Cloud Insights. October 2013 Update and Q3 Review. M&A and Capital Markets Perspective on the Cloud Computing Industries:

Transcription

1 October 2013 Update and Q3 Review M&A and Capital Markets Perspective on the Cloud Computing Industries: Software-as-a-Service Platform-as-a-Service Infrastructure-as-a-Service

2 Table of Contents Summary... 1 M&A Overview... 5 Capital Markets Overview... 7 Public Company Analysis... 9 Venture Capital Activity William Blair & Company Selected Cloud Transactions William Blair & Company Cloud Contacts William Blair & Company SaaS Equity Research Coverage Disclosures Table of Contents

3 Summary SaaS Mergers and Acquisitions SaaS M&A picked up the pace in third quarter 2013 with 52 SaaS M&A transactions announced, up from 39 in the third quarter Dollar volume for the third quarter 2013 was up year over year, with $3.5 billion in total disclosed transaction value (includes Thoma Bravo s $1.0 billion acquisition of Intuit Financial Services (nka Digital Insight), and Davis + Henderson Corporation s $1.2 billion acquisition of Harland Financial Solutions) versus $1.8 billion during third quarter 2012 (which includes IBM s $1.4 billion acquisition of Kenexa). Also notable for the PaaS sector was PayPal's $800 million acquisition of cloud payments platform Braintree. Q Selected SaaS Mergers and Acquisitions Date Trans. Value Enterprise Enterprise Value / Announced Completed ($ MM) Value ($ MM) Target Acquirer(s) LTM Revenue LTM EBITDA 9/9/13 9/9/13 CitizenHawk, Inc. Wolters Kluwer Corporate Legal Services 9/3/13 8/30/13 $43.1 $43.1 CombineNet, Inc. SciQuest, Inc. 3.6x 8/23/13 $800.0 $800.0 Omnitracs, Inc. Vista Equity Partners 8/21/13 $150.0 $150.0 Equator, LLC Altisource Portfolio Solutions S.A. 8/20/13 Alert Logic, Inc. Welsh, Carson, Anderson & Stowe 8/2/13 8/2/13 Teletrac, Inc. Danaher Corp. 7/25/13 6/30/13 $27.3 $27.3 VerticalResponse Deluxe Corp. 7/24/13 07/24/13 EASY Software Solutions Bullhorn 7/23/13 8/16/13 $1,200.0 $1,200.0 Harland Financial Solutions Davis + Henderson Corporation 4.7x 7/16/13 7/16/13 TRX Concur Technologies 7/15/13 7/15/13 Zimbra, Inc. Telligent Systems, Inc. 7/4/13 7/26/13 $145.0 $145.0 Voxeo Corporation Aspect Software 7/1/13 8/1/13 $1,025.0 $1,025.0 Intuit Financial Services (nka Digital Insight) Thoma Bravo 3.4x Sources: Capital IQ, public news sources, and third party estimates Summary 1

4 SaaS Equity Performance SaaS stocks have continued to outperform the broader market in The broad SaaS group increased 45.5%, topping the increase of 21.9% in the NASDAQ. For September, the SaaS index outperformed the NASDAQ and S&P 500, gaining 7.8% compared with a gain of 5.5% on the NASDAQ and 3.6% on the S&P 500. Indexed Stock Price Performance Index 2013 YTD September 2013 Large cap SaaS +45.0% +9.3% Midcap SaaS +32.2% +0.9% Small cap SaaS +63.1% +6.3% All SaaS +45.5% +7.8% NASDAQ +21.9% +5.5% S&P % +3.6% Note: All indices are weighted by current market capitalization Source: FactSet SaaS Capital Markets The third quarter witnessed four SaaS IPOs, two SaaS convertible offerings, five follow on offerings, and one filing. s Benefitfocus, a provider of cloud based benefits software solutions, completed an initial public offering of $150.4 million; the stock is up 85.5% since the IPO. Cvent, a provider of cloud based enterprise event management software, completed an initial public offering of $135.2 million; the stock is up 67.5% since the IPO. MiX Telematics, a provider of driver safety, vehicle tracking, and fleet management solutions, completed its initial public offering in the United States of $115.8 million and, as a result, began its listing on the NYSE under the ticker symbol MIXT. The company s stock is down 7.5% since its U.S. IPO. William Blair served as an underwriter on the transaction. RingCentral, a provider of SaaS solutions for business communications, completed an initial public offering of $112.1 million; the stock is up 38.6% since the IPO. Convertibles Medidata, a provider of clinical development solutions that enhance the efficiency of clinical trials, completed its convertible note offering of $287.5 million; the company s stock is up 13.9% since pricing of the offering. ServiceSource, a provider of recurring revenue management solutions, completed its convertible note offering of $130 million; the company s stock is down 4.6% since pricing of the offering. Follow ons Fleetmatics, a provider of fleet management solutions, completed follow on offerings of $360.5 million and $279.6 million in July and September respectively; the company s stock is down 27.9% since pricing of the September secondary offering and up 120.8% since the IPO. William Blair served as an underwriter on both transactions. Halogen, a provider of SaaS based talent management software, completed a follow on of $20.2 million; the company s stock is up 3.7% since pricing of the secondary offering and 19.6% since the IPO. Marketo, a provider of cloud based marketing software, completed a follow on of $213.0 million; the company s stock is down 10.2% since pricing of the secondary offering and up 145% since the IPO. Rally Software, a provider of cloud based solutions for managing Agile software development, completed a follow on of $138.3 million; the company s stock is up 21.1% since pricing of the secondary offering and 58.3% since the IPO. William Blair served as an underwriter on the transaction. Textura, a provider of collaboration and productivity tools for the construction industry, completed a follow on of $200.4 million; the company s stock is up 13.4% since pricing of the secondary offering and 102.9% since the IPO. William Blair served as book running co lead manager of the offering. Filings Veeva, a provider of cloud based CRM for the life sciences industry, filed an S 1 with the SEC to raise $195 million in an initial public offering. William Blair is pleased to serve as underwriter for Fleetmatics, MiX Telematics, Rally Software, and Textura. 2 Summary

