and Progenics Pharmaceuticals’ 4Q15 acquisition of EXINI Diagnostics AB ($7.1million, 6.3x TTM revenue).

• Notable Financial Services software transactions included Deutsche Boerse’s 3Q15 acquisition of 360 Treasury Systems ($796 million, 14.5x TTMrevenue); Intercontinental Exchange’s 4Q15 acquisition of Trayport ($860 million, 11.0x TTM revenue); and Broadridge Financial Solutions’ 2Q16acquisition of 4Sight Financial Software Limited ($40 million, 3.3x TTM revenue).

• On-premise CRM and Marketing exit multiples lagged far behind all other product categories on a TTM basis – posting a meager 1.0x median TTM revenuemultiple in 2Q16.

52

Median EV/Revenue Exit Multiples by Software Product Category

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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 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 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.

Perhaps 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 .

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, please contact Kris Beible, Vice President (858) 509-2800, [email protected].

CONTACT INFORMATION:

SEG Capital Advisors, L.L.C.12220El Camino Real, Suite 320

San Diego, CA 92130www.softwareequity.comp: (858) 509-2800

The information contained in this Report is obtained from sources that SEG Capital Advisors LLC (“SEG”) believes to be reliable. However, SEG makes no representations or warranties, express or implied, about the accuracy, completeness or fairness 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. Any person or entity reviewing this report (a) should conduct its own diligence and reach its own conclusions regarding its business transactions, (b) should not rely upon any conclusions reached by SEG, and (c) should consult its own advisors regarding its tax, accounting, financial and/or business decisions. SEG or its affiliates may have an interest in one or more of the securities or companies discussed herein. Financial data was provided by Capital IQ.

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

ABOUT SOFTWARE EQUITY GROUP

53


APPENDIX


THE SEG SaaS INDEX: PUBLIC MARKET MULTIPLES (ANNUAL)

55

31.4x 32.2x35.2x 35.2x

42.4x

56.8x

33.9x

2009 2010 2011 2012 2013 2014 2015

Me

dia

n E

V/

EB

ITD

A M

ult

iple

2.6x

3.6x

4.5x5.0x

6.7x

5.7x 5.8x

2009 2010 2011 2012 2013 2014 2015

Me

dia

n E

V/

Re

ve

nu

e M

ult

iple

Median EV/EBITDA – AnnualMedian EV/Revenue – Annual


$123.7

$104.7

$155.4 $169.0 $163.5

$128.7

$164.1

2009 2010 2011 2012 2013 2014 2015

TT

M T

ota

l R

ev

en

ue

68.3% 68.6%

63.4%

70.9%70.0%

66.1% 66.0%

2009 2010 2011 2012 2013 2014 2015

Gro

ss P

rofi

t M

arg

in

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE (ANNUAL)

26.0%

14.2%

26.9%25.5% 26.0%

28.4%27.1%

2009 2010 2011 2012 2013 2014 2015

TT

M R

ev

en

ue

Gro

wth

6.7%

9.6%8.8%

8.1%

1.0%

-8.9% -9.4%

2009 2010 2011 2012 2013 2014 2015

EB

ITD

A M

arg

in

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

Median EBITDA Margin - AnnualMedian Gross Profit Margin - Annual


THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES (ANNUAL)

1.5x

2.3x

2.7x 2.7x

3.0x 3.0x

2.8x

2009 2010 2011 2012 2013 2014 2015

EV

/R

ev

en

ue

Mu

ltip

le

10.0x

12.4x 12.3x 11.9x

14.0x15.0x

14.0x

2009 2010 2011 2012 2013 2014 2015

EV

/E

BIT

DA

Mu

ltip

le



THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE (ANNUAL)

$239.80

$387.90 $381.40

$470.50

$535.80

$743.10

2010 2011 2012 2013 2014 2015

TT

M T

ota

l R

ev

en

ue

4.2% 4.5%

16.1%

13.3%

9.3%8.0% 7.5%

2009 2010 2011 2012 2013 2014 2015

TT

M R

ev

en

ue

Gro

wth

66.6%

68.6%

65.8%66.1%

66.5%66.0%

65.7%

2009 2010 2011 2012 2013 2014 2015

Gro

ss P

rofi

t M

arg

in

15.3%

17.4%

18.9%

17.9%17.5% 17.6%

18.5%

2009 2010 2011 2012 2013 2014 2015

EB

ITD

A M

arg

in




THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES (ANNUAL)

1.2x

1.6x

2.9x

2.1x

2.6x2.5x

1.8x

2009 2010 2011 2012 2013 2014 2015

Me

dia

n E

V/

RE

ve

nu

e M

ult

iple

10.0x11.8x

15.2x13.9x

20.8x

24.6x

17.0x

2009 2010 2011 2012 2013 2014 2015

Me

dia

n E

V/

EB

ITD

A M

ult

iple



THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE (ANNUAL)

$216.2

$278.1

$333.0

$392.8

$440.2 $411.2

$492.9

2009 2010 2011 2012 2013 2014 2015

TT

M T

ota

l R

ev

en

ue

2.9% 3.4%

26.4%

23.9%

18.7%20.6%

17.5%

2009 2010 2011 2012 2013 2014 2015

TT

M R

ev

en

ue

Gro

wth

60.1%60.9%

66.2%65.0% 64.7%

63.8%63.2%

2009 2010 2011 2012 2013 2014 2015

Gro

ss P

rofi

t M

arg

in

10.2%

12.2%

13.1%

10.6%

8.9%8.3%

7.3%

2009 2010 2011 2012 2013 2014 2015

EB

ITD

A M

arg

in




THE SEG SaaS INDEX COMPANIES – KEY METRICS

61

SEG SaaS Index

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


2U 8.8x 10.5x 7.1x 5.4x 6.7x - - - - - 31.2% 33.9% 32.0% 36.2% 37.6% -22.3% -19.4% -18.6% -16.6% -14.0%

Alarm.com 3.8x 4.4x 3.6x 3.0x 4.0x 27.6x 30.7x 23.0x 21.0x 27.3x 26.9% 25.4% 26.1% 24.8% 25.8% 13.9% 14.2% 15.6% 14.4% 14.8%

Amber Road 2.9x 1.9x 1.8x 1.8x 2.1x - - - - - 16.3% 11.4% 7.5% 3.5% 5.9% -11.9% -19.6% -27.4% -33.6% -30.0%

Apigee Corporation 5.9x 2.4x 2.4x 2.0x 2.9x - - - - - - 30.2% 26.6% 28.3% 32.1% -78.0% -68.6% -60.6% -53.3% -48.8%

AppFolio 8.4x 8.3x 7.5x 5.3x 5.1x - - - - - - - - 57.3% 53.4% -16.4% -17.1% -19.3% -16.1% -14.4%

Athenahealth 6.0x 6.5x 7.2x 5.9x 5.5x 71.8x 87.4x 92.5x 89.7x 70.7x 25.9% 24.2% 23.8% 22.9% 22.4% 8.3% 7.4% 7.8% 6.6% 7.8%

Atlassian Corp - - 1.2x 11.2x 10.3x - - 6.6x 275.0x 313.6x 44.8% 48.5% - - - 12.7% 3.0% 4.2% 4.1% 3.3%

Bazaarvoice 2.2x 2.0x 1.6x 1.1x 1.2x - - - - - 13.7% 11.7% 9.3% 6.1% 4.5% -11.3% -10.5% -9.1% -9.2% -7.5%

Benefitfocus 6.9x 6.5x 6.0x 4.6x 5.3x - - - - - 33.9% 33.6% 34.1% 34.7% 32.0% -34.7% -31.6% -27.5% -24.4% -22.3%

Box 7.6x 5.8x 4.9x 4.1x 4.1x - - - - - 62.0% - 45.5% 39.9% 38.2% -60.2% -57.7% -56.3% -54.3% -47.6%

Callidus Software 5.0x 5.2x 5.9x 4.2x 5.0x - - - 1975.1x - 23.4% 24.2% 27.8% 26.7% 25.0% -2.5% -3.3% -3.1% 0.2% 0.0%

Castlight Health 11.0x 6.8x 3.6x 2.4x 3.1x - - - - - 173.5% 121.2% 88.9% 65.1% 54.3% -145.6% -129.8% -115.4% -103.8% -93.6%

ChannelAdvisors 2.5x 2.4x 2.9x 2.3x 2.5x - - - - - 21.7% 18.6% 16.5% 18.5% 18.4% -30.8% -24.9% -19.1% -11.5% -6.7%

Cornerstone OnDemand 6.0x 6.5x 6.0x 5.0x 5.4x - - - - - 36.7% 35.7% 32.3% 28.9% 30.3% -16.9% -17.5% -18.5% -17.8% -16.1%

Covisint 0.5x 0.7x 0.5x 0.5x 0.5x - - - - - -8.9% -9.7% -10.6% -11.2% -14.1% -30.4% -26.8% -25.8% -24.9% -14.9%

Cvent 6.3x 7.0x 376.8x 4.0x 6.7x 311.7x - - 657.1x 212.4x 28.6% 31.7% 31.8% 32.0% 30.9% 2.0% -0.3% 0.5% 0.6% 3.2%

DealerTrack 2.4x 2.6x 3.9x 3.4x 3.5x 20.2x 20.0x 28.2x 24.5x 19.3x 94.2% 60.3% 39.7% 39.7% 43.7% 11.9% 12.9% 13.7% 13.7% 18.0%

Demandware 12.0x 10.6x 8.4x 5.2x 5.8x - - - - - 50.2% 47.8% 46.3% 47.8% 42.5% -12.7% -15.8% -15.7% -14.4% -13.3%

Ebix 5.5x 4.8x 4.9x 4.8x 6.2x 15.3x 13.5x 13.9x 13.1x 16.6x 11.4% 17.6% 25.1% 23.9% 20.3% 36.2% 35.5% 35.1% 36.8% 37.3%

Ellie Mae 9.6x 9.9x 7.8x 8.9x 9.1x 46.1x 45.2x 37.5x 46.9x 52.4x 41.4% 54.6% 62.2% 57.2% 48.9% 20.9% 21.9% 20.7% 18.9% 17.3%

FireEye 13.4x 12.0x 5.6x 3.5x 3.7x - - - - - 130.3% 97.4% 71.0% 46.4% 39.5% -83.8% -74.8% -66.9% -63.5% -61.7%

Fleetmatics 6.3x 6.5x 7.2x 5.0x 4.6x 24.3x 24.8x 28.9x 21.0x 20.2x 28.5% 27.0% 24.7% 23.0% 21.7% 25.9% 26.3% 24.9% 24.0% 22.8%

Halogen Software 2.3x 2.0x 1.4x 1.1x 1.6x - - - - - 18.2% 18.0% 17.4% 15.9% 14.2% -16.0% -13.9% -9.7% -6.0% -4.4%

HealthStream 4.4x 3.6x 3.0x 2.4x 2.7x 29.9x 21.8x 18.3x 19.8x 24.0x 27.3% 24.8% 22.2% 22.4% 20.3% 14.9% 16.4% 16.3% 12.1% 11.1%

HortonWorks 14.1x 11.8x 7.9x 4.0x 3.8x - - - - - 95.1% 108.3% 123.1% 164.8% 135.6% -314.4% -263.0% -219.1% -143.3% -140.1%

HubSpot 11.4x 10.4x 10.4x 7.9x 7.2x - - - - - 52.7% 55.3% 56.6% 57.0% 56.1% -37.5% -35.5% -33.2% -24.0% -20.6%

inContact 3.3x 2.3x 2.7x 2.4x 2.6x - - - - 403.9x 37.4% 36.1% 33.3% 29.2% 25.2% -4.8% -4.3% -2.5% -0.7% 0.6%

