2Q 2014 Software Valuations and M&A Activity

Q2

20

14

Software Equity Group, L.L.C.

12220 El Camino Real

Suite 320

San Diego, CA 92130

[email protected]

(858) 509-2800

The Software Industry

Financial Report

SOFTWARE EQUITY GROUP | Q2 2014 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © Software Equity Group, LLC, All Rights Reserved 2

About Software Equity Group

Leaders in Software M&A 5

Extensive Global Reach 6

Leading Market Position

Software Industry Macroeconomics

U.S and Global GDP 8

U.S. GDP and Unemployment 9

Global IT Spending 10

E-Commerce and Digital Advertising Spend 11

Stock Market Performance 12

Public Software Financial and Valuation Performance

The SEG Software Index 14

The SEG Software Index: Financial Performance 15-16

The SEG Software Index: Public Market Multiples 17-18

The SEG Software Index by Product Category 19

The SEG Software Index by Product Category: Financial Performance 20

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

Public SaaS Company Financial and Valuation Performance

The SEG SaaS Index 23

The SEG SaaS Index: Financial Performance 24-25

The SEG SaaS Index: Public Market Multiples 26-28

The SEG SaaS Index by Product Category: Financial Performance 29

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

Public Internet Company Financial and Valuation Performance

The SEG Internet Index 32

The SEG Internet Index: Financial Performance 33-34

The SEG Internet Index: Public Market Multiples 35-36

The SEG Internet Index by Product Category 37

The SEG Internet Index by Product Category: Financial Performance 38

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

SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS


SOFTWARE INDUSTRY FINANCIAL REPORT CONTENTS

Software Industry M&A Market Update

Software/SaaS M&A Deal Volume and Spending 41

Software M&A Exit Multiples 42

Software M&A by Ownership Structure and Size 43

Software M&A by Vertical and Horizontal Markets 44

Software M&A Deal Volume by Product Category 45

Software M&A Exit Valuations by Product Category 46

SaaS M&A Deal Volume and Exit Multiples 47

SaaS M&A by Product Category 48

SaaS M&A 2Q14 Transactions 49-51

Internet M&A: Deal Volume and Exit Multiples 52

Internet M&A: By Product Category 53

Appendix

SEG Software Index Key Metrics 55-58

SEG Software Index Key Metrics by Product Category 59-60

SEG SaaS Index Key Metrics 61

SEG SaaS Index Key Metrics by Product Category 62

SEG Internet Index Key Metrics 63-65

SEG Internet Index Key Metrics by Product Category 66

2Q14 Select Public Sellers 67

2Q14 Mega Deals 68

2Q14 Most Active Buyers 69

About Software Equity Group 70

SOFTWARE EQUITY GROUP | Q2 2014 SOFTWARE INDUSTRY FINANCIAL REPORTCopyright © Software Equity Group, LLC, All Rights Reserved

ABOUT SOFTWARE EQUITY GROUP


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

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

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

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

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

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

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

• Unparalleled software industry reputation and track record.

• Highly referenceable base of past clients

We Do Deals.

LEADERS IN SOFTWARE M&A


SEG Research Distribution

Current Sell-side Representation

Recent Sell-side Representation

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

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

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

EXTENSIVE GLOBAL REACH


SOFTWARE INDUSTRY MACROECONOMICS


U.S. AND GLOBAL GDP

Select World Regions GDP (% YoY Change)Global GDP (% YoY Change)

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

• The latest IMF forecast portrays a global economy of continuing uncertainty and lackluster growth.

• The IMF’s most recent forecast predicts GDP will increase 3.6% in 2014, a modest improvement over 2013’s 3.0% growth rate. Global GDP is expected toinch up to 3.9%.

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

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


1.5%

-2.7%

-5.4%

-6.4%

-0.7%

2.2%

5.0%

3.7%

1.7%2.6%

3.1%

0.4%

2.5%

1.3%

4.1%

2.0%1.3%

3.1%

0.4%

2.5%1.8%

4.1%

2.6%

-2.9%

3.3%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14

GDP % Growth

Unemployment Rate

9

U.S. GDP AND UNEMPLOYMENT

• According to February’s Federal Reserve survey of 42 economists, GDP growth in 2Q14 is forecast to be 3.3%. For the year, expectations are the U.S.economy will grow 2.4%, as a surprisingly weak first-quarter tempered expectations for a more robust annual growth rate in 2014.

• Fewer than 30% of economists surveyed by the Fed predicted the U.S. economy will grow 3.0% or greater in 2014, down from more than 40% threemonths earlier.

• The Labor Department reported the unemployment rate at the end of 2Q14 was 6.4%, a noteworthy decline from 1Q14’s 6.7%. The unemployment rateremains at its lowest levels since 2008. The labor participation rate showed minimal decline, edging down slightly to 62.8% in June, the same laborparticipation rate as December 2013 which was, and still is, a 35 year low.