5 SaaS Venture Capital During third quarter 2013, 107 SaaS venture investments were announced, up from 64 in third quarter Dollar volume for the third quarter 2013 also increased meaningfully year over year, with $1.4 billion in total disclosed transaction value versus $685 million during third quarter Notable SaaS Venture Capital Announced Date Size ($ in MM) Company Description Investors 9/24/13 $70.0 Practice Fusion, Inc. Web based electronic health record system including medical charting and secure messaging Artis Capital Management; Deerfield Management; Band of Angels; Felicis Ventures; Industry Ventures; Kleiner, Perkins, Caufield & Byers 9/19/13 $98.2 Rearden Commerce, Inc. E commerce platform allowing customers and businesses to purchase products or services 9/18/13 $50.0 Blue Jeans Network, Inc. Offers cloud based video conferencing services 9/17/13 $37.0 Apttus Inc. SaaS application to complete quoteto cash and procure to pay supplier process 9/3/13 $50.0 Lithium Technologies, Inc. Social customer community software and social media marketing solutions Accel Management; Battery Ventures; New Enterprise Associates; Norwest Venture Partners K1 Investment Management; ICONIQ Capital New Enterprise Associates 8/20/13 $38.0 Birst, Inc. Business analytics solutions DAG Ventures; Hummer Winblad Venture Partners; Northgate Capital Group; Sequoia Capital 8/16/13 $40.0 SugarCRM, Inc. Open source customer relationship management software Goldman Sachs 8/12/13 $40.0 Extreme Reach, Inc. Video advertising management and delivery solutions Digital Generation, Inc. 8/1/13 $165.0 HootSuite Media, Inc. Social media management solutions to execute campaigns across various social networks 7/25/13 $40.0 BigCommerce PTY. Ltd. Designs and develops e commerce software Accel Management; Insight Venture Partners; OMERS Ventures Revolution Growth 7/24/13 $35.8 Mediaspectrum, Inc. Cloud platform for mobile advertising, content management, and publishing applications Insight Venture Partners 7/3/13 $66.0 TOA Technologies, Inc. Provides on demand mobile Technology Crossover Ventures workforce management and customer experience management software Sources: Capital IQ and VentureSource Summary 3

6 PaaS and IaaS Activity Notable PaaS and IaaS Mergers and Acquisitions Date Trans. Value Implied Enterprise Enterprise Value Announced Completed ($ MM) Value ($ MM) Target Company Acquirer Company LTM Revenue LTM EBITDA 9/26/13 9/26/13 $800.0 $800.0 Braintree Payment Solutions, LLC PayPal, Inc. 9/17/13 9/17/13 Shore.Net Leaseweb USA, Inc. 9/16/13 9/16/13 Adept Cloud Hightail Inc. 9/10/13 9/10/13 Standing Cloud, Inc. Origo Networks, Inc. 9/3/13 9/3/13 IP Commerce, Inc. EVO Payments International, LLC 8/14/13 8/14/13 Precog RichRelevance, Inc. Sources: Capital IQ and VentureSource Notable PaaS and IaaS Venture Capital Announced Date Size ($ in MM) Company Description Investors 9/21/13 $25.0 Egnyte, Inc. Provides cloud file server solutions to address the infrastructure needs of enterprises and professionals NA 9/10/13 $40.0 Virtustream, Inc. Provides enterprise cloud software and services for hybrid cloud deployments SAP AG 9/5/13 $50.0 Zuora, Inc. Online subscription billing and management platform 9/3/13 $25.0 Datto, Inc. Provides hardware based on site and off site backup, disaster recovery, and business continuity solutions 8/21/13 Ajubeo, LLC Offers private, public, hybrid, and cloud mesh network solutions and cloud monitoring 8/7/13 ServiceNow, Inc. Provider of cloud based services that automate enterprise IT operations Benchmark Capital; Greylock Partners; Index Ventures; Northgate Capital Group; Redpoint Ventures; Shasta Ventures; Tenaya Capital; Vulcan Capital General Catalyst Partners Grey Mountain Partners UXC Limited 8/6/13 $7.0 ClearDATA Networks, Inc. Provider of healthcare cloud computing and information security services Excel Venture Management; Norwest Venture Partners 7/26/13 $35.2 Apigee Designs and develops application programming interface management products 7/17/13 $45.3 DataStax Provides software, support, and training for Apache Cassandra, an open source database 7/15/13 $3.4 DigitalOcean Provider of cloud hosting platforms where developers can deploy SSD cloud servers Source: Capital IQ and VentureSource Accenture; Bay Partners; Focus Ventures; Norwest Venture Partners; SAP Ventures; Third Point Ventures CrossLink Capital; DFJ; Lightspeed Venture Partners; MeriTech Capital Partners; Next World Capital; Scale Venture Partners CrunchFund; IA Ventures; TechStars 4 Summary