Instructure - - 8.6x 5.5x 5.2x - - - - - - - - 65.0% 62.5% -94.5% -92.5% -85.3% -67.9% -56.8%

IntraLinks Holdings 2.3x 2.5x 2.0x 1.8x 1.7x 50.2x 54.4x 51.3x 58.2x 43.7x 10.1% 9.7% 8.5% 7.9% 6.7% 4.6% 4.5% 3.9% 3.0% 4.0%

J2 Global 5.4x 5.3x 5.9x 5.2x 4.4x 13.1x 12.9x 14.2x 12.9x 10.8x 15.7% 20.7% 19.9% 20.3% 21.4% 40.9% 40.8% 41.4% 40.6% 41.1%

Jive Software 1.7x 1.3x 1.3x 0.8x 1.0x - - - - - 20.8% 18.0% 13.5% 9.6% 7.9% -17.2% -13.8% -11.8% -10.7% -9.6%

Liquid Holdings Group - - - - - - - - - - 1.3% 1.3% 1.3% 1.3% 1.3% n/a n/a n/a n/a n/a

LivePerson 2.3x 2.1x 1.7x 1.2x 1.3x 51.7x 52.3x 23.9x 16.2x 18.9x 21.2% 20.5% 19.9% 13.9% 5.8% 4.5% 4.0% 7.0% 7.1% 7.0%

Marin Software 1.7x 1.0x 1.0x 0.8x 0.5x - - - - - 24.1% 19.5% 13.1% 9.2% 6.2% -26.4% -27.8% -25.7% -19.4% -14.4%

Marketo 6.8x 6.3x 6.0x 3.4x 4.9x - - - - - 50.9% 46.2% 42.8% 40.0% 38.1% -31.9% -31.0% -29.5% -26.5% -23.8%

Medical Transcript 1.1x 1.0x 0.8x 0.6x 0.5x - - - - - 102.3% 126.9% 75.0% 26.1% 0.8% -14.5% -11.1% -7.0% -6.5% -5.9%

Medidata Solutions 8.5x 7.8x 6.3x 5.2x 6.0x 75.2x 76.2x 59.7x 51.1x 55.3x 20.9% 19.8% 19.5% 17.1% 15.2% 11.3% 10.2% 10.5% 10.2% 10.9%


THE SEG SaaS INDEX COMPANIES – KEY METRICS

62

SEG SaaS Index



Mimecast - - 4.5x 3.3x 2.6x - - 31.1x 32.5x 46.3x 31.4% - - - 22.2% 7.6% 10.9% 14.4% 10.1% 5.6%

MINDBODY 9.2x 6.2x - 4.0x 4.3x - - - - - - - - 44.8% 45.0% -30.3% -29.8% -27.4% -28.3% -24.1%

NantHealth, Inc. - - - - 27.6x - - - - - - - - 71.9% 70.9% -151.2% -159.3% -123.7% -109.1% -124.0%

Netsuite 12.1x 11.0x 9.6x 6.9x 7.7x - - - - - 34.2% 35.0% 34.9% 33.2% 32.6% -8.3% -9.7% -8.3% -8.3% -7.9%

New Relic 12.0x 11.7x 11.3x 7.1x 6.1x - - - - - 74.7% 73.2% 68.8% 67.5% 64.2% -40.9% -38.2% -36.2% -32.5% -32.4%

Paycom Software 12.1x 11.4x 11.3x 8.3x 9.0x 68.7x 55.4x 56.4x 44.2x 38.2x 44.6% 46.2% 48.4% 48.8% 53.4% 17.6% 20.6% 20.1% 18.7% 23.5%

Paylocity Holding 11.1x 10.8x 11.9x 8.0x 8.7x - - - - 374.4x 40.9% 40.5% 42.0% 46.7% 49.2% -6.7% -5.2% -3.6% -0.2% 2.3%

Q2 Holdings 9.2x 9.7x 9.0x 6.6x 7.2x - - - - - 42.0% 41.8% 38.5% 37.6% 37.0% -16.2% -15.1% -14.9% -14.8% -15.7%

Qualys 9.4x 6.5x 6.6x 4.3x 4.3x 49.3x 31.5x 29.8x 18.1x 17.6x 24.0% 24.1% 24.1% 23.0% 23.0% 19.0% 20.7% 22.3% 23.8% 24.6%

RealPage 3.7x 3.5x 3.7x 3.4x 3.7x 55.8x 44.2x 39.4x 30.5x 29.7x 6.7% 11.6% 14.1% 15.8% 17.4% 6.6% 7.8% 9.4% 11.3% 12.4%

RingCentral 4.5x 4.5x 5.2x 4.1x 3.9x - - - - - 36.8% 35.3% 35.1% 34.7% 34.0% -13.1% -10.6% -7.9% -5.5% -4.0%

Salesforce.com 8.6x 8.0x 8.3x 7.2x 7.5x 200.7x 150.8x 130.8x 102.5x 101.4x 28.4% 25.3% 24.2% 24.1% 25.0% 4.3% 5.3% 6.3% 7.0% 7.4%

SciQuest 3.0x 2.0x 1.9x 2.0x 2.4x 64.6x 38.5x 28.6x 26.6x 27.1x 7.9% 4.7% 2.0% 3.4% 3.7% 4.6% 5.1% 6.8% 7.7% 8.9%

Service-now.com 15.1x 13.6x 14.3x 9.4x 10.0x - - - - - 58.1% 54.0% 50.5% 47.3% 45.5% -16.1% -14.9% -12.5% -10.5% -9.3%

Shopify 18.6x 16.5x 11.6x 7.9x 9.2x - - - - - - - - 95.4% 94.7% -11.9% -7.2% -5.9% -5.9% -6.9%

SPS Commerce 7.2x 7.2x 7.2x 3.9x 4.6x 70.3x 72.9x 70.8x 37.5x 43.8x 24.1% 25.0% 25.8% 23.9% 22.9% 10.2% 9.8% 10.1% 10.5% 10.5%

Tableau Software 15.5x 12.4x 9.8x 3.8x 4.1x 711.2x - - - - 75.4% 71.4% 69.1% 58.4% 48.5% 2.2% -0.3% -1.4% -4.3% -8.4%

Tangoe 2.2x 1.3x 1.3x 1.3x 1.3x 28.5x 19.2x 30.5x 29.0x 29.0x 10.9% 8.3% 5.7% 5.7% 5.7% 7.7% 6.7% 4.4% 4.4% 4.4%

The Ultimate Software Group 8.8x 9.0x 9.4x 7.9x 8.4x 65.7x 74.2x 83.5x 76.8x 86.5x 22.2% 21.1% 20.8% 22.2% 24.7% 13.4% 12.2% 11.3% 10.3% 9.7%

TrueCar 4.7x 1.7x 2.0x 1.6x 1.8x - - - - - 44.8% 37.2% 31.6% 25.7% 18.9% -18.2% -16.1% -13.7% -14.3% -14.4%

Twilio, Inc. - - - - 13.2x - - - - - - - - 87.9% 86.6% -27.4% -24.7% -23.2% -19.9% -15.8%

Upland Software 1.7x 1.8x 1.7x 1.5x 2.0x 95.1x - - 153.6x 81.8x 38.1% 25.0% 14.2% 8.3% 5.2% 1.8% -0.2% -0.1% 1.0% 2.4%

Veeva Systems 9.4x 8.3x 8.2x 7.1x 7.7x 38.6x 34.1x 34.5x 33.0x 38.9x 43.7% 37.9% 32.2% 30.6% 30.5% 24.4% 24.5% 23.9% 21.6% 19.9%

Workday 17.1x 13.6x 13.2x 10.5x 10.8x - - - - - 63.7% 58.2% 51.4% 47.5% 43.0% -17.4% -15.7% -15.5% -15.6% -15.5%

Workiva 4.1x 4.1x 4.8x 3.0x 3.0x - - - - - 28.6% 27.8% 27.7% 28.9% 29.2% -30.9% -29.3% -28.8% -27.0% -28.8%

Xactly 3.9x 3.1x 3.2x 2.0x 2.6x - - - - - - - 20.9% 24.3% 27.9% -19.8% -20.4% -20.7% -21.5% -21.0%

Zendesk 11.8x 9.4x 9.9x 7.5x 8.2x - - - - - 73.3% 69.1% 66.3% 64.3% 63.0% -46.5% -40.4% -35.3% -32.8% -31.6%

Zix 4.7x 4.8x 5.0x 3.7x 3.4x 27.6x 27.8x 25.7x 20.2x 17.8x 5.6% 5.3% 6.9% 8.7% 9.2% 16.9% 17.3% 19.5% 18.4% 19.2%


Other SaaS 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 65.2x 40.3x 50.0x 44.6x 33.6x


EBITDA Margin -13.1% -13.8% -11.8% -10.5% -8.4%


TTM Revenue Growth (YoY) 36.8% 27.8% 27.7% 29.1% 25.2%

TTM EBITDA Growth (YoY) -5.3% -5.1% -2.3% 7.1% -5.0%

TTM Earnings Growth (YoY) 0.6% -49.5% 15.5% 6.6% 19.6%

Cash as Percent of Market Cap 11.0% 13.0% 11.4% 14.3% 13.2%

Enterprise Value Growth (YoY) 28.0% 29.4% 0.4% -29.2% -17.9%

CRM & Marketing 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 46.5x 36.0x 48.4x 40.5x 27.5x


EBITDA Margin -18.8% -19.1% -17.4% -14.3% -11.0%



TTM EBITDA Growth (YoY) -11.8% -16.7% -5.6% 16.3% 36.2%

TTM Earnings Growth (YoY) 17.2% 26.9% 14.7% -2.0% 5.5%


Enterprise Value Growth (YoY) 11.1% 2.0% 5.5% -24.0% 5.1%

ERP & Supply Chain 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 59.6x 67.3x 66.3x 54.6x 41.3x


EBITDA Margin -8.3% -9.7% -8.3% -8.3% -7.9%



TTM EBITDA Growth (YoY) 18.3% 25.2% 16.2% 7.6% 7.1%

TTM Earnings Growth (YoY) 76.2% 58.8% 39.7% 56.4% 33.2%


Enterprise Value Growth (YoY) -5.7% -7.3% 16.9% 3.2% -8.8%

Vertically Focused 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 35.1x 32.4x 29.0x 31.3x 29.4x


EBITDA Margin 6.6% 7.4% 7.8% 6.6% 7.8%






Enterprise Value Growth (YoY) 51.6% 15.5% 26.3% 6.2% 14.0%

Human Capital Management 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 65.4x 60.4x 54.4x 49.8x 41.3x


EBITDA Margin -11.3% -9.6% -6.7% -3.1% -2.2%




TTM Earnings Growth (YoY) 41.6% 28.4% -0.5% -17.1% -33.7%



THE SEG SaaS INDEX METRICS BY PRODUCT CATEGORY

63


SEG Software Index



A10 Networks 1.4x 1.7x 1.7x 1.4x 1.4x - - - - - 12.6% 4.2% 6.2% 10.8% 17.4% -18.8% -19.7% -18.0% -13.8% -10.8%

Accretive Health 0.5x 0.4x 0.4x 0.5x 0.4x 8.1x 7.3x 7.5x 7.8x 7.3x 5.8% 10.8% 13.3% 16.6% 13.0% 6.1% 6.1% 6.0% 6.0% 6.1%

ACI Worldwide 3.5x 3.3x 3.4x 2.9x 3.0x 17.2x 16.4x 17.4x 17.2x 20.5x 11.2% 6.7% 1.8% 2.9% 1.1% 20.2% 20.2% 19.4% 16.7% 14.6%