GLOBAL IT SPEND

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

• At the outset of 2014, analysts at Goldman Sachs, Gartner and elsewhere projected Global IT spending in 2014 would grow 4%, a marked improvementover 2013’s 2.8% increase over the prior two years.

• Their revised forecasts now call for average global IT spending to increase 4.8% in 2014, citing an improving economy and growing demand for mobility,cloud computing solutions and IT infrastructure. IDC, however, cut its forecast slightly, from 4.6% to 4.1%, citing spending slowdowns in emergingmarkets, and deceleration in the massive growth of smartphones and tablets.

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

9.0%

6.0%

-10.0%

8.0%

6.0%

2.0% 2.0%

4.8%

2007 2008 2009 2010 2011 2012 2013 2014 (F)

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


E-COMMERCE AND DIGITAL ADVERTISING SPEND

Sources: comScore, IAB, IBD, and eMarketer

• E-commerce retail sales in the U.S. totaled $56.1 billion in 1Q14 (the latest data available), up 12% YoY. The increase marks the eighteenth consecutivequarter of YoY growth, and the fourteenth consecutive quarter of double digit growth.

• The Q4 total for E-Commerce spending accounted for 12% of all discretionary retail dollars spent.

• Mobile commerce accounted for $7.3B, or 14.2% of the 2013 E-Commerce total, according to comScore. In addition, YoY growth in mobile commerce grew23%.

• Of the additional $7.3 billion in mobile commerce (m-commerce), 62% came from smartphones, and 38% from tablets.

• According to eMarketer, worldwide digital ad spending will hit $137.5 billion in 2014, with the U.S. accounting for almost 40% of total. While the USspends the most on digital advertising, the United Kingdom forecasts 47.5% of all advertising will be digital in 2014.

Worldwide Digital Advertising SpendU.S. E-Commerce Spend


(35.0%)

(30.0%)

(25.0%)

(20.0%)

(15.0%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014

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

12

STOCK MARKET PERFORMANCE

• Technology stock prices retreated in 2Q14, especially high-growth, SaaS based companies that have been unable to recapture pre-recession growth rates.

• The S&P posted the best return of the three major stock indices in 2Q14, finishing up 6.1%. The Nasdaq finished close behind, up 5.5%. Surprisingly, in anenvironment where investors flocked to value stocks, the DOW performed worst among the three major U.S. stock market indices, closing 2Q14 with again of only 1.5%.

• The SEG SaaS Index had the most dramatic swing in median stock returns in the second quarter. In early March, our SaaS Index peaked at a 9.2% gain,only to plunge dramatically in the second quarter, closing 2Q14 down 9.9%. In addition to macro economic concerns, many were concerned SaaSvaluations had grown too rich. More on the impact to median EV/Revenue multiples later in the report.

• The SEG Software Index, consisting largely of large, mature, and profitable companies held its own in a tough stock market environment, finishing thequarter down 1.8%, compared to a decline of 7.9% in May, its lowest point for the year.


THE SEG SOFTWARE INDUSTRY FINANCIAL REPORT

PUBLIC SOFTWARE COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


Measure 2Q13 3Q13 4Q13 1Q14 2Q14

EV/Revenue 2.8x 3.0x 3.2x 3.1x 3.0x

EV/EBITDA 12.2x 13.7x 14.7x 15.0x 14.5x

EV/Earnings 22.9x 24.6x 25.8x 26.4x 24.8x

Gross Profit Margin 68.3% 67.9% 68.2% 67.6% 67.9%

EBITDA Margin 18.3% 18.4% 18.2% 18.5% 17.9%

Net Income Margin 9.2% 8.6% 8.6% 9.4% 8.5%

TTM Revenue Growth 10.8% 9.7% 8.9% 8.5% 8.2%

TTM Total Revenue ($M) $460.2 $460.4 $489.0 $503.8 $533.2

TTM EBITDA Growth 5.3% 6.1% 6.2% 4.1% 5.3%

TTM Total EBITDA ($M) $79.0 $86.2 $89.0 $91.8 $94.9

Cash & Eq ($M) $142.4 $156.7 $183.9 $184.7 $221.9

Current Ratio 1.9 1.9 2.0 2.0 2.0

Debt / Equity Ratio 27.3% 24.8% 31.2% 33.0% 29.7%

SEG - Software: Median Metrics

14

THE SEG SOFTWARE INDEX

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

• The SEG Software Index is currently comprised of 135 publicsoftware companies*.

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

• Median Cash and Equivalents of the SEG Software Index grew by20.1%, signaling the likelihood of larger acquisitions in 2H14 and2015.

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


THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

• Median TTM revenue growth of public on-premise softwarecompanies in 2Q14 declined for the sixth consecutive quarter, to8.2%.

• Indeed, more than half of public on-premise software companiesreported TTM revenue growth rates of 10% or below in 2Q14.