7 M&A Overview M&A Activity Detail Number of Transactions Dollar Value ($ in MM) LTM 09/12 LTM 09/ LTM 09/12 LTM 09/13 Annual Disclosed $2,826 $3,432 $11,694 $13,789 $18,753 $8,615 Annual Undisclosed Total $2,826 $3,432 $11,694 $13,789 $18,753 $8,615 Source: Capital IQ Annual M&A Detail ($ in millions) Transaction Value # of Transactions Transaction Value $20,000 $15,000 $10,000 $5,000 $0 Number of Transactions LTM 09/12 LTM 09/13 Transaction Value $6,005 $1,854 $2,826 $3,432 $11,694 $13,789 $18,753 $8,615 Number of Transactions Source: Capital IQ M&A Overview 5

8 M&A Valuation Analysis ($ in millions) Annual Volume LTM 09/12 LTM 09/13 Number of Announced Transactions Number of Disclosed Transactions Total Dollar Volume $1,854 $2,826 $3,432 $11,694 $13,789 $18,753 $8,615 Average Transaction Size $143 $202 $114 $217 $300 $391 $233 EV/LTM Revenues Number of Disclosed Transactions Mean 2.88x 4.03x 5.04x 4.78x 5.15x 5.47x 3.22x Median 2.80x 4.60x 2.83x 3.70x 3.59x 4.11x 3.18x EV/LTM EBITDA Number of Disclosed Transactions Mean 15.9x 47.7x 19.0x 33.0x 48.0x 50.8x 23.1x Median 18.5x 47.7x 19.0x 20.2x 42.3x 49.0x NM Source: Capital IQ M&A Activity by Target Ownership (Percentage of Transactions) Private V.C. Backed Private Independent Public 75.0% 50.0% 25.0% 0.0% LTM 09/12 LTM 09/13 Private V.C. Backed 60% 57% 52% 62% 50% 44% 45% 42% 52% Private Independent 34% 26% 35% 31% 48% 54% 51% 52% 43% Public 6% 17% 13% 7% 2% 2% 4% 6% 5% Source: Capital IQ 6 M&A Overview

9 Capital Markets Overview Annual SaaS Public Offering Activity ($ Volume by IPO, Follow on, and Convertible Debt) ($ in millions) s Follow On Offerings PIPEs Convertible Debt Offerings $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $ LTM 09/12 LTM 09/13 s $145.0 $805.0 $194.9 $486.5 $722.6 $1,945.8 $2,164.2 $1,853.6 Follow on Offerings $439.4 $934.8 $177.0 $457.9 $631.3 $594.0 $1,317.0 $673.0 $1,835.9 PIPEs $251.0 Convertible Debt Offerings $1,029.6 $200.0 $200.0 $3,069.3 Sources: Capital IQ and Dealogic. Excludes MiX Telematics and Halogen Software, Inc. Capital Markets Overview 7