Activision Blizzard 3.8x 4.3x 5.4x 5.4x 6.3x 12.5x 14.3x 16.4x 17.9x 19.3x 4.7% 8.4% 12.3% 5.8% 5.8% 30.6% 30.4% 32.8% 30.4% 32.9%

Allot Communications 1.2x 0.5x 0.6x 0.4x 0.5x 33.8x - - - - 17.6% 3.9% -7.6% -14.7% -21.2% 3.5% -0.8% -3.3% -4.3% -9.6%

Allscripts Healthcare Solutions 2.2x 2.3x 2.4x 2.1x 2.2x 43.9x 39.4x 35.2x 26.3x 24.1x 0.4% 0.0% -0.5% 0.6% 1.8% 5.0% 5.8% 6.9% 8.1% 8.9%

Amdocs Limited 2.0x 2.1x 2.1x 2.0x 2.0x 10.3x 10.6x 10.7x 10.6x 10.9x 4.8% 3.1% 2.2% 1.5% 2.0% 19.4% 19.4% 19.3% 18.9% 18.6%

American Software 2.1x 1.9x 2.1x 1.8x 1.7x 17.9x 15.1x 15.1x 13.5x 10.4x 2.3% 4.6% 11.6% 11.3% 10.7% 11.5% 12.5% 13.7% 13.5% 16.8%

ANSYS 7.7x 7.9x 7.9x 7.3x 7.3x 16.7x 17.3x 17.3x 15.9x 15.9x 6.8% 5.1% 3.0% 0.7% 1.3% 46.0% 46.0% 45.6% 45.8% 45.7%

Aspen Technology 8.1x 7.2x 7.2x 5.7x 6.6x 20.0x 17.2x 16.6x 12.8x 14.2x 14.6% 12.5% 10.4% 10.7% 10.5% 40.7% 41.9% 43.1% 44.4% 46.4%

Autodesk 4.6x 4.1x 5.1x 4.4x 5.2x 47.3x 52.2x 75.7x 74.7x 546.1x 11.8% 7.1% 3.5% -0.3% -7.7% 9.7% 7.9% 6.8% 5.9% 0.9%

AVG Technologies 3.6x 3.6x 2.8x 2.6x 2.5x 11.4x 11.6x 9.5x 8.6x 8.5x -3.2% 5.1% 11.5% 14.5% 13.1% 31.5% 30.7% 29.5% 30.4% 29.6%

Bango PLC 11.1x 12.3x 13.5x 11.0x 5.9x - - - - - -44.9% -48.3% -43.7% -37.2% -37.2% -110.0% -129.3% -135.2% -142.1% -142.1%

Barracuda Networks 6.8x 4.2x 2.5x 1.6x 2.1x 308.2x 256.7x 222.6x 60.3x 81.6x 18.7% 17.4% 16.2% 15.4% 15.4% 2.2% 1.6% 1.1% 2.6% 2.6%

Blackbaud 4.6x 4.9x 5.1x 4.7x 5.0x 27.9x 30.1x 31.4x 28.8x 30.0x 13.2% 13.4% 12.5% 13.0% 13.1% 16.4% 16.3% 16.1% 16.4% 16.7%

Bottomline Technologies 3.1x 3.2x 3.3x 3.3x 3.0x 26.0x 24.1x 25.7x 26.0x 22.8x 15.2% 10.1% 5.6% 3.9% 4.1% 12.1% 13.2% 13.0% 12.8% 13.3%

Broadridge Financial 2.5x 2.5x 2.6x 2.5x 2.7x 13.0x 11.7x 12.1x 11.9x 12.8x 4.5% 5.3% 6.4% 6.7% 7.6% 19.6% 21.4% 21.2% 21.2% 21.3%

Brocade Communications Systems 2.1x 1.7x 1.6x 1.4x 1.5x 8.0x 6.4x 6.3x 5.5x 6.1x 1.6% 1.5% 2.4% 1.7% 0.3% 26.0% 26.2% 25.7% 25.0% 24.1%

BSQUARE 0.4x 0.5x 0.5x 0.4x 0.4x 7.4x 7.7x 8.4x 5.5x 7.0x 5.8% 10.6% 11.5% 11.1% 6.4% 5.2% 6.1% 6.6% 6.6% 5.5%

CA 2.9x 2.7x 2.8x 2.9x 3.1x 9.1x 8.5x 8.9x 9.5x 9.9x -3.4% -4.9% -6.1% -6.6% -5.6% 32.1% 32.2% 30.9% 30.5% 31.2%

CA Technologies 2.9x 2.7x 2.8x 2.9x 3.1x 9.1x 8.5x 8.9x 9.5x 9.9x -3.4% -4.9% -6.1% -6.6% -5.6% 32.1% 32.2% 30.9% 30.5% 31.2%

Cadence Design Systems 3.3x 3.4x 3.6x 3.4x 4.0x 15.4x 14.4x 15.0x 14.4x 16.1x 8.7% 10.0% 9.7% 7.7% 7.7% 21.5% 23.5% 23.7% 24.0% 24.7%

Cerner 6.7x 5.8x 5.1x 4.3x 4.2x 23.3x 20.4x 18.2x 15.4x 15.0x 20.0% 24.0% 29.0% 31.4% 27.4% 28.6% 28.3% 27.8% 27.7% 27.9%

Check Point Software Tech 9.3x 8.5x 8.6x 8.2x 7.9x 17.1x 15.8x 16.2x 15.8x 15.3x 8.0% 8.6% 8.9% 9.0% 8.9% 54.0% 53.5% 52.9% 52.3% 51.6%

Cisco Systems 2.3x 2.1x 2.1x 2.0x 2.1x 8.6x 7.9x 7.7x 6.8x 7.4x 3.1% 4.3% 4.9% 3.1% 1.6% 27.2% 27.2% 27.6% 28.8% 29.2%

Citrix Systems 3.5x 3.7x 3.8x 3.4x 3.9x 16.3x 15.9x 16.7x 13.2x 13.9x 5.2% 4.0% 4.2% 4.2% 6.0% 21.4% 23.1% 22.7% 25.9% 27.9%

CommVault Systems 2.7x 2.2x 2.4x 2.2x 2.6x 32.3x 46.1x 104.4x 154.7x 121.7x 3.6% -1.7% -4.9% -4.5% -2.0% 8.4% 4.7% 2.3% 1.4% 2.2%

Computer Programs and Sys 2.9x 2.5x 2.5x 3.3x 3.3x 11.6x 11.1x 13.1x 18.2x 18.9x -2.2% -5.1% -12.2% -11.0% 3.4% 24.7% 22.5% 19.1% 18.3% 17.6%

Constellation 5.2x 5.3x 5.2x 4.5x 4.5x 32.3x 30.9x 29.2x 19.3x 19.4x 25.8% 17.6% 12.5% 10.1% 12.1% 16.0% 17.2% 17.8% 23.2% 23.2%

CSG Systems International 1.5x 1.5x 1.6x 1.7x 2.0x 9.4x 9.2x 9.3x 8.7x 9.7x -0.8% -0.8% -0.4% 0.2% 0.6% 16.3% 16.3% 17.5% 19.4% 20.8%

Cyberark Software 14.9x 11.7x 8.1x 6.5x 6.7x 62.0x 48.8x 35.9x 29.7x 33.3x 67.4% 76.5% 67.9% 56.1% 47.5% 24.1% 24.0% 22.7% 21.8% 20.1%

Cyren 2.9x 2.2x 2.2x 1.7x 2.2x - - - - - -4.9% -10.2% -11.9% -13.0% -8.6% -12.5% -9.4% -10.4% -5.9% -5.5%

Dassault Systèmes 6.9x 6.0x 6.2x 5.8x 5.6x 27.1x 24.5x 23.4x 21.4x 20.4x 17.3% 22.9% 24.2% 23.8% 17.8% 25.4% 24.4% 26.5% 27.2% 27.3%

DST Systems 1.7x 1.5x 1.7x 1.5x 1.6x 10.9x 9.8x 11.5x 10.2x 11.5x 4.1% 3.7% 3.6% 2.8% 3.6% 15.7% 15.5% 14.6% 14.3% 14.0%

Electronic Arts 3.8x 4.4x 4.5x 4.0x 4.5x 14.9x 15.3x 17.2x 18.2x 18.2x 26.3% 17.3% 4.7% -4.0% -2.6% 25.2% 28.5% 26.3% 22.0% 24.5%

EMC 2.1x 2.0x 2.1x 2.0x 2.1x 9.3x 9.1x 9.9x 10.1x 10.7x 5.4% 4.7% 2.8% 1.1% 0.0% 22.9% 21.9% 21.0% 19.7% 19.5%

EPIQ Systems 2.1x 2.0x 1.9x 1.7x 1.8x 16.3x 14.8x 14.3x 11.0x 11.8x -3.6% -2.5% 4.7% 13.9% 21.6% 12.9% 13.5% 13.2% 15.5% 14.9%

THE SEG SOFTWARE INDEX COMPANIES – KEY METRICS

64


SEG Software Index



Evertec 6.5x 5.7x 5.2x 4.5x 4.5x 15.6x 13.6x 12.5x 11.3x 11.5x 2.2% 2.1% 2.7% 3.2% 3.2% 41.6% 41.9% 41.5% 39.7% 39.1%

Evolving Systems 3.1x 2.3x 2.4x 2.4x 2.6x 10.1x 8.4x 10.2x 11.5x 11.8x 19.0% 2.7% -8.9% -13.8% -14.7% 31.1% 27.2% 23.9% 21.2% 22.1%

F5 Networks 4.5x 4.2x 3.4x 3.0x 3.3x 14.3x 13.1x 11.1x 9.8x 10.9x 15.6% 13.3% 10.8% 8.8% 6.4% 31.5% 31.7% 31.0% 30.5% 29.9%

Fair Isaac 4.1x 4.1x 4.0x 4.2x 4.6x 18.3x 18.2x 17.8x 18.1x 19.8x 9.7% 9.2% 6.3% 6.9% 4.0% 22.2% 22.3% 22.6% 23.0% 23.3%

FalconStor Software 0.9x 1.1x 1.4x 1.2x 1.4x 238.3x 253.3x 26527.6x 159.3x - -2.1% -0.4% 3.8% 5.0% -33.5% 0.4% 0.4% 0.0% 0.7% -29.1%

Fidessa 2.9x 2.4x 2.3x 2.5x 2.7x 16.3x 13.5x 13.5x 14.5x 16.0x 0.5% 2.5% 5.0% 7.4% 7.4% 17.8% 17.5% 17.2% 17.0% 17.0%

First Data Corp - - 5.0x 4.4x 4.3x - - 14.9x 14.4x 14.2x 3.9% 3.4% 3.5% 2.9% 2.7% 32.7% 33.0% 33.6% 30.6% 30.0%

Fiserv 4.4x 4.7x 4.9x 4.9x 5.1x 14.6x 15.3x 15.9x 15.9x 16.6x 4.3% 4.1% 3.8% 3.7% 4.0% 30.3% 30.5% 30.8% 30.5% 30.8%

Fortinet 7.1x 7.7x 5.4x 3.9x 4.3x 80.5x 98.7x 82.0x 70.8x 86.1x 25.6% 27.0% 29.4% 31.0% 32.7% 8.8% 7.8% 6.6% 5.5% 5.0%

GameLoft SA 1.5x 1.1x 1.6x 1.8x 2.5x 37.6x 39.6x 40.2x 32.4x 45.0x 0.5% 3.5% 8.0% 12.7% 12.7% 3.9% 2.8% 4.1% 5.6% 5.6%

Gigamon 4.5x 3.3x 3.3x 2.9x 3.6x 161.6x 54.5x 42.6x 38.0x 41.4x 27.0% 38.4% 41.3% 41.3% 40.7% 2.8% 6.1% 7.7% 7.7% 8.7%