• Of the 15% of on-premise software providers with TTM revenuegrowth rates of 30% or more, most were focused on three of thehottest product categories, mobility (King Digital Entertainment –555.3%), networking (Mavenir Systems, Inc. – 41.0%), and security(Palo Alto Networks – 48.1%).

• Despite the tepid growth rate, median TTM revenue of the SEGSoftware Index reached $538M in the second quarter, the highest inhistory, and the highest among our three tracking indices.

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

0%

2%

4%

6%

8%

10%

12%

$0

$100

$200

$300

$400

$500

$600

2Q13 3Q13 4Q13 1Q14 2Q14

TT

M R

ev

en

ue

Gro

wth

TT

M T

ota

l Re

ve

nu

e

TTM Total Revenue ($M) TTM Revenue Growth

26%29%

23%

7%

3%

12%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

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TTM Revenue Growth

TTM Revenue Growth Rate Distribution – 2Q14Median Revenue Performance – Quarterly

15


THE SEG SOFTWARE INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of public on-premise software companieshas remained relatively steady over the past five quarters, closing2Q14 at 17.9%.

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

• Check Point Software, a security software provider, led the pack againthis quarter with an EBITDA margin of 55.1%, virtually equal to lastquarter’s 55.4%. Check Point’s extraordinary profitability can beattributed in part to a strong, well-performing channel that reducesits cost of sales. Curiously, for a company in a technology drivenproduct category, Check Point also spends substantially less on R&D(8% of revenue) compared to their category peers (15% of totalrevenue).

• We anticipate the median EBITDA margin of public softwarecompanies will decline modestly in 2H14, as many ramp up spendingon sales and marketing and invest more in R&D to update legacyproducts and expand their SaaS offerings.

18.3% 18.4% 18.2% 18.5% 17.9%

2Q13 3Q13 4Q13 1Q14 2Q14

EB

ITD

A M

arg

in

19%

11%

32%

21%

14%

4%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

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TTM EBITDA Margin

TTM EBITDA Margin Distribution – 2Q14Median EBITDA Margin Performance – Quarterly

16


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

• SEG Software Index companies with TTM revenue between $100Mand $1B closed 2Q14 with virtually the same EV/Revenue marketmultiple as a year earlier.

2.8x 3.0x 3.2x 3.1x 3.0x

12.2x13.7x

14.7x 15.0x 14.5x

2Q13 3Q13 4Q13 1Q14 2Q14

EV/Revenue EV/EBITDA

THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• The median EV/Revenue market multiple for on-premise softwareproviders was 3.0x in 2Q14, up 7% YoY.

• Despite their unimpressive financial performances, public on-premisesoftware providers closed 2Q14 with trading multiples at or neartheir seven year peak.

• The higher median EV/Revenue valuations are a reflection ofinvestors’ enthusiasm for technology stocks, which is likely to waneover time unless revenue growth improves and recurring revenuefrom subscriptions accelerates.

• The 3.0x median EV/Revenue multiple in 2Q14 marks the fourth timesince 1Q06 that EV/Revenue multiples have reached or topped 3.0xor higher.

• 2Q14’s median EV/EBITDA market multiple of 14.5x was the thirdhighest since 4Q07.

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

17


THE SEG SOFTWARE INDEX: PUBLIC MARKET MULTIPLES

• Market performance of on premise public software companiesremained closely correlated with TTM revenue growth rates in 2Q14,even though the median trading multiples of companies growing TTMrevenue between 30 - 40% and greater than 40% have declined 31%and 61%, respectively, from the prior quarter.

• On-premise software providers that grew TTM revenue 20%+ in2Q14 were rewarded with a market multiple well above the median.On-premise software providers achieving 20 - 30% revenue growthrates boasted the highest median EV/Revenue multiple of 4.6x.

• Members of Q2’s 40%+ growth club that rewarded investorshandsomely in 2Q14 came from the fastest growing product category,mobile. Select 2Q14 outperformers included: Qihoo 360 Technology(123.6% TTM revenue growth, 13.0x EV/Revenue) and Sungy Mobile(76.6% TTM revenue growth, 6.4x EV/Revenue).

2.0x

2.7x

3.5x

4.6x

3.5x

4.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

nu

e

TTM Revenue Growth

2.4x 2.3x 2.3x

3.3x3.9x

6.7x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

Me

dia

n E

V/

Re

ve

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TTM EBITDA Margin

• The median market multiple of unprofitable and modestly profitableon-premise software providers in 2Q14 was virtually the same in2Q14.

• On-premise software companies with TTM EBITDA margins greaterthan 20% were awarded a median EV/Revenue multiple greater thanthe index median of 3.0x in the second quarter.