10 SaaS Public Equity Offering Detail (Last 12 Months) Company Filing Date Pricing Date Filing Range Offer Price Offering Size ($ in MM) Primary as % of Offering Market Cap % Change Pricing to Post Offering Dilution ($ in MM) First Day First Week To Date Offer Price Discount to Filing Price Last Sale IPOs Priced RingCentral 08/26/13 09/26/13 $11.00 $13.00 $13.00 $ % 13.8% $ % 30.1% 38.6% Benefitfocus 08/14/13 09/17/13 $21.50 $24.50 $26.50 $ % 12.3% $ % 69.7% 85.5% Cvent 07/08/13 08/08/13 $17.00 $19.00 $21.00 $ % 16.3% $ % 46.2% 67.5% MiX Telematics 08/08/13 08/08/13 $14.00 $16.00 $16.00 $ % 1.8% $ % (10.3%) (7.5%) Textura 04/05/13 06/06/13 $13.00 $15.00 $15.00 $ % 25.3% $ % 46.1% 187.2% ChannelAdvisor 04/11/13 05/22/13 $12.00 $14.00 $14.00 $ % 31.0% $ % 21.4% 161.6% Marketo 02/26/13 05/16/13 $11.00 $13.00 $13.00 $ % 18.4% $ % 89.0% 145.2% Halogen 04/02/13 05/13/13 $11.38 $11.38 $ % 23.5% $ % 14.2% 23.0% Rally Software 03/11/13 04/11/13 $11.00 $13.00 $14.00 $ % 29.2% $ % 27.5% 114.0% Marin Software 02/13/13 03/21/13 $11.00 $13.00 $14.00 $ % 26.9% $ % 14.2% (10.4%) Workday 08/30/12 10/11/12 $24.00 $26.00 $28.00 $ % 16.0% $4, % 97.9% 189.0% Fleetmatics 08/20/12 10/04/12 $15.00 $17.00 $17.00 $ % 18.2% $ % 26.5% 120.9% Qualys 06/08/12 09/28/12 $11.00 $13.00 $12.00 $ % 22.3% $ % 12.9% 78.3% IPOs Filed Veeva Systems 09/11/13 $195.0 Follow ons Priced Textura 09/10/13 09/19/13 $38.00 $ % 6.9% $ % 13.4% 13.4% (5.8%) (2.1%) Fleetmatics 09/12/13 09/17/13 $46.79 $ % 0.0% $1,700.0 (2.7%) (18.9%) (19.7%) 0.0% (2.6%) Marketo 08/30/13 09/12/13 $35.50 $ % 1.8% $1,380.8 (3.0%) (9.0%) (10.2%) 1.2% (3.2%) Halogen 08/21/13 08/21/13 $13.50 $ % 0.0% $ % (0.4%) 3.7% (3.5%) (3.5%) Rally Software 07/12/13 07/24/13 $24.75 $ % 1.0% $ % 16.6% 21.1% 1.4% (1.9%) Fleetmatics 06/28/13 07/24/13 $33.00 $ % 2.8% $1, % 19.0% 13.8% (0.7%) (2.0%) Fleetmatics 01/22/13 01/30/13 $25.00 $ % 0.0% $ % (1.3%) 50.2% (5.1%) (4.3%) ServiceNow 10/31/12 11/14/12 $28.00 $ % 1.5% $3, % 9.9% 85.5% (8.6%) (2.5%) Convertible Priced ServiceSource International 08/06/13 08/08/13 $130.0 $928.1 Medidata Solutions 08/05/13 08/06/13 $287.5 $2,286.5 Workday 06/10/13 06/11/13 $350.0 $10,672.4 Workday 06/10/13 06/11/13 $250.0 $10,672.4 Concur Technologies 05/28/13 05/29/13 $488.8 $4,417.8 NetSuite 05/28/13 05/29/13 $310.0 $6,345.1 Cornerstone OnDemand 05/10/13 05/11/13 $253.0 $2,042.7 Salesforce.com 03/11/13 03/12/13 $1,000.0 $26,476.7 Note: William Blair clients highlighted Sources: FactSet and Dealogic as of September 30, 2013 (1) Non U.S. targets are not included in William Blair s total transaction volume statistics 8 Capital Markets Overview

11 Public Company Analysis Year to date, the SaaS index was up 45.5%, outperforming the NASDAQ, which was up 21.9%. The large cap, midcap, and small cap SaaS groups were up significantly, increasing 45.0%, 32.2%, and 63.1%, respectively. SaaS Indexed Stock Price Performance (2013 Year to Date) Large cap (+45.0%) Midcap (+32.2%) Small cap (+63.1%) NASDAQ (+21.9%) /31/12 01/30/13 03/01/13 03/31/13 04/30/13 05/31/13 06/30/13 07/30/13 08/29/13 09/30/13 09/29/13 Note: Groupings based on market caps at December 31, 2012 Mkt. Cap > $1 billion consists of: ATHN, CNQR, CSOD, TRAK, MDSO, N, RP, CRM, NOW, ULTI, WDAY Mkt. Cap $500 million to $1 billion consists of: BV, DWRE, ELLI, FLTX, JIVE, LPSN, LOGM, SPSC, SNCR Mkt. Cap < $500 million consists of: BNFT, CTCT, CVT, ECOM, EOPN, HGN, IL, MIXT, MKTO, MRIN, QLYS, RALY, RNG, MKTG, SQI, SREV, TNGO, TXTR, VOCS Source: FactSet as of September 30, 2013 Valuation Overview Large cap Midcap Small cap 9.8x 5.1x 5.1x 38.2x 18.3x 26.8x 31.4x 27.4x 34.8x EV / 2013E Revenue EV / 2013E EBITDA EV / 2013E FCF Note: Groupings based on market caps at December 31, 2012; data points represent median multiples Sources: FactSet and Capital IQ as of September 30, 2013 Public Company Analysis 9