Glu Mobile 2.9x 1.6x 1.0x 0.8x 0.7x 43.2x 34.2x 18.2x 31.9x - 97.5% 85.3% 41.4% 12.0% -5.3% 6.7% 4.7% 5.3% 2.5% -2.4%

Gree 1.1x 0.8x 0.7x 0.7x 0.9x 3.5x 3.0x 2.7x 2.8x 3.6x -27.9% -26.4% -25.4% -25.0% -23.4% 30.3% 27.3% 26.3% 24.8% 26.3%

GSE Systems 0.4x 0.3x 0.3x 0.5x 0.5x - - - 25.8x 20.0x -2.5% 17.1% 49.2% 51.3% 30.2% -7.8% -5.2% -1.5% 1.8% 2.7%

Guidance Software 1.6x 2.2x 1.5x 1.2x 1.4x - - - - - -0.6% -0.2% -0.7% -1.5% -0.4% -2.6% -3.4% -4.3% -7.2% -8.9%

Guidewire Software 8.2x 8.8x 9.5x 8.2x 8.7x 121.3x 147.5x 209.7x 151.4x 156.0x 13.3% 8.6% 5.4% 7.1% 9.8% 6.8% 5.9% 4.5% 5.4% 5.5%

Hewlett Packard 0.8x 0.7x 0.3x 0.2x 0.2x 6.1x 5.5x 2.8x 2.2x 2.4x -25.9% -28.2% -7.3% 4.7% 21.2% 13.2% 13.3% 11.8% 10.9% 10.1%

IBM 2.2x 2.1x 2.0x 2.0x 2.2x 8.3x 8.1x 7.7x 7.9x 9.2x -7.3% -10.4% -12.8% -11.9% -10.3% 26.2% 25.7% 25.6% 24.6% 23.5%

iDream Sky Technologies 1.4x 1.7x 1.9x 2.0x 2.2x 74.3x 130.1x 146.1x 16.2x 17.1x 196.5% - - 66.5% 66.5% 1.9% 1.3% 1.3% 12.6% 12.6%

Imperva 8.4x 9.4x 8.8x 5.4x 4.3x - - - - - 26.0% 30.1% 37.1% 42.9% 40.7% -31.4% -29.3% -22.5% -18.5% -19.1%

Intuit 6.9x 6.4x 6.0x 5.8x 5.9x 24.5x 24.8x 22.2x 19.8x 19.2x -10.8% -1.2% 1.4% 6.4% 17.5% 28.1% 25.9% 27.2% 29.1% 30.5%

Jack Henry & Associates 4.3x 4.4x 4.8x 5.0x 5.0x 12.6x 12.7x 13.7x 14.1x 14.4x 9.1% 7.1% 6.6% 6.4% 6.8% 34.4% 34.8% 35.1% 35.0% 34.8%

Juniper Networks 2.3x 2.2x 2.5x 2.0x 1.8x 12.6x 11.4x 11.8x 9.0x 8.1x -5.3% -7.0% -3.3% 5.0% 8.0% 18.4% 19.5% 21.0% 22.2% 22.4%

Konami 1.3x 1.4x 1.5x 1.4x 1.8x 9.9x 9.6x 9.8x 7.4x 6.7x 0.3% 0.1% 4.0% 11.0% 14.6% 13.3% 14.8% 15.6% 18.6% 26.8%

Magic Software Enterprises 1.3x 1.2x 1.0x 1.2x 1.3x 6.8x 6.7x 5.9x 6.5x 7.3x 7.3% 4.5% 4.7% 7.1% 10.2% 18.9% 17.9% 17.2% 18.0% 17.4%

Manhattan Associates 7.7x 8.4x 9.4x 7.1x 7.7x 28.1x 29.8x 32.5x 23.5x 25.0x 18.7% 17.1% 16.2% 13.1% 11.8% 27.5% 28.4% 29.0% 30.4% 30.7%

Mentor Graphics 2.3x 2.3x 2.3x 1.7x 1.9x 10.7x 10.1x 10.3x 9.2x 11.6x 6.9% 8.1% 6.4% -5.1% -10.1% 21.6% 22.9% 22.4% 18.9% 16.3%

Microsoft 3.3x 3.2x 4.1x 4.0x 4.0x 9.3x 8.8x 11.4x 11.7x 11.9x 13.7% 7.8% -0.8% -5.7% -8.3% 35.6% 35.9% 35.7% 34.6% 33.5%

MicroStrategy 2.9x 3.3x 2.9x 2.7x 3.0x 23.2x 16.0x 11.1x 9.5x 11.0x -3.1% -5.2% -10.3% -8.6% -7.2% 12.4% 20.8% 26.2% 28.0% 27.4%

MIND C.T.I. 1.5x 1.5x 1.5x 1.4x 1.3x 4.6x 4.5x 4.5x 4.3x 4.2x 26.8% 10.7% -4.1% -16.4% -20.9% 32.3% 34.2% 34.1% 31.5% 31.1%

MobileIron 2.7x 1.8x 1.5x 1.3x 1.2x - - - - - 27.4% 23.3% 17.3% 12.9% 11.8% -47.2% -52.2% -56.3% -46.2% -43.9%

Model N 2.5x 2.0x 2.0x 2.1x 2.3x - - - - - -13.3% -0.6% 14.7% 16.8% 18.0% -20.3% -18.2% -16.1% -18.5% -22.2%

Momo 26.3x 22.1x 14.9x 11.1x 11.2x - - 354.6x 120.9x 137.3x 665.4% 416.7% 296.5% 199.4% 141.6% -24.6% -9.7% 4.2% 9.2% 8.2%

Monotype Imaging Holdings 5.2x 4.5x 4.7x 4.3x 4.2x 17.7x 16.3x 17.8x 15.5x 15.7x 8.1% 6.5% 3.9% 4.3% 6.4% 29.2% 27.5% 26.5% 27.5% 26.7%

MSCI 7.1x 7.0x 7.3x 7.1x 7.7x 17.2x 16.8x 16.8x 15.9x 16.5x 9.2% 8.0% 7.2% 7.9% 7.0% 41.2% 41.7% 43.6% 44.8% 46.5%

Myriad Group AG 17.7x 13.8x 9.0x 10.9x 10.8x 1740.0x - - - - -12.1% -17.3% -24.4% -32.1% -32.1% 1.0% -6.0% -27.2% -55.1% -55.1%

NetApp 1.2x 0.9x 1.0x 0.6x 0.7x 7.5x 7.8x 8.8x 6.0x 6.2x -3.2% -5.2% -6.7% -8.4% -9.4% 15.7% 12.1% 11.3% 10.7% 11.4%


65



66

SEG Software Index



Netscout Systems 3.2x 7.9x 5.4x 2.5x 2.3x 12.9x 33.4x 33.8x 23.9x 30.8x 14.4% 5.6% 39.1% 76.6% 110.6% 24.9% 23.7% 16.0% 10.4% 7.3%

NetSol Technologies 1.2x 1.5x 1.4x 1.6x 1.5x 85.3x 9.0x 7.0x 6.3x 6.1x 16.6% 41.3% 51.2% 49.7% 35.4% 1.4% 16.9% 19.3% 24.9% 24.2%

NeuStar 2.1x 1.9x 1.7x 2.1x 2.1x 5.3x 5.0x 4.4x 5.6x 5.8x 7.6% 7.7% 7.7% 9.0% 10.2% 38.6% 39.1% 39.8% 38.1% 36.5%

NICE Systems Ltd 3.4x 3.4x 3.0x 3.5x 3.7x 17.3x 17.1x 14.5x 14.4x 14.9x 7.9% 7.4% 6.5% 6.3% -9.0% 19.5% 19.7% 20.8% 24.1% 24.7%

NQ Mobile 1.1x 0.9x 1.0x 0.9x 1.1x - - - - - 40.5% 27.7% 18.8% 22.4% 14.4% -18.0% -9.7% -4.0% -2.9% -0.5%

Nuance Communications, Inc. 3.6x 3.6x 3.7x 3.8x 3.4x 34.1x 30.3x 29.0x 24.7x 21.8x 2.1% 1.9% 0.4% 0.8% 1.0% 10.5% 11.9% 12.8% 15.3% 15.7%

Omnicell 2.6x 2.6x 2.1x 1.9x 2.4x 16.8x 17.7x 14.3x 13.9x 20.2x 15.2% 13.9% 11.9% 9.9% 18.4% 15.3% 14.6% 14.5% 13.4% 12.0%

Open Text Corp 3.7x 3.5x 3.6x 3.7x 4.1x 12.8x 12.3x 13.0x 12.8x 13.5x 26.1% 14.0% 4.5% -1.5% -2.1% 28.9% 28.1% 27.8% 28.8% 30.5%

Opera 2.4x 1.7x 1.6x 1.9x 1.9x 12.6x 10.3x 9.9x 13.5x 14.4x 60.1% 60.6% 38.7% 28.1% 25.4% 19.3% 16.9% 16.1% 14.3% 13.5%

Oracle 4.7x 4.1x 4.0x 3.9x 4.2x 11.2x 10.0x 9.8x 9.6x 10.5x -0.1% -1.1% -3.5% -4.3% -3.1% 42.0% 41.4% 40.6% 40.1% 39.8%

Palo Alto Networks 15.2x 15.6x 13.9x 11.0x 9.5x - - - - - 54.5% 55.1% 56.0% 55.6% 53.4% -11.7% -11.3% -10.5% -10.6% -11.1%

Pandora Media 3.5x 3.3x 2.3x 1.7x 1.8x - - - - - 30.4% 28.0% 26.0% 26.4% 28.6% -3.6% -3.7% -3.4% -5.8% -9.1%

Parametric Technology 3.6x 3.4x 3.5x 3.3x 3.9x 17.5x 17.1x 17.3x 16.9x 23.1x 2.2% -1.9% -7.5% -10.1% -12.2% 20.4% 20.0% 20.2% 19.3% 16.8%

PDF Solutions 3.9x 2.8x 2.2x 2.0x 3.0x 13.0x 10.4x 7.9x 8.6x 16.8x -4.3% -5.5% -1.2% -2.2% -3.7% 30.1% 26.6% 27.3% 23.9% 18.2%

Pegasystems 2.4x 2.7x 3.0x 2.4x 2.5x 20.1x 21.9x 23.5x 18.6x 19.7x 13.2% 11.4% 12.7% 15.7% 17.3% 12.0% 12.1% 12.6% 12.9% 12.9%

Progress Software 3.7x 3.9x 3.0x 3.0x 3.0x 16.7x 19.2x 15.5x 13.5x 12.3x 7.2% 11.4% 13.5% 13.6% 13.1% 22.1% 20.1% 19.2% 22.2% 24.4%

Proofpoint 10.8x 10.8x 10.6x 7.7x 8.0x - - - - - 40.6% 38.5% 36.8% 35.7% 36.1% -16.8% -18.8% -19.7% -20.9% -21.4%

PROS Holdings 3.1x 3.2x 3.6x 1.8x 2.0x - - - - - 24.0% 15.5% 5.4% -9.5% -13.8% -5.3% -9.6% -16.6% -25.1% -29.8%

QAD 1.2x 1.2x 1.2x 0.9x 0.9x 16.6x 15.8x 17.7x 16.4x 19.3x 8.4% 4.8% -0.3% -5.8% -7.4% 7.1% 7.6% 6.9% 5.3% 4.4%

Qihoo 360 Technology 5.1x 4.9x 4.9x 5.3x 5.3x 19.6x 18.0x 19.7x 25.2x 25.0x 82.7% 64.2% 47.7% 29.8% 29.8% 25.9% 27.0% 25.1% 21.1% 21.1%

