Software Industry financial_report_3_q14

Q3

20

14

Software Equity Group, L.L.C.

12220 El Camino Real

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(858) 509-2800

The Software Industry

Financial Report

SOFTWARE EQUITY GROUP | Q3 2014 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © Software Equity Group, LLC, All Rights Reserved 2

About Software Equity Group

Leaders in Software M&A 5

Extensive Global Reach 6

Leading Market Position

Software Industry Macroeconomics

U.S and Global GDP 8

U.S. GDP and Unemployment 9

Global IT Spending 10

E-Commerce and Digital Advertising Spend 11

Stock Market Performance 12

Public Software Financial and Valuation Performance

The SEG Software Index 14

The SEG Software Index: Financial Performance 15-16

The SEG Software Index: Public Market Multiples 17-18

The SEG Software Index by Product Category 19

The SEG Software Index by Product Category: Financial Performance 20

The SEG Software Index by Product Category: Public Market Multiples 21

Public SaaS Company Financial and Valuation Performance

The SEG SaaS Index 23

The SEG SaaS Index: Financial Performance 24-25

The SEG SaaS Index: Public Market Multiples 26-28

The SEG SaaS Index by Product Category: Financial Performance 29

The SEG SaaS Index by Product Category: Public Market Multiples 30

Public Internet Company Financial and Valuation Performance

The SEG Internet Index 32

The SEG Internet Index: Financial Performance 33-34

The SEG Internet Index: Public Market Multiples 35-36

The SEG Internet Index by Product Category 37

The SEG Internet Index by Product Category: Financial Performance 38

The SEG Internet Index by Product Category: Public Market Multiples 39

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS


SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS

Software Industry M&A Market Update

Software/SaaS M&A Deal Volume and Spending 41

Software M&A Exit Multiples 42

Software M&A by Ownership Structure and Size 43

Software M&A by Vertical and Horizontal Markets 44

Software M&A Deal Volume by Product Category 45

Software M&A Exit Valuations by Product Category 46

SaaS M&A Deal Volume and Exit Multiples 47

SaaS M&A by Product Category 48

SaaS M&A 2Q14 Transactions 49-51

Internet M&A: Deal Volume and Exit Multiples 52

Internet M&A: By Product Category 53

Appendix

SEG Software Index Key Metrics 55-58

SEG Software Index Key Metrics by Product Category 59-60

SEG SaaS Index Key Metrics 61-62

SEG SaaS Index Key Metrics by Product Category 63

SEG Internet Index Key Metrics 64-66

SEG Internet Index Key Metrics by Product Category 67

2Q14 Select Public Sellers 68

2Q14 Mega Deals 69

2Q14 Most Active Buyers 70

About Software Equity Group 71

SOFTWARE EQUITY GROUP | Q3 2014 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © Software Equity Group, LLC, All Rights Reserved

ABOUT SOFTWARE EQUITY GROUP


• Industry leading boutique investment bank, founded in 1992, representing public and private software and internet companies seeking:

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

• Sell-side client revenue range: $5 - 75 million

• Buy-side clients include private equity firms and NASDAQ, NYSE and foreign exchange listed companies

• Clients span virtually every software technology, product category, delivery model and vertical market

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

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

• Unparalleled software industry reputation and track record.

• Highly referenceable base of past clients

We Do Deals.

LEADERS IN SOFTWARE M&A


SEG Research Distribution

Current Sell-side Representation

Recent Sell-side Representation

• SEG currently represents software companies in the United States, Canada, France, Germany, Australia & Saudi Arabia

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

• SEG’s Quarterly and Annual Software Industry Equity Reports and Monthly Flash Reports are distributed to an opt-in list of 70,000 public software company CEOs, software entrepreneurs, private equity managing directors, VCs, high tech corporate lawyers, public accountants, etc. in 76 countries.

EXTENSIVE GLOBAL REACH


SOFTWARE INDUSTRY MACROECONOMICS


U.S. AND GLOBAL GDP

U.S. GDP (% YoY Change)Global GDP (% YoY Change)

Sources: Worldbank, The Economist, Council of Economic Advisors, and Statista

• The latest IMF forecast portrays a gradually improving global economy that remains susceptible to a host of economic and geopolitical downside risks.

• The IMF’s most recent forecast predicts U.S. GDP will grow 2.2% in 2014, the same as 2013’s growth rate. Temporary setbacks, such as an unusually harshwinter, constrained GDP growth in the first quarter. According to the IMF, the U.S. economy rebounded in Q2, in part due to improved housing activity,declining unemployment and steady payroll gains.

• According to the IMF, global GDP is expected to inch up to 3.5% in the second half of 2014 and 3.8% in 2015, while GDP growth in developed nations isexpected to grow at a median of 1.8% in 2014, a modest improvement over 2013’s 1.4%. Key growth drivers include an improving labor market, betterhousehold balance sheets, and a favorable economic climate. In emerging markets, annual GDP growth is expected to slow slightly from 2.8% in 2013 to2.7% in 2014, but is predicted to rebound in 2015 to 2.9%.

• The IMF acknowledged its forecasts could be imperiled by recent geopolitical events and renewed threats of defaults and recessions among EEC membercountries.


U.S. GDP AND UNEMPLOYMENT

• According to February’s Federal Reserve survey of 43 economists, GDP growth in the U.S. for 3Q14 is forecast to be 3.0%. For the year, expectations arethe U.S. economy will grow 2.1%, as a surprisingly weak first half tempered expectations for a more robust annual growth rate in 2014.

• Fewer than 15% of economists surveyed by the Fed predicted the U.S. economy will grow more than 3.0% in the third quarter of 2014. However, morethan 40% believe the U.S. economy will grow 3.0% or greater in 2015.

• The Labor Department reported the unemployment rate at the end of 3Q14 was 6.1%, a noteworthy decline from 1Q14’s 6.7%, and the lowestunemployment rate since 2008. The labor participation rate showed minimal decline, edging down slightly to 62.7% in September, a 35 year low.


GLOBAL IT SPEND

Sources: Global IT spending chart is a blended average of Goldman Sachs, IDC, Forrester, and Gartner forecasts. IT Spending by Category chart from Forrester.

• At the outset of 2014, analysts at Goldman Sachs, Gartner and elsewhere projected Global IT spending in 2014 would increase 4%, a marked improvementfrom the tepid 2.0% growth that has prevailed during the past two years.

• Revised forecasts predict average global IT spending will increase only 3.3% in 2014, citing a weak 1H 2014 and continuing economic uncertainty andgeopolitical upheaval. Gartner, however, cut its forecast from 3.2% to 2.1%, citing a tougher competitive environment that is placing significant pricepressure on suppliers.

• Forrester estimates software will account for 26% of all tech spending, leading all other categories. According to Forrester, “Software’s leading position isnot a surprise, because it is the focal point for tech innovation today, whether that innovation takes the form of cloud computing and adoption of SaaS,PaaS, smart computing and big data, real-time predictive analytics and smart process apps, or mobile computing and mobile apps and enterprise appstores.”

Global IT Spending by CategoryGlobal IT Spending (% YoY Change)


E-COMMERCE AND DIGITAL ADVERTISING SPEND

Sources: comScore, IAB, IBD, and Forrester

• E-commerce retail sales in the U.S. totaled $54.8 billion in 2Q14 (the latest data available), up 13% YoY. The increase marks the nineteenth consecutivequarter of YoY growth, and the fifteenth consecutive quarter of double digit growth.

• The Q3 total for E-Commerce spending accounted for 11.6% of all discretionary retail dollars spent.

• Mobile commerce accounted for $6.8 billion, or 11.1% of the 2014 E-Commerce total, according to comScore. In addition, YoY growth in mobile commercegrew a whopping 47%.

• The digital commerce growth rate of 13% in Q2 far exceeded the 3% growth in total consumer discretionary spending, confirming that the shift to onlinecontinues unabated.

• According to Forrester, U.S. digital ad revenues will total $19.8 billion in 2014, with the most growth coming from video advertising. Forrester predictsvideo advertising on desktop devices alone will grow 21% annually until 2019, when it will contribute 54.6% of total desktop display ad revenue acrossthe Web.

Worldwide Digital Advertising SpendU.S. E-Commerce Spend


STOCK MARKET PERFORMANCE

• Technology stock prices lost more ground in 3Q14, especially high-growth, SaaS based companies that have been unable to recapture pre-recessiongrowth rates.

• The Nasdaq posted the best return of the three major stock indices in 3Q14, finishing up 7.6%. The S&P finished close behind, up 6.7%. Surprisingly, in anenvironment where investors flocked to value stocks in 2Q14, the DOW performed worst among the three major U.S. stock market indices, closing 3Q14with a gain of only 2.8%.

• The SEG SaaS Index posted the greatest Q3 decline in median stock return among our six tracking indices. In early March, our SaaS Index peaked at a9.2% gain, only to plunge dramatically in the second quarter. The SEG SaaS Index lost another 4.1% in Q3 to close 3Q14 down 14.1% for the year, makingit the worst YTD performer of our three tracking indices. In addition to macro economic concerns, many were concerned SaaS valuations had grown toorich. More on SaaS median EV/Revenue multiples later in this report.

• The SEG Software Index, consisting largely of mature, profitable software providers slowed its descent, finishing the third quarter 4.6%, lower, comparedto a decline of 8.4% in May, its lowest point for the year.

(35.0%)

(30.0%)

(25.0%)

(20.0%)

(15.0%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014

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


THE SEG SOFTWARE INDUSTRY FINANCIAL REPORT

PUBLIC SOFTWARE COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


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 141 publicsoftware companies*.

• The number of public companies comprising the SEG Software Indexhas declined steadily over the past ten years, as many on premiseproviders have migrated to a SaaS business model.

• Median Cash and Equivalents of the SEG Software Index grew YoY by23.8%, despite a markedly lower median EBITDA margin and medianTTM revenue growth rate.

Measure 3Q13 4Q13 1Q14 2Q14 3Q14

EV/Revenue 3.0x 3.2x 3.2x 3.0x 2.9x

EV/EBITDA 13.8x 14.7x 15.5x 14.8x 15.3x

EV/Earnings 28.1x 26.9x 27.2x 26.2x 27.0x

Gross Profit Margin 67.9% 67.5% 66.6% 66.5% 66.3%

EBITDA Margin 17.8% 17.6% 17.3% 17.1% 16.4%

Net Income Margin 8.2% 8.5% 8.6% 8.2% 8.5%

TTM Revenue Growth 9.9% 8.9% 8.5% 8.2% 8.0%

TTM Total Revenue ($M) $451.5 $449.8 $484.4 $532.3 $558.8

TTM EBITDA Growth 6.4% 6.7% 5.7% 5.1% 6.1%

TTM Total EBITDA ($M) $82.8 $88.0 $86.5 $90.2 $100.1

Cash & Eq ($M) $153.2 $181.7 $175.6 $203.4 $189.6

Current Ratio 1.9 2.0 2.0 2.0 2.1

Debt / Equity Ratio 26.5% 33.8% 34.9% 31.1% 37.7%

SEG - Software: Median Metrics

* 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

• Median TTM revenue growth of public on-premise softwarecompanies in 3Q14 declined for the seventh consecutive quarter, to8.0%.

• Indeed, more than half of public on-premise software companiesreported TTM revenue growth rates of 10% or lower in 3Q14; only13% posted TTM revenue growth rates of 30% or more.

• Those growing 30%+ were focused on three of the hottest productcategories: mobility (NQ Mobile – 114.3%), networking (MavenirSystems – 40.3%), and security (Palo Alto Networks – 51.0%).

• The median revenue of the SEG Software Index grew by an amount roughly equivalent to the tepid median revenue growth rate,. Increasingly, this is a world of very large behemoths whose growth has stalled due to much more focused, prioritized and constrained enterprise IT spending – a five year phenomenon that now appears to be an established trend.

TTM Revenue Growth Rate Distribution – 3Q14Median Revenue Performance – Quarterly

15


THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of public on-premise software companieshas remained mostly unchanged over the past five quarters, closing3Q14 at 16.4%.

• Only 4% of on-premise software companies achieved EBITDAmargins of 40%+ in the third quarter.

• Check Point Software, a security software provider, led the pack againthis quarter with an EBITDA margin of 54.7%, only slightly lowerthan last quarter’s 55.1%. Check Point’s extraordinary profitabilitycan be attributed in part to a strong, well-performing channel thatreduces its cost of sales. Curiously, for a company in a technologydriven product category, Check Point also spends substantially less onR&D (9% of revenue) compared to their category peers (15% of totalrevenue).

• We anticipate the median EBITDA margin of public softwarecompanies will continue to decline modestly in 4Q14 and into 2015,as many ramp up spending on sales and marketing to spur growth,and invest more in R&D to update legacy products and expand theirSaaS offerings.

TTM EBITDA Margin Distribution – 3Q14Median EBITDA Margin Performance – Quarterly

16


• Investors continued to be comforted by size. The EV/Revenuemultiples of on-premise software companies with revenues <$100million remained notably lower than their larger counterparts.

• The increased volatility of tech sector stocks in Q3 seems to haveprompted investors to view the largest on premise companies(revenues greater than $1 billion) more favorably, despite theirslowed growth.

• SEG Software Index companies with TTM revenue between $100Mand $1B closed 3Q14 with virtually the same EV/Revenue marketmultiple as a year earlier.

THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• The median EV/Revenue market multiple for on-premise softwareproviders was 2.9x in 3Q14.

• Despite mostly unremarkable financial performance, the SEGSoftware Index closed 3Q14 with a median trading multiple onlyslightly lower than the prior quarter.

• The higher median EV/Revenue valuations of many public softwarecompanies over the past several quarters reflect continuing investorenthusiasm for technology stocks, which is likely to wane over timeunless revenue growth accelerates and recurring revenue fromsubscriptions increases substantially.

• 3Q14’s median EV/EBITDA market multiple of 15.3x was the secondhighest since 4Q07.

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

17

3.0x 3.2x 3.2x 3.0x 2.9x

13.8x14.7x

15.5x14.8x 15.3x

3Q13 4Q13 1Q14 2Q14 3Q14

Me

dia

n M

ult

iple

EV/Revenue EV/EBITDA


THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• Market performance of most on premise public software companiesremained closely correlated with their TTM revenue growth rates in3Q14. The median EV/Revenue multiples of companies growing TTMrevenue greater than 40% increased 14%, from the prior quarter.

• Members of Q3’s 40%+ growth club that rewarded investorshandsomely in 3Q14 came from the fastest growing product category,mobile. Select 3Q14 outperformers included: Qihoo 360 Technology(121.3% TTM revenue growth, 11.1x EV/Revenue), and Splunk(51.6% TTM revenue growth, 13.3x EV/Revenue).

• On-premise software providers that grew TTM revenue 30% to 40%in 3Q14 were rewarded with a median market multiple of 4.9x, a 40%improvement over the prior quarter.

• The median market multiples of unprofitable and modestly profitableon-premise software providers in 3Q14 were virtually the same as theprior quarter.

• On-premise software companies with TTM EBITDA margins greaterthan 20% for Q3 were awarded median EV/Revenue multiplessubstantially greater than the index median of 2.9x.

• Investors did take special note in 3Q14 of on-premise providers withEBITDA margins greater than 40%, conferring a median EV/Revenuemultiple of 6.8x, or 134% higher than the index median. Examplesincluded: Check Point Software (54.7% EBITDA margin, 8.2xEV/Revenue multiple); Ansys (46.5%, 7.2x); Verisk (45.4%, 6.8x); andEvertec (41.7%, 6.9x).

EV/Revenue Multiples vs. TTM EBITDA Margins – 3Q14EV/Revenue Multiples vs. TTM Revenue Growth – 3Q14

18


THE SOFTWARE INDEX BY PRODUCT CATEGORY

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

• Market valuations, TTM growth rates and margins can vary widely quarter to quarter, and category to category. For example, Billing & ServiceManagement providers had a median EV/Revenue market valuation of 3.6x in 4Q13 when revenue growth was only 4.4%; median EV/Revenue for thecategory plummeted to 1.8x in 3Q14 despite a revenue growth rate (8.2%) that was almost double.

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

3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14

Billing & Service Management 3.1x 3.6x 2.6x 1.9x 1.8x 9.9x 9.0x 9.3x 10.1x 9.9x 17.7% 4.4% 3.6% 4.8% 8.2% 18.7% 18.6% 18.5% 18.4% 21.1%

Business Intelligence 3.4x 3.3x 3.1x 2.9x 3.0x 17.7x 18.8x 16.2x 15.1x 16.0x 6.5% 5.2% 8.1% 9.3% 9.5% 15.5% 17.1% 16.6% 16.8% 15.0%

Development Platforms 2.1x 2.4x 2.4x 2.4x 1.8x 12.9x 15.4x 13.0x 15.1x 21.3x -1.9% -0.6% -3.1% -0.8% 1.2% 18.4% 19.5% 19.1% 19.2% 18.9%

Engineering & PLM 2.9x 3.3x 3.8x 3.8x 4.1x 14.8x 14.8x 14.9x 14.8x 15.4x 9.4% 6.8% 7.1% 6.6% 6.8% 18.9% 20.5% 20.8% 19.5% 19.0%

Enterprise Resource Planning 3.0x 2.9x 3.7x 3.6x 3.4x 12.1x 12.5x 12.5x 12.3x 11.7x 1.6% 2.7% 2.0% 2.7% 3.0% 28.7% 29.0% 29.3% 29.5% 29.5%

Financial & Accounting 3.3x 3.7x 3.7x 3.6x 3.4x 12.3x 13.6x 15.7x 13.3x 13.5x 9.5% 10.7% 8.5% 4.7% 2.5% 26.1% 26.7% 25.9% 25.6% 26.0%

Gaming 1.6x 1.6x 1.7x 1.9x 1.5x 12.2x 13.5x 11.3x 14.1x 13.0x 15.2% 10.7% -3.6% -4.8% 0.2% 13.9% 13.6% 17.9% 15.9% 15.5%

Healthcare 2.4x 2.5x 2.4x 2.3x 2.2x 13.2x 14.4x 15.0x 14.6x 14.8x 7.1% 3.1% 3.0% 0.1% 1.1% 17.8% 16.9% 15.2% 14.1% 14.1%

IT Conglomerates 2.7x 3.0x 3.0x 3.3x 3.5x 8.4x 8.5x 9.0x 8.9x 9.6x 1.2% 0.9% 2.0% 2.7% 2.2% 32.4% 33.1% 34.2% 34.4% 34.5%

Mobile Solutions/Content 3.4x 3.5x 3.5x 2.9x 3.1x 13.6x 19.5x 39.5x 19.0x 20.5x 29.1% 27.3% 27.5% 17.9% 21.1% 7.7% 5.4% 5.9% 4.2% 0.7%

Networking & Network

Performance Management2.9x 3.3x 3.3x 3.0x 2.5x 17.0x 16.9x 18.9x 20.4x 19.5x 7.2% 6.1% 9.4% 8.8% 8.7% 12.4% 8.1% 7.1% 7.8% 8.2%

Security 3.1x 3.5x 4.0x 3.2x 3.2x 11.4x 13.8x 10.0x 11.6x 15.0x 19.6% 17.0% 17.5% 16.5% 15.2% 11.1% 2.4% 10.6% 10.9% 12.5%

Storage, Data Management &

Integration2.5x 2.6x 3.0x 2.6x 2.5x 10.6x 9.5x 9.4x 8.8x 9.9x 4.4% 4.5% 4.7% 5.4% 2.4% 17.6% 18.1% 18.2% 18.0% 17.1%

Systems Management 5.4x 4.5x 5.0x 4.5x 5.0x 20.1x 17.0x 18.9x 17.8x 19.4x 16.4% 15.3% 13.0% 13.3% 15.8% 24.2% 24.2% 25.9% 25.7% 25.3%

Vertical - Finance 3.7x 4.7x 4.5x 4.3x 4.4x 12.6x 13.0x 13.4x 13.3x 13.5x 6.1% 6.8% 8.2% 8.1% 6.3% 25.9% 26.0% 26.7% 26.8% 29.3%

Vertical - Other 3.7x 3.6x 3.2x 3.2x 3.4x 22.8x 21.8x 19.6x 18.3x 24.3x 22.3% 24.9% 21.2% 21.2% 16.6% 13.9% 13.9% 12.8% 11.3% 11.6%

Median 3.0x 3.2x 3.2x 3.0x 2.9x 13.8x 14.7x 15.5x 14.8x 15.3x 9.9% 8.9% 8.5% 8.2% 8.0% 17.8% 17.6% 17.3% 17.1% 16.4%

SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin


THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

3Q14 YoY Change in Median Revenue Growth3Q14 Median TTM Revenue Growth

3Q14 YoY Change in Median EBITDA Margin3Q14 Median TTM EBITDA Margin


• In 3Q14, ten product categories achieved median EV/Revenue multiples above the SEG Software Index median of 2.9x, led by Systems Management (5.0x),Vertical Finance (4.4x) and Engineering & PLM (4.1x).