12 Comparable Company Analysis Groupings Based on Market Caps at December 31, 2012 Market Market Enterprise Close Cap ($MM) Cap ($MM) Value 9/30/13 12/31/12 9/30/13 ($MM) Enterprise Value/Revenue Enterprise Value/EBITDA Enterprise Value/FCF LTM 2013E 2014E LTM 2013E 2014E LTM 2013E 2014E '13E '14E Revenue Growth 2013E EBITDA Margin Large cap athenahealth $ $2,658.4 $4,001.1 $4, x 7.09x 5.49x nmf 37.8x 28.7x nmf nmf nmf 29.1% 18.7% Concur Technologies $ $3,718.5 $6,191.1 $5, x 10.24x 8.15x nmf 47.9x 37.4x nmf nmf nmf 25.6% 21.4% Cornerstone OnDemand $51.44 $1,490.7 $2,644.5 $2, x 13.91x 9.90x nmf nmf nmf nmf nmf nmf 40.5% 0.6% DealerTrack Holdings $42.84 $1,226.7 $1,874.2 $1, x 4.01x 3.55x 30.8x 16.0x 13.9x 36.7x nmf 37.7x 13.2% 25.1% Medidata Solutions $98.93 $1,015.2 $2,639.2 $2, x 9.06x 7.46x nmf 38.2x 30.7x nmf na na 21.4% 23.7% NetSuite $ $4,822.2 $8,007.3 $7, x 19.10x 14.94x nmf nmf nmf nmf nmf nmf 27.9% 10.3% RealPage $23.11 $1,627.1 $1,780.3 $1, x 4.51x 3.81x 31.4x 19.4x 15.5x 53.9x 31.4x 21.4x 18.3% 23.3% Salesforce.com $51.91 $23,870.2 $30,938.4 $32, x 8.30x 6.43x nmf 51.6x 38.0x 40.2x nmf 43.6x 29.1% 16.1% ServiceNow $51.95 $3,754.4 $7,106.8 $6, x 16.75x 11.51x nmf nmf nmf nmf nmf nmf 45.5% 3.7% Ultimate Software Group $ $2,577.5 $4,102.9 $4, x 9.83x 8.04x nmf 46.0x 38.0x nmf nmf nmf 22.3% 21.4% Workday $80.93 $9,047.0 $14,081.8 $13, x 30.75x 20.33x nmf nmf nmf nmf nmf nmf 51.3% (19.0%) Mean 14.32x 12.14x 9.06x 31.1x 36.7x 28.9x 43.6x 31.4 x 34.2 x 29.5% 13.2% Median 10.86x 9.83x 8.04x 31.1x 38.2x 30.7x 40.2x 31.4 x 37.7 x 27.9% 18.7% Midcap Bazaarvoice $9.07 $668.1 $676.8 $ x 3.33x 2.85x nmf nmf nmf 47.7x nmf nmf 17.0% (8.2%) Demandware $46.33 $811.9 $1,418.9 $1, x 13.11x 9.65x nmf nmf nmf nmf nmf nmf 35.8% (3.8%) Ellie Mae $32.01 $712.1 $847.2 $ x 5.88x 4.82x 26.9x 17.5x 13.3x 29.5x 27.4x 23.5x 22.0% 33.5% Fleetmatics Group $37.55 $866.0 $1,338.2 $1, x 7.29x 5.87x 34.8x 23.4x 18.8x nmf nmf nmf 24.2% 31.2% Jive Software $12.50 $934.5 $859.5 $ x 5.06x 4.00x nmf nmf nmf nmf nmf nmf 26.2% (16.5%) LivePerson $9.43 $734.1 $509.6 $ x 2.45x 2.14x 34.7x 21.3x 16.3x nmf 54.6x 36.1x 14.3% 11.5% LogMeIn $31.05 $555.9 $753.5 $ x 3.37x 2.92x nmf 18.3x 12.4x 19.7x 25.5x 19.1x 15.6% 18.4% SPS Commerce $66.92 $547.2 $1,013.4 $ x 9.11x 7.64x nmf nmf 56.3x nmf nmf nmf 19.2% 12.5% Synchronoss Technologies $38.06 $802.7 $1,473.7 $1, x 4.07x 3.38x 22.6x 13.6x 10.2x 27.8x nmf 25.0x 20.5% 29.9% Mean 6.66x 5.96x 4.81x 29.7x 18.8x 21.2x 31.2x 35.8 x 25.9 x 21.7% 12.1% Median 5.63x 5.06x 4.00x 30.8x 18.3x 14.8x 28.7x 27.4 x 24.2 x 20.5% 12.5% Small cap Benefitfocus $49.16 na $1,195.2 $1, x na na nmf na na na na na na na ChannelAdvisor $36.63 na $792.9 $ x 10.72x 8.59x nmf nmf nmf na nmf nmf 24.8% (16.1%) Constant Contact $23.68 $434.0 $726.5 $ x 2.20x 1.96x 32.0x 14.0x 11.6x 46.3x 29.6x 22.9x 11.9% 15.7% Cvent $35.17 na $1,412.9 $1, x 11.68x 9.36x nmf nmf nmf na nmf nmf 24.8% 9.4% E2open $22.40 $354.8 $577.4 $ x 7.10x 6.05x nmf nmf nmf nmf nmf nmf 17.3% (7.9%) Halogen $14.00 na $302.6 $ x na na nmf na na na na na na na IntraLinks Holdings $8.80 $336.0 $484.3 $ x 2.16x 2.07x nmf 13.5x 12.1x 23.0x na na 4.4% 15.9% Marin Software $12.55 na $407.6 $ x 3.83x 3.12x nmf nmf nmf na nmf nmf 22.5% (37.0%) Marketo $31.88 na $1,200.8 $1, x 12.03x 9.40x nmf nmf nmf na nmf nmf 28.0% (35.0%) MiX Telematics $14.80 na $452.3 $ x na na 13.3x na na na na na na na Qualys $21.39 $464.6 $684.5 $ x 5.39x 4.51x 47.4x 34.2x 24.2x 58.0x 43.8x 28.1x 19.4% 15.7% Rally Software $29.96 na $730.9 $ x 8.69x 7.01x nmf nmf nmf na nmf nmf 23.9% (19.8%) Responsys $16.52 $290.8 $831.7 $ x 3.68x 3.10x 43.2x 33.0x 24.9x nmf nmf 59.9x 18.9% 11.1% RingCentral $18.02 na $1,094.7 $1, x na na nmf na na na na na na na SciQuest $22.46 $353.9 $514.0 $ x 5.11x 4.13x nmf 26.1x 20.8x 28.6x 47.2x 27.5x 23.6% 19.6% ServiceSource International $12.08 $442.0 $959.3 $ x 3.04x 2.63x nmf 52.3x 31.4x nmf nmf nmf 15.6% 5.8% Tangoe $23.83 $449.6 $894.5 $ x 4.54x 3.81x 54.1x 27.5x 21.2x nmf 34.8x 26.5x 19.1% 16.5% Textura $43.08 na $1,031.4 $ x 24.00x 15.11x nmf nmf nmf na nmf nmf 58.8% (30.8%) Vocus $9.31 $359.8 $196.6 $ x 1.27x 1.14x nmf 14.6x 9.1x 12.7x 20.4x 14.2x 10.9% 8.7% Mean 8.00x 7.03x 5.47x 38.0x 26.9x 19.4x 33.7x 35.2 x 29.8 x 21.6% (1.9%) Median 5.84x 5.11x 4.13x 43.2x 26.8x 21.0x 28.6x 34.8 x 27.0 x 19.4% 8.7% Overall Mean 9.47x 8.36x 6.42x 33.7x 28.3x 23.1x 35.3x 35.0 x 29.6 x 24.1% 6.4% Mean 7.29x 7.09x 5.49x 32.0x 24.7x 20.8x 33.1x 31.4 x 26.5 x 22.3% 11.5% Sources: FactSet and Capital IQ as of September 30, Public Company Analysis