• Investors in 2Q14 did take special note of on-premise providers withEBITDA margins greater than 40%, conferring a median EV/Revenuemultiple of 6.7x, or 123% higher than the index median. Examplesincluded: Verisk (45.6% EBITDA margin, 6.7x EV/Revenue multiple);Ansys (46.8%, 7.0x); Checkpoint Software (55.1%, 8.0x); and MCSI(42.5%, 5.2x).

EV/Revenue Multiples vs. TTM EBITDA Margins – 2Q14EV/Revenue Multiples vs. TTM Revenue Growth – 2Q14

18


THE SOFTWARE INDEX BY PRODUCT CATEGORY

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

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

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

Billing & Service Management 2.3x 3.1x 3.6x 2.6x 1.9x 8.3x 9.9x 9.0x 9.2x 10.1x 2.2% 17.7% 4.4% 3.6% 4.8% 18.8% 18.7% 18.6% 18.5% 18.4%

Business Intelligence 3.0x 3.3x 3.3x 3.1x 2.7x 16.7x 17.4x 19.4x 17.3x 17.7x 8.3% 8.7% 4.8% 10.2% 13.3% 12.2% 12.6% 11.5% 10.2% 7.0%

Development Platforms 2.8x 2.6x 2.7x 2.7x 2.8x 10.6x 14.4x 11.9x 11.1x 10.2x 0.6% -0.3% 0.1% -0.3% -1.6% 20.3% 20.0% 20.0% 19.6% 19.1%

Engineering & PLM 2.7x 2.8x 2.9x 3.3x 3.3x 14.2x 14.6x 14.1x 14.9x 14.7x 11.7% 8.4% 4.4% 6.2% 6.0% 20.2% 19.9% 20.1% 20.7% 19.7%

Enterprise Resource Planning 3.0x 3.0x 2.9x 3.7x 3.6x 11.4x 12.1x 12.5x 12.5x 11.9x 0.2% 1.6% 2.7% 2.0% 2.7% 28.5% 28.7% 29.0% 29.3% 29.5%

Financial & Accounting 3.3x 3.3x 3.7x 3.7x 3.6x 11.7x 12.2x 13.6x 15.8x 13.3x 6.4% 9.5% 10.7% 8.5% 4.7% 26.6% 26.1% 26.7% 25.9% 25.6%

Gaming 1.3x 1.6x 1.6x 1.7x 1.9x 10.3x 12.4x 14.2x 11.4x 12.5x 15.1% 15.2% 10.7% -3.6% -4.8% 14.4% 13.7% 13.4% 18.5% 17.0%

Healthcare 2.1x 2.4x 2.5x 2.4x 2.3x 12.1x 13.2x 14.4x 15.0x 14.6x 7.3% 7.2% 3.1% 3.0% 0.1% 17.8% 17.9% 16.9% 15.2% 14.1%

IT Conglomerates 2.9x 2.7x 3.0x 3.0x 3.2x 9.0x 8.4x 8.5x 9.0x 8.9x 0.2% 1.2% 0.9% 2.0% 2.7% 32.2% 34.3% 35.0% 34.2% 34.4%

Mobile Solutions/Content 2.8x 3.4x 3.5x 3.6x 3.0x 13.2x 13.6x 19.7x 40.1x 21.4x 31.1% 29.1% 27.3% 27.5% 18.2% 8.7% 8.1% 7.9% 5.9% 4.2%

Networking & Network

Performance Management2.9x 2.8x 2.8x 3.3x 3.0x 17.4x 17.0x 15.0x 16.9x 19.8x 12.9% 7.2% 6.1% 9.4% 8.8% 12.6% 12.7% 7.9% 7.5% 7.8%

Security 3.6x 4.0x 3.5x 5.0x 3.4x 10.7x 13.0x 13.8x 12.7x 14.6x 21.8% 21.2% 18.3% 15.3% 11.1% 11.5% 11.1% 0.5% -3.0% -1.0%

Storage, Data Management &

Integration2.4x 2.7x 3.0x 3.0x 2.6x 9.0x 8.9x 8.7x 9.0x 8.9x 4.1% 3.3% 4.4% 2.0% 2.9% 21.9% 22.2% 23.3% 24.2% 23.7%

Supply Chain Management &

Logistics4.1x 4.5x 5.2x 5.8x 5.4x 15.6x 17.3x 19.5x 21.5x 19.6x 10.7% 13.6% 14.2% 14.7% 16.9% 19.1% 21.4% 24.1% 26.8% 27.7%

Systems Management 5.0x 5.4x 4.5x 5.1x 4.5x 21.0x 19.7x 16.5x 19.0x 17.8x 16.1% 16.4% 15.3% 13.0% 13.3% 23.8% 24.1% 24.2% 25.8% 25.7%

Vertical - Finance 3.8x 3.7x 4.7x 4.5x 4.3x 11.4x 12.6x 12.9x 13.5x 13.3x 5.8% 6.1% 6.8% 8.2% 8.1% 26.4% 26.0% 26.1% 27.0% 27.2%