Qiwi 5.2x 4.5x 3.2x 2.1x 2.1x 16.5x 14.1x 10.8x 7.0x 7.3x 24.5% 24.1% 22.8% 20.4% 16.0% 31.4% 32.1% 29.9% 30.2% 29.3%

Qlik Technologies 5.3x 5.7x 4.5x 3.4x 3.9x 987.4x 2792.8x 984.3x 569.5x 641.3x 16.7% 14.1% 10.1% 10.0% 11.4% 0.5% 0.2% 0.5% 0.6% 0.6%

Quality Systems 1.7x 1.4x 1.6x 1.6x 1.6x 16.3x 13.0x 13.9x 14.1x 13.7x 10.2% 9.2% 8.0% 3.3% 0.5% 10.4% 10.5% 11.5% 11.6% 11.6%

Radware 4.4x 3.5x 2.7x 1.9x 1.6x 23.0x 16.9x 15.0x 13.1x 17.1x 14.7% 12.7% 4.0% -2.4% -8.9% 19.1% 20.4% 18.0% 14.2% 9.3%

Rapid7 - 11.3x 7.3x 4.1x 3.6x - - - - - - - - 43.8% 45.4% -28.1% -26.4% -27.5% -35.6% -39.3%

Red Hat 7.3x 7.2x 7.2x 6.1x 6.1x 38.7x 37.8x 38.5x 33.8x 35.0x 15.8% 14.3% 14.3% 14.7% 15.8% 18.9% 19.0% 18.6% 17.9% 17.5%

Redknee Solutions 1.5x 1.2x 1.1x 0.9x 0.9x 22.2x 11.3x 9.8x 9.7x 25.6x -3.1% -11.9% -13.6% -19.1% -18.6% 6.7% 10.9% 11.4% 9.3% 3.5%

Sage Group 4.6x 4.1x 4.5x 4.5x 4.7x 17.0x 15.3x 16.4x 16.7x 17.6x 6.8% 9.0% 6.1% 4.8% 3.6% 26.9% 26.7% 27.1% 26.9% 26.7%

SAP 4.8x 4.2x 4.5x 4.4x 4.1x 15.7x 13.9x 14.9x 16.0x 14.8x 8.6% 12.8% 15.7% 18.4% 14.5% 30.8% 30.2% 30.1% 27.5% 27.7%

SAP AG 4.8x 4.2x 4.5x 4.4x 4.1x 15.7x 13.9x 14.9x 16.0x 14.8x 8.6% 12.8% 15.7% 18.4% 14.5% 30.8% 30.2% 30.1% 27.5% 27.7%

Sapiens International 2.3x 3.0x 2.7x 2.6x 2.7x 18.4x 21.7x 18.1x 16.6x 17.6x 15.2% 14.1% 17.7% 17.9% 18.2% 12.7% 13.8% 14.9% 15.4% 15.2%

Secureworks Corp - - - - 3.0x - - - - - - - - 29.5% 29.8% -9.4% -13.7% -16.3% -17.8% -15.8%

Silver Spring Networks 1.8x 1.5x 1.6x 1.0x 1.4x - - 20.2x 5.1x 12.0x -8.4% 27.7% 74.2% 155.9% 35.7% -6.1% -2.6% 7.9% 20.1% 11.5%

Software AG 2.5x 2.4x 2.3x 2.7x 2.8x 9.5x 8.9x 8.1x 9.1x 9.1x -11.9% -6.8% -2.2% 1.8% 5.0% 26.1% 26.9% 28.6% 29.8% 30.9%

Sourcefire 1.0x 0.9x 1.2x 1.2x 1.2x 13.7x 8.4x 7.9x 7.9x 7.9x 2.2% 5.6% 27.2% 33.9% 37.6% 7.1% 10.9% 15.5% 15.7% 14.7%

Splunk 15.5x 14.3x 10.9x 7.6x 8.0x - - - - - 48.1% 46.8% 47.7% 48.3% 48.5% -45.5% -42.0% -41.5% -39.9% -39.9%

Square - - 3.9x 2.9x 2.0x - - - - - - - - 49.0% 52.6% -11.3% -8.3% -8.1% -7.5% -7.2%



67

SEG Software Index



SS&C 7.2x 8.0x 10.2x 8.4x 7.6x 19.1x 20.9x 31.2x 25.6x 23.3x 8.6% 10.2% 20.1% 30.3% 42.0% 37.5% 38.2% 32.7% 32.9% 32.7%

Stratasys 2.0x 1.6x 1.4x 1.1x 1.3x 19.4x 22.8x 29.7x - 277.0x 43.4% 27.2% 7.5% -7.2% -10.5% 10.2% 7.0% 4.8% -1.6% 0.5%

Symantec 3.8x 2.1x 1.9x 1.9x 2.5x 22.2x 7.2x 6.5x 6.0x 10.0x -5.4% -6.4% 15.2% 32.0% -9.0% 16.9% 28.8% 29.7% 31.5% 24.8%

Synchronoss Technologies 4.2x 3.8x 3.0x 2.4x 2.9x 15.4x 13.6x 10.4x 8.8x 11.9x 33.2% 35.3% 30.1% 26.6% 19.7% 27.1% 28.0% 28.5% 27.2% 24.5%

Synopsys 3.1x 3.2x 2.9x 2.7x 3.0x 16.3x 16.7x 16.0x 15.3x 17.0x 8.8% 8.4% 9.0% 7.0% 7.2% 19.3% 18.8% 18.4% 17.7% 17.6%

Take-Two Interactive 1.5x 1.5x 1.6x 1.7x 1.7x - - - - 26.6x -53.9% -47.2% -37.1% 36.7% 30.5% -21.9% -21.3% -10.0% -15.8% 6.3%

Tangoe 2.2x 1.3x 1.3x 1.3x 1.3x 28.5x 19.2x 30.5x 29.0x 29.0x 10.9% 8.3% 5.7% 5.7% 5.7% 7.7% 6.7% 4.4% 4.4% 4.4%

TeleNav 1.5x 1.0x 1.0x 0.7x 0.6x - - - - - -7.1% 6.6% 20.1% 21.7% 18.1% -22.7% -20.0% -19.3% -18.3% -18.4%

Teradata 2.1x 1.5x 1.4x 1.3x 1.3x 10.5x 8.2x 8.3x 8.6x 8.6x -1.7% -3.9% -6.1% -7.4% -7.2% 20.1% 18.5% 17.2% 14.9% 15.2%

The Descartes Systems Group 6.0x 6.5x 7.7x 6.9x 7.5x 20.0x 21.4x 24.5x 21.6x 23.0x 10.3% 8.8% 8.6% 8.3% 8.6% 30.0% 30.6% 31.3% 32.0% 32.5%

Trend Micro 3.8x 3.9x 4.2x 3.9x 3.4x 11.0x 11.3x 12.4x 12.3x 10.8x 6.8% 8.8% 9.3% 7.9% 5.7% 34.4% 34.3% 33.9% 31.6% 31.9%

Tyler Technologies 7.7x 8.4x 10.0x 7.9x 8.5x 34.6x 37.4x 44.4x 36.3x 40.5x 18.9% 18.2% 17.5% 19.9% 23.3% 22.3% 22.5% 22.6% 21.8% 21.0%

Ubisoft Entertainment 1.1x 1.3x 2.5x 2.3x 2.4x 9.1x 35.9x - 15.6x 5.4x 45.3% 20.2% -0.9% -3.0% -4.8% 12.6% 3.5% -7.7% 14.8% 44.4%

Varonis Systems 4.3x 3.7x 2.7x 2.8x 3.5x - - - - - 34.5% 29.1% 25.5% 25.5% 26.0% -18.3% -19.3% -17.8% -13.7% -12.3%

VASCO Data Security International 3.9x 2.4x 2.2x 1.8x 2.4x 17.2x 9.9x 9.7x 8.0x 13.3x 43.7% 45.4% 38.7% 19.8% -2.1% 22.9% 23.7% 22.4% 22.6% 18.2%

Verint Systems Inc 3.7x 3.3x 2.8x 2.3x 2.2x 26.2x 23.6x 20.0x 18.7x 20.3x 18.8% 14.3% 8.3% 0.2% -3.0% 14.3% 14.2% 13.8% 12.3% 10.9%

Verisk 7.7x 8.7x 8.4x 7.4x 7.4x 16.4x 18.3x 17.3x 16.3x 16.2x 5.7% 8.0% 11.7% 18.4% 26.4% 46.9% 47.4% 48.6% 45.7% 45.6%

VMWare 5.1x 4.7x 3.0x 2.3x 2.7x 20.2x 18.2x 11.4x 8.5x 10.2x 15.1% 13.2% 11.4% 10.1% 8.7% 25.1% 25.7% 26.2% 26.7% 26.1%

Zynga 2.4x 1.8x 1.7x 1.2x 1.8x - - - - - -9.3% 7.5% 14.4% 10.8% 8.9% -17.1% -13.6% -8.6% -6.4% -3.4%


Enterprise Resource Planning 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 20.1x 16.2x 16.0x 14.9x 11.7x


EBITDA Margin 26.9% 26.7% 27.1% 26.9% 26.7%



TTM EBITDA Growth (YoY) -4.6% -4.5% -2.7% -4.4% -0.4%

TTM Earnings Growth (YoY) -9.3% -8.8% 3.4% -6.6% -10.4%



Financial & Accounting 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 17.2x 20.0x 20.1x 19.0x 21.7x


EBITDA Margin 22.2% 22.3% 22.6% 24.9% 24.2%



TTM EBITDA Growth (YoY) -4.5% 1.2% 3.0% -2.0% -0.4%

TTM Earnings Growth (YoY) 9.3% 2.5% -2.7% -2.4% 6.7%



Gaming 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 11.7x 7.2x 8.4x 12.6x 12.9x


EBITDA Margin 13.0% 9.2% 9.8% 16.7% 25.6%



TTM EBITDA Growth (YoY) -29.7% -28.8% 2.8% 24.2% 98.0%



Enterprise Value Growth (YoY) -2.8% 9.8% 46.7% 38.2% 70.7%

Healthcare 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 14.1x 15.7x 17.9x 17.7x 18.5x


EBITDA Margin 12.9% 12.6% 13.0% 12.5% 11.8%




TTM Earnings Growth (YoY) 19.0% 18.6% 19.1% 2.7% -21.5%


Enterprise Value Growth (YoY) 11.5% 4.1% 3.8% -1.0% 2.3%

THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

68

IT Conglomerates 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 10.6x 11.1x 11.2x 10.2x 11.1x


EBITDA Margin 30.8% 30.2% 30.1% 27.5% 27.7%


TTM Revenue Growth (YoY) -0.1% -1.1% -3.5% -4.3% -3.1%


TTM Earnings Growth (YoY) -10.8% -13.2% -9.2% -18.3% -10.4%


Enterprise Value Growth (YoY) 3.0% -6.9% -8.0% -15.5% -11.0%

Mobile Solutions/Content 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 24.2x 17.4x 23.2x 21.2x 18.5x


EBITDA Margin 1.0% -3.7% 1.3% 2.5% -0.5%



TTM EBITDA Growth (YoY) -1.1% 1.7% -6.3% -2.5% -2.5%



Enterprise Value Growth (YoY) -14.6% -31.0% -25.5% -28.7% -30.7%

Networking & Network Perf Mgmt 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 11.7x 9.8x 9.5x 10.4x 10.4x


EBITDA Margin 18.4% 19.5% 18.0% 14.2% 9.3%

Net Income Margin -0.4% 3.2% 2.8% 8.6% 4.5%





Enterprise Value Growth (YoY) 22.0% 4.2% -14.7% -26.1% -21.1%

Security 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 33.3x 17.1x 17.7x 15.0x 14.3x