• The Systems Management product category is attracting renewed investor interest as large enterprises seek to address shrinking margins, operationalinefficiencies and demanding customers by providing a new wave of systems solutions.

• The Systems Management and Security categories are benefitting from the rapid shift to cloud and mobile computing, which require new approaches toscaling, managing and securing these new environments.

• The Gaming category closed 3Q14 with a median EV/Revenue multiple of 1.5x, the lowest of our 16 product categories, in-line with the 9.7% YoY medianEV/Revenue decay for Gaming. Expect gaming multiples to improve, as gaming providers - caught flat footed by the explosion of mobile and Internetgaming - reposition with online and mobile games suitable for a multi-device world.

• The median TTM revenue growth rate accelerated in 6 of 16 product categories in 3Q14, although there was little correlation between median TTMrevenue growth and market multiple. The six categories with higher YoY EV/Revenue multiples included: Engineering & PLM, Enterprise ResourcePlanning, Financial & Accounting, IT Conglomerates, Security and Vertical – Finance (i.e. software providers focused on the financial services vertical).

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:PUBLIC MARKET MULTIPLES

Median 3Q14 YoY Change in EV/Revenue3Q14 Median EV/Revenue Multiples


THE SEG SaaS INDEX

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.

• The SEG SaaS Index is currently comprised of 52 publicly traded,pure-play SaaS companies*.

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

23

SEG - SaaS: Median Metrics

Measure 3Q13 4Q13 1Q14 2Q14 3Q14EV/Revenue 6.9x 7.5x 7.6x 6.5x 6.2xEV/EBITDA 36.8x 46.8x 65.4x 51.8x 56.0xEV/Earnings 146.4x 102.7x 159.0x 89.9x 145.9xGross Profit Margin 67.7% 67.2% 68.3% 65.8% 65.2%EBITDA Margin -5.1% -8.3% -4.0% -1.7% -2.4%Net Income Margin -12.4% -14.2% -16.5% -15.8% -14.5%TTM Revenue Growth 28.1% 28.5% 30.5% 29.3% 25.8%TTM Total Revenue ($M) $107.9 $120.4 $129.3 $132.6 $140.5TTM EBITDA Growth 16.2% 19.8% 6.0% 16.3% 12.9%TTM Total EBITDA ($M) -$4.4 -$5.2 -$4.5 -$4.4 -$3.4Cash & Eq ($M) $69.8 $80.1 $87.0 $92.0 $107.1Current Ratio 1.7 2.4 2.3 2.3 2.1Debt / Equity Ratio 11.3% 13.4% 28.3% 15.9% 5.9%


THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

• The median TTM revenue growth rate of Public SaaS companies in 3Q14 was 25.8%, down from 28.1% in 3Q13. We anticipate only marginally highergrowth in Q4.

• The median TTM revenue of public SaaS companies was $140.5M in 3Q14, a significant YoY increase from 3Q13’s $107.9M. The growth in revenue ispartly inorganic, as the group has become increasingly acquisitive, and partly attributable to larger enterprise subscriptions and upgrades.

• For sheer size, Salesforce continued to dominate the SaaS Sector 3Q14 with TTM revenue of $4.5B, over 7x greater than the next largest Public SaaScompany. However, many public SaaS companies reached critical revenue mass (>$350 million) in 3Q14, a feat made more difficult by a revenue modelthat often requires deferring a significant percentage of booked revenue. SaaS providers with revenues of $350M+ can now be found among a wide arrayof product categories and industry sectors, including Athenahealth (Healthcare, $672M); Concur (Expense Management, $678M TTM revenue);DealerTrack (Automotive, $634M); Workday (HCM/Financial, $616M); Service-Now (IT Automation, $542M); NetSuite (ERP, $477M); and RealPage (RealEstate, $389M).

• Medians alone do not capture the standout performances of the most successful SaaS companies. Nearly one in five public SaaS companies grew TTMrevenue growth by 50% or more. As further testament to the widespread adoption of SaaS, these outperformers come from a variety of productcategories including Workforce Management, Life Sciences, Marketing, Security, and Business Intelligence. Select high growth public SaaS companiesinclude: FireEye (132.9%); Tableau Software (87.8%); Workday (74.4%); Service-Now.com (65.5%); Marketo (65.5%); Veeva Systems (54.9%); andOpower (54.4%).

TTM Revenue Growth Rate Distribution– 3Q14Median Revenue Performance – Quarterly

24


THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of public SaaS companies remainednegative, closing 3Q14 at -2.4%, a modest decline from the priorquarter.

• Over half (55%) of public SaaS companies are unprofitable, androughly seven out of ten have EBITDA margins below the 20%median of their on-premise software peers.

• And for the time being, that’s just what investors expect, if the strongcorrelation between their EV/Revenue multiples and TTM revenuegrowth rates (see slide 26) is any indication.

• Investors should be circumspect about the GAAP compliant P&Lstatements of many public SaaS companies which seem to indicatethey’re suffering significant losses and hemorrhaging cash. In truth,many are not only cash flow positive, but flush with revenue fromprepaid subscription fees that require deferred recognition underGAAP. As example, in its most recent 10-Q, ServiceNow reported a$92.6M net comprehensive loss, but was cash flow positive fromoperations to the tune of $66.3M.

TTM EBITDA Margin Distribution– 3Q14Median EBITDA Margin Performance – Quarterly

25


THE SEG SaaS INDEX: PUBLIC MARKET MULTIPLES

• At the close of 3Q14, the median EV/Revenue multiple for public SaaS companies was 6.2x, down 10% YoY, but only slightly lower than last quarter’smedian EV/Revenue multiple of 6.5x. The retreat reflected growing investor concerns over the past two quarters about overheated technology sectorstock prices.

• Still, over 30% of the companies in the SEG SaaS Index achieved a median EV/Revenue multiple of 8x or higher in 3Q14, and public SaaS companiescontinued to trade at a significant premium to their on-premise peers (6.2x vs. 2.9x median EV/Revenue). Public SaaS companies have historicallyenjoyed trading multiples at least twice that of their on-premise peers, and while 3Q14’s differential was exceptional, we anticipate further regression tothe mean for the remainder of 2014.

• A premium market valuation multiple can be largely justified by comparing the relative lifetime value of a SaaS customer vs. an on-premise licensee. ASaaS company with a mission critical hosted app and strong customer retention will garner significantly greater cash over time (typically, 10+ years) fromits average customer than will its on-premise counterpart. As for profitability, it remains to be seen if SaaS companies can eventually achieve bottom lineperformances that are equivalent to their on-premise counterparts.

• In the meantime, investors are placing their bets on the next wave of SaaS category leaders that are positioned to displace incumbent on-premiseproviders across multiple product categories - just as Salesforce did to Siebel years ago in the CRM category.

EV/Revenue Multiple Distribution– 3Q14Median EV/Revenue and EV/EBITDA Multiples – Quarterly

26

6.9x 7.5x 7.6x 6.5x 6.2x

36.8x

46.8x

65.4x

51.8x56.0x

3Q13 4Q13 1Q14 2Q14 3Q14

Me

dia

n M

ult

iple




• In 3Q14, investors continued to handsomely reward the fastest growing public SaaS companies, as noted by the very strong correlation between theirmedian TTM revenue growth rates and median market multiples. Public SaaS companies that grew TTM revenue in excess of 50% were anointed with thehighest median EV/Revenue multiple of 12.2x in 3Q14.

• Conversely, investors deemed profitability to be an unacceptable tradeoff for accelerated growth. Once again, there was an inverse correlation betweenEBITDA margins and median EV/Revenue multiples in 3Q14. Unprofitable or slightly profitable public SaaS companies achieved an admirable medianEV/Revenue multiple of 6.7x and 6.9x, respectively, in the third quarter, while those with EBITDA margins above 30% had a median market multiple ofonly 3.5x EV/Revenue.


27


Company Ticker EV (Median)

TTM

Revenue

TTM

Revenue

Growth

EV/

Revenue

TTM

EBITDA

EBITDA

Margin

EV/

EBITDA

Liquid Holdings Group LIQD n/a $4 -10.9% - NA n/a -

Castlight Health CSLT $1,013 $28 - 36.6x -$82 -295.7% -

Workday WDAY $14,516 $616 74.4% 23.6x -$155 -25.2% -

FireEye FEYE $4,379 $268 132.9% 16.3x -$278 -103.6% -

Service-now.com NOW $8,336 $542 65.5% 15.4x -$84 -15.5% -

Zendesk ZEN $1,454 $96 - 15.1x -$37 -38.2% -

Demandware DWRE $1,745 $128 44.5% 13.6x -$18 -13.7% -

Netsuite N $6,263 $477 33.4% 13.1x -$39 -8.1% -

Tableau Software DATA $3,751 $308 87.8% 12.2x $15 5.0% 244.2x

Veeva Systems VEEV $2,799 $260 54.9% 10.8x $53 20.4% 52.8x

Textura TXTR $630 $59 - 10.7x -$14 -23.0% -

Cornerstone OnDemand CSOD $2,067 $222 48.8% 9.3x -$37 -16.6% -

Paylocity Holding PCTY $976 $109 40.6% 9.0x -$3 -2.4% -

The Ultimate Software Group ULTI $3,961 $458 23.7% 8.6x $66 14.5% 59.6x

Marketo MKTO $1,047 $122 63.7% 8.6x -$42 -34.4% -

Concur CNQR $5,495 $668 31.8% 8.2x $22 3.3% 247.8x

Medidata Solutions MDSO $2,438 $305 24.2% 8.0x $25 8.2% 96.9x

Benefitfocus BNFT $907 $120 31.1% 7.6x -$37 -30.8% -

Salesforce.com CRM $36,034 $4,767 37.3% 7.6x $3 0.1% 11579.1x

Athenahealth ATHN $5,073 $672 36.0% 7.5x $61 9.1% 82.8x

OPOWER OPWR $785 $108 54.4% 7.3x -$29 -26.7% -

Cvent NYSE:CVT $907 $125 29.6% 7.2x $6 4.6% 156.4x

TrueCar NasdaqGS:TRUE $1,150 $172 - 6.7x -$30 -17.6% -

2U TWOU $639 $96 - 6.6x -$31 -32.3% -

SPS Commerce SPSC $757 $115 24.8% 6.6x $11 9.7% 67.7x

Ellie Mae ELLI $877 $136 10.6% 6.5x $23 16.7% 38.7x

Q2 Holdings QTWO $411 $66 - 6.2x -$16 -24.8% -

Qualys QLYS $713 $119 20.4% 6.0x $14 11.8% 50.4x

Amber Road AMBR $337 $60 30.2% 5.6x -$25 -41.1% -

E2open EOPN $409 $77 9.2% 5.3x -$25 -32.4% -

Fleetmatics FLTX $1,059 $204 35.7% 5.2x $44 21.9% 23.8x

DealerTrack TRAK $2,929 $634 46.9% 4.6x $76 12.0% 38.4x

ChannelAdvisors ECOM $338 $77 28.9% 4.4x -$23 -30.4% -

J2 Global JCOM $2,376 $545 21.0% 4.4x $226 41.5% 10.5x

RingCentral RNG $798 $188 38.5% 4.2x -$39 -20.5% -

Callidus Software CALD $509 $124 23.6% 4.1x $0 -0.2% -

Zix ZIXI $190 $49 6.5% 3.9x $12 23.5% 16.4x

Medical Transcript MTBC $40 $11 - 3.6x $1 6.5% 56.0x

inContact SAAS $523 $145 19.9% 3.6x -$3 -2.4% -

SciQuest SQI $332 $99 25.8% 3.4x $3 2.9% 114.8x

RealPage RP $1,246 $389 10.4% 3.2x $42 10.8% 29.6x

LivePerson LPSN $607 $191 13.8% 3.2x $8 4.3% 73.7x

Bazaarvoice BV $536 $174 14.7% 3.1x -$30 -17.4% -

Constant Contact CTCT $855 $307 14.4% 2.8x $34 11.0% 25.3x

Ebix EBIX $539 $204 -3.5% 2.6x $78 38.5% 6.9x

Jive Software JIVE $405 $161 23.4% 2.5x -$57 -35.3% -

Tangoe TNGO $496 $201 14.4% 2.5x $14 7.2% 34.2x

Marin Software MRIN $218 $89 30.5% 2.5x -$27 -30.5% -

Halogen Software TSX:HGN $127 $52 21.3% 2.4x -$6 -11.7% -

Rally Software Development RALY $173 $79 20.2% 2.2x -$25 -31.3% -

IntraLinks Holdings IL $489 $245 8.7% 2.0x $9 3.6% 56.0x

Covisint COVS $127 $95 0.4% 1.3x -$41 -43.2% -


Top 25%

Bottom 25%

• When the SEG SaaS Index is segmented onthe basis of median EV/Revenue multiple,the top 25% boasted a breathtaking median12.7x in 3Q14.

• These SaaS high flyers are market leaders ina wide array of SaaS categories includingsecurity (FireEye); HCM/Finance(Workday); ERP (NetSuite); eCommerce(Demandware); and Vertically Focused(Castlight Health – Healthcare ERP).

• The median TTM revenue growth rate ofthose in the Top 25% percentile was 51.9%.All but three companies (Tableau Software,Veeva Systems, Ultimate Software Group) inthe top 25% had a negative EBITDA marginas of 3Q14.

• In contrast, the median TTM revenuegrowth rate of those comprising the bottom25% of EV/Revenue multiples was 14.4%,and over half of these companies wereprofitable.

28


(8.6%)

(8.1%)

8.2%

(11.7%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

THE SEG SaaS INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

3Q14 YoY Change in Median Revenue Growth3Q14 Median TTM Revenue Growth

3Q14 YoY Change in Median EBITDA Margin3Q14 Median TTM EBITDA Margin

29

29.6%

30.2%

30.1%

31.1%

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

42.9%

(20.0%)

7.9%

(22.8%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

(28.5%)

(1.6%)

(22.3%)

(6.1%)

CRM & Marketing

ERP & Supply Chain

Vertically Focused

Workforce Management


THE SEG SaaS INDEX BY PRODUCT CATEGORY: PUBLIC MARKET MULTIPLES

• As in past quarters, public SaaS companies comprising the Workforce Management category posted the highest median public market valuation (8.6xEV/Revenue) of our four SaaS tracking categories in 3Q14. The category is led by Workday (23.6x EV/Revenue multiple) and Cornerstone On Demand(9.3x EV/Revenue). Valuation drivers included the continued displacement of on-premise incumbents, and growing pressure on large enterprisecustomers to enhance products, reduce costs and improve employee retention and satisfaction.

• Workforce Management SaaS companies also achieved the highest TTM revenue growth rate in 3Q14, 31.1%. This category, which includes long-standingcategory member LivePerson, was boosted by Marketo’s stunning TTM revenue growth rate of 63.7%, and Salesforce revenue growth of 37.3% in Q3.

• Although Workforce Management companies had the highest TTM revenue growth rate, median TTM growth actually declined YoY, which likely explainsthe 7.9% YoY contraction in Q3’s median EV/Revenue multiple for the category.

3Q14 YoY Change in Median EV/Revenue3Q14 Median EV/Revenue Multiple

30

5.2x

5.6x

6.6x

8.6x

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

17.5%

(39.1%)

16.5%

(26.4%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement


THE SEG INTERNET INDEX

PUBLIC INTERNET COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


THE SEG INTERNET INDEX

• The SEG Internet Index tracks public companies that primarily offerB2C and B2B solutions over the Internet using a wide array of pricingmodels.

• The SEG Internet Index is currently comprised of 103 public Internetcompanies*.

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

32


17%16%

20% 20%

8%

20%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

om

pa

nie

s

TTM Revenue Growth

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

• Approximately 62% of the companies comprising the SEG InternetIndex offer online services and solutions primarily or exclusively toconsumers; their revenue growth typically lags a quarter behind theperformance of the U.S. economy.

• After declining to 18.0% growth in Q2 from 18.9% in Q1, median TTMrevenue of the SEG Internet Index grew 19.2% in the third quarter.

• Once again demonstrating the Internet is an ecosystem of unequals,one in five public Internet providers far outpaced the pack, postingTTM revenue growth greater than 40% in 3Q14. These high flyersincluded Twitter (117%), Rocketfuel (97%), and Facebook (64%).

• Conversely, 34% of public Internet companies struggled to advance,reporting TTM revenue growth of 10% or less in 3Q14. Examplesinclude Orbitz, 1-800-Flowers.com, Zynga, and VeriSign.

TTM Revenue Growth Rate Distribution – 3Q14Median Revenue Performance – Quarterly

33

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$380

$385

$390

$395

$400

$405

$410

$415

$420

$425

3Q13 4Q13 1Q14 2Q14 3Q14

TT

M R

ev

en

ue

Gro

wth

TT

M T

ota

l R

ev

en

ue

TTM Total Revenue ($M) TTM Revenue Growth Qtrly GDP Growth


24%

31%

22%

8%11%

5%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

om

pan

ies

TTM EBITDA Margin

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of the SEG internet Index declined for thefourth consecutive quarter.

• Almost one in four SEG Internet Index companies were unprofitablein 3Q14, compared to one in five the prior quarter. The median S&Mspend as a percent of revenue of public Internet companies increasedin the third quarter to 26.2%, up from 25.4% last quarter.

• At the other end of the spectrum, 5% of public Internet companies,mostly those with significant transaction or advertising revenue,achieved EBITDA margins above 40%, led by VeriSign (61.0%),Facebook (54.2%) and recent IPO Alibaba (51.6%).

• The widely disparate financial performance of the SEG Internet Indexreveals an Internet ecosystem clearly bifurcated into “haves” and“have nots.” Virile market adoptions, consumer fickleness, switchingease and fierce competition handsomely continued to reward a selectfew and punish others in the third quarter.

• Facebook has added credibility to the notion that its better to scalethe user base first, then monetize it. The question remains, will otherpublic Internet companies such as Yelp and Twitter fare as well?

TTM EBITDA Margin Distribution – 3Q14Median EBITDA Margin Performance – Quarterly

34

9.3%10.0%

9.0%8.5% 8.3%

3Q13 4Q13 1Q14 2Q14 3Q14

EB

ITD

A M

arg

in


THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• The median public market EV/Revenue multiple of public Internet providers closed 3Q14 at 2.7x, the lowest since 3Q13.

• Considering approximately 60% of public Internet companies are highly dependent on consumer spending (Travel, Games, Advertising, etc), we see thedeterioration in median EV/Revenue as a reflection of declining profitability caused by increased competition and downward pressure on prices. Almost50% of companies comprising our Internet Index closed Q3 with an EV/Revenue multiple of 2.0x or less.

• Conversely, 24% closed the quarter with a market multiple of 7.0x EV/Revenue or higher. Internet companies boosting the highest EV/Revenue publicmarket multiples in 3Q14 were those that have captured a significant share of online advertising and commerce dollars. Examples include Twitter (26.1x);Alibaba (24.0x); Zillow (19.7x); LinkedIn (12.6x); and Baidu.com (11.2x).

Median EV/Revenue Multiple Distribution – 3Q14Median EV/Revenue and EV/EBITDA Multiples – Quarterly

35

18%

27%

12%

8%

3%5% 6%

3% 2%

17%

<= 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

2.7x 2.8x 3.3x 3.0x 2.7x

20.0x22.5x

23.8x21.3x 20.5x

3Q13 4Q13 1Q14 2Q14 3Q14

Me

dia

n M

ult

iple



THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• Public Internet companies with TTM revenue growth of 40% or higher were rewarded with a much higher median EV/Revenue multiple (11.2x) in Q3than their slower growing peers. Among those outperformers were: Trulia (124.7%, 10.1x EV/Revenue); Twitter (117.3%, 26.1x EV/Revenue); Yelp(66.2%, 16.7x EV/Revenue); LinkedIn (48.5%, 12.6x EV/Revenue).

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

• Public Internet companies with EBITDA margins above 40% posted a median EV/Revenue multiple of 6.8x in 3Q14, 152% higher than the overall Indexmedian. By comparison, public SaaS companies with EBITDA margins above 30% (not enough companies with 40%+) posted a median EV/Revenuemultiple of 3.5x in Q3, 42% below the SaaS median market valuation.

• When valuing Internet vs. SaaS stocks, investors have clearly taken into consideration the likely longevity of the customer relationship and associatedrecurring revenue, and the nature and extent of switching costs. By those measures, the likely lifetime value of a SaaS customer appears to greatlyoutweigh the perceived value of an online consumer.

• With few exceptions, many of the most profitable public Internet companies also reported stellar TTM revenue growth. Among them were Facebook(54.2% EBITDA margin, 63.7% revenue growth); Baidu.com (38.4% EBITDA margin, 52.8% revenue growth); Yandex (37.8% EBITDA margin, 36.2%revenue growth); and Tencent Holdings (35.4% EBITDA margin, 36.8% revenue growth).


36

1.1x 1.4x2.4x

3.0x 2.6x

11.2x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM Revenue Growth

1.6x 1.8x 1.8x

4.5x

7.9x

6.8x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM EBITDA Margin


Ad Tech Commerce Content & Media Gaming

Infrastructure Services Social Travel

• 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

37

Search


THE SEG INTERNET INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

3Q14 Median YoY Change in Revenue Growth3Q14 Median TTM Revenue Growth

3Q14 Median YoY Change in EBITDA Margin3Q14 Median TTM EBITDA Margin

38

23.4%

14.1%

11.7%

14.1%

9.8%

28.7%

30.6%

63.7%

22.1%

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel

(9.3%)

(15.3%)

(19.8%)

(44.1%)10.4%

(8.9%)

(11.2%)

17.9%

6.5%

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel

6.3%

6.3%

11.0%

21.0%

5.1%

33.8%

6.5%

10.6%

15.6%

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel

(4.5%)

3.7%

(29.9%)

(42.0%)

(27.0%)

(11.9%)

45.0%

(16.7%)

(7.1%)

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel


THE SEG INTERNET INDEX BY PRODUCT CATEGORY:PUBLIC MARKET MULTIPLES

• Public Internet companies comprising the Social product category closed Q3 with a median revenue growth rate of 63.7%, more than 3x the overallInternet median growth rate of 19.2%. The Services product category ended Q3 with a median revenue growth rate of 30.6%, more than 50% greaterthan Q3’s Internet median.

• Public Internet companies comprising the Social category closed 3Q14 with the highest median EV/Revenue multiple, 12.6x, led by Twitter (26.1x) andFacebook (18.0x).

• The success social media Internet providers have had monetizing their services, largely through advertising, has come at the expense of many in the AdTech space, with marketers clearly favoring the scalability and ROI of advertising on Twitter and Facebook. As a result of these shifting advertisingpriorities, the median TTM revenue growth of the Ad Tech product category fell 40.5% YoY in 3Q14.

• Companies within the Search product category continued to be very profitable in Q3, posting a median EBITDA margin of 33.8%, 4x higher than themedian EBITDA margin across all Internet categories in 3Q14.

• Despite poor financial performance, the Gaming product category median EV/Revenue spiked almost 30% YoY to 2.8x in 3Q14. The category was largelydriven by the outperformance of Giant Interactive and Tencent Holdings, two Chinese companies that are demonstrating impressive growth in the hugeAsia-Pacific market.

Median 3Q14 YoY Change in EV/Revenue3Q14 Median EV/Revenue Multiples

39

2.0x

1.2x

2.7x

2.8x

1.3x

6.2x

2.6x

12.6x

5.4x

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel

8.1%

29.8%

5.5%

17.1%

Ad Tech

Commerce

Content & Media

Gaming

Infrastructure

Search

Services

Social

Travel

(40.5%)

(17.0%)

(11.0%)

(17.0%)

(12.5%)


SOFTWARE INDUSTRY M&A MARKET UPDATE


Average On-Premise Software Deal SizeU.S. Software Mergers & Acquisitions Activity

• There were 462 software M&A transactions in 3Q14. Deal activity over the past three years has remained consistently robust.

• Software M&A spending totaled $39.4 billion in 3Q14, and has increased each of the past five quarters, buoyed by a plethora of mega deals (EV>500M).

• SAP’s $7.7 billion acquisition of Concur Technologies was the largest for the quarter. In addition to SAP/Concur, Q3 featured seventeen other On-premise/SaaS/Internet mega deals (EV > $500M), including Zillow’s acquisition of Trulia ($3.1B EV, 14.8x EV/Revenue multiple); Cognizant Technology’spurchase of Trizetto ($2.7B, 3.8x estimate); Microsoft’s acquisition of Mojang ($2.5B); Micro Focus’ acquisition of The Attachmate Group ($2.3 billion, 2.5xestimate); and Thoma Bravo’s acquisition of Compuware ($2.1 billion, 2.9x).

• Megadeals aside, most buyers continued to focus on small and mid-sized acquisitions in 3Q14, in line with our 2013 and 2014 Buyers Surveys, in responseto which 72% of buyers indicated they would focus on deals ranging from $10M - $99M in 2014.

• The average software M&A purchase price has increased each of the past four quarters, reaching $64M in 3Q14.

3Q14 SOFTWARE / SAAS M&A DEAL VOLUME AND SPENDING

41

$42 $41 $41 $42

$36$39

$36 $35$40

$43

$53$54

$64

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

TT

M A

ver

age

Dea

l Val

ue

(Mil

lio

ns)


• The median on-premise software exit multiple in 3Q14 inched up to2.4x in 3Q14 after holding steady at a respectable 2.3x EV/Rev for thepast four quarters.

• Historically, a median 2.4x EV/Revenue exit multiple is at the upperend of the valuation range for on-premise software companies. Thatquarterly median valuation was beaten only twice since 2007, in3Q10 and 2Q11, when it climbed to 2.5x before retreating thefollowing quarter.

SOFTWARE M&A EXIT MULTIPLES

• On a TTM basis, 40.7% of all on-premise software targets in 3Q14were acquired for 2.0x TTM revenue or less, and 69.9% for 3.0x orless.

• Most targets receiving an exit multiple of 3.0x or higher belonged tocurrently “hot” software product categories that are experiencingrapid market adoption and growth, including Systems Management,Engineering & PLM, and Electronic Design Automation.

• Despite Q3’s many mega deals, the quarter also featured a number ofsmaller, but noteworthy transactions, including Sage Software’sacquisition of ERP vendor Exact Software Deutschland ($22 million,1.6x TTM revenue); and KB Advanced Technologies’ acquisition ofupstream oil & gas software provider FEESA ($19.2 million, 4.9x TTMrevenue).

Median EV/Revenue Exit Multiple DistributionMedian Exit Multiples

42

2.3x 2.3x 2.3x 2.3x 2.4x

11.5x12.9x 13.3x

18.1x 17.7x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

3Q13 4Q13 1Q14 2Q14 3Q14


16.7%

24.0%

29.2%

10.4% 9.4%

2.1%

8.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

<= 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

eal

s-

3Q

14

TTM


Large Vs. Smaller BuyerPublic vs. Private Target

SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZE

• Of the deals announced in 3Q14 with an ascertainable exit multiple,more than four out of five software M&A transactions featuredprivately-held targets.

• The median exit multiple in the third quarter was virtually the samefor both private sellers (2.4x TTM revenue) and their publiccounterparts (2.5x TTM revenue).

• Public buyers in 3Q14 paid a median 2.4x TTM revenue for theirtargets in 3Q14, compared to a median of 2.2x paid by private buyers.

• Buyers with revenue greater than $200 million paid a median 2.8xTTM revenue for their targets, compared to a median 1.7x TTMrevenue purchase price paid by sub-$200 million 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). InQ3, this match-up produced a median 3.4x EV/Revenue exit multiple.

43


SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

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

• The median exit valuation of horizontal software companies was 2.4x TTM revenue in 3Q14, consistent with the preceding three quarters. Q3 horizontaltransactions included Dassault Systemes’ acquisition of supply chain planning solution provider Quintiq for $337.0 million (3.3x revenue); Micro Focus’acquisition of infrastructure software solution provider The Attachmate Group for $2.3 billion (2.5x revenue); and Gemalto’s acquisition of securitysoftware provider SafeNet Inc. for $890 million (2.4x revenue).

• Vertical software sellers accounted for the lowest percentage of total in the past five quarters.

• That said, buyers of vertical software targets valued quality over quantity. The median exit valuation of vertical software companies was 2.5x TTMrevenue in 3Q14, well above industry norms and up significantly from prior quarters.

• Q3’s more noteworthy vertical software deals included Cognizant‘s acquisition of healthcare insurance software provider Trizetto Group for $2.7 billion(3.8x revenue); Xchanging’s acquisition of property and casualty software provider Agencyport Software for $110 million (3.4x revenue); and P2 CapitalPartner’s acquisition of legal software provider Epiq Software for $1 billion (2.2x revenue).

44

33% 39% 35% 35% 31%

67% 61% 65% 65% 69%

0%10%20%30%40%50%60%70%80%90%

100%

3Q13 4Q13 1Q14 2Q14 3Q14

Horizontal Vertical

2.7x

1.7x

2.1x 2.1x

2.5x

2.0x2.4x 2.5x 2.4x 2.4x

3Q13 4Q13 1Q14 2Q14 3Q14

Vertical Horizontal


SOFTWARE M&A ACTIVITY BY PRODUCT CATEGORY

• Mobile was the most active productcategory by far in the third quarter,accounting for 19.2% of all software M&Atransactions. Distant runner-ups wereFinancial Services (7.3%), Content &Document Management (5.5%), CRM,Marketing & Sales and BI, Risk &Compliance (4.4%)

• Historically, deal activity in any givenproduct category varies widely from yearto year, based upon evolving marketadoption, changing technology platforms,economic cycles, etc. Examples include:

• Content & Document Managementtransactions accounted for 5.5% of allsoftware M&A activity in 3Q14, but only2.5% in 3Q13.

• CRM, Marketing & Sales dealsaccounted for 4.4% of software M&Aactivity in 3Q14 compared with 2.5% in3Q13.

• Healthcare transactions accounted for4.1% of software M&A activity in 3Q14versus 6.3% in 3Q13.

• Network Performance Managementaccounted for 0.3% of all software M&Aactivity in 3Q14 compared with 1.6% in3Q13.

45


SOFTWARE M&A EXIT VALUATIONS BY PRODUCT CATEGORY

Median EV/Revenue Exit Multiples by Software Product Category

• Among the 32 on-premise software product categories we track, nine had both sufficient deal activity and deal data to ascertain a category TTM revenuemultiple in 3Q14.

• On a TTM basis, the Systems Management and Engineering PLM categories garnered the highest median exit multiple (2.8x)

• Systems Management software transactions included Solarwinds’ 4Q13’s acquisition of Confio Software (6.7x EV/Revenue) and Thoma Bravo’s 3Q14acquisition of Compuware (2.9x EV/Revenue). When the Confio deal falls out of our TTM calculation next quarter, its likely the median exit multiple in thiscategory will drop sharply.

• Notable Engineering PLM Software deals included 2Q14’s acquisition of AtegoTM by PTC; 2Q14’s acquisition of SpaceClaim by Ansys (6.0x revenue); and4Q13’s acquisition of Delcam by Autodesk (3.1x revenue).

46

2.8x 2.8x

2.2x 2.1x1.9x

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Median SaaS EV/Revenue Exit MultiplesSaaS M&A Volume

• There were 118 SaaS M&A transactions in 3Q14, the most on record for any quarter and about 250% greater than three years ago.

• The median TTM EV/Revenue exit multiple of SaaS transactions was 4.1x in 3Q14, virtually the same as in three of the past four quarters.

• SaaS transactions in the third quarter that featured especially noteworthy exit multiples included SAP’s acquisition of Concur Technologies ($7.7 billion,11.5x TTM revenue); ServiceNow’s acquisition of Neebula Systems ($100 million, 20.0x revenue estimate); and PTC’s acquisition of Aexda ($170 million,7.0x revenue estimate).

• The median SaaS exit multiple was 71% greater than the median on-premise software exit multiple in 3Q14 (4.1x vs 2.4x).

SaaS M&A: DEAL VOLUME AND MEDIAN EXIT MULTIPLES

47

4.3x4.1x

4.6x

4.0x 4.1x

3Q13 4Q13 1Q14 2Q14 3Q14

48

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SaaS M&A Deals SaaS as % of Software


• CRM, Marketing & Sales, and HR &Workforce Management were the mostactive SaaS M&A product categories,accounting for 14.7% and 11.2%,respectively, of all SaaS M&A transactions inthe third quarter.

• After five quarters of lackluster deal volume,SaaS transactions in the CRM, Marketing &Sales product category came roaring backover the past two quarters, comprising14.7% of Q3 and 13.0% of Q2 total SaaSM&A activity, compared to only 2.1% for allof 2013. The resurgence in the category’squarterly deal volume is largely attributableto strong customer demand for marketingrelated big data and marketing analytics.

• The Systems Management and BI, Risk &Compliance product categories alsoexhibited strength in 3Q14, accounting for9.5% and 6.9%, respectively, of total SaaSdeal volume for the quarter. Both categoriesbenefited from rapidly ramping enterpriseadoption of SaaS deployed solutions, whichis placing increasing pressure on large, on-premise legacy vendors to catch up.

SaaS M&A BY PRODUCT CATEGORY

48


3Q14 SaaS M&A TRANSACTIONS

49

Date Buyer SellerEnterprise

Value (mm)TTM Revenue

(mm) EV / Rev09/22/14 Sage Group plc (LSE:SGE) PAI Group, Inc. $157.8 $39.0 4.1x

09/22/14 Premiere Global Services, Inc. (NYSE:PGI) TalkPoint Holdings, LLC - - -

09/22/14 Ericsson (OM:ERIC B) Apcera, Inc. - - -

09/19/14 REWE Digital GmbH commercetools GmbH - - -

09/19/14 The Hearst Corporation BranchOut, Inc. - - -

09/18/14 SAP America, Inc. Concur Technologies, Inc. (NasdaqGS:CNQR) $7,651.6 $668.0 11.5x

09/18/14 HRdirect Hello Industries Inc. - - -

09/18/14 Red Hat, Inc. (NYSE:RHT) FeedHenry Ltd.* $82.0 $4.0 20.0x

09/18/14 ParTech, Inc. Brink Software, Inc. $17.0 - -

09/18/14 Geospatial Corporation (OTCPK:GSPH) ShaleNavigator - - -

09/17/14 Cisco Systems, Inc. (NasdaqGS:CSCO) Metacloud, Inc. - - -

09/17/14 Boyser S.R.L Dexma Sensors, SL - - -

09/16/14 Callidus Software Inc. (NasdaqGM:CALD) Clicktools Ltd.* $16.4 $2.3 7.0x

09/16/14 Kenshoo, Ltd. Adquant Ltd - - -

09/16/14 OnApp Limited SoluLabs Ltd. - - -

09/15/14 Cision AB; Vocus Inc. Visible Technologies, Inc. - - -

09/15/14 Brocade Communications (Nasdaq:BRCD) Vistapointe Networks - - -

09/14/14 Oracle Corporation (NYSE:ORCL) Front Porch Digital Inc. - - -

09/12/14 Sabre Corporation (NasdaqGS:SABR) Genares Worldwide Reservation Services, Ltd. - - -

09/12/14 Genstar Capital, LLC Construction Software Technologies, Inc. - - -

09/11/14 Givex Corporation Marqui Inc. - - -

09/11/14 Ticketmaster Entertainment, LLC Eventjoy, Inc. - - -

09/11/14 Ericsson (OM:ERIC B) Fabrix Systems Ltd. $95.0 - -

09/10/14 Equiniti Limited Charter UK Ltd. - - -

09/10/14 FxPro Group Limited Quotix Limited - - -

09/09/14 Pointer Telocation Ltd. (NasdaqCM:PNTR) Thales Telematics - - -

09/09/14 QmedRx, Inc. GoEscribe - - -

09/05/14 Intercontinental Exchange, Inc. (NYSE:ICE) SuperDerivatives Inc. $350.0 - -

09/04/14 Figaro Classifieds S.A.; RegionsJob SAS Ubiposting SAS - - -

09/03/14 Symphony Technology Group Ventiv Technology Inc. - - -

09/03/14 Fidelity National Info. Services, Inc. (NYSE:FIS) Clear2Pay nv/sa* $492.7 $123.0 4.0x

09/03/14 Capita plc (LSE:CPI) Eclipse Hardware Limited - - -

09/02/14 HomeAdvisor, Inc. Mhelpdesk, Inc. - - -

09/02/14 Mixpo, Inc. ShopIgniter, Inc. - - -

09/02/14 Shenzhen Xunlei Networking Technologies Kuaipan Personal and Kansunzi Business Assets $33.0 - -

09/02/14 RealNex Ten Eight LLC - - -

09/01/14 Equiniti Limited Invigia Limited - - -

08/29/14 Omnitracs, LLC XRS Corporation (NasdaqCM:XRSC) $177.5 $53.0 3.4x

08/29/14 Morpho SA Dictao Siege - - -

08/29/14 OmniEarth Inc. IRISmaps, Inc. - - -


3Q14 SaaS M&A TRANSACTIONS (CON’T)