Vertical - Other 3.1x 3.5x 2.8x 2.7x 2.4x 16.8x 16.7x 17.6x 16.3x 16.1x 21.7% 22.3% 24.6% 21.2% 21.2% 13.4% 13.3% 12.3% 11.3% 11.2%

Median 2.8x 3.0x 3.2x 3.1x 3.0x 12.2x 13.7x 14.7x 15.0x 14.5x 10.8% 9.7% 8.9% 8.5% 8.2% 18.3% 18.4% 18.2% 18.5% 17.9%

SEG Software Index

CategoryEV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin


THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

2Q14 YoY Change in Median Revenue Growth2Q14 Median TTM Revenue Growth

2Q14 YoY Change in Median EBITDA Margin2Q14 Median TTM EBITDA Margin


• In 2Q14, eight product categories achieved median EV/Revenue multiples above the SEG Software Index median of 3.0x, led by Supply Chain Mgmt (5.4x),Systems Management (4.5x) and Vertical Finance (4.3x).

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

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

• The Gaming category and the Billing & Service Mgmt category each closed 2Q14 with a median EV/Revenue multiple of 1.9x, the lowest of our 17 productcategories, despite the 48% YoY median EV/Revenue growth for Gaming. Expect gaming multiples to improve, as gaming providers - caught flat footed bythe explosion of mobile and Internet gaming - reposition with online and mobile games suitable for a multi-device world.

• The median TTM revenue growth rate accelerated in 11 of 17 product categories in 2Q14, although there was little correlation between median TTMrevenue growth and market multiple. The six category exceptions, with lower YoY growth rates, included: Billing & Service Mgmt, Business Intelligence,Development Platforms, Security, Systems Mgmt and Vertical – Other (i.e. software providers focused on a vertical).

THE SEG SOFTWARE INDEX BY PRODUCT CATEGORY:PUBLIC MARKET MULTIPLES

Median 2Q14 YoY Change in EV/Revenue2Q14 Median EV/Revenue Multiples


THE SEG SaaS INDEX

PUBLIC SaaS COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


THE SEG SaaS INDEX

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

• The SEG SaaS Index is currently comprised of 48 public pure-playSaaS companies*.

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

Measure 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 29.8x 39.9x 46.8x 55.9x 52.7x



EBITDA Margin -3.6% -6.5% -8.2% -5.7% -5.3%

Net Income Margin -11.0% -14.0% -14.2% -16.5% -15.8%




TTM Total EBITDA ($M) -$3.2 -$4.7 -$6.9 -$7.6 -$10.1

Cash & Eq ($M) $53.9 $69.8 $80.1 $87.0 $95.5

Current Ratio 1.5 1.7 2.2 2.2 2.2


SEG - SaaS: Median Metrics

23


5% 5%

23%20%

28%

3%

18%

<= 0% > 0%<= 10%

> 10%<= 20%

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> 50%

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TTM Revenue Growth

THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

• The median TTM revenue growth rate for Public SaaS companies in 2Q14 was 29.5%, down from 31.3% in 2Q13. We believe higher growth in 2H14 willdepend largely on GDP growth, which will spur increased adoption of SaaS among the vitally important SMB segment.

• The median TTM revenue of public SaaS companies was $144.1M in 2Q14, a significant YoY increase from 2Q13’s $105.6M. We attribute the growth inmedian revenue, notwithstanding a declining TTM growth rate, to larger enterprise subscriptions.

• The median SaaS EBITDA margin in 2Q14 was negative 5.3%, a modest improvement from the prior three quarters.

• For sheer size, Salesforce continued to dominate the SaaS Sector 2Q14 with TTM revenue of $4.4B, nearly 7x greater than the next largest Public SaaScompany. However, many public SaaS Companies reached critical revenue mass (>$350 million) in 2Q14, a feat made more difficult by a revenue modelthat often requires deferring a significant percentage of booked revenue. SaaS providers with revenues of $350M+ can now be found among a wide arrayof product categories and industry sectors. Examples include Concur (Expense Management, $628M TTM revenue); Athenahealth (Healthcare, $632M);Workday (HCM/Financial, $537M); NetSuite (ERP, $446M); Service-Now (IT Automation, $478M); and RealPage (Real Estate, $389M).

• Medians alone do not capture the standout performances of the most successful SaaS companies. Nearly one in five public SaaS companies grew TTMrevenue growth by 50% or more. As yet further testament to the widespread adoption of SaaS, these outperformers come from a variety of productcategories including HCM, Security, Marketing, and Construction. Select high growth public SaaS companies include: Workday (74.1%); FireEye (111.5%);Marketo (64.5%); Cornerstone OnDemand (55.7%); and Veeva Systems (58.4%).