EBITDA Margin 2.2% 1.6% 1.1% 2.6% 2.6%




TTM Earnings Growth (YoY) -0.4% 3.2% 5.0% 0.0% 1.7%



Billing & Service Management 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 10.1x 10.0x 9.4x 9.5x 10.0x


EBITDA Margin 27.1% 27.2% 23.9% 21.2% 22.1%


TTM Revenue Growth (YoY) 7.6% 3.1% -0.4% 0.2% 0.6%

TTM EBITDA Growth (YoY) 20.0% 14.3% 11.2% 5.4% -2.2%

TTM Earnings Growth (YoY) 24.2% 21.2% 20.4% -1.7% -10.4%



Business Intelligence 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 29.5x 24.9x 25.8x 20.1x 23.3x


EBITDA Margin 12.4% 18.5% 17.2% 14.9% 15.2%

Net Income Margin 5.7% 4.2% -1.8% -1.2% -0.8%



TTM Earnings Growth (YoY) -11.8% 4.3% 21.3% 26.4% 33.9%



Development Platforms 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 13.6x 11.1x 11.2x 12.8x 15.6x


EBITDA Margin 18.9% 19.0% 18.6% 18.0% 17.5%




TTM Earnings Growth (YoY) -10.5% -2.2% 14.1% 18.5% 8.0%


Enterprise Value Growth (YoY) 47.1% 30.6% 7.9% 8.9% -0.8%

Engineering & PLM 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 16.9x 16.2x 16.3x 17.2x 19.1x


EBITDA Margin 21.5% 22.9% 22.4% 19.3% 17.6%



TTM EBITDA Growth (YoY) 2.9% 1.4% 11.7% 0.1% -2.0%

TTM Earnings Growth (YoY) -7.6% 2.8% 3.1% -0.9% -0.6%




Storage, Data Mgmt & Integration 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 8.7x 8.6x 8.9x 9.2x 11.0x


EBITDA Margin 15.7% 12.1% 11.3% 10.7% 11.4%




TTM Earnings Growth (YoY) -6.1% 0.6% -6.5% -5.2% -14.8%



Systems Management 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 14.0x 14.4x 12.7x 11.2x 12.2x


EBITDA Margin 24.9% 23.7% 22.7% 25.9% 26.1%




TTM Earnings Growth (YoY) -7.4% 3.7% -4.0% 11.6% 10.2%



Vertical - Finance 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 18.9x 16.4x 17.6x 17.3x 17.9x


EBITDA Margin 34.4% 34.8% 32.7% 32.9% 32.7%




TTM Earnings Growth (YoY) 1.6% 9.2% -3.3% 1.3% 1.3%



Vertical - Other 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 28.8x 29.7x 23.9x 25.8x 25.3x


EBITDA Margin 12.9% 13.8% 14.9% 16.4% 15.2%







THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

69


SEG Internet Index



1-800-FLOWERS.COM 0.7x 0.6x 0.6x 0.5x 0.5x 9.1x 10.4x 9.5x 6.3x 6.6x 48.3% 51.4% 13.3% 8.0% 8.0% 7.2% 6.0% 6.8% 7.3% 7.3%

58.com 27.5x 14.7x 12.8x 10.8x 8.3x - - - - - 78.4% 99.7% 134.6% 169.8% 182.7% -15.5% -18.8% -33.0% -30.6% -23.9%

8x8 3.7x 3.3x 4.5x 4.2x 4.2x 68.8x 65.0x 135.0x 191.5x 287.5x 26.3% 25.6% 25.8% 26.4% 28.9% 5.3% 5.1% 3.4% 2.2% 1.5%

Akamai Technologies 6.5x 6.1x 4.9x 4.2x 4.0x 19.2x 18.5x 15.0x 13.5x 12.9x 22.5% 19.3% 15.6% 11.9% 9.9% 34.0% 33.1% 32.4% 31.5% 31.2%

Alibaba 16.6x 13.6x 14.9x 11.9x 12.2x 45.7x 41.4x 44.7x 35.0x 34.1x 45.1% 40.3% 35.7% 33.3% 32.7% 36.3% 32.7% 33.2% 34.1% 35.8%

Amazon.com 2.2x 2.6x 3.1x 2.5x 2.9x 41.5x 43.0x 44.6x 34.0x 36.5x 17.7% 17.2% 18.0% 20.2% 23.3% 5.3% 6.0% 7.0% 7.4% 8.0%

Angie's List 1.1x 0.9x 1.6x 1.4x 1.4x 75.3x 18.2x 25.8x 22.9x 30.1x 22.5% 17.0% 12.7% 9.2% 5.7% 1.4% 4.7% 6.0% 6.3% 4.8%

Baidu.com 7.9x 5.6x 6.4x 5.3x 5.1x 24.6x 18.7x 24.8x 20.2x 20.1x 47.4% 42.5% 38.6% 35.3% 32.9% 32.3% 30.1% 26.0% 26.4% 25.6%

Bankrate 4.6x 3.9x 4.9x 3.4x 2.4x 13.9x 12.3x 13.2x 11.7x 9.2x -37.5% -40.0% -42.5% 5.8% 23.7% 33.2% 32.0% 37.2% 29.1% 25.7%

Baozun 1.9x 1.0x 0.7x 0.4x 0.4x - - 50.8x 34.5x 35.6x - - 68.2% 64.0% 55.6% -2.2% -1.8% 1.4% 1.2% 1.2%

Bitauto Holdings 6.4x 1.9x 1.9x 1.2x - 34.1x 17.8x 51.3x 14.5x - 80.7% 89.3% 90.5% 63.1% - 18.7% 10.6% 3.8% 8.4% -

BlueNile 0.6x 0.7x 0.8x 0.5x 0.6x 17.9x 20.8x 22.7x 13.0x 15.8x 4.3% 6.2% 5.5% 1.4% 0.1% 3.4% 3.4% 3.5% 3.6% 3.5%

Brightcove 1.6x 1.2x 1.4x 1.2x 1.3x - - - 111.8x 84.2x 9.0% 6.9% 6.1% 7.8% 8.9% -2.4% -1.9% -0.8% 1.1% 1.5%

BroadSoft 4.1x 3.7x 3.7x 3.2x 3.9x 35.0x 47.6x 60.7x 29.3x 35.3x 25.1% 25.8% 25.7% 28.6% 29.6% 11.9% 7.9% 6.1% 10.9% 10.9%

Carbonite 1.9x 1.9x 1.6x 1.1x 1.3x - - - - - 13.1% 12.3% 11.7% 11.4% 19.9% -0.2% -1.4% -4.9% -5.7% -3.1%

Care.com 1.1x 1.0x 1.0x 0.9x 1.4x - - - - - 33.6% 26.9% 25.3% 24.2% 24.2% -15.3% -9.7% -7.3% -2.4% -2.4%

ChangYou.com 2.0x 1.1x 1.0x 0.9x 0.5x 9.7x 4.1x 2.8x 2.9x 1.7x 5.7% 9.7% 11.1% 0.8% -12.8% 20.9% 27.5% 36.0% 31.9% 32.0%

Chegg 1.9x 1.9x 1.7x 1.1x 1.2x 30.4x 30.9x 23.3x 124.8x 107.6x 17.2% 14.5% 6.8% -1.1% -10.2% 6.2% 6.3% 7.3% 0.9% 1.1%

Cimpress 2.2x 2.0x 2.2x 2.1x 2.2x 14.6x 14.7x 16.7x 16.0x 16.1x 19.8% 17.6% 15.6% 13.9% 16.4% 14.9% 13.6% 13.0% 13.1% 13.9%

Coupons.com 3.8x 2.7x 1.8x 2.3x 3.2x - - - - - 23.5% 17.6% 6.3% 7.0% 9.7% -6.3% -6.5% -10.0% -9.4% -8.5%

Criteo SA 2.2x 2.4x 1.8x 1.5x 1.6x 26.5x 29.1x 21.6x 17.3x 18.2x 107.6% 69.1% 64.2% 33.9% 27.9% 8.5% 8.2% 8.5% 8.6% 9.0%

Ctrip 7.9x 7.2x 13.0x 11.9x 12.2x - - 643.3x 185.9x - 39.1% 41.4% 44.6% 48.3% 57.9% -2.6% -2.5% 2.0% 6.4% -7.2%

DangDang 0.4x 0.2x 0.2x 0.2x 0.2x 95.6x - - 13.7x 15.6x 25.4% 22.2% 21.4% 17.0% 17.0% 0.4% -0.2% -0.4% 1.4% 1.4%

DemandMedia 0.4x 0.4x 0.5x 0.5x 0.7x 15.7x - - - - 4.4% -22.5% -25.6% -26.9% -25.4% 2.7% -4.2% -11.4% -13.3% -18.7%

eBay 10.2x 1.8x 2.0x 3.4x 3.3x 26.9x 6.3x 7.4x 9.8x 9.6x -57.9% 39.4% 61.0% -2.3% 26.5% 37.9% 27.8% 27.6% 34.3% 34.4%

eHealth 1.0x 1.1x 0.9x 0.6x 0.9x 27.0x 34.7x 31.8x 21.1x 6.7x 1.7% -1.3% -2.4% 5.5% 6.4% 3.6% 3.2% 2.7% 3.0% 13.0%

Everyday Health 2.4x 2.1x 1.4x 1.0x 1.2x 30.4x 22.4x 16.0x 9.6x 12.6x 15.4% 20.5% 22.4% 25.9% 30.9% 8.0% 9.2% 8.6% 10.4% 9.2%

Expedia 2.3x 2.6x 2.8x 2.8x 2.6x 18.8x 22.6x 24.3x 25.3x 23.0x 19.7% 16.3% 13.9% 15.8% 21.3% 12.2% 11.4% 11.7% 11.0% 11.1%

Facebook 16.0x 16.9x 17.6x 16.3x 15.9x 34.7x 39.0x 42.3x 35.5x 33.2x 51.5% 46.2% 42.3% 43.8% 46.3% 46.3% 43.4% 41.6% 46.0% 47.7%

GoDaddy 2.0x 1.8x 2.0x 1.9x 2.0x 29.0x 30.7x 28.1x 22.8x 21.9x 21.5% 19.9% 17.6% 15.9% 15.3% 6.9% 5.9% 6.9% 8.1% 9.3%

Google 4.6x 5.5x 6.3x 5.8x 5.5x 14.3x 16.8x 19.3x 17.8x 16.9x 17.0% 14.4% 12.8% 13.6% 15.0% 32.3% 32.5% 32.5% 32.6% 32.7%

Groupon 1.1x 0.6x 0.4x 0.5x 0.4x 29.2x 15.7x 11.8x 22.5x 44.9x 13.5% 9.9% 5.4% 2.5% 1.2% 3.9% 3.6% 3.3% 2.1% 1.0%

GrubHub 10.9x 7.0x 5.5x 4.4x 4.9x 39.6x 25.1x 20.8x 17.9x 20.9x 66.8% 53.3% 46.0% 42.5% 36.1% 27.4% 27.8% 26.5% 24.7% 23.2%

Harmonic 1.2x 1.0x 1.0x 0.5x 0.7x 26.4x 18.2x 25.9x 23.6x - -8.3% -8.2% -10.7% -13.0% -17.4% 4.7% 5.4% 3.8% 2.2% -1.7%

Interactive Intelligence 2.6x 2.2x 1.8x 1.5x 2.0x 1016.7x 86.1x 74.0x 159.6x - 8.3% 12.1% 10.7% 14.5% 14.0% 0.3% 2.5% 2.4% 0.9% -0.1%

InterActiveCorp 2.0x 2.1x 1.8x 1.4x 1.4x 14.3x 16.4x 14.4x 12.0x 12.2x 4.0% 6.0% 7.0% 3.9% 4.3% 14.1% 12.7% 12.4% 11.9% 11.7%

LendingClub - - - - - - - - - - 110.5% 104.5% 105.4% 103.6% 97.5% - - - - -

THE SEG INTERNET INDEX COMPANIES – KEY METRICS

70



71

SEG Internet Index



LifeLock 2.3x 0.9x 1.8x 1.4x 1.6x 35.5x 13.4x 25.0x 18.4x 22.4x 27.3% 26.3% 25.0% 23.4% 21.8% 6.4% 6.8% 7.3% 7.7% 7.0%

Limelight Networks 2.0x 1.2x 0.7x 0.4x 0.8x - - - - - -3.2% -0.9% 3.2% 5.3% 4.0% -4.4% -5.0% -5.9% -2.8% -1.0%

LinkedIn 10.4x 9.1x 10.2x 4.5x 4.7x 103.1x 108.1x 123.6x 54.7x 57.0x 42.1% 38.6% 37.1% 34.8% 34.9% 10.1% 8.5% 8.3% 8.3% 8.3%

Liquidity Services 0.4x 0.3x 0.4x 0.2x 0.3x 5.2x 5.0x 6.9x - - -6.0% -13.8% -19.9% -32.3% -32.0% 8.6% 6.5% 5.1% -0.2% -1.7%

Mail.ru Group 8.2x 6.3x 8.0x 8.4x 8.1x 17.7x 14.2x 20.2x 23.7x 22.9x 19.7% 19.9% 18.8% 17.9% 17.9% 46.2% 44.0% 39.5% 35.4% 35.4%

MakeMyTrip 2.4x 1.6x 1.9x 2.2x 1.9x - - - - - 17.3% 9.3% 5.0% 5.1% 12.1% -3.4% -4.4% -6.2% -10.6% -17.8%

Marchex 0.7x 0.5x 0.5x 0.4x 0.3x 39.5x 39.3x 42.8x 28.5x - -2.7% -14.6% -23.5% -17.6% -11.4% 1.9% 1.2% 1.1% 1.3% -1.0%

Match Group - - 3.4x 3.7x 4.2x - - 14.1x 15.2x 16.9x - - - 14.9% 17.2% 25.7% 23.4% 24.2% 24.0% 24.6%

MaxPoint Interactive 1.8x 0.9x 0.2x 0.1x 0.3x - - - - - 70.2% 60.4% 49.5% 31.6% 17.6% -9.7% -9.9% -9.6% -11.9% -13.9%

Mercadolibre 10.6x 8.6x 7.9x 6.8x 8.6x 31.9x 27.7x 26.5x 24.8x 33.7x 21.4% 21.2% 19.4% 17.1% 12.2% 33.3% 30.9% 29.8% 27.4% 25.5%

Mitel Networks 1.1x 1.3x 1.4x 1.2x 1.2x 8.6x 10.0x 11.0x 9.9x 10.2x 75.1% 41.5% 22.2% 4.9% 6.8% 13.1% 12.9% 12.5% 12.4% 11.5%

MOL Global 2.1x 0.9x 0.6x 0.5x - - - - - - 16.5% 11.2% 23.9% 22.6% 22.6% -13.4% -45.7% -43.0% -33.4% -33.4%

Monster Worldwide 1.0x 1.0x 1.0x 0.5x 0.5x 12.9x 9.4x 7.7x 3.5x 3.2x -11.8% -3.4% -2.9% -8.1% -6.9% 8.0% 11.2% 13.1% 14.1% 14.2%

NCSoft 3.7x 3.8x 4.0x 4.4x 4.6x 10.1x 10.2x 11.7x 13.5x 13.4x 13.2% 10.5% 2.8% -0.1% 5.0% 36.9% 37.0% 34.0% 32.5% 34.0%

Netease 7.0x 5.5x 5.6x 4.6x 4.2x 17.9x 15.0x 16.4x 14.0x 12.4x 38.2% 49.4% 72.1% 94.7% 108.0% 39.3% 36.4% 34.3% 32.7% 33.4%

Netflix 6.3x 7.2x 7.5x 6.2x 5.7x 79.7x 108.7x 130.5x 114.0x 127.1x 25.7% 24.9% 24.0% 23.2% 23.4% 7.9% 6.7% 5.8% 5.4% 4.5%

Overstock.com 0.3x 0.2x 0.2x 0.1x 0.2x 17.4x 16.3x 12.7x 18.2x 35.8x 16.6% 17.3% 15.7% 10.7% 7.7% 1.5% 1.5% 1.2% 0.7% 0.5%

Pandora 3.5x 3.3x 2.3x 1.7x 1.8x - - - - - 30.4% 28.0% 26.0% 26.4% 28.6% -3.6% -3.7% -3.4% -5.8% -9.1%

PetMed Express 1.2x 1.2x 1.2x 1.2x 1.4x 9.4x 8.9x 8.7x 8.8x 10.0x -1.7% -1.4% -0.5% 0.5% 2.3% 13.1% 13.7% 14.2% 14.1% 14.1%

Polycom 1.0x 0.8x 1.1x 0.8x 0.9x 8.4x 6.5x 8.3x 6.5x 7.8x -0.8% -1.0% -3.3% -5.8% -9.0% 12.3% 12.5% 12.7% 12.8% 12.1%

Priceline 7.2x 7.4x 7.4x 7.0x 7.1x 18.8x 20.0x 19.6x 18.5x 18.5x 21.1% 16.1% 11.3% 9.3% 10.3% 38.1% 37.1% 37.9% 38.0% 38.3%

Qihoo 5.1x 4.9x 4.9x 5.3x 5.3x 19.6x 18.0x 19.7x 25.2x 25.0x 82.7% 64.2% 47.7% 29.8% 29.8% 25.9% 27.0% 25.1% 21.1% 21.1%

QuinStreet 0.8x 0.8x 0.6x 0.4x 0.4x - - - - - -4.1% -0.1% 3.8% 3.0% 3.8% -1.4% -1.0% -0.8% -1.4% -1.7%

ReachLocal 0.1x 0.2x 0.1x 0.2x 0.2x - - - - - -13.0% -17.3% -19.3% -19.4% -19.6% -8.1% -8.1% -7.1% -4.5% -2.5%

Renren 19.3x 12.4x 17.4x 22.1x 20.5x - - - - - -75.6% -45.0% -31.6% -11.9% 37.4% -332.6% -136.4% -138.8% -238.1% -208.2%

Rocket Fuel 0.8x 0.6x 0.3x 0.3x 0.3x - - - - - 58.5% 47.9% 34.1% 13.0% 5.4% -11.8% -11.3% -11.3% -7.3% -4.5%

Rovi 4.5x 3.6x 3.5x 4.7x 4.3x 13.7x 11.2x 11.5x 14.8x 13.3x -2.4% -5.5% -8.8% -3.0% -4.4% 33.0% 31.8% 30.4% 31.8% 32.3%

SeaChange International 1.2x 1.3x 1.5x 1.2x 0.6x - - - - - -15.4% -12.0% -7.3% -7.3% -7.8% -11.5% -11.3% -9.2% -7.2% -6.8%

ShoreTel 1.0x 1.0x 1.4x 1.1x 0.9x 15.0x 14.2x 18.0x 12.5x 14.0x 5.2% 6.1% 4.2% 2.4% 1.9% 6.8% 7.4% 7.9% 8.6% 6.6%

Shutterfly 1.9x 1.7x 1.8x 1.6x 1.7x 20.4x 18.5x 19.5x 14.5x 15.0x 17.5% 16.8% 17.2% 15.0% 14.5% 9.2% 9.2% 9.3% 10.8% 11.2%

Shutterstock 5.8x 2.5x 2.3x 2.1x 2.6x 42.3x 18.2x 17.7x 16.1x 19.4x 37.2% 34.3% 31.4% 29.6% 26.0% 13.8% 13.7% 12.8% 13.0% 13.5%

SINA 1.9x 1.7x 2.8x 2.5x 2.6x 299.1x 123.3x 58.5x 45.4x 37.3x 10.0% 9.2% 10.8% 14.6% 14.5% 0.6% 1.4% 4.7% 5.6% 7.1%

Sohu.com 1.3x 0.8x 0.8x 0.7x 0.4x 15.3x 6.4x 4.1x 3.6x 2.3x 20.9% 22.2% 23.2% 15.8% 7.2% 8.7% 13.0% 18.6% 18.6% 18.2%

Sonus Networks 1.2x 0.9x 0.9x 1.0x 1.3x - - - - - -12.3% -15.6% -15.6% -16.0% -6.4% -7.5% -6.6% -6.6% -6.0% -0.2%

Stamps.com 6.8x 6.9x 8.2x 7.4x 6.5x 26.6x 28.3x 32.6x 24.7x 20.2x 22.5% 31.2% 34.9% 45.3% 59.3% 25.4% 24.5% 25.3% 30.0% 32.1%

Synacor 0.3x 0.2x 0.3x 0.4x 0.7x 21.0x 5.8x 5.1x 9.6x 17.6x 0.1% 3.0% 3.5% 3.4% 5.3% 1.3% 2.9% 6.3% 4.0% 4.1%

Tencent Holdings 13.8x 11.7x 12.1x 10.6x 11.0x 33.7x 27.9x 29.0x 25.4x 26.2x 27.0% 22.6% 24.7% 30.3% 35.6% 40.9% 42.0% 41.5% 41.7% 42.1%


SEG Internet Index



The Rubicon Project 4.3x 3.3x 3.0x 2.4x 2.0x - - - 31.3x 19.5x 54.5% 65.1% 75.9% 98.3% 101.2% -5.7% -6.0% -3.6% 7.7% 10.1%

TheStreet.com 0.5x 0.4x 0.4x 0.2x 0.2x 19.0x 39.6x 28.2x 7.3x 15.3x 13.0% 14.6% 16.0% 10.8% 5.2% 2.4% 1.1% 1.5% 2.7% 1.1%

Travelzoo 0.8x 0.5x 0.6x 0.6x 0.6x 14.0x 14.0x 13.3x 8.8x 8.7x -2.6% -5.2% -6.3% -7.5% -9.7% 6.0% 3.6% 4.6% 6.8% 7.0%

Tree.Com 3.3x 5.8x 5.0x 3.2x 2.7x 38.9x 62.2x 47.4x 27.9x 23.3x 17.9% 22.6% 37.4% 51.9% 67.2% 8.6% 9.3% 10.4% 11.4% 11.8%

Tremor 0.4x 0.3x 0.2x 0.2x 0.2x - - - - - 14.6% 9.9% 13.9% 9.0% 4.7% -9.8% -9.2% -8.4% -6.3% -6.9%

TripAdvisor 8.6x 7.1x 7.9x 6.1x 6.0x 30.6x 28.1x 31.6x 32.5x 38.1x 33.3% 31.5% 25.6% 19.7% 11.5% 28.1% 25.2% 24.9% 18.8% 15.7%

TubeMogul 3.6x 2.3x 2.2x 1.9x 1.9x - - - - - 75.9% 62.4% 58.0% 58.2% 57.1% -5.0% -6.5% -7.1% -5.1% -6.2%

Tucows 1.4x 1.7x 1.5x 1.3x 1.4x 13.9x 15.9x 13.4x 10.7x 11.5x 14.4% 16.0% 17.4% 17.1% 15.8% 9.9% 10.7% 11.5% 12.0% 12.5%

Twitter 14.0x 9.5x 7.9x 4.5x 3.6x - - - - - 98.3% 82.6% 70.3% 58.1% 49.6% -21.1% -16.1% -10.5% -7.9% -2.8%