13 Stock Price and Revenue Multiple Over Time Groupings Based on Market Caps at December 31, 2012 Large cap Market Market 12/31/12 52 Week Low Point 52 Week High Point 9/30/13 Percent Change in Stock Price Cap ($MM) Cap ($MM) Stock EV/LTM Stock EV/LTM Stock EV/LTM Stock EV/LTM 12/31/12 to 52 Week Low 52 Week High 12/31/12 9/30/13 Price Rev Price Rev Price Rev Price Rev 9/30/13 to 9/30/13 to 9/30/13 athenahealth $2,658.4 $4,001.1 $ x $ x $ x $ x 48.2% 92.8% (7.8%) Concur Technologies $3,718.5 $6,191.1 $ x $ x $ x $ x 63.7% 91.5% (3.3%) Cornerstone $1,490.7 $2,644.5 $ x $ x $ x $ x 74.2% 102.2% (7.3%) DealerTrack Holdings $1,226.7 $1,874.2 $ x $ x $ x $ x 49.2% 83.8% (0.4%) Medidata Solutions $1,015.2 $2,639.2 $ x $ x $ x $ x 152.5% 216.1% (3.9%) NetSuite $4,822.2 $8,007.3 $ x $ x $ x $ x 60.4% 94.3% (1.9%) RealPage $1,627.1 $1,780.3 $ x $ x $ x $ x 7.1% 36.9% (5.8%) Salesforce.com $23,870.2 $30,938.4 $ x $ x $ x $ x 23.5% 49.3% (4.3%) ServiceNow $3,754.4 $7,106.8 $ x $ x $ x $ x 73.0% 103.4% (2.2%) Ultimate Software $2,577.5 $4,102.9 $ x $ x $ x $ x 56.1% 73.2% (2.4%) Workday $9,047.0 $14,081.8 $ x $ x $ x $ x 48.5% 79.6% (4.1%) Midcap Bazaarvoice $668.1 $676.8 $ x $ x $ x $ x (3.0%) 42.4% (43.3%) Demandware $811.9 $1,418.9 $ x $ x $ x $ x 69.6% 93.8% (5.7%) Ellie Mae $712.1 $847.2 $ x $ x $ x $ x 15.4% 72.0% (1.8%) Fleetmatics $866.0 $1,338.2 $ x $ x $ x $ x 49.2% 95.6% (28.2%) Jive Software $934.5 $859.5 $ x $ x $ x $ x (14.0%) 17.6% (32.4%) LivePerson $734.1 $509.6 $ x $ x $ x $ x (28.2%) 17.4% (49.2%) LogMeIn $555.9 $753.5 $ x $ x $ x $ x 38.6% 92.6% (3.8%) SPS Commerce $547.2 $1,013.4 $ x $ x $ x $ x 79.6% 108.6% (9.0%) Synchronoss $802.7 $1,473.7 $ x $ x $ x $ x 80.5% 122.8% (3.2%) Small cap BenefitFocus na $1,195.2 na na $ x $ x $ x na 18.5% (12.0%) ChannelAdvisor na $792.9 na na $ x $ x $ x na 157.1% (11.2%) Constant Contact $434.0 $726.5 $ x $ x $ x $ x 66.6% 105.9% (1.4%) Cvent na $1,412.9 na na $ x $ x $ x na 17.2% (23.8%) E2open $354.8 $577.4 $ x $ x $ x $ x 58.2% 82.6% (13.4%) Halogen na $302.6 na na $ x $ x $ x na 11.1% (12.9%) IntraLinks Holdings $336.0 $484.3 $ x $ x $ x $ x 42.6% 66.7% (12.4%) Marin Software na $407.6 na na $ x $ x $ x na 43.4% (37.1%) Marketo na $1,200.8 na na $ x $ x $ x na 85.3% (19.9%) MiX Telematics na $452.3 $ x $ x $ x $ x 72.1% 176.2% (16.3%) Qualys $464.6 $684.5 $ x $ x $ x $ x 44.6% 110.7% (7.8%) Rally Software na $730.9 na na $ x $ x $ x na 78.3% (9.4%) Responsys $290.8 $831.7 $ x $ x $ x $ x 177.2% 202.0% (9.3%) RingCentral na $1,094.7 $ x $ x $ x $ x na 7.9% (7.1%) SciQuest $353.9 $514.0 $ x $ x $ x $ x 41.6% 71.1% (13.6%) ServiceSource $442.0 $959.3 $ x $ x $ x $ x 106.5% 201.2% (11.7%) Tangoe $449.6 $894.5 $ x $ x $ x $ x 100.8% 106.7% (3.1%) Textura na $1,031.4 na na $ x $ x $ x na 118.9% (2.5%) Vocus $359.8 $196.6 $ x $ x $ x $ x (46.4%) 15.7% (54.1%) Sources: FactSet and Capital IQ as of September 30, 2013 Public Company Analysis 11

