1q14 software industry financial report

Q1

2014

Software Equity Group, L.L.C.12220 El Camino RealSuite 320San Diego, CA [email protected](858) 509-2800

The Software Industry Financial Report

2 Q1 2014 Software Industry Financial Report

Copyright © 2014 by Software Equity Group, LLCAll Rights Reserved

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS

About Software Equity GroupLeaders in Software M&A 4Extensive Global Reach 5

Software Industry MacroeconomicsGlobal GDP 7U.S. GDP and Unemployment 8Global IT Spending 9E-Commerce and Digital Advertising Spend 10Stock Market Performance 11

Public Software Financial and Valuation PerformanceThe SEG Software Index 13The SEG Software Index: Financial Performance 14-15The SEG Software Index: Market Multiples 16-17The SEG Software Index by Product Category 18The SEG Software Index by Product Category: Financial Performance 19The SEG Software Index by Product Category: Market Multiples 20

Public SaaS Company Financial and Valuation PerformanceThe SEG SaaS Index 22The SEG SaaS Index: Financial Performance 23-24The SEG SaaS Index: Market Multiples 25-29The SEG SaaS Index by Product Category 30-31The SEG SaaS Index by Product Category: Financial Performance 32The SEG SaaS Index by Product Category: Market Multiples 33

Public Internet Company Financial and Valuation PerformanceThe SEG Internet Index 35The SEG Internet Index: Financial Performance 36-37The SEG Internet Index: Market Multiples 38-39The SEG Internet Index by Product Category 40The SEG Internet Index by Product Category: Financial Performance 41The SEG Internet Index by Product Category: Market Multiples 42



SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS

Software Industry M&A Market UpdateSoftware/SaaS M&A Deal Volume and Spending 44Software M&A Exit Multiples 45Software M&A by Ownership Structure and Size 46Software M&A by Vertical and Horizontal Markets 47Software M&A Deal Volume by Product Category 48Software M&A Exit Valuations by Product Category 49SaaS M&A Deal Volume and Exit Multiples 50SaaS M&A by Product Category 51SaaS M&A 1Q14 Transactions 52-54Internet M&A: Deal Volume and Exit Multiples 55Internet M&A: By Product Category 56

AppendixSEG Software Index Key Metrics 58-61

SEG Software Index Key Metrics by Product Category 62-63SEG SaaS Index Key Metrics 64SEG SaaS Index Key Metrics by Product Category 65 SEG Internet Index Key Metrics 66-68SEG Internet Index Key Metrics by Product Category 691Q14 Select Public Sellers 701Q14 Mega Deals 711Q14 Most Active Buyers 72About Software Equity Group 73

4

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

LEADERS IN SOFTWARE M&A

We Do Deals.



EXTENSIVE GLOBAL REACH

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.

7

SOFTWARE INDUSTRY MACROECONOMICS



GLOBAL GDP

Sources: Worldbank, The Economist and PIMCO

• The latest IMF forecast paints a picture of a steadily improving, but tentative, global economy.

• The IMF’s most recent forecast predicted GDP would grow 3.6% in 2014, a modest improvement over 2013’s 3.0% growth rate. In 2015, global GDP is expected to improve further, growing to 3.9%.

• According to the IMF, median GDP growth in developed nations is expected to reach 2.3% in 2014, an improvement of 1.0% over 2013. Key growth drivers include more government spending and highly favorable monetary policies. In emerging markets, GDP growth is expected to advance from 4.7% in 2013, to 5.0% in 2014, and 5.3% in 2015.

• The IMF acknowledged its forecasts could be imperiled by recent geopolitical events and a growing risk of deflation, particularly in advanced economies.

GDP SizeGlobal GDP (% YoY Change)



U.S. GDP AND UNEMPLOYMENT

• According to February’s Federal Reserve survey of 45 economists, GDP growth in 1Q14 is forecast to be 2.0%. For the year, expectations are the U.S. economy will grow 2.8%, boosted by much stronger growth in the second, third, and fourth quarters.

• Over 40% of the economists surveyed by the Fed predicted the U.S. economy will grow 3.0% or greater. Only three months earlier, only 30% of economists were that optimistic.

• The Labor Department reported the unemployment rate at the end of 1Q14 was 6.7%, unchanged from 4Q13. The unemployment rate remains at its lowest levels since 2008. The labor participation rate showed modest improvement, edging up slightly to 63.2% in March after reaching a 35 year low in December 2013.

-0.7%

1.5%

-2.7%

-5.4%

-6.4%

-0.7%

2.2%

5.0%

3.7%

1.7%2.6%

3.1%

0.4%

2.5%

1.3%

4.1%

2.0%1.3%

3.1%

0.4%

2.5%1.8%

4.1%

2.6% 2.0%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14

GDP % GrowthUnemployment Rate



GLOBAL IT SPENDING

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

• On average, analysts were more bullish in their forecasts for Global IT spending in 2014, predicting IT budget increases will more than double each of the prior two years.

• The average global IT spending increase, as forecast by the several analysts we track, is 4.8% in 2014. That’s a noteworthy increase from their average estimate of 4.0% made at the end of 2013.

• Analysts who raised their earlier forecasts, cited an improving economy and growing demand for mobility, cloud computing solutions and infrastructure. IDC, however, cut its forecast slightly, from 5.0% to 4.6%, citing spending slowdowns in emerging markets and deceleration in the massive growth of smartphones and tablets.

• Forrester forecasts software will account for 26% of all tech spending, leading all other categories. According to Forrester, “Software’s leading position is not 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 app stores.”

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

9.0%

6.0%

-10.0%

8.0%

6.0%

2.0% 2.0%

4.8%

2007 2008 2009 2010 2011 2012 2013 2014 (F)



E-COMMERCE AND DIGITAL ADVERTISING SPEND

Sources: comScore, IAB, IBD

Digital Advertising SpendE-Commerce Spend

• E-commerce retail sales in the U.S. totaled $63.6 billion in 4Q13 (the latest data available), up 13% YoY. The increase marks the seventeenth consecutive quarter of YoY growth, and the thirteenth consecutive quarter of double digit growth.

• The Q4 total for E-Commerce spending accounted for 13% of all discretionary retail dollars spent.

• Mobile commerce accounted for $6.6B, or 10.5% of the 2013 E-Commerce total, according to comScore. In addition, YoY growth in mobile commerce grew 23% in 2013.

• Internet ad revenues surged in 4Q13 (the latest data available) to $12.1 billion, up 17% YoY. For the year, 2013 ad revenues soared to $42.8 billion, a landmark high, and the first time Internet advertising surpassed broadcast television in total ad spend.

• According to eMarketer, mobile ad spending was $18.0 billion in 2013, with Facebook and Google grabbing the majority of mobile ad market growth. Facebook’s advance was especially noteworthy. In 2012, the company accounted for just 5.4% of global ad spending, but its share rocketed to 17.5% in 2013.

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

$0

$2

$4

$6

$8

$10

$12

$14

YoY

Cha

nge

Dig

ital A

dver

tisin

g R

even

ue ($

B)

Digital Advertising Spend ($B) YoY Percent Change

-5%

0%

5%

10%

15%

20%

$0

$10

$20

$30

$40

$50

$60

$70

YoY

Cha

nge

E-C

omm

erce

Spe

ndin

g ($

B)

E-Com m erce Spend ($B) YoY Percent Change



STOCK MARKET PERFORMANCE

• After a five year run up that included stellar returns in 2013, the bull market is showing signs of fatigue. After a very slow start in January, 1Q14 stock market performance across all exchanges and indices was choppy for the remainder of the quarter.

• Q1’s bumpy ride for investors was largely attributable to the Fed’s announced plans for quantitative easing, skyrocketing market multiples, and geopolitical unrest, particularly in Ukraine.

• The S&P posted the best return of the three major stock indices in 1Q14, finishing up 1.3%. The Nasdaq finished close behind, up 0.5%. Surprisingly, in an environment where investors flocked to value stocks, the DOW performed the worst of the three major U.S. stock market indices, closing 1Q14 down 0.72%.

• The most dramatic swing in median stock returns in the first quarter was exhibited in the SEG SaaS Index. In early March, the index peaked with a 9.2% return, only to plunge dramatically the rest of the month, closing 1Q14 down 4.6%. In addition to macro economic concerns, many expressed concerns that SaaS valuations had become too rich. More on the impact to median EV/Revenue multiples later in the report.

• The SEG Software Index, consisting largely of large, mature, and profitable companies held its own in a tough stock market environment, finishing the quarter flat.

(10.0%)

(8.0%)

(6.0%)

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Jan 2014 Feb 2014 Mar 2014

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

13

THE SEG SOFTWARE INDEX

PUBLIC SOFTWARE COMPANY FINANCIAL AND VALUATION PERFORMANCE



THE SEG SOFTWARE INDEX• The SEG Software Index tracks public

software companies which primarily offer on-premise software under a perpetual license with annual M&S.

• The SEG Software Index is currently comprised of 152 public software companies*.

Measure 1Q13 2Q13 3Q13 4Q13 1Q14EV/Revenue 2.9x 2.8x 3.0x 3.2x 3.2xEV/EBITDA 12.4x 12.0x 13.8x 14.6x 15.0xEV/Earnings 23.7x 23.2x 25.9x 26.3x 27.0xGross Profit Margin 66.7% 67.7% 67.9% 68.2% 67.6%EBITDA Margin 18.6% 18.6% 18.6% 18.1% 18.5%Net Income Margin 9.0% 9.2% 8.6% 8.6% 9.1%TTM Revenue Growth 12.8% 10.9% 9.9% 9.2% 8.7%TTM Total Revenue ($M) $452.9 $466.8 $479.0 $499.4 $509.0TTM EBITDA Growth 7.6% 5.6% 6.2% 5.8% 6.1%TTM Total EBITDA ($M) $77.7 $81.9 $91.1 $93.4 $91.8Cash & Eq ($M) $153.9 $169.6 $161.0 $186.6 $191.6Current Ratio 1.9 1.9 2.0 2.0 2.1Debt / Equity Ratio 27.3% 27.0% 24.8% 25.6% 33.4%

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

• On a quarterly basis, median TTM revenue growth in 1Q14 declined for the sixth consecutive quarter, to 8.7%.

• Despite the tepid growth rate, the median TTM revenue of the SEG Software Index reached $509M, the highest in history, and the highest among our three tracking indices.

• More than half of public on-premise software companies reported TTM revenue growth rates of 10% or below in 1Q14.

• Of the 15% of on-premise software providers with TTM revenue growth rates of 30% or more, most were focused on three of the hottest product categories, mobility (NQ Mobile – 114%), security (Palo Alto Networks – 49.2%), and Big Data (Splunk – 52.1%).

• Forecasts for moderately increased IT spending portend well for these on premise providers. We expect median TTM revenue growth to steadily, albeit modestly, improve for the balance of 2014.

Median Revenue Performance - Quarterly TTM Revenue Growth Rate Distribution – 1Q14

0%

2%

4%

6%

8%

10%

12%

14%

$0

$100

$200

$300

$400

$500

$600

1Q13 2Q13 3Q13 4Q13 1Q14

TTM

Rev

enue

Gro

wth

TTM

Tot

al R

even

ue

TTM Total Revenue ($M) TTM Revenue Growth

25%

29%

20%

11%

5%

10%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f Com

pani

es

TTM Revenue Growth



TTM EBITDA Margin Distribution – 1Q14Median EBITDA Margin Performance - Quarterly

• The median EBITDA margin of public on-premise software companies remained relatively steady over the past five quarters, closing 1Q14 at 18.5%.

• Only 5% of on-premise software companies achieved EBITDA margins of 40%+.

• Check Point Software, a security provider, led the pack with an EBITDA margin of 55.4%. Check Point’s extraordinary profitability can be attributed to a strong, well-performing channel that reduces Check Point’s cost of sales. Curiously, for a company in the rapidly evolving security space, Check Point also spends much less on R&D (8% of total revenue) vs. their industry peers (15% of total revenue).

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

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

17%

12%

29%

24%

14%

5%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f Com

pani

es

TTM EBITDA Margin

18.6% 18.6% 18.6% 18.1% 18.5%

1Q13 2Q13 3Q13 4Q13 1Q14

EB

ITD

A M

argi

n



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

• The median EV/Revenue multiple for on-premise software providers was 3.2x in 1Q14, up 10% YoY.

• Despite their unimpressive financial performance, public on-premise software providers closed 1Q14 with trading multiples at or near their seven year peak.

• The higher median EV/Revenue valuations are a reflection of investor’s enthusiasm for technology stocks, which is likely to wane over time, unless revenue growth improves and recurring revenue from subscriptions accelerates.

• The 3.2x median EV/Revenue multiple in 1Q14 marks only the third time since 1Q06 that EV/Revenue multiples surpassed 3.0x.

• 1Q14’s median EV/EBITDA multiple of 15.0x was the highest of any quarter since 4Q07.

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

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

THE SEG SOFTWARE INDEX: MARKET MULTIPLES

2.9x 2.8x 3.0x 3.2x 3.2x

12.4x 12.0x

13.8x14.6x 15.0x

1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue EV/EBITDA

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

1Q13 2Q13 3Q13 4Q13 1Q14

Med

ian

EV

/Rev

enu

e

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

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



EV/Revenue Multiples vs. TTM EBITDA Margins – 1Q14EV/Revenue Multiples vs. TTM Revenue Growth – 1Q14

• The correlation between the public market EV/Revenue multiples and TTM revenue growth rates in 1Q14 was the highest since the recovery began in 2009.

• On-premise software providers with TTM revenue growth rates of 10%+ were rewarded with median EV/Revenue multiples well above the median. On-premise software providers achieving 40%+ revenue growth rates boasted a median 10.9x EV/Revenue multiple, 240% higher than the index median.

• Members of Q1’s 40%+ growth club mostly came from the highest growth sectors of the software ecosystem – business intelligence and security. Select companies included: Tableau Software (82.0% TTM Revenue Growth, 19.8x EV/Revenue); Palo Alto Networks (49.2%, 9.6x); and Splunk (52.1%, 24.9x).

• In a departure from the past several years, the market multiples of on-premise software providers in 1Q14 correlated poorly with their profitability.

• In 1Q14, on-premise software companies with no profits achieved a median EV/Revenue multiple of 3.6x, higher than their peers with EBITDA margins of break even to 40%.

• Investors in 1Q14 did take special note of on-premise providers with EBITDA margins greater than 40%, conferring a median EV/Revenue multiple of 7.7x, or 140% higher than the index median. Select companies included: Verisk (46.1% EBITDA margin, 7.7x EV/Revenue multiple); Ansys (46.8%, 7.4x); Checkpoint Software (55.4%, 8.5x); and Solar Winds (41.7%, 9.1x).

THE SEG SOFTWARE INDEX: MARKET MULTIPLES

2.1x3.1x

3.5x

4.8x 5.1x

10.9x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Med

ian

EV

/Rev

enue

TTM Revenue Growth

3.6x

2.5x 2.4x

3.5x3.0x

7.7x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Med

ian

EV

/Rev

enue

TTM EBITDA Margin



• The SEG Software Index is segmented into 17 product categories.

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

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY

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

Billing & Service Management 2.4x 2.3x 3.1x 3.5x 2.7x 9.3x 8.3x 9.9x 9.0x 9.3x 6.9% 2.2% 17.7% 4.4% 3.6% 22.2% 18.8% 18.7% 18.6% 18.5%

Business Intelligence 3.5x 3.0x 3.3x 3.1x 3.1x 16.0x 16.5x 17.2x 18.4x 17.3x 12.8% 13.1% 14.2% 9.7% 10.2% 10.8% 12.2% 12.6% 11.5% 10.2%

Development Platforms 2.5x 2.6x 2.6x 2.7x 2.7x 9.6x 10.2x 14.4x 11.9x 11.1x 3.0% 0.6% -0.3% 0.1% -0.3% 23.9% 20.3% 20.0% 20.0% 19.6%

Engineering & PLM 2.7x 2.7x 2.8x 2.9x 3.3x 14.8x 14.2x 14.6x 14.2x 14.9x 13.1% 11.7% 8.4% 4.4% 6.2% 20.7% 19.8% 19.9% 20.1% 20.7%

Enterprise Resource Planning 2.9x 3.0x 3.0x 2.9x 3.7x 10.1x 11.4x 12.1x 12.4x 12.7x 2.0% 0.2% 1.6% 2.7% 2.7% 28.5% 28.5% 28.7% 29.0% 29.0%

Financial & Accounting 3.1x 3.3x 3.3x 3.7x 3.7x 10.8x 11.1x 12.2x 13.5x 15.8x 8.6% 6.4% 9.5% 10.7% 8.5% 27.5% 26.6% 26.1% 26.7% 25.9%

Gaming 1.1x 1.3x 1.6x 1.6x 1.7x 7.1x 10.0x 12.1x 14.2x 11.3x 7.4% 15.1% 15.2% 10.7% 3.9% 14.9% 14.8% 14.0% 13.4% 19.0%

Healthcare 2.0x 2.1x 2.4x 2.5x 2.4x 12.5x 12.0x 13.1x 14.4x 15.0x 8.8% 7.6% 7.5% 3.1% 3.0% 18.4% 18.0% 17.9% 16.9% 15.2%

IT Conglomerates 2.5x 2.9x 2.7x 3.0x 3.0x 9.3x 9.0x 8.4x 8.5x 9.0x 0.5% 0.2% 1.2% 0.9% 2.0% 32.1% 33.8% 34.3% 35.0% 34.2%

Mobile Solutions/Content 3.0x 2.8x 3.4x 3.4x 3.6x 18.4x 13.2x 13.6x 19.7x 30.7x 47.2% 26.4% 20.3% 23.7% 24.9% 7.3% 10.2% 8.5% 8.4% 7.2%

Networking & Network Performance Management

2.8x 2.7x 2.8x 2.8x 3.3x 16.6x 17.0x 17.0x 14.9x 16.8x 20.3% 12.9% 7.2% 6.1% 7.2% 12.6% 12.7% 12.7% 7.9% 7.5%

Security 3.3x 3.6x 4.0x 3.5x 5.0x 11.6x 10.8x 13.0x 13.7x 12.7x 23.8% 21.8% 21.2% 18.3% 15.3% 11.5% 11.5% 11.1% 0.5% -3.0%

Storage, Data Management & Integration

2.4x 2.4x 2.7x 3.0x 3.0x 9.3x 9.0x 8.9x 8.6x 9.0x 4.8% 4.1% 3.3% 4.4% 2.0% 21.8% 21.9% 22.2% 23.3% 24.2%

Supply Chain Management & Logistics

3.8x 4.1x 4.5x 5.2x 5.8x 14.7x 15.6x 17.3x 19.4x 21.5x 12.8% 10.7% 13.6% 14.2% 14.7% 19.3% 19.1% 21.4% 24.1% 26.8%

Systems Management 5.6x 5.0x 5.4x 4.4x 5.0x 23.1x 20.9x 19.7x 16.5x 18.9x 17.2% 16.1% 16.4% 15.3% 13.0% 24.3% 23.8% 24.2% 24.2% 25.8%

Vertical - Finance 3.4x 3.8x 3.7x 4.7x 4.5x 10.7x 11.4x 12.6x 12.8x 13.4x 6.7% 7.6% 7.4% 8.1% 8.2% 25.9% 26.3% 26.0% 26.1% 27.0%

Vertical - Other 3.1x 3.4x 3.7x 3.6x 3.2x 21.2x 24.6x 26.0x 30.2x 16.2x 20.6% 21.7% 22.3% 24.6% 21.2% 13.9% 13.5% 13.3% 12.3% 14.6%

Median 2.9x 2.8x 3.0x 3.2x 3.2x 12.4x 12.0x 13.8x 14.6x 15.0x 12.8% 10.9% 9.9% 9.2% 8.7% 18.6% 18.6% 18.6% 18.1% 18.5%

SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin



1Q14 Median YoY Change in Revenue Growth1Q14 Median TTM Revenue Growth

1Q14 Median YoY Change EBITDA Margin1Q14 Median TTM EBITDA Margin

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

(131%)

3.6%

10.2%

(0.5%)

6.2%

2.7%

8.5%

3.9%

3.0%

2.0%

24.9%

7.2%

15.3%

2.0%

14.7%

13.0%

8.2%

21.2%

Billing & Service Management

Business In telligence

Development Platforms

Engineering & PLM

Enterprise Resource Planning

Financial & Accounting

Gaming

Healthcare

IT Cong lomerates

Mobile So lutions/Content

Networking & Network Performance …

Security

Storage, Data Management & In tegration

Supp ly Chain Management & Log istics

Systems Management

Vertical - Finance

Vertical - Other

(47.6%)

(20.2%)

(52.6%)

34.8%

(0.3%)

(47.1%)

(65.3%)

(47.3%)

(64.6%)

(35.6%)

(57.7%)

15.0%

(24.8%)

21.8%

2.6%




Engineering & PLM



Gaming

Healthcare

IT Cong lomerates



Security



Systems Management

Vertical - Finance

Vertical - Other

(16.4%)(5.9%)

(18.1%)0.1% 1.9%

(5.9%)27.5%

(17.8%)6.7%

(2.1%)(40.2%)

11.0% 38.4%

6.1% 4.3% 5.1%

Billing & Service ManagementBusiness In telligence

Development PlatformsEngineering & PLM

Enterprise Resource PlanningFinancial & Accounting

GamingHealthcare

IT Cong lomeratesMobile So lutions/Content

Networking & Network Performance …Security

Storage, Data Management & In tegrationSupp ly Chain Management & Log istics

Systems ManagementVertical - Finance

Vertical - Other

343.5%

18.5%

10.2%

19.6%

20.7%

29.0%

25.9%

19.0%

15.2%

34.2%

7.2%

7.5%

(3.0%)

24.2%

26.8%

25.8%

27.0%

14.6%




Engineering & PLM



Gaming

Healthcare

IT Cong lomerates



Security



Systems Management

Vertical - Finance

Vertical - Other



• In 1Q14, nine product categories achieved median EV/Revenue multiples above the SEG Software Index median of 3.2x, led by Supply Chain Mgmt (5.8x), Systems Management (5.0x) and Security (5.0x).

• The Supply Chain Management product category is attracting renewed investor interest as manufacturers, distributors and large ecommerce retailers seek to address shrinking margins, operational inefficiencies and demanding customers with a new wave of IT solutions.

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

• The Gaming category closed 1Q14 with a median EV/Revenue multiple of 1.7x, the lowest of our 17 product categories, despite its 52% YoY median EV/Revenue growth. Expect gaming multiples to grow further, as gaming providers - caught flat footed by the explosion of mobile and Internet gaming - reposition with online and mobile games suitable for a multi-device world.

• TTM revenue growth rates slowed in 12 of 17 product categories saw in 1Q14. The five categories that proved to be the exceptions with higher YoY growth rates included: ERP, IT Conglomerates, Supply Chain, Vertical – Finance (i.e. software providers providing solutions to the financial services industry exclusively) and Vertical – Other (i.e. software providers focused on a vertical).

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:MARKET MULTIPLES

Median 1Q14 YoY Change in EV/Revenue Multiples1Q14 Median EV/Revenue Multiples

2.7x

3.1x

2.7x

3.3x

3.7x

3.7x

1.7x

2.4x

3.0x

3.6x

3.3x

5.0x

3.0x

5.8x

5.0x

4.5x

3.2x

Billing & Service Managem ent

Business Intelligence

Developm ent Platform s

Engineering & PLM



Gam ing

Healthcare

IT Conglom erates

Mobile Solutions/Content

Networking & Network Perform ance …

Security

Storage, Data Managem ent & Integration

Supply Chain Managem ent & Logistics

System s Managem ent

Vertical - Finance

Vertical - Other

10.1%

(9.1%)

7.3%

21.6%

28.4%

17.0%

52.3%

20.5%

22.6%

18.6%

15.8%

51.2%

23.5%

52.0%

(10.6%)

29.6%

3.0%

Billing & Service Managem ent

Business Intelligence

Developm ent Platform s

Engineering & PLM



Gam ing

Healthcare

IT Conglom erates

Mobile Solutions/Content

Networking & Network Perform ance …

Security

Storage, Data Managem ent & Integration

Supply Chain Managem ent & Logistics

System s Managem ent

Vertical - Finance

Vertical - Other

22

THE SEG SaaS INDEX

PUBLIC SaaS COMPANY FINANCIAL AND VALUATION PERFORMANCE



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

• The SEG SaaS Index is currently comprised of 49 public pure-play SaaS companies*.

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

THE SEG SaaS INDEX

Measure 1Q13 2Q13 3Q13 4Q13 1Q14EV/Revenue 5.4x 5.7x 6.6x 7.6x 8.0xEV/EBITDA 33.6x 30.2x 39.9x 46.8x 55.7xEV/Earnings 84.8x 112.3x 136.1x 81.9x 134.9xGross Profit Margin 69.2% 68.6% 67.7% 67.7% 68.5%EBITDA Margin 0.4% 0.5% -0.6% -1.2% -1.5%Net Income Margin -6.5% -8.6% -9.2% -9.3% -9.3%TTM Revenue Growth 33.0% 31.4% 32.1% 28.5% 28.2%TTM Total Revenue ($M) $112.0 $119.3 $126.5 $137.5 $153.1TTM EBITDA Growth 17.2% 13.1% 15.0% 17.4% 5.4%TTM Total EBITDA ($M) $1.1 -$0.2 -$1.8 -$2.6 -$2.7Cash & Eq ($M) $55.2 $59.9 $73.0 $82.7 $90.2Current Ratio 1.7 1.4 1.7 2.2 2.2Debt / Equity Ratio 7.0% 7.1% 10.3% 12.4% 23.7%

SEG - SaaS: Median Metrics



• The median TTM revenue growth rate for Public SaaS companies in 1Q14 was 28.2%, down from 33.0% in 1Q13. We expect improvement in 2014, thanks to accelerating enterprise adoption of SaaS solutions, suites and platforms, and increased adoption of SaaS among the SMB segment.

• The median TTM revenue of public SaaS companies was $153.3M in 1Q14, a significant increase from just four years ago, when the median was $114.6M. Despite their increased size, TTM revenue growth rates remained in the mid-twenties or higher.

• From the standpoint of size, Salesforce continued to dominate the SaaS Sector 1Q14 with TTM revenue of $4.1B, nearly 7x greater than the next largest Public SaaS company. However, a good number of public SaaS Companies reached critical mass (>$350 million) from a revenue standpoint in 1Q14, a feat made more difficult by a revenue model that typically requires deferring a large percentage of the revenue booking. These $350M+ SaaS providers can now be counted among a wide variety of product categories and industry sectors. Examples include Concur (expense management product category, $586M TTM revenue); Athenahealth (healthcare, $595M); DealerTrack (automotive, $482M); Workday (HCM/Financial, $469M); NetSuite (ERP, $415M); Service-Now (IT automation, $425M); and RealPage (real estate, $377M).

• Medians alone do not capture the standout performances of the most successful SaaS companies. Nearly one in five public SaaS companies grew TTM revenue growth by 50% or more. As yet further testament to the widespread adoption of SaaS, these outperformers come from a variety of categories including HCM, Security, Marketing, and Construction. Select companies include: Workday (71.4%); FireEye (94.0%); Marketo (64.0%); Cornerstone OnDemand (57.0%); and Textura (70.1%).

TTM Revenue Growth Rate Distribution – 1Q14Revenue Performance - Quarterly

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

2%

6%

17%

28%

19%

9%

19%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

% o

f C

ompa

nies

TTM Revenue Growth

25.0%

26.0%

27.0%

28.0%

29.0%

30.0%

31.0%

32.0%

33.0%

34.0%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

1Q13 2Q13 3Q13 4Q13 1Q14

TT

M R

even

ue

Gro

wth

TT

M T

ota

l R

even

ue




• After peaking in 2010, the median EBITDA margin of public SaaS companies has steadily declined, closing 1Q14 at -1.5%.

• Over half (54%) of public SaaS companies are unprofitable, and roughly nine 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 strong correlation between their EV/Revenue multiples and TTM revenue growth rates (see slide 26) is any indication.

• Investors should be circumspect about the GAAP P&L statements of many public SaaS companies which seem to imply they’re suffering significant losses and hemorrhaging cash. In truth, many are not only cash flow positive, but flush with revenue from prepaid subscription fees. But since GAAP requires deferred recognition of most of this revenue, many SaaS providers reported negative operating margins. As example, in its most recent earnings report, Workday reported $56M in net income, yet generated $35M of cash from operations.

TTM EBITDA Margin Distribution – 1Q14Median EBITDA Margin Performance - Quarterly

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

54%

21%

15%

4%6%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

% o

f C

ompa

nies

TTM EBITDA Margin

0.4%0.5%

-0.6%

-1.2%-1.5%

1Q13 2Q13 3Q13 4Q13 1Q14

EB

ITD

A M

argi

n



EV/Revenue Multiple Distribution – 1Q14Median EV/Revenue and EV/EBITDA Multiples - Quarterly

• At the close of 1Q14, the median EV/Revenue multiple for public SaaS companies was 8.0x, up 48% YoY. Although the 48% YoY multiple increase was the highest on record, we expect the decline in the SaaS median TTM revenue growth rate portends a correction to more rational market multiples later this year.

• Public SaaS companies continued to trade at a significant premiums to their on-premise peers (8.0x vs. 3.2x). While public SaaS companies have historically enjoyed trading multiples twice that of their on-premise peers, 1Q14’s differential was exceptional.

• A premium multiple can be largely justified by comparing the relative lifetime value of a SaaS customer vs. an on-premise licensee. A SaaS company’s strong customer retention and gross margins will garner significantly greater cash over time from its average customer than will its on-premise counterpart. On the expense side of the equation, the jury is still out as to whether SaaS companies can achieve levels of profitability on par with their on-premise counterparts, once SaaS demand tapers and current levels of sales & marketing spending become unsustainable.

• In the meantime, investors are placing their bets on the next wave of SaaS category leaders who are positioned to displace incumbent on-premise providers across multiple product categories - just as Salesforce did to Siebel in the CRM category. A whopping 49% of the companies in the SEG SaaS Index achieved a median EV/Revenue multiple of 9x or higher in 1Q14.

THE SEG SaaS INDEX: MARKET MULTIPLES

5.4x 5.7x 6.6x 7.6x 8.0x

33.6x30.2x

39.9x

46.8x

55.7x

1Q13 2Q13 3Q13 4Q13 1Q14


0%2%

9%12%

2%7%

2%

12%

5%

49%

<= 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

ompa

nies

EV/Revenue



EV/Revenue Multiples vs. TTM EBITDA Margins – 1Q14EV/Revenue Multiples vs. TTM Revenue Growth Rates – 1Q14

• In 1Q14, profitable SaaS companies continued to be penalized with lower market multiples, as investors deemed profitability to be an unacceptable tradeoff for accelerated growth.

• As proof, note the very strong correlation between the median TTM revenue growth rate and median market multiple of public SaaS companies. Public SaaS companies that grew TTM revenue in excess of 50% were rewarded with an eye-popping median EV/Revenue multiple of 19.1x in 1Q14.

• Conversely, there was an inverse correlation between EBITDA margins and median EV/Revenue multiples. Unprofitable public SaaS companies boasted a rather remarkable median EV/Revenue multiple of 9.6x in 1Q14, while those with EBITDA margins above 30% had a far more modest median market multiple in 1Q14 of 4.3x EV/Revenue.


0.0x

2.5x4.7x 5.4x

9.2x7.0x

19.1x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

Med

ian

EV/R

even

ue

TTM Revenue Growth

9.6x

6.3x7.2x

6.3x

4.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

Med

ian

EV

/Rev

enue

TTM EBITDA Margin



Company Ticker EV (Median)TTM

Revenue

TTM Revenue

GrowthEV/

RevenueTTM

EBITDAEBITDA Margin

EV/EBITDA

Castlight Health, Inc. CSLT $2,386 $13 212% 183.9x -$62 -475.6% -FireEye, Inc. FEYE $8,974 $162 94% 55.6x -$143 -88.4% -Workday, Inc. WDAY $15,928 $469 71% 34.0x -$119 -25.3% -Demandware, Inc. DWRE $2,247 $104 31% 21.7x -$16 -15.6% -Service-now.com NOW $8,644 $425 74% 20.4x -$43 -10.1% -Netsuite N $7,723 $415 34% 18.6x -$37 -8.9% -Veeva Systems Inc. VEEV $3,754 $210 62% 17.9x $41 19.4% 92.3xCornerstone OnDemand CSOD $2,892 $185 57% 15.6x -$30 -16.1% -Marketo MKTO $1,457 $96 64% 15.2x -$41 -42.4% -Textura Corp. TXTR $610 $41 70% 15.0x -$33 -81.5% -Benefitfocus, Inc. BNFT $1,507 $105 28% 14.4x -$23 -21.7% -ChannelAdvisors ECOM $913 $68 27% 13.4x -$11 -15.8% -OPOWER, Inc. OPWR n/a $89 71% 13.2x -$12 -13.1% -Paylocity Holding Corp. PCTY $1,175 $91 - 13.0x $2 2.2% 602.0x

Cvent NYSE:CVT $1,374 $111 33% 12.4x $2 1.9% 663.9xMedidata Solutions MDSO $3,156 $277 27% 11.4x $32 11.5% 99.0xAthenahealth, Inc ATHN $6,322 $595 41% 10.6x $55 9.2% 115.3xThe Ultimate Software Group, Inc.ULTI $4,298 $410 24% 10.5x $59 14.3% 73.1xConcur CNQR $6,091 $586 27% 10.4x $37 6.2% 166.9xE2open, Inc EOPN $682 $69 -7% 9.8x -$18 -25.4% -Salesforce.com CRM $38,016 $4,071 33% 9.3x -$61 -1.5% -OpenTable, Inc. OPEN $1,743 $190 18% 9.2x $58 30.6% 30.0xSPS Commerce SPSC $936 $104 35% 9.0x $10 9.4% 95.3xQ2 Holdings, Inc. QTWO $479 $57 38% 8.4x -$13 -22.9% -RingCentral, Inc. RNG $1,213 $161 40% 7.6x -$32 -20.0% -Fleetmatics FLTX $1,299 $177 39% 7.3x $45 25.3% 29.0xAmber Road, Inc. AMBR $380 $53 21% 7.2x -$12 -22.3% -Qualys, Inc. QLYS $778 $108 18% 7.2x $12 11.0% 65.3xSciQuest SQI $650 $90 36% 7.2x $0 -0.2% -2U, Inc. TWOU $534 $83 49% 6.4x -$27 -32.8% -Ellie Mae ELLI $689 $128 26% 5.4x $25 19.5% 27.5xZix Corporation ZIXI $252 $48 11% 5.2x $11 22.4% 23.3xCallidus Software Inc. CALD $584 $112 18% 5.2x -$5 -4.0% -DealerTrack TRAK $2,166 $482 24% 4.5x $58 12.0% 37.4xHalogen Software, Inc. TSX:HGN $212 $48 26% 4.4x -$4 -7.4% -

J2 Global JCOM $2,255 $521 40% 4.3x $215 41.3% 10.5xFive9, Inc. FIVN n/a $84 32% 4.2x -$23 -27.8% -RealPage RP $1,571 $377 17% 4.2x $54 14.4% 29.0xLivePerson LPSN $633 $178 13% 3.6x $6 3.5% 101.2xTangoe TNGO $670 $189 22% 3.5x $16 8.7% 40.8xinContact, Inc. SAAS $460 $130 18% 3.5x -$2 -1.4% -Jive Software, Inc JIVE $515 $146 28% 3.5x -$61 -41.7% -Marin Software MRIN $239 $77 30% 3.1x -$30 -38.3% -Ebix Inc. EBIX $590 $205 3% 2.9x $76 37.1% 7.8xBazaarvoice, Inc BV $482 $181 22% 2.7x -$31 -16.8% -Constant Contact CTCT $735 $285 13% 2.6x $27 9.4% 27.5xIntraLinks Holdings IL $596 $234 8% 2.5x $13 5.5% 46.1xVocus VOCS $313 $187 9% 1.7x $0 0.1% 1582.5x

Top 25%

Bottom 25%

• When the SEG SaaS Index is segmented by relative EV/Revenue multiples, the top 25% of public SaaS companies had a median EV/Revenue of 16.8x in 1Q14.

• These SaaS high flyers are market leaders in a wide array of SaaS categories including security (FireEye); HCM/Finance (Workday); ERP (NetSuite); eCommerce (Demandware); and Marketing (Marketo).

• The median TTM revenue growth rate of those in the Top 25% percentile was 64.2%. All but two companies (Paylocity and Veeva) in the top 25% had negative EBITDA margins as of 1Q14.

• In contrast, public SaaS companies comprising the bottom 25% of EV/Revenue multiples posted a median EV/Revenue of only 3.5x. For this group, the median TTM revenue growth rate was 17.9%, and all but four were profitable.




• While Q1’s median market multiple for public SaaS companies was impressive, trading multiples throughout the quarter were especially volatile.

• During the first two months of the quarter, public SaaS EV/Revenue multiples jumped 17.7%, reaching a peak at the end of February.

• During the run-up, fears of another tech bubble gained momentum, and investors scurried during the quarter’s closing month.

• Consequently, public SaaS EV/Revenue multiples plunged 17.1% in March, giving up all gains from the prior two months, as investors flocked to less risky value stocks.


Up 17.7%8.7x EV/Rev

Down 17.1%7.2x EV/Rev

Daily EV/Revenue Multiples for 1Q14

Start of 1Q147.4x EV/Rev

End of 1Q14



• However, the March decline in median market multiples of public SaaS companies should be viewed from a broader historical perspective.

• Since November 2008, the median EV/Revenue multiple for public SaaS companies has expanded by 248%.


7.3x EV/Revenue Multiple, 1Q14

EV/Revenue Multiples Since 2004

2.1x EV/Revenue Multiple, 4Q08



• The SEG SaaS Index is currently comprised of 49 publicly listed SaaS companies. Four distinct SaaS product categories had a sufficient number for us to analyze trends and compare results.

• Representative companies for each SaaS categories are referenced below. The complete list of companies, as well as detailed financial data about each, can be found in the Appendix.

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

THE SEG SaaS INDEX BY PRODUCT CATEGORY



• In addition to these four SaaS product categories, there are a number of emerging SaaS product categories that currently lack sufficient number to yield reliable trend data, but nevertheless demonstrate continued adoption of SaaS across vertical markets and traditionally on-premise product categories.

eCommerce Healthcare

THE SEG SaaS INDEX BY PRODUCT CATEGORY

Real Estate SecurityLife Sciences



THE SEG SaaS INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE



26.0%

35.4%

39.6%

26.3%

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagem ent

(39.3%)

15.3%

(24.2%)

(16.6%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused


-0.7%

(4.0%)

10.4%

(13.5%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused


1183.4%

(515.5%)

(23.4%)

0.0%

CRM & Marketing

ERP & Supply Chain

Vertically Focused

Workforce Managem ent



• As in past quarters, public SaaS companies comprising the Workforce Management category boasted the highest median market valuation (11.7x EV/Revenue) among our four SaaS product categories at the close of 1Q14. The category is led by Workday (34.0x EV/Revenue multiple) and Cornerstone On Demand (15.6x). Valuation drivers included the continued displacement of on-premise incumbents, as well as a growing performance among enterprises to facilitate and empower employers at all levels.

• Vertically focused SaaS companies achieved the highest TTM revenue growth rate in 1Q14, 39.6%. This group, which consists of long-standing companies such as RealPage (real estate) and AthenaHealth (healthcare), was given a boost by Veeva Systems (life sciences) and Textura (construction), both of whom IPO’ed in the past year. Veeva’s TTM revenue growth rate was 62.2% and Textura closed 1Q14 at 70.1%.

• The strong revenue performance of vertically focused SaaS companies led to a 68.5% YoY expansion in the median EV/Revenue multiple, the best among our four tracking indices.

• In the CRM & Marketing category, SaaS providers that focused on leading edge marketing (marketing automation, business social marketing, etc.), such as Marketo (15.2x) and Salesforce (9.3x), enjoyed market multiples considerably higher than those focused on more established offerings in the category (e.g. email marketing campaign management) such as Constant Contact (2.6x).

THE SEG SaaS INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES

1Q14 Median YoY Change in EV/Revenue Multiples1Q14 Median EV/Revenue Multiples

3.3x

9.0x

8.4x

11.7x

CRM &Marketing

ERP &Supply Chain

VerticallyFocused


(2.6%)

34.8%

68.5%

9.6%

CRM &Marketing

ERP &Supply Chain

VerticallyFocused


35

THE SEG INTERNET INDEX

PUBLIC INTERNET COMPANY FINANCIAL AND VALUATION PERFORMANCE



THE SEG INTERNET INDEX

• The SEG Internet Index tracks public companies which primarily offer B2C solutions over the Internet using a wide array of pricing models.

• The SEG Internet Index is currently comprised of 92 public Internet companies*.

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

Measure 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 2.0x 2.2x 2.6x 2.6x 3.3xEV/EBITDA 13.3x 14.9x 18.4x 19.0x 23.3xEV/Earnings 21.4x 26.6x 31.1x 38.2x 33.7xGross Profit Margin 66.1% 65.6% 65.5% 66.0% 66.5%EBITDA Margin 10.1% 9.0% 9.4% 10.0% 9.1%

Net Income Margin 2.3% 2.2% 2.1% 1.8% 2.2%TTM Revenue Growth 21.8% 20.3% 19.3% 16.5% 18.4%TTM Total Revenue ($M) $351.8 $384.8 $409.5 $435.1 $453.7TTM EBITDA Growth 16.0% 10.3% 16.6% 16.1% 14.6%TTM Total EBITDA ($M) $26.8 $30.5 $30.4 $31.2 $34.6Cash & Eq ($M) $132.2 $133.3 $140.0 $164.3 $207.3Current Ratio 2.2 2.3 2.1 2.3 2.6Debt / Equity Ratio 19.7% 20.1% 19.7% 22.2% 24.8%

SEG - Internet: Median Metrics



• Approximately 62% of the companies comprising the SEG Internet Index offer online services and solutions that are consumer targeted; their revenue growth closely parallels the performance of the U.S. economy.

• After a sequential drop in each of the last six quarters, median TTM revenue growth of the SEG Internet Index improved in 1Q14, edging up to 18.4% from 16.5% in 4Q13.

• Once again demonstrating the Internet is an ecosystem of unequals, one in four public Internet providers far outpaced the pack, touting TTM revenue growth greater than 40% in 1Q14.

• Many of these high flyers were recent IPOs whose innovative products services and business models allowed them to scale quickly. Select examples included: Trulia (111%), Facebook (55%), and Yelp (69%)

• Conversely, 31% of public Internet companies struggled to advance, reporting TTM revenue growth of 10% or less.

TTM Revenue Growth Rate Distribution – 1Q14Median Revenue Performance - Quarterly

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

1Q13 2Q13 3Q13 4Q13 1Q14

TTM

Rev

enue

Gro

wth

TTM

Tot

al R

even

ue


11%

20%21%

15%

9%

23%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

ompa

nies

TTM Revenue Growth



• The median EBITDA margin of the SEG internet Index declined slightly in 1Q14. Over the past five quarters, EBITDA margins of public Internet companies have been stable, ranging from 9% to 10%.

• As testament to the revenue growth focus, 19% of SEG Internet Index Companies were unprofitable in 1Q14.

• By contrast 9% of public Internet companies, mostly those with significant transaction or advertising revenue, achieved EBITDA margins above 40%, led by Giant Interactive (65.7%), VeriSign (61.0%), Facebook (49.9%), Baidu.com (43.4%).

• Facebook, much maligned after its botched IPO and spotty mobile performance when it first went public, has set an example for others in the Internet sector by successfully monetizing its massive user base.

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

TTM EBITDA Margin Distribution – 1Q14Median EBITDA Margin Performance – Quarterly

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

19%

33%

21%

9% 9% 9%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

f C

ompa

nies

TTM EBITDA Margin

10.1%9.3% 9.4%

10.0%9.1%

1Q13 2Q13 3Q13 4Q13 1Q14

EB

ITD

A M

argi

n



EV/Revenue Multiple Distribution - QuarterlyMedian EV/Revenue and EV/EBITDA Multiples – Quarterly

• The median market multiple of public Internet providers closed 1Q14 at 3.3x, a marked improvement over 1Q13’s 2.0x.

• Considering approximately 60% of the public Internet companies are highly levered to consumer spending (Travel, Games, Advertising, etc), we see the improvement in median EV/Revenue as a reflection of growing investor confidence in rapidly ramping online consumer spending and digital advertising.

• The widely disparate financial performance of the 92 companies comprising the SEG Internet Index reveals an Internet ecosystem clearly bifurcated into “haves” and “have nots.” Virile market adoptions, consumer fickleness, switching ease, unlimited choice and fierce competition handsomely reward a select few and punish others. Many investors have apparently taken careful note.

• 1Q14 only served to further reinforce this reality, 35% of companies closed the quarter with an EV/Revenue multiple of 2.0x or less, while 28% closed the quarter with a market multiple of 7.0x EV/Revenue or higher.

• Among the Internet companies boosting the highest EV/Revenue market multiples were a large number of relatively recent IPO’s that are capturing a significant share of online advertising dollars. Examples include Twitter (44.3x); Yelp (24.1x); Qihoo (17.3x); and LinkedIn (14.7x).

THE SEG INTERNET INDEX: MARKET MULTIPLES

2.0x 2.2x 2.6x 2.6x 3.3x

13.3x14.9x

18.4x 19.0x

23.3x

1Q13 2Q13 3Q13 4Q13 1Q14


13%

22%

12%

6%

9%

5%4%

3%4%

21%

<= 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

ompa

nies

EV/Revenue



EV/Revenue Multiples vs. TTM EBITDA Margins – 1Q14EV/Revenue Multiples vs. TTM Revenue Growth Rates – 1Q14

• Public Internet companies with TTM revenue growth of 40% or higher were rewarded with median EV/Revenue multiples (11.2x) markedly greater than their slower growing peers. Among those growing 40%+ were: Trulia (93.3%); Zillow (69.5%); Yelp (67.7%); LinkedIn (65.6%).

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

• Public Internet companies with EBITDA margins above 40% posted a median EV/Revenue multiple of 6.8x in 1Q14, 113% higher than the overall Index median. By comparison, public SaaS companies with EBITDA margins above 30% (not enough companies with 40%+) posted a median EV/Revenue multiple of 4.5x, 44% below the SaaS median market valuation.

• Investors have clearly taken into consideration, when valuing Internet vs SaaS stocks, such factors as sustainability of the customer relationship, and the associated recurring revenue, and the nature and extent of switching costs. By those measures the long term promise of SaaS seems to far out weight the attractiveness of many public Internet companies.

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

THE SEG INTERNET INDEX: MARKET MULTIPLES

1.1x1.8x 2.1x

5.4x 5.7x

11.2x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Med

ian

EV

/Rev

enue

TTM Revenue Growth

3.2x

2.1x 2.0x

4.9x

7.3x6.8x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Med

ian

EV

/Rev

enue

TTM EBITDA Margin



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

• Representative companies in each Internet category are referenced below.

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

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

Infrastructure Services Social Travel

THE SEG INTERNET INDEX BY PRODUCT CATEGORY



THE SEG INTERNET INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE



27.6%

15.2%

7.9%

11.2%

8.9%

52.7%57.2%

21.0%

Ad Tech &Lead Generation

Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel

(22.2%)

(25.7%)

(37.2%)

(49.1%)

(3.3%)

26.2%

(12.2%)

8.5%


Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel

6.8%

7.3%

13.2%

32.9%

6.1%

7.4%

10.9%

17.2%


Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel

(9.0%)

45.5%

(3.8%)

(8.1%)

(16.4%)

(0.5%)

(15.5%)

(5.0%)


Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel



1Q14 YoY Change in Median EV/Revenue Multiples1Q14 Median EV/Revenue Multiples

• Public Internet companies comprising the Services and Social product categories closed Q1 with revenue growth rates more than twice the median (52.7%, 57.2%, respectively).

• Public Internet companies comprising the social category closed 1Q14 with the highest median EV/Revenue multiple, 14.7x, 206% higher than the second highest category . Facebook and LinkedIn led the ascent, after proving social networking could be extremely profitable.

• The success social media Internet providers have had monetizing their services, largely through advertising, is taking share away from many in the Ad Tech & Lead Generation space, with marketers clearly attracted to the scalability and ROI of advertising in Facebook and LinkedIn. As a result of these shifting advertising budgets, the median TTM revenue growth of the Ad Tech & Lead Generation product category plunged 22.2% YoY in 1Q14.

• Companies within the Gaming product category continue to be very profitable. At the close of 1Q14, the Gaming product category closed with a median EBITDA margin of 32.9%, 3x higher than the median of public Internet companies. However, the category continues to be extremely hits driven leading to low visibility of future performance, which keeps trading multiples somewhat muted.

• Despite poor financial performance, the Content & Media product category median EV/Revenue spiked 128% YoY to 3.5x in 1Q14. The category was largely driven by outperformance of Netflix and Pandora, two companies who are demonstrating incredible staying power in the face of stiff competition from companies with deep pockets.

THE SEG INTERNET INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES

3.2x

1.2x

3.5x

3.8x

1.9x

4.2x

14.7x

4.8x


Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel

39.6%

30.7%

128.2%

40.6%

11.2%

18.6%

61.0%

69.6%


Com m erce

Content & Media

Gam ing

Infrastructure

Services

Social

Travel

44

SOFTWARE INDUSTRY M&A MARKET UPDATE



Median On-Premise Software EV/Revenue Exit MultiplesU.S. Software Mergers & Acquisitions Activity

• There were 444 software M&A transactions in 1Q14. Deal activity over the past three years has remained consistently robust.

• Software M&A spending soared to $31.4 billion in 1Q14, the highest quarterly deal spend since 2Q07. Facebook’s $16.4 billion acquisition of WhatsApp accounted for roughly half of the quarter’s tally.

• In addition to WhatsApp, Q1 featured seven other On-premise/SaaS/Internet mega deals (EV > $500M), including Thoma Bravo’s acquisition of TravelClick ($930M EV, 3.5x EV/Revenue multiple estimate); Verint’s purchase of Kana Software ($514M, 4.0x estimate); Rakuten’s acquisition of Viber Media ($900 million); VMWare’s acquisition of AirWatch ($1.5 billion, 10.0x estimate); and Dassault Systemes’ acquisition of Accelrys ($683 million, 4.1x).

• The average software M&A purchase price has increased each of the past three quarters, reaching $54M in 1Q14.

• Megadeals aside, most buyers have focused on small and mid-sized acquisitions, in line with out 2013 and 2014 Buyers Survey in response to which 72% of buyers indicated they would focus on deals ranging in size from $10M - $99M.

SOFTWARE/SaaS M&A DEAL VOLUME AND SPENDING

426 430

454 456432 454

435406 394

431 444455

444

$13.1

$21.3

$23.4

$12.6

$15.8

$23.1

$12.3

$15.8

$9.9

$20.8

$20.2 $22.8

$31.4

$0

$5

$10

$15

$20

$25

$30

$35

0

50

100

150

200

250

300

350

400

450

500

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Value (BIllions)

Num

ber o

f Dea

ls

Deals Value

$37$40

$42 $41 $41 $42

$36$39

$36 $35$40

$43

$54

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

TTM

Ave

rage

Dea

l Val

ue (M

illio

ns)



Median Exit Multiples

• The median on-premise software exit multiple in 1Q14 was 2.3x, precisely the same as the past two quarters.

• Historically, a 2.3x revenue exit multiple is at the upper end of the valuation range for on-premise software companies. That quarterly median multiple was beaten only twice since 2007, in 3Q10 and 2Q11, when it climbed to 2.5x before receding the following quarter.

• On a TTM basis, 43% of all on-premise software targets in 1Q14 were acquired for 2.0x TTM revenue or less, and 69% for 3.0x or less.

• Targets receiving an exit multiple of 3.0x or higher belonged to currently “hot” software product categories experiencing rapid market adoption and growth, including big data integration, network infrastructure and security.

• Noteworthy smaller on-premise acquisitions in 1Q14 included AeroFlex Holdings’ acquisition of network performance management vendor Shenick Network Systems ($28.5 million, 3.0x TTM revenue), and Medina Capital’s acquisition of encryption software provider Cryptzone ($13.4 million, 3.6x TTM revenue).

SOFTWARE M&A EXIT MULTIPLES

Median EV/Revenue Exit Multiple Distribution

25.0%

17.9%

26.2%

14.3%16.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

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

> 2.0x & <=3.0x

> 3.0x & <=4.0x

> 4.0x

TTM Revenue Exit Multiple Bins

% o

f Dea

ls-2

013

TTM

% o

f Dea

ls-2

013

TTM

1.6x 1.8x2.3x 2.3x 2.3x

12.7x

11.6x 11.5x

12.9x 13.3x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

1Q13 2Q13 3Q13 4Q13 1Q14




by Sizeby Ownership Structure

SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZE

• Almost three out of four software M&A transactions in 1Q14 featured privately-held targets.

• Privately-held software companies in the first quarter were paid a marginally higher multiple than their public counterparts (2.3x TTM revenue vs. 2.1x)

• Public buyers in 1Q14 paid a median 2.7x TTM revenue for their targets in 1Q14, compared to a median of 1.7x paid by private buyers.

• Buyers with revenue greater than $200 million paid a median 3.1x TTM revenue for their targets, compared to a median 1.6x TTM revenue purchase price paid by smaller buyers.

• On a TTM basis, software M&A transactions with the highest exit multiples featured a large public or private buyer (greater than $200 million in revenue) acquiring a small target (less than $20 million). In Q1, this match-up produced a median 3.7x EV/Revenue exit multiple.

Public Sellers 2.1x Median Multiple

Private Sellers 2.3x Median Multiple

72%28%

Public Buyers 2.7x Median Multiple

Private Buyers 1.7x Median Multiple

60%40%

66%

34%

Buyer Less Than $200 million 1.6x Median Multiple

Buyer Greater Than $200 million 3.1x Median Multiple

Seller Less Than $20 million: 2.4x


Seller Greater Than $20 million: 1.5x



Seller Less Than $20

million

Seller Greater

Greater

Than $20 million: 1.6x




Horizontal & Vertical M&A Median EV/Revenue Exit Multiples

Horizontal & Vertical M&A Volume

SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

• As in the past five quarters, horizontal software providers garnered almost two-thirds of all software M&A transactions in 1Q14.

• The median exit multiple for horizontal software companies has risen steadily during the past three quarters, reaching 2.5x TTM revenue in 1Q14. First quarter horizontal transactions included Alibaba Group’s acquisition of digital map content provider AutoNavi Holdings for $1.2 billion (8.3x revenue); Barco’s acquisition of digital media content management provider X2O Median for $19 million (4.2x revenue); Medina Capital’s acquisition of encryption software provider Cryptzone for $13.4 million (3.6x revenue); and Aeroflex Holding’s acquisition of network performance management software vendor Shenick Network Systems for $28.5 million (3.0x revenue).

• The median exit valuation of vertical software companies has fluctuated widely over the past five quarters, advancing from 1.7x TTM revenue in 4Q13 to a more historically normal 2.1x TTM in the first quarter.

• Q1’s vertical software deals included Equifax’s acquisition of debt collection software provider TDX Group for $326.8 million (3.7x revenue); Dassault Systemes’ acquisition of scientific informatics provider Accelrys for $682.9 million (4.1x revenue); and Advanced Software Group’s acquisition of higher education software provider Compass Computer for $19.4 million (2.1x revenue).

33% 36% 33% 39% 35%

67% 64% 67% 61% 65%

0%

20%

40%

60%

80%

100%

1Q13 2Q13 3Q13 4Q13 1Q14

Horizontal Vertical

1.3x

1.9x

2.7x

1.7x2.1x

1.8x1.6x

2.0x2.4x 2.5x

1Q13 2Q13 3Q13 4Q13 1Q14

Vertical Horizontal



SOFTWARE M&A ACTIVITY BY PRODUCT CATEGORY

• The Mobile product category accounted for 25.4% of all software M&A transactions in the first quarter, making it the most active category. Distant runner-ups were Healthcare (7.1%), Financial Services (6.5%), Security (5.0%), and BI, Risk & Compliance (4.6%)

• Historically, deal activity in any given product category typically varies widely from year to year, based upon evolving market adoption, changing technology platforms, economic cycles, etc. Examples include:

• BI, Risk & Compliance transactions accounted for 4.6% of all software M&A activity in 1Q14, but only 2.3% in 1Q13.

• Engineering, PLM & CAD deals accounted for 2.2% of software M&A activity in 1Q14 compared with 4.6% in 1Q13.

• Supply Chain Management transactions accounted for 2.8% of software M&A activity in 1Q14 versus 4.6% in 1Q13.

CRM, Marketing & Sales4.3%

Data Mgmt & Integration0.3%

Dev. Tools & IT Asset Mgmt2.2%

eCommerce1.9%

EDA2.2%

Engineering, PLM & CAD2.2%

Middleware0.3%ERP

0.6%

Entertainment0.9%

HR & Workforce Mgmt2.5%

Messaging, Conferencing & Communications

1.5%Multimedia, Graphics &

Communications2.8%

Network Performance Mgmt0.9%

Security5.0%

Systems Mgmt1.2%

Supply Chain Mgmt & Logistics

2.8%

Mobile25.4%

Automotive0.9%

Construction0.9%

Education3.4%

Energy & Utilities1.2%

Financial Services6.5%

Healthcare7.1%

Insurance1.2%

Legal0.3%

Manufacturing0.6%

Other Verticals8.0%

Public Sector0.3%

Real Estate1.2%

Retail2.5%

Telcom0.3%

Accounting & Finance0.6%

Billing & Service Provisioning

0.3% BI, Risk & Compliance

4.6%

Content & Document Mgmt2.8%

Verti

cals



Median EV/Revenue Exit Multiples by Software Product Category

• Among the 32 on-premise software product categories we track, ten had both sufficient deal activity and deal data to ascertain a TTM revenue multiple in 1Q14.

• On a TTM basis, Systems Management software M&A transactions garnered the highest median exit multiple (3.1x) among these ten categories in the first quarter, led by Insight Venture Partners’ 2Q13 acquisition of BMC Software and Solarwinds’ 4Q13 purchase of Confio Software.

• Healthcare Software was a close second, posting a solid 3.0x median EV/Revenue exit multiple in 1Q14. Notable Healthcare Software deals included 2Q13’s acquisition of Ingenuity by Qiagen (5.5x revenue); 3Q13’s acquisition of MSS Management by Ideagen (4.3x revenue); and 3Q13’s acquisition of Qline Solutions by Biosign Technologies (3.0x revenue).

3.1x 3.0x2.7x

2.3x 2.2x1.8x 1.8x

1.5x1.1x 1.1x

Sys

tem

sM

ana

gem

ent

He

alth

care

Sec

urity

Eng

inee

ring

an

dP

LM

Oth

er

Ve

rtic

als

(A&

D, T

elc

o,R

eta

il, e

tc.)

Edu

catio

n

BI,

Ris

k &

Co

mpl

ianc

e

Mo

bile

Fin

anci

al S

erv

ices

Sof

twa

re

Sup

ply

Cha

in

SOFTWARE M&A EXIT VALUATIONS BY PRODUCT CATEGORY



SaaS M&A: DEAL VOLUME AND EXIT MULTIPLES

• There were 104 SaaS M&A transactions in 1Q14, essentially the same deal volume level as in three of the past four quarters.

• The median TTM EV/Revenue exit multiple of SaaS transactions rose sharply to 4.6x in 1Q14, after holding mostly steady the past year.

• SaaS transactions in the first quarter with especially lofty exit multiples included Infor’s acquisition of PeopleAnswers ($200 million, 7.0x TTM revenue estimate); ServiceSource’s acquisition of Scout Analytics ($32.5 million, 6.0x revenue); Wolters Kluwer’s acquisition of Third Coast ($290 million, 5.8x revenue); and Microsoft’s acquisition of Parature ($100 million, 5.0x revenue).

• The median SaaS exit multiple was 100% greater than the median on-premise exit multiple in 1Q14 (4.6x vs 2.3x).

Median SaaS EV/Revenue Exit MultiplesSaaS M&A Volume

4.0x 4.0x4.3x

4.1x

4.6x

1Q13 2Q13 3Q13 4Q13 1Q14

3945 48

68 6559

94 9486

10497 103 104

0%

5%

10%

15%

20%

25%

30%

0

20

40

60

80

100

120

SaaS

M&

A D

eals

as

a %

of T

otal

So

ftw

are

M&

A D

eals

# of

Saa

S M

&A

Dea

ls

SaaS M&A Deals SaaS as % of Software



SaaS M&A BY PRODUCT CATEGORY

• CRM, Marketing & Sales, and HR & Workforce Management were the most active SaaS product categories, each accounting for 13.6% of all SaaS M&A transactions in the first quarter.

• After three quarters of lackluster deal volume, SaaS transactions in the HR & Workforce Mgmt product category comprised 13.6% of Q1’s total SaaS M&A activity, compared to only 6.4% for all of 2013. The resurgence in the category’s quarterly deal volume is largely attributable to strong customer demand for HR big data and HR analytics, as well as mobile workforce and social recruiting solutions.

• Messaging, Conferencing & Communications and Systems Management product categories also exhibited strength in 1Q14, with each accounting for 10.7% of total quarterly deal volume. Both categories benefited from rapidly ramping enterprise adoption of SaaS deployed solutions, which is placing increasing pressure on large, on-premise legacy vendors to catch up.

CRM, Marketing & Sales13.6%

Data Mgmt & Integration1.0%

eCommerce1.9%

Engineering, PLM & CAD1.9%

ERP1.9%

HR & Workforce Mgmt13.6%

Messaging, Conferencing & Communications

10.7%

Multimedia, Graphics & Communications

1.0%

Network Performance Mgmt1.9%

Security3.9%

Systems Mgmt10.7%

Supply Chain Mgmt & Logistics

3.9%

Automotive1.0%

Construction1.9%

Education3.9%

Financial Services2.9%

Healthcare1.9%

Insurance1.0%

Legal2.9%

Manufacturing1.0%

Non-profit1.0%

Other Verticals3.9%

Real Estate1.0%

Accounting & Finance1.9%

Billing & Service Provisioning1.0%

BI, Risk & Compliance5.8%

Content & Document Mgmt2.9%

Verti

cals



1Q14 SaaS M&A TRANSACTIONS

Date Buyer SellerEnterprise Value (mm)

TTM Rev. (mm) EV/Rev

03/26/2014 SAP AG (DB:SAP) Fieldglass, Inc. - - -03/25/2014 Golden Gate Capital LiveVox, Inc. - - -03/21/2014 ALSO Holding AG (SWX:ALSN) Nervogrid Oy - - -03/20/2014 Dromana Estate Ltd. (ASX:DMY) CloudCentral Pty Ltd $2.4 - -03/19/2014 InterCloud Systems, Inc. (NasdaqCM:ICLD) VaultLogix, LLC $44.0 $12.0 3.7x03/19/2014 IgnitionOne, Inc. Knotice, Ltd. - - -03/19/2014 BigHand Ltd. Esquire Innovations, Inc. - - -03/18/2014 Thoma Bravo, LLC TravelCLICK, Inc.* $930.0 $265.7 3.5x03/18/2014 Dropbox, Inc. Zulip, Inc. - - -03/18/2014 TrustWave Holdings, Inc. Cenzic, Inc. - - -03/17/2014 Everbridge, Inc. Vocal Ltd. - - -03/14/2014 Charterhouse Capital Partners LLP SkillSoft Limited - - -03/13/2014 Clear Payment Solutions LLC eKiosk Solutions LLC - - -03/12/2014 eBet Limited (ASX:EBT) Industry Data Online Pty Ltd $0.6 - -03/12/2014 Xumanii International Holdings Corp (OTCPK:XUII) Amonshare.com $1.5 - -03/11/2014 Sysxnet Limited SaaS Markets, LLC - - -03/11/2014 Ian Martin Limited Fitzii, Inc. - - -03/10/2014 Chinasoft International Ltd. (SEHK:354) Deem, Inc. - - -03/07/2014 DocuSign, Inc. Comprova.com Informatica S.A. - - -03/06/2014 Axium XTS Corporation ArchitTrek, LLC - - -03/05/2014 Raine Ventures LLC The Immediate Edge $1.4 $0.5 2.7x03/05/2014 Tribal Group plc (LSE:TRB) Sky Softw are Pty Limited $19.1 - -03/05/2014 L-3 Communications Holdings Inc. (NYSE:LLL) L-3 Data Tactics - - -03/04/2014 TalentSoft SA PeopleXS Holding BV - - -03/03/2014 Shutterstock, Inc. (NYSE:SSTK) WebDAM, Inc. - - -03/03/2014 Securus Technologies, Inc. Telerus, Inc. - - -02/28/2014 Corporate Executive Board Co. (NYSE:CEB) Know ledgeAdvisors, Inc. $52.0 - -02/28/2014 FrontStream Payments, Inc. Truist, Inc. - - -02/26/2014 Wolters Kluw er Corporate Legal Services Third Coast Holdings Inc $290.3 $50.1 5.8x02/26/2014 Workday, Inc. (NYSE:WDAY) Identif ied, Inc. - - -02/26/2014 Square, Inc. BookFresh - - -02/26/2014 DEKRA International GmbH TTL Automotive Ltd. - - -02/25/2014 AmbiCom Holdings, Inc. (OTCPK:ABHI) Veloxum Corporation - - -02/24/2014 Oracle Corporation (NYSE:ORCL) Blue Kai, Inc. - - -



1Q14 SaaS M&A TRANSACTIONS (CON’T)



02/24/2014 Monster Worldw ide, Inc. (NYSE:MWW) Gozaik LLC - - -02/24/2014 CloudFlare, Inc. Jaal, LLC - - -02/24/2014 International Business Machines Corporation (NYSE:IBM) Cloudant, Inc. - - -02/24/2014 QSC AG (XTRA:QSC) FTAPI Softw are GmbH - - -02/20/2014 - codeMantra, LLC - - -02/20/2014 OTOY, Inc. AppSlingr, Inc. - - -02/19/2014 Sprinklr Inc. Dachis Corporation, Inc. - - -02/19/2014 FSX Interlinked, Inc. Interlinked, Inc. - - -02/19/2014 Ocuco Limited EMRlogic Systems Inc. - - -02/19/2014 Clearsw ift Limited Microdasys Europe GmbH - - -02/18/2014 ClickSoftw are Technologies Ltd. (NasdaqGS:CKSW) Xora, Inc. $14.7 - -02/18/2014 Remark Media, Inc. (NasdaqCM:MARK) BH Enterprises of FL, Inc., - - -02/18/2014 Wyless Inc. ASPIDER Solutions B.V. - - -02/18/2014 Court Square Capital Partners AFS Technologies, Inc. - - -02/14/2014 Equifax Inc. (NYSE:EFX) Forseva, LLC - - -02/13/2014 Yahoo! Inc. (NasdaqGS:YHOO) Distill, Inc. - - -02/11/2014 SearchDex, Inc. Altruik, Inc. - - -02/11/2014 j2 Global, Inc. (NasdaqGS:JCOM) Betteroff Netw orks Pty Ltd. and - - -02/11/2014 RealPage, Inc. (NasdaqGS:RP) Bookt LLC - - -02/10/2014 Visma AS Logium Oy - - -02/06/2014 Ericsson (OM:ERIC B) Azuki Systems, Inc. - - -02/06/2014 Arqiva Broadcast Holdings Limited Capablue Ltd - - -02/05/2014 Persistent Systems Limited (BSE:533179) Cloudsquads, Inc. - - -02/05/2014 PointAcross, Inc. GoldMail, Inc. - - -02/04/2014 Callidus Softw are Inc. (NasdaqGM:CALD) LeadRocket, Inc. $3.0 - -02/04/2014 Service Scout, Inc. Betterf ly, Inc. - - -02/03/2014 - RentVM, Inc. $5.9 - -01/31/2014 Physio-Control, Inc. Sansio, Inc. - - -01/31/2014 Altiux Innovations Pvt Ltd. P-Device Systems Pvt Ltd - - -01/31/2014 Vector Capital CollabNet, Inc. - - -01/31/2014 Explorer Softw are Inc. Computer Guidance Corporation - - -01/30/2014 SalesFUSION Inc. LoopFuse, Inc. - - -01/29/2014 Bottomline Technologies (de), Inc. (NasdaqGS:EPAY) Rationalw ave, Inc. $8.0 - -01/29/2014 - Theta Research, LLC - - -



1Q14 SaaS M&A TRANSACTIONS (CON’T)



01/29/2014 ThinkHR Corporation HR That Works, Inc. - - -01/27/2014 LiveOps, Inc. UserEvents, Inc. - - -01/27/2014 Navico Holding AS Contour Innovations, LLC - - -01/27/2014 Berkshire Hathaw ay Specialty Insurance MyAssist Inc. and Insure America LLC - - -01/26/2014 Dealer Authority eReputationBuilder - - -01/24/2014 Budget Center Inc. (OTCPK:BDGN) Vericard Inc. $0.9 - -01/23/2014 AdRoll, Inc. Userfox - - -01/23/2014 The Gores Group LLC Zmags, Corp. - - -01/22/2014 ServiceSource International, Inc. (NasdaqGS:SREV) Scout Analytics, Inc. $32.5 $5.4 6.0x01/20/2014 Callcredit Information Group Limited Coactiva Aspiren Ltd - - -01/20/2014 Ellucian, Inc. CampusIT Limited - - -01/20/2014 Genesys Telecommunications Laboratories, Inc. Ventriloquist Customer - - -01/18/2014 Allied Wallet, Ltd. Cloudasia Limited - - -01/16/2014 4CAD Group Plate-forme d’Ingénierie Collaborative - - -01/16/2014 Electronics for Imaging, Inc. (NasdaqGS:EFII) SmartLinc, Inc. - - -01/16/2014 HUBHEAD CORP. NRX Global Inc. - - -01/15/2014 Trusted Team LLC 22Touch Systems, Inc. - - -01/15/2014 Google Inc. (NasdaqGS:GOOG) Impermium Corporation - - -01/15/2014 Hamilton-Ryker IT Solutions, LLC WMS iSymphony, Inc. - - -01/14/2014 PROACTIS Holdings PLC (AIM:PHD) EGS Group Limited $3.6 - -01/14/2014 RuffaloCODY, LLC ScaleFunder, Inc. - - -01/13/2014 Project Management Institute, Inc., Endow ment Arm ProjectManagement.com And - - -01/13/2014 NGB Markets, Inc. Local Food Systems, Inc. - - -01/10/2014 Deutsche Boerse AG (XTRA:DB1) Impendium Systems Ltd. - - -01/10/2014 Qualcomm Connected Experiences, Inc. kooaba AG - - -01/10/2014 AFS Technologies, Inc. Visicom Inc. - - -01/09/2014 HireVue, Inc. Reschedge - - -01/08/2014 IQNavigator, Inc. ProcureStaff Technologies, Ltd. - - -01/07/2014 INFOR, INC. PeopleAnsw ers, LLC* $200.0 $28.6 7.0x01/07/2014 Oracle Corporation (NYSE:ORCL) Corente, Inc. - - -01/06/2014 Verint Systems Inc. (NasdaqGS:VRNT) KANA Softw are, Inc.* $514.0 $128.5 4.0x01/06/2014 Microsoft Dynamics Inc Parature, Inc.* $100.0 $20.0 5.0x01/06/2014 Pinterest, Inc. VisualGraph Inc. - - -01/06/2014 ABRY Partners, LLC Inmar, Inc. - - -01/02/2014 Firespring, Inc. Cost Effective Technologies, Inc. - - -



• Internet M&A deal volume remained highly volatile, in large part due to shifting marketing strategies, evolving business models, and constant changes in the competitive landscape.

• In early 2012, a large number of Internet targets exited amidst the hype of the pending Facebook IPO (5/2012), creating a spike in M&A volume. After the Facebook IPO debacle, Internet investors and buyers alike became more cautious and circumspect, and M&A volume declined markedly, plunging to 185 transactions in 1Q13, down from 273 transactions in 2Q12.

• There were 195 Internet M&A transactions in the first quarter, a 23% decline from 4Q13’s 256 deals. We believe the retreat signals a return to more typical quarterly deal activity in the Internet sector, following three consecutive quarters of frothy deal activity. A similar normalization was witnessed in 1Q13.

• The median EV/Revenue exit multiple for Internet sellers in 1Q14 was 1.8x, virtually unchanged from the prior four quarters.

Internet M&A Volume

185

204

231

256

195

1Q13 2Q13 3Q13 4Q13 1Q14

1.9x 1.9x 1.9x 1.9x 1.8x

1Q13 2Q13 3Q13 4Q13 1Q14

INTERNET M&A: DEAL VOLUME AND EXIT MULTIPLES

Median Internet EV/Revenue Exit Multiples



INTERNET M&A: BY PRODUCT CATEGORY

• Internet ad-tech remained the most active Internet M&A category, with 57 transactions in 1Q14. The first quarter’s tally was down sharply from 4Q13’s 94 ad-tech transactions, but in line with quarterly transaction volume during the first half of 2013. We do not anticipate a resurgence in Ad-tech and Lead gen deal activity for the remainder of the year.

• Internet Infrastructure and Internet Commerce transaction activity declined significantly in 1Q14 from the prior quarter. Here too, the category’s quarterly deal volume represented a retreat to normalcy following high deal volumes in recent quarters.

• Content and Media were the only Internet categories to post increases in deal activity over the prior quarter.

M&A Volume by QuarterTTM M&A Volume by Product Category

29.4%

19.6%25.8%

5.2%

10.8%

9.3%

Ad-Tech & Lead Gen

Commerce

Content & Media

Gaming

Infrastructure

Social Tech

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

Ad-Tech & Lead Gen 58 60 85 94 57Commerce 34 39 44 49 38Content & Media 42 34 36 42 50Gaming 7 11 8 10 10Infrastructure 24 41 39 39 21Social Tech 20 19 19 22 18

Total 185 204 231 256 194

58

APPENDIX



THE SEG SOFTWARE INDEX COMPANIES – KEY METRICS

Company


A10 Networks, Inc. - - - - 7.1x - - - - - 31.5% 31.5% 31.5% - 18.1% 11.5% 11.5% 11.5% 0.5% -3.0%Accretive Health 0.4x 0.4x 0.4x 0.4x 0.4x 5.8x 6.4x 5.5x 5.7x 5.6x 8.0% 8.2% 5.6% -0.2% -0.2% 6.9% 6.4% 6.4% 6.5% 6.5%ACI Worldwide, Inc. 3.2x 3.4x 3.3x 3.7x 3.4x 16.5x 19.5x 17.6x 17.4x 15.8x 43.3% 38.7% 39.7% 39.5% 29.8% 19.7% 17.4% 19.0% 21.2% 21.6%Activision Blizzard 2.3x 2.4x 2.9x 2.0x 3.0x 7.1x 7.1x 7.7x 5.7x 9.3x 2.1% 11.8% 13.1% 7.5% -5.6% 32.4% 33.3% 37.6% 35.4% 32.3%Actuate Corporation 1.6x 1.7x 2.0x 2.2x 1.5x 9.7x 11.5x 16.0x 18.9x 14.9x 2.9% 0.9% -1.9% -0.6% -3.1% 16.4% 14.9% 12.6% 11.5% 10.2%Adobe Systems Incorporated 3.9x 4.7x 5.1x 6.4x 7.6x 13.3x 17.7x 22.1x 33.8x 40.7x 3.1% -1.9% -5.3% -7.9% -7.3% 29.7% 26.6% 23.3% 19.0% 18.6%Advent Software, Inc. 3.5x 4.1x 3.7x 5.4x 4.9x 18.1x 19.7x 21.2x 29.9x 26.2x 10.0% 7.9% 6.7% 6.9% 6.7% 19.1% 20.6% 17.3% 18.1% 18.6%Allot Communications Ltd. 2.8x 2.4x 2.9x 3.3x 4.2x 24.7x 37.0x 156.9x - - 34.7% 23.4% 7.2% -4.8% -7.8% 11.4% 6.6% 1.9% -5.1% -0.8%Allscripts Healthcare Solutions Inc. 1.6x 1.9x 2.2x 2.3x 2.5x 19.0x 26.3x 50.2x 108.3x 352.0x 0.2% -3.0% -5.6% -7.4% -5.1% 8.3% 7.4% 4.4% 2.1% 0.7%Amdocs Limited 1.5x 1.5x 1.5x 1.6x 1.7x 8.0x 7.8x 8.1x 8.6x 9.3x 1.8% 1.9% 2.6% 3.0% 3.6% 18.5% 18.6% 18.7% 18.6% 18.5%American Software, Inc. 1.7x 1.7x 1.7x 1.9x 2.1x 10.7x 11.4x 12.1x 12.5x 12.9x 3.3% -2.1% -6.6% -6.6% -3.2% 15.9% 15.3% 14.3% 15.4% 16.5%ANSYS, Inc. 8.2x 7.9x 8.7x 8.6x 8.0x 17.2x 16.8x 18.7x 18.4x 17.1x 15.4% 12.8% 10.5% 9.1% 7.9% 47.6% 47.1% 46.7% 46.6% 46.8%Aruba Networks, Inc. 4.0x 2.7x 2.6x 2.6x 2.9x 55.8x 43.8x 60.8x 88.1x 168.9x 22.8% 19.3% 16.1% 13.8% 11.6% 7.1% 6.1% 4.3% 3.0% 1.7%Aspen Technology, Inc. 9.7x 9.1x 9.4x 10.2x 11.2x 138.6x 65.7x 49.1x 44.2x 40.6x 22.9% 26.1% 28.1% 24.3% 27.3% 7.0% 13.8% 19.2% 23.0% 27.7%Autodesk, Inc. 3.2x 3.1x 3.0x 3.7x 4.5x 15.7x 15.1x 14.8x 18.3x 24.2x 4.4% 0.8% -0.5% -0.2% -1.7% 20.7% 20.5% 20.3% 20.1% 18.8%AVG Technologies N.V. 2.3x 2.5x 3.0x 2.3x 2.3x 7.6x 8.1x 8.8x 7.1x 6.5x 30.7% 28.2% 27.2% 19.5% 14.4% 29.8% 31.4% 34.1% 33.0% 35.0%Bango PLC 8.8x 9.8x 9.4x 6.9x 7.6x - - - - - - - - - -13.7% -28.6% -36.2% -40.5% -40.5% -51.5%Barracuda Networks, Inc. - - - 4.9x 7.4x - - - - - 23.6% - - - 17.5% 2.9% 2.1% 1.1% -0.1% -0.1%Blackbaud, Inc. 3.1x 3.4x 3.7x 3.7x 3.2x 21.7x 22.3x 20.8x 19.3x 16.2x 20.6% 23.6% 22.3% 15.8% 12.6% 14.5% 15.3% 17.8% 19.1% 20.0%

Bottomline Technologies 3.7x 3.3x 3.4x 4.5x 4.6x 38.9x 36.4x 35.0x 45.5x 42.4x 14.9% 15.7% 13.6% 11.5% 11.6% 9.6% 9.1% 9.8% 9.8% 10.8%

Broadridge Financial 1.4x 1.5x 1.6x 1.9x 1.9x 7.8x 8.4x 8.5x 9.6x 9.5x 3.4% 3.8% 5.5% 6.8% 7.3% 17.3% 17.7% 18.6% 19.7% 19.9%

Brocade Communications Systems, Inc. 1.2x 1.1x 1.4x 1.5x 1.7x 5.6x 5.2x 6.2x 6.6x 7.1x 4.8% 4.8% 1.5% -0.7% -3.0% 21.8% 21.9% 22.2% 23.3% 24.4%

BSQUARE Corporation 0.2x 0.1x 0.1x 0.2x 0.2x 7.9x 8.8x 12.9x - - 4.7% 0.3% -3.5% -6.9% -9.2% 2.1% 1.5% 1.0% -1.8% -2.0%CA, Inc. 2.2x 2.4x 2.7x 3.0x 3.0x 6.6x 7.0x 8.0x 8.6x 8.6x -1.6% -3.6% -3.5% -2.8% -2.1% 33.4% 33.7% 34.0% 34.5% 34.2%Cadence Design Systems, Inc 2.7x 2.6x 2.8x 2.5x 2.7x 11.9x 11.3x 12.3x 11.9x 13.0x 15.4% 13.8% 12.7% 10.1% 10.1% 22.7% 23.0% 22.4% 20.9% 20.9%Cerner Corporation 5.5x 5.9x 5.9x 6.5x 6.6x 20.0x 21.0x 20.4x 24.9x 25.3x 20.9% 14.7% 12.3% 8.8% 8.8% 27.3% 28.2% 28.8% 26.2% 26.2%Check Point Software Tech Ltd. 6.5x 6.0x 7.2x 7.7x 8.3x 11.6x 10.8x 13.0x 13.8x 15.0x 7.7% 5.7% 4.4% 3.4% 3.8% 56.4% 56.1% 55.8% 55.8% 55.4%Cimatron Ltd. 1.3x 1.3x 1.3x 1.4x 1.8x 8.8x 8.5x 8.9x 9.0x 12.1x 3.9% 2.1% 1.6% 4.0% 4.6% 15.2% 14.7% 14.4% 15.1% 14.7%Cisco Systems, Inc. 1.7x 1.8x 2.0x 1.8x 1.8x 6.1x 6.3x 7.1x 6.1x 6.6x 5.4% 5.1% 5.5% 4.6% 1.3% 28.3% 28.1% 28.5% 28.8% 27.1%Citrix Systems, Inc. 4.8x 4.3x 4.6x 3.6x 3.6x 20.6x 19.0x 20.8x 16.4x 16.0x 17.2% 15.8% 16.5% 15.8% 12.8% 23.6% 22.5% 21.9% 21.9% 22.2%CommVault Systems, Inc. 6.6x 6.0x 6.7x 5.8x 4.9x 39.9x 34.7x 38.4x 32.8x 26.9x 23.4% 21.9% 21.7% 21.4% 20.4% 16.5% 17.3% 17.6% 17.6% 18.2%Computer Programs and Sys, Inc. 3.0x 2.9x 3.1x 3.4x 3.5x 12.4x 12.0x 12.5x 13.2x 13.0x 5.7% 6.1% 12.3% 11.2% 9.6% 24.2% 24.2% 24.9% 25.3% 26.7%Compuware Corporation 2.6x 2.5x 2.4x 2.4x 2.3x 16.6x 18.3x 17.4x 17.1x 17.6x -2.3% -6.5% -6.0% -1.3% -2.5% 15.5% 13.9% 13.9% 14.2% 13.3%Constellation 2.9x 3.1x 3.5x 3.6x 3.9x 20.6x 27.0x 33.9x 42.1x 30.2x 15.2% 20.4% 29.4% 36.6% 35.9% 13.9% 11.4% 10.2% 8.5% 12.8%CSG Systems International, Inc. 1.0x 1.1x 1.2x 1.4x 1.4x 5.1x 6.0x 6.8x 8.0x 8.0x 3.0% 2.2% 2.1% 0.6% -1.2% 19.8% 18.3% 17.6% 17.1% 16.8%Cyan, Inc. - 6.0x 3.3x 1.1x 0.9x - - - - - 137.2% - - 58.4% 21.6% -9.8% -11.9% -17.1% -20.7% -29.9%Cyren 3.0x 2.7x 2.4x 2.3x 2.9x 37.8x 182.2x - - - 3.9% 10.9% 21.2% 33.4% 34.9% 8.1% 1.5% -2.3% -2.1% -5.8%

SEG Software Index

EV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin




Company


Dassault Systèmes 4.6x 5.0x 5.3x 4.6x 4.4x 14.8x 16.0x 17.2x 14.8x 13.9x 13.8% 11.7% 8.4% 4.4% 1.9% 31.3% 31.0% 31.0% 30.9% 31.5%DST Systems, Inc. 1.4x 1.4x 1.4x 1.6x 1.6x 9.7x 9.4x 9.2x 10.1x 9.9x 7.9% 6.4% 5.2% 4.3% 3.2% 14.5% 14.7% 14.9% 15.5% 16.2%Electronic Arts Inc. 1.1x 1.4x 1.9x 1.7x 1.9x 10.9x 16.6x 21.2x 14.9x 31.6x 2.4% -8.4% -7.5% -7.8% -7.5% 9.9% 8.6% 9.1% 11.7% 6.1%EMC 2.2x 2.1x 2.3x 2.1x 2.2x 9.3x 8.8x 9.7x 8.8x 9.0x 8.5% 7.4% 6.4% 6.2% 6.9% 23.9% 23.8% 23.9% 23.8% 24.2%EPIQ Systems, Inc. 2.0x 1.9x 1.9x 2.0x 1.8x 8.7x 9.2x 9.9x 11.2x 10.6x 32.0% 25.9% 22.2% 24.9% 27.2% 22.6% 20.5% 19.1% 17.9% 16.6%Evertec - 6.7x 7.6x 7.0x 7.4x - 14.9x 20.7x 17.9x 19.0x 6.4% 6.2% 5.4% 5.5% 4.6% 37.2% 44.9% 36.7% 39.2% 39.0%Evolving Systems, Inc. 2.4x 2.3x 3.1x 4.0x 3.6x 10.1x 8.3x 11.6x 15.0x 15.3x 38.0% 38.2% 20.2% 4.4% -4.4% 23.8% 27.5% 27.0% 26.5% 23.8%F5 Networks, Inc. 5.0x 3.8x 4.3x 4.1x 4.9x 15.1x 11.9x 13.8x 12.9x 16.0x 17.8% 12.9% 9.0% 7.6% 7.2% 33.1% 32.0% 31.2% 31.6% 30.8%Fair Isaac Corporation 2.9x 2.9x 3.0x 3.2x 3.1x 10.5x 10.7x 11.4x 12.1x 11.9x 9.8% 11.7% 13.6% 9.9% 6.0% 27.5% 26.6% 26.1% 26.7% 25.9%FalconStor Software, Inc. 1.3x 0.6x 0.4x 0.7x 0.9x - - - - - -9.0% -14.4% -14.1% -15.2% -22.2% -13.5% -15.1% -14.5% -11.5% -12.4%Fidessa 2.1x 2.3x 2.7x 2.6x 3.1x 10.3x 11.5x 13.5x 13.4x 15.9x 0.1% -1.0% -2.1% -1.0% 0.1% 20.0% 19.9% 19.8% 19.6% 19.4%Fiserv 3.1x 3.4x 3.5x 3.7x 3.8x 10.8x 11.6x 12.2x 12.7x 13.1x 3.4% 3.4% 5.4% 6.5% 8.5% 29.1% 29.0% 29.0% 29.0% 28.9%Fortinet Inc. 6.3x 4.5x 4.9x 4.6x 5.0x 30.3x 23.0x 27.5x 28.3x 35.6x 23.1% 20.7% 18.0% 17.0% 15.3% 20.6% 19.6% 17.9% 16.2% 14.1%GameLoft SA 1.8x 1.8x 2.1x 2.6x 2.5x 11.6x 11.6x 13.8x 17.3x 15.0x 26.7% 24.1% 21.8% 16.6% 12.0% 15.3% 15.2% 15.2% 15.0% 16.5%Gigamon, LLC - 7.1x 8.2x 5.7x 6.0x - 85.5x - - - 42.0% 41.6% 41.8% 45.1% 45.1% 9.3% 8.3% -22.3% -19.5% -19.5%Glu Mobile, Inc. 1.2x 1.5x 1.5x 2.5x 3.3x - - - - - 46.1% 26.4% 6.0% -7.4% -2.4% -7.7% -10.8% -13.7% -17.3% -13.2%Gree 1.5x 1.5x 1.1x 1.1x 1.6x 3.1x 3.7x 3.1x 3.4x 5.0x 49.5% 11.5% -3.8% -9.7% -12.7% 47.1% 40.4% 36.1% 33.5% 31.6%GSE Systems Inc. 0.4x 0.2x 0.2x 0.2x 0.3x 5.8x 6.6x - - - 2.2% -1.8% -9.3% -12.1% -9.0% 6.2% 3.3% -0.4% -5.2% -6.8%Guidance Software, Inc. 1.9x 1.8x 1.8x 2.0x 2.6x 34.2x 108.0x - - - 23.8% 21.8% 10.9% -3.5% -14.6% 5.5% 1.6% -2.3% -7.9% -12.3%Guidewire Software, Inc. 6.3x 7.9x 8.0x 9.0x 9.0x 88.1x 241.2x 110.7x 739.8x - 28.2% 25.9% 29.6% 25.1% 21.2% 7.2% 3.3% 7.2% 1.2% -1.1%Hewlett Packard 0.4x 0.5x 0.6x 0.5x 0.6x 3.5x 4.2x 4.6x 4.7x 5.0x -5.0% -6.8% -7.7% -6.7% -5.6% 12.1% 12.1% 12.0% 11.6% 11.8%IBM 2.4x 2.4x 2.3x 2.2x 2.3x 9.3x 9.4x 8.9x 8.5x 9.0x -2.3% -3.5% -3.5% -3.2% -4.6% 25.7% 25.6% 25.6% 25.6% 25.1%Imperva 7.2x 7.6x 9.0x 7.3x 9.7x - - - - - 33.1% 33.5% 32.5% 32.5% 32.2% -5.0% -7.1% -10.1% -10.9% -16.5%Informatica Corporation 4.1x 3.8x 4.1x 4.0x 3.9x 21.1x 18.8x 21.0x 21.2x 22.6x 3.5% 2.2% 6.5% 12.8% 16.8% 19.5% 20.4% 19.4% 18.7% 17.3%Intuit Inc 5.1x 4.4x 4.2x 4.6x 5.1x 14.7x 11.9x 12.2x 13.6x 16.3x -6.5% -2.0% 9.5% 11.5% 12.2% 34.7% 37.2% 34.7% 34.0% 31.4%

Jack Henry & Associates, Inc. 3.4x 3.6x 3.7x 4.0x 4.1x 10.8x 11.3x 11.6x 12.4x 11.9x 7.9% 8.7% 10.0% 9.9% 9.8% 31.7% 31.9% 32.2% 32.5% 34.0%Juniper Networks, Inc. 2.0x 1.7x 1.9x 1.9x 2.4x 14.6x 11.1x 12.2x 11.5x 14.3x -1.9% 0.3% 3.1% 4.4% 7.0% 13.7% 15.0% 15.9% 16.2% 17.0%King Digital Entertainment - - - - 3.0x - - - - 7.7x 157.3% - - - 1046.1% 7.6% 23.3% 31.1% 36.2% 38.2%Konami Corporation 0.9x 1.2x 1.3x 1.5x 1.5x 6.5x 8.3x 10.3x 13.5x 13.3x -12.4% -15.0% -14.4% -12.9% -4.1% 14.4% 14.3% 12.8% 11.0% 11.3%Magic Software Enterprises Ltd. 1.2x 1.2x 1.5x 1.5x 2.0x 6.1x 6.5x 7.9x 7.5x 10.2x 11.5% 10.1% 15.1% 15.2% 14.7% 18.9% 19.2% 18.4% 19.5% 19.1%Manhattan Associates, Inc. 3.3x 3.4x 4.1x 5.0x 6.0x 14.5x 15.0x 17.4x 20.0x 23.1x 14.3% 9.3% 10.2% 10.4% 10.2% 22.8% 23.0% 23.7% 25.3% 25.8%

Mavenir Systems, Inc. - - - 3.4x 4.0x - - - - - 49.2% - - 12.0% 37.2% -14.2% -12.1% -10.3% -7.3% -3.7%MedAssets 3.2x 3.0x 3.3x 3.2x 3.2x 10.4x 9.3x 10.5x 10.4x 10.4x 10.7% 11.0% 9.4% 6.4% 6.3% 30.5% 31.7% 31.6% 30.8% 30.6%Mentor Graphics Corp 1.8x 1.9x 2.2x 2.4x 2.2x 9.4x 11.4x 12.6x 13.6x 10.4x 7.3% 3.4% 1.9% 0.8% 6.2% 19.3% 17.0% 17.7% 17.4% 20.7%Merge Healthcare 1.8x 2.0x 2.0x 1.9x 1.9x 17.5x 21.1x 25.0x 27.5x 17.2x 7.1% 4.5% -0.9% -2.3% -6.9% 10.5% 9.7% 8.1% 6.7% 11.1%Micros Systems 2.5x 2.2x 2.5x 2.7x 2.7x 11.3x 10.4x 12.6x 13.6x 13.9x 14.3% 15.1% 14.5% 11.5% 8.2% 21.8% 21.4% 19.9% 19.8% 19.7%Microsoft Corporation 2.5x 2.9x 2.7x 3.0x 3.0x 6.2x 7.3x 7.1x 7.8x 7.9x 1.2% 4.1% 5.6% 11.1% 14.4% 39.6% 40.0% 38.7% 39.0% 38.1%

SEG Software Index





Company


MicroStrategy Incorporated 1.6x 1.2x 1.3x 1.8x 1.8x 18.1x 17.4x 26.2x 30.8x 26.1x 5.3% 1.4% 2.3% 4.4% 1.8% 9.0% 6.9% 5.0% 5.8% 7.0%

Millennial Media Inc 4.4x 2.4x 2.4x 2.0x 2.5x - - - - 564.7x 71.4% 68.7% 60.3% 42.9% 45.9% -1.0% -0.9% -0.6% -0.9% 0.4%MIND C.T.I. Ltd. 1.1x 0.7x 0.8x 0.9x 1.2x 4.9x 4.0x 4.4x 6.1x 9.0x 6.9% -1.6% -9.4% -10.6% -8.6% 23.0% 18.8% 18.2% 15.3% 13.0%Model N, Inc 4.7x 4.2x 3.0x 1.0x 1.7x 275.9x - 127.2x 27.0x 67.4x - - - 20.9% 14.2% 1.7% -0.5% 2.4% 3.9% 2.5%MSCI, Inc. 4.8x 4.8x 5.0x 5.5x 5.4x 10.6x 10.6x 11.1x 12.2x 12.5x 5.5% 7.3% 8.0% 9.2% 9.0% 45.1% 45.0% 45.0% 44.9% 43.6%Myriad Group AG 2.7x 2.9x 3.0x 3.6x 3.9x - - - - - -7.8% -2.9% 3.0% -10.8% -23.3% -20.1% -19.0% -17.8% -17.0% -16.0%NetApp, Inc. 1.2x 1.3x 1.6x 1.5x 1.5x 9.2x 10.4x 11.4x 10.2x 9.8x 6.0% 1.6% 3.0% 2.5% 1.2% 13.6% 13.0% 13.9% 14.6% 15.2%Netscout Systems, Inc. 2.8x 2.4x 2.6x 2.9x 3.5x 12.2x 10.3x 11.2x 13.3x 15.0x 15.1% 13.6% 10.6% 9.0% 11.8% 22.7% 22.9% 23.1% 22.1% 23.5%NetSol Technologies Inc. 0.6x 0.8x 1.2x 1.2x 1.3x 1.3x 1.5x 2.8x 2.6x 3.6x 40.8% 61.5% 19.9% 22.6% 2.3% 51.5% 52.6% 44.4% 46.4% 35.8%NeuStar, Inc 3.9x 3.9x 4.2x 3.8x 2.9x 9.3x 9.4x 9.9x 9.0x 7.2x 34.0% 25.9% 17.7% 11.0% 8.5% 41.6% 41.7% 42.0% 42.0% 39.9%NQ Mobile Inc. 1.9x 2.8x 5.8x 3.4x 4.1x 47.3x 52.9x 129.9x 115.2x 553.4x 125.6% 122.4% 117.0% 113.0% 114.3% 4.0% 5.3% 4.5% 3.0% 0.7%Omnicell, Inc. 1.7x 1.7x 2.0x 2.0x 2.3x 12.5x 12.0x 13.8x 14.6x 16.5x 27.9% 33.5% 33.1% 27.3% 21.2% 13.4% 14.1% 14.3% 13.9% 13.8%Opera 3.2x 3.6x 3.8x 5.5x 5.4x 11.7x 13.2x 13.6x 19.6x 19.7x 35.2% 35.9% 38.0% 36.5% 38.9% 27.8% 27.2% 27.8% 27.9% 27.5%Oracle Corporation 4.1x 3.9x 3.7x 3.8x 4.2x 9.5x 9.0x 8.4x 8.7x 9.6x 0.5% 0.2% 1.2% 0.9% 2.0% 43.1% 43.2% 43.5% 43.4% 43.5%Palo Alto Networks, Inc 10.7x 9.1x 7.6x 6.5x 9.6x - - - - - 74.8% 63.6% 55.3% 54.4% 49.2% -0.1% -1.6% -1.3% -1.5% -3.7%Pandora Media 4.5x 5.4x 6.3x 8.5x 10.9x - - - - - 55.7% 55.2% 56.0% 53.5% 53.5% -7.2% -8.2% -7.5% -7.1% -7.1%Parametric Technology Corporation 2.3x 2.3x 2.5x 2.9x 3.3x 13.0x 12.3x 12.7x 13.0x 14.8x 3.2% 1.5% 0.3% 3.3% 3.3% 17.9% 18.8% 19.9% 22.3% 22.3%PDF Solutions Inc 4.5x 5.1x 5.7x 6.2x 5.8x 18.7x 19.5x 20.6x 20.9x 17.7x 34.2% 28.6% 22.6% 17.8% 13.3% 24.2% 26.0% 27.4% 29.5% 32.6%Pegasystems Inc. 1.8x 2.1x 2.6x 3.2x 3.0x 16.2x 16.9x 18.3x 19.9x 18.6x 10.8% 9.7% 12.2% 15.3% 10.2% 10.8% 12.2% 14.0% 16.2% 15.9%Progress Software Corporation 3.2x 2.7x 3.2x 3.3x 3.1x 10.8x 13.5x 16.0x 11.9x 11.1x 3.2% 34.7% 69.1% 5.2% 1.9% 29.1% 20.4% 19.9% 28.0% 28.3%Proofpoint, Inc. 3.6x 4.8x 7.9x 8.1x 9.7x - - - - - 29.9% 28.2% 26.2% 25.3% 29.8% -11.4% -12.4% -12.1% -12.9% -12.2%PROS Holdings 5.3x 5.6x 6.3x 6.6x 6.7x 60.4x 74.0x 96.1x 100.0x 101.6x 21.9% 21.7% 23.6% 24.6% 23.0% 8.8% 7.6% 6.5% 6.7% 6.6%QAD Inc. 0.6x 0.5x 0.5x 0.7x 0.9x 9.4x 12.7x 12.8x 16.5x 14.8x 2.0% -0.5% 1.6% 2.8% 5.6% 6.4% 4.3% 4.2% 4.2% 5.8%Qihoo 360 Technology Co. Ltd 10.3x 12.2x 18.3x 17.8x 17.3x 51.0x 68.2x 82.1x 67.3x 78.3x 96.0% 72.6% 78.1% 91.5% 104.0% 20.3% 17.9% 22.3% 26.4% 22.1%Qiwi plc - 1.7x 4.3x 6.1x 5.1x - 8.2x 19.7x 27.2x 22.0x 9.2% - - - 30.9% 18.8% 20.2% 21.9% 22.4% 23.1%Qlik Technologies 5.0x 5.5x 6.1x 4.6x 4.8x 97.8x 192.7x 475.8x 478.2x 193.4x 21.2% 20.5% 22.8% 24.2% 21.1% 5.1% 2.8% 1.3% 1.0% 2.5%Quality Systems, Inc. 2.1x 2.1x 2.5x 2.8x 2.2x 9.1x 9.6x 11.6x 14.1x 13.5x 9.6% 7.1% 0.8% -2.1% -3.7% 23.5% 21.9% 21.6% 19.9% 16.5%Radware Ltd. 3.8x 3.2x 3.2x 3.4x 3.4x 17.5x 15.6x 17.0x 21.0x 21.8x 13.3% 9.1% 5.7% 2.9% 2.0% 21.6% 20.4% 18.6% 16.1% 15.4%Red Hat, Inc. 7.2x 6.1x 6.2x 5.3x 6.5x 35.2x 30.2x 30.5x 26.0x 32.4x 17.3% 16.4% 16.7% 16.0% 15.5% 20.4% 20.1% 20.2% 20.4% 20.1%Redknee Solutions 3.5x 3.9x 3.3x 3.6x 2.7x 36.2x 93.0x 46.6x 195.9x 74.2x -0.6% -1.4% 74.4% 149.8% 226.0% 9.6% 4.2% 7.1% 1.8% 3.6%Riverbed Technology, Inc. 3.2x 2.9x 2.8x 2.8x 3.2x 19.7x 19.5x 20.2x 22.4x 22.2x 15.2% 20.8% 23.1% 24.0% 24.4% 16.1% 15.0% 14.0% 12.7% 14.2%Sage Group plc 2.9x 3.0x 3.0x 2.9x 3.7x 10.1x 10.7x 10.6x 10.0x 12.7x 1.7% 2.9% 2.8% 2.7% 2.7% 28.5% 28.5% 28.7% 29.0% 29.0%SAP AG 4.6x 4.5x 4.2x 4.4x 4.2x 14.4x 13.2x 12.2x 12.5x 12.2x 14.0% 13.2% 9.8% 6.6% 3.6% 32.1% 33.8% 34.3% 35.0% 34.2%Sapiens International 1.4x 1.5x 1.6x 2.0x 2.2x 9.9x 11.4x 12.1x 16.0x 15.1x 62.9% 44.6% 31.2% 21.5% 18.8% 13.8% 13.5% 13.3% 12.3% 14.6%Silver Spring Networks, Inc. 4.5x 4.0x 3.7x 2.8x 2.1x - - - - - -17.0% -20.7% 8.0% 34.5% 66.1% -41.5% -51.1% -27.3% -19.8% -10.8%Software AG 2.5x 2.2x 2.1x 2.4x 2.4x 8.9x 8.3x 8.2x 9.4x 9.6x -4.6% -5.8% -7.9% -8.1% -7.1% 27.5% 26.2% 26.0% 25.6% 25.0%SolarWinds, Inc. 14.7x 11.2x 9.1x 7.9x 9.1x 31.6x 22.9x 18.6x 16.6x 21.9x 35.6% 31.2% 26.8% 24.2% 24.7% 46.5% 49.0% 49.0% 47.8% 41.7%

SEG Software Index





Company


Splunk, Inc. 15.8x 19.0x 20.7x 23.6x 28.3x - - - - - 64.5% 59.2% 54.7% 51.4% 52.1% -8.8% -12.1% -14.5% -16.4% -23.3%SS&C Corporation 5.2x 5.6x 5.6x 5.8x 5.7x 13.4x 14.6x 14.4x 14.7x 14.4x 48.8% 68.1% 70.1% 47.5% 29.1% 38.6% 38.5% 38.8% 39.5% 39.5%Stratasys, Inc. 8.1x 11.3x 11.7x 12.9x 10.9x 33.5x 57.2x 58.9x 72.2x 65.5x 38.1% 60.9% 82.4% 113.4% 125.0% 24.2% 19.8% 19.9% 17.9% 16.6%Sungy Mobile Limited - - - 10.6x 12.2x - - - 35.4x 41.1x 91.7% - - - 77.5% 7.1% 17.2% 24.6% 29.8% 29.6%Symantec Corporation 2.1x 2.2x 2.3x 2.1x 1.9x 7.9x 8.0x 8.4x 7.3x 6.5x 1.7% 2.6% 1.8% -0.6% -0.6% 26.5% 27.3% 27.6% 28.8% 28.8%

Synchronoss Technologies, Inc. 4.1x 4.0x 4.4x 4.0x 3.6x 18.4x 18.4x 21.1x 19.8x 16.0x 19.5% 19.4% 20.3% 23.7% 27.5% 22.2% 21.8% 20.7% 20.2% 22.2%

Synopsys Inc 2.6x 2.7x 2.6x 2.5x 2.7x 16.4x 14.2x 14.3x 13.5x 14.9x 13.1% 14.5% 13.0% 11.7% 8.9% 15.9% 18.8% 18.4% 18.4% 18.3%

Take-Two Interactive 1.2x 1.1x 1.4x 1.5x 0.6x - 58.4x 15.5x 1215.9x 2.8x 23.6% 47.1% 57.6% 13.9% 130.9% -6.4% 1.9% 8.8% 0.1% 21.4%Tangoe, Inc. 3.3x 2.8x 3.8x 3.5x 3.5x 39.0x 32.9x 42.3x 38.9x 40.8x 47.2% 41.5% 38.1% 30.8% 22.3% 8.5% 8.7% 8.9% 9.0% 8.7%TeleCommunication Systems 0.5x 0.5x 0.5x 0.6x 0.6x 6.5x 6.2x 6.7x 7.0x 10.2x 14.6% 10.8% 2.5% -12.6% -25.7% 7.9% 7.9% 8.0% 7.9% 5.9%TeleNav 0.5x 0.1x 0.2x 0.4x 0.3x 2.8x 0.7x 2.4x 6.3x 22.7x -7.2% -5.8% -6.7% -0.9% -6.2% 16.8% 13.2% 8.1% 6.5% 1.5%Teradata 3.8x 3.2x 3.4x 2.5x 2.5x 15.3x 13.7x 15.0x 11.3x 11.0x 12.8% 6.9% 3.6% 2.5% 1.0% 24.7% 23.2% 22.8% 22.3% 23.1%The Descartes Systems Group Inc. 4.3x 4.7x 4.9x 5.4x 5.6x 14.9x 16.2x 17.2x 19.1x 19.9x 11.3% 12.2% 17.1% 18.0% 19.2% 28.9% 29.1% 28.4% 28.2% 28.1%TIBCO Software Inc. 3.3x 3.0x 3.4x 3.4x 3.0x 16.4x 16.1x 18.5x 18.7x 16.4x 7.9% 4.4% 3.3% 4.4% 4.7% 20.2% 18.6% 18.6% 18.1% 18.5%Trend Micro 2.3x 2.7x 3.3x 3.5x 2.9x 7.3x 8.2x 9.9x 10.3x 8.6x -2.6% 2.1% 7.7% 11.3% 15.4% 31.9% 32.8% 33.0% 33.7% 33.9%Tyler Technologies, Inc. 4.7x 5.5x 6.2x 7.8x 7.3x 25.3x 28.0x 31.2x 41.3x 38.5x 17.4% 18.1% 16.4% 14.6% 14.7% 18.6% 19.6% 19.8% 19.0% 18.9%Ubisoft Entertainment 0.8x 0.7x 0.8x 0.8x 1.2x 2.2x 2.0x 2.2x 2.2x 3.1x 12.5% 18.4% 17.3% 16.3% 16.3% 34.4% 36.8% 37.3% 37.7% 37.7%Varonis Systems, Inc. - - - - 13.8x - - - - - 34.3% - - - 39.7% -2.0% -3.0% -3.8% -6.5% -6.8%VASCO Data Security International 1.4x 1.4x 1.5x 1.4x 1.3x 9.3x 9.4x 14.0x 15.0x 12.7x -8.4% -4.3% -12.5% -8.0% 0.7% 14.8% 14.8% 11.1% 9.1% 10.6%Verisk 7.6x 7.1x 7.2x 7.2x 7.4x 15.9x 16.0x 16.1x 16.3x 16.0x 18.2% 16.5% 16.1% 14.2% 13.3% 47.5% 44.5% 44.5% 44.6% 46.1%VMWare, Inc. 6.4x 5.7x 6.4x 5.9x 6.9x 25.6x 22.9x 25.2x 22.5x 24.4x 22.2% 19.2% 16.3% 14.7% 13.1% 25.1% 24.7% 25.3% 26.4% 28.1%Zynga, Inc 1.0x 1.1x 1.2x 2.0x 3.3x 24.5x 9.5x 7.8x 14.0x 38.7x 12.4% 0.5% -11.8% -21.3% -31.8% 4.2% 11.7% 15.0% 14.2% 8.4%


SEG Software Index



THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

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

EV/Revenue 2.4x 2.3x 3.1x 3.5x 2.7xEV/EBITDA 9.3x 8.3x 9.9x 9.0x 9.3xEV/Earnings 15.6x 15.9x 17.3x 19.0x 17.8xGross Profit Margin 61.1% 58.5% 58.7% 57.8% 57.4%EBITDA Margin 22.2% 18.8% 18.7% 18.6% 18.5%Net Income Margin 12.2% 12.2% 12.7% 12.3% 11.8%TTM Revenue Growth (YoY) 6.9% 2.2% 17.7% 4.4% 3.6%TTM EBITDA Growth (YoY) 13.0% 15.6% 7.7% 3.4% 3.7%TTM Earnings Growth (YoY) 4.2% 7.8% -16.7% -9.6% -4.8%Current Ratio 3.3 2.5 2.6 2.3 2.4Cash as Percent of Market Cap 15.4% 19.2% 17.9% 14.2% 13.5%Enterprise Value Growth (YoY) 13.4% 22.6% 29.3% 30.7% 27.2%

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

EV/Revenue 3.5x 3.0x 3.3x 3.1x 3.1xEV/EBITDA 16.0x 16.5x 17.2x 18.4x 17.3xEV/Earnings 34.7x 25.2x 34.0x 33.8x 30.1xGross Profit Margin 75.1% 73.9% 73.6% 74.5% 75.9%EBITDA Margin 10.8% 12.2% 12.6% 11.5% 10.2%Net Income Margin 4.7% 6.8% 7.1% 8.6% 7.5%TTM Revenue Growth (YoY) 12.8% 13.1% 14.2% 9.7% 10.2%TTM EBITDA Growth (YoY) -0.7% -8.2% -26.9% -14.2% -8.5%TTM Earnings Growth (YoY) 15.5% 14.9% 15.6% 4.3% -10.0%Current Ratio 1.9 1.9 2.0 2.1 2.0Cash as Percent of Market Cap 15.7% 14.3% 11.8% 9.4% 9.5%Enterprise Value Growth (YoY) -7.2% -9.1% 21.3% 37.8% 11.6%

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

EV/Revenue 2.5x 2.6x 2.6x 2.7x 2.7xEV/EBITDA 9.6x 10.2x 14.4x 11.9x 11.1xEV/Earnings 17.2x 14.2x 13.7x 16.0x 18.2xGross Profit Margin 77.9% 78.1% 77.7% 77.6% 76.7%EBITDA Margin 23.9% 20.3% 20.0% 20.0% 19.6%Net Income Margin 14.3% 12.6% 11.2% 11.5% 11.3%TTM Revenue Growth (YoY) 3.0% 0.6% -0.3% 0.1% -0.3%TTM EBITDA Growth (YoY) 0.0% -2.7% -13.9% -12.6% -6.5%TTM Earnings Growth (YoY) -7.0% -6.9% 1.6% -0.3% -10.3%Current Ratio 2.3 2.3 2.1 2.1 2.0Cash as Percent of Market Cap 19.8% 20.6% 19.3% 18.9% 20.9%Enterprise Value Growth (YoY) 0.1% -3.0% 6.3% 18.1% 7.0%

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

EV/Revenue 2.7x 2.7x 2.8x 2.9x 3.3xEV/EBITDA 14.8x 14.2x 14.6x 14.2x 14.9xEV/Earnings 20.0x 19.6x 22.9x 23.1x 25.8xGross Profit Margin 83.3% 83.4% 83.6% 84.0% 84.1%EBITDA Margin 20.7% 19.8% 19.9% 20.1% 20.7%Net Income Margin 10.8% 10.4% 10.8% 11.2% 11.4%TTM Revenue Growth (YoY) 13.1% 11.7% 8.4% 4.4% 6.2%TTM EBITDA Growth (YoY) 10.6% 11.3% 8.0% 3.7% 7.0%TTM Earnings Growth (YoY) 14.2% 13.3% 6.1% 4.0% 8.6%Current Ratio 1.9 2.2 2.2 2.5 2.4Cash as Percent of Market Cap 13.9% 16.4% 15.5% 16.5% 14.2%Enterprise Value Growth (YoY) 21.1% 27.4% 32.2% 40.9% 25.6%

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

EV/Revenue 2.9x 3.0x 3.0x 2.9x 3.7xEV/EBITDA 10.1x 11.4x 12.1x 12.4x 12.7xEV/Earnings 22.8x 25.4x 23.4x 23.5x 21.1xGross Profit Margin 71.2% 71.6% 71.9% 72.2% 72.6%EBITDA Margin 28.5% 28.5% 28.7% 29.0% 29.0%Net Income Margin 12.6% 10.4% 9.8% 10.7% 10.9%TTM Revenue Growth (YoY) 2.0% 0.2% 1.6% 2.7% 2.7%TTM EBITDA Growth (YoY) 5.3% 0.0% 4.1% 3.9% 2.9%TTM Earnings Growth (YoY) -18.4% -16.7% -16.6% -6.8% 0.2%Current Ratio 1.1 1.1 1.1 1.1 1.2Cash as Percent of Market Cap 19.2% 21.4% 22.3% 20.6% 21.8%Enterprise Value Growth (YoY) 2.0% 15.4% 4.3% 13.7% 25.8%

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


Gaming 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 1.1x 1.3x 1.6x 1.6x 1.7xEV/EBITDA 7.1x 10.0x 12.1x 14.2x 11.3xEV/Earnings 16.8x 20.5x 43.6x 29.7x 35.5xGross Profit Margin 64.7% 65.3% 66.3% 66.8% 64.2%EBITDA Margin 14.9% 14.8% 14.0% 13.4% 19.0%Net Income Margin 4.5% 4.4% 3.5% 3.4% 3.7%TTM Revenue Growth (YoY) 7.4% 15.1% 15.2% 10.7% 3.9%TTM EBITDA Growth (YoY) 12.1% 40.1% 50.6% 27.6% 8.0%TTM Earnings Growth (YoY) -10.7% 26.4% 25.3% -17.6% -18.2%Current Ratio 2.5 2.6 2.4 2.0 2.4Cash as Percent of Market Cap 28.7% 26.0% 21.6% 22.6% 19.4%Enterprise Value Growth (YoY) -1.3% 27.1% 65.0% 45.7% 44.5%

Healthcare 1Q13 2Q13 3Q13 4Q13 1Q14


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

EV/Revenue 2.5x 2.9x 2.7x 3.0x 3.0xEV/EBITDA 9.3x 9.0x 8.4x 8.5x 9.0xEV/Earnings 14.7x 14.2x 13.5x 12.7x 13.6xGross Profit Margin 71.2% 71.6% 71.9% 72.2% 71.5%EBITDA Margin 32.1% 33.8% 34.3% 35.0% 34.2%Net Income Margin 17.3% 17.6% 17.8% 18.6% 19.8%TTM Revenue Growth (YoY) 0.5% 0.2% 1.2% 0.9% 2.0%TTM EBITDA Growth (YoY) 0.2% 2.4% 0.6% 2.1% 3.1%TTM Earnings Growth (YoY) -6.8% -6.7% 3.3% 5.5% 11.9%Current Ratio 1.1 1.2 1.2 1.2 1.3Cash as Percent of Market Cap 19.2% 21.4% 22.3% 20.6% 21.8%Enterprise Value Growth (YoY) 1.6% 1.7% 3.7% 9.7% 5.1%

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

EV/Revenue 3.0x 2.8x 3.4x 3.4x 3.6xEV/EBITDA 18.4x 13.2x 13.6x 19.7x 30.7xEV/Earnings 41.1x 52.2x 63.0x 79.1x 35.3xGross Profit Margin 58.7% 60.9% 60.9% 59.9% 58.5%EBITDA Margin 7.3% 10.2% 8.5% 8.4% 7.2%Net Income Margin 3.4% 4.2% 3.4% 3.1% 0.6%TTM Revenue Growth (YoY) 47.2% 26.4% 20.3% 23.7% 24.9%TTM EBITDA Growth (YoY) 16.4% 12.0% 16.0% 16.5% 26.5%TTM Earnings Growth (YoY) 13.4% -20.1% -36.6% -34.9% 88.3%Current Ratio 2.0 2.1 2.1 3.3 2.8Cash as Percent of Market Cap 10.5% 15.7% 15.7% 10.8% 8.7%Enterprise Value Growth (YoY) -15.7% -6.5% 9.1% 50.2% 30.0%

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

EV/Revenue 2.8x 2.7x 2.8x 2.8x 3.3xEV/EBITDA 16.6x 17.0x 17.0x 14.9x 16.8xEV/Earnings 29.7x 21.0x 22.8x 21.7x 25.8xGross Profit Margin 70.6% 70.7% 70.8% 71.1% 71.1%EBITDA Margin 12.6% 12.7% 12.7% 7.9% 7.5%Net Income Margin 4.7% 1.3% -2.4% -2.7% -2.5%TTM Revenue Growth (YoY) 20.3% 12.9% 7.2% 6.1% 7.2%TTM EBITDA Growth (YoY) 11.7% 8.9% 3.6% -21.6% -21.8%TTM Earnings Growth (YoY) -14.4% 2.9% 10.0% 6.9% -0.8%Current Ratio 1.6 1.5 2.1 2.3 2.6Cash as Percent of Market Cap 14.4% 17.3% 16.9% 19.1% 14.2%Enterprise Value Growth (YoY) -4.3% 2.2% 8.4% 8.1% 3.9%

Security 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 3.3x 3.6x 4.0x 3.5x 5.0xEV/EBITDA 11.6x 10.8x 13.0x 13.7x 12.7xEV/Earnings 15.8x 16.2x 19.6x 16.8x 17.7xGross Profit Margin 79.0% 78.8% 78.2% 78.3% 76.4%EBITDA Margin 11.5% 11.5% 11.1% 0.5% -3.0%Net Income Margin 6.2% -3.8% -7.4% -7.7% -14.7%TTM Revenue Growth (YoY) 23.8% 21.8% 21.2% 18.3% 15.3%TTM EBITDA Growth (YoY) 2.0% -16.4% -29.9% -39.8% -39.8%TTM Earnings Growth (YoY) -3.5% -6.1% -4.1% -13.0% -21.6%Current Ratio 1.4 1.4 1.3 1.4 1.6Cash as Percent of Market Cap 12.8% 11.0% 9.9% 11.6% 8.8%Enterprise Value Growth (YoY) -0.2% 13.6% 30.7% 29.0% 24.6%



THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

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

EV/Revenue 2.4x 2.4x 2.7x 3.0x 3.0xEV/EBITDA 9.3x 9.0x 8.9x 8.6x 9.0xEV/Earnings 15.4x 16.9x 15.5x 16.4x 14.3xGross Profit Margin 72.6% 72.3% 72.8% 73.5% 71.5%EBITDA Margin 21.8% 21.9% 22.2% 23.3% 24.2%Net Income Margin 11.5% 10.7% 10.9% 11.1% 12.4%TTM Revenue Growth (YoY) 4.8% 4.1% 3.3% 4.4% 2.0%TTM EBITDA Growth (YoY) 1.6% 1.8% -0.6% 3.8% 3.6%TTM Earnings Growth (YoY) 4.7% 3.2% 8.9% 6.9% 5.7%Current Ratio 2.2 2.2 2.4 2.5 2.6Cash as Percent of Market Cap 22.1% 21.4% 19.6% 20.6% 21.8%Enterprise Value Growth (YoY) -9.1% -0.8% 13.0% 27.6% 5.8%

Supply Chain Mgmt & Logistics 1Q13 2Q13 3Q13 4Q13 1Q14


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

EV/Revenue 5.6x 5.0x 5.4x 4.4x 5.0xEV/EBITDA 23.1x 20.9x 19.7x 16.5x 18.9xEV/Earnings 37.6x 34.7x 34.7x 29.8x 32.3xGross Profit Margin 85.6% 85.5% 85.6% 85.7% 85.9%EBITDA Margin 24.3% 23.8% 24.2% 24.2% 25.8%Net Income Margin 14.9% 14.1% 13.8% 14.8% 15.9%TTM Revenue Growth (YoY) 17.2% 16.1% 16.4% 15.3% 13.0%TTM EBITDA Growth (YoY) 6.7% 13.2% 11.9% 16.7% 12.8%TTM Earnings Growth (YoY) 2.7% 0.7% 9.4% 16.8% 16.1%Current Ratio 1.5 1.5 1.5 1.6 1.3Cash as Percent of Market Cap 11.0% 11.3% 10.5% 10.9% 9.5%Enterprise Value Growth (YoY) 4.1% -10.3% -9.1% -9.1% 11.7%

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


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

EV/Revenue 3.1x 3.4x 3.7x 3.6x 3.2xEV/EBITDA 21.2x 24.6x 26.0x 30.2x 16.2xEV/Earnings 41.0x 45.5x 51.8x 68.1x 53.6xGross Profit Margin 53.4% 52.8% 52.4% 52.5% 51.9%EBITDA Margin 13.9% 13.5% 13.3% 12.3% 14.6%Net Income Margin 6.5% 6.7% 5.8% 4.5% 6.0%TTM Revenue Growth (YoY) 20.6% 21.7% 22.3% 24.6% 21.2%TTM EBITDA Growth (YoY) 8.7% 4.8% -3.5% 0.6% 17.0%TTM Earnings Growth (YoY) -4.2% -3.4% 15.1% 6.3% -1.5%Current Ratio 1.6 1.4 1.5 1.6 2.1Cash as Percent of Market Cap 9.8% 8.0% 7.9% 5.2% 8.0%Enterprise Value Growth (YoY) 21.9% 55.4% 69.3% 77.5% 67.6%



THE SEG SaaS INDEX COMPANIES – KEY METRICSCompany


2U, Inc. - - - - 6.4x - - - - - 87.9% 87.9% 87.9% - 48.8% -40.4% -40.4% -40.4% -37.1% -32.8%Amber Road, Inc. - - - - 7.2x - - - - - 15.4% - - - 21.1% -0.8% -8.6% -19.5% -21.0% -22.3%

Athenahealth, Inc 7.2x 7.2x 8.6x 9.4x 10.6x 55.7x 78.6x 99.7x 105.9x 115.3x 30.3% 28.7% 31.3% 35.4% 40.9% 13.0% 9.1% 8.6% 8.9% 9.2%

Bazaarvoice, Inc 2.6x 2.6x 4.0x 3.3x 2.7x - - - - - 57.9% 51.0% 41.3% 32.1% 22.3% -23.7% -28.1% -27.4% -20.0% -16.8%Benefitfocus, Inc. - - 13.0x 11.9x 14.4x - - - - - 18.8% - - - 28.2% -7.6% -10.2% -15.3% -17.3% -21.7%

Callidus Software Inc. 2.1x 2.5x 3.1x 4.3x 5.2x - - - - - 13.3% 14.5% 12.6% 16.4% 18.3% -20.9% -16.1% -14.4% -9.8% -4.0%

Castlight Health, Inc. - - - - 183.9x - - - - - 121.5% 121.5% 121.5% - 212.3% -840.2% -840.2% -840.2% -579.4% -475.6%ChannelAdvisors - 5.8x 9.2x 11.5x 13.4x - - - - - 23.0% - - 26.0% 26.9% -1.8% -3.7% -5.1% -8.3% -15.8%Concur 7.9x 8.7x 10.3x 9.9x 10.4x 81.8x 113.9x 112.0x 112.5x 166.9x 25.1% 22.3% 21.5% 24.1% 26.8% 9.7% 7.7% 9.2% 8.8% 6.2%Constant Contact 1.4x 1.3x 1.7x 2.6x 2.6x 17.8x 18.5x 23.5x 30.8x 27.5x 17.6% 16.1% 14.8% 13.7% 13.2% 7.8% 7.3% 7.3% 8.5% 9.4%Cornerstone OnDemand 13.4x 14.6x 17.1x 15.1x 15.6x - - - - - 61.5% 61.9% 60.2% 60.5% 57.0% -23.6% -21.5% -19.7% -17.3% -16.1%Cvent - - 14.3x 12.0x 12.4x - - 178.8x 226.1x 663.9x 37.2% - - - 33.1% 13.6% 10.7% 8.0% 5.3% 1.9%

DealerTrack 3.3x 3.3x 4.0x 4.0x 4.5x 23.5x 23.6x 28.7x 28.5x 37.4x 10.1% 10.5% 15.1% 20.8% 23.8% 14.0% 14.0% 14.1% 14.0% 12.0%

Demandware, Inc. 8.8x 9.5x 14.2x 18.0x 21.7x - - - - - 40.5% 37.5% 33.4% 31.7% 30.5% -4.8% -10.7% -13.5% -15.8% -15.6%

E2open, Inc 5.9x 4.5x 6.9x 8.4x 9.8x 273.0x - - - - 25.6% 17.4% 0.0% -6.6% -6.6% 2.1% -2.1% -16.1% -25.4% -25.4%

Ebix Inc. 3.3x 3.7x 2.1x 2.6x 2.9x 7.9x 8.8x 5.4x 6.4x 7.8x 18.0% 20.5% 18.6% 9.8% 2.7% 42.4% 41.8% 39.2% 40.3% 37.1%Ellie Mae 5.0x 5.0x 5.7x 5.5x 5.4x 19.5x 19.9x 24.2x 24.8x 27.5x 83.5% 69.9% 57.2% 41.2% 26.2% 25.5% 24.8% 23.6% 22.1% 19.5%FireEye, Inc. - - 39.3x 32.7x 55.6x - - - - - 147.5% - - - 93.9% -31.6% -43.9% -61.9% -79.2% -88.4%Five9, Inc. - - - - - - - - - - 47.8% 47.8% 47.8% - 31.8% -22.6% -22.6% -22.6% -28.6% -27.8%

Fleetmatics 6.9x 5.6x 8.9x 7.6x 7.3x 37.0x 27.8x 35.9x 28.7x 29.0x 38.1% 39.6% 38.7% 38.8% 39.2% 18.6% 20.3% 24.7% 26.6% 25.3%

Halogen Software, Inc. - 8.0x 5.7x 4.7x 4.4x - - - - - 22.5% - - - 26.3% -11.4% -11.1% -8.2% -8.0% -7.4%

inContact, Inc. 2.8x 3.2x 3.4x 3.0x 3.5x 475.8x 236.3x 243.5x 1078.5x - 24.6% 25.5% 24.9% 22.1% 17.9% 0.6% 1.4% 1.4% 0.3% -1.4%IntraLinks Holdings 1.6x 1.5x 2.1x 2.5x 2.5x 20.3x 66.2x 170.3x - 46.1x 1.8% 4.6% 6.2% 8.0% 8.2% 7.9% 2.3% 1.2% -0.1% 5.5%J2 Global 4.1x 4.5x 4.9x 4.6x 4.3x 8.3x 9.8x 11.0x 11.0x 10.5x 12.5% 16.0% 29.7% 36.8% 40.2% 49.6% 46.1% 44.5% 41.7% 41.3%Jive Software, Inc 7.6x 7.0x 5.9x 4.7x 3.5x - - - - - 47.1% 41.2% 36.5% 34.1% 28.2% -32.2% -35.4% -37.0% -38.9% -41.7%

LivePerson 4.3x 2.6x 2.6x 3.1x 3.6x 35.5x 29.8x 35.9x 58.0x 101.2x 18.3% 17.0% 14.9% 14.5% 13.0% 12.0% 8.7% 7.4% 5.4% 3.5%

Marin Software 8.2x 4.2x 4.3x 3.2x 3.1x - - - - - 64.9% - - 34.5% 29.8% -38.0% -39.1% -40.6% -39.2% -38.3%

Marketo - 11.5x 15.0x 13.1x 15.2x - - - - - 80.3% - - - 64.2% -55.8% -53.2% -49.4% -42.8% -42.4%

Medidata Solutions 5.3x 7.3x 9.0x 11.1x 11.4x 31.8x 45.5x 55.8x 68.1x 99.0x 18.4% 19.2% 24.5% 26.1% 26.8% 16.6% 16.0% 16.1% 16.3% 11.5%

Netsuite 15.4x 18.7x 19.7x 18.6x 18.6x - - - - - 30.7% 31.3% 32.8% 33.5% 34.2% -5.2% -6.3% -7.8% -8.1% -8.9%OpenTable, Inc. 7.1x 7.9x 8.7x 9.5x 9.2x 25.1x 27.2x 28.0x 30.3x 30.0x 15.9% 15.6% 15.5% 16.0% 17.6% 28.5% 29.2% 31.2% 31.3% 30.6%OPOWER, Inc. - - - - - - - - - - 80.0% - - - 71.4% -21.8% -15.7% -11.3% -10.9% -13.1%Paylocity Holding Corp. - - - - 13.0x - - - - 602.0x 39.5% 39.5% 40.3% - - 8.5% 8.5% 3.3% 3.2% 2.2%

Q2 Holdings, Inc. - - - - 8.4x - - - - - 52.3% 52.3% 52.3% - 38.4% -13.2% -13.2% -13.2% -19.5% -22.9%

Qualys, Inc. 3.1x 3.4x 4.9x 5.7x 7.2x 27.4x 30.2x 39.9x 46.8x 65.3x 20.0% 19.3% 18.9% 18.5% 18.1% 11.3% 11.1% 12.3% 12.3% 11.0%

RealPage 5.0x 4.4x 4.4x 5.0x 4.2x 31.0x 27.3x 28.2x 32.0x 29.0x 24.9% 22.5% 20.7% 19.4% 17.0% 16.2% 16.0% 15.7% 15.5% 14.4%

RingCentral, Inc. - - 5.6x 6.7x 7.6x - - - - - 45.2% - - - 40.1% -23.2% -21.0% -21.3% -18.6% -20.0%Salesforce.com 8.2x 7.4x 7.4x 9.0x 9.3x 6293.7x - - - - 34.6% 32.1% 31.4% 32.1% 33.5% 0.1% -0.3% -0.5% -0.5% -1.5%SciQuest 5.5x 6.6x 6.2x 6.8x 7.2x 180.4x 432.9x - - - 24.4% 31.5% 36.7% 37.9% 35.8% 3.0% 1.5% -0.7% -1.9% -0.2%Service-now.com 15.0x 17.0x 17.7x 18.9x 20.4x - - - - - 90.3% 87.8% 84.5% 80.3% 74.2% -8.9% -9.4% -10.3% -9.5% -10.1%

SPS Commerce 6.4x 7.7x 9.6x 9.8x 9.0x 76.3x 86.7x 108.5x 105.0x 95.3x 33.0% 36.3% 40.2% 40.3% 35.4% 8.4% 8.9% 8.9% 9.4% 9.4%

Tangoe 3.3x 2.8x 3.8x 3.5x 3.5x 39.0x 32.9x 42.3x 38.9x 40.8x 47.2% 41.5% 38.1% 30.8% 22.3% 8.5% 8.7% 8.9% 9.0% 8.7%Textura Corp. - 18.7x 23.3x 23.7x 15.0x - - - - - - - - 63.9% 70.1% -62.6% -55.1% -93.0% -86.0% -81.5%

The Ultimate Software Group, Inc. 8.0x 8.5x 10.5x 10.7x 10.5x 63.9x 61.9x 73.0x 73.7x 73.1x 23.4% 24.4% 24.2% 24.9% 23.5% 12.5% 13.8% 14.3% 14.5% 14.3%

Veeva Systems Inc. - - - 24.8x 17.9x - - - 120.7x 92.3x 111.5% - - - 62.2% 23.6% 23.0% 21.8% 20.5% 19.4%Vocus 2.1x 1.3x 1.4x 1.3x 1.7x - 92.0x 286.2x 217.4x 1582.5x 48.7% 48.4% 34.3% 21.0% 9.4% -0.2% 1.4% 0.5% 0.6% 0.1%Workday, Inc. 30.1x 32.0x 33.8x 32.2x 34.0x - - - - - 103.6% 88.3% 77.4% 73.6% 71.4% -32.5% -31.9% -28.4% -26.0% -25.3%

Zix Corporation 4.2x 4.7x 5.4x 5.2x 5.2x 17.9x 25.3x 33.2x 28.2x 23.3x 13.7% 14.4% 15.5% 14.4% 11.0% 23.7% 18.5% 16.2% 18.5% 22.4%

TTM Revenue Growth EBITDA Margin

SEG SaaS Index




THE SEG SaaS INDEX METRICS BY PRODUCT CATEGORYCRM & Marketing 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 3.4x 2.6x 4.1x 3.2x 3.3xEV/EBITDA 35.5x 29.8x 107.4x 136.8x 382.6xEV/Earnings 66.9x 85.4x 431.4x 75.1x 101.8xGross Profit Margin 73.1% 73.2% 72.8% 72.4% 71.2%EBITDA Margin -0.1% 0.5% 0.0% 0.0% -0.7%Net Income Margin -11.3% -10.6% -9.2% -7.6% -8.7%TTM Revenue Growth (YoY) 42.9% 32.1% 31.4% 26.5% 26.0%TTM EBITDA Growth (YoY) -94.8% -40.5% -44.4% -38.1% -27.8%TTM Earnings Growth (YoY) -46.8% -64.1% -68.6% -62.2% -42.6%Current Ratio 1.8 1.5 1.6 2.4 2.3Cash as Percent of Market Cap 17.5% 17.6% 14.3% 15.0% 11.5%Enterprise Value Growth (YoY) -1.5% -36.2% -24.3% -15.0% 9.5%

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

EV/Revenue 6.6x 7.1x 9.3x 9.1x 9.0xEV/EBITDA 128.4x 86.7x 72.2x 66.8x 62.1xEV/Earnings 283.6x 331.2x 478.7x 466.1x 466.5xGross Profit Margin 69.1% 68.5% 67.8% 67.4% 67.4%EBITDA Margin 2.1% -2.1% -7.8% -8.1% -8.9%Net Income Margin -1.8% -5.0% -14.3% -15.6% -17.0%TTM Revenue Growth (YoY) 30.7% 33.9% 37.7% 38.3% 35.4%TTM EBITDA Growth (YoY) 7.1% 0.3% -77.8% -94.6% -107.5%TTM Earnings Growth (YoY) -1.3% 23.0% 698.4% 393.6% 224.6%Current Ratio 1.4 1.4 2.5 2.5 2.1Cash as Percent of Market Cap 7.5% 8.0% 6.4% 6.0% 5.6%Enterprise Value Growth (YoY) 64.8% 94.4% 69.3% 69.5% 68.1%

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

EV/Revenue 5.0x 5.0x 5.7x 7.4x 8.4xEV/EBITDA 27.2x 25.4x 28.5x 32.1x 37.4xEV/Earnings 63.3x 137.6x 119.5x 104.7x 159.0xGross Profit Margin 62.0% 62.0% 62.1% 62.5% 62.7%EBITDA Margin 13.5% 11.6% 11.3% 11.4% 10.4%Net Income Margin 3.0% 1.1% 0.2% 0.7% 0.8%TTM Revenue Growth (YoY) 52.3% 28.7% 31.3% 26.1% 39.6%TTM EBITDA Growth (YoY) 11.1% 13.3% 11.5% 4.1% -6.8%TTM Earnings Growth (YoY) -1.4% -3.1% -36.1% -13.4% -16.0%Current Ratio 2.0 1.6 2.0 2.5 2.0Cash as Percent of Market Cap 8.3% 10.5% 8.8% 7.7% 5.6%Enterprise Value Growth (YoY) 25.6% 21.5% 27.2% 46.0% 61.2%

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

EV/Revenue 10.7x 8.5x 10.5x 10.7x 11.7xEV/EBITDA 63.9x 61.9x 73.0x 73.7x 337.6xEV/Earnings 181.0x 165.7x 190.0x 189.1x 6398.7xGross Profit Margin 57.0% 57.9% 58.9% 59.6% 60.6%EBITDA Margin -16.2% -13.6% -11.3% -8.9% -5.7%Net Income Margin -27.9% -26.5% -25.4% -22.1% -20.4%TTM Revenue Growth (YoY) 31.5% 39.5% 40.3% 42.7% 26.3%TTM EBITDA Growth (YoY) -33.8% -17.9% -4.8% 6.5% 5.6%TTM Earnings Growth (YoY) 241.7% 264.2% 69.5% 113.6% 74.5%Current Ratio 1.1 1.1 1.7 1.7 1.6Cash as Percent of Market Cap 3.8% 11.9% 9.2% 8.1% 8.3%Enterprise Value Growth (YoY) 49.2% 42.8% 76.4% 74.4% 85.7%

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

EV/Revenue 4.2x 5.2x 5.9x 6.1x 7.6xEV/EBITDA 26.2x 31.5x 41.1x 37.1x 40.8xEV/Earnings 48.2x 50.6x 52.6x 56.1x 52.2xGross Profit Margin 70.3% 70.7% 71.6% 71.6% 69.8%EBITDA Margin -0.6% -1.2% -2.0% -4.2% -5.8%Net Income Margin -8.6% -9.7% -10.2% -10.8% -12.1%TTM Revenue Growth (YoY) 24.9% 23.9% 27.3% 25.1% 27.5%TTM EBITDA Growth (YoY) 6.9% -23.8% -23.7% -47.5% -43.5%TTM Earnings Growth (YoY) 8.6% 10.9% 5.0% 29.9% -5.0%Current Ratio 1.9 1.7 1.7 2.4 2.4Cash as Percent of Market Cap 13.0% 13.3% 10.3% 12.6% 9.9%Enterprise Value Growth (YoY) 3.8% 30.0% 64.9% 66.3% 59.3%



THE SEG INTERNET INDEX COMPANIES – KEY METRICS

Company


1-800-FLOWERS.COM, Inc. 0.4x 0.5x 0.5x 0.5x 0.5x 7.0x 8.1x 8.8x 8.3x 7.6x 3.4% 2.2% 4.0% 4.5% 4.5% 5.9% 6.3% 6.1% 6.2% 6.2%58.com Inc. - - - 20.2x 21.9x - - - 392.4x 165.9x 109.8% - - - 67.3% -31.4% -17.8% -6.7% 5.1% 13.2%8x8, Inc. 4.4x 4.6x 5.5x 6.3x 6.1x 33.7x 33.8x 40.0x 49.1x 63.9x 25.5% 25.4% 21.4% 21.7% 24.2% 13.2% 13.5% 13.8% 12.7% 9.6%Akamai Technologies, Inc. 4.5x 5.0x 5.3x 5.0x 6.2x 12.8x 14.0x 14.7x 14.1x 17.4x 18.6% 18.3% 17.0% 15.2% 14.8% 35.5% 35.6% 36.0% 35.7% 35.3%Amazon.com, Inc. 1.9x 1.8x 2.0x 2.3x 2.2x 45.7x 43.4x 45.1x 51.1x 46.1x 27.1% 24.5% 23.0% 22.5% 21.9% 4.1% 4.2% 4.4% 4.5% 4.8%Angie's List, Inc. 5.8x 7.5x 6.5x 3.6x 3.2x - - - - - 73.0% 70.9% 67.6% 62.7% 57.7% -31.7% -24.3% -17.2% -13.0% -9.8%AOL, Inc. 1.1x 1.2x 1.1x 1.5x 1.5x 6.4x 5.3x 4.8x 7.9x 7.9x -0.5% 0.9% 1.9% 3.3% 5.8% 17.3% 22.1% 22.6% 18.8% 18.8%Baidu.com, Inc. 8.3x 7.5x 10.3x 11.2x 10.5x 14.8x 14.1x 20.4x 24.9x 24.3x 53.8% 47.1% 42.2% 40.7% 43.2% 56.3% 53.5% 50.7% 45.0% 43.4%Bankrate, Inc. 2.9x 3.4x 4.3x 4.7x 4.0x 11.8x 14.2x 19.8x 21.4x 16.7x 7.8% -2.1% -10.5% -10.3% 0.1% 24.9% 23.8% 21.9% 21.8% 23.8%Bitauto Holdings Limited 1.7x 1.9x 2.4x 4.8x 5.7x 9.6x 11.4x 13.7x 24.8x 27.8x 57.8% 51.5% 45.6% 41.0% 36.2% 17.5% 17.0% 17.7% 19.5% 20.4%BlueNile 0.9x 0.9x 1.0x 1.2x 0.8x 26.1x 24.8x 28.0x 32.8x 21.8x 14.9% 18.0% 19.3% 12.5% 12.5% 3.4% 3.5% 3.6% 3.5% 3.5%Borderfree, Inc. - - - - 4.7x - - - - 387.1x 121.2% - - - 35.7% 2.6% 2.4% 0.8% 0.0% 1.2%Brightcove Inc. 1.7x 2.0x 2.6x 3.5x 2.6x - - - - - 38.4% 31.7% 27.7% 27.2% 24.9% -11.2% -9.9% -8.2% -5.6% -1.7%BroadSoft, Inc. 5.3x 4.1x 4.9x 4.0x 4.2x 28.0x 29.7x 53.9x 92.7x 582.9x 19.4% 13.2% 9.4% 8.0% 8.3% 18.8% 13.8% 9.2% 4.3% 0.7%Carbonite, Inc. 2.4x 2.5x 3.1x 2.6x 2.0x - - - - 92.0x 38.9% 35.9% 33.2% 31.4% 27.5% -8.1% -6.0% -3.0% -0.3% 2.2%Care.com, Inc. - - - - 8.7x - - - - - 86.5% 86.5% 86.5% 68.0% 68.0% -36.0% -36.0% -36.0% -25.0% -25.0%ChangYou.com 2.4x 2.2x 2.2x 2.0x 1.9x 3.7x 3.5x 3.5x 3.3x 4.0x 28.7% 28.6% 25.2% 18.7% 18.4% 63.3% 63.0% 61.4% 58.7% 47.6%Conversant, Inc. 3.7x 2.9x 2.3x 2.3x 3.0x 11.2x 9.4x 7.3x 6.9x 8.2x 34.8% 21.7% 24.8% 24.7% 6.2% 33.0% 31.1% 31.9% 32.7% 36.1%Coupons.com, Inc. - - - - 11.7x - - - - - 22.8% 22.8% 22.8% - 49.7% -47.4% -47.4% -47.4% -9.6% -2.1%Criteo Corp. - - - 3.4x 3.2x - - - 99.7x 63.2x 89.4% - - - 63.3% 4.9% 3.4% 2.3% 3.5% 5.1%Ctrip 3.6x 4.6x 6.8x 7.3x 6.0x 20.0x 27.6x 41.6x 41.8x 33.9x 18.9% 21.0% 23.6% 26.7% 29.5% 18.1% 16.7% 16.3% 17.4% 17.8%DangDang 0.2x 0.4x 0.6x 0.5x 0.6x - - - - - 43.5% 35.6% 29.3% 24.1% 21.8% -8.6% -7.7% -6.4% -5.0% -2.3%DemandMedia 1.5x 1.5x 1.2x 1.0x 1.0x 8.6x 8.4x 7.0x 6.4x 9.2x 17.1% 19.1% 16.7% 10.8% 3.7% 17.9% 17.7% 17.7% 15.6% 11.4%Digital River Inc. 0.2x 0.6x 0.8x 0.8x 0.8x 2.3x 6.5x 11.1x 13.8x 9.1x -1.6% -1.2% 2.4% 4.7% 5.2% 10.8% 9.0% 7.3% 5.6% 8.3%eBay Inc. 4.6x 4.5x 4.2x 4.0x 4.1x 16.0x 15.1x 14.3x 13.5x 13.8x 20.8% 17.4% 15.4% 15.2% 14.0% 29.1% 29.6% 29.4% 29.7% 29.7%eHealth, Inc. 1.7x 2.0x 2.6x 4.2x 4.8x 13.2x 15.2x 22.1x 38.1x 74.9x 2.5% 6.9% 10.2% 11.1% 15.2% 13.0% 13.1% 11.6% 10.9% 6.5%Envivio, Inc. - - 0.6x 0.8x 1.1x - - - - - -22.8% -38.8% -36.5% -18.1% 10.5% -35.7% -49.8% -43.4% -31.5% -20.7%Everyday Health, Inc. - - - - 3.0x - - - - 43.9x 10.1% - - - 12.5% -0.2% 0.8% 0.8% 3.1% 6.8%Expedia 2.0x 1.8x 1.5x 1.7x 2.0x 12.4x 11.8x 10.5x 12.3x 14.9x 16.9% 19.5% 19.8% 19.6% 18.4% 16.0% 15.2% 13.9% 14.0% 13.7%Facebook 11.3x 10.0x 14.0x 16.4x 19.3x 48.6x 41.7x 31.0x 34.5x 38.6x 37.1% 35.9% 41.4% 48.2% 54.7% 23.3% 23.9% 45.2% 47.5% 49.9%GeekNet 0.5x 0.3x 0.4x 0.6x 0.5x - - 61.4x 30.5x 67.6x 20.0% 25.2% 19.4% 21.3% 16.3% -0.5% -0.4% 0.7% 2.0% 0.8%Giant Interactive 3.2x 3.8x 3.8x 4.6x 5.6x 5.0x 5.9x 5.9x 7.2x 8.6x 20.1% 16.8% 14.4% 11.9% 9.5% 64.3% 64.9% 65.0% 63.6% 65.7%Google Inc. 4.4x 4.6x 4.5x 5.2x - 13.5x 14.7x 14.8x 16.9x - 32.4% 33.8% 30.5% 23.8% 19.2% 32.6% 31.4% 30.5% 30.7% 30.1%Groupon 1.0x 1.4x 2.2x 2.3x 2.3x 15.3x 22.9x 40.2x 45.5x 41.9x 45.0% 26.8% 17.9% 11.7% 10.2% 6.5% 6.0% 5.5% 5.1% 5.4%GrubHub Inc. - - - - - - - - - - 35.8% 35.8% 35.8% - 66.6% 16.1% 16.1% 16.1% 20.1% 21.8%Harmonic Inc 0.9x 0.8x 1.2x 1.1x 1.1x 16.7x 14.4x 19.0x 18.3x 21.0x -2.9% -3.2% 2.1% 2.1% -3.1% 5.6% 5.9% 6.1% 6.1% 5.0%HomeAway 6.5x 7.7x 7.6x 8.3x 10.0x 35.9x 40.1x 41.3x 46.0x 58.3x 21.8% 22.0% 21.7% 22.6% 23.6% 18.1% 19.1% 18.3% 18.0% 17.1%


SEG Internet Index




Company


Interactive Intelligence, Inc. 3.1x 3.6x 4.0x 4.1x 4.4x 63.8x 61.8x 57.9x 51.1x 49.4x 13.3% 20.2% 28.5% 32.7% 34.1% 4.8% 5.8% 6.9% 8.0% 8.9%InterActiveCorp 1.2x 1.5x 1.4x 1.5x 2.0x 8.3x 9.5x 9.0x 8.6x 10.9x 36.0% 29.6% 24.1% 16.4% 7.9% 15.0% 15.5% 15.9% 17.6% 18.0%LifeLock, Inc. 3.5x 2.4x 2.8x 3.6x 4.4x 47.4x 41.2x 64.7x 85.7x 59.5x 42.5% 44.9% 41.2% 38.2% 33.7% 7.5% 5.8% 4.4% 4.2% 7.4%Limelight Networks, Inc. 0.5x 0.4x 0.5x 0.4x 0.5x - - - - - 5.2% 4.3% 1.7% -1.1% -3.8% -2.3% -1.9% -4.0% -5.4% -5.9%LinkedIn 16.9x 16.8x 20.3x 17.7x 14.7x 130.8x 124.6x 159.3x 145.7x 134.4x 86.2% 79.8% 71.9% 65.6% 57.2% 12.9% 13.5% 12.8% 12.1% 10.9%Liquidity Services, Inc. 2.1x 2.0x 1.8x 1.5x 1.4x 10.0x 10.5x 10.3x 8.3x 7.9x 37.3% 25.8% 15.4% 6.4% 2.9% 20.8% 19.3% 17.9% 18.0% 17.4%Mail.ru Group 8.8x 6.7x 8.3x 10.1x 9.4x 20.7x 15.4x 18.6x 19.1x 15.5x 40.2% 35.8% 32.2% 32.2% 31.8% 42.8% 43.6% 44.3% 53.2% 60.8%MakeMyTrip 2.0x 1.8x 1.8x 2.1x 3.5x - - - - - 21.9% 16.4% 15.9% 15.7% 13.2% -2.8% -6.8% -8.2% -9.3% -7.8%Marchex Inc. 0.9x 1.4x 1.6x 1.9x 2.2x 75.9x 84.1x 73.9x 74.2x 50.6x -4.3% -9.2% -1.1% 8.2% 14.9% 1.1% 1.6% 2.1% 2.5% 4.3%Mecox Lane Limited - 0.1x 0.3x 0.4x 0.4x - - - - - -30.3% -34.4% -36.7% -38.9% -42.4% -12.2% -14.2% -16.5% -16.3% -21.3%Mercadolibre, Inc. 9.8x 11.8x 12.4x 10.9x 8.6x 26.5x 32.4x 35.1x 31.6x 24.5x 25.0% 22.2% 22.1% 24.0% 26.5% 37.1% 36.4% 35.4% 34.3% 35.0%Mitel Networks Corp. 0.7x 0.7x 0.8x 1.1x 2.0x 5.2x 5.1x 5.4x 7.4x 17.0x -3.8% -5.7% -3.5% -2.1% - 13.9% 13.8% 15.1% 15.3% 11.9%Monster Worldwide, Inc. 0.7x 0.7x 0.7x 0.8x 1.0x 4.6x 4.5x 4.4x 5.3x 7.3x -10.4% -10.1% -10.1% -10.0% -9.3% 15.4% 15.6% 15.8% 15.4% 13.9%NCSoft 3.0x 3.2x 3.5x 4.4x 4.7x 12.0x - 9.5x 12.5x 14.8x 23.8% 34.1% 46.6% 36.3% 0.4% 25.2% 32.2% 36.3% 34.7% 31.6%Netease 3.2x 3.7x 4.4x 4.3x 4.3x 6.7x 7.9x 9.2x 8.9x 8.8x 12.5% 8.1% 8.8% 12.6% 12.1% 47.5% 47.4% 47.6% 48.7% 49.1%Netflix 2.7x 3.3x 3.8x 4.7x 5.4x 103.0x 94.8x 87.8x 91.9x 85.5x 12.6% 12.1% 14.1% 17.1% 21.2% 2.6% 3.5% 4.4% 5.1% 6.3%Orbitz 0.8x 1.3x 1.6x 1.3x 1.4x 6.2x 9.6x 11.5x 9.2x 10.0x 1.6% 2.6% 6.0% 9.5% 8.8% 13.6% 13.4% 13.5% 14.1% 13.7%Overstock.com, Inc. 0.2x 0.4x 0.5x 0.4x 0.3x 10.1x 20.9x 21.8x 18.9x 15.6x 4.3% 9.3% 13.9% 16.6% 18.6% 1.8% 2.1% 2.4% 2.4% 1.7%Pandora 4.5x 5.4x 6.3x 8.5x 10.9x - - - - - 55.7% 55.2% 56.0% 53.5% 53.5% -7.2% -8.2% -7.5% -7.1% -7.1%Perfect World 0.8x 0.8x 1.6x 1.2x 1.3x 2.8x 3.3x 7.5x 6.0x 6.5x -7.1% -10.3% -6.0% -0.6% 10.2% 27.3% 24.6% 21.2% 20.3% 19.6%PetMed Express, Inc. 0.9x 0.9x 1.1x 1.1x 1.0x 7.5x 7.7x 8.8x 8.7x 7.7x -0.3% -4.4% -0.2% 0.8% 1.4% 11.7% 12.3% 12.6% 12.5% 12.4%Polycom, Inc. 0.9x 0.9x 0.8x 0.9x 1.1x 10.1x 11.1x 11.3x 11.1x 12.6x -0.7% -2.9% -5.1% -3.7% -1.7% 8.9% 8.0% 7.4% 8.0% 8.7%Priceline 5.9x 6.5x 7.6x 8.3x 8.5x 16.1x 18.0x 20.9x 22.0x 22.7x 20.8% 20.6% 22.3% 27.3% 29.1% 36.8% 36.3% 36.4% 37.8% 37.6%Qihoo 10.3x 12.2x 18.3x 17.8x 17.3x 51.0x 68.2x 82.1x 67.3x 78.3x 96.0% 72.6% 78.1% 91.5% 104.0% 20.3% 17.9% 22.3% 26.4% 22.1%QuinStreet 0.8x 0.9x 1.2x 1.1x 0.9x 5.8x 7.5x 10.9x 11.0x 9.8x -16.4% -16.8% -17.6% -12.8% -9.5% 13.0% 12.1% 11.0% 10.2% 9.0%ReachLocal, Inc. 0.6x 0.7x 0.5x 0.5x 0.4x 23.7x 35.1x 27.9x 27.3x 17.2x 21.2% 19.7% 17.7% 15.5% 13.0% 2.7% 1.9% 1.9% 1.9% 2.6%Renren Inc 1.8x 1.2x 2.3x 2.2x 2.1x - - - - - 49.3% 47.2% 35.8% 20.3% -11.0% -42.9% -42.3% -46.7% -54.1% -59.9%Rocket Fuel - - 11.4x 8.6x 7.5x - - - - - 138.7% - - - 125.7% -6.1% -8.5% -7.7% -7.7% -4.3%Rovi Corporation 4.7x 4.7x 4.0x 4.1x 5.3x 15.1x 13.8x 12.0x 13.0x 15.7x -9.9% -9.1% -7.0% -7.6% 2.3% 31.0% 34.2% 33.8% 31.9% 33.7%SeaChange International Inc. 1.8x 1.6x 1.7x 2.1x 1.8x 26.2x 21.7x 15.7x 18.5x 32.1x -4.6% -3.2% -1.8% -0.4% -6.9% 6.7% 7.3% 10.8% 11.4% 5.6%ShoreTel, Inc. 0.7x 0.7x 0.8x 1.3x 1.5x - - - 647.7x 46.3x 29.3% 36.4% 27.1% 20.6% 17.0% -4.5% -3.1% -2.2% 0.2% 3.1%Shutterfly 2.0x 2.5x 2.8x 2.5x 2.1x 15.4x 19.7x 23.9x 22.4x 19.3x 35.4% 31.3% 32.0% 31.1% 22.3% 12.9% 12.5% 11.8% 11.0% 11.0%Shutterstock, Inc. 5.3x 7.8x 8.9x 11.0x 11.5x 28.2x 37.0x 40.8x 53.5x 57.5x 41.0% 38.4% 38.4% 39.6% 38.9% 18.8% 21.0% 21.8% 20.6% 20.0%SINA Corporation 5.3x 5.6x 7.8x 7.7x 6.0x 132.9x 98.1x 297.8x 128.9x 76.0x 9.6% 12.3% 14.7% 16.0% 25.7% 4.0% 5.7% 2.6% 6.0% 7.9%Sohu.com Inc. 1.3x 1.7x 1.7x 1.6x 1.7x 4.0x 5.2x 5.7x 5.6x 7.5x 25.2% 27.0% 28.1% 29.6% 31.2% 32.1% 32.1% 30.4% 28.5% 22.4%Sonus Networks, Inc 1.7x 1.9x 2.7x 2.2x 2.4x - - - - - -2.1% -1.4% 8.9% 8.9% 8.9% -8.1% -9.8% -3.2% -3.2% -0.1%SouFun Holdings Ltd. 5.4x 4.9x 6.2x 9.6x 10.6x 11.3x 9.8x 12.3x 17.8x 19.0x 25.1% 28.0% 34.9% 43.2% 48.1% 47.9% 49.7% 50.7% 53.6% 56.0%


SEG Internet Index




Company


Stamps.com 3.1x 4.3x 4.8x 5.1x 4.2x 13.7x 17.3x 18.4x 18.6x 14.5x 13.9% 11.6% 13.5% 11.3% 10.5% 22.3% 24.7% 26.3% 27.3% 28.7%Synacor, Inc 0.9x 0.4x 0.4x 0.3x 0.3x 10.9x 6.0x 6.8x 7.5x 9.6x 34.0% 16.9% 1.7% -3.5% -8.3% 7.9% 7.0% 5.3% 4.3% 3.5%Tencent Holdings 8.7x 8.1x 9.8x 10.8x 12.6x 22.0x 21.0x 26.5x 30.5x 36.7x 54.0% 50.3% 45.1% 40.2% 37.7% 39.6% 38.6% 37.0% 35.6% 34.2%The Rubicon Project, Inc. - - - - - - - - - - 54.0% 54.0% 54.0% - 46.9% 6.6% 6.6% 6.6% 1.7% 2.2%TheStreet.com, Inc. 0.4x 0.4x 0.4x 0.5x 0.8x - - - - - -12.2% -10.6% -4.5% 4.5% 7.4% -4.5% -2.6% -3.3% -3.5% -0.7%Travelzoo 1.8x 2.2x 2.4x 1.6x 1.7x 8.6x 11.7x 13.7x 9.1x 10.1x 1.9% 2.2% 2.3% 5.7% 4.7% 20.5% 19.2% 17.4% 17.1% 17.2%Tree.Com, Inc. 1.4x 1.6x 1.5x 1.9x 2.0x - 80.9x 33.3x 36.7x 27.6x 41.8% 71.1% 108.9% 97.6% 79.8% -6.0% 1.9% 4.5% 5.3% 7.1%Tremor Video, Inc. - 3.6x 3.8x 1.3x 1.0x - - - - - 16.5% - - - 25.3% -9.6% -5.5% -1.4% -1.9% -5.5%TripAdvisor Inc 8.4x 10.3x 12.2x 13.0x 13.5x 20.8x 25.6x 31.2x 35.8x 40.9x 19.8% 20.5% 22.8% 23.2% 23.8% 40.5% 40.0% 38.9% 36.3% 32.9%Trulia, Inc. 9.0x 10.1x 13.5x 11.6x 8.6x - - - - - 76.8% 87.8% 81.1% 93.3% 111.1% -10.3% -5.3% -0.7% -2.6% -7.1%Tucows Inc. 0.6x 0.7x 0.8x 0.9x 1.1x 9.7x 11.9x 15.2x 14.8x 16.4x 18.2% 14.8% 12.2% 13.7% 13.3% 6.3% 5.5% 5.0% 6.4% 6.6%Twitter, Inc. - - - 45.4x 44.3x - - - - - 198.1% - - - 109.8% -9.1% -6.1% -5.4% -10.6% -80.0%VeriSign 7.0x 6.8x 6.8x 7.5x 7.3x 11.9x 11.1x 11.0x 12.0x 12.0x 13.2% 13.6% 13.3% 12.1% 10.5% 58.5% 60.7% 61.9% 62.5% 61.0%VistaPrint 1.3x 1.5x 1.7x 1.7x 1.5x 13.1x 15.6x 18.4x 17.7x 13.3x 19.8% 16.3% 14.4% 12.4% 9.6% 9.6% 9.5% 9.1% 9.7% 11.4%WebMD Health Corp. 1.4x 2.3x 2.7x 2.8x 3.5x 39.4x 31.9x 28.3x 22.6x 24.5x -15.9% -10.9% -3.4% 2.9% 9.7% 3.6% 7.1% 9.7% 12.2% 14.3%Wix.com Ltd. - - - 11.6x 12.2x - - - - - 77.5% - - - 84.2% -32.3% -29.4% -27.1% -28.5% -31.8%XO Group 1.3x 1.6x 1.9x 2.2x 1.8x 9.4x 9.8x 11.2x 12.2x 13.8x 3.9% 2.5% 3.1% 4.3% 3.6% 13.7% 16.5% 17.4% 18.0% 13.2%Xoom 8.8x 6.3x 8.4x 7.5x 6.4x - - 195.6x 97.2x 69.1x 60.0% - - 52.9% 52.7% -3.5% -2.3% 4.3% 7.7% 9.3%Yahoo! Inc. 4.1x 5.0x 5.5x 7.1x 7.8x 15.4x 18.6x 20.8x 28.4x 35.5x 0.0% -1.7% -3.1% -4.1% -6.1% 26.4% 27.1% 26.6% 24.9% 22.0%Yandex - - - - 9.7x - - - - 23.9x 43.6% 40.3% 37.1% 37.3% 37.3% 42.0% 43.8% 44.2% 42.7% 40.7%Yelp, Inc. - - - - 24.1x - - - - 6200.4x 65.2% 66.0% 66.6% 67.7% 69.4% -8.2% -2.7% -1.1% -0.3% 0.4%Youku - - - - 9.2x - - - - 86.7x 100.0% 96.3% 95.8% 88.1% 68.7% 1.9% -0.5% 2.5% 5.5% 10.6%YuMe, Inc. - - - - 1.1x - - - - 39.3x 70.3% - - - 29.5% 8.3% 7.1% 6.0% 5.0% 2.9%YY, Inc. - - - - 11.5x - - - - 40.0x 156.5% 151.5% 132.1% 121.9% 122.4% 16.5% 20.0% 21.1% 24.5% 28.8%Zillow - - - - 15.1x - - - - - 76.9% 71.3% 69.9% 69.5% 69.1% 10.6% 6.1% -1.6% -5.5% -2.8%Zynga, Inc. - - - - 3.3x - - - - 38.7x 12.4% 0.5% -11.8% -21.3% -31.8% 4.2% 11.7% 15.0% 14.2% 8.4%


SEG Internet Index



THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORY

Ad Tech & Lead Generation 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 2.3x 2.9x 2.6x 2.9x 3.2xEV/EBITDA 14.2x 15.2x 22.8x 27.3x 24.3xEV/Earnings 21.8x 25.9x 25.7x 38.0x 78.7xGross Profit Margin 65.7% 63.7% 62.8% 64.5% 66.3%EBITDA Margin 7.5% 6.8% 6.3% 5.7% 6.8%Net Income Margin 3.4% 3.6% 0.5% 0.0% 0.2%TTM Revenue Growth (YoY) 35.4% 26.9% 24.4% 20.1% 27.6%TTM EBITDA Growth (YoY) 10.2% 26.2% 11.1% 8.3% 14.9%TTM Earnings Growth (YoY) 5.3% 5.0% -1.7% 2.9% 8.6%Current Ratio 2.3 2.4 2.0 2.5 2.9Cash as Percent of Market Cap 18.7% 20.5% 17.7% 17.1% 13.9%Enterprise Value Growth (YoY) 4.9% 44.4% 51.5% 64.7% 57.7%

Commerce 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 0.9x 0.9x 1.1x 1.2x 1.2xEV/EBITDA 10.1x 15.1x 16.3x 18.6x 18.7xEV/Earnings 13.8x 23.8x 24.6x 28.6x 24.8xGross Profit Margin 38.7% 38.7% 38.9% 39.7% 40.7%EBITDA Margin 5.0% 5.3% 5.2% 5.4% 7.3%Net Income Margin 2.0% 2.2% 2.1% 2.2% 4.6%TTM Revenue Growth (YoY) 20.4% 17.7% 15.4% 13.9% 15.2%TTM EBITDA Growth (YoY) 26.5% 30.7% 18.3% 16.8% 16.4%TTM Earnings Growth (YoY) -0.5% 1.7% 11.6% 13.9% 14.5%Current Ratio 1.7 1.6 1.7 1.6 2.0Cash as Percent of Market Cap 18.5% 15.4% 13.4% 13.3% 12.8%Enterprise Value Growth (YoY) -6.3% 29.0% 40.5% 52.1% 21.1%

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

EV/Revenue 1.5x 2.3x 2.7x 2.8x 3.5xEV/EBITDA 15.4x 14.2x 20.8x 22.5x 24.5xEV/Earnings 19.2x 23.9x 23.3x 30.8x 42.2xGross Profit Margin 52.4% 52.4% 52.3% 50.5% 49.6%EBITDA Margin 13.7% 15.5% 15.9% 15.6% 13.2%Net Income Margin 1.6% 2.2% 2.4% 1.7% 2.9%TTM Revenue Growth (YoY) 12.6% 12.1% 14.1% 10.8% 7.9%TTM EBITDA Growth (YoY) 5.9% 17.7% 19.1% 28.6% 30.1%TTM Earnings Growth (YoY) 80.9% 85.8% 24.8% 48.2% -38.9%Current Ratio 1.8 1.8 2.0 2.8 2.6Cash as Percent of Market Cap 17.2% 15.3% 13.8% 11.0% 10.1%Enterprise Value Growth (YoY) 12.8% 34.4% 72.4% 111.1% 93.7%

Gaming 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 2.7x 2.7x 2.8x 3.2x 3.8xEV/EBITDA 5.8x 5.9x 7.7x 8.0x 8.7xEV/Earnings 7.2x 8.4x 11.2x 9.4x 9.7xGross Profit Margin 71.2% 71.3% 72.5% 73.3% 72.3%EBITDA Margin 35.9% 38.6% 36.6% 35.2% 32.9%Net Income Margin 24.8% 26.7% 28.0% 26.5% 23.3%TTM Revenue Growth (YoY) 21.9% 21.9% 19.8% 15.7% 11.2%TTM EBITDA Growth (YoY) 8.8% 13.4% 11.5% 12.1% 17.2%TTM Earnings Growth (YoY) 12.9% 12.9% 12.4% 6.0% 11.8%Current Ratio 2.5 2.4 2.4 2.2 2.2Cash as Percent of Market Cap 36.7% 35.9% 31.8% 33.7% 31.0%Enterprise Value Growth (YoY) -6.3% 22.8% 63.6% 66.5% 86.2%

Infrastructure 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 1.7x 1.6x 1.4x 1.7x 1.9xEV/EBITDA 12.3x 12.9x 14.7x 14.4x 17.2xEV/Earnings 23.3x 35.3x 47.1x 40.6x 33.3xGross Profit Margin 61.5% 61.2% 62.2% 62.2% 63.3%EBITDA Margin 7.3% 7.2% 7.1% 6.3% 6.1%Net Income Margin -1.0% 0.4% 0.7% -0.8% -1.8%TTM Revenue Growth (YoY) 9.2% 8.8% 5.6% 6.3% 8.9%TTM EBITDA Growth (YoY) -32.2% -16.2% -14.8% 11.9% 3.6%TTM Earnings Growth (YoY) -28.3% -73.4% -73.2% -14.9% 43.9%Current Ratio 3.1 3.1 3.1 3.2 2.7Cash as Percent of Market Cap 28.4% 25.7% 22.9% 22.7% 23.1%Enterprise Value Growth (YoY) -2.8% -2.5% 17.9% 48.1% 35.5%

Services 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 3.5x 3.4x 4.3x 4.2x 4.2xEV/EBITDA 14.2x 19.7x 23.9x 22.3x 27.6xEV/Earnings 50.2x 74.6x 117.9x 94.9x 69.3xGross Profit Margin 71.8% 72.3% 72.5% 72.7% 73.0%EBITDA Margin 7.5% 5.8% 4.4% 5.3% 7.4%Net Income Margin 2.3% 0.3% 0.3% -1.4% -0.1%TTM Revenue Growth (YoY) 41.8% 40.4% 38.5% 48.0% 52.7%TTM EBITDA Growth (YoY) 21.0% 30.6% 42.8% 41.2% 33.0%TTM Earnings Growth (YoY) 56.5% -43.2% -40.5% 42.2% 94.8%Current Ratio 1.4 1.3 1.3 1.4 2.1Cash as Percent of Market Cap 13.2% 18.9% 12.3% 12.3% 9.8%Enterprise Value Growth (YoY) 16.1% 65.8% 102.8% 94.0% 41.0%

Social 1Q13 2Q13 3Q13 4Q13 1Q14

EV/Revenue 9.1x 8.3x 11.9x 16.3x 14.7xEV/EBITDA 38.9x 37.1x 38.7x 37.8x 40.0xEV/Earnings 401.8x 259.2x 103.4x 77.3x 44.0xGross Profit Margin 62.2% 62.9% 63.8% 65.3% 66.6%EBITDA Margin 12.9% 13.5% 12.8% 12.1% 10.9%Net Income Margin 1.0% 1.2% 3.2% 2.5% 19.1%TTM Revenue Growth (YoY) 65.2% 56.6% 54.0% 56.9% 57.2%TTM EBITDA Growth (YoY) 17.2% 45.1% 67.7% 43.9% 73.8%TTM Earnings Growth (YoY) 81.4% 119.7% 101.3% 180.2% 229.8%Current Ratio 5.4 4.6 3.8 4.7 10.3Cash as Percent of Market Cap 10.6% 13.4% 9.6% 9.0% 8.1%Enterprise Value Growth (YoY) n/a n/a n/a 154.3% 105.8%

Travel 1Q13 2Q13 3Q13 4Q13 1Q14




PUBLIC SELLERS

Buyer SellerPurchase Price

(mm)Enterprise Value

(mm) EV/Rev EV/EBITDATTM Rev Growth

Alibaba Group Holding Limited AutoNavi Holdings Limited (NasdaqGS:AMAP) $1,236.2 $1,167.7 8.2x - -

Dassault Systemes SA (ENXTPA:DSY) Accelrys Inc. (NasdaqGS:ACCL) $746.4 $682.9 4.1x 101.4x 3.7%

WABCO Europe BVBA Transics International NV (ENXTBR:TRAN) $136.4 $115.3 1.6x 7.2x 5.2%

SintecMedia Ltd.; Sintec Media Software Ltd. Pilat Media Global plc (AIM:PGB) $80.7 $72.1 1.6x 12.4x 9.1%

Medina Capital Cryptzone Group AB (publ) (OM:CZON B) $13.4 $13.4 3.6x - -35.9%



MEGA DEALS



(mm) EV/ Rev EV/ EBITDATTM Rev Growth

Facebook, Inc. (NasdaqGS:FB) WhatsApp Inc. $16,374.2 $16,374.2 - - -

VMware, Inc. (NYSE:VMW) AirWatch, LLC $1,540.0 $1,540.0 - - -

Alibaba Group Holding Limited AutoNavi Holdings Limited (NasdaqGS:AMAP) $1,236.2 $1,167.7 8.2x - -11.3%

Thoma Bravo, LLC TravelCLICK, Inc. $930.0 $930.0 - - -

Rakuten, Inc. (TSE:4755) Viber Media Inc. $900.0 $900.0 - - -

Dassault Systemes SA (ENXTPA:DSY) Accelrys Inc. (NasdaqGS:ACCL) $746.4 $682.9 4.1x 101.4x 3.7%

Platinum Equity, LLC Sensis Pty Ltd $411.0 $587.1 - 0.9x -

Zynga Game International Limited NaturalMotion Ltd. $527.1 $527.1 - - -

Verint Systems Inc. (NasdaqGS:VRNT) KANA Software, Inc. $514.0 $514.0 - - -



MOST ACTIVE BUYERS



(mm)TTM Revenue

(mm) EV/ Rev

Facebook, Inc. (NasdaqGS:FB) WhatsApp Inc. $16,374.2 $16,374.2 - -

Little Eye Software Labs Pvt Ltd. $14.5 $14.5 - -

Branch Media, Inc. $15.0 $15.0 - -

Google Inc. (NasdaqGS:GOOG) Deepmind Technologies Limited $401.3 $401.3 - -

Impermium Corporation - - - -

Spider.io - - - -

SlickLogin - - - -

Bitspin GmbH - - - -

Synopsys Inc. (NasdaqGS:SNPS) Coverity, Inc. $375.0 $350.0 - -

Target Compiler Technologies N.V. - - - -

Brandenburg GmbH - - - -



Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, our firm has guided and advised companies on five continents, including privately-held software and technology companies in the United States, Canada, Europe, Asia Pacific, Africa and Israel. We have represented public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges. Software Equity Group also advises several of the world's leading private equity firms. We are ranked among the top ten investment banks worldwide for application software mergers and acquisitions.

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

Perhaps most important are the relationships we've built and the industry reputation we enjoy. Software Equity Group is known and respected by publicly traded and privately owned software and technology companies worldwide, and we speak with them often. Our Quarterly and Annual Software Industry Equity Reports are read and relied upon by more than thousands of industry executives, entrepreneurs and equity investors in sixty-one countries, and we have been quoted widely in such leading publications as The Wall Street Journal, Barrons, Information Week, The Daily Deal, The Street.com, U.S. News & World Report, Reuters, Mergers & Acquisitions, USA Today, Arizona Republic, Detroit Free Press, Entrepreneur Magazine, Softletter, Software Success, Software CEO Online and Software Business Magazine .

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

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

CONTACT INFORMATION:

Software Equity Group, L.L.C.12220 El Camino Real, Suite 320

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

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

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

ABOUT SOFTWARE EQUITY GROUP

1q14 software industry financial report

Technology

private software

public software financial

software entrepreneurs

software technology

software ma exit multiples

product category

software equity group

represented software