VeriSign 7.3x 7.6x 8.8x 8.5x 8.5x 11.8x 12.2x 14.1x 13.5x 13.4x 4.3% 4.4% 4.3% 4.9% 6.2% 62.0% 61.8% 62.6% 63.0% 63.6%

WebMD Health 3.2x 2.9x 2.9x 3.3x 3.7x 15.8x 14.3x 13.7x 14.1x 15.8x 10.0% 8.4% 7.6% 9.6% 10.4% 20.4% 20.4% 21.2% 23.0% 23.6%

Wix.com 5.3x 4.4x 4.3x 3.4x 4.2x - - - - - 67.9% 57.8% 50.3% 43.5% 40.0% -35.0% -30.0% -25.2% -21.4% -20.7%

XO Group 2.3x 2.1x 2.3x 2.0x 2.3x 18.4x 16.0x 17.9x 14.3x 15.7x 5.8% 3.2% 1.0% -1.4% 0.6% 12.6% 12.9% 12.8% 14.2% 14.8%

Xunlei 1.7x 1.0x 0.3x - - 4.4x 6.1x 1.7x - - -20.7% -5.8% -3.4% -3.2% 4.3% 37.3% 16.8% 18.1% 4.1% -5.8%

Yahoo! 7.6x 6.0x 5.4x 4.9x 6.3x 59.9x 53.8x 56.3x 73.7x 123.9x 0.8% 5.4% 6.8% 7.6% 2.5% 12.7% 11.1% 9.6% 6.7% 5.1%

Yandex 6.5x 4.1x 5.5x 4.9x 6.1x 17.9x 12.5x 17.9x 17.5x 21.0x 23.2% 19.0% 17.0% 17.8% 22.4% 36.4% 32.5% 30.7% 28.2% 29.3%

Yelp 7.5x 3.3x 3.2x 2.2x 2.6x 110.6x 54.0x 100.6x 14853.8x - 59.4% 56.5% 49.5% 45.6% 40.6% 6.8% 6.1% 3.2% 0.0% -1.5%

YuMe 0.6x 0.4x 0.3x 0.4x 0.4x - - - - - 11.6% 7.6% 1.0% -2.5% -4.6% -2.7% -4.7% -6.5% -6.8% -5.5%

YY 4.9x 3.9x 3.8x 3.6x 2.5x 16.9x 14.3x 16.6x 14.9x 10.8x 91.4% 79.5% 65.6% 60.3% 53.7% 29.0% 27.3% 23.1% 24.1% 22.9%

Zillow 13.1x 9.0x 7.8x 5.8x 6.8x - - - - - 72.1% 86.9% 94.5% 97.8% 81.8% -2.9% -3.4% -3.9% -0.7% -1.5%

Zynga 2.4x 1.8x 1.7x 1.2x 1.8x - - - - - -9.3% 7.5% 14.4% 10.8% 8.9% -17.1% -13.6% -8.6% -6.4% -3.4%


72


Infrastructure 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 18.3x 15.5x 15.4x 15.2x 13.9x


EBITDA Margin 6.8% 5.9% 6.3% 8.1% 6.6%




TTM Earnings Growth (YoY) -4.2% 45.0% 45.2% 5.6% -6.0%


Enterprise Value Growth (YoY) -3.7% 5.2% 13.8% -8.1% -6.4%

Search 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 16.8x 16.1x 17.8x 15.9x 16.0x


EBITDA Margin 32.3% 31.3% 28.3% 27.3% 27.5%






Enterprise Value Growth (YoY) 5.1% -9.1% -6.6% -16.7% -8.5%

Services 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 20.4x 19.6x 16.3x 20.4x 29.9x


EBITDA Margin 6.4% 6.8% 7.3% 7.7% 9.2%






Enterprise Value Growth (YoY) 0.4% -21.7% 6.1% -22.7% -5.5%

Social 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 38.7x 30.4x 30.6x 20.8x 20.5x


EBITDA Margin 17.9% 15.9% 15.7% 16.1% 15.6%



TTM EBITDA Growth (YoY) 6.1% 4.4% -0.4% 5.9% 13.1%



Enterprise Value Growth (YoY) 21.5% -25.1% 13.0% 3.8% -19.8%

Travel 2Q15 3Q15 4Q15 1Q16 2Q16EV/TTM Revenue 5.1x 5.3x 5.3x 4.5x 4.3xEV/NTM Revenue 4.8x 3.7x 5.3x 5.0x 4.2xEV/TTM EBITDA 20.8x 23.2x 27.7x 25.3x 20.8xEV/TTM CFO 24.3x 25.2x 32.5x 21.2x 20.2xGross Profit Margin 83.6% 83.4% 83.5% 83.5% 83.7%EBITDA Margin 9.1% 7.5% 8.1% 8.9% 9.1%Net Income Margin 6.9% 7.4% 14.5% 12.4% 8.6%TTM Revenue Growth (YoY) 20.4% 16.2% 12.6% 12.5% 11.8%TTM EBITDA Growth (YoY) -3.1% -5.3% -2.2% 2.7% -16.5%TTM Earnings Growth (YoY) 13.6% 5.6% 10.0% 5.4% 31.1%Cash as Percent of Market Cap 16.7% 16.3% 15.2% 14.2% 13.6%Enterprise Value Growth (YoY) -2.6% -7.4% 13.2% 1.1% -2.3%

THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORY

73

Ad Tech 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 15.8x 16.1x 17.6x 14.8x 16.0x


EBITDA Margin -0.4% -1.8% -1.2% 4.0% 2.0%







Commerce 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 11.0x 16.6x 19.1x 20.1x 18.6x


EBITDA Margin 6.2% 6.0% 5.1% 3.6% 2.5%




TTM Earnings Growth (YoY) -7.2% -4.8% 5.0% 13.1% 8.0%



Content & Media 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 13.4x 13.7x 17.8x 13.6x 13.4x


EBITDA Margin 12.6% 11.1% 9.6% 5.6% 5.1%




TTM Earnings Growth (YoY) 48.5% 64.7% -29.8% -32.8% -18.4%



Gaming 2Q15 3Q15 4Q15 1Q16 2Q16




EV/TTM CFO 12.7x 14.8x 16.4x 13.1x 14.7x


EBITDA Margin 28.9% 31.9% 34.2% 32.2% 32.7%








Select Public Sellers

74

Date Buyers SellerPurchase Price

(mm)Enterprise

Value (mm) EV/ Rev EV/ EBITDATTM Revenue

Growth

06/13/16 Microsoft Corporation (NasdaqGS:MSFT) LinkedIn Corporation (NYSE:LNKD) $29,350.6 $26,190.9 8.2x 98.4x 34.9%

06/01/16 salesforce.com, inc. (NYSE:CRM) Demandware, Inc. (NYSE:DWRE) $2,857.7 $2,661.9 10.5x - 42.5%

06/02/16 Thoma Bravo, LLC Qlik Technologies, Inc. (NasdaqGS:QLIK) $2,984.8 $2,614.9 4.2x - 11.4%

05/31/16 Vista Equity Partners Marketo, Inc. (NasdaqGS:MKTO) $1,795.1 $1,700.4 7.5x - 38.1%

04/18/16 Vista Equity Partners Cvent, Inc. (NYSE:CVT) $1,590.8 $1,413.6 7.1x 225.3x 30.9%

04/29/16 Rovi Corporation (NasdaqGS:ROVI) TiVo Inc. (NasdaqGS:TIVO) $1,881.3 $1,235.3 2.5x 14.5x -

05/18/16 NICE Ltd. (TASE:NICE) inContact, Inc. (NasdaqCM:SAAS) $967.5 $881.2 3.8x - 25.2%

04/18/16 Silver Lake; AltaOne Capital Cegid Group SA (ENXTPA:CGD) $481.1 $714.1 2.2x 14.6x 5.8%

05/23/16 Siris Capital Group, LLC Xura, Inc. (NasdaqGM:MESG) $806.6 $691.1 2.6x - 17.3%

02/18/16 Vivendi SA (ENXTPA:VIV) GameLoft S.E. (ENXTPA:GFT) $467.2 $627.4 2.4x 82.2x 12.7%

04/28/16 Oracle Corporation (NYSE:ORCL) Textura Corporation $682.6 $600.3 6.5x - 34.8%

05/02/16 Oracle Corporation (NYSE:ORCL) OPOWER, Inc. $551.6 $490.8 3.2x - 14.0%

05/31/16 Accel-KKR LLC SciQuest, Inc. (NasdaqGS:SQI) $489.3 $378.0 3.6x 40.1x 3.7%


Select Mega Deals

75

Date Buyer SellerPurchase Price

(mm)Enterprise Value

(mm) EV/Rev EV/EBITDATTM Rev Growth

06/13/16 Microsoft Corporation (NasdaqGS:MSFT) LinkedIn Corporation (NYSE:LNKD) $29,350.6 $26,190.9 8.2x 98.4x 34.9%

06/12/16 Symantec Corporation (NasdaqGS:SYMC) Blue Coat, Inc. $4,858.8 $4,722.3 7.9x - -5.2%

06/01/16 salesforce.com, inc. (NYSE:CRM) Demandware, Inc. (NYSE:DWRE) $2,857.7 $2,661.9 10.5x - 42.5%

06/02/16 Thoma Bravo, LLC Qlik Technologies, Inc. (NasdaqGS:QLIK) $2,984.8 $2,614.9 4.2x - 11.4%

05/31/16 Vista Equity Partners Marketo, Inc. (NasdaqGS:MKTO) $1,795.1 $1,700.4 7.5x - 38.1%

04/18/16 Vista Equity Partners Cvent, Inc. (NYSE:CVT) $1,590.8 $1,413.6 7.1x 225.3x 30.9%

04/29/16 Rovi Corporation (NasdaqGS:ROVI) TiVo Inc. (NasdaqGS:TIVO) $1,881.3 $1,235.3 2.5x 14.5x 5.0%

04/18/16 Silver Lake; AltaOne Capital Cegid Group SA (ENXTPA:CGD) $481.1 $714.1 2.2x 14.6x 5.8%

04/28/16 Oracle Corporation (NYSE:ORCL) Textura Corporation $682.6 $600.3 6.5x - 34.8%


Most Active Buyers

76

Buyer Seller

Enterprise Value

(mm) EV/Rev EV/EBITDA

Blue Star Sports Bonzi Technology, Inc.

GOALLINE Sports Administration Systems

Pointstreak Sports Technologies Inc.

Dentsu Aegis Network Ltd. Consider Digital Sdn. Bhd.

Liveposter Ltd

Magnetix A/S

Merdeka LHS Sdn. Bhd.

Scorch Pty Ltd

Microsoft Corporation (NasdaqGS:MSFT) LinkedIn Corporation (NYSE:LNKD)8.2

-Solair Srl

Wand Labs, Inc.

Crosswise, Ltd. - - -

OPOWER, Inc. - - -

Textura Corporation $600.0 6.5x -

salesforce.com, inc. (NYSE:CRM) Demandware, Inc. (NYSE:DWRE)-

-Implisit Insights Ltd. -

MetaMind Inc. $48.0

Thoma Bravo, LLC Bomgar Corporation-

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-Elemica, Inc. - - -

Qlik Technologies, Inc. (NasdaqGS:QLIK) $2,614.0 4.2x -

Vista Equity Partners Cvent, Inc. (NYSE:CVT) $1,413.0 7.1x 225.3x

Marketo, Inc. (NasdaqGS:MKTO) $1,700.0 7.5x -

Ping Identity Corporation - - -

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26,190

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Oracle Corporation (NYSE:ORCL)

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Documents

The Software Industry Financial Report - Software … Software Industry Financial Report. SOFTWARE EQUITY GROUP | Q2 2016 SOFTWARE INDUSTRY FINANCIAL REPORT ... B2B enterprise software