50



(mm) EV / Rev08/27/14 SmartFocus SA Content Savvy Inc. - - -

08/27/14 GL Education Group Limited The Test Factory Limited - - -

08/27/14 SmartFocus SA TagPoints Ltd - - -

08/26/14 Mailigen Limited Leadersend ltd. - - -

08/26/14 Google Inc. (NasdaqGS:GOOGL) ZYNC INC. - - -

08/26/14 UST Global Inc. Trulioo, Inc. - - -

08/26/14 Auctane LLC Finale Inventory - - -

08/26/14 Veeder-Root Company Inc. FuelQuest, Inc. - - -

08/25/14 Dynamic Signal Inc. PaperShare, Inc. - - -

08/21/14 Host Europe WVS Limited Sign-Up Technologies Ltd. - - -

08/20/14 GoDaddy Inc. Mad Mimi, LLC - - -

08/20/14 TeamSnap, Inc. Easy Team Manager - - -

08/19/14 Readyforce, Inc. HireBrite, LLC - - -

08/15/14 VMware, Inc. (NYSE:VMW) CloudVolumes, Inc. - - -

08/14/14 RedeHost Internet Ltda. Mailee - - -

08/14/14 INFOR, INC. SalesLogix, N.A., LLC - - -

08/13/14 Intuit Inc. (NasdaqGS:INTU) Itrios LLC - - -

08/12/14 iQU B.V. HoneyTracks GmbH - - -

08/12/14 Singapore eDevelopment Limited (Catalist:5QZ) Cloudtel Pte. Ltd. - - -

08/12/14 Kaseya International Shared Services Sàrl Scorpion Software Corp. - - -

08/12/14 SHE Software Ltd Mobile Safety Solutions Limited - - -

08/12/14 LexisNexis Risk Solutions, Inc. Coplogic, Inc. - - -

08/11/14 Thinking Phone Networks, Inc. Whaleback Systems Corporation - - -

08/11/14 International Business Machines (NYSE:IBM) Lighthouse Security Group, LLC - - -

08/11/14 Manhattan Associates, Inc. (NasdaqGS:MANH) GlobalBay Technologies Inc. - - -

08/07/14 Intuit Inc. (NasdaqGS:INTU) PaySuite Limited - - -

08/06/14 FuseMail, LLC MXSweep Limited - - -

08/05/14 Bullhorn, Inc. The Code Works Inc. - - -

08/04/14 Rocket Fuel Inc. (NasdaqGS:FUEL) [x+1], Inc. $236.0 $72.0 3.3x

08/04/14 comScore, Inc. (NasdaqGS:SCOR) MdotLabs, Inc. $4.5 - -

08/01/14 Frontline Technologies Group LLC Aspex Solutions - - -

08/01/14 cloudControl Inc. Docker, Inc., DotCloud PaaS Business - - -

07/31/14 SQAD Inc. Workhorse Software Company - - -

07/31/14 HootSuite Media Inc. Brightkit - - -

07/31/14 Oracle Corporation (NYSE:ORCL) TOA Technologies, Inc. - - -

07/31/14 Goldstar North American Mining, Inc. XFormity Technologies, Inc. (OTCPK:XFMY) - - -

07/30/14 Intuit Inc. (NasdaqGS:INTU) K.D.K. Softwares (India) Pvt. Ltd. - - -

07/30/14 j2 Global, Inc. (NasdaqGS:JCOM) Contactology, Inc. - - -

07/30/14 Qualcomm Technologies, Inc. Empowered Careers Inc. - - -

07/29/14 Ericsson (OM:ERIC B) MetraTech Corp. - - -


3Q14 SaaS M&A TRANSACTIONS (CON’T)

51



(mm) EV / Rev07/29/14 Engage Mobility, Inc. (OTCPK:ENGA) Hub Data, Inc., Certain Assets - - -

07/28/14 Twitter, Inc. (NYSE:TWTR) Madbits - - -

07/28/14 2426818 Ontario Inc. MediaMiser Ltd. $8.5 $3.6 2.4x

07/28/14 Beijing Tongtech Co., Ltd. (SZSE:300379) Neostart, Inc. $4.9 - -

07/25/14 RIB Software AG (DB:RSTA) Byggeweb A/S $25.9 - -

07/24/14 Crucible Gold Limited (ASX:CUG) Dubber Pty Ltd $5.2 - -

07/23/14 PTC Inc. (NasdaqGS:PTC) Axeda Corporation* $170.0 $24.0 7.0x

07/22/14 Docker, Inc. Orchard Laboratories Ltd - - -

07/21/14 LinkedIn Corporation (NYSE:LNKD) Bizo, Inc. $175.0 $50.0 3.5x

07/21/14 RCS Capital Corporation (NYSE:RCAP) Trupoly, Inc. - - -

07/18/14 Blackfin Capital Partners SAS Able B.V. - - -

07/17/14 Teradata Corporation (NYSE:TDC) Hadapt, Inc. - - -

07/17/14 NetSuite Inc. (NYSE:N) Venda, Inc. $50.5 - -

07/16/14 HighJump Software Inc. Atlas Products International Holdings Ltd. - - -

07/16/14 Zillow, Inc. (NasdaqGS:Z) Retsly Software, Inc. - - -

07/15/14 Equity Administration Solutions, Inc. Option Admin, Inc. - - -

07/15/14 Chef, Inc. Tower3 Inc. - - -

07/14/14 Lexalytics, Inc. Semantria LLC - - -

07/11/14 Comcast Corporation (NasdaqGS:CMCS.A) PowerCloud Systems, Inc. - - -

07/10/14 Ascentis Corporation Starfield TMS, LLC - - -

07/10/14 Salesforce.com, Inc (NYSE:CRM) RelateIQ, Inc. $391.0 - -

07/09/14 Add Shoppers, LLC Sociaby, LLC - - -

07/09/14 ServiceNow, Inc. (NYSE:NOW) Neebula Systems Ltd.* $100.0 $5.0 20.0x

07/08/14 GTCR, LLC; Opus Global Holdings Hiperos, LLC - - -

07/08/14 Top Image Systems Ltd. (NasdaqCM:TISA) eGistics, Inc. $18.0 $11.0 1.7x

07/08/14 EMC Corporation (NYSE:EMC) TwinStrata, Inc. - - -

07/08/14 Vista Equity Partners Social Solutions, Inc. - - -

07/07/14 Asure Software, Inc. (NasdaqCM:ASUR) FotoPunch Inc. $4.5 - -

07/07/14 Thoma Bravo, LLC Sparta Systems, Inc. - - -

07/07/14 Zero2Sixty Software, Inc. Conductiv Inc. - - -

07/04/14 Zimbra, Inc. Mezeo Software Corporation - - -

07/04/14 Enghouse Systems Limited (TSX:ESL) Basset AB $9.4 - -

07/02/14 EPOSability Ltd. Mylivevision Limited - - -

07/02/14 Roper Industries Inc. (NYSE:ROP) FoodLink Holdings, Inc. - - -

07/01/14 Taxware, LLC Convey Compliance Systems, Inc. - - -

07/01/14 EFactor Group Corp. (OTCPK:EFCT) Member Digital Ltd $1.0 - -


Internet M&A Volume

INTERNET M&A: DEAL VOLUME AND EXIT MULTIPLES

Median Internet EV/Revenue Exit Multiples

• After dropping sharply in the first quarter, Internet M&A deal volume increased steadily over the second and third quarters of this year.

• There were 241 Internet M&A transactions in the third quarter, a 12% increase from 2Q14’s 215 deals. In both 2013 and 2014, we’ve witnessed asubstantial decrease in M&A activity during Q1 followed by steadily increasing M&A activity during the following quarters. The first quarter has become atime to assess and digest holiday on-line spending results, discern changing trends and establish new acquisition priorities. We expect continued M&Agrowth in the fourth quarter.

• The median EV/Revenue exit multiple for Internet sellers in 3Q14 was 2.1x, a notable increase from the past four quarters.

• Leading 3Q14 Internet transactions included Facebook’s acquisition of LiveRail ($500 million, 5.0x EV/Revenue); Rakuten’s acquisition of EbatesPerformance Marketing ($1 billion, 6.0x EV/Revenue); Zillow’s acquisition of Trulia ($3.1 billion, 14.8x EV/Revenue); Varde Partners acquisition ofBancopopular-e ($1.3 billion).

52

1.9x 1.9x 1.8x 1.7x2.1x

3Q13 4Q13 1Q14 2Q14 3Q14

231

256

195

215

241

3Q13 4Q13 1Q14 2Q14 3Q14


INTERNET M&A: BY PRODUCT CATEGORY

TTM M&A Volume by Product Category M&A Volume by Quarter

• Internet Ad-tech remained the most active Internet M&A category, with 73 transactions in 3Q14. The third quarter’s tally was up from 1Q14’s 57 ad-techtransactions and 2Q14’s 68 transactions, and more in line with quarterly transaction volume during the first half of 2013.

• Internet Gaming posted 21 transactions in 3Q14, a marked increase compared to 3Q13’s 8 transactions. Quarterly M&A deal volume in the Gamingcategory has risen steadily over the course of the year.

• Other than Social Tech, all Internet categories posted increases in deal activity over the prior quarter.

53

Category 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

Ad-Tech & Lead Gen 85 94 57 68 73

Commerce 44 49 38 41 49

Content & Media 36 42 50 41 43

Gaming 8 10 10 16 21

Infrastructure 39 39 21 25 32

Social Tech 19 22 18 24 23

Total 231 256 194 215 241

32.7%

20.0%19.7%

4.7%

13.1%

9.8%

Ad-Tech

Commerce

Content & Media

Gaming

Infrastructure

Social Tech


APPENDIX


THE SEG SOFTWARE INDEX COMPANIES – KEY METRICS

55

Company


A10 Networks - - 7.1x 4.0x 3.2x - - - - - 31.5% - 18.1% - - 11.5% 0.5% -3.0% -1.0% -1.7%

Accretive Health 0.4x 0.4x 0.4x 0.4x 0.4x 5.4x 5.7x 5.6x 5.2x 5.5x 4.9% -0.2% -0.2% -2.1% -3.1% 6.6% 6.5% 6.5% 6.7% 6.5%

ACI Worldwide 3.3x 3.7x 3.4x 3.1x 2.9x 17.7x 17.5x 15.7x 14.5x 13.5x 39.7% 39.5% 29.8% 33.8% 30.3% 18.9% 21.1% 21.6% 21.0% 21.7%

Activision Blizzard 2.9x 2.0x 3.0x 3.4x 3.8x 7.7x 5.7x 9.4x 11.5x 14.1x 13.1% 7.5% -5.6% -12.7% -13.9% 37.6% 35.5% 32.3% 29.5% 27.2%

Actuate 2.0x 2.2x 1.5x 1.2x 1.2x 17.1x 18.9x 14.9x 20.7x 56.7x -1.9% -0.6% -3.1% -11.0% -16.2% 11.8% 11.5% 10.2% 5.9% 2.2%

Advent Software 3.7x 5.4x 4.9x 4.6x 4.9x 21.2x 29.9x 26.2x 24.5x 20.2x 6.7% 6.9% 6.7% 6.3% 5.6% 17.3% 18.1% 18.6% 18.6% 24.1%

Allot Communications 2.9x 3.3x 4.2x 3.1x 2.4x 156.9x - - 554.0x 69.2x 7.2% -4.8% -7.8% -3.8% 8.3% 1.9% -5.1% -0.8% 0.6% 3.4%

Allscripts Healthcare Solutions 2.2x 2.3x 2.5x 2.4x 2.3x 51.1x 175.3x 352.2x 245.1x 108.9x -5.6% -7.4% -5.1% -4.4% -2.2% 4.4% 1.3% 0.7% 1.0% 2.1%

Amdocs Limited 1.5x 1.6x 1.7x 1.9x 1.8x 8.1x 8.6x 9.3x 10.1x 9.9x 2.6% 3.0% 3.6% 4.8% 5.6% 18.7% 18.6% 18.5% 18.4% 18.3%

American Software 1.7x 1.9x 2.1x 2.0x 1.9x 12.1x 12.5x 12.9x 12.5x 11.9x -6.6% -6.6% -3.2% 0.1% 4.4% 14.4% 15.4% 16.5% 16.2% 15.9%

ANSYS 8.7x 8.6x 8.0x 6.9x 7.2x 18.7x 18.4x 17.1x 14.8x 15.4x 10.5% 9.1% 7.9% 8.4% 8.0% 46.7% 46.6% 46.8% 46.8% 46.5%

Aruba Networks 2.6x 2.6x 2.9x 2.6x 2.5x 59.4x 85.3x 160.3x 105.9x 57.6x 16.1% 13.8% 11.6% 15.8% 21.5% 4.4% 3.1% 1.8% 2.4% 4.4%

Aspen Technology 9.4x 10.2x 11.3x 10.1x 9.4x 49.7x 44.6x 41.1x 33.8x 27.7x 28.1% 24.3% 27.3% 27.7% 25.7% 19.0% 22.8% 27.5% 29.9% 34.0%

Autodesk 3.0x 3.7x 4.5x 4.3x 4.7x 14.8x 18.3x 24.2x 25.1x 30.9x -0.5% -0.2% -1.7% 0.1% 3.7% 20.3% 20.1% 18.8% 17.1% 15.3%

AVG Technologies 3.0x 2.3x 2.3x 2.6x 2.3x 8.9x 7.1x 6.5x 7.3x 6.8x 27.2% 19.5% 14.4% 4.8% -3.0% 33.7% 32.6% 35.0% 35.0% 33.6%

Bango PLC 9.0x 6.6x 7.6x 6.4x 5.8x - - - - - - - -13.7% -16.5% -19.5% -35.8% -35.8% -51.5% -60.4% -71.1%

Barracuda Networks - 4.9x 7.1x 5.4x 5.0x - - - 331.7x 153.1x - - 17.5% 16.5% 16.8% 1.1% -0.1% 0.0% 1.6% 3.3%

Blackbaud 3.7x 3.7x 3.2x 3.2x 3.4x 20.7x 17.9x 16.2x 16.2x 17.5x 22.3% 15.8% 12.6% 10.1% 9.5% 17.9% 20.5% 20.0% 19.7% 19.6%

Bottomline Technologies 3.4x 4.5x 4.6x 3.9x 3.5x 36.7x 45.5x 42.3x 33.0x 31.2x 13.6% 11.5% 11.6% 13.1% 18.0% 9.3% 9.8% 10.8% 11.7% 11.1%

Broadridge Financial 1.6x 1.9x 1.9x 2.0x 2.0x 8.9x 10.0x 9.9x 10.0x 10.0x 5.5% 6.8% 7.3% 7.2% 5.2% 17.8% 18.9% 19.1% 19.6% 20.4%

Brocade Communications Systems 1.4x 1.5x 1.7x 1.6x 1.6x 6.2x 6.6x 7.1x 6.1x 6.1x 1.5% -0.7% -3.0% -2.8% -1.6% 22.2% 23.3% 24.4% 25.5% 26.2%

BSQUARE 0.1x 0.2x 0.2x 0.2x 0.2x 12.9x - - - 75.1x -3.5% -6.9% -9.2% -2.8% 1.2% 1.0% -1.8% -2.0% -1.3% 0.3%

CA Technologies 2.7x 3.0x 3.0x 2.6x 2.5x 8.1x 8.8x 8.8x 8.1x 7.9x -4.9% -4.2% -3.5% -2.1% -1.6% 33.8% 34.3% 33.9% 32.0% 31.7%

Cadence Design Systems 2.8x 2.5x 2.7x 2.8x 3.2x 12.3x 11.9x 13.0x 15.0x 16.8x 12.7% 10.1% 10.1% 7.1% 7.1% 22.4% 20.9% 20.9% 19.0% 19.0%

Cerner 5.9x 6.5x 6.6x 5.6x 6.0x 20.4x 24.9x 25.3x 21.5x 22.9x 12.3% 8.8% 8.8% 13.4% 13.4% 28.8% 26.2% 26.2% 26.2% 26.2%

Check Point Software Tech 7.2x 7.7x 8.3x 8.0x 8.2x 13.0x 13.8x 15.0x 14.6x 15.0x 4.4% 3.4% 3.8% 4.5% 5.3% 55.8% 55.8% 55.4% 55.1% 54.7%

Cimatron 1.3x 1.4x 1.8x 1.2x 1.1x 8.9x 9.0x 12.0x 8.2x 7.0x 1.6% 4.0% 4.6% 5.8% 6.4% 14.4% 15.1% 14.7% 15.0% 15.2%

Cisco Systems 2.0x 1.8x 1.8x 2.0x 2.1x 7.3x 6.1x 6.2x 7.0x 7.7x 5.5% 4.6% 1.3% -1.4% -3.0% 27.9% 28.8% 28.5% 28.7% 26.8%

Citrix Systems 4.6x 3.6x 3.5x 3.2x 3.9x 20.8x 16.5x 16.0x 14.1x 16.4x 16.5% 15.8% 12.8% 12.2% 9.4% 21.9% 21.9% 22.2% 22.7% 23.8%

ClickSoftware Technologies Ltd 1.6x 1.7x 2.4x 2.2x 1.9x 26.2x - - - - 14.7% 5.5% 3.1% 4.2% 9.1% 6.1% -0.7% -3.0% -4.5% -3.0%

CommVault Systems 6.7x 5.8x 4.9x 3.2x 3.2x 38.4x 32.8x 26.9x 17.5x 18.7x 21.7% 21.4% 20.4% 18.2% 16.5% 17.6% 17.6% 18.2% 18.2% 17.1%

Computer Programs and Sys 3.1x 3.4x 3.5x 3.3x 3.3x 12.5x 13.2x 13.0x 12.1x 11.9x 12.3% 11.2% 9.6% 8.0% 3.7% 24.9% 25.3% 26.7% 27.3% 27.9%

Compuware 3.4x 3.4x 3.3x 3.0x 2.5x 25.8x 25.0x 26.6x 22.3x 21.3x -33.5% -30.0% -31.1% -0.4% 6.9% 13.3% 13.7% 12.5% 13.2% 12.0%

Constellation 3.5x 3.6x 3.9x 3.9x 3.8x 24.8x 25.7x 30.3x 34.5x 38.8x 29.4% 36.6% 35.9% 41.7% 40.8% 13.9% 13.9% 12.8% 11.2% 9.8%

CSG Systems International 1.2x 1.4x 1.4x 1.3x 1.3x 6.8x 8.0x 8.0x 7.8x 8.3x 2.1% 0.6% -1.2% 0.3% -0.2% 17.6% 17.1% 16.8% 16.2% 16.0%

Cyan 3.3x 1.1x 0.9x 1.3x 1.4x - - - - - - 58.4% 21.6% 1.2% -12.5% -17.1% -20.7% -29.9% -40.8% -49.9%

Cyberark Software - - - - 10.7x - - - - 84.6x 29.8% 29.8% 40.1% - - 16.9% 16.9% 14.4% 13.2% 12.6%

SEG Software Index

EV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin



56

Company


Cyren 2.4x 2.3x 3.0x 2.6x 2.3x - - - - - 21.2% 33.4% 34.9% 25.0% 15.2% -2.3% -2.1% -7.7% -10.6% -13.7%

Dassault Systèmes 5.3x 4.6x 4.4x 4.8x 5.3x 17.2x 14.8x 13.9x 15.7x 18.6x 8.4% 4.4% 1.9% 1.6% 2.3% 31.0% 30.9% 31.5% 30.3% 28.6%

DST Systems 1.5x 1.7x 1.7x 1.6x 1.6x 10.1x 10.7x 10.6x 9.9x 9.9x 5.2% 4.3% 3.2% 2.1% 2.0% 14.8% 15.4% 16.2% 16.0% 15.8%

Electronic Arts 1.9x 1.7x 1.9x 2.5x 2.5x 21.1x 14.9x 31.6x 36.1x 26.6x -7.5% -7.8% -7.5% -5.8% 1.3% 9.1% 11.7% 6.1% 6.9% 9.5%

EMC 2.3x 2.1x 2.2x 2.3x 2.5x 9.7x 8.8x 9.1x 9.5x 10.8x 6.4% 6.2% 6.9% 5.9% 5.7% 23.9% 23.8% 24.2% 23.7% 23.1%

EPIQ Systems 1.9x 2.0x 1.8x 1.7x 1.8x 9.5x 10.7x 10.6x 11.0x 13.3x 22.2% 24.9% 27.2% 23.9% 21.7% 19.9% 18.7% 16.6% 15.1% 13.2%

Evertec 7.6x 7.0x 7.4x 7.2x 6.9x 20.7x 18.6x 19.0x 18.0x 16.5x 5.4% 5.5% 4.6% 3.1% 2.2% 36.7% 37.9% 39.0% 40.0% 41.7%

Evolving Systems 3.1x 4.0x 3.6x 3.3x 3.7x 11.6x 15.0x 15.3x 15.4x 14.9x 20.2% 4.4% -4.4% -7.4% 3.9% 27.0% 26.5% 23.8% 21.4% 24.6%

F5 Networks 4.3x 4.1x 4.9x 4.6x 4.8x 13.8x 12.9x 16.1x 15.1x 15.7x 9.0% 7.6% 7.2% 11.3% 14.7% 31.2% 31.6% 30.8% 30.7% 30.8%

Fair Isaac 3.0x 3.2x 3.1x 3.1x 3.1x 11.4x 12.1x 11.9x 11.9x 11.8x 13.6% 9.9% 6.0% 3.9% 2.5% 26.1% 26.7% 25.9% 26.4% 26.0%

FalconStor Software 0.4x 0.7x 0.9x 1.0x 0.8x - - - - - -14.1% -15.2% -22.2% -22.4% -23.5% -14.5% -11.5% -12.4% -10.7% -9.2%

Fidessa 2.7x 2.6x 3.1x 3.0x 2.7x 13.5x 13.4x 15.9x 15.6x 14.6x -2.1% -1.0% 0.1% 0.1% 0.1% 19.7% 19.6% 19.4% 19.1% 18.8%

Fiserv 3.6x 3.7x 3.8x 3.8x 3.9x 12.3x 12.7x 13.1x 13.0x 13.3x 4.4% 6.5% 8.5% 9.0% 7.6% 29.0% 29.0% 28.9% 29.1% 29.3%

Fortinet 4.9x 4.6x 5.0x 4.7x 5.2x 27.4x 28.0x 35.6x 35.9x 41.9x 18.0% 17.0% 15.3% 17.4% 20.0% 18.0% 16.4% 14.1% 13.1% 12.5%

GameLoft SA 2.1x 2.6x 2.4x 2.2x 1.5x 14.0x 16.6x 15.7x 16.7x 13.7x 21.8% 16.6% 12.0% 8.7% 5.7% 15.0% 15.5% 15.6% 13.4% 11.3%

Gigamon 8.2x 5.7x 6.0x 2.7x 1.5x - - - - - 41.8% 45.1% 45.1% 28.4% 28.4% -4.6% -19.5% -19.5% -22.2% -22.2%

Glu Mobile 1.5x 2.5x 3.3x 2.4x 3.1x - - - - - 6.0% -7.4% -2.4% 18.2% 40.0% -12.2% -17.3% -13.2% -6.0% -2.4%

Gree 1.1x 1.1x 1.6x 1.3x 1.1x 3.1x 3.4x 5.0x 3.9x 3.4x -3.8% -9.7% -12.7% -12.4% -17.5% 36.1% 33.5% 31.6% 34.2% 33.5%

GSE Systems 0.2x 0.2x 0.3x 0.3x 0.2x - - - - - -9.3% -12.1% -9.0% -14.3% -16.2% -0.2% -5.0% -6.8% -8.9% -10.4%

Guidance Software 1.8x 2.0x 2.6x 2.3x 1.9x - - - - - 10.9% -3.5% -14.6% -16.4% -14.1% -2.3% -7.9% -12.3% -10.9% -9.2%

Guidewire Software 8.0x 9.0x 9.0x 6.7x 7.3x 70.0x 805.5x - - 107.4x 29.6% 25.1% 21.2% 21.2% 16.5% 11.4% 1.1% -1.1% -0.7% 6.8%

Hewlett Packard 0.6x 0.5x 0.6x 0.6x 0.7x 4.6x 4.7x 5.0x 5.4x 5.6x -7.7% -6.7% -5.6% -3.2% -0.8% 12.0% 11.6% 11.8% 11.7% 11.8%

IBM 2.3x 2.2x 2.3x 2.3x 2.3x 8.9x 8.5x 9.0x 8.9x 9.0x -3.5% -3.2% -4.6% -4.3% -4.0% 25.6% 25.6% 25.1% 25.4% 25.6%

iDream Sky Technologies - - - - 12.8x - - - - 61.7x - - 1172.4% - - -39.7% -39.7% 15.3% 20.8% 20.8%

Imperva 9.0x 7.3x 9.7x 3.4x 4.3x - - - - - 32.5% 32.5% 32.2% 26.4% 25.2% -10.1% -10.9% -16.5% -23.5% -28.7%

Informatica 4.1x 4.0x 3.9x 3.4x 2.9x 24.1x 21.2x 22.6x 18.9x 16.0x 6.5% 12.8% 16.8% 17.7% 16.6% 16.9% 18.7% 17.3% 17.9% 18.4%

Intuit 4.2x 4.6x 5.1x 4.6x 4.8x 12.2x 13.6x 16.3x 13.6x 14.6x 9.5% 11.5% 12.2% 15.1% 8.0% 34.7% 34.0% 31.4% 33.9% 33.0%

Jack Henry & Associates 3.7x 4.0x 4.1x 4.0x 4.0x 11.6x 12.4x 11.9x 11.8x 11.6x 10.0% 9.9% 9.8% 9.1% 7.1% 32.2% 32.5% 34.0% 34.1% 34.5%

Juniper Networks 1.9x 1.9x 2.4x 2.1x 1.9x 12.4x 11.6x 14.3x 12.4x 11.0x 3.1% 4.4% 7.0% 8.8% 8.7% 15.7% 16.0% 17.0% 17.0% 17.6%

King Digital Entertainment - - 3.0x 2.2x 1.5x - - 7.7x 6.0x 4.1x - - 1046.1% 555.3% 213.8% 30.6% 35.9% 38.2% 35.8% 36.3%

Konami 1.3x 1.5x 1.5x 1.5x 1.4x 10.3x 13.5x 13.3x 17.5x 12.3x -14.4% -12.9% -4.1% -3.7% -0.8% 12.8% 11.0% 11.3% 8.3% 11.6%

Magic Software Enterprises 1.5x 1.5x 2.0x 1.8x 1.5x 7.9x 7.5x 10.3x 9.2x 7.7x 15.1% 15.2% 14.7% 17.5% 16.0% 18.4% 19.5% 19.1% 19.2% 19.2%

Manhattan Associates 4.1x 5.0x 6.0x 5.5x 4.9x 17.4x 20.0x 23.1x 20.2x 18.0x 10.2% 10.4% 10.2% 13.1% 15.7% 23.7% 25.3% 25.8% 27.2% 27.4%

Mavenir Systems - 3.4x 4.0x 3.1x 2.9x - - - - - - 12.0% 37.2% 41.0% 40.3% -10.3% -7.3% -3.7% -3.4% -4.1%

MedAssets 3.3x 3.2x 3.2x 3.2x 3.1x 10.6x 10.4x 10.4x 10.9x 10.6x 9.4% 6.4% 6.3% 2.3% 1.8% 31.5% 30.7% 30.6% 29.8% 29.6%

Mentor Graphics 2.2x 2.4x 2.2x 2.0x 2.1x 12.4x 13.3x 10.4x 10.2x 11.1x 1.9% 0.8% 6.2% 10.7% 10.1% 18.0% 17.8% 20.7% 20.0% 19.1%

Merge Healthcare 2.0x 1.9x 1.9x 1.9x 2.0x 25.0x 27.6x 17.2x 16.7x 15.2x -0.9% -2.3% -6.9% -13.0% -12.3% 8.1% 6.7% 11.1% 11.6% 13.4%

SEG Software Index




57

Company


Microsoft 2.7x 3.0x 3.0x 3.3x 3.5x 6.9x 7.6x 7.7x 8.4x 9.6x 5.6% 11.1% 14.4% 9.6% 11.5% 39.6% 39.9% 39.0% 38.5% 37.0%

MicroStrategy 1.4x 1.8x 1.8x 1.9x 2.1x 25.5x 30.8x 26.1x 27.0x 40.3x -2.7% 4.4% 1.8% 4.7% 4.9% 5.4% 5.8% 7.0% 7.0% 5.1%

Millennial Media 2.4x 2.0x 2.5x 1.3x 0.6x - - 564.3x - - 60.3% 42.9% 45.9% 45.4% 38.2% -1.0% -1.3% 0.4% -1.8% -4.7%

MIND C.T.I. 0.8x 0.9x 1.2x 1.2x 1.8x 4.4x 6.1x 9.0x 6.8x 8.4x -9.4% -10.6% -8.6% 1.8% 16.7% 18.2% 15.3% 13.0% 17.3% 21.1%

MobileIron - - - 6.3x 5.3x - - - - - 195.1% 195.1% 158.2% - - -113.8% -113.8% -24.5% -33.8% -40.7%

Model N 3.0x 1.0x 1.7x 1.5x 1.5x 41.3x 27.0x 79.5x - - - 20.9% 14.2% 4.7% -8.3% 7.3% 3.9% 2.1% -1.9% -11.6%

Monotype Imaging Holdings 5.8x 6.3x 6.4x 5.7x 6.0x 16.0x 17.9x 18.2x 16.5x 17.8x 18.4% 14.1% 11.2% 8.3% 9.0% 36.0% 35.1% 34.9% 34.2% 34.0%

MSCI 5.4x 5.8x 5.4x 5.2x 5.1x 11.5x 12.6x 12.5x 12.3x 12.4x 1.3% 2.6% 9.0% 12.3% 16.3% 46.4% 46.2% 43.6% 42.5% 41.2%

Myriad Group AG 3.0x 3.6x 3.9x 3.3x 6.3x - - - - - 3.0% -10.8% -23.3% -20.4% -17.3% -13.8% -17.0% -16.0% -11.4% -6.8%

NetApp 1.6x 1.5x 1.5x 1.2x 1.5x 11.4x 10.2x 9.8x 7.6x 8.9x 3.0% 2.5% 1.2% -0.1% -1.7% 13.9% 14.6% 15.2% 16.2% 16.4%

Netscout Systems 2.6x 2.9x 3.5x 3.6x 3.9x 11.2x 13.2x 14.9x 15.2x 16.0x 10.6% 9.0% 11.8% 13.1% 18.7% 23.2% 22.1% 23.7% 23.6% 24.6%

NetSol Technologies 1.2x 1.2x 1.3x 1.1x 1.1x 3.0x 2.7x 3.8x 7.4x - 19.9% 22.6% 2.3% -17.9% -21.7% 41.8% 43.9% 33.4% 15.2% -8.9%

NeuStar 4.2x 3.8x 2.9x 2.2x 2.2x 9.9x 9.0x 7.2x 5.7x 6.0x 17.7% 11.0% 8.5% 7.9% 8.2% 42.0% 42.0% 39.9% 38.4% 37.6%

NICE Systems Ltd 2.3x 2.4x 2.4x 2.3x 2.2x 12.7x 13.8x 13.5x 13.2x 13.3x 8.4% 7.2% 8.0% 6.8% 6.8% 17.7% 17.5% 18.0% 17.5% 16.9%

NQ Mobile 5.8x 3.4x 4.1x 2.2x 1.2x 129.9x 115.2x 553.4x 296.0x 166.5x 117.0% 113.0% 114.3% 114.3% 114.3% 4.5% 3.0% 0.7% 0.7% 0.7%

Nuance Communications, Inc. 4.0x 3.4x 3.4x 3.6x 3.7x 26.0x 26.7x 30.4x 35.0x 40.2x 19.5% 12.3% 6.3% 4.1% 2.2% 15.4% 12.9% 11.3% 10.2% 9.1%

Omnicell 2.0x 2.0x 2.3x 2.2x 2.1x 13.8x 14.7x 16.5x 15.4x 14.5x 33.1% 27.3% 21.2% 17.3% 14.4% 14.2% 13.8% 13.8% 14.3% 14.7%

Open Text Corp 3.1x 3.7x 4.4x 4.6x 4.7x 13.3x 15.7x 18.2x 17.9x 17.0x 12.9% 9.3% 7.6% 11.8% 19.2% 23.1% 23.6% 23.9% 25.5% 27.6%

Opera 3.8x 5.5x 5.4x 4.8x 5.0x 13.6x 19.5x 20.8x 19.0x 20.5x 38.0% 36.5% 38.9% 40.7% 39.9% 27.8% 27.9% 26.0% 25.2% 24.5%

Oracle 3.7x 3.8x 4.2x 4.5x 4.3x 8.4x 8.7x 9.6x 10.2x 9.9x 1.2% 0.9% 2.0% 2.9% 3.0% 43.6% 43.5% 43.6% 43.7% 43.7%

Palo Alto Networks 7.6x 6.5x 9.6x 8.7x 10.3x - - - - - 55.3% 54.4% 49.2% 48.1% 51.0% -1.3% -1.5% -3.7% -5.2% -7.5%

Pandora Media 6.3x 8.5x 10.9x 6.7x 6.4x - - - - - 56.0% 53.5% 53.5% - - -7.5% -7.1% -7.1% -1.0% -1.4%

Parametric Technology 2.5x 2.9x 3.3x 3.2x 3.4x 13.4x 13.0x 14.8x 13.6x 14.4x 0.3% 3.3% 3.3% 4.8% 4.8% 18.8% 22.3% 22.3% 23.7% 23.7%

PDF Solutions 5.7x 6.2x 5.7x 4.6x 4.9x 20.6x 20.9x 17.6x 13.1x 13.8x 22.6% 17.8% 13.3% 12.3% 9.5% 27.4% 29.5% 32.6% 34.8% 35.4%

Pegasystems 2.6x 3.2x 3.0x 2.3x 2.6x 18.3x 19.9x 18.5x 14.8x 17.9x 12.2% 15.3% 10.2% 14.2% 16.7% 14.0% 16.2% 15.9% 15.8% 14.4%

Progress Software 3.4x 3.3x 3.1x 2.7x 2.9x 12.5x 11.9x 11.1x 9.2x 9.5x 60.6% 5.2% 1.9% -0.8% -1.2% 26.8% 28.0% 28.3% 29.3% 30.9%

Proofpoint 7.9x 8.1x 9.7x 7.2x 8.2x - - - - - 26.2% 25.3% 29.8% 33.3% 39.0% -12.1% -12.9% -12.2% -13.1% -14.8%

PROS Holdings 6.3x 6.6x 6.7x 4.6x 4.3x 96.1x 100.0x 101.6x 209.1x - 23.6% 24.6% 23.0% 22.3% 22.1% 6.5% 6.7% 6.6% 2.2% -0.6%

QAD 0.5x 0.7x 0.9x 0.9x 0.9x 12.8x 16.5x 16.9x 15.9x 15.5x 1.6% 2.8% 5.6% 9.0% 10.3% 4.2% 4.2% 5.1% 5.7% 5.7%

Qihoo 360 Technology 18.3x 17.8x 17.3x 13.0x 11.1x 82.1x 67.3x 56.7x 43.5x 41.9x 78.1% 91.5% 104.0% 123.6% 121.3% 22.3% 26.4% 30.6% 29.8% 26.6%

Qiwi 4.3x 6.1x 5.1x 4.1x 4.4x 19.7x 27.2x 22.0x 15.8x 16.2x - - 30.9% 30.0% 26.3% 21.9% 22.4% 23.1% 25.6% 27.5%

Qlik Technologies 6.1x 4.6x 4.8x 3.6x 4.3x 475.8x 478.2x 193.7x 306.0x 259.4x 22.8% 24.2% 21.1% 19.5% 18.8% 1.3% 1.0% 2.5% 1.2% 1.7%

Quality Systems 2.5x 2.8x 2.2x 1.9x 1.8x 11.8x 14.1x 13.5x 13.7x 15.6x 0.8% -2.1% -3.7% -3.4% 0.3% 21.3% 19.9% 16.5% 13.9% 11.3%

Radware 3.2x 3.4x 3.4x 3.0x 2.9x 17.0x 21.0x 21.8x 21.0x 21.7x 5.7% 2.9% 2.0% 5.1% 8.4% 18.6% 16.1% 15.4% 14.4% 13.5%

Red Hat 6.2x 5.3x 6.5x 5.4x 6.1x 30.5x 26.0x 32.5x 27.9x 32.5x 16.7% 16.0% 15.5% 15.8% 16.6% 20.2% 20.4% 20.1% 19.2% 18.9%

Redknee Solutions 3.3x 3.6x 2.6x 1.9x 1.3x 46.6x 195.9x 73.8x 33.9x 107.0x 74.4% 149.8% 226.0% 349.5% 156.4% 7.1% 1.8% 3.6% 5.6% 1.2%

Riverbed Technology 2.8x 2.8x 3.2x 3.0x 2.9x 19.6x 21.6x 22.3x 19.8x 17.7x 23.1% 24.0% 24.4% 17.7% 12.9% 14.5% 13.2% 14.2% 15.3% 16.2%

SEG Software Index




58

Company


Saba Software, Inc. 2.3x - - - - - - - - - 7.7% 7.7% 7.7% 7.7% 7.7% -8.7% -8.7% -8.7% -8.7% -8.7%

Sage Group 3.0x 2.9x 3.7x 3.6x 3.4x 10.6x 10.0x 12.5x 12.3x 11.7x 2.8% 2.7% -0.5% -3.7% -3.7% 28.7% 29.0% 29.3% 29.5% 29.5%

SAP 4.2x 4.4x 4.2x 3.9x 4.0x 12.9x 13.2x 12.2x 11.5x 11.7x 9.8% 6.6% 3.6% 2.7% 2.2% 32.4% 33.1% 34.2% 34.4% 34.5%

Sapiens International 1.6x 2.0x 2.2x 2.1x 2.1x 12.1x 16.0x 19.6x 18.3x 17.8x 31.2% 21.5% 18.8% 17.6% 16.6% 13.3% 12.3% 11.3% 11.3% 11.6%

Silver Spring Networks 3.7x 2.8x 2.1x 1.6x 1.5x - - - - - 8.0% 34.5% 66.1% 62.8% 3.5% -27.3% -19.8% -10.8% -7.3% -22.7%

Software AG 2.1x 2.4x 2.4x 2.4x 1.8x 8.2x 9.4x 9.6x 9.6x 7.5x -7.9% -8.1% -7.1% -6.0% -8.2% 26.0% 25.6% 25.0% 24.8% 23.6%

SolarWinds 9.1x 7.9x 9.1x 7.8x 7.9x 19.5x 17.5x 21.9x 20.4x 22.5x 26.8% 24.2% 24.7% 27.0% 29.3% 46.6% 45.4% 41.7% 38.1% 35.2%

Sourcefire 0.9x 0.8x 1.1x 1.0x 1.0x - 33.6x 10.0x 7.7x 8.2x -8.1% 5.6% 25.2% 36.0% 43.9% -7.9% 2.4% 10.6% 13.6% 12.7%

Splunk 20.7x 23.6x 28.6x 15.8x 13.3x - - - - - 54.7% 51.4% 52.1% 51.3% 51.6% -14.5% -16.4% -23.3% -31.3% -40.8%

SS&C 5.6x 5.8x 5.7x 5.7x 5.8x 14.4x 14.7x 14.4x 14.3x 15.0x 70.1% 47.5% 29.1% 14.9% 7.1% 38.8% 39.5% 39.5% 39.6% 39.0%

Stratasys 11.7x 12.9x 10.9x 7.7x 8.3x 69.4x 75.3x 65.5x 49.3x 57.1x 82.4% 113.4% 125.0% 101.2% 88.0% 16.9% 17.1% 16.6% 15.7% 14.6%

Symantec 2.3x 2.1x 1.9x 1.9x 2.2x 8.5x 7.4x 6.5x 6.6x 7.5x 1.8% -0.6% -3.3% -3.3% -3.5% 27.4% 28.5% 29.1% 29.1% 29.0%

Synchronoss Technologies 4.4x 4.0x 3.6x 3.4x 4.2x 21.1x 19.8x 16.0x 14.1x 16.5x 20.3% 23.7% 27.5% 28.5% 27.8% 20.7% 20.2% 22.2% 24.0% 25.7%

Synopsys 2.6x 2.5x 2.7x 2.6x 2.7x 14.3x 13.5x 14.9x 14.6x 15.3x 13.0% 11.7% 8.9% 6.0% 5.8% 18.4% 18.4% 18.3% 17.6% 17.8%

Take-Two Interactive 1.4x 1.5x 0.6x 0.6x 0.7x 22.1x - 3.0x 3.5x 3.5x 57.6% 13.9% 130.9% 93.5% 106.3% 6.2% -2.8% 20.2% 18.4% 19.3%

Tangoe 3.8x 3.5x 3.5x 2.8x 2.5x 42.3x 38.9x 40.8x 34.6x 34.2x 38.1% 30.8% 22.3% 17.7% 14.4% 8.9% 9.0% 8.7% 8.1% 7.2%

TeleCommunication Systems 0.5x 0.6x 0.6x 0.8x 0.7x 6.7x 7.0x 10.2x 12.1x 9.9x 2.5% -12.6% -25.7% -26.9% -24.8% 8.0% 7.9% 5.9% 6.3% 7.4%

TeleNav 0.2x 0.4x 0.3x 0.5x 0.6x 2.5x 7.6x 91.8x - - -6.7% -0.9% -6.2% -16.9% -21.6% 7.7% 5.4% 0.4% -8.6% -15.7%

Teradata 3.4x 2.5x 2.5x 2.3x 2.2x 15.0x 11.3x 11.0x 9.5x 9.5x 3.6% 2.5% 1.0% 3.6% 3.6% 22.8% 22.3% 23.1% 23.7% 23.2%

The Descartes Systems Group 4.9x 5.4x 5.6x 5.4x 6.1x 17.2x 19.1x 19.9x 19.0x 21.3x 17.1% 18.0% 19.2% 20.6% 17.2% 28.4% 28.2% 28.1% 28.2% 28.7%

TIBCO Software 3.4x 3.4x 3.0x 2.8x 3.2x 18.5x 18.7x 16.4x 15.3x 20.2x 3.3% 4.4% 4.7% 5.4% 2.4% 18.6% 18.1% 18.5% 18.0% 15.6%

Trend Micro 3.3x 3.5x 2.9x 3.0x 3.2x 9.9x 10.3x 8.6x 8.7x 9.0x 7.7% 11.3% 15.4% 13.5% 9.8% 33.0% 33.7% 33.9% 34.7% 35.1%

Tyler Technologies 6.2x 7.8x 7.3x 5.9x 6.3x 32.0x 41.3x 38.5x 30.2x 30.8x 16.4% 14.6% 14.7% 15.2% 17.2% 19.3% 19.0% 18.9% 19.5% 20.5%

Ubisoft Entertainment 0.8x 0.8x 1.3x 1.6x 1.3x 2.2x 2.2x 3.6x 4.9x 4.0x 17.3% 16.3% -3.0% -19.8% -19.8% 37.3% 37.7% 35.6% 32.9% 32.9%

Varonis Systems - - 13.8x 6.1x 4.9x - - - - - - - 39.7% 43.7% 38.0% -3.8% -6.5% -6.8% -11.1% -14.0%

VASCO Data Security 1.5x 1.4x 1.3x 2.0x 2.6x 14.0x 15.0x 12.7x 18.6x 19.5x -12.5% -8.0% 0.7% 0.9% 14.3% 11.1% 9.1% 10.6% 10.9% 13.3%

Verint Systems Inc 2.6x 2.6x 3.0x 2.8x 3.7x 14.6x 14.4x 16.7x 17.0x 25.5x 4.5% 7.0% 8.1% 13.2% 18.3% 17.8% 18.2% 18.1% 16.5% 14.5%

Verisk 8.1x 8.1x 7.4x 6.7x 6.8x 16.7x 16.8x 16.0x 14.6x 14.9x 3.1% 1.7% 13.3% 13.3% 14.2% 48.5% 48.5% 46.1% 45.6% 45.4%

VMWare 6.4x 5.9x 6.9x 6.8x 6.6x 25.3x 22.5x 24.4x 24.4x 25.2x 16.3% 14.7% 13.1% 13.4% 15.0% 25.2% 26.3% 28.1% 27.8% 26.0%

Zynga 1.2x 2.0x 3.3x 3.0x 2.7x 9.6x 13.7x 39.5x 70.5x - -11.8% -21.3% -31.8% -36.5% -37.6% 12.2% 14.6% 8.4% 4.2% -2.5%


SEG Software Index


THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

59

Billing & Service Management 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 9.9x 9.0x 9.3x 10.1x 9.9x



EBITDA Margin 18.7% 18.6% 18.5% 18.4% 21.1%


TTM Revenue Growth (YoY) 17.7% 4.4% 3.6% 4.8% 8.2%

TTM EBITDA Growth (YoY) 3.9% 3.4% 1.6% 1.7% -3.3%

TTM Earnings Growth (YoY) -16.7% -9.6% -4.8% -9.2% -3.3%

Current Ratio 2.6 2.3 2.4 2.7 2.7

Cash as Percent of Market Cap 17.9% 12.8% 16.1% 15.0% 15.8%

Enterprise Value Growth (YoY) 29.3% 30.7% 27.2% 33.1% 23.2%

Business Intelligence 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 17.7x 18.8x 16.2x 15.1x 16.0x



EBITDA Margin 15.5% 17.1% 16.6% 16.8% 15.0%



TTM EBITDA Growth (YoY) -14.2% -11.0% -0.7% 3.5% 0.7%


Current Ratio 2.0 2.1 2.0 2.0 2.0


Enterprise Value Growth (YoY) 19.4% 29.0% 15.0% 3.3% -13.0%

Development Platforms 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 12.9x 15.4x 13.0x 15.1x 21.3x



EBITDA Margin 18.4% 19.5% 19.1% 19.2% 18.9%


TTM Revenue Growth (YoY) -1.9% -0.6% -3.1% -0.8% 1.2%

TTM EBITDA Growth (YoY) -18.9% -14.2% -1.8% -2.8% -3.3%


Current Ratio 2.0 2.1 1.9 1.7 1.8



Engineering & PLM 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 14.8x 14.8x 14.9x 14.8x 15.4x



EBITDA Margin 18.9% 20.5% 20.8% 19.5% 19.0%



TTM EBITDA Growth (YoY) 4.9% 11.2% 17.6% 7.5% 10.0%

TTM Earnings Growth (YoY) 6.1% 5.0% 11.9% 9.4% 17.7%

Current Ratio 2.1 2.3 2.3 2.2 2.0



Enterprise Resource Planning 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 12.1x 12.5x 12.5x 12.3x 11.7x



EBITDA Margin 28.7% 29.0% 29.3% 29.5% 29.5%



TTM EBITDA Growth (YoY) -2.3% 4.1% 4.2% 4.5% 14.5%

TTM Earnings Growth (YoY) -17.1% -6.8% 0.2% 16.0% 7.7%

Current Ratio 1.1 1.1 1.2 1.2 1.2



Financial & Accounting 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 12.3x 13.6x 15.7x 13.3x 13.5x



EBITDA Margin 26.1% 26.7% 25.9% 25.6% 26.0%





Current Ratio 1.4 1.6 1.3 1.2 1.3



Gaming 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 12.2x 13.5x 11.3x 14.1x 13.0x



EBITDA Margin 13.9% 13.6% 17.9% 15.9% 15.5%


TTM Revenue Growth (YoY) 15.2% 10.7% -3.6% -4.8% 0.2%

TTM EBITDA Growth (YoY) 19.4% 32.1% 5.7% -3.9% -13.9%

TTM Earnings Growth (YoY) 25.3% -17.6% -18.9% -50.8% -15.1%

Current Ratio 2.4 2.0 2.4 3.0 3.2



Healthcare 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 13.2x 14.4x 15.0x 14.6x 14.8x



EBITDA Margin 17.8% 16.9% 15.2% 14.1% 14.1%





Current Ratio 2.0 1.7 1.8 1.6 1.6



IT Conglomerates 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 8.4x 8.5x 9.0x 8.9x 9.6x



EBITDA Margin 32.4% 33.1% 34.2% 34.4% 34.5%





Current Ratio 1.2 1.2 1.3 1.2 1.2



Mobile Solutions/Content 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 13.6x 19.5x 39.5x 19.0x 20.5x



EBITDA Margin 7.7% 5.4% 5.9% 4.2% 0.7%

Net Income Margin 2.3% 1.6% -1.4% -2.7% -3.1%


TTM EBITDA Growth (YoY) 0.0% 0.0% -39.5% 0.1% 0.1%


Current Ratio 2.1 2.2 2.6 2.9 2.8



Networking & Network Perf Mgmt 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 17.0x 16.9x 18.9x 20.4x 19.5x



EBITDA Margin 12.4% 8.1% 7.1% 7.8% 8.2%

Net Income Margin -3.2% -2.8% -1.7% -0.3% 1.4%


TTM EBITDA Growth (YoY) -6.4% -25.0% -11.6% -8.8% 14.8%

TTM Earnings Growth (YoY) 10.0% 6.9% -0.8% 3.3% 9.7%

Current Ratio 2.1 2.3 2.6 2.7 2.7



Security 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 11.4x 13.8x 10.0x 11.6x 15.0x



EBITDA Margin 11.1% 2.4% 10.6% 10.9% 12.5%




TTM Earnings Growth (YoY) -0.6% 4.4% 5.3% 0.9% 26.3%

Current Ratio 1.4 1.5 1.7 1.8 1.9




THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

60

Storage, Data Mgmt & Integration 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 10.6x 9.5x 9.4x 8.8x 9.9x



EBITDA Margin 17.6% 18.1% 18.2% 18.0% 17.1%





Current Ratio 2.4 2.5 2.6 2.4 2.3



Systems Management 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 20.1x 17.0x 18.9x 17.8x 19.4x



EBITDA Margin 24.2% 24.2% 25.9% 25.7% 25.3%





Current Ratio 1.5 1.6 1.3 1.3 1.2


Enterprise Value Growth (YoY) -9.1% -9.1% 11.7% 6.5% 12.3%

Vertical - Finance 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 12.6x 13.0x 13.4x 13.3x 13.5x



EBITDA Margin 25.9% 26.0% 26.7% 26.8% 29.3%





Current Ratio 1.3 1.3 1.3 1.4 1.4



Vertical - Other 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 22.8x 21.8x 19.6x 18.3x 24.3x



EBITDA Margin 13.9% 13.9% 12.8% 11.3% 11.6%





Current Ratio 1.3 1.4 1.6 1.7 1.6




THE SEG SaaS INDEX COMPANIES – KEY METRICS

61

Company


2U - - 6.4x 6.9x 6.6x - - - - - 87.9% - 48.8% - - -40.4% -37.1% -32.8% -32.8% -32.3%

Amber Road - - 7.2x 6.0x 5.6x - - - - - - - 21.1% 24.4% 30.2% -19.5% -21.0% -22.3% -50.5% -41.1%

Athenahealth 8.6x 9.4x 10.7x 7.8x 7.5x 81.2x 88.1x 115.7x 83.9x 82.8x 31.3% 35.4% 40.9% 40.1% 36.0% 10.6% 10.7% 9.2% 9.2% 9.1%

Bazaarvoice 4.4x 3.7x 3.0x 2.9x 3.1x - - - - - 26.5% 18.8% 10.3% 14.5% 14.7% -23.7% -15.4% -12.1% -17.7% -17.4%

Benefitfocus 13.0x 11.9x 14.4x 7.7x 7.6x - - - - - - - 28.2% 29.0% 31.1% -12.5% -17.2% -21.7% -26.0% -30.8%

Callidus Software 3.1x 4.3x 5.2x 4.0x 4.1x - - - - - 12.6% 16.4% 18.3% 19.6% 23.6% -16.3% -10.9% -4.0% -1.7% -0.2%

Castlight Health - - 183.9x 64.0x 36.6x - - - - - 121.5% - 212.3% - - -840.2% -579.4% -475.6% -382.4% -295.7%

ChannelAdvisors 9.2x 11.5x 13.4x 6.8x 4.4x - - - - - - 26.0% 26.9% 28.5% 28.9% -5.1% -8.3% -15.9% -24.4% -30.4%

Concur 10.3x 9.9x 10.4x 7.6x 8.2x 118.7x 112.5x 167.4x 163.7x 247.8x 21.5% 24.1% 26.8% 30.6% 31.8% 8.6% 8.8% 6.2% 4.7% 3.3%

Constant Contact 1.7x 2.6x 2.6x 2.6x 2.8x 23.3x 30.5x 27.5x 25.0x 25.3x 14.8% 13.7% 13.2% 13.7% 14.4% 7.4% 8.5% 9.4% 10.3% 11.0%

Cornerstone OnDemand 17.1x 15.1x 15.6x 10.0x 9.3x - - - - - 60.2% 60.5% 57.0% 55.7% 48.8% -19.9% -17.3% -16.1% -15.5% -16.6%

Covisint 4.9x 4.8x 3.3x 2.1x 1.3x - - - - - 20.8% 20.6% 13.9% 7.1% 0.4% -7.4% -19.4% -27.6% -34.6% -43.2%

Cvent 14.3x 12.0x 12.4x 8.4x 7.2x 178.8x 226.1x 664.9x 303.5x 156.4x - - 33.1% 31.9% 29.6% 8.0% 5.3% 1.9% 2.8% 4.6%

DealerTrack 4.0x 4.0x 4.5x 5.1x 4.6x 28.5x 28.3x 37.5x 45.7x 38.4x 15.1% 20.8% 23.8% 30.8% 46.9% 14.2% 14.1% 12.0% 11.1% 12.0%

Demandware 14.2x 18.0x 21.7x 15.2x 13.6x - - - - - 33.4% 31.7% 30.5% 37.5% 44.5% -13.5% -15.8% -15.6% -14.8% -13.7%

E2open 6.9x 8.4x 9.6x 6.3x 5.3x - - - - - 0.0% -6.6% -4.9% -0.5% 9.2% -16.1% -25.4% -29.4% -29.7% -32.4%

Ebix 2.1x 2.6x 2.9x 3.0x 2.6x 5.4x 6.7x 7.8x 8.1x 6.9x 18.6% 9.8% 2.7% -2.2% -3.5% 39.2% 38.2% 37.1% 36.7% 38.5%

Ellie Mae 5.7x 5.5x 5.4x 5.2x 6.5x 24.2x 24.8x 27.6x 31.7x 38.7x 57.2% 41.2% 26.2% 16.1% 10.6% 23.6% 22.1% 19.5% 16.3% 16.7%

FireEye 39.3x 32.7x 55.6x 23.6x 16.3x - - - - - - - 93.9% 111.5% 132.9% -61.9% -79.2% -88.4% -100.5% -103.6%

Fleetmatics 8.9x 7.6x 7.3x 5.4x 5.2x 36.8x 29.3x 29.0x 22.4x 23.8x 38.7% 38.8% 39.2% 38.3% 35.7% 24.1% 26.0% 25.3% 24.0% 21.9%

Halogen Software 5.7x 4.7x 4.4x 2.5x 2.4x - - - - - - - 26.3% 22.4% 21.3% -9.1% -8.8% -7.4% -8.9% -11.7%

inContact 3.4x 3.0x 3.5x 3.4x 3.6x 243.5x 1078.5x - - - 24.9% 22.1% 17.9% 16.4% 19.9% 1.4% 0.3% -1.4% -1.2% -2.4%

IntraLinks Holdings 2.1x 2.5x 2.5x 2.1x 2.0x 27.1x - 46.1x 44.2x 56.0x 6.2% 8.0% 8.2% 8.1% 8.7% 7.6% -0.1% 5.5% 4.7% 3.6%

J2 Global 4.9x 4.6x 4.3x 4.2x 4.4x 11.0x 11.0x 10.5x 9.9x 10.5x 29.7% 36.8% 40.2% 35.9% 21.0% 44.5% 41.7% 41.3% 42.2% 41.5%

Jive Software 5.9x 4.7x 3.5x 3.0x 2.5x - - - - - 36.5% 34.1% 28.2% 25.2% 23.4% -37.3% -39.2% -41.7% -39.6% -35.3%

Liquid Holdings Group - - - - - - - - - - - - 137.4% 14.1% -10.9% - - - - -

LivePerson 2.6x 3.1x 3.6x 2.5x 3.2x 36.0x 58.1x 101.1x 69.3x 73.7x 14.9% 14.5% 13.0% 12.3% 13.8% 7.4% 5.4% 3.5% 3.5% 4.3%

Marin Software 4.3x 3.2x 3.1x 2.8x 2.5x - - - - - - 34.5% 29.8% 30.2% 30.5% -41.4% -39.2% -38.3% -33.2% -30.5%

Marketo 15.0x 13.1x 15.2x 8.8x 8.6x - - - - - - - 64.2% 64.5% 63.7% -49.1% -42.8% -42.4% -39.1% -34.4%

Medical Transcript - - - - 3.6x - - - - 56.0x -0.7% - 4.5% - - 8.3% 6.8% 10.5% 8.6% 6.5%

Medidata Solutions 9.0x 11.1x 11.4x 7.4x 8.0x 55.8x 68.2x 99.1x 83.8x 96.9x 24.5% 26.1% 26.8% 25.5% 24.2% 16.1% 16.3% 11.5% 8.9% 8.2%

Netsuite 19.7x 18.6x 18.7x 13.2x 13.1x - - - - - 32.8% 33.5% 34.2% 34.6% 33.4% -8.2% -8.6% -8.9% -8.8% -8.1%

OPOWER - - - 9.1x 7.3x - - - - - - - 71.4% 64.2% 54.4% -11.3% -10.9% -13.1% -16.2% -26.7%

Paylocity Holding - - 13.0x 9.4x 9.0x - - 602.0x 480.7x - 40.3% - - - 40.6% 3.3% 3.2% 2.2% 2.0% -2.4%

Q2 Holdings - - 8.4x 6.7x 6.2x - - - - - 52.3% - 38.4% - - -13.2% -19.5% -22.9% -26.0% -24.8%

Qualys 4.9x 5.7x 7.2x 5.7x 6.0x 39.9x 46.8x 65.4x 50.9x 50.4x 18.9% 18.5% 18.1% 19.3% 20.4% 12.3% 12.3% 11.0% 11.1% 11.8%

Rally Software Development 8.2x 7.3x 5.4x 3.0x 2.2x - - - - - - 33.5% 30.8% 29.7% 20.2% -17.9% -20.9% -21.1% -24.0% -31.3%

TTM Revenue Growth EBITDA Margin

SEG SaaS Index



THE SEG SaaS INDEX COMPANIES – KEY METRICS

62

Company


RealPage 4.4x 5.0x 4.2x 3.8x 3.2x 28.5x 32.2x 28.9x 27.1x 29.6x 20.7% 19.4% 17.0% 15.4% 10.4% 15.6% 15.4% 14.4% 14.0% 10.8%

RingCentral 5.6x 6.7x 7.6x 4.8x 4.2x - - - - - - - 40.1% 38.3% 38.5% -18.1% -16.4% -20.0% -20.2% -20.5%

Salesforce.com 7.4x 9.0x 9.3x 7.8x 7.6x - - - - 11579.1x 31.4% 32.1% 33.5% 35.7% 37.3% -0.5% -0.5% -1.5% -0.7% 0.1%

SciQuest 6.2x 6.8x 7.2x 4.7x 3.4x - - - 280.8x 114.8x 36.7% 37.9% 35.8% 30.6% 25.8% -0.7% -1.9% -0.2% 1.7% 2.9%

Service-now.com 17.7x 18.9x 20.4x 15.2x 15.4x - - - - - 84.5% 80.3% 74.2% 69.3% 65.5% -10.5% -9.7% -10.1% -13.1% -15.5%

SPS Commerce 9.6x 9.8x 9.0x 6.9x 6.6x 111.3x 105.0x 95.2x 72.8x 67.7x 40.2% 40.3% 35.4% 29.9% 24.8% 8.7% 9.4% 9.4% 9.5% 9.7%

Tableau Software 22.2x 18.9x 21.7x 13.5x 12.2x - - 479.2x 231.4x 244.2x - - 82.0% 86.6% 87.8% -2.7% -1.1% 4.5% 5.8% 5.0%

Tangoe 3.8x 3.5x 3.5x 2.8x 2.5x 42.3x 38.9x 40.8x 34.6x 34.2x 38.1% 30.8% 22.3% 17.7% 14.4% 8.9% 9.0% 8.7% 8.1% 7.2%

Textura 23.3x 23.7x 12.7x 8.1x 10.7x - - - - - - 63.9% 77.3% - - -93.0% -86.0% -50.5% -49.3% -23.0%

The Ultimate Software Group 10.5x 10.7x 10.5x 8.1x 8.6x 72.6x 73.7x 73.1x 55.3x 59.6x 24.2% 24.9% 23.5% 23.2% 23.7% 14.4% 14.5% 14.3% 14.6% 14.5%

TrueCar - - - 5.7x 6.7x - - - - - 4.7% - 67.7% - - -75.7% -22.2% -13.1% -12.3% -17.6%

Veeva Systems - 24.8x 17.9x 10.3x 10.8x - 119.7x 92.3x 52.7x 52.8x - - 62.2% 58.3% 54.9% 22.0% 20.7% 19.4% 19.5% 20.4%

Workday 33.8x 32.2x 34.0x 24.3x 23.6x - - - - - 77.4% 73.6% 71.4% 74.1% 74.4% -28.4% -26.0% -25.3% -24.6% -25.2%

Zendesk - - - 14.1x 15.1x - - - - - - - 88.5% - - -60.3% -60.3% -26.2% -26.6% -38.2%

Zix 5.4x 5.2x 5.2x 3.7x 3.9x 33.2x 28.2x 23.3x 15.1x 16.4x 15.5% 14.4% 11.0% 8.3% 6.5% 16.2% 18.5% 22.4% 24.5% 23.5%

SEG SaaS Index



THE SEG SaaS INDEX METRICS BY PRODUCT CATEGORY

63

CRM & Marketing 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 36.0x 58.1x 101.1x 69.3x 115.1x



EBITDA Margin -12.1% -8.0% -6.8% -9.2% -8.6%

Net Income Margin -24.0% -22.5% -18.5% -19.5% -20.7%



TTM Earnings Growth (YoY) -69.4% -63.7% -42.6% -25.5% 16.5%

Current Ratio 2.3 2.6 2.3 2.4 2.3


Enterprise Value Growth (YoY) -9.1% 22.5% 27.8% 18.3% 0.0%

ERP & Supply Chain 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 74.1x 67.2x 62.1x 72.8x 67.7x



EBITDA Margin -8.2% -8.6% -8.9% -8.8% -8.1%





Current Ratio 2.5 2.5 2.1 2.1 2.1



Vertically Focused 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 28.5x 32.2x 37.5x 45.7x 45.8x



EBITDA Margin 10.6% 10.7% 10.5% 8.9% 8.2%

Net Income Margin 0.3% -0.9% 0.4% -1.1% -1.7%


TTM EBITDA Growth (YoY) 0.0% 4.9% -11.1% -18.3% -21.6%


Current Ratio 1.6 1.6 1.5 1.8 2.3



Workforce Management 3Q13 4Q13 1Q14 2Q14 3Q14

EV/Revenue 11.8x 11.3x 13.0x 8.1x 8.6x

EV/EBITDA 72.6x 73.7x 337.6x 268.0x 59.6x



EBITDA Margin -12.5% -10.9% -7.4% -8.9% -11.7%



TTM EBITDA Growth (YoY) -6.8% -3.5% 8.5% -10.3% -54.7%


Current Ratio 1.1 2.3 2.0 2.0 1.7



Other SaaS 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 39.9x 42.8x 46.1x 44.2x 50.4x



EBITDA Margin -5.1% -8.3% -10.1% -12.3% -13.7%




TTM Earnings Growth (YoY) -29.0% 76.3% -5.0% -5.6% -11.4%

Current Ratio 1.7 2.7 2.4 2.6 2.7




THE SEG INTERNET INDEX COMPANIES – KEY METRICS

64

Company


1-800-FLOWERS.COM 0.5x 0.5x 0.5x 0.5x 0.5x 8.8x 8.3x 7.6x 8.3x 8.1x 4.0% 4.5% 4.5% 2.8% 2.8% 6.1% 6.2% 6.2% 5.8% 5.8%

58.com - 20.2x 22.2x 18.4x 20.0x - 392.4x 167.8x 119.1x 138.1x - - 67.3% 86.4% 86.7% -6.7% 5.1% 13.2% 15.5% 14.5%

8x8 5.7x 6.5x 6.3x 4.6x 3.8x 43.0x 52.0x 68.6x 69.9x 82.6x 16.5% 17.8% 20.4% 23.9% 27.3% 13.4% 12.5% 9.2% 6.6% 4.6%

Akamai Technologies 5.3x 5.0x 6.2x 5.7x 6.0x 14.7x 14.1x 17.4x 16.0x 17.1x 17.0% 15.2% 14.8% 16.9% 19.9% 36.0% 35.7% 35.3% 35.5% 35.1%

Alibaba - - - - 24.0x - - - - 46.5x 72.4% 72.4% - 52.1% - 44.3% 44.3% 54.0% 53.0% 51.6%

Amazon.com 2.0x 2.3x 2.2x 1.8x 1.8x 45.1x 51.1x 46.0x 36.8x 36.9x 23.0% 22.5% 21.9% 22.1% 22.3% 4.4% 4.5% 4.8% 4.9% 4.9%

Angie's List 6.5x 3.6x 3.2x 2.4x 1.5x - - - - - 67.6% 62.7% 57.7% 50.5% 43.2% -17.5% -13.2% -9.8% -7.3% -8.2%

AOL 1.1x 1.5x 1.5x 1.3x 1.4x 5.9x 7.9x 7.9x 7.1x 7.8x 1.9% 3.3% 5.8% 7.5% 9.9% 18.3% 18.8% 18.8% 18.4% 18.2%

Baidu.com 10.3x 11.2x 10.5x 9.3x 11.2x 20.4x 24.9x 24.3x 22.9x 29.3x 42.2% 40.7% 43.2% 47.7% 52.8% 50.7% 45.0% 43.3% 40.5% 38.4%

Bankrate 4.3x 4.7x 4.0x 3.7x 3.3x 19.8x 21.4x 16.7x 15.6x 14.3x -10.5% -10.3% 0.1% 10.2% 20.4% 21.9% 21.8% 23.8% 23.6% 23.2%

Bitauto Holdings 2.4x 4.8x 5.7x 5.7x 10.7x 13.7x 24.8x 28.3x 27.2x 45.5x 45.6% 41.0% 36.2% 38.9% 43.7% 17.7% 19.5% 20.0% 21.0% 23.5%

BlueNile 1.0x 1.2x 0.8x 0.7x 0.6x 28.0x 32.8x 21.8x 19.2x 17.7x 19.3% 12.5% 12.5% 5.6% 5.6% 3.6% 3.5% 3.5% 3.6% 3.6%

Borderfree - - 4.7x 3.5x 2.8x - - 440.0x 365.7x 264.1x - - 35.7% 20.6% 17.4% 0.8% 0.0% 1.1% 1.0% 1.1%

Brightcove 2.6x 3.5x 2.6x 2.3x 1.5x - - - - - 27.7% 27.2% 24.9% 25.4% 22.8% -8.2% -5.6% -1.7% -0.9% -1.0%

BroadSoft 4.9x 4.0x 4.2x 3.4x 3.2x 53.7x 92.0x 583.3x - 617.5x 9.4% 8.0% 8.3% 10.0% 12.8% 9.2% 4.3% 0.7% -1.7% 0.5%

Carbonite 3.1x 2.6x 2.0x 1.9x 1.9x - - 91.5x 24.2x 26.3x 33.2% 31.4% 27.5% 24.2% 20.8% -3.0% -0.3% 2.2% 7.8% 7.2%

Care.com - - 8.7x 2.9x 1.8x - - - - - 86.5% 68.0% 68.0% - - -36.0% -25.0% -25.0% -32.4% -32.4%

ChangYou.com 2.2x 2.0x 1.9x 1.7x 1.6x 3.5x 3.3x 4.0x 5.7x 9.5x 25.2% 18.7% 18.4% 11.6% 5.3% 61.4% 58.7% 47.6% 29.8% 16.5%

Chegg - 2.8x 1.9x 1.4x 1.7x - 16.2x 17.4x 15.7x 27.5x - - 19.8% 19.1% 16.8% 18.2% 17.4% 10.8% 8.8% 6.3%

Conversant 2.8x 2.3x 3.0x 2.8x 2.8x 8.2x 6.9x 8.2x 8.1x 8.5x 2.6% 24.7% 6.2% 10.7% 6.0% 34.8% 32.7% 36.1% 34.9% 33.3%

Coupons.com - - 11.7x 8.2x 5.0x - - - - - 22.8% - 49.7% - - -47.4% -9.6% -2.1% -4.9% -6.6%

Criteo SA - 3.4x 3.2x 2.3x 2.0x - 99.7x 63.2x 37.9x 26.6x - - 63.3% 61.7% 60.8% 2.3% 3.5% 5.1% 6.2% 7.5%

Ctrip 6.8x 7.3x 6.0x 7.2x 8.2x 41.6x 41.8x 33.5x 48.0x 66.5x 23.6% 26.7% 29.5% 31.7% 34.3% 16.3% 17.4% 17.8% 15.0% 12.3%

DangDang 0.6x 0.5x 0.6x 0.7x 0.7x - - - - 131.9x 29.3% 24.1% 21.8% 23.6% 25.6% -6.4% -5.0% -2.3% -0.8% 0.6%

DemandMedia 1.2x 1.0x 1.0x 0.8x 0.3x 7.0x 6.6x 9.2x 10.1x 6.6x 16.7% 10.8% 3.7% -2.8% -7.6% 17.7% 15.2% 11.4% 8.3% 4.9%

Digital River 0.8x 0.8x 0.8x 0.7x 0.6x 12.0x 15.2x 9.0x 8.4x 6.6x -1.6% 0.6% 5.2% -0.7% -3.3% 7.0% 5.3% 8.3% 7.9% 9.2%

eBay 4.2x 4.0x 4.1x 3.7x 3.7x 14.4x 13.6x 13.8x 12.6x 12.8x 15.4% 15.2% 14.0% 13.9% 13.5% 29.3% 29.5% 29.7% 29.6% 29.2%

eHealth 2.6x 4.2x 4.8x 3.3x 2.1x 22.1x 38.1x 75.0x 140.8x 44.9x 10.2% 11.1% 15.2% 15.7% 14.4% 11.6% 10.9% 6.5% 2.3% 4.6%

Envivio 0.6x 0.8x 1.1x 0.5x 0.2x - - - - - -36.5% -18.1% 10.5% 33.2% 29.9% -43.4% -31.5% -20.8% -19.8% -23.4%

Everyday Health - - 3.0x 4.0x 2.9x - - 43.9x 46.8x 33.0x - - 12.5% 17.1% - 1.0% 3.1% 6.8% 8.5% 8.9%

Expedia 1.5x 1.7x 2.0x 1.9x 2.0x 10.6x 12.4x 14.9x 14.3x 14.0x 19.8% 19.6% 18.4% 17.3% 19.5% 13.7% 13.8% 13.7% 13.2% 14.0%

Facebook 14.0x 16.4x 19.4x 16.3x 18.0x 31.0x 34.5x 38.8x 31.2x 33.2x 41.4% 48.2% 54.7% 62.4% 63.7% 45.2% 47.5% 49.9% 52.1% 54.2%

GeekNet 0.4x 0.6x 0.5x 0.3x 0.2x 61.4x 30.5x 67.1x 69.7x - 19.4% 21.3% 16.3% 16.9% 14.1% 0.7% 2.0% 0.8% 0.4% -1.2%

Giant Interactive - - 119.8x 62.3x 21.9x - - - - - - - - - - - - -576.9% - -

Google 4.7x 5.4x 5.7x 5.2x 5.3x 14.3x 16.4x 19.0x 17.3x 17.8x 25.8% 19.5% 19.2% 18.7% 21.1% 32.6% 32.8% 30.1% 29.8% 29.8%

Groupon 2.2x 2.3x 2.3x 1.2x 1.2x 40.2x 45.5x 41.8x 28.0x 36.5x 17.9% 11.7% 10.2% 14.9% 18.9% 5.5% 5.1% 5.4% 4.3% 3.3%

GrubHub - - - 14.9x 13.2x - - - 64.5x 60.6x 35.8% - 66.6% - - 16.1% 20.1% 21.8% 23.0% 21.8%


SEG Internet Index



65

Company


Harmonic 1.3x 1.3x 1.0x 1.2x 1.0x 26.7x 25.7x 16.0x 20.8x 17.4x -8.5% -8.5% 1.3% 0.8% 0.8% 4.9% 4.9% 6.5% 5.6% 5.6%

HomeAway 7.6x 8.3x 10.0x 7.0x 6.6x 41.3x 46.0x 58.4x 43.1x 40.4x 21.7% 22.6% 23.6% 26.0% 28.8% 18.3% 18.0% 17.1% 16.1% 16.3%

Interactive Intelligence 4.0x 4.1x 4.4x 3.1x 2.5x 57.0x 50.5x 49.4x 49.0x 78.0x 28.5% 32.7% 34.1% 25.8% 17.4% 7.0% 8.1% 8.9% 6.4% 3.3%

InterActiveCorp 1.4x 1.5x 2.0x 1.9x 1.9x 9.1x 8.8x 10.9x 10.7x 11.0x 24.1% 16.4% 7.9% 4.1% -1.4% 15.7% 17.2% 18.0% 17.5% 17.3%

LifeLock 2.8x 3.5x 4.4x 2.6x 2.6x 51.2x 83.9x 59.0x 43.4x 50.0x 41.2% 38.2% 33.7% 31.3% 30.6% 5.6% 4.2% 7.4% 5.9% 5.2%

Limelight Networks 0.5x 0.4x 0.5x 0.6x 0.8x - - - - - 1.7% -1.1% -3.8% -7.1% -7.0% -3.5% -5.0% -5.9% -7.0% -5.6%

LinkedIn 20.3x 17.7x 14.6x 10.5x 12.6x 159.3x 145.7x 133.8x 106.0x 118.1x 71.9% 65.6% 57.2% 51.3% 48.5% 12.8% 12.1% 10.9% 9.9% 10.6%

Liquidity Services 1.8x 1.5x 1.4x 0.8x 0.7x 9.8x 8.3x 7.9x 5.4x 5.7x 15.4% 6.4% 2.9% 1.5% 1.5% 18.8% 18.0% 17.4% 15.0% 13.1%

Mail.ru Group 8.3x 10.2x 9.6x 7.7x 6.1x 19.9x 24.1x 22.2x 17.4x 13.5x 32.2% 30.7% 29.4% 26.8% 24.5% 41.5% 42.4% 43.2% 44.4% 45.5%

MakeMyTrip 1.8x 2.1x 3.6x 3.9x 4.1x - - - - - 15.9% 15.7% 13.2% 11.6% 12.9% -8.4% -9.3% -7.8% -5.1% -3.5%

Marchex 1.6x 1.9x 2.2x 2.4x 1.7x 80.5x 79.5x 53.6x 52.7x 32.1x -4.9% 4.3% 14.9% 27.5% 30.3% 2.0% 2.4% 4.1% 4.6% 5.4%

Mecox Lane 0.3x 0.4x 0.4x 0.4x 0.6x - - - - - -36.7% -38.9% -42.4% -36.9% -36.6% -15.1% -14.7% -21.3% -15.4% -7.0%

Mercadolibre 12.4x 10.9x 8.6x 7.5x 9.2x 35.1x 31.6x 24.5x 21.2x 25.6x 22.1% 24.0% 26.5% 23.6% 21.4% 35.4% 34.3% 35.0% 35.4% 35.9%

Mitel Networks 0.7x 1.1x 2.0x 2.0x 1.6x 6.4x 7.4x 17.0x 17.4x 13.8x - -2.1% - - - 11.6% 32.2% 11.9% 11.6% 11.3%

Monster Worldwide 0.7x 0.8x 1.0x 0.9x 0.9x 4.6x 5.3x 7.3x 7.3x 7.9x -10.1% -10.0% -9.3% -8.6% -6.6% 15.2% 15.4% 13.9% 12.6% 10.9%

NCSoft 3.5x 4.4x 4.7x 4.5x 2.9x 9.5x 12.5x 14.8x 14.6x 9.6x 46.6% 36.3% 0.4% -5.9% -8.4% 36.3% 34.7% 31.8% 30.7% 30.1%

Netease 4.4x 4.3x 4.3x 4.2x 5.1x 9.2x 8.9x 8.8x 8.6x 10.9x 8.8% 12.6% 12.1% 12.2% 14.1% 47.6% 48.7% 49.1% 48.5% 47.0%

Netflix 3.8x 4.7x 5.4x 4.6x 5.4x 87.8x 91.9x 85.6x 61.5x 63.3x 14.1% 17.1% 21.2% 22.8% 24.0% 4.4% 5.1% 6.3% 7.4% 8.5%

Orbitz 1.6x 1.3x 1.4x 1.3x 1.3x 11.0x 9.2x 10.0x 8.7x 8.7x 6.0% 9.5% 8.8% 7.9% 7.3% 14.1% 14.1% 13.7% 14.9% 14.9%

Overstock.com 0.5x 0.4x 0.3x 0.2x 0.2x 21.7x 18.9x 15.6x 12.9x 16.9x 13.9% 16.6% 18.6% 16.1% 14.2% 2.4% 2.4% 1.7% 1.6% 1.3%

Pandora 6.3x 8.5x 10.9x 6.7x 6.4x - - - - - 56.0% 53.5% 53.5% - - -7.5% -7.1% -7.1% -1.0% -1.4%

Perfect World 1.6x 1.2x 1.3x 0.9x 1.3x 7.5x 6.0x 6.1x 4.6x 6.2x -6.0% -0.6% 10.2% 24.5% 30.9% 21.2% 20.3% 20.9% 20.5% 21.0%

PetMed Express 1.1x 1.1x 1.0x 1.0x 1.0x 8.8x 8.7x 7.7x 7.9x 8.1x -0.2% 0.8% 1.4% 2.4% -0.6% 12.6% 12.5% 12.4% 12.5% 12.7%

Polycom 0.8x 0.9x 1.1x 1.1x 1.1x 11.3x 11.1x 12.6x 11.1x 10.6x -5.1% -3.7% -1.7% -2.0% -2.0% 7.4% 8.0% 8.7% 9.7% 10.4%

Priceline 7.6x 8.3x 8.6x 8.2x 7.9x 21.1x 22.2x 22.8x 21.7x 20.7x 22.3% 27.3% 29.1% 29.1% 28.9% 36.1% 37.5% 37.6% 37.6% 38.2%

Qihoo 18.3x 17.8x 17.3x 13.0x 11.1x 82.1x 67.3x 56.7x 43.5x 41.9x 78.1% 91.5% 104.0% 123.6% 121.3% 22.3% 26.4% 30.6% 29.8% 26.6%

QuinStreet 1.2x 1.1x 0.9x 0.7x 0.6x 10.9x 11.0x 9.8x 10.0x 15.1x -17.6% -12.8% -9.5% -7.7% -7.4% 11.0% 10.2% 9.0% 7.3% 3.9%

ReachLocal 0.5x 0.5x 0.4x 0.2x 0.2x 14.6x 14.5x 17.2x 27.5x - 17.5% 15.3% 13.0% 9.4% 5.5% 3.6% 3.6% 2.6% 0.9% -1.5%

Renren 2.3x 2.2x 2.2x 1.7x 1.7x - - - - - 35.8% 20.3% -1.8% -17.1% -40.9% -46.7% -54.1% -58.4% -71.0% -81.4%

Rocket Fuel 11.4x 8.6x 7.5x 3.1x 1.3x - - - - - - - 125.7% 115.9% 97.4% -7.7% -7.7% -4.3% -4.8% -5.5%

Rovi 5.5x 5.7x 5.3x 5.4x 5.2x 20.0x 23.2x 15.7x 15.4x 14.9x -31.1% -32.4% 2.3% 11.9% 19.8% 27.3% 24.4% 33.7% 35.0% 35.1%

SeaChange International 1.7x 2.1x 1.8x 1.4x 1.1x 18.1x 18.5x 32.1x 931.3x - -1.8% -0.4% -6.9% -13.5% -18.6% 9.3% 11.4% 5.6% 0.1% -5.0%

ShoreTel 0.8x 1.3x 1.5x 1.1x 1.0x - 647.7x 46.2x 26.0x 18.5x 27.1% 20.6% 17.0% 9.9% 8.4% -2.2% 0.2% 3.1% 4.4% 5.6%

Shutterfly 2.8x 2.5x 2.1x 1.8x 2.2x 23.9x 22.4x 19.2x 18.0x 22.5x 32.0% 31.1% 22.3% 20.7% 18.4% 11.8% 11.0% 11.0% 9.8% 9.9%

Shutterstock 8.9x 11.0x 11.4x 8.9x 8.7x 40.8x 53.5x 57.4x 48.8x 53.3x 38.4% 39.6% 38.9% 40.4% 40.8% 21.8% 20.6% 20.0% 18.2% 16.4%

SINA 7.8x 7.7x 6.0x 3.6x 2.7x 297.8x 128.9x 68.9x 43.0x 29.3x 14.7% 16.0% 25.7% 29.4% 28.7% 2.6% 6.0% 8.7% 8.5% 9.3%

Sohu.com 1.7x 1.6x 1.7x 1.2x 1.2x 5.8x 5.7x 7.5x 9.2x 18.6x 28.1% 29.6% 31.2% 27.0% 23.4% 30.0% 28.0% 22.4% 13.4% 6.3%


SEG Internet Index



66

Company


Sonus Networks 2.7x 2.2x 2.3x 2.3x 2.8x - - 93.1x 145.2x 176.1x 8.9% 8.9% 12.3% 9.8% 9.8% -3.2% -3.2% 2.5% 1.6% 1.6%

Stamps.com 4.8x 5.1x 4.1x 3.5x 3.6x 18.4x 18.6x 14.4x 12.5x 13.0x 13.5% 11.3% 10.5% 8.0% 6.4% 26.3% 27.3% 28.7% 28.3% 27.7%

Synacor 0.4x 0.3x 0.3x 0.3x 0.3x 6.8x 7.5x 9.7x 24.4x - 1.7% -3.5% -8.3% -10.4% -9.4% 5.3% 4.3% 3.5% 1.2% -0.9%

Tencent Holdings 9.8x 10.8x 12.6x 11.9x 12.9x 26.8x 30.7x 36.8x 35.3x 36.5x 45.1% 40.2% 37.7% 36.6% 36.8% 36.7% 35.3% 34.2% 33.9% 35.4%

The Rubicon Project - - - 5.5x 3.1x - - - - - 54.0% - 46.9% - - 6.6% 1.7% 2.2% -3.1% -8.1%

TheStreet.com 0.4x 0.5x 0.8x 0.5x 0.4x - - - - - -4.5% 4.5% 7.4% 11.4% 11.7% -3.3% -3.5% -0.7% -0.5% -0.2%

Travelzoo 2.4x 1.6x 1.7x 1.4x 1.3x 13.7x 9.1x 10.1x 8.3x 7.7x 2.3% 5.7% 4.7% 1.5% -2.7% 17.4% 17.1% 17.2% 16.8% 16.4%

Tree.Com 1.5x 1.9x 2.0x 1.4x 1.5x 33.1x 36.7x 27.6x 21.3x 19.6x 108.9% 97.6% 79.8% 63.8% 38.3% 4.5% 5.3% 7.1% 6.7% 7.8%

Tremor 3.8x 1.3x 1.0x 0.9x 0.5x - - - - - - - 25.3% 25.9% 22.1% -1.4% -1.9% -5.5% -6.5% -9.5%

TripAdvisor 12.2x 13.0x 13.5x 12.5x 12.8x 31.2x 35.8x 40.9x 38.8x 41.5x 22.8% 23.3% 23.8% 23.0% 24.7% 38.9% 36.2% 32.9% 32.3% 31.0%

Trulia 13.5x 11.6x 8.6x 7.5x 10.1x - - - - - 81.1% 93.3% 111.1% 118.0% 124.7% -0.6% -2.6% -7.1% -10.4% -12.6%

TubeMogul - - - - 3.6x - - - - - 118.1% - 67.5% - - -14.1% -14.0% -10.4% -6.5% -0.8%

Tucows 0.8x 0.9x 1.1x 1.1x 1.2x 15.5x 14.8x 16.4x 15.3x 14.8x 12.2% 13.7% 13.3% 14.7% 15.5% 4.9% 6.4% 6.6% 7.2% 8.0%

Twitter - 45.4x 44.3x 26.0x 26.1x - - - - - - - 109.8% 112.5% 117.3% -3.2% -10.6% -80.0% -76.9% -73.1%

VeriSign 6.8x 7.5x 7.3x 6.4x 6.8x 11.0x 12.0x 12.0x 10.5x 11.1x 13.3% 12.1% 10.5% 8.1% 6.3% 61.9% 62.5% 61.0% 61.0% 61.5%

VistaPrint 1.7x 1.7x 1.5x 1.2x 1.5x 18.3x 17.5x 13.2x 11.1x 11.8x 14.4% 12.4% 9.6% 6.5% 8.8% 9.1% 9.8% 11.5% 11.2% 13.0%

WebMD Health 2.7x 2.8x 3.5x 3.4x 3.7x 28.3x 22.6x 24.5x 20.7x 20.4x -3.4% 2.9% 9.7% 12.8% 12.9% 9.7% 12.2% 14.3% 16.2% 18.0%

Wix.com - 11.6x 12.2x 6.2x 5.0x - - - - - - - 84.2% 88.5% 85.3% -27.1% -28.5% -31.8% -37.2% -40.0%

XO Group 1.9x 2.2x 1.8x 1.7x 1.7x 12.3x 13.4x 13.8x 14.3x 16.4x 3.1% 4.3% 3.6% 4.9% 4.7% 15.9% 16.5% 13.2% 11.7% 10.6%

Xoom 8.4x 7.5x 6.4x 4.8x 4.7x 195.6x 97.2x 69.0x 53.4x 72.6x - 52.9% 52.7% 53.1% 40.4% 4.3% 7.7% 9.3% 8.9% 6.5%

Xunlei - - - 3.8x 2.7x - - - 15.7x 13.6x 71.6% 71.6% 24.2% - - 37.0% 37.0% 26.9% 24.3% 19.8%

Yahoo! 5.5x 7.1x 7.8x 7.1x 7.7x 20.9x 28.7x 35.5x 37.5x 46.0x -3.1% -4.1% -6.1% -4.7% -4.2% 26.4% 24.7% 22.0% 19.0% 16.7%

Yandex 10.4x 11.0x 9.7x 7.9x 7.1x 23.5x 25.7x 23.8x 20.4x 18.8x 37.1% 37.3% 37.3% 37.2% 36.2% 44.2% 42.7% 40.7% 39.0% 37.8%

Yelp 18.2x 21.5x 24.1x 16.1x 16.7x - - 6200.4x 3102.6x 768.2x 66.6% 67.7% 69.4% 68.4% 66.2% -1.1% -0.3% 0.4% 0.5% 2.2%

Youku 8.4x 9.3x 9.2x 6.9x 6.1x 354.3x 173.3x 92.0x 59.3x 55.8x 95.8% 88.1% 68.7% 57.4% 42.0% 2.4% 5.4% 10.0% 11.7% 11.0%

YuMe 2.4x 1.6x 1.1x 0.9x 0.7x 42.1x 32.0x 39.3x 55.0x 93.6x - - 29.5% 31.2% 26.8% 5.8% 5.0% 2.9% 1.6% 0.8%

YY 9.8x 10.2x 11.6x 9.3x 9.7x 46.4x 41.4x 40.1x 30.2x 30.4x 132.1% 121.9% 122.4% 117.8% 113.7% 21.1% 24.5% 28.8% 30.8% 31.9%

Zillow 19.6x 16.0x 15.1x 17.5x 19.7x - - - - - 69.9% 69.5% 69.1% 69.1% 68.6% -1.6% -5.5% -2.8% -2.9% -1.9%

Zynga 1.2x 2.0x 3.3x 3.0x 2.7x 9.6x 13.7x 39.5x 70.5x - -11.8% -21.3% -31.8% -36.5% -37.6% 12.2% 14.6% 8.4% 4.2% -2.5%


SEG Internet Index


THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORY

67

Infrastructure 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 15.5x 16.9x 17.0x 19.1x 17.1x



EBITDA Margin 7.0% 5.8% 6.5% 6.0% 5.1%

Net Income Margin 0.2% -0.8% -1.8% -3.2% -3.6%




Current Ratio 3.1 3.2 2.7 2.4 2.4



Search 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 17.4x 20.6x 21.4x 18.8x 18.3x



EBITDA Margin 38.4% 37.7% 35.4% 34.4% 33.8%





Current Ratio 3.0 3.8 4.2 4.2 4.1



Services 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 23.0x 29.5x 35.7x 24.2x 26.3x



EBITDA Margin 4.5% 5.3% 7.1% 7.3% 6.5%




TTM Earnings Growth (YoY) -40.5% -9.3% -14.8% 159.9% 455.6%

Current Ratio 2.2 1.6 2.1 2.7 2.7



Social 3Q13 4Q13 1Q14 2Q14 3Q14

EV/Revenue 11.9x 16.4x 14.6x 10.5x 12.6x

EV/EBITDA 38.7x 37.9x 40.1x 31.2x 33.2x



EBITDA Margin 12.8% 12.1% 10.9% 9.9% 10.6%





Current Ratio 3.8 4.6 9.7 9.6 6.7


Enterprise Value Growth (YoY) n/a n/a n/a 84.1% 22.1%

Travel 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 21.1x 22.2x 22.8x 21.7x 20.7x



EBITDA Margin 16.8% 17.3% 17.2% 15.6% 15.6%





Current Ratio 1.9 1.7 1.8 1.8 1.7



Ad Tech 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 17.5x 24.9x 23.8x 22.9x 22.7x



EBITDA Margin 6.6% 5.0% 5.1% 6.2% 6.3%




TTM Earnings Growth (YoY) 4.8% -2.5% 0.4% 10.1% 13.6%

Current Ratio 2.1 2.4 2.9 2.5 3.4



Commerce 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 18.4x 18.9x 19.6x 17.4x 25.6x



EBITDA Margin 6.1% 5.3% 8.3% 7.9% 6.3%





Current Ratio 1.6 1.5 1.8 1.8 1.7



Content & Media 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 24.6x 25.7x 30.0x 20.7x 20.4x



EBITDA Margin 15.7% 15.2% 13.2% 11.7% 11.0%




TTM Earnings Growth (YoY) 24.8% 47.2% 4.3% -47.7% -42.2%

Current Ratio 2.1 2.8 2.6 3.2 3.4



Gaming 3Q13 4Q13 1Q14 2Q14 3Q14


EV/EBITDA 9.2x 8.9x 8.8x 9.2x 10.3x



EBITDA Margin 36.3% 34.7% 27.1% 29.8% 21.0%



TTM EBITDA Growth (YoY) 8.8% 15.1% -8.8% -19.3% -14.0%


Current Ratio 2.1 2.0 1.9 2.0 1.8




Select PUBLIC SELLERS

68

Date Buyer Seller

Purchase Price

(mm)

Enterprise Value

(mm) EV / Rev EV / EBITDA

TTM Rev.

Growth

09/18/14 SAP Concur Technologies, Inc. (NasdaqGS:CNQR) $8,468.0 $7,651.6 11.5x 235.8x 31.8%

09/02/14 Thoma Bravo, LLC Compuware Corporation (NasdaqGS:CPWR) $2,366.4 $2,090.9 2.9x 24.5x 5.4%

08/29/14 Omnitracs, LLC XRS Corporation (NasdaqCM:XRSC) $190.6 $177.5 3.4x 28.9x -7.1%

08/29/14 P2 Capital Partners, LLC Epiq Systems, Inc. (NasdaqGS:EPIQ) $993.4 $1,003.4 2.2x 16.4x 21.7%

08/07/14 Yahoo Synergy Marketing, Inc. (JASDAQ:3859) $91.1 $66.2 1.7x 12.0x 11.9%

07/28/14 Zillow, Inc. (NasdaqGS:Z) Trulia, Inc. (NYSE:TRLA) $3,305.4 $3,090.5 14.8x - 124.7%


Select MEGA DEALS

69

Date Buyer SellerPurchase

PriceEnterprise

Value (mm) EV / RevEV /

EBITDATTM Rev. Growth

09/18/14 SAP America, Inc. Concur Technologies, Inc. (NasdaqGS:CNQR) $8,468.0 $7,651.6 11.5x 235.8x 31.8%

09/15/14 Micro Focus International plc (LSE:MCRO) The Attachmate Group, Inc. $2,302.4 $2,302.4 2.5x 13.7x -

09/15/14 Microsoft Corporation (NasdaqGS:MSFT) Mojang AB $2,500.0 $2,500.0 - - -

09/14/14 Cognizant Technology (NasdaqGS:CTSH) TriZetto Corporation $2,700.0 $2,700.0 3.8x - -

09/11/14 Alliance Data Systems Corporation (NYSE:ADS) Conversant, Inc. (NasdaqGS:CNVR) $2,448.9 $2,365.3 4.0x 12.0x 6.0%

09/09/14 Rakuten, Inc. (TSE:4755) Ebates Performance Marketing, Inc. $1,000.0 $1,000.0 6.0x - -

09/02/14 Thoma Bravo, LLC Compuware Corporation (NasdaqGS:CPWR) $2,366.4 $2,090.9 2.9x 24.5x 5.4%

08/29/14 P2 Capital Partners, LLC Epiq Systems, Inc. (NasdaqGS:EPIQ) $993.4 $1,003.4 2.2x 16.4x 21.7%

08/25/14 Amazon.com Inc. (NasdaqGS:AMZN) Twitch Interactive, Inc. $970.0 $970.0 - - -

08/13/14 Intel Corporation (NasdaqGS:INTC) LSI Corporation, Axxia Networking Business Assets $650.0 $650.0 5.8x - -

08/08/14 Gemalto NV (ENXTAM:GTO) SafeNet, Inc. $890.0 $890.0 2.4x 17.5x -

08/05/14 Gannett Co., Inc. (NYSE:GCI) Classified Ventures, LLC $1,827.8 $2,473.5 - - -

08/04/14 Värde Partners Europe Limited Bancopopular-e, S.A. $684.2 $1,341.7 - - -

07/28/14 Zillow, Inc. (NasdaqGS:Z) Trulia, Inc. (NYSE:TRLA) $3,305.4 $3,090.5 14.8x - 124.7%

07/09/14 Teleperformance S.A. (ENXTPA:RCF) Aegis Business Group, Inc. $610.0 $610.0 1.5x - -

07/02/14 Facebook, Inc. (NasdaqGS:FB) LiveRail Inc. $500.0 $500.0 5.0x 33.3x -


MOST ACTIVE BUYERS

70

Buyer Seller Enterprise Value (mm) TTM Revenue (mm) EV / Rev

Ericsson (OM:ERIC B) Apcera, Inc. - - -

Fabrix Systems Ltd. $95.0 - -

MetraTech Corp. - - -

Google Inc. (NasdaqGS:GOOGL) Baarzo, Inc. - - -

drawElements Ltd. - - -

Input Factory Inc. - - -

Jetpac Inc. - - -

Lynx Design, Inc. - - -

Songza Media, Inc. - - -

ZYNC INC. - - -

Intuit Inc. (NasdaqGS:INTU) Itrios LLC - - -

K.D.K. Softwares (India) Pvt. Ltd. - - -

PaySuite Limited - - -

Microsoft Corporation (NasdaqGS:MSFT) InMage Systems, Inc. - - -

Mojang AB $2,500.0 - -

SyntaxTree SARL - - -

Trimble Navigation Limited (NasdaqGS:TRMB) Gehry Technologies, Inc. - - -

Manhattan Software Group Limited - - -

The Omega Group, Inc. - - -

Twitter, Inc. (NYSE:TWTR) CardSpring Inc. - - -

Madbits - - -

Mitro Labs - - -

Yahoo! Inc. (NasdaqGS:YHOO) Bookpad Techsoft India Private Limited - - -

Flurry, Inc. $300.0 $100.0 3.0x

Luminate, Inc. - - -

RayV Inc. - - -

Synergy Marketing, Inc. (JASDAQ:3859) $66.2 $38.7 1.7x


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