28.0%

29.0%

30.0%

31.0%

32.0%

33.0%

34.0%

35.0%

$0

$20

$40

$60

$80

$100

$120

$140

$160

2Q13 3Q13 4Q13 1Q14 2Q14

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24


56%

23%

13%

4% 4%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

% o

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TTM EBITDA Margin

-3.6%

-6.5%

-8.2%

-5.7%-5.3%

2Q13 3Q13 4Q13 1Q14 2Q14

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THE SEG SaaS INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of public SaaS companies remainednegative, closing 2Q14 at -5.3%.

• Over half (56%) of public SaaS companies are unprofitable, androughly nine out of ten have EBITDA margins below the 20% medianof their on-premise software peers.

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

• Investors should be circumspect about the GAAP compliant P&Lstatements of many public SaaS companies which seem to indicatethey’re suffering significant losses and hemorrhaging cash. In truth,many are not only cash flow positive, but flush with revenue fromprepaid subscription fees that require deferred recognition underGAAP. As example, in its most recent 10-K, ServiceNow reported a$43M net consolidated loss, but was cash flow positive fromoperations to the tune of $24M.

TTM EBITDA Margin Distribution– 2Q14Median EBITDA Margin Performance – Quarterly

25


0% 0%

18%

11%

0%

11%14%

11%9%

25%

<= 1.0x > 1.0x<= 2.0x

> 2.0x<= 3.0x

> 3.0x <= 4.0x

> 4.0x<= 5.0x

> 5.0x<= 6.0x

> 6.0x<= 7.0x

> 7.0x<= 8.0x

> 8.0x<= 9.0x

> 9.0x

% o

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THE SEG SaaS INDEX: PUBLIC MARKET MULTIPLES

• At the close of 2Q14, the median EV/Revenue multiple for public SaaS companies was 6.6x, up 16% YoY, but a marked decline from last quarter’s medianEV/Revenue multiple of 8.4x. The retreat reflected growing investor concerns in 1H14 about overheated technology sector stock prices.

• Still, over 34% of the companies in the SEG SaaS Index achieved a median EV/Revenue multiple of 8x or higher in 2Q14, and public SaaS companiescontinued to trade at a significant premium to their on-premise peers (6.6x vs. 3.0x median EV/Revenue). Public SaaS companies have historicallyenjoyed trading multiples at least twice that of their on-premise peers, and while 2Q14’s differential was exceptional, we anticipate further regression tothe mean in 2H14.

• A premium market valuation multiple can be largely justified by comparing the relative lifetime value of a SaaS customer vs. an on-premise licensee. ASaaS company with a mission critical hosted app and strong customer retention will garner significantly greater cash over time from its average customerthan will its on-premise counterpart. As for profitability, it remains to be seen if SaaS companies can eventually achieve levels of profitability on par withtheir on-premise counterparts.

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

5.7x 6.6x 7.6x 8.4x 6.6x

29.8x

39.9x

46.8x

55.9x52.7x

2Q13 3Q13 4Q13 1Q14 2Q14


EV/Revenue Multiple Distribution– 2Q14Median EV/Revenue and EV/EBITDA Multiples – Quarterly

26


6.9x 6.9x

5.4x

4.5x

3.6x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%

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0.0x

2.9x3.4x

6.8x

5.4x

7.8x

10.3x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%<= 50%

> 50%

Me

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• In 2Q14, investors continued to reward the fastest growing public SaaS companies, as noted by the very strong correlation between their median TTMrevenue growth rates and median market multiples. Public SaaS companies that grew TTM revenue in excess of 50% were anointed with the highestmedian EV/Revenue multiple of 10.3x in 2Q14.

• Conversely, investors deemed profitability to be an unacceptable tradeoff for accelerated growth. There was an inverse correlation between EBITDAmargins and median EV/Revenue multiples in 2Q14. Unprofitable public SaaS companies achieved an admirable median EV/Revenue multiple of 6.9x inthe second quarter, while those with EBITDA margins above 30% had a median market multiple of only 3.6x EV/Revenue.


27


Company Ticker EV (Median)

TTM

Revenue

TTM

Revenue

Growth

EV/

Revenue TTM EBITDA

EBITDA

Margin

EV/

EBITDA

Castlight Health, Inc. CSLT $1,249 $19 - 64.3x -$74 -382.4% -

Workday, Inc. WDAY $12,999 $537 74% 24.2x -$132 -24.6% -

FireEye, Inc. FEYE $4,889 $207 112% 23.6x -$208 -100.5% -

Service-now.com NOW $7,267 $478 69% 15.2x -$63 -13.1% -

Demandware, Inc. DWRE $1,752 $115 38% 15.2x -$17 -14.8% -

Zendesk, Inc. ZEN $1,164 $83 - 14.0x -$22 -26.6% -

Netsuite N $5,901 $446 35% 13.2x -$39 -8.8% -

Veeva Systems Inc. VEEV $2,403 $234 58% 10.3x $46 19.5% 52.7x

Cornerstone OnDemand CSOD $2,033 $205 56% 9.9x -$32 -15.5% -

Paylocity Holding Corp. PCTY $938 $100 - 9.4x $2 2.0% 479.7x

OPOWER, Inc. OPWR $897 $98 64% 9.1x -$16 -16.2% -

Marketo MKTO $956 $108 65% 8.8x -$42 -39.1% -

Cvent NYSE:CVT $990 $118 32% 8.4x $3 2.8% 303.1x

The Ultimate Software Group, Inc. ULTI $3,505 $434 23% 8.1x $63 14.6% 55.3x

Textura Corp. TXTR $429 $53 - 8.1x -$26 -49.3% -

Salesforce.com CRM $34,372 $4,405 36% 7.8x -$33 -0.7% -

Athenahealth, Inc ATHN $4,903 $632 40% 7.8x $58 9.2% 84.0x

Benefitfocus, Inc. BNFT $861 $112 29% 7.7x -$29 -26.0% -

Concur CNQR $4,789 $628 31% 7.6x $29 4.7% 163.7x

Medidata Solutions MDSO $2,157 $290 26% 7.4x $26 8.9% 83.8x

2U, Inc. TWOU $625 $90 - 6.9x -$30 -32.8% -

SPS Commerce SPSC $752 $110 30% 6.9x $10 9.5% 72.6x

ChannelAdvisors ECOM $488 $72 29% 6.7x -$17 -24.0% -

Q2 Holdings, Inc. QTWO $406 $61 - 6.7x -$16 -26.0% -

E2open, Inc EOPN $467 $71 -5% 6.6x -$21 -29.4% -

Amber Road, Inc. AMBR $337 $56 24% 6.0x -$28 -50.5% -

TrueCar, Inc. NasdaqGS: TRUE $875 $153 - 5.7x -$19 -12.3% -

Qualys, Inc. QLYS $637 $113 19% 5.6x $13 11.1% 50.5x

Fleetmatics FLTX $1,028 $191 38% 5.4x $46 24.0% 22.4x

Ellie Mae ELLI $668 $130 16% 5.1x $21 16.3% 31.6x

DealerTrack TRAK $2,699 $531 31% 5.1x $47 8.9% 57.3x

RingCentral, Inc. RNG $839 $173 38% 4.8x -$35 -20.2% -

SciQuest SQI $443 $95 31% 4.7x $2 1.7% 280.2x

J2 Global JCOM $2,250 $541 36% 4.2x $228 42.2% 9.9x

Five9, Inc. FIVN $368 $89 - 4.1x -$25 -28.4% -

Callidus Software Inc. CALD $468 $118 20% 4.0x -$2 -1.7% -

RealPage RP $1,463 $389 15% 3.8x $54 14.0% 26.9x

Zix Corporation ZIXI $179 $49 8% 3.7x $12 24.5% 15.1x

inContact, Inc. SAAS $457 $135 16% 3.4x -$2 -1.2% -

Jive Software, Inc JIVE $460 $153 25% 3.0x -$61 -39.6% -

Ebix Inc. EBIX $610 $204 -2% 3.0x $74 36.6% 8.2x

Bazaarvoice, Inc BV $478 $168 15% 2.8x -$30 -17.7% -

Tangoe TNGO $543 $194 18% 2.8x $16 8.1% 34.6x

Marin Software MRIN $231 $83 30% 2.8x -$28 -33.2% -

Constant Contact CTCT $760 $296 14% 2.6x $30 10.3% 24.9x

Halogen Software, Inc. TSX:HGN $126 $50 22% 2.5x -$4 -8.9% -

LivePerson LPSN $449 $183 12% 2.5x $6 3.5% 69.3x

IntraLinks Holdings IL $500 $239 8% 2.1x $11 4.7% 44.2x


Top 25%

Bottom 25%

• When the SEG SaaS Index is segmented onthe basis of median EV/Revenue multiple,the top 25% boasted a breathtaking 14.0x in2Q14.

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

• The median TTM revenue growth rate ofthose in the Top 25% percentile was 61.3%.All but one company (Paylocity) in the top25% had a negative EBITDA margin as of2Q14.

• In contrast, public SaaS companiescomprising the bottom 25% of EV/Revenuemultiples posted a median EV/Revenue ofonly 2.9x. For this group, the median TTMrevenue growth rate was 15.4%, and half ofthese companies were profitable.

28


THE SEG SaaS INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

30.2%

30.6%

28.1%

23.2%

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

22.9%

(9.7%)

(1.9%)

(41.3%)

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

113.3%

156.4%

(20.3%)

(63.9%)

CRM & Marketing

ERP & Supply Chain

Vertically Focused

Workforce Management

2Q14 YoY Change in Median Revenue Growth2Q14 Median TTM Revenue Growth

2Q14 YoY Change in Median EBITDA Margin2Q14 Median TTM EBITDA Margin

(0.7%)

(4.0%)

29


THE SEG SaaS INDEX BY PRODUCT CATEGORY: PUBLIC MARKET MULTIPLES

• As in past quarters, public SaaS companies comprising the Workforce Management category posted the highest median public market valuation (8.7xEV/Revenue) of our four SaaS tracking categories in 2Q14. The category is led by Workday (24.2x EV/Revenue multiple) and Cornerstone On Demand(9.9x EV/Revenue). Valuation drivers included the continued displacement of on-premise incumbents, and continuing pressure on enterprises to enhanceproducts, reduce costs and improve employee retention and satisfaction.

• ERP & Supply Chain SaaS companies achieved the highest TTM revenue growth rate in 2Q14, 30.6%. This category, which includes recent IPO AmberRoad, was given a boost by long-standing category members Workday and NetSuite. Workday’s TTM revenue growth rate was 74.1% and NetSuite closed2Q14 at 34.6%.

• Although ERP & Supply Chain companies had the highest TTM revenue growth rate, median TTM growth actually declined YoY, which likely explains the7.9% YoY contraction in Q2’s median EV/Revenue multiple for the category.

2.8x

6.6x

7.2x

8.7x

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

(19.3%)

(7.9%)

44.8%

2.2%

CRM &Marketing

ERP &Supply Chain

VerticallyFocused

WorkforceManagement

2Q14 YoY Change in Median EV/Revenue2Q14 Median EV/Revenue Multiple

30


THE SEG INTERNET INDEX

PUBLIC SaaS COMPANY FINANCIAL PERFORMANCE AND MARKET MULTIPLE TRENDS


Measure 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 15.2x 18.4x 18.9x 19.2x 21.0x



EBITDA Margin 9.9% 9.4% 10.0% 9.4% 8.7%





TTM Total EBITDA ($M) $29.6 $30.4 $31.2 $34.6 $37.6

Cash & Eq ($M) $130.0 $132.0 $159.0 $191.2 $218.4

Current Ratio 2.2 2.1 2.3 2.6 2.6


SEG - Internet: Median Metrics

THE SEG INTERNET INDEX

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

• The SEG Internet Index is currently comprised of 101 public Internetcompanies*.

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

32


13%

16%

23%20%

8%

20%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

% o

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TTM Revenue Growth

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$340

$350

$360

$370

$380

$390

$400

$410

$420

$430

2Q13 3Q13 4Q13 1Q14 2Q14

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THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

• Approximately 62% of the companies comprising the SEG InternetIndex offer online services and solutions primarily or exclusively toconsumers; their revenue growth closely parallels the performance ofthe U.S. economy.

• After edging up to 18.6% in Q1 from 16.8% in 4Q13, the median TTMrevenue growth of the SEG Internet Index declined slightly in 2Q14 to17.3%.

• Once again demonstrating the Internet is an ecosystem of unequals,one in five public Internet providers outpaced the pack, touting TTMrevenue growth greater than 40% in 2Q14.

• Many of these high flyers were recent IPOs whose innovativeproducts, services and business models allowed them to scale quickly.Select examples included: Rocketfuel (116%), Twitter (113%), andWix.com (89%).

• Conversely, 27% of public Internet companies struggled to advance,reporting TTM revenue growth of 10% or less.

TTM Revenue Growth Rate Distribution – 2Q14Median Revenue Performance – Quarterly

33


20%

34%

19%

10% 10%7%

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

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TTM EBITDA Margin

9.9%9.4%

10.0%9.4%

8.7%

2Q13 3Q13 4Q13 1Q14 2Q14

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THE SEG INTERNET INDEX: FINANCIAL PERFORMANCE

• The median EBITDA margin of the SEG internet Index declined in2Q14. Over the past five quarters, the median EBITDA margins ofpublic Internet companies have been stable, ranging from 8% to 10%.

• Only 20% of SEG Internet Index Companies were unprofitable in2Q14, compared to 19% in 1Q14. At the other end of the spectrum,7% of public Internet companies, mostly those with significanttransaction or advertising revenue, achieved EBITDA margins above40%, led by Giant Interactive (65.5%), VeriSign (61.0%), Facebook(52.3%) and Baidu.com (40.6%).

• The widely disparate financial performance of the SEG Internet Indexreveals an Internet ecosystem clearly bifurcated into “haves” and“have nots.” Virile market adoptions, consumer fickleness, switchingease and fierce competition handsomely reward a select few andpunish others. Many investors have apparently taken careful note.

• Facebook, much maligned for its initially unimpressive mobileadvertising performance when it first went public, has exceededanalyst expectations for mobile generated ad revenue.

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

TTM EBITDA Margin Distribution – 2Q14Median EBITDA Margin Performance – Quