2q13 software industry financial report

Q2

20

13

The Software Industry

Financial Report

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSAbout Software Equity Group

Leaders in Software M&A 4Extensive Global Reach 5

Software Industry MacroeconomicsGlobal GDP 8Global GDP 8U.S. GDP and Unemployment 9Global IT Spending 10E-Commerce and Digital Advertising Spend 11SEG Indices vs. Benchmark Indices 12

Public Software Financial and Valuation PerformancePublic Software Financial and Valuation PerformanceThe SEG Software Index 14The SEG Software Index: Financial Performance 15-17The SEG Software Index: Market Multiples 18-19The SEG Software Index by Product Category 20The SEG Software Index by Product Category: Financial Performance 21The SEG Software Index by Product Category: Financial Performance 21The SEG Software Index by Product Category: Market Multiples 22

Public SaaS Company Financial and Valuation PerformanceThe SEG SaaS Index 24The SEG SaaS Index Detail 25The SEG SaaS Index: Financial Performance 26-28The SEG SaaS Index: Financial Performance 26 28The SEG SaaS Index: Market Multiples 29-30The SEG SaaS Index by Product Category 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 PerformancePublic Internet Company Financial and Valuation PerformanceThe SEG Internet Index 35The SEG Internet Index: Financial Performance 36-38The SEG Internet Index: Market Multiples 39-40The SEG Internet Index by Product Category 41The SEG Internet Index by Product Category: Financial Performance 42

1 Q2 2013 Software Industry Financial ReportCopyright © 2013 by Software Equity Group, LLC

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The SEG Internet Index by Product Category: Financial Performance 42The SEG Internet Index by Product Category: Market Multiples 43

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTSSoftware Industry M&A Market Update

Software/SaaS M&A Deal Volume and Spending 45Software M&A Exit Multiples 46Software M&A by Ownership Structure and Size 47Software M&A by Vertical and Horizontal Markets 48Software M&A by Vertical and Horizontal Markets 48Software M&A by Product Category 49-50SaaS M&A Deal Volume and Exit Multiples 51SaaS M&A by Product Category 52SaaS M&A: 2Q13 Transactions 53-55Internet M&A: Deal Volume and Exit Multiples 56-57Internet M&A: Deal Volume and Exit Multiples 56 57

AppendixThe SEG Software Index Companies 59-63The SEG SaaS Index Companies 64The SEG Internet Index Companies 65-67The SEG Software Index Metrics by Product Category 68-69The SEG Software Index Metrics by Product Category 68 69The SEG SaaS Index Metrics by Product Category 70The SEG Internet Index Metrics by Product Category 712Q13 Public Sellers 722Q13 Software Mega Deals (>$500M) 732Q13 Most Active Buyers 742Q13 Most Active Buyers 74


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ABOUT SOFTWARE EQUITY GROUP


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• Industry leading boutique investment bank founded in

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

• Strategic exit• Growth capital

We Do Deals.

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

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

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

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

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

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

• Unparalleled software industry reputation and track record.

• Highly referenceable base of past clients

4

EXTENSIVE GLOBAL REACH

Current Sell-side Representation

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

Recent Sell-side Representation

Germany, Australia & Saudi Arabia

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

SEG Research Distribution

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

5

p ,

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

ABOUT SOFTWARE EQUITY GROUPq y p y g gy , g

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

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

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

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

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

CONTACT INFORMATION:

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

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

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

SOFTWARE INDUSTRY MACROECONOMICS


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GLOBAL GDP

• According to the Economist Global GDP growth slowed in 2Q13 growing only 2 1% down from 3 1% in 2Q12• According to the Economist, Global GDP growth slowed in 2Q13, growing only 2.1%, down from 3.1% in 2Q12.

• The global economy continued to be impacted by the European Union’s recession, and slowing GDP growth in China, which is rebalancing its economy to be more urban based and consumer driven.

• Other large, emerging markets are struggling with social unrest, largely driven by high unemployment and lackluster growth.

F th PIMCO f t Gl b l GDP t th 2 0% 2 5% li htl f i f t d t i t i• For the year, PIMCO forecasts Global GDP to growth 2.0% - 2.5%, up slightly from previous forecasts due to improvements in the U.S. and Japan offsetting continued challenges in Europe and potentially slower growth in key emerging markets.


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Sources: Worldbank, The Economist and PIMCO

U.S. GDP AND UNEMPLOYMENT

5.0%

4 1%

6%

8%

10%

GDP Unemployment Rate

1.2%

3.2% 3.6%

2.1%

0 7%

1.5%

0 7%

2.2%

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%

0%

2%

4%

-0.7%

-2.7%

-5.4%

6 4%

-0.7%

-6%

-4%

-2%

• Current economic forecast calls for moderate U S GDP growth in 2Q13 that should modestly improve in the second half of the

-6.4%-8%

2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13

• Current economic forecast calls for moderate U.S. GDP growth in 2Q13 that should modestly improve in the second half of the year.

• May’s Federal Reserve survey of 42 economists predicted GDP growth in 2Q13 would be 1.8%, ticking up to 2.5% growth in the second half of the year. For the year, expectations are the U.S. will grow 2.0%.

• PIMCO’s latest forecasts were consistent with the Federal Reserve’s panel of outside experts. In its 2Q13 market perspectives,PIMCO s latest forecasts were consistent with the Federal Reserve s panel of outside experts. In its 2Q13 market perspectives, PIMCO forecast U.S. GDP growth of 1.5% - 2.0% for the year, driven by continuing strength in the housing market.


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GLOBAL IT SPENDING

9.0%

6.0%

8.0%

6.0%

4.1%5.0%

10.0%

2.0% 2.0%

0.0%2007 2008 2009 2010 2011 2012 2013 2014 (F)

in IT

Spe

nding

-10 0%‐10.0%

‐5.0%

YoY Ch

ange

• In July analysts revised their earlier Global IT spending forecasts predicting only a 2% increase rather than their previous growth

10.0%

‐15.0%

• In July, analysts revised their earlier Global IT spending forecasts predicting only a 2% increase, rather than their previous growth estimate of 3.9%.

• Estimates for 2014 are more promising, with an array of economists forecasting a 4.1% increase in Global IT spending.

• According to Forrester, software is receiving the largest share of Global IT dollars with $542M in 2013. Software spending is expected to grow 3.3% in 2013, and 6.2% in 2014.expected to grow 3.3% in 2013, and 6.2% in 2014.

• SaaS software spending is expected to increase 25% in 2013.

• Especially hot Software spending priorities include: collaboration (13% YoY growth), business intelligence (11%), ePurchasing(10%), HR management (9%), and healthcare systems (8%).


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

E-COMMERCE AND DIGITAL ADVERTISING SPENDilli

ons)

llions

)

Digital Advertising RevenueE-Commerce Spending

20%

50 000

60,000

25%

30%

10 000

12,000

oY %

Cha

nge

rce

Spen

ding

($ M

oY %

Cha

nge

ng R

even

ue ($

Mi l

5%

10%

15%

20 000

30,000

40,000

50,000

5%

10%

15%

20%

6,000

8,000

10,000

Yo

E-C

omm

er Yo

Inte

rnet

Adv

ertis

i

‐5%

0%

0

10,000

20,000

‐10%

‐5%

0%

5%

0

2,000

4,000

• U.S. retail e-commerce sales totaled $50.2B in 1Q13 (the latest data available), marking the second consecutive $50B+ quarter.

Th $50 2B i d t d f 10 6% f ll di ti

• U.S. digital advertising revenues totaled $9.6B in 1Q13 (the latest quarter data was available). The figure is a 15.6% increase over the $8 3 billion digital advertising tally• The $50.2B in spend accounted for 10.6% of all discretionary

dollars spent, the highest on record.

• 1Q13’s 13% YoY growth in online sales, while impressive, was down YoY from 1Q12’s 17% growth rate.

E commerce categories with greater than 20% YoY growth

increase over the $8.3 billion digital advertising tally reported in the first quarter 2012.

• 1Q13’s strong first quarter follows on the heels of a strong 2012, when digital advertising soared 15% to $36.6B.

• E-commerce categories with greater than 20% YoY growth included: Digital Content & Subscriptions, Apparel & Accessories, Sport & Fitness, Consumer Electronics, and Consumer Packaged Goods.

• Apparel & Accessories was the highest growing mobile


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Sources: comScore, IAB, IBD

commerce category, generating nearly $1 billion in sales in Q1.

SEG INDICES VS. BENCHMARK INDICES

25.0%

30.0% DOW S&P NASDAQ SEG SaaS SEG SW Index SEG Internet Index

15.0%

20.0%

5.0%

10.0%

• An improving macro economic climate and continued support from the Federal Reserve helped drive the U.S. stock markets higherin 2Q13.

0.0% Jan Feb Mar Apr May Jun

in 2Q13.

• After finishing Q1 with the best overall performance (11.3%) among the three major indices we track, the Dow gained 2.3% in Q2, for a first half return in 2013 of 13.6%. Meanwhile, the NASDAQ, which posted the weakest Q1 return (8.2%), led the way in Q2 with a 5.0% return. The S&P continued its middle of the pack performance, adding to Q1’s return of 10.0% with an additional 2.8% in Q2.

• Both the SEG SaaS and the SEG Internet Index derived significant benefit from investor receptivity to higher risk assets, posting g p y g , p g17.2% and 17.0% returns, respectively, by close of Q2. By contrast, the SEG Software index closed 2Q13 with a comparatively paltry return of 1.9%.

• For the first half of the year, the SEG SaaS and SEG Internet indexes have posted stellar returns of 22.5% and 24.8%, respectively.


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

THE SEG SOFTWARE INDEX


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THE SEG SOFTWARE INDEXSEG - Software: Median Metrics

• The SEG Software Index tracks public software companies that primarily offer on-premise software under a perpetual

Measure 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.7x 2.7x 2.6x 2.8x 2.7xEV/EBITDA 11.0x 11.2x 11.8x 13.2x 12.0xEV/Earnings 22.3x 21.4x 22.0x 24.0x 24.4xGross Profit Margin 65.5% 66.0% 66.0% 66.4% 66.8%EBITDA M i 19 3% 19 4% 19 7% 19 5% 18 8% license with annual M&S

• The SEG Software Index is currently comprised of 137 public software

i *

EBITDA Margin 19.3% 19.4% 19.7% 19.5% 18.8%Net Income Margin 10.7% 10.2% 10.4% 9.4% 9.1%TTM Revenue Growth 15.8% 14.7% 13.9% 12.5% 11.0%TTM Total Revenue ($M) $432.5 $445.4 $454.3 $466.7 $477.0TTM EBITDA Growth 17.8% 15.1% 8.8% 6.3% 4.9%TTM Total EBITDA ($M) $73.5 $76.7 $78.9 $78.0 $85.3

companies*TTM Total EBITDA ($M) $73.5 $76.7 $78.9 $78.0 $85.3Cash & Eq ($M) $185.6 $162.5 $165.7 $172.3 $182.1Current Ratio 1.9 2.0 1.9 1.9 1.9Debt / Equity Ratio 19.3% 21.3% 22.5% 25.1% 25.3%


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

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

71% of public on-premise software companies had TTM revenue growth rates of 20% or below

Of the 15% of companies with TTM revenue

TTM Revenue Growth Rate DistributionRevenue Performance

18%$490

TTM Total Revenue ($M) TTM Revenue Growth

31%35%

Of the 15% of companies with TTM revenue growth rates of 30% or more, a disproportionate number are focused on mobility and cloud computing

10%

12%

14%

16%

$450

$460

$470

$480

$

nue Growth

l Reven

ue

16%

31%

24%

14%

20%

25%

30%

ompanies

0%

2%

4%

6%

8%

$410

$420

$430

$440

$450

TTM Reven

TTM Tota 14%

5%

10%

0%

5%

10%

15%

% of C

o

• On-premise software companies lost market share to SaaS and Internet providers and struggled with continuing tight

0%$410

2Q12 3Q12 4Q12 1Q13 2Q13

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

p gg g gconstraints on IT capital spending and macro economic headwinds, as their 2Q13 median TTM revenue growth rate declined to 11.0%, the lowest since 4Q10.

• Despite slowing growth, the median TTM revenue of the SEG Software Index reached $477 0M the highest in itsSEG Software Index reached $477.0M, the highest in its history and the highest among our three tracking indices.

• We expect TTM revenue growth for most on-premise public software companies to remain modest, which portends increased and highly strategic M&A and R&D spending to


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spur top line growth.

THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

26% 27%30%

TTM EBITDA Margin DistributionEBITDA Margin Performance

Almost one in three on-premise software companies posted EBITDA margins of 20% - 30%

20%22%

EBITDA Margin TTM EBITDA Growth

18%

26%

15%

20%

25%

ompanies

10%

12%

14%

16%

18%

20%

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

DA Growth

Margin

10%11%

7%

0%

5%

10%% of C

o

0%

2%

4%

6%

8%

10%

0%2%4%6%8%

10%

TTM EBITD

EBITDA

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin• EBITDA margins of public on-premise software companies

have held relatively constant over the past year and remain

0%0%

2Q12 3Q12 4Q12 1Q13 2Q13

y p yat historic levels, closing 2Q13 at 18.8%.

• Median TTM EBITDA growth plunged from 17.8% YoY in 2Q12 to a 4.9% YoY increase in 2Q13, suggesting many public software companies are spending more to grow revenue after paring expenses to the bonerevenue after paring expenses to the bone.

• A year ago in 2Q12, median TTM EBITDA growth outpaced TTM revenue growth by 7.5%. In a dramatic reversal, TTM EBITDA growth in 2Q13 lagged TTM revenue growth by 6.1% (4.9% vs. 11.0%).


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THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCEMargin PerformanceOperating Ratios

30%

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

80%

Gross Profit Margin EBITDA Margin Net Income Margin

15%

20%

25%

Revenu

e

40%

50%

60%

70%

Margin

0%

5%

10%% of R

0%

10%

20%

30%

% M

• Median spending on sales & marketing (S&M), research & development (R&D) and general & administrative (G&A), as

• In 2Q13, median gross profit, EBITDA and net income margins were 66.8%, 18.8% and 9.1%, respectively.

0%

2Q12 3Q12 4Q12 1Q13 2Q13

0%

2Q12 3Q12 4Q12 1Q13 2Q13

p ( ) g ( ),a percentage of total revenue was 24.0%, 15.0% and 10.6%, respectively, in 2Q13 – consistent with historical norms for public, on-premise software companies.

• Over the past year, S&M and G&A expenses as a percent of revenue have remained flat while R&D grew slightly from

g , , p y

• Several on-premise providers achieved gross profit margins of 89% and greater, including Qlik Technologies (89%), Splunk (89%), Autodesk (90%), Glu Mobile (90%), Unit 4 (92%) and SolarWinds (93%).

revenue have remained flat, while R&D grew slightly from 14.5% in 2Q12 to 15.0% in Q2.

• Median S&M spending among on-premise public software companies lagged far behind their SaaS counterparts, which are investing heavily in customer acquisition (38.9% for

• We anticipate EBITDA margins and net income margins will likely decline over the next several quarters, as on-premise software companies increase their investments in R&D to improve products/delivery models, and sales & marketing to accelerate TTM revenue growth.


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SaaS and 24.0% for on-premise).

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

3.5x

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

Revenue Between $100 million and $500 million Revenue Less Than $100 million13.2x14.0x

EV/Revenue EV/EBITDA

2.0x

2.5x

3.0x

3 5

V/Reven

ue

11.0x 11.2x11.8x 12.0x

8.0x

10.0x

12.0x

0

0 0x

0.5x

1.0x

1.5x

Med

ian EV

2.7x 2.7x 2.6x 2.8x 2.7x

0 0x

2.0x

4.0x

6.0x

• Despite slowing growth and EBITDA erosion, the median EV/Revenue multiple of public on-premise software

• Investors in 2Q13 continued to place higher value on larger public software companies with revenues >$100 million.

0.0x

2Q12 3Q12 4Q12 1Q13 2Q13

0.0x

2Q12 3Q12 4Q12 1Q13 2Q13

p p pcompanies remained unchanged YoY in 2Q13, closing the quarter at 2.7x.

• By contrast, the median EV/EBITDA multiple in 2Q13 was 12.0x, well below the high-teen EBITDA multiples that prevailed in 2007 and years prior

p p $

• Throughout 2012, and in 2Q13, 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 prevailed in 2007 and years prior. $100M and $1B successfully balanced TTM revenue growth

(median 17.3%) and spending (median EBITDA of 17.7%), and were rewarded with the highest median EV/Revenue multiples.


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THE SEG SOFTWARE INDEX: MARKET MULTIPLES

5.4x6.0x

EV/Revenue Multiples vs. TTM EBITDA MarginsEV/Revenue Multiples vs. TTM Revenue Growth Rates

6.0x

2.4x 2.6x2.9x 3.0x

3.0x

4.0x

5.0x

EV/Reven

ue

2 1

2.9x

3.9x

3.4x

4.8x

3.0x

4.0x

5.0x

EV/Reven

ue

1.7x

0.0x

1.0x

2.0x

Med

ian

1.4x

2.1x

0.0x

1.0x

2.0x

Med

ian

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

• Noting the decline in the median revenue growth of on-premise software providers investors awarded markedly

• Premium market multiples were awarded to the select few on-premise software providers generating EBITDA margins north

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

premise software providers, investors awarded markedly higher market multipes to public on-premise software companies with revenue growth exceeding 20%.

• Indeed, public on-premise software companies with revenue growth rates of 20% or higher were rewarded with median

premise software providers generating EBITDA margins north of 40%.

• Surprisingly, the EV/Revenue multiple range for most on-premise software companies was relatively narrow, suggesting investors were seemingly indifferent to profitability, a stark

EV/Revenue multiples of 3.4x or higher in 2Q13, considerably greater than the SEG Software Index median of 2.7x.

reversal from prior quarters.


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THE SEG SOFTWARE INDEX: BY PRODUCT CATEGORY

2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13Billing & Service Management 1.3x 1.3x 1.5x 1.9x 1.9x 7.9x 8.3x 8.4x 8.4x 8.3x 13.6% 9.5% 10.4% 10.4% 8.9% 18.9% 18.8% 19.9% 21.1% 18.7%Business Intelligence 3.2x 2.9x 3.2x 3.4x 3.0x 26.7x 25.9x 17.6x 15.8x 16.5x 18.3% 14.5% 13.2% 11.8% 8.3% 15.1% 15.4% 14.7% 14.0% 13.7%Development Platforms 1.9x 2.1x 2.5x 2.5x 2.6x 8.4x 8.2x 9.6x 9.1x 10.0x 5.3% 3.5% 1.6% 3.0% 0.3% 22.3% 21.8% 23.6% 21.8% 20.6%

EBITDA Margin SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth

Engineering & PLM 2.3x 2.6x 2.5x 2.7x 2.7x 11.5x 12.1x 11.8x 13.4x 12.4x 13.5% 13.2% 14.0% 13.1% 11.7% 19.9% 20.7% 20.6% 20.7% 20.5%

Enterprise Resource Planning 2.4x 2.7x 2.7x 2.9x 3.0x 8.3x 9.1x 9.0x 9.7x 11.3x 10.1% 9.0% 2.9% 2.0% 0.2% 29.0% 29.3% 29.6% 29.6% 29.6%Financial & Accounting 2.7x 2.9x 2.9x 3.1x 3.3x 9.5x 9.8x 9.8x 10.5x 11.3x 7.3% 17.2% 13.8% 8.6% 10.7% 27.2% 29.0% 28.8% 27.5% 26.6%Gaming 1.0x 1.0x 1.0x 1.1x 1.3x 7.6x 9.1x 8.0x 7.1x 9.7x 2.6% 2.2% 0.1% 7.4% 15.1% 16.3% 15.5% 16.3% 15.4% 15.0%Healthcare 2.7x 2.2x 2.1x 2.1x 2.1x 13.0x 12.8x 11.3x 14.8x 17.6x 37.1% 24.2% 19.6% 10.7% 11.0% 22.3% 19.6% 18.4% 13.4% 14.1%IT Conglomerates 2.9x 2.8x 2.5x 2.5x 2.9x 7.3x 8.2x 7.8x 8.8x 8.3x 5.3% 1.5% 1.4% 0.5% 0.2% 36.9% 36.1% 34.6% 33.8% 33.8%Mobile Solutions/Content 3 6x 3 6x 2 5x 2 7x 2 8x 16 1x 13 8x 11 9x 20 6x 13 2x 43 5% 34 4% 33 1% 35 2% 19 4% 8 1% 7 8% 6 4% 4 5% 7 9%Mobile Solutions/Content 3.6x 3.6x 2.5x 2.7x 2.8x 16.1x 13.8x 11.9x 20.6x 13.2x 43.5% 34.4% 33.1% 35.2% 19.4% 8.1% 7.8% 6.4% 4.5% 7.9%Networking & Network Performance Management 2.4x 2.5x 2.5x 2.7x 2.6x 15.0x 14.0x 14.0x 15.1x 15.6x 22.9% 19.5% 15.5% 14.2% 9.1% 17.9% 16.7% 15.8% 14.9% 15.0%

Security 2.9x 3.2x 2.7x 3.3x 3.6x 10.2x 10.5x 11.2x 11.5x 10.7x 19.4% 20.1% 23.1% 23.4% 21.3% 13.1% 14.5% 13.9% 8.1% 4.5%Storage, Data Management & Integration 2.5x 2.5x 2.3x 2.4x 2.4x 9.4x 9.2x 8.4x 9.2x 8.8x 7.6% 6.3% 6.5% 4.8% 4.1% 23.7% 23.9% 23.8% 22.2% 21.9%

Supply Chain Management & Logistics 3.2x 3.2x 3.5x 3.8x 4.1x 11.3x 11.1x 13.6x 14.7x 15.6x 19.1% 16.1% 13.1% 12.8% 10.7% 19.6% 19.6% 19.6% 19.4% 19.2%gSystems Management 5.9x 5.5x 4.5x 4.8x 4.3x 22.9x 22.3x 18.9x 20.5x 19.0x 18.1% 18.1% 16.5% 17.2% 15.8% 26.8% 25.8% 25.5% 25.8% 24.7%Vertical - Finance 3.3x 3.2x 3.0x 3.4x 3.8x 10.3x 10.6x 9.4x 10.7x 11.0x 6.8% 6.3% 7.1% 6.7% 7.6% 26.4% 26.3% 26.4% 26.5% 27.3%

Vertical - Other 3.0x 2.9x 2.9x 3.0x 3.2x 16.4x 21.0x 20.3x 22.0x 22.1x 26.5% 28.0% 19.8% 21.3% 21.0% 15.8% 14.7% 14.4% 14.1% 14.4%

Median 2.7x 2.7x 2.6x 2.8x 2.7x 11.0x 11.2x 11.8x 13.2x 12.0x 15.8% 14.7% 13.9% 12.5% 11.0% 19.3% 19.4% 19.7% 19.5% 18.8%

• The SEG Software Index is segmented into 17 product categories• See the appendix for the complete list of companies within each product category


All Rights Reserved

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE

2Q13 YoY Change in Revenue Growth2Q13 TTM Revenue Growth

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All Rights Reserved

Bus E

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THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES

2Q13 YoY Change in Median EV/Revenue Multiples2Q13 Median EV/Revenue Multiples

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• In 2Q13, eleven product categories achieved median EV/Revenue multiples above the SEG Software Index median (2.7x), includingSystems Management (4.3x), Supply Chain Mgmt (4.1x), Vertical – Finance (3.8x), Security (3.6x), Financial & Accounting (3.3x), Vertical –Other (3.2x), Business Intelligence (3.0x), Enterprise Resource Planning (3.0x), IT Conglomerates (2.9x), and Mobile (2.8x).

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• The Systems Management product category, benefitting from the rapid shift to cloud computing and growing demand for cloud infrastructure, achieved the highest median EV/Revenue multiple (4.3x) in 2Q13, driven by strong TTM revenue growth (15.8%) andEBITDA i (24 7%) b th b th di f th i d


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EBITDA margins (24.7%) – both above the median for the index.

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

THE SEG SaaS INDEX


All Rights Reserved

THE SEG SaaS INDEXSEG - SaaS: Median Metrics

• The SEG SaaS Index tracks public companies that primarily offer hosted, on-demand software under a subscription

Measure 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 4.9x 5.4x 4.6x 5.0x 5.3xEV/EBITDA 29.9x 37.9x 41.7x 35.4x 31.5xEV/Earnings 32.1x 34.5x 36.8x 63.2x 95.3xGross Profit Margin 70.2% 70.2% 70.9% 70.7% 70.6%

and/or transaction based pricing model• The SEG SaaS Index is currently

comprised of 40 public pure-play SaaS i *

EBITDA Margin 8.9% 8.0% 8.0% 6.0% 3.1%Net Income Margin -1.0% -0.7% 0.5% -1.4% -2.6%TTM Revenue Growth 30.9% 28.0% 26.8% 25.1% 25.5%TTM Total Revenue ($M) $119.7 $132.4 $145.6 $156.0 $164.2TTM EBITDA Growth 28.2% 23.2% 10.4% 5.7% -1.5%TTM Total EBITDA ($M) $7 2 $6 8 $6 7 $7 5 $6 3 companies*TTM Total EBITDA ($M) $7.2 $6.8 $6.7 $7.5 $6.3Cash & Eq ($M) $62.6 $68.5 $68.6 $75.9 $77.6Current Ratio 1.8 1.6 1.7 1.8 1.6Debt / Equity Ratio 9.4% 11.0% 6.7% 6.0% 7.1%


All Rights Reserved

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

THE SEG SaaS INDEX DETAILSSEG SaaS Index

Company2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13

Athenahealth, Inc Vertically Focused 7.2x 8.2x 6.1x 7.2x 7.2x 50.0x 62.9x 48.9x 59.9x 74.6x 34.4% 34.2% 32.4% 30.3% 28.7% 14.5% 13.1% 12.5% 12.1% 9.6%Bazaarvoice, Inc CRM & Marketing 9.4x 7.2x 4.3x 2.7x 2.7x - - - - - 64.6% 62.6% 59.3% 57.9% 51.0% -19.4% -17.8% -17.9% -18.2% -28.1%Callidus Software Inc. Workforce Management 2.4x 2.0x 2.0x 2.1x 2.5x - - - - - 15.4% 15.0% 14.9% 13.3% 14.5% -13.8% -17.0% -18.1% -17.1% -15.4%ChannelAdvisors Workforce Management - - - - 5.8x - - - - - 18.8% 18.8% - 23.0% - -2.6% -2.6% -1.5% -1.8% -3.7%Concur Other SaaS 8.0x 8.7x 7.8x 7.9x 8.7x 57.1x 66.8x 67.5x 81.7x 113.9x 24.0% 25.7% 25.8% 25.1% 22.3% 14.0% 13.1% 11.5% 9.7% 7.7%

SEG SaaS Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin

Constant Contact CRM & Marketing 2.3x 2.0x 1.3x 1.4x 1.3x 21.4x 19.6x 14.2x 17.9x 18.5x 21.4% 20.0% 19.1% 17.6% 16.1% 10.9% 10.4% 9.3% 7.8% 7.3%Cornerstone OnDemand Workforce Management 11.7x 12.9x 13.1x 13.4x 14.6x - - - - - 63.2% 72.2% 68.1% 61.5% 61.9% -25.5% -21.5% -24.1% -23.4% -21.5%DealerTrack Vertically Focused 3.1x 2.9x 2.9x 3.3x 3.3x 20.0x 19.4x 20.1x 23.9x 24.0x 39.2% 28.7% 16.8% 10.1% 10.5% 15.5% 15.2% 14.3% 13.8% 13.8%Demandware, Inc. Other SaaS 12.5x 9.8x 10.0x 8.9x 9.5x 553.5x - - - - 48.7% 45.0% 42.3% 40.5% 37.5% 2.3% -3.5% -5.9% -4.8% -10.7%E2open, Inc ERP & Supply Chain - 4.6x 4.5x 5.9x 4.5x - 92.6x 76.6x 754.0x - - - 22.2% 25.6% 17.4% 1.6% 5.0% 5.9% 0.8% -3.4%Ebix Inc. Vertically Focused 4.1x 5.2x 3.7x 3.4x 3.7x 9.3x 12.2x 8.9x 7.9x 8.8x 22.8% 18.2% 18.4% 18.0% 20.5% 43.5% 42.9% 41.2% 42.4% 41.8%Ellie Mae Vertically Focused 4.6x 7.8x 6.0x 5.0x 5.0x 29.8x 37.9x 24.6x 19.5x 19.9x 46.4% 67.0% 83.5% 83.5% 69.9% 15.4% 20.6% 24.4% 25.5% 24.8%ExactTarget, Inc. CRM & Marketing 2.8x 2.5x 2.9x 2.9x 2.9x 9.3x 8.0x 9.2x 9.5x 9.8x -5.1% 1.2% 9.4% 14.4% 7.8% 29.6% 30.8% 31.3% 30.7% 29.1%Fleetmatics ERP & Supply Chain - - 7.5x 6.9x 5.6x - - 45.1x 37.0x 27.8x - - - 38.1% 39.6% 18.1% 16.8% 16.6% 18.6% 20.3%Halogen Software, Inc. Workforce Management - - - - 8.0x - - - - - 36.4% 36.4% 36.4% 22.5% - -6.7% -6.7% -6.7% -8.8% -9.6%inContact, Inc. Other SaaS 2.4x 2.5x 2.4x 2.7x 3.2x - - - 458.2x 236.3x 12.5% 16.1% 20.3% 24.6% 25.5% -5.8% -4.9% -2.1% 0.6% 1.4%IntraLinks Holdings Other SaaS 1.3x 1.4x 1.6x 1.6x 1.5x 12.1x 26.1x 86.0x 51.1x 66.2x 7.3% 2.9% 0.1% 1.8% 4.6% 10.3% 5.4% 1.9% 3.2% 2.3%J2 Global Other SaaS 2.9x 3.3x 3.4x 4.1x 4.5x 6.0x 6.7x 6.7x 8.3x 9.8x 27.9% 18.6% 12.1% 12.5% 16.0% 49.5% 49.7% 50.5% 49.6% 46.1%Jive Software, Inc Other SaaS 13.0x 8.7x 6.9x 7.6x 7.0x - - - - - 64.2% 56.8% 49.3% 47.1% 41.2% -43.6% -39.3% -34.9% -32.2% -35.4%LivePerson CRM & Marketing 5.8x 6.0x 4.3x 4.3x 2.6x 30.0x 37.2x 30.3x 35.4x 29.8x 21.3% 21.4% 19.7% 18.3% 17.0% 19.3% 16.2% 14.1% 12.1% 8.7%Marin Software CRM & Marketing - - - 8.2x 4.5x - - - - - 90.1% 90.1% - 64.9% - -42.4% -42.4% -37.2% -38.0% -39.9%Marin Software CRM & Marketing 8.2x 4.5x 90.1% 90.1% 64.9% 42.4% 42.4% 37.2% 38.0% 39.9%Marketo CRM & Marketing - - - - 11.5x - - - - - 130.8% 130.8% 130.8% 80.3% - -67.9% -67.9% -67.9% -56.2% -53.2%Medidata Solutions Vertically Focused 3.0x 4.0x 4.4x 5.3x 7.3x 14.9x 23.0x 26.6x 31.8x 45.6x 14.5% 10.0% 12.1% 18.4% 19.2% 20.4% 17.6% 16.5% 16.6% 16.0%Netsuite ERP & Supply Chain 12.5x 14.2x 14.6x 15.4x 18.7x - - - - - 24.6% 26.3% 28.4% 30.7% 31.3% -6.8% -5.6% -5.2% -5.2% -6.3%OpenTable, Inc. Other SaaS 5.9x 5.9x 6.1x 7.1x 7.9x 19.8x 20.7x 20.3x 25.0x 27.2x 30.3% 22.0% 17.1% 15.9% 15.6% 29.8% 28.5% 29.8% 28.5% 29.2%Qualys, Inc. Other SaaS - 4.8x 4.8x 3.1x 3.4x - 57.6x 50.5x 27.7x 30.2x - - - 20.0% 19.3% 9.8% 8.3% 9.5% 11.3% 11.1%RealPage Vertically Focused 4.9x 6.1x 5.1x 5.0x 4.4x 37.9x 46.9x 36.0x 30.6x 27.3x 34.4% 32.0% 27.7% 24.9% 22.5% 12.9% 13.1% 14.1% 16.4% 16.0%Responsys CRM & Marketing 3.4x 2.7x 1.4x 1.7x 2.1x 20.3x 20.3x 11.4x 14.0x 19.0x 36.3% 27.2% 21.1% 20.7% 21.3% 16.6% 13.1% 12.1% 11.8% 11.2%Salesforce com CRM & Marketing 8 2x 7 4x 7 4x 8 2x 7 4x 189 2x 168 0x 235 9x 298 6x 331 3x 37 7% 36 5% 36 1% 34 6% 32 1% 4 3% 4 4% 3 1% 2 8% 2 2%Salesforce.com CRM & Marketing 8.2x 7.4x 7.4x 8.2x 7.4x 189.2x 168.0x 235.9x 298.6x 331.3x 37.7% 36.5% 36.1% 34.6% 32.1% 4.3% 4.4% 3.1% 2.8% 2.2%SciQuest ERP & Supply Chain 5.0x 5.4x 4.7x 5.5x 6.6x 41.4x 47.1x 50.7x 96.2x 167.3x 23.3% 22.0% 21.4% 24.4% 31.5% 12.1% 11.6% 9.4% 5.7% 3.9%Service-now.com Other SaaS 19.5x 20.3x 17.7x 14.9x 17.0x - - - - - - - - 90.3% 87.8% -1.2% -6.1% -9.2% -8.9% -9.4%SPS Commerce ERP & Supply Chain 4.9x 5.6x 6.6x 6.4x 7.7x 68.5x 67.2x 78.0x 73.9x 86.7x 31.6% 31.5% 30.4% 33.0% 36.3% 7.1% 8.4% 8.5% 8.7% 8.9%Tableau Software Other SaaS - - - - 21.4x - - - - 20132.4x 82.5% 82.5% 82.5% 104.8% - 9.6% 9.6% 9.6% 6.3% 0.1%Tangoe Other SaaS 6.3x 5.5x 3.2x 3.3x 2.8x 77.9x 70.3x 41.7x 38.9x 32.9x 56.0% 50.8% 48.1% 47.2% 41.5% 8.1% 7.8% 7.6% 8.5% 8.7%Textura Corp. Vertically Focused - - - - 18.7x - - - - - 74.7% 74.7% 106.2% - - -102.3% -102.3% -68.0% -62.6% -55.1%The Ultimate Software Group, Inc. Workforce Management 7.0x 8.3x 8.0x 7.9x 8.5x 71.1x 80.0x 69.4x 63.7x 61.9x 19.6% 21.0% 21.8% 23.4% 24.4% 9.9% 10.4% 11.6% 12.5% 13.8%U it 4 ERP & S l Ch i 1 5 1 5 1 6 1 8 1 9 10 0 10 6 11 8 12 7 13 3 6 0% 4 3% 3 8% 5 4% 5 4% 14 9% 13 9% 13 8% 14 3% 14 3%Unit 4 ERP & Supply Chain 1.5x 1.5x 1.6x 1.8x 1.9x 10.0x 10.6x 11.8x 12.7x 13.3x 6.0% 4.3% 3.8% 5.4% 5.4% 14.9% 13.9% 13.8% 14.3% 14.3%Vocus CRM & Marketing 3.0x 3.3x 2.6x 2.1x 1.3x 311.8x 433.8x 242.6x - 92.0x 21.0% 29.9% 39.7% 48.7% 48.4% 1.0% 0.8% 1.1% -0.2% 1.4%Workday, Inc. ERP & Supply Chain - - 33.2x 29.9x 32.0x - - - - - - - - 103.6% 88.3% -42.4% -38.1% -35.7% -32.5% -31.9%Zix Corporation Other SaaS 3.9x 3.5x 3.6x 4.2x 4.7x 12.5x 11.3x 12.7x 15.3x 21.1x 12.4% 11.1% 12.0% 13.7% 14.4% 31.2% 30.7% 28.1% 27.6% 22.2%

Median: 4.9x 5.4x 4.6x 5.0x 5.3x 29.9x 37.9x 41.7x 35.4x 31.5x 30.9% 28.0% 26.8% 25.1% 25.5% 8.9% 8.0% 8.0% 6.0% 3.1%


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THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

26%30%

TTM Revenue Growth Rate DistributionRevenue Performance

24% achieved TTM35.0%$180


26%

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TTM Revenue Growth• After declining for four consecutive quarters, the median TTM revenue growth rate for the SEG SaaS Index edged up to 25.5%

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2Q12 3Q12 4Q12 1Q13 2Q13

in 2Q13.

• Public SaaS companies continued to grow and mature, and gain market share; Q2’s median TTM revenue exceeded $164M, up sharply from 2Q12’s $120M.

• Accelerating demand for SaaS solutions has bolstered the TTM revenue growth rates of public SaaS providers, but many are reaching a size that makes it difficult to recapture 2007’s median 42.5% growth rate in a slowly recovering economy.

• We expect median TTM revenue growth for public SaaS


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We expect median TTM revenue growth for public SaaScompanies to remain at current levels for the remainder of 2013.

THE SEG SaaS INDEX: FINANCIAL PERFORMANCETTM EBITDA Margin DistributionEBITDA Margin Performance

85% with EBITDA margins of 20% or lower

30%10%

EBITDA Margin TTM EBITDA Growth

35%40%

15%

20%

25%

6%

8%

DA Growth

Margin

35%33%

18%20%

25%

30%

35%

ompanies

5%

0%

5%

10%

0%

2%

4%

TTM EBITD

EBITDA

10%

5%

0%

5%

10%

15%

% of C

o

• After peaking in 2010, the median EBITDA margin of public SaaS companies has declined every quarter.

‐5%0%

2Q12 3Q12 4Q12 1Q13 2Q13

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

TTM EBITDA Margin

SaaS companies has declined every quarter.

• The trend continued in 2Q13, as EBITDA margins fell to 3.1% from 8.9% in 2Q12.

• The continuing erosion of EBITDA margins among SaaSproviders has not been accompanied by a concomitant p p yincrease in TTM revenue growth rates, suggesting public SaaS providers are working harder and spending more just to stay even.


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THE SEG SaaS INDEX: FINANCIAL PERFORMANCEMedian Margin PerformanceMedian Operating Ratios

45%


80%


25%

30%

35%

40%

45%

even

ue

40%

50%

60%

70%

80%

argin

0%

5%

10%

15%

20%

% of R

e

0%

10%

20%

30%

40%

% Ma

• Increased spending on sales and marketing by public SaaS companies accounted for much of the decline in median

• Median gross profit margins for public SaaS companies in 2Q13 were 70.6%, and have remained steady over the past

0%

2Q12 3Q12 4Q12 1Q13 2Q13

0%

2Q12 3Q12 4Q12 1Q13 2Q13

EBITDA margin.

• In 2Q13, 38.9% of total revenue was spent on sales & marketing, up from 35.8% in 2Q12.

• R&D spending as a percent of revenue increased to 17.8% in

, y pfive quarters.

• Stable gross profit margins demonstrate the ability of public SaaS companies to grow without disproportionally scaling infrastructure and increasing application delivery costs.

2Q13, compared to 15.0% of revenue invested in R&D by on-premise software companies.

• It is unclear whether the increased spending on product development and sales by public SaaS companies will accelerate revenue growth in the absence of improved GDP

• With growth as their primary objective, public SaaS companies are running close to break even, with net income in 2Q13 of -2.6%.


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accelerate revenue growth in the absence of improved GDP growth and increased IT capital spending.

THE SEG SaaS INDEX: MARKET MULTIPLESEV/Revenue Multiple DistributionEV/Revenue and EV/EBITDA Multiples

41.7x45.0x


21%

25%

29.9x

37.9x35.4x

31.5x

20 0x

25.0x

30.0x

35.0x

40.0x

11%

16%

11% 11%

16%

21%

15%

20%

Companies

4.9x 5.4x 4.6x 5.0x 5.3x

0.0x

5.0x

10.0x

15.0x

20.0x

0%

5%

3%

8%

0%

5%

10%

% of C

• Median EV/Revenue multiples remained strong for public SaaS providers, closing 2Q13 at 5.3x.

• The wide disparity in public SaaS company EV/Revenue multiples is striking, and demonstrates growing awareness

2Q12 3Q12 4Q12 1Q13 2Q13 <= 1.0x > 1.0x<= 2.0x

> 2.0x<= 3.0x

> 3.0x <= 4.0x

> 4.0x<= 5.0x

> 5.0x<= 6.0x

> 6.0x<= 7.0x

> 7.0x<= 8.0x

> 8.0x<= 9.0x

> 9.0x

EV/Revenue

p , g Q

• Public SaaS providers in 2Q13 continued to trade at a significant premium relative to their on-premise peers (5.3x vs. 2.7x).

• Public SaaS EV/Revenue multiples have exceeded 5x in

p g, g gand sophistication among SaaS investors.

• Typically, we would expect to see a cluster of companies with multiples around the median (5.3x); instead, public SaaS companies are clustered at the low and high ends of the range suggesting SaaS is increasingly comprised ofthree of the past five quarters, the best streak since 2007. the range, suggesting SaaS is increasingly comprised of underperformers and overachievers.

• 22% of the companies in the SEG SaaS Index are trading for 9x TTM revenue or greater, while 27% are trading for 3x or lower.


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THE SEG SaaS INDEX: MARKET MULTIPLESEV/Revenue Multiples vs. TTM EBITDA MarginsEV/Revenue Multiples vs. TTM Revenue Growth Rates

14.0x8 8x

10.0x

7.4x

11.5x

8.0x

10.0x

12.0x

EV/Reven

ue

8.8x

4.5x5.3x

4 1x5.0x

6.0x

7.0x

8.0x

9.0x

EV/Reven

ue

0.0x

1.7x

3.4x4.4x

2.8x

0 0x

2.0x

4.0x

6.0x

Med

ian E

3.4x4.1x

0 0x

1.0x

2.0x

3.0x

4.0x

Med

ian E

• There is a clear and direct correlation between the median TTM th t d di EV/R lti l

• There is an inverse correlation between EBITDA margins and median EV/Re en e m ltiples

0.0x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

TTM Revenue Growth

0.0x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

TTM EBITDA Margin

TTM revenue growth rate and median EV/Revenue multiple of public SaaS companies.

• Public SaaS companies growing TTM revenue in excess of 50% achieved a median EV/Revenue multiple of 11.5x.

• The premium EV/Rev market multiples awarded rapidly

and median EV/Revenue multiples.

• In the current market, SaaS profitability is penalized, as investors perceive profitability to be at the expense of growth, which they deem all important.

• As proof public SaaS companies with no profitability• The premium EV/Rev market multiples awarded rapidly growing public SaaS companies, which is driving their increased spending on sales & marketing.

• As proof, public SaaS companies with no profitability boasted a remarkable 8.8x median EV/Revenue multiple in 2Q13.


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THE SEG SaaS INDEX BY PRODUCT CATEGORY

2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13CRM & Marketing 5.8x 5.0x 4.3x 3.5x 2.7x 4.1x 4.5x 2.8x 2.3x 3.0x 37.0% 33.2% 37.9% 40.9% 32.1% 1.0% 0.8% 2.8% 1.4% 1.4%ERP & Supply Chain 4.9x 5.4x 6.6x 6.4x 6.6x 5.0x 5.3x 5.7x 5.7x 6.7x 24.0% 24.1% 22.2% 30.7% 31.5% 7.1% 8.4% 8.5% 5.7% 3.9%Vertically Focused 4.3x 5.7x 4.7x 5.0x 5.0x 4.1x 4.6x 3.9x 4.2x 4.0x 34.4% 32.0% 27.7% 21.6% 21.5% 15.4% 15.2% 14.3% 16.4% 16.0%

SEG SaaS Index

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

Currently comprised of 40 public companies, The SEG SaaS Index has sufficient critical mass to analyze trends across four distinct SaaS product categories Select companies within each SaaS

Workforce Management 7.0x 8.3x 10.5x 10.7x 8.5x 6.5x 7.3x 7.6x 8.0x 7.4x 28.0% 28.7% 29.1% 23.4% 43.1% -13.8% -17.0% -18.1% -17.1% -15.4%

Median: 4.9x 5.4x 4.6x 5.0x 5.3x 4.5x 4.7x 4.2x 4.5x 5.3x 30.9% 28.0% 26.8% 25.1% 25.5% 8.9% 8.0% 8.0% 6.0% 3.1%

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

analyze trends across four distinct SaaS product categories. Select companies within each SaaScategory are included below. See the appendix to this report for the complete list.

CRM & M k ti ERP & S l Ch i V ti ll F d W kf M tCRM & Marketing ERP & Supply Chain Vertically Focused Workforce ManagementCRM & Marketing ERP & Supply Chain Vertically Focused Workforce Management


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THE SEG SaaS INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE

2Q13 YoY Change in Revenue Growth2Q13 TTM Revenue Growth 2Q13 YoY Change in Revenue Growth2Q13 TTM Revenue Growth

20%

40%

60%

30%35% 40% 45% 50%

(60%)

(40%)

(20%)

0%

g in ly d e nt0%5%

10% 15% 20% 25% 30%

CR

M &

Mar

ketin

ER

P &

Sup

ply

Cha

i

Ver

tical

lFo

cuse

Wor

kfor

ceM

anag

emen0%

CR

M &

Mar

ketin

g

ER

P &

Sup

ply

Cha

in

Ver

tical

lyFo

cuse

d

Wor

kfor

ceM

anag

emen

t2Q13 YoY Change EBITDA Margin2Q13 TTM EBITDA Margin

10%15% 20%

20%30% 40% 50%

(20%)(15%)(10%)(5%)0% 5%

10%

(50%)(40%)(30%)(20%)(10%)0%

10% 20%

g n d t(20%)

CR

M &

Mar

ketin

g

ER

P &

Sup

ply

Cha

in

Ver

tical

lyFo

cuse

d

Wor

kfor

ceM

anag

emen

t

CR

M &

Mar

ketin

g

P &

Sup

ply

Cha

in

ertic

ally

Foc

used

Wor

kfor

ce

Man

agem

ent


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C

ER

P Ve

THE SEG SaaS INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES


9 0 40%

4 05.0x6.0x7.0x8.0x9.0x

(10%)0%

10% 20% 30% 40%

0.0x1.0x2.0x3.0x4.0x

g n y d nt

(60%)(50%)(40%)(30%)(20%)

g n y d nt

• Public SaaS companies comprising the Workforce Management category achieved a 8.5x median EV/Revenue multiple, 66% higher

CRM

&M

arke

ting

ERP

&Su

pply

Cha

i n

Verti

cally

Focu

sed

Wor

kfor

ceM

anag

eme n

CRM

&M

arke

ting

ERP

&Su

pply

Cha

i n

Verti

cally

Focu

sed

Wor

kfor

ceM

anag

eme n

g g g y gthan the next closest product category, ERP & Supply Chain.

• The stellar market valuations of these SaaS Workforce Management providers can be attributed to their breakneck TTM revenue growth (23.4%), despite little or no profitability.

• Workforce management SaaS providers continued to benefit from a continuing migration from legacy, on-premise solutions to hostedSaaS solutions.

• SaaS ERP & Supply chain, where market adoption has lagged due to concerns over security and integration, achieved the second highest median EV/Revenue multiple (6.6x).

• Although ERP & Supply Chain TTM revenue growth was only slightly above the SaaS median, companies within this product t i d i k t lti l b f th i k t t ti l f h t d ERP & S l Ch i l ti


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category received premium market multiples because of the massive market potential of hosted ERP & Supply Chain solutions.

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

THE SEG INTERNET INDEX


All Rights Reserved

Public Internet Company Market Valuations by Product CategoryTHE SEG INTERNET INDEXSEG - Internet: Median Metrics

• The SEG Internet Index tracks public companies that primarily offer B2C solutions over the Internet using a wide

Measure 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.2x 1.9x 2.1x 2.0x 2.2xEV/EBITDA 12.3x 13.5x 13.3x 13.5x 14.8xEV/Earnings 23.3x 27.2x 23.6x 22.4x 28.1xGross Profit Margin 66.7% 66.3% 65.5% 65.7% 65.7%EBITDA M i 13 3% 13 2% 13 3% 13 0% 13 3% array of pricing models

• The SEG Internet Index is currently comprised of 89 public Internet

i *

EBITDA Margin 13.3% 13.2% 13.3% 13.0% 13.3%Net Income Margin 4.8% 4.3% 6.2% 3.9% 2.4%TTM Revenue Growth 26.6% 24.9% 22.0% 19.8% 18.7%TTM Total Revenue ($M) $394.3 $400.7 $396.9 $427.1 $430.6TTM EBITDA Growth 20.3% 20.3% 11.5% 15.6% 9.4%TTM Total EBITDA ($M) $44.3 $48.6 $46.7 $42.7 $42.5

companies*($ ) $ $ $ $ $

Cash & Eq ($M) $136.6 $122.6 $130.8 $148.2 $164.5Current Ratio 2.6 2.6 2.5 2.2 2.4Debt / Equity Ratio 15.9% 13.8% 21.0% 21.1% 20.1%


All Rights Reserved

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

Initial Public OfferingsTHE SEG INTERNET INDEX: FINANCIAL PERFORMANCETTM Revenue Growth Rate DistributionRevenue Performance

30.0%$440


23%25%

15 0%

20.0%

25.0%

30.0%

$410

$420

$430

$440

nue Growth

l Reven

ue

13%

18%17%

10%

19%

15%

20%

ompanies

0 0%

5.0%

10.0%

15.0%

$370

$380

$390

$400

TTM Reven

TTM Tota 10%

0%

5%

10%

% of C

o

• In 2Q13, the median YoY TTM revenue growth rate of public companies comprising the SEG Internet Index declined from 26.6%

0.0%$370

2Q12 3Q12 4Q12 1Q13 2Q13

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

to 18.7%.

• While lower, Q2’s median Internet growth rate remains healthy, especially considering the median TTM revenue of the SEG Internet Index is $430.6M, compared to only $164.2M for the SEG SaaSIndexIndex.

• The SEG Internet Index had an impressive number of star performers, 19% of companies in the index reported TTM revenue growth greater than 40% in 1Q13.

• Conversely, 23% of companies in the SEG Internet Index posted


All Rights Reserved

Conversely, 23% of companies in the SEG Internet Index posted negative TTM revenue growth, depressing the median as a whole.

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCETTM EBITDA Margin DistributionEBITDA Margin Performance

25%14%

EBITDA Margin TTM EBITDA Growth30%

15%

20%

25%

8%

10%

12%

14%

DA Growth

Margin

20%

24% 24%

14%15%

20%

25%

ompanies

0%

5%

10%

0%

2%

4%

6%

TTM EBITD

EBITDA

9% 9%

0%

5%

10%% of C

o

• Over the past five quarters, public Internet companies managed to maintain respectable EBITDA margins despite

0%0%

2Q12 3Q12 4Q12 1Q13 2Q13

0%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

g p g ptheir declining revenue growth rates.

• The median ~13% Internet Index EBITDA margin for 2Q13 was consistent with 2006 and 2007 performance, but was markedly lower than the 18.1% median EBITDA achieved in 1Q111Q11.

• The EBITDA margin decline was partly due to a greater number of Internet IPOs with stellar revenue growth, but little, if any, profitability.

• 44% of all public Internet companies posted EBITDA


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• 44% of all public Internet companies posted EBITDA margins of 10% or lower.

THE SEG INTERNET INDEX: FINANCIAL PERFORMANCEMedian Margin PerformanceMedian Operating Ratios

25%


70%


15%

20%

25%

even

ue

40%

50%

60%

70%

argin

0%

5%

10%

% of R

e

0%

10%

20%

30%% M

a

• In 2Q13, companies comprising the SEG Internet Index spent 22.1% of total revenue on sales and marketing (S&M), 11.5% on research development (R&D), and 11.3% on general and administrative.

0%

2Q12 3Q12 4Q12 1Q13 2Q13

0%

2Q12 3Q12 4Q12 1Q13 2Q13

p ( ), g

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

• Despite TTM revenue growth declines, public Internet companies kept their cost structures in line, resulting in a median TTM EBITDA margin of 13.3% in 2Q13.


All Rights Reserved

THE SEG INTERNET INDEX: MARKET MULTIPLESEV/Revenue Multiple DistributionMedian EV/Revenue and EV/EBITDA Multiples

14.8x16.0x


30%

12.3x13.5x 13.3x 13.5x

8 0x

10.0x

12.0x

14.0x 23%25%

15%

20%

25%

ompanies

2.2x 1.9x 2.1x 2.0x 2.2x

0 0x

2.0x

4.0x

6.0x

8.0x

9%8%

9%

3%5%

7%

2%

9%

0%

5%

10%% of C

o

• In 2Q13, the median EV/Revenue multiple of the SEG Internet Index was 2.2x, flat YoY.

• The EV/Revenue market multiples of public internet providers vary dramatically with the largest concentration at 2 0x or below (48%

0.0x

2Q12 3Q12 4Q12 1Q13 2Q13

0%

<= 1.0x > 1.0x<= 2.0x

> 2.0x<= 3.0x

> 3.0x <= 4.0x

> 4.0x<= 5.0x

> 5.0x<= 6.0x

> 6.0x<= 7.0x

> 7.0x<= 8.0x

> 8.0x<= 9.0x

>= 9.0x

EV/Revenue

• The EV/Revenue market multiples of public internet providers vary dramatically, with the largest concentration at 2.0x or below (48% of our Internet Index).

• However, a significant minority – mostly the headline grabbers – are valued highly. 23% of public Internet companies closed 2Q13 with EV/Revenue multiples of 6.0x or higher.

• Among the Internet companies boosting the highest EV/Revenue market multiples were a large number of relatively recent IPO’s that• 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; several also benefited from originating in high growth economies like China and Brazil. Examples include LinkedIn (16.8x), Zillow (13.0x), Qihoo (12.2x), Mercadolibre (11.8x), Yelp (11.6x), Facebook(10.0x), Trulia (10.1x) and Youku (7.9x).


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THE SEG INTERNET INDEX: MARKET MULTIPLESEV/Revenue Multiples vs. TTM EBITDA MarginsEV/Revenue Multiples vs. TTM Revenue Growth Rates

7.5x8.0x 8.0x

4.0x

5.0x

6.0x

7.0x

EV/Reven

ue

3.8x

4.8x

6.8x

4.0x

5.0x

6.0x

7.0x

EV/Reven

ue

0.9x1.3x

2.5x2.9x

2.5x

0 0x

1.0x

2.0x

3.0x

Med

ian E

1.9x1.4x

1.9x

0 0x

1.0x

2.0x

3.0x

Med

ian E

• Public Internet company valuations are being driven by TTM revenue growth with dramatic differences between new • With few exceptions, and in stark contrast to SaaS

0.0x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM Revenue Growth

0.0x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

TTM EBITDA Margin

revenue growth, with dramatic differences between new, rapidly growing social and ad-tech providers and their slower growing incumbent counterparts (e.g., Facebook vs. Yahoo).

• Public Internet companies with TTM revenue growth of 40% or higher were rewarded with median EV/Revenue multiples

companies, many of the most profitable public Internet companies also reported stellar TTM revenue growth. Among them were ChangYou, Baidu, Yandex, Mail.ru, TripAdvisorand Tencent Holdings.

• Unlike The SEG SaaS Index where TTM EBITDA marginsmarkedly greater than their slower growing peers.

• Investors were noticeably less excited about public Internet companies with TTM revenue growth less than 40%.

Unlike The SEG SaaS Index where TTM EBITDA margins bore little relationship to median EV/Revenue multiples, investors in public Internet companies kept a keen eye on margins, and rewarded strong performers with significantly higher market multiples.


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THE SEG INTERNET INDEX BY PRODUCT CATEGORYSEG Internet Index

2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13Ad Tech & Lead Generation 2.5x 1.8x 2.1x 2.0x 2.0x 11.0x 13.3x 12.0x 14.9x 14.9x 37.5% 35.3% 32.9% 25.2% 26.8% 14.0% 14.4% 14.1% 13.0% 13.5%Commerce 0.7x 0.8x 1.2x 0.9x 0.9x 18.8x 15.1x 15.2x 10.5x 15.1x 16.7% 23.3% 20.6% 17.5% 17.7% 8.3% 8.3% 8.4% 7.6% 7.5%Content & Media 1.6x 1.3x 1.4x 1.6x 2.3x 10.1x 10.8x 10.9x 15.4x 13.8x 15.5% 12.3% 10.5% 12.6% 12.1% 14.0% 14.1% 14.1% 14.8% 15.5%Gaming 3 4x 2 1x 2 4x 2 7x 2 7x 4 0x 3 4x 4 3x 5 8x 5 9x 33 1% 32 0% 24 8% 21 9% 21 9% 45 0% 43 5% 38 6% 36 3% 38 6%

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin

Gaming 3.4x 2.1x 2.4x 2.7x 2.7x 4.0x 3.4x 4.3x 5.8x 5.9x 33.1% 32.0% 24.8% 21.9% 21.9% 45.0% 43.5% 38.6% 36.3% 38.6%Infrastructure 1.8x 1.1x 1.0x 1.7x 1.6x 12.4x 14.0x 11.7x 11.9x 13.6x 13.7% 12.2% 10.9% 9.2% 8.8% 10.7% 8.3% 7.5% 8.0% 7.2%Services 2.2x 2.9x 2.7x 3.2x 2.9x 16.9x 16.4x 17.7x 15.3x 26.8x 55.1% 49.5% 42.0% 42.2% 44.9% 6.5% 7.3% 8.5% 8.5% 6.6%Social 13.0x 9.6x 8.6x 8.9x 7.1x 30.4x 29.3x 36.4x 29.1x 32.6x 64.0% 64.6% 50.9% 49.3% 47.2% 12.9% 12.6% 13.3% 16.5% 20.0%

Travel 2.8x 2.3x 2.0x 2.0x 2.2x 19.7x 16.5x 15.3x 16.2x 18.2x 29.1% 24.0% 18.6% 19.8% 19.5% 24.5% 25.7% 21.7% 18.1% 19.1%

Median 2.2x 1.9x 2.1x 2.0x 2.2x 12.3x 13.5x 13.3x 13.5x 14.8x 26.6% 24.9% 22.0% 19.8% 18.7% 13.3% 13.2% 13.3% 13.0% 13.3%

The SEG Internet Index is segmented into eight product categories. Select companies within each Internet product category are included 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


All Rights Reserved

THE SEG INTERNET INDEX BY PRODUCT CATEGORY: FINANCIAL PERFORMANCE

2Q13 YoY Change in Revenue Growth2Q13 TTM Revenue Growth 2Q13 YoY Change in Revenue Growth2Q13 TTM Revenue Growth

(15%)(10%)(5%)0% 5%

10%

30%35% 40% 45% 50%

(40%)(35%)(30%)(25%)(20%)(15%)

n ce ia ng re es al el0% 5%

10% 15% 20% 25% 30%

Ad

Tech

&Le

ad G

ener

atio

Com

mer

c

Con

tent

& M

edi

Gam

in

Infr

astru

ctur

Ser

vice

Soc

ia

Trav

e

Ad

Tech

&Le

ad G

ener

atio

n

Com

mer

ce

Con

tent

& M

edia

Gam

ing

Infr

astru

ctur

e

Ser

vice

s

Soc

ial

Trav

el

2Q13 YoY Change EBITDA Margin2Q13 TTM EBITDA Margin

30% 40% 50% 60%

L C

30%35% 40% 45%

(40%)(30%)(20%)(10%)0% 10% 20%

5% 10% 15% 20% 25% 30%

(40%)A

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Le CoA

Lea

Con

THE SEG INTERNET INDEX BY PRODUCT CATEGORY: MARKET MULTIPLES


0%

20%

40%

60%

4.0x5.0x6.0x7.0x8.0x

(60%)

(40%)

(20%)

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• Public Internet Companies comprising the social product category closed Q2 with the highest median EV/Revenue multiple among the eight Internet categories we track. The 7.1x median market valuation was 84% higher than the next closest product category, Services (2.9x).

• Social solutions Facebook, LinkedIn, Yelp, etc., continued to expand their online footprints and investors rewarded them accordingly. Social Market Multiples also reflected significant YoY EBITDA margin improvement, as category members demonstrated a greater ability to monetize their large user bases with advertising, subscriptions, more mobile offerings and other value added services.

• The Commerce product category lagged all other product categories, with a 0.9x EV/Revenue multiple, a tepid TTM revenue growth of 17.7%, and a lackluster 7.5% EBITDA margin. Amazon, one of the most notable commerce companies, is aggressively trying to diversify its content offerings and expand its hardware offerings as a way of differentiating from competitors and driving more spend


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diversify its content offerings and expand its hardware offerings as a way of differentiating from competitors and driving more spend through its platform.

SOFTWARE INDUSTRY M&A MARKET UPDATE


All Rights Reserved

SOFTWARE/SaaS M&A DEAL VOLUME AND SPENDINGMedian On-Premise Software EV/Revenue Exit MultiplesU.S. Software Mergers & Acquisitions Activity

383407

421 426 430454 456

432454

435

406388

396

$17 9 $21.3

$23.4 $23.1

$20

$25

400

450

500

$$33

$37$40

$42 $41 $41 $42

$36$39

$36$34

$35.0

$40.0

$45.0

Millions)

$17.3$17.9

$12.7 $13.1

$

$12.6

$15.8

$12.3

$15.8

$

$17.6

$10

$15

200

250

300

350

Value (BIllions)

Num

ber o

f Deals

$28$31

$15.0

$20.0

$25.0

$30.0

$35.0

rage Deal V

alue

(M

$8.8

$0

$5

0

50

100

150

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

$0.0

$5.0

$10.0

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

TTM A

ver

• Software M&A deal volume in Q2 once again hovered at of 400 transactions, which is historically consistent with an active M&A market.

• Total Software M&A spending rose sharply to $17.6 billion in 2Q13, up from 1Q13’s $6.8 billion, due in large part to the return of software mega deals (EV > $500M).

Deals Value*2Q13 Projected

2 3 4 1 2 3 4 1 2 3 4 1 2

• There were eight on-premise/SaaS/Internet mega deals in 2Q13 alone, a marked increase from 1Q13’s single mega deal. Notable mega deals in the second quarter included: Adobe’s acquisition of Neolane ($600M EV, 10.3x EV/Revenue multiple); Vista Equity Partner’s acquisition of Websense ($971M, 2.7x); IBM’s acquisition of SoftLayer Technologies ($2B, 5.0x); Salesforce.com’s acquisition of Exact Target ($2.2B, 7.1x); Insight Venture Partners’ acquisition of BMC Software ($6.9B, 3.1x).

• The software M&A average deal size retreated to the mid $30M range after surging then peaking in 2011The software M&A average deal size retreated to the mid $30M range, after surging, then peaking, in 2011.

• Software buyers have remained true to their word. Of the software buyers who responded to our Annual Buyer Survey over the last two years, 72% on average said they would focus on deals ranging in size from $10M - $99M.


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SOFTWARE M&A EXIT MULTIPLESMedian Exit Multiples Median EV/Revenue Exit Multiple Distribution

12.1x 11.8x12.7x

11 6x12 0

14.0x


25 0%

29.3%30.0%

35.0%

TM11.2x 11.6x

6 0x

8.0x

10.0x

12.0x 25.0%

20.7%

12.0% 13.0%

10.0%

15.0%

20.0%

25.0%

of D

eals

in 2

Q13

TT

1.7x2.3x

1.8x 1.6x 1.8x

0 0x

2.0x

4.0x

6.0x

0.0%

5.0%

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

> 2.0x &<= 3.0x

> 3.0x &<= 4.0x

> 4.0x

%

• After two consecutive quarters of declining TTM revenue exit multiples, on-premise software transactions regained some

• On a TTM basis, 75.0% of all on-premise software targets were acquired for 3.0x TTM revenue or less in 2Q13.

0.0x2Q12 3Q12 4Q12 1Q13 2Q13 TTM Revenue Exit Multiple Bins

multiples, on premise software transactions regained some lost ground, closing Q2 at 1.8x TTM revenue.

• Over the last several years, the median exit multiple of on-premise software providers has been ~30% lower than the median exit multiple for public on-premise software

i M f th t i iti f bli

e e acqu ed o 3 0 e e ue o ess Q 3

• The remaining 25.0% of targets, those with 3.0x or higher exit multiples, came from software categories growing much faster than the overall on-premise software market, such as cloud, network infrastructure and security.

companies. Many of the more recent acquisitions of public on-premise software companies were primarily financial, rather than strategic, yielding lower EV/Revenue exit valuations.

• Among the more noteworthy on-premise acquisitions in 2Q13: McAfee’s acquisition of Stonesoft ($378.7M, 7.0x rev.) and IBM’s acquisition of SoftLayer Technologies ($2B, 5.0x).


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SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZEby Sizeby Ownership Structure

Public Sellers 1.8x Median Multiple

Buyer Less Than $200 million1.5x Median Multiple

Buyer Greater Than $200 million2.7x Median Multiple

Private Sellers2.0x Median Multiple

64%36%

60%40%

Private Buyers1.7x Median Multiple

59%41%

Seller Greater Than $20 million: 1.5x




Public Buyers2.3x Median Multiple

Seller Less Than $20 million: 2.4x



Seller Less Than $20 Not enough data

• In Q2, as in quarters past, large (greater than $200 million in • Public buyers with revenue greater than $200 million paid a revenue), public buyers paid the highest multiples.

• Public buyers in 2Q13 paid a median 2.3x TTM revenue for their targets in 2Q13, compared to a median of 1.7x paid by private buyers.

median 2.7x TTM revenue for their targets, compared to only 1.5x paid by smaller public buyers.

• On a TTM basis, deals with the highest multiples featured a large public or private buyer (greater than $200 million in revenue) acquiring a small target (less than $20 million). Inrevenue) acquiring a small target (less than $20 million). In Q1, this combination produced a median 3.3x EV/Revenue exit multiple. Unfortunately, in 2Q13 there was not enough data to provide a meaningful multiple.


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Horizontal & Vertical M&A Median EV/Revenue Exit

SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

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

100%

% 37% 42% 36%

65% 63% 58% 67% 64%

20%

40%

60%

80%

1.9x 2.0x1.4x 1.3x

1.9x1.6x

3.0x

2.2x 1.8x 1.6x

35% 37% 42% 33% 36%

0%

20%

2Q12 3Q12 4Q12 1Q13 2Q13

Horizontal Vertical

2Q12 3Q12 4Q12 1Q13 2Q13

Vertical Horizontal

• As they have for most of the past five quarters, horizontal software providers garnered the lion’s share of M&A transactions in 2Q13.

However TTM revenue exit multiples dropped precipitously from 3 0x in 3Q12 to1 6x in 2Q13• However, TTM revenue exit multiples dropped precipitously, from 3.0x in 3Q12 to1.6x in 2Q13.

• Q2’s most noteworthy horizontal deals included the take private of BMC Software by a group of private equity firms for $6.9 billion (3.1x revenue), and Tyco International’s acquisition of security software provider ExactTechnologies ($150 million, 2.7x revenue).

• After two consecutive lackluster quarters the median TTM revenue exit multiple for vertical software providers improved• After two consecutive lackluster quarters, the median TTM revenue exit multiple for vertical software providers improved significantly in 2Q13, closing the quarter at 1.9x.

• Select Q2 vertical deals included P2 Energy Solution’s acquisition of process manufacturing software provider, ISS Group Limited ($36.8M, 1.8x revenue); and OMERS Private Equity’s acquisition of public sector software provider, Civica plc ($607.8 million, 1.9x revenue).


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SOFTWARE M&A BY PRODUCT CATEGORY

• The Mobile product category accounted for 20.1% of all software M&A transactions in the second quarter, making it the most active M&A product category.

CRM, Marketing & Sales2.1%

Data Mgmt & Integration0.7%

Dev. Tools & IT Asset Mgmt4.6%

eCommerce0 4%

Billing & Service Provisioning0 7%

BI, Risk & Compliance2.5%

Content & Document Mgmt1.8%

p g y

• Other active M&A categories in the first quarter included Healthcare (7.0%), Financial Services (7.0%), and Security (5.6%).

0.4%

EDA0.7%

Engineering, PLM & CAD3.9%

Middleware0.4%

ERP1.4%

EntertainmentReal EstateRetail1 4%

Utility0.7%

Other Verticals8.8%

Accounting & Finance1.1%

0.7%

• As a percent of total deals, the Security product category increased its share 93% YoY, the largest among all categories.

• According to Gartner, the global security software market grew 7 9% in 2012 The

2.5%

HR & Workforce Mgmt2.5%

Messaging, Conferencing & Communications

2.5%

l d hLegal

Manufacturing1.4%

Oil & Gas1.1%

Public Sector2.1%

0.4%1.4%

s software market grew 7.9% in 2012. The sector has shown continued strength in 2013, driven by new security demands spawned by bring your own device (BYOD) and cloud hosting trends. Buyers have taken note adding best of breed technology

Multimedia, Graphics & Communications

2.1%Network Performance Mgmt

1.8%

SecurityFi i l S i

Healthcare7.0%

Insurance0.4%

Legal1.1%

Vertical

taken note, adding best of breed technology providers to plug holes in their product portfolio.

5.6%

Systems Mgmt3.5%

Supply Chain Mgmt & Logistics

Construction2.1%

Education2.5%

Financial Services7.0%

Logistics3.2%

Mobile20.1%

Automotive0.4%


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SOFTWARE M&A BY PRODUCT CATEGORYMedian EV/Revenue Exit Multiples by Software Product Category

3.3x 3.1x 3.0x2.7x

2 4x2.4x1.8x 1.8x 1.6x 1.5x 1.5x

1.1x

Sys

tem

sM

anag

emen

t

BI,

Ris

k &

Com

plia

nce

neer

ing,

PLM

& C

AD Sec

urity

Hea

lthca

re

Oth

er V

ertic

als

(A&

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uppl

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Dat

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&A

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ncia

l Ser

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oftw

are

• Among the 32 on-premise software product categories we track, eleven had both sufficient deal activity and deal data to ascertain a TTM revenue multiple in 2Q13

Eng

i O (

Su

Ma A

Fina

n S

ascertain a TTM revenue multiple in 2Q13.

• Among the eleven product categories offering Systems Management solutions garnered the highest median TTM revenue multiple (3.3x) in Q2. Buyers in this product category are paying up for best-of-breed cloud and mobile computing companies with demonstrated market success. Examples include: The KEYW Holding Company’s acquisition of Sensage ($85.5M EV 7.0x TTM revenue); EQT Partners’ acquisition of UC4 Software ($271.6M, 3.6x); and BMC’s takeover by a group of private equity fi ($6 9B 3 1 )firms ($6.9B, 3.1x).

• Led by a strong demand for business intelligence tools in the era of Big Data, BI, Risk & Compliance also posted a strong 3.1x median EV/Revenue exit multiple in 2Q13. Select BI deals in Q213 include: Kofax’s acquisition of altosoft ($13.5M, 4.0x TTM revenue and Datawatch’s acquisition of Panopticon Software ($31.4M, 6.3x).


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SaaS M&A: DEAL VOLUME AND EXIT MULTIPLESMedian SaaS EV/Revenue Exit MultiplesSaaS M&A Volume

104

30%120

al

SaaS M&A Deals SaaS as % of Software

39 3945 48

68 6559

94 9486

104

15%

20%

25%

60

80

100

eals as a % of T

ota

re M

&A Deals

aS M

&A Deals

4.0x

3.9x

4.1x

4.0x 4.0x

3039

26

39

0%

5%

10%

0

20

40

SaaS M

&A De

Softwar

# of Saa

2Q12 3Q12 4Q12 1Q13 2Q13

• There were 104 SaaS M&A transactions in 2Q13 At the half-year mark there have been 190 SaaS M&A transactions on pace• There were 104 SaaS M&A transactions in 2Q13. At the half-year mark, there have been 190 SaaS M&A transactions, on pace to exceed SEG’s 2013 projection of 344, and 2012’s record breaking total of 311.

• After a steady rise from 2009 – 2012, the median TTM EV/Revenue exit multiple of SaaS transactions has held relatively steady over the past five quarters, closing 2Q13 at 4.0x.

• The median SaaS exit multiple was 120% greater than the median on-premise exit multiple in 1Q13 (4.0x vs.1.8x), the secondThe median SaaS exit multiple was 120% greater than the median on premise exit multiple in 1Q13 (4.0x vs.1.8x), the second highest valuation disparity on record.


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SaaS M&A BY PRODUCT CATEGORY

• CRM, Marketing & Sales was the most active SaaS product category, accounting for 12.0% of all M&A transactions in the second quarter

Content & Document Mgmt6%

CRM, Marketing & SalesBilling & Service Provisioning

BI, Risk & Compliance9%

transactions in the second quarter.

• Buyers are seeking targets that will help them capitalize on the rapid growth in spending on marketing technology. According to Gartner, by 2017 the CMO

CRM, Marketing & Sales12%

Telecommunications%

Other Verticals8%

Billing & Service Provisioning1%

will purchase more IT than the CIO.

• After two years of claiming almost 20% of all SaaS transactions, the HR & Workforce Mgmt product category had its second consecutive lackluster

Data Mgmt & Integration2%

eCommerce4%

Engineering, PLM & CAD1%Insurance

4%

Real Estate4%

1%

als

its second consecutive lackluster quarter, closing 2Q13 with only 6% of SaaS transactions. After a period of rapid consolidation by the large HR software providers, the M&A window for many smaller HR providers is rapidly

HR & Workforce Mgmt6%

Messaging, Conferencing & Communications

4%

Financial Services6%

Healthcare2%V

ertic

many smaller HR providers is rapidly closing.

• The Systems Management (10%) and BI, Risk and Compliance (9%) product categories also exhibited strength in

Multimedia, Graphics & Communications

2%

Network Performance Mgmt1%

SecurityAutomotive

2%

Construction2%

Education8%

2Q13. Both categories are benefiting from adoption of SaaS deployed solutions, which should continue for the foreseeable future.

3%Systems Mgmt

10%Supply Chain Mgmt & Logistics

6%

2%


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2Q13 SaaS M&A TRANSACTIONSE t i

Date Buyer SellerEnterprise

Value TTM Revenue EV/Rev06/28/13 Deutsche Post AG (XTRA:DPW) optivo GmbH - - -06/28/13 Renaissance Learning Inc. Subtext Media, Inc. - - -06/27/13 Adobe Systems Inc. (NasdaqGS:ADBE) Neolane SA $600,000,000 $58,000,000 10.3x06/26/13 EMN8, Inc. Snapfinger - - -06/25/13 Vi i T h l i I A i I06/25/13 Virima Technologies, Inc. Aruvio, Inc. - - -06/24/13 DIGIEON Technologies Pvt. Ltd. SmartVault Corporation - - -06/24/13 Incentivated Limited Ad.IQ Limited - - -06/24/13 Cenduit, LLC Patient Reminders Limited - - -06/24/13 LINE-X Franchise Development Corporation American Aftermarket Group LLC - - -06/23/13 Thoma Bravo, LLC Keynote Systems, Inc. (NasdaqGS:KEYN) $340,770,000 $124,000,000 2.8x06/21/13 Intuit Inc (NasdaqGS:INTU) Elastic Intelligence Inc06/21/13 Intuit Inc. (NasdaqGS:INTU) Elastic Intelligence, Inc. - - -06/20/13 NET(net), Inc. xPeerient, Inc. - - -06/20/13 - Gainsight, Inc. - - -06/20/13 Fixmo Inc. Fixmo Carrier Services - - -06/17/13 Lulu Software DOC2PDF Limited - - -06/17/13 Professional Diversity Network LLC (NasdaqCM:IPDN) Resunate - - -06/13/13 Accumuli plc (AIM:ACM) Signify Solutions Limited $4 080 000 $4 500 000 0 9x06/13/13 Accumuli plc (AIM:ACM) Signify Solutions Limited $4,080,000 $4,500,000 0.9x06/12/13 AdRoll, Inc. Bitdeli Inc. - - -06/12/13 Paychex, Inc. (NasdaqGS:PAYX) HR Services, Inc. - - -06/12/13 ReviMedia, Inc. N2O Marketing, LLC - - -06/12/13 Yahoo! Inc. (NasdaqGS:YHOO) Rondee, Inc. - - -06/12/13 AVG Technologies N.V. (NYSE:AVG) LPI Level Platforms Inc. - - -06/12/13 - Teliae SARL - - -06/ / 3 e ae S06/11/13 DocDoc Pte. Ltd. NewCo Internet Pte Ltd - - -06/11/13 Copart UK Limited Autoresiduos S.L.U. - - -06/11/13 Immoware24 GmbH AWImmoware GmbH - - -06/10/13 AFS Logistics, LLC Trendset Inc. $1,140,000 - -06/10/13 @WalmartLabs Inkiru, Inc. - - -06/10/13 Progress Software Corp. (NasdaqGS:PRGS) Rollbase, Inc. - - -g p ( q )06/10/13 Contractors Register, Inc. JobSite123.com, LLC - - -06/07/13 Salesforce.com, Inc (NYSE:CRM) EdgeSpring, Inc. $79,560,000 - -06/06/13 RxVantage, Inc. RepAccess - - -06/06/13 Canal Digitaal B.V. Stream Group B.V. - - -06/05/13 SilverSky, Inc. Latis Networks, Mngd Security Div. - - -06/04/13 International Business Machines Corporation (NYSE:IBM) SoftLayer Technologies, Inc. $2,000,000,000 $400,000,000 5.0x


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2Q13 SaaS M&A TRANSACTIONS (CON’T)E t i


Value TTM Revenue EV/Rev06/04/13 Starhome BV MACH S.à.r.l., Certain Assets - - -06/03/13 Salesforce.com, Inc (NYSE:CRM) ExactTarget, Inc. (NYSE:ET) $2,249,560,000 $317,000,000 7.1x05/31/13 Zoopla Property Group Limited Vizzihome Limited - - -05/31/13 Trimble Navigation Limited (NasdaqGS:TRMB) Trade Service Company, LLC - - -05/31/13 HGGC LLC M W bG I05/31/13 HGGC, LLC MyWebGrocer, Inc. - - -05/30/13 Diasoft AO Seeneco - - -05/30/13 BloomReach, Inc. ShopLogic, Inc. - - -05/29/13 eCommera Limited OrderDynamics Corp. - - -05/28/13 R Capital Management; TIME Equity Partners Oodrive Group - - -05/28/13 Greenbriar Equity Group LLC Transplace, Inc. - - -05/24/13 Answers Corporation WebCollage Inc $37 000 00005/24/13 Answers Corporation WebCollage, Inc. $37,000,000 - -05/24/13 - Klick2Contact EU LTD - - -05/22/13 Recargo, Inc. Xatori, Inc. - - -05/22/13 GT Analytix, Inc. TRAQ-IT Software, LLC - - -05/20/13 TOT Group, Inc. Aptito, Inc. $1,090,000 - -05/20/13 C-Leveled, LLC FINTEL LLC - - -05/17/13 SolarWinds Worldwide LLC N-able Technologies International Inc $120 000 000 - -05/17/13 SolarWinds Worldwide, LLC N able Technologies International, Inc. $120,000,00005/17/13 - Syncron International AB - - -05/16/13 Upland Software, Inc. Marex Group, Inc. - - -05/15/13 DocuSign, Inc. Cartavi, Inc. - - -05/14/13 OMT Inc. (TSXV:OMT) AnalytixInsight Inc. $2,070,000 - -05/14/13 8K Miles Software Services Ltd (BSE:512161) FuGen Solutions, Inc. $7,500,000 - -05/14/13 @WalmartLabs OneOps Inc. - - -@ p05/13/13 Twitter, Inc. Lucky Sort Inc. - - -05/13/13 RichRelevance, Inc. Avail Intelligence AB - - -05/10/13 Intelligent Living Inc. Mind360 $1,000,000 - -05/10/13 CellarStone Inc. webKPI LLC - - -05/10/13 Guidewire Software, Inc. (NYSE:GWRE) Millbrook, Inc. - - -05/09/13 Box, Inc. crocodoc - - -05/09/13 Twitter, Inc. Ubalo, Inc. - - -05/08/13 Rippe & Kingston Systems, Inc. ProspectStream LLC - - -05/07/13 ReadSoft AB (OM:RSOF B) Expert Systems Development Svenska AB $9,190,000 $2,000,000 4.6x05/07/13 Trulia, Inc. (NYSE:TRLA) Market Leader, Inc. (NasdaqGS:LEDR) $314,290,000 $48,000,000 6.6x05/07/13 Swisscom AG (SWX:SCMN) Tweasy SA - - -05/06/13 Dell Inc. (NasdaqGS:DELL) enstratius, Inc. - - -


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2Q13 SaaS M&A TRANSACTIONS (CON’T)E t i


Value TTM Revenue EV/Rev05/06/13 LoanLogics, Inc. NYLX, Inc. - - -05/03/13 NetSuite Inc. (NYSE:N) OrderMotion, Inc. - - -05/02/13 The Descartes Systems Group Inc (TSX:DSG) KSD Software Norway AS $30,760,000 $9,600,000 3.2x05/02/13 5Touch Solutions, Inc. NK Labs Inc. - - -05/01/13 Everest Group LLC JangoMail Inc05/01/13 Everest Group LLC JangoMail, Inc. - - -04/30/13 Extraprise Group Inc. SmartSource Corporation - - -04/29/13 Courier New Media, Inc. FastPencil, Inc. $18,000,000 - -04/29/13 Konetic Limited RecruitActive Ltd. - - -04/25/13 Software AG (XTRA:SOW) Relational Networks, Inc. $25,000,000 - -04/24/13 Dassault Systemes SA (ENXTPA:DSY) Archividéo SARL - - -04/24/13 Alegeus Technologies WealthCare Marketplace - - -04/24/13 Alegeus Technologies WealthCare Marketplace - - -04/18/13 Jive Software, Inc. (NasdaqGS:JIVE) CLARA ehf $6,500,000 - -04/18/13 Quindell Portfolio Plc (AIM:QPP) iter8 Inc.* $25,580,000 $5,000,000 5.0x04/18/13 Access UK Limited TeamSeer Limited - - -04/16/13 Echo360, Inc. ThinkBinder Inc. - - -04/16/13 Ener-Core, Inc. (OTCBB:ENCR) Inventtech Inc. - - -04/15/13 InnRoad, Inc. LTV Hotel Systems LLC - - -04/15/13 InnRoad, Inc. LTV Hotel Systems LLC04/12/13 Egmont Hjemmet Mortensen AS MyKid AS - - -04/12/13 ViaSat Inc. (NasdaqGS:VSAT) LonoCloud Inc. - - -04/10/13 Coupa Software Incorporated Xpenser, Inc. - - -04/10/13 Solera Holdings Inc. (NYSE:SLH) Eziworks Pty Ltd - - -04/09/13 Proofpoint, Inc. (NasdaqGM:PFPT) Mail Distiller Ltd - - -04/08/13 Follett Corporation BetterKnow, Inc. - - -p ,04/07/13 Fujitsu Limited (TSE:6702) RunMyProcess SAS $20,220,000 $1,000,000 20.0x04/07/13 Ebix Singapore Pte Ltd. Qatarlyst Limited - - -04/04/13 IntraLinks Holdings, Inc. (NYSE:IL) MergerID Limited - - -04/04/13 IntraLinks Holdings, Inc. (NYSE:IL) PE-Nexus, LLC - - -04/04/13 Sport Ngin eYouthSportsUSA - - -04/03/13 ReachForce, Inc. SetLogik, Inc. - - -04/03/13 Experian Finance Plc Decisioning Solutions, Inc. - - -04/02/13 ConnectSolutions Inc. NextUC, Inc. - - -04/01/13 Rosetta Stone Ltd. LiveMocha, Inc. $8,500,000 $3,600,000 2.4x04/01/13 inContact, Inc. (NasdaqCM:SAAS) Sierra360 LLC - - -04/01/13 SAP AG (DB:SAP) KMS Software Company, LLC - - -


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INTERNET M&A: DEAL VOLUME AND EXIT MULTIPLESMedian Internet EV/Revenue Exit MultiplesInternet M&A Volume

273 263

222185

204

ber o

f Dea

ls

2.1x

1.9x 1.9x 1.9x 1.9x

2Q12 3Q12 4Q12 1Q13 2Q13

Num

b

2Q12 3Q12 4Q12 1Q13 2Q13

• Internet M&A 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.

I 2Q13 th 204 I t t M&A t ti k d i t th i t b t till ll b l 2012 d l• In 2Q13, there were 204 Internet M&A transactions, a marked improvement over the prior quarter, but still well below 2012 deal levels.

• Internet median TTM EV/Revenue exit multiples have held steady, finishing 2Q13 at 1.9x. This is an M&A world of haves and have nots, with wide disparities in exit multiples.


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

Category 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 201311.3%Ad-Tech & Lead Gen 70 85 57 58 60Commerce 57 40 41 34 39Content & Media 62 52 55 42 34Gaming 25 13 12 7 11Infrastructure 30 41 27 24 41

28.8%

5 9%

14.2%

Ad‐Tech & Lead Gen

Commerce

Content & Media

GamingSocial Tech 29 32 30 20 19Total 273 263 222 185 204

18.4%21.4%

5.9%g

Infrastructure

Social Tech

• Driven by a dearth of ad-tech players in the Internet landscape a much needed consolidation continued to shape the Internet• Driven by a dearth of ad-tech players in the Internet landscape, a much needed consolidation continued to shape the Internet ad-tech landscape in 2Q13, making it the most active Internet M&A product category over the past twelve months.

• After years of consolidation, Internet ad-tech leaders have now emerged, and the pace of ad tech M&A deals has tapered off over the last three quarters, suggesting that buyers and advertisers have placed their bets. Mobile ad-tech is the next frontier.

• Despite the marked decline in Internet M&A transactions YoY, the Infrastructure category showed strength in 2Q13, accountingDespite the marked decline in Internet M&A transactions YoY, the Infrastructure category showed strength in 2Q13, accounting for 20.1% of all Internet M&A deals and much higher than its TTM average of 14.2%.

• After a respectable 2Q12 showing with 25 M&A transactions, the Internet Gaming M&A has been largely dormant over the past four quarters, averaging ten transactions per quarter. The product category has been decimated by the emergence of mobile gaming.


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THE SEG SOFTWARE INDEX COMPANIESCompany Ticker Product Category

Amdocs Limited DOX Billing & Service ManagementAsiaInfo Holdings, Inc. ASIA Billing & Service ManagementCSG Systems International, Inc. CSGS Billing & Service ManagementEvolving Systems, Inc. EVOL Billing & Service Management

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


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

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THE SEG SOFTWARE INDEX COMPANIES (CON’T)Company Ticker Product Category

American Software, Inc. AMSW.A Enterprise Resource PlanningOracle Corporation ORCL Enterprise Resource PlanningQAD Inc. QADA Enterprise Resource PlanningSage Group plc LSE:SGE Enterprise Resource PlanningSAP SAP Enterprise Resource PlanningUnit 4 ENXTAM:UNIT4Enterprise Resource PlanningACI Worldwide, Inc. ACIW Financial & AccountingBottomline Technologies EPAY Financial & AccountingDST Systems, Inc. DST Financial & AccountingEvertec EVTC Financial & AccountingFair Isaac Corporation FICO Financial & AccountingFair Isaac Corporation FICO Financial & AccountingFiserv FISV Financial & AccountingIntuit Inc INTU Financial & AccountingModel N, Inc MODN Financial & AccountingNetSol Technologies Inc. KASE:NETSOL Financial & AccountingSage Group plc LSE:SGE Financial & AccountingQiwi plc QIWI Financial & AccountingQiwi plc QIWI Financial & AccountingActivision Blizzard ATVI GamingElectronic Arts Inc. EA GamingGameLoft SA ENXTPA:GFT GamingKonami Corporation TSE: 9766 GamingTake-Two Interactive TTWO GamingUbisoft Entertainment ENXTPA:UBI GaminggAccretive Health AH HealthcareAllscripts Healthcare Solutions Inc. MDRX HealthcareCerner Corporation CERN HealthcareComputer Programs and Sys, Inc. CPSI HealthcareGreenway Medical Technologies, Inc GWAY HealthcareMedAssets MDAS HealthcareMerge Healthcare MRGE HealthcareOmnicell, Inc. OMCL HealthcareQuality Systems, Inc. QSII HealthcareHewlett Packard HPQ IT ConglomeratesIBM IBM IT ConglomeratesMicrosoft Corporation MSFT IT ConglomeratesO l C ti ORCL IT C l t


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Oracle Corporation ORCL IT ConglomeratesSAP AG SAP IT Conglomerates

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Bango PLC BGO Mobile Solutions/ContentGlu Mobile, Inc. GLUU Mobile Solutions/ContentGree TSE:3632 Mobile Solutions/ContentMillennial Media Inc MM Mobile Solutions/ContentMyriad Group AG MYRN Mobile Solutions/ContentNQ Mobile Inc. NQ Mobile Solutions/ContentOpera OB:OPERA Mobile Solutions/ContentQihoo 360 Technology Co. Ltd QIHU Mobile Solutions/ContentPandora Media P Mobile Solutions/ContentSynchronoss Technologies, Inc. SNCR Mobile Solutions/ContentTangoe Inc TNGO Mobile Solutions/ContentTangoe, Inc. TNGO Mobile Solutions/ContentTeleCommunication Systems TSYS Mobile Solutions/ContentTeleNav TNAV Mobile Solutions/ContentVelti Plc VELT Mobile Solutions/ContentZynga, Inc ZNGA Mobile Solutions/ContentAllot Communications Ltd. ALLT Networking & Network Performance ManagementAruba Networks Inc ARUN Networking & Network Performance ManagementAruba Networks, Inc. ARUN Networking & Network Performance ManagementBrocade Communications Systems, Inc. BRCD Networking & Network Performance ManagementCisco Systems, Inc. CSCO Networking & Network Performance ManagementCompuware Corporation CPWR Networking & Network Performance ManagementCyan, Inc. CYNI Networking & Network Performance ManagementF5 Networks, Inc. FFIV Networking & Network Performance ManagementGigamon, LLC GIMO Networking & Network Performance Managementg , g gJuniper Networks, Inc. JNPR Networking & Network Performance ManagementKeynote Systems, Inc. KEYN Networking & Network Performance ManagementRadware Ltd. RDWR Networking & Network Performance ManagementRiverbed Technology, Inc. RVBD Networking & Network Performance ManagementAVG Technologies N.V. AVG SecurityCheck Point Software Tech Ltd. CHKP SecurityCommtouch Software Ltd. CTCH SecurityFortinet Inc. FTNT SecurityGuidance Software, Inc. GUID SecurityImperva IMPV SecurityPalo Alto Networks, Inc PANW SecurityProofpoint, Inc. PFPT SecurityS fi I FIRE S it


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Sourcefire, Inc. FIRE SecuritySymantec Corporation SYMC Security

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Trend Micro TSE:4704 SecuityVASCO Data Security International VDSI SecurityBrocade Communications Systems, Inc. BRCD Storage, Data Management & IntegrationCA, Inc. CA Storage, Data Management & IntegrationCi S t I CSCO St D t M t & I t tiCisco Systems, Inc. CSCO Storage, Data Management & IntegrationCommVault Systems, Inc. CVLT Storage, Data Management & IntegrationEMC EMC Storage, Data Management & IntegrationFalconStor Software, Inc. FALC Storage, Data Management & IntegrationIBM IBM Storage, Data Management & IntegrationInformatica Corporation INFA Storage, Data Management & IntegrationMicrosoft Corporation MSFT Storage Data Management & IntegrationMicrosoft Corporation MSFT Storage, Data Management & IntegrationNetApp, Inc. NTAP Storage, Data Management & IntegrationOracle Corporation ORCL Storage, Data Management & IntegrationSplunk, Inc. SPLK Storage, Data Management & IntegrationTIBCO Software Inc. TIBX Storage, Data Management & IntegrationAmerican Software, Inc. AMSW.A Supply Chain Management & LogisticsAspen Technology, Inc. AZPN Supply Chain Management & LogisticsAspen Technology, Inc. AZPN Supply Chain Management & LogisticsManhattan Associates, Inc. MANH Supply Chain Management & LogisticsThe Descartes Systems Group Inc. TSX:DSG Supply Chain Management & LogisticsUnit 4 ENXTAM:UNIT4Supply Chain Management & LogisticsBMC Software Inc. BMC Systems ManagementCA Technologies CA Systems ManagementCitrix Systems, Inc. CTXS Systems ManagementNetscout Systems, Inc. NTCT Systems ManagementRed Hat, Inc. RHT Systems ManagementSolarWinds, Inc. SWI Systems ManagementVMWare, Inc. VMW Systems ManagementAdvent Software, Inc. ADVS Vertical - FinanceBroadridge Financial BR Vertical - FinanceFid LSE FDSA V ti l FiFidessa LSE:FDSA Vertical - FinanceJack Henry & Associates, Inc. JKHY Vertical - FinanceMSCI, Inc. MSCI Vertical - FinanceSS&C Corporation SSNC Vertical - FinanceBlackbaud, Inc. BLKB Vertical - OtherConstellation TSX:CSU Vertical - OtherEPIQ Systems Inc EPIQ Vertical Other


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EPIQ Systems, Inc. EPIQ Vertical - OtherGuidewire Software, Inc. GWRE Vertical - Other

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Micros Systems MCRS Vertical - OtherPROS Holdings PRO Vertical - OtherSapiens International SPNS Vertical - OtherSilver Spring Networks, Inc. SSNI Vertical - Otherp g ,The Active Network, Inc. ACTV Vertical - OtherTyler Technologies, Inc. TYL Vertical - Other


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THE SEG SaaS INDEX COMPANIESCompany Ticker Product Category

Bazaarvoice, Inc BV CRM & MarketingConstant Contact CTCT CRM & MarketingExactTarget, Inc. ET CRM & MarketingLivePerson LPSN CRM & MarketingMarketo MKTO CRM & MarketingMarketo MKTO CRM & MarketingMarin Software MRIN CRM & MarketingResponsys MKTG CRM & MarketingSalesforce.com CRM CRM & MarketingVocus VOCS CRM & MarketingE2open, Inc EOPN ERP & Supply ChainFleetmatics FLTX ERP & Supply ChainFleetmatics FLTX ERP & Supply ChainNetsuite N ERP & Supply ChainSciQuest SQI ERP & Supply ChainSPS Commerce SPSC ERP & Supply ChainWorkday, Inc. WDAY ERP & Supply ChainAthenahealth, Inc ATHN Vertically FocusedDealerTrack TRAK Vertically FocusedyEbix Inc. EBIX Vertically FocusedEllie Mae ELLI Vertically FocusedMedidata Solutions MDSO Vertically FocusedRealPage RP Vertically FocusedTextura Corp. TXTR Vertically FocusedCallidus Software Inc. CALD Workforce ManagementCornerstone OnDemand CSOD Workforce ManagementHalogen Software, Inc. TSX:HGN Workforce ManagementThe Ultimate Software Group, Inc. ULTI Workforce ManagementWorkday, Inc. WDAY Workforce ManagementChannelAdvisors ECOM Other SaaSConcur CNQR Other SaaSDemand are Inc DWRE Other SaaSDemandware, Inc. DWRE Other SaaSinContact, Inc. SAAS Other SaaSIntraLinks Holdings IL Other SaaSJ2 Global JCOM Other SaaSJive Software, Inc JIVE Other SaaSOpenTable, Inc. OPEN Other SaaSQualys Inc QLYS Other SaaS


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Qualys, Inc. QLYS Other SaaSService-now.com NOW Other SaaS

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THE SEG INTERNET INDEX COMPANIESCompany Ticker Product Category

Angie's List, Inc. ANGI Ad Tech & Lead GenerationBaidu.com, Inc. BIDU Ad Tech & Lead GenerationBankrate, Inc. RATE Ad Tech & Lead GenerationDigital Generation, Inc. DGIT Ad Tech & Lead Generation

H lth I EHTH Ad T h & L d G tieHealth, Inc. EHTH Ad Tech & Lead GenerationGoogle Inc. GOOG Ad Tech & Lead GenerationGroupon GRPN Ad Tech & Lead GenerationInterActiveCorp IACI Ad Tech & Lead GenerationLinkedIn LNKD Ad Tech & Lead GenerationMarchex Inc. MCHX Ad Tech & Lead GenerationQuinStreet QNST Ad Tech & Lead GenerationQuinStreet QNST Ad Tech & Lead GenerationReachLocal, Inc. RLOC Ad Tech & Lead GenerationSINA Corporation SINA Ad Tech & Lead GenerationSohu.com Inc. SOHU Ad Tech & Lead GenerationTree.Com, Inc. TREE Ad Tech & Lead GenerationValueClick, Inc. VCLK Ad Tech & Lead GenerationYandex YNDX Ad Tech & Lead GenerationYandex YNDX Ad Tech & Lead Generation1-800-FLOWERS.COM, Inc. FLWS CommerceAmazon.com, Inc. AMZN CommerceBitauto Holdings Limited BITA CommerceBlueNile NILE CommerceDangDang DANG CommerceDigital River Inc. DRIV CommerceeBay Inc. EBAY CommerceGeekNet GKNT CommerceLiquidity Services, Inc. LQDT CommerceMecox Lane Limited MCOX CommerceMercadolibre, Inc. MELI CommerceOverstock.com, Inc. OSTK CommerceP tM d E I PETS CPetMed Express, Inc. PETS CommerceStamps.com STMP CommerceAOL, Inc. AOL Content & MediaDemandMedia DMD Content & MediaInterActiveCorp IACI Content & MediaNetflix NFLX Content & MediaPandora P Content & Media


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Pandora P Content & MediaShutterstock, Inc. SSTK Content & Media

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THE SEG INTERNET INDEX COMPANIES (CON’T)Company Ticker Product Category

TheStreet.com, Inc. TST Content & MediaWebMD Health Corp. WBMD Content & MediaXO Group XOXO Content & MediaYahoo! Inc. YHOO Content & MediaY k YOKU C t t & M diYouku YOKU Content & MediaChangYou.com CYOU GamingGiant Interactive GA GamingNetease NTES GamingNCSoft KOSE:A036570 GamingPerfect World PWRD GamingSohu com Inc SOHU GamingSohu.com Inc. SOHU GamingTencent Holdings SEHK:700 GamingZynga, Inc. ZNGA Gaming8x8, Inc. EGHT InfrastructureAkamai Technologies, Inc. AKAM InfrastructureBrightcove Inc. BCOV InfrastructureBroadSoft, Inc. BSFT InfrastructureBroadSoft, Inc. BSFT InfrastructureDigital River Inc. DRIV InfrastructureEnvivio, Inc. ENVI InfrastructureHarmonic Inc HLIT InfrastructureInteractive Intelligence, Inc. ININ InfrastructureLimelight Networks, Inc. LLNW InfrastructureMitel Networks Corp. MITL InfrastructurePolycom, Inc. PLCM InfrastructureRovi Corporation ROVI InfrastructureSeaChange International Inc. SEAC InfrastructureShoreTel, Inc. SHOR InfrastructureSonus Networks, Inc SONS InfrastructureSynacor, Inc SYNC InfrastructureT I TCX I f t tTucows Inc. TCX InfrastructureVeriSign VRSN InfrastructureAngie's List, Inc. ANGI ServicesBankrate RATE ServicesCarbonite, Inc. CARB ServicesLifeLock, Inc. LOCK ServicesMonster Worldwide Inc MWW Services


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Monster Worldwide, Inc. MWW ServicesQihoo QIHU Services

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THE SEG INTERNET INDEX COMPANIES (CON’T)Company Ticker Product Category

Shutterfly SFLY ServicesTree.Com, Inc. TREE ServicesTrulia, Inc. TRLA ServicesVistaPrint VPRT ServicesVistaPrint VPRT ServicesXoom XOOM ServicesZillow Z ServicesFacebook FB SocialFriendFinder Networks Inc FFN SocialLinkedIn LNKD SocialMail.ru Group LSE:MAIL SocialRenren Inc RENN SocialYelp, Inc. YELP SocialYY, Inc. YY SocialCtrip CTRP TravelExpedia EXPE TravelHomeAway AWAY TravelMakeMyTrip MMYT TravelOrbitz OWW TravelPriceline PCLN TravelTravelzoo TZOO TravelTravelzoo TZOO TravelTripAdvisor Inc TRIP Travel


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THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

Billing & Service Management 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 1.3x 1.3x 1.5x 1.9x 1.9xEV/EBITDA 7.9x 8.3x 8.4x 8.4x 8.3xEV/Earnings 13.1x 15.9x 17.1x 15.4x 14.2xGross Profit Margin 57.4% 58.0% 58.3% 59.4% 58.4%EBITDA Margin 18.9% 18.8% 19.9% 21.1% 18.7%Net Income Margin 12.2% 11.7% 12.1% 11.0% 9.9%TTM Revenue Growth (YoY) 13.6% 9.5% 10.4% 10.4% 8.9%TTM EBITDA Growth (YoY) 0.9% 9.9% 15.7% 14.5% 14.9%TTM E i G th (Y Y) 19 1% 4 9% 5 6% 7 6% 48 0%

Enterprise Resource Planning 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.4x 2.7x 2.7x 2.9x 3.0xEV/EBITDA 8.3x 9.1x 9.0x 9.7x 11.3xEV/Earnings 13.1x 14.3x 14.0x 22.8x 25.4xGross Profit Margin 71.5% 71.6% 71.4% 71.2% 71.6%EBITDA Margin 29.0% 29.3% 29.6% 29.6% 29.6%Net Income Margin 18.4% 20.3% 18.6% 12.6% 10.4%TTM Revenue Growth (YoY) 10.1% 9.0% 2.9% 2.0% 0.2%TTM EBITDA Growth (YoY) 53.7% 42.6% 11.4% 6.7% -0.4%TTM E i G th (Y Y) 38 0% 32 5% 35 1% 11 2% 12 3%

IT Conglomerates 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.9x 2.8x 2.5x 2.5x 2.9xEV/EBITDA 7.3x 8.2x 7.8x 8.8x 8.3xEV/Earnings 12.9x 14.4x 13.7x 14.7x 14.2xGross Profit Margin 71.5% 71.6% 71.4% 71.2% 71.6%EBITDA Margin 36.9% 36.1% 34.6% 33.8% 33.8%Net Income Margin 23.9% 23.0% 18.6% 17.4% 17.6%TTM Revenue Growth (YoY) 5.3% 1.5% 1.4% 0.5% 0.2%TTM EBITDA Growth (YoY) 2.3% 1.4% 0.6% 0.9% -0.2%TTM E i G th (Y Y) 12 4% 4 1% 20 0% 24 9% 51 8%TTM Earnings Growth (YoY) -19.1% 4.9% -5.6% -7.6% -48.0%

Current Ratio 2.3 2.4 2.7 3.0 2.7Cash as Percent of Market Cap 20.9% 21.4% 17.2% 16.0% 16.5%Enterprise Value Growth (YoY) -20.2% -5.0% 13.9% 10.2% 21.5%

Business Intelligence 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.2x 2.9x 3.2x 3.4x 3.0xEV/EBITDA 26.7x 25.9x 17.6x 15.8x 16.5xEV/Earnings 47.2x 47.7x 30.9x 34.6x 25.2xGross Profit Margin 73 9% 73 8% 73 3% 72 8% 72 3%

TTM Earnings Growth (YoY) -38.0% -32.5% -35.1% -11.2% -12.3%Current Ratio 1.2 1.2 1.2 1.1 1.1Cash as Percent of Market Cap 20.3% 20.2% 20.3% 19.2% 20.6%Enterprise Value Growth (YoY) -2.1% 4.4% -0.2% 2.0% 15.4%

Financial & Accounting 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.7x 2.9x 2.9x 3.1x 3.3xEV/EBITDA 9.5x 9.8x 9.8x 10.5x 11.3xEV/Earnings 18.1x 20.1x 20.3x 22.8x 24.4xGross Profit Margin 54 4% 58 7% 55 3% 54 6% 55 7%

TTM Earnings Growth (YoY) -12.4% -4.1% 20.0% 24.9% 51.8%Current Ratio 1.3 1.2 1.2 1.1 1.2Cash as Percent of Market Cap 18.6% 20.2% 20.3% 19.2% 20.6%Enterprise Value Growth (YoY) -2.1% 9.4% 2.4% 1.6% 1.7%

Mobile Solutions/Content 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.6x 3.6x 2.5x 2.7x 2.8xEV/EBITDA 16.1x 13.8x 11.9x 20.6x 13.2xEV/Earnings 24.9x 22.2x 21.4x 40.1x 50.5xGross Profit Margin 54 1% 56 0% 57 1% 55 1% 54 2%Gross Profit Margin 73.9% 73.8% 73.3% 72.8% 72.3%

EBITDA Margin 15.1% 15.4% 14.7% 14.0% 13.7%Net Income Margin 5.9% 5.3% 7.8% 6.1% 9.5%TTM Revenue Growth (YoY) 18.3% 14.5% 13.2% 11.8% 8.3%TTM EBITDA Growth (YoY) 16.1% 17.5% 0.6% 3.0% -2.8%TTM Earnings Growth (YoY) -14.3% -14.0% 1.8% -7.5% -66.3%Current Ratio 1.9 2.0 2.2 1.9 2.0Cash as Percent of Market Cap 11.1% 13.9% 15.6% 15.7% 13.4%Enterprise Value Growth (YoY) 1.8% 1.5% -9.3% -7.2% -9.1%

Gross Profit Margin 54.4% 58.7% 55.3% 54.6% 55.7%EBITDA Margin 27.2% 29.0% 28.8% 27.5% 26.6%Net Income Margin 11.2% 11.0% 12.8% 12.6% 12.6%TTM Revenue Growth (YoY) 7.3% 17.2% 13.8% 8.6% 10.7%TTM EBITDA Growth (YoY) 13.0% 8.4% 4.3% 3.9% 3.9%TTM Earnings Growth (YoY) -13.4% -22.6% -22.2% -17.4% 16.6%Current Ratio 1.2 1.2 1.2 1.3 1.5Cash as Percent of Market Cap 11.4% 5.3% 5.5% 5.8% 11.1%Enterprise Value Growth (YoY) 5.1% 14.0% 19.8% 12.0% 20.9%

Gross Profit Margin 54.1% 56.0% 57.1% 55.1% 54.2%EBITDA Margin 8.1% 7.8% 6.4% 4.5% 7.9%Net Income Margin -1.8% -0.4% -5.1% -3.1% -2.7%TTM Revenue Growth (YoY) 43.5% 34.4% 33.1% 35.2% 19.4%TTM EBITDA Growth (YoY) -19.0% -31.0% -20.3% 13.7% 10.9%TTM Earnings Growth (YoY) -45.5% 27.0% 25.1% 18.7% 73.0%Current Ratio 1.9 1.9 2.0 1.9 2.1Cash as Percent of Market Cap 10.4% 8.1% 11.9% 12.8% 11.6%Enterprise Value Growth (YoY) -12.7% -20.9% -9.1% -18.9% -20.8%

Development Platforms 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 1.9x 2.1x 2.5x 2.5x 2.6xEV/EBITDA 8.4x 8.2x 9.6x 9.1x 10.0xEV/Earnings 18.3x 13.6x 16.6x 17.1x 14.2xGross Profit Margin 77.7% 77.8% 77.6% 77.9% 78.1%EBITDA Margin 22.3% 21.8% 23.6% 21.8% 20.6%Net Income Margin 13.3% 13.7% 13.8% 14.3% 12.6%TTM Revenue Growth (YoY) 5.3% 3.5% 1.6% 3.0% 0.3%TTM EBITDA Growth (YoY) 3.7% 4.9% -0.6% -3.0% -6.3%

Gaming 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 1.0x 1.0x 1.0x 1.1x 1.3xEV/EBITDA 7.6x 9.1x 8.0x 7.1x 9.7xEV/Earnings 11.3x 12.1x 20.2x 16.8x 20.5xGross Profit Margin 62.1% 61.7% 62.0% 64.7% 65.3%EBITDA Margin 16.3% 15.5% 16.3% 15.4% 15.0%Net Income Margin 6.1% 6.0% 5.4% 4.5% 4.8%TTM Revenue Growth (YoY) 2.6% 2.2% 0.1% 7.4% 15.1%TTM EBITDA Growth (YoY) -10.6% -20.8% -12.3% 6.3% 28.6%

Networking & Network Perf Mgmt 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.4x 2.5x 2.5x 2.7x 2.6xEV/EBITDA 15.0x 14.0x 14.0x 15.1x 15.6xEV/Earnings 24.6x 25.0x 28.8x 34.0x 24.5xGross Profit Margin 68.1% 68.5% 68.1% 68.2% 67.6%EBITDA Margin 17.9% 16.7% 15.8% 14.9% 15.0%Net Income Margin 12.5% 10.4% 8.7% 5.8% 4.9%TTM Revenue Growth (YoY) 22.9% 19.5% 15.5% 14.2% 9.1%TTM EBITDA Growth (YoY) 15.6% 21.5% 18.1% 14.2% 6.2%

TTM Earnings Growth (YoY) -9.9% 3.9% 3.0% 7.1% 13.8%Current Ratio 2.0 2.1 2.2 2.3 2.3Cash as Percent of Market Cap 20.0% 21.3% 22.1% 19.8% 19.8%Enterprise Value Growth (YoY) -9.2% 6.5% -1.7% 0.1% -3.0%

Engineering & PLM 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.3x 2.6x 2.5x 2.7x 2.7xEV/EBITDA 11.5x 12.1x 11.8x 13.4x 12.4xEV/Earnings 24.3x 23.3x 23.2x 20.0x 19.6x

TTM Earnings Growth (YoY) -19.6% -29.2% -24.8% -28.2% -44.2%Current Ratio 2.5 2.8 2.4 2.5 2.6Cash as Percent of Market Cap 24.3% 35.1% 32.0% 28.8% 27.2%Enterprise Value Growth (YoY) -14.8% -10.5% -12.3% -1.3% 27.1%

Healthcare 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.7x 2.2x 2.1x 2.1x 2.1xEV/EBITDA 13.0x 12.8x 11.3x 14.8x 17.6xEV/Earnings 31.7x 37.9x 41.7x 34.2x 37.3x

TTM Earnings Growth (YoY) -22.9% -27.9% 19.2% 36.6% 26.3%Current Ratio 2.7 2.7 2.6 1.9 2.0Cash as Percent of Market Cap 16.2% 17.9% 17.8% 16.6% 18.8%Enterprise Value Growth (YoY) -9.1% 2.8% -8.1% -6.9% 0.8%

Security 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.9x 3.2x 2.7x 3.3x 3.6xEV/EBITDA 10.2x 10.5x 11.2x 11.5x 10.7xEV/Earnings 10.5x 14.5x 13.7x 15.8x 16.2x

Gross Profit Margin 83.6% 84.1% 83.4% 83.3% 83.4%EBITDA Margin 19.9% 20.7% 20.6% 20.7% 20.5%Net Income Margin 10.4% 11.4% 10.6% 10.8% 10.4%TTM Revenue Growth (YoY) 13.5% 13.2% 14.0% 13.1% 11.7%TTM EBITDA Growth (YoY) 31.7% 34.9% 14.3% 10.5% 10.9%TTM Earnings Growth (YoY) -19.7% -38.8% -14.9% -9.0% -20.8%Current Ratio 1.8 1.8 1.8 1.9 2.2Cash as Percent of Market Cap 18.6% 18.7% 15.4% 13.9% 12.5%Enterprise Value Growth (YoY) 13.0% 29.0% 31.1% 21.1% 27.4%

Gross Profit Margin 55.4% 55.1% 55.4% 55.7% 54.5%EBITDA Margin 22.3% 19.6% 18.4% 13.4% 14.1%Net Income Margin 4.5% 4.0% 3.3% 1.9% 1.7%TTM Revenue Growth (YoY) 37.1% 24.2% 19.6% 10.7% 11.0%TTM EBITDA Growth (YoY) 27.3% 18.4% 13.7% -0.2% -19.8%TTM Earnings Growth (YoY) -28.2% -24.0% -16.2% -10.8% 581.1%Current Ratio 2.4 2.1 2.1 2.2 2.2Cash as Percent of Market Cap 6.5% 7.9% 7.3% 7.1% 6.1%Enterprise Value Growth (YoY) -16.8% -25.5% -17.3% -10.0% 0.4%

Gross Profit Margin 75.3% 75.1% 74.9% 74.5% 74.3%EBITDA Margin 13.1% 14.5% 13.9% 8.1% 4.5%Net Income Margin 6.9% 6.6% 7.7% 4.2% 1.1%TTM Revenue Growth (YoY) 19.4% 20.1% 23.1% 23.4% 21.3%TTM EBITDA Growth (YoY) 7.8% 11.2% 9.3% 3.0% -2.8%TTM Earnings Growth (YoY) -6.9% -1.1% 0.5% 6.2% 0.0%Current Ratio 1.7 2.0 2.0 1.6 1.6Cash as Percent of Market Cap 13.4% 12.6% 13.0% 12.8% 11.9%Enterprise Value Growth (YoY) 0.0% 4.6% 0.0% 3.9% 7.0%


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THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORY

Storage, Data Mgmt & Integration 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.5x 2.5x 2.3x 2.4x 2.4xEV/EBITDA 9.4x 9.2x 8.4x 9.2x 8.8xEV/Earnings 15.5x 15.2x 14.5x 15.4x 16.9xGross Profit Margin 73.8% 72.8% 72.4% 72.6% 72.3%EBITDA Margin 23.7% 23.9% 23.8% 22.2% 21.9%Net Income Margin 12.5% 12.8% 12.7% 11.5% 10.7%TTM Revenue Growth (YoY) 7.6% 6.3% 6.5% 4.8% 4.1%TTM EBITDA Growth (YoY) 12.9% 14.1% 8.5% 5.5% -0.3%TTM E i G th (Y Y) 11 8% 11 4% 9 9% 8 0% 9 5%

Vertical - Other 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.0x 2.9x 2.9x 3.0x 3.2xEV/EBITDA 16.4x 21.0x 20.3x 22.0x 22.1xEV/Earnings 41.9x 47.5x 39.8x 40.9x 45.5xGross Profit Margin 55.2% 54.6% 54.2% 53.8% 53.5%EBITDA Margin 15.8% 14.7% 14.4% 14.1% 14.4%Net Income Margin 7.1% 6.2% 5.7% 5.7% 5.5%TTM Revenue Growth (YoY) 26.5% 28.0% 19.8% 21.3% 21.0%TTM EBITDA Growth (YoY) 7.7% 10.4% 7.8% 1.1% 8.4%

TTM Earnings Growth (YoY) -11.8% -11.4% -9.9% -8.0% -9.5%Current Ratio 2.3 2.1 2.3 2.2 2.2Cash as Percent of Market Cap 19.1% 20.2% 20.3% 22.1% 21.7%Enterprise Value Growth (YoY) -2.1% 7.8% -1.1% -9.1% -0.8%

Supply Chain Mgmt & Logistics 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.2x 3.2x 3.5x 3.8x 4.1xEV/EBITDA 11.3x 11.1x 13.6x 14.7x 15.6xEV/Earnings 27.1x 17.1x 30.4x 29.0x 31.2xGross Profit Margin 62 2% 61 9% 62 0% 61 8% 62 0%

TTM Earnings Growth (YoY) -12.8% -14.5% 12.5% 22.4% 89.3%Current Ratio 1.2 1.3 1.4 1.4 1.4Cash as Percent of Market Cap 12.1% 7.7% 12.4% 11.3% 8.7%Enterprise Value Growth (YoY) 9.6% 15.6% 7.5% 8.4% 50.5%

Gross Profit Margin 62.2% 61.9% 62.0% 61.8% 62.0%EBITDA Margin 19.6% 19.6% 19.6% 19.4% 19.2%Net Income Margin 12.6% 10.7% 10.5% 11.5% 11.4%TTM Revenue Growth (YoY) 19.1% 16.1% 13.1% 12.8% 10.7%TTM EBITDA Growth (YoY) 61.3% 74.1% 44.6% 28.8% 15.7%TTM Earnings Growth (YoY) -37.7% -31.1% -8.7% -0.3% 14.5%Current Ratio 2.3 2.4 2.5 2.4 2.4Cash as Percent of Market Cap 12.0% 11.3% 10.5% 10.0% 8.8%Enterprise Value Growth (YoY) 34.0% 41.4% 38.9% 38.4% 37.2%

Systems Management 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 5.9x 5.5x 4.5x 4.8x 4.3xEV/EBITDA 22.9x 22.3x 18.9x 20.5x 19.0xEV/Earnings 39.0x 36.6x 31.9x 35.5x 33.1xGross Profit Margin 84.6% 85.0% 85.0% 84.9% 84.7%EBITDA Margin 26.8% 25.8% 25.5% 25.8% 24.7%Net Income Margin 18.5% 16.5% 15.8% 15.0% 15.0%TTM Revenue Growth (YoY) 18.1% 18.1% 16.5% 17.2% 15.8%TTM EBITDA Growth (YoY) 19.4% 22.1% 13.7% 8.9% 5.9%TTM Earnings Growth (YoY) -7.9% -13.1% -2.9% -7.2% -8.8%Current Ratio 1.5 1.7 1.5 1.4 1.5Cash as Percent of Market Cap 12.4% 11.7% 12.0% 14.0% 14.2%Enterprise Value Growth (YoY) 8.0% 21.6% 10.8% 9.6% -3.7%

Vertical - Finance 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.3x 3.2x 3.0x 3.4x 3.8xEV/EBITDA 10.3x 10.6x 9.4x 10.7x 11.0xEV/Earnings 22.9x 26.0x 23.3x 24.1x 23.2xGross Profit Margin 45.9% 45.4% 44.3% 43.8% 43.3%EBITDA Margin 26.4% 26.3% 26.4% 26.5% 27.3%Net Income Margin 12.8% 10.4% 10.0% 9.7% 10.3%TTM Revenue Growth (YoY) 6.8% 6.3% 7.1% 6.7% 7.6%TTM EBITDA Growth (YoY) 4.7% 3.9% 8.1% 6.5% 7.0%TTM Earnings Growth (YoY) -4.6% 1.3% -3.3% -7.7% 7.5%Current Ratio 1.3 1.3 1.4 1.3 1.5Cash as Percent of Market Cap 8.8% 8.7% 9.4% 6.5% 6.1%Enterprise Value Growth (YoY) -2.8% 2.7% -4.4% 0.9% 20.9%


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THE SEG SaaS INDEX METRICS BY PRODUCT CATEGORYCRM & Marketing 2Q12 3Q12 4Q12 1Q13 2Q13

EV/Revenue 5.8x 5.0x 4.3x 3.5x 2.7xEV/EBITDA 30.0x 37.2x 94.4x 35.4x 29.8xEV/Earnings 60.4x 71.9x 28.4x 35.6x 52.7xGross Profit Margin 65.7% 65.5% 65.2% 65.4% 65.6%EBITDA Margin 1.0% 0.8% 2.8% 1.4% 1.4%Net Income Margin -16.2% -14.4% -8.9% -8.9% -9.8%TTM Revenue Growth (YoY) 37.0% 33.2% 37.9% 40.9% 32.1%TTM EBITDA Growth (YoY) 18.7% 12.0% -22.0% -29.4% -31.6%TTM Earnings Growth (YoY) 86 6% 38 6% 34 3% 46 5% 114 3%

Other SaaS 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 6.1x 5.5x 4.8x 4.2x 5.8xEV/EBITDA 19.8x 26.1x 41.7x 33.3x 32.9xEV/Earnings 9.0x 10.1x 40.2x 48.1x 50.6xGross Profit Margin 71.9% 71.7% 71.9% 71.9% 71.7%EBITDA Margin 9.6% 7.8% 7.6% 6.3% 2.3%Net Income Margin -3.5% -3.1% -1.6% -3.9% -4.0%TTM Revenue Growth (YoY) 27.9% 22.0% 23.1% 24.6% 22.3%TTM EBITDA Growth (YoY) 15.9% 14.6% 2.2% 6.4% -18.3%TTM E i G th (Y Y) 45 6% 8 0% 5 6% 16 0% 16 7%TTM Earnings Growth (YoY) 86.6% 38.6% 34.3% 46.5% 114.3%

Current Ratio 2.9 2.6 2.4 1.9 1.8Cash as Percent of Market Cap 10.9% 10.6% 12.9% 17.5% 16.8%Enterprise Value Growth (YoY) -20.3% 7.5% 23.3% -17.2% -21.9%

ERP & Supply Chain 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 4.9x 5.4x 6.6x 6.4x 6.6xEV/EBITDA 41.4x 57.1x 50.7x 73.9x 86.7xEV/Earnings 26.7x 79.7x 113.5x 161.9x 106.1xGross Profit Margin 70 0% 69 9% 70 9% 69 5% 68 9%

TTM Earnings Growth (YoY) 45.6% 8.0% -5.6% 16.0% 16.7%Current Ratio 2.2 2.0 1.9 2.0 1.9Cash as Percent of Market Cap 12.1% 13.8% 13.8% 13.0% 10.8%Enterprise Value Growth (YoY) -23.0% -3.8% -0.5% 4.0% 30.0%

Gross Profit Margin 70.0% 69.9% 70.9% 69.5% 68.9%EBITDA Margin 7.1% 8.4% 8.5% 5.7% 3.9%Net Income Margin 3.1% 2.8% 3.8% -0.9% -0.9%TTM Revenue Growth (YoY) 24.0% 24.1% 22.2% 30.7% 31.5%TTM EBITDA Growth (YoY) -4.1% 1.1% -7.8% 5.8% -22.9%TTM Earnings Growth (YoY) -41.9% 9.8% 17.9% 126.5% n/aCurrent Ratio 1.5 1.3 1.2 1.4 1.4Cash as Percent of Market Cap 7.9% 6.1% 5.6% 7.5% 8.7%Enterprise Value Growth (YoY) 23.8% 43.6% 38.8% 51.2% 81.5%

Vertically Focused 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 4.3x 5.7x 4.7x 5.0x 5.0xEV/EBITDA 24.9x 30.4x 25.6x 27.3x 25.7xEV/Earnings 28.7x 23.7x 30.7x 63.2x 137.6xGross Profit Margin 61.7% 61.1% 71.4% 71.3% 71.8%EBITDA Margin 15.4% 15.2% 14.3% 16.4% 16.0%Net Income Margin 12.3% 16.3% 14.0% 5.3% 3.8%TTM Revenue Growth (YoY) 34.4% 32.0% 27.7% 21.6% 21.5%TTM EBITDA Growth (YoY) 13.8% 18.7% 2.8% 6.5% -1.9%TTM Earnings Growth (YoY) -1.7% -38.6% 1.1% 3.4% n/aCurrent Ratio 2.2 2.2 2.4 2.5 1.6Cash as Percent of Market Cap 8.3% 8.1% 8.5% 8.3% 6.6%Enterprise Value Growth (YoY) 30.8% 58.5% 25.7% 26.3% 21.5%

Workforce Management 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 7.0x 8.3x 10.5x 10.7x 8.5xEV/EBITDA 71.1x 80.0x 69.4x 63.7x 61.9xEV/Earnings 399.4x 368.3x 243.2x 180.5x 165.7xGross Profit Margin 56.4% 56.5% 56.6% 57.4% 58.5%EBITDA Margin -13.8% -17.0% -18.1% -17.1% -15.4%Net Income Margin -30.0% -27.5% -27.9% -29.2% -27.7%TTM Revenue Growth (YoY) 28.0% 28.7% 29.1% 23.4% 43.1%TTM EBITDA Growth (YoY) -8.4% -4.7% -42.8% -32.9% -36.5%TTM Earnings Growth (YoY) -44.8% -63.6% 17.9% 25.4% n/aCurrent Ratio 1.2 1.2 1.2 1.1 1.1Cash as Percent of Market Cap 6.5% 5.9% 4.0% 3.8% 3.9%Enterprise Value Growth (YoY) 23.0% 87.1% 62.3% 49.2% 42.8%


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THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORY

Ad Tech & Lead Generation 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.5x 1.8x 2.1x 2.0x 2.0xEV/EBITDA 11.0x 13.3x 12.0x 14.9x 14.9xEV/Earnings 28.8x 29.6x 28.0x 21.9x 25.4xGross Profit Margin 67.6% 68.5% 67.3% 66.8% 65.4%EBITDA Margin 14.0% 14.4% 14.1% 13.0% 13.5%Net Income Margin 3.6% 4.3% 6.4% 5.7% 4.8%TTM Revenue Growth (YoY) 37.5% 35.3% 32.9% 25.2% 26.8%TTM EBITDA Growth (YoY) 16.5% 16.4% 15.8% 10.0% 13.6%TTM E i G th (Y Y) 16 6% 9 3% 9 3% 11 5% 137 5%

Infrastructure 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 1.8x 1.1x 1.0x 1.7x 1.6xEV/EBITDA 12.4x 14.0x 11.7x 11.9x 13.6xEV/Earnings 23.3x 18.2x 20.5x 23.3x 35.3xGross Profit Margin 64.8% 63.8% 63.1% 61.6% 61.2%EBITDA Margin 10.7% 8.3% 7.5% 8.0% 7.2%Net Income Margin 4.6% 3.4% 1.8% -0.8% 0.4%TTM Revenue Growth (YoY) 13.7% 12.2% 10.9% 9.2% 8.8%TTM EBITDA Growth (YoY) 7.1% 2.9% -6.0% -18.6% -30.9%TTM E i G th (Y Y) 9 7% 23 1% 59 7% 51 9% 13 6%TTM Earnings Growth (YoY) -16.6% -9.3% -9.3% -11.5% 137.5%

Current Ratio 2.8 2.7 2.6 2.2 2.4Cash as Percent of Market Cap 20.6% 19.7% 20.6% 19.1% 17.8%Enterprise Value Growth (YoY) -18.6% -3.6% 2.7% 8.8% 39.1%

Commerce 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 0.7x 0.8x 1.2x 0.9x 0.9xEV/EBITDA 18.8x 15.1x 15.2x 10.5x 15.1xEV/Earnings 14.6x 17.1x 18.8x 13.9x 23.8xGross Profit Margin 37 3% 37 3% 38 6% 38 4% 38 5%

TTM Earnings Growth (YoY) 9.7% 23.1% 59.7% 51.9% -13.6%Current Ratio 2.9 3.3 3.1 3.0 3.1Cash as Percent of Market Cap 26.4% 22.0% 28.2% 28.4% 30.6%Enterprise Value Growth (YoY) -28.1% -12.7% 1.6% -2.8% -1.6%

Services 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.2x 2.9x 2.7x 3.2x 2.9xEV/EBITDA 16.9x 16.4x 17.7x 15.3x 26.8xEV/Earnings 41.8x 37.2x 44.0x 54.6x 79.4xGross Profit Margin 67 6% 69 1% 69 8% 69 5% 69 8%Gross Profit Margin 37.3% 37.3% 38.6% 38.4% 38.5%

EBITDA Margin 8.3% 8.3% 8.4% 7.6% 7.5%Net Income Margin 3.1% 3.1% 4.5% 4.6% 4.9%TTM Revenue Growth (YoY) 16.7% 23.3% 20.6% 17.5% 17.7%TTM EBITDA Growth (YoY) 5.4% 13.6% 20.9% 25.7% 26.4%TTM Earnings Growth (YoY) -3.0% -38.1% -28.0% -8.4% 0.5%Current Ratio 1.9 2.0 1.9 1.8 1.6Cash as Percent of Market Cap 19.4% 24.2% 22.5% 18.5% 13.4%Enterprise Value Growth (YoY) -32.0% -14.4% 6.2% -6.3% 28.0%

Gross Profit Margin 67.6% 69.1% 69.8% 69.5% 69.8%EBITDA Margin 6.5% 7.3% 8.5% 8.5% 6.6%Net Income Margin 0.2% 4.1% 2.1% 2.9% 0.3%TTM Revenue Growth (YoY) 55.1% 49.5% 42.0% 42.2% 44.9%TTM EBITDA Growth (YoY) 21.1% 16.4% 8.2% 13.7% 23.0%TTM Earnings Growth (YoY) -88.6% 2.0% -31.6% -4.0% 204.0%Current Ratio 1.7 1.7 2.3 2.1 2.5Cash as Percent of Market Cap 12.0% 16.9% 19.5% 14.9% 13.0%Enterprise Value Growth (YoY) -43.5% -15.4% -17.8% 13.1% 74.5%

Content & Media 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 1.6x 1.3x 1.4x 1.6x 2.3xEV/EBITDA 10.1x 10.8x 10.9x 15.4x 13.8xEV/Earnings 20.8x 19.2x 22.0x 18.9x 22.6xGross Profit Margin 54.0% 53.9% 52.5% 52.4% 52.4%EBITDA Margin 14.0% 14.1% 14.1% 14.8% 15.5%Net Income Margin 4.8% 4.0% 1.3% 1.6% 2.2%TTM Revenue Growth (YoY) 15.5% 12.3% 10.5% 12.6% 12.1%TTM EBITDA Growth (YoY) -7.5% -4.5% 10.5% 19.5% 22.7%

Social 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 13.0x 9.6x 8.6x 8.9x 7.1xEV/EBITDA 30.4x 29.3x 36.4x 29.1x 32.6xEV/Earnings 50.4x 98.0x 99.7x 400.2x 259.2xGross Profit Margin 75.4% 73.9% 64.2% 65.3% 67.0%EBITDA Margin 12.9% 12.6% 13.3% 16.5% 20.0%Net Income Margin 2.4% 1.8% 2.0% 1.0% 1.2%TTM Revenue Growth (YoY) 64.0% 64.6% 50.9% 49.3% 47.2%TTM EBITDA Growth (YoY) -24.3% -32.4% -18.1% 15.3% 20.7%

TTM Earnings Growth (YoY) 22.8% 34.3% 9.4% 0.4% 73.0%Current Ratio 2.0 2.1 1.6 1.8 1.8Cash as Percent of Market Cap 22.7% 21.7% 18.4% 17.2% 16.2%Enterprise Value Growth (YoY) -28.6% -21.9% -11.8% 12.8% 23.5%

Gaming 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 3.4x 2.1x 2.4x 2.7x 2.7xEV/EBITDA 4.0x 3.4x 4.3x 5.8x 5.9xEV/Earnings 8.2x 8.4x 7.1x 7.1x 8.4x

TTM Earnings Growth (YoY) -37.1% -39.4% 12.8% -45.0% n/aCurrent Ratio 6.0 7.2 5.4 5.2 5.3Cash as Percent of Market Cap 14.5% 16.5% 19.0% 21.9% 16.3%Enterprise Value Growth (YoY) n/a n/a n/a -5.8% -5.1%

Travel 2Q12 3Q12 4Q12 1Q13 2Q13EV/Revenue 2.8x 2.3x 2.0x 2.0x 2.2xEV/EBITDA 19.7x 16.5x 15.3x 16.2x 18.2xEV/Earnings 27.8x 23.7x 20.7x 21.9x 30.8x

Gross Profit Margin 73.2% 71.9% 69.4% 71.2% 71.3%EBITDA Margin 45.0% 43.5% 38.6% 36.3% 38.6%Net Income Margin 31.8% 28.9% 27.3% 24.8% 26.7%TTM Revenue Growth (YoY) 33.1% 32.0% 24.8% 21.9% 21.9%TTM EBITDA Growth (YoY) 15.4% 17.1% 4.3% 13.9% 18.8%TTM Earnings Growth (YoY) 1.2% 1.1% -12.8% -13.5% n/aCurrent Ratio 2.4 2.4 2.2 2.5 2.4Cash as Percent of Market Cap 27.6% 37.0% 37.6% 36.7% 31.9%Enterprise Value Growth (YoY) -8.6% -30.8% 9.0% -6.3% 22.8%

Gross Profit Margin 82.0% 82.0% 81.6% 81.0% 80.7%EBITDA Margin 24.5% 25.7% 21.7% 18.1% 19.1%Net Income Margin 13.9% 15.3% 14.0% 12.0% 13.0%TTM Revenue Growth (YoY) 29.1% 24.0% 18.6% 19.8% 19.5%TTM EBITDA Growth (YoY) 6.7% 9.5% -7.8% -6.7% -6.3%TTM Earnings Growth (YoY) -41.5% -52.7% -25.6% -14.3% 42.7%Current Ratio 2.3 2.1 2.3 2.0 1.9Cash as Percent of Market Cap 11.6% 16.6% 16.8% 18.6% 16.4%Enterprise Value Growth (YoY) -35.6% -30.5% -15.8% -0.3% 32.8%


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2Q13 PUBLIC SELLERS

Buyer SellerPurchase Price

(mm)Enterprise Value

(mm) EV/Rev EV/EBITDATTM Rev Growth

Private Equity Consortium BMC Softw are Inc. (NasdaqGS:BMC) $8,376.8 $6,866.4 3.1x 11.2x 1.4%Salesforce.com, Inc (NYSE:CRM) ExactTarget, Inc. (NYSE:ET) $2,350.6 $2,249.6 7.1x - 39.4%Vista Equity Partners Websense Inc $1 054 8 $971 1 2 7x 17 9x 1 5%Vista Equity Partners Websense, Inc. $1,054.8 $971.1 2.7x 17.9x -1.5%McAfee, Inc. Stonesoft Oyj (HLSE:SFT1V) $371.6 $378.7 7.0x - 27.1%Thoma Bravo, LLC Keynote Systems, Inc. (NasdaqGS:KEYN) $398.7 $340.8 2.8x 23.1x 5.2%Trulia, Inc. (NYSE:TRLA) Market Leader, Inc. (NasdaqGS:LEDR) $336.3 $314.3 6.6x - 29.1%The Carlyle Group LP (NasdaqGS:CG) Simplex Holdings Inc. (TSE:4340) $283.6 $216.2 1.2x 7.1x 4.0%DPA Group NV (ENXTAM:DPA) ICT Automatisering NV (ENXTAM:ICT) $43 2 $46 3 0 4x 14 2x 3 0%DPA Group NV (ENXTAM:DPA) ICT Automatisering NV (ENXTAM:ICT) $43.2 $46.3 0.4x 14.2x -3.0%P2 Energy Solutions Incorporated ISS Group Limited (ASX:ISS) $43.3 $36.8 1.8x 26.6x 9.3%


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2Q13 MEGA DEALS



(mm) EV/Rev EV/EBITDATTM Rev Growth

Private Equity Consortium BMC Softw are Inc. (NasdaqGS:BMC) $8,376.8 $6,866.4 3.1x 11.2x 1.4%Salesforce.com, Inc (NYSE:CRM) ExactTarget, Inc. (NYSE:ET) $2,350.6 $2,249.6 7.1x - 39.4%Adobe Systems Inc (NasdaqGS:ADBE) Neolane SA $600 0 $600 0 10 3x -Adobe Systems Inc. (NasdaqGS:ADBE) Neolane SA $600.0 $600.0 10.3x - -OMERS Private Equity Civica plc $607.8 $607.8 1.9x 10.3x -Vista Equity Partners Websense, Inc. $1,054.8 $971.1 2.7x 17.9x -1.5%Yahoo! Inc. (NasdaqGS:YHOO) Tumblr, Inc. $1,100.0 $1,100.0 84.6x - -International Business Machines C ( S )

SoftLayer Technologies, Inc. $2,000.0 $2,000.0 5.0x - -


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2Q13 MOST ACTIVE BUYERS



(mm)TTM Revenue

(mm)EV /

RevenueConstellation Softw are, Inc. (TSX:CSU) 123Signup AMS Inc - - - -, ( ) 123Signup AMS, Inc.

Metalogic Holdings Limited - - - -

Quadramed, Inc. - - - -

Quantitative Medical Systems, Inc. - - - -Dassault Systemes SA (ENXTPA:DSY) Apriso Corporation $205.0 $205.0 - -

Archividéo SARL - - - -FE-DESIGN GmbH - - - -SIMPOE SAS - - - -

Google Inc. (NasdaqGS:GOOG) Behavio, Inc. - - - -Wavii, Inc. - - - -Waze Ltd. - - - -

Intel Corporation (NasdaqGS:INTC) Aepona Ltd - - - -Mashery, Inc. - - - -ST-Ericsson, Navigation Satellite Business - - - -

Tw itter, Inc. Lucky Sort Inc. - - - -Spindle Labs, Inc. - - - -p ,Ubalo, Inc. - - - -

Yahoo! Inc. (NasdaqGS:YHOO) GhostBird Softw are Inc. - - - -Go Poll Go, Inc. - - - -Loki Studios, Inc. - - - -PlayerScale, Inc. - - - -y ,Rondee, Inc. - - - -Todoroo, Inc. - - - -Tumblr, Inc. $1,100.0 $1,100.0 $13.0 84.6x


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

ABOUT SOFTWARE EQUITY GROUPq y p y g gy , g

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

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

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

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

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

CONTACT INFORMATION:

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

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


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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.