14 Venture Capital Activity The total number of venture investments increased 46% when comparing LTM 09/13 with LTM 09/12. Year over year, third quarter 2013 increased significantly in number of venture capital investments; third quarter 2013 witnessed 107 venture investments totaling $1.4 billion, while third quarter 2012 witnessed 64 venture investments totaling $685 million. There were 40 SaaS venture investments totaling $611 million in disclosed transaction value in September 2013, compared with 17 investments totaling $104 million in September Annual Venture Capital SaaS Activity Transaction Value # of Transactions Transaction Value ($ in millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Number of Transactions LTM 09/12 LTM 09/13 Transaction Value $1,296 $961 $941 $2,046 $3,255 $3,123 $4,074 No. of Transactions Sources: Capital IQ and VentureSource Quarterly Venture Capital SaaS Activity Transaction Value # of Transactions Transaction Value ($ in millions) $1,200 $900 $600 $300 $0 Number of Transactions Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2 13 Q3 13 Transaction Value $137 $302 $310 $332 $356 $712 $666 $1,194 $536 $685 $840 $786 $914 $1,396 # of Transactions Sources: Capital IQ and VentureSource 12 Venture Capital Activity

15 The number of Series A C and later stage investments for LTM 09/13 decreased compared with LTM 09/12. The median transaction size has increased for Series A, Series B, and Series C, but remained flat for later stage transactions (note that for LTM 09/13, Series B transactions include a $60 million capital raise by Domo and a $165 million capital raise by HootSuite Media, and later stage transactions include a $66 million capital raise by TOA Technologies and an $80 million capital raise by New Relic). Number of SaaS Transactions by Round LTM 09/12 LTM 09/ Series A Series B Series C Later Stage Sources: Capital IQ and VentureSource Median SaaS Transaction Size by Round ($ in millions) LTM 09/12 LTM 09/13 $25 $23 $23 $20 $18 $15 $12 $14 $10 $5 $3 $4 $7 $0 Series A Series B Series C Later Stage Sources: Capital IQ and VentureSource Venture Capital Activity 13

16 William Blair & Company Selected Cloud Transactions Selected M&A Transactions $115,000,000 has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by has acquired has been acquired by has been acquired by Selected Public Equity Transactions $286,645,242 $115,848,192 $234,939,011 $695,594,375 $70,312,500 &Follow On Offering &Follow On Offering &Follow On Offerings $158,622,000 $111,298,383 $101,200,000 $71,875,000 $91,351,224 & Follow On Offerings & Follow On Offering $318,436,530 $156,975,000 $266,512,000 $206,816,000 $126,500,000 & Follow On Offering & Follow On Offering & Follow On Offering Selected Private Equity Transactions $54,000,000 $50,000,000 TM received a significant investment from Private Equity Preferred Stock Series E Preferred Stock Preferred Stock Convertible Preferred Stock 14 William Blair & Company Selected Cloud Transactions

17 William Blair & Company Cloud Contacts Dan Connolly is a managing director and partner and the co head of the software investment banking practice at William Blair. Dan joined William Blair in 1999 and was named partner in Previously, Dan spent three years in the M&A group at Merrill Lynch & Company. During his career, Dan has successfully completed more than 90 acquisition and financing transactions throughout the world, for which he has received industry recognition, including the 2011 M&A Atlas Technology & Telecom Deal of the Year and the Under 40 M&A Advisor Recognition Award. Dan graduated from the University of Notre Dame where he was twice elected class president, and he received his M.B.A. from Harvard Business School. [email protected] Chris Lane is a managing director and co head of the software investment banking practice at William Blair. Chris joined William Blair in Before joining William Blair, Chris spent 12 years with Jefferies in Silicon Valley; before that, he was at Deutsche Bank for 4 years. Chris has led many transformative M&A and capital market transactions in the technology sector, including the sales of Paradigm to Apax Partners; Radiant Systems to NCR; Layer 7 to CA; and i2 to IBM. Chris received a B.A. from Colgate University and an M.B.A. from Northwestern University s Kellogg School of Management. [email protected] Andrew Arno, director of William Blair s West Coast investment banking team based in San Francisco, joined the firm in From 2000 to 2002, he was an investment banking associate at WR Hambrecht+Co. in the technology group. From 1997 to 2000, he worked at The Shattan Group LLC, a boutique investment bank focused on private equity placements. He received his B.A. from Columbia University and his M.B.A. from the Haas School of Business at University of California, Berkeley. [email protected] Scott Mattson, director of the software and mobility group at William Blair, is based in Boston and joined William Blair in Previously, Scott worked at Canaccord Genuity in the technology team for five years covering location technology, software, Internet, and digital media companies. Scott has significant transaction experience, including merger and acquisition advisory and public and private financings. Before his investment banking career, Scott was a lieutenant in the Navy where he was responsible for the procurement, maintenance, and modernization of nuclear powered submarines. Scott graduated with distinction from the United States Naval Academy with a B.S. in economics and earned his M.B.A. from the University of Maryland while serving in the Navy. [email protected] Peter Dalrymple, vice president in the technology investment banking group at William Blair in Boston, joined William Blair in Previously, Peter spent three years in the technology investment banking group at Canaccord Genuity focused on software, Internet, and digital media companies. Before his investment banking career, Peter was an associate with Pelion Venture Partners and also served as the Central and Southeast European country manager for the U.S. Trade & Development Agency. Peter graduated from Bates College with a B.S. in political science and earned an M.B.A. in finance from Northeastern University. [email protected] Raphael Grunschlag, managing director and head of European technology banking, has been an investment banker with William Blair since 2012 and focuses on expanding the firm s technology practice across Europe and the Middle East. He has more than 16 years of investment banking experience and advised on more than $24 billion of transactions, across M&A, ECM, and debt financings. Before joining William Blair, Raphael served as head of European technology investment banking at Bank of America Merrill Lynch ( ), led the European Internet and software team for the CSFB Technology Group ( ), and previously worked at Hambrecht & Quist ( ). Raphael holds a master s in international affairs from Columbia University s School of International and Public Affairs, and a B.A. in Middle East and Asian languages and cultures from Columbia. [email protected] Andy Kaye joined William Blair in 2009 as head of Asian banking, based in Shanghai, China. Andy has held positions at CIBC World Markets, where he was regional head, and Robertson Stephens, where he led industry groups in Europe and was the head of Israeli banking. Andy holds an M.B.A. with honors from Fordham University, New York, and a B.A. in accounting and marketing from Tel Aviv. [email protected] William Blair & Company Cloud Contacts 15

18 William Blair & Company SaaS Equity Research Coverage SaaS Equity Research Company Ticker Analyst athenahealth ATHN Ryan Daniels Concur Technologies CNQR Bhavan Suri Cornerstone OnDemand CSOD Justin Furby Demandware DWRE Justin Furby E2open EOPN Bhavan Suri Ellie Mae ELLI Brandon Dobell Fleetmatics FLTX Bhavan Suri MiX Telematics MIXT Bhavan Suri NetSuite N Justin Furby Rally Software RALY Bhavan Suri RealPage RP Brandon Dobell Responsys MKTG Justin Furby salesforce.com CRM Bhavan Suri SciQuest SQI Bhavan Suri ServiceSource SREV Bhavan Suri SPS Commerce SPSC Bhavan Suri Textura TXTR Bhavan Suri Ultimate Software ULTI Justin Furby Workday WDAY Justin Furby 16 William Blair & Company SaaS Equity Research Coverage

19 Disclosures William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair Company, L.L.C. is a Delaware Company and is regulated by the Securities and Exchange Commission, the financial industry regulatory authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Services Authority ( FSA ) in the United Kingdom. William Blair & Company only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States. This material has been approved for distribution in the United Kingdom by William Blair International Limited, and is directed only at professional clients and eligible counterparties (as defined in cobs 3.5 and 3.6 of the FDA handbook). This advertisement is not intended to be investment advice. William Blair & Company 222 West Adams Street Chicago, Illinois williamblair.com October 7, 2013 Disclosures 17

20 International Frankfurt William Blair International, Limited An der Hauptwache Frankfurt am Main Germany Headquarters Chicago 222 West Adams Street Chicago, IL [email protected] williamblair.com United States Boston 125 High Street Oliver Street Tower Suite 1901 Boston, MA Hartford Putnam Place 100 Great Meadow Road Suite 606 Wethers ield, CT New York 666 Fifth Avenue 14th Floor New York, NY San Francisco 343 Sansome Street 12th Floor San Francisco, CA Wilmington 500 Delaware Avenue Suite 720 Wilmington, DE London William Blair International, Limited The Broadgate Tower 20 Primrose Street 17th Floor London EC2A 2EW United Kingdom Equity Sales: Corporate Finance: William Blair International, Limited 40 Bruton Street London W1J 6QZ United Kingdom Investment Management: São Paulo William Blair do Brasil Assessoria Financeira Ltda. Av. Brigadeiro Faria Lima 3729, room 511 São Paulo, SP Brazil Shanghai William Blair & Company, L.L.C. Shanghai Representative Of ice Unit 16-18, 11th Floor Building One, Corporate Avenue 222 Hubin Road Shanghai P.R. China Zurich William Blair & Company, L.L.C. Stockerstrasse 46 CH-8002 Zurich Switzerland Institutional Sales: Investment Management:

21 About William Blair Investment Banking William Blair s investment banking group combines signi icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and inancing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth inancing, special situations and restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and ive continents, and was an underwriter on over 20% of all U.S. initial public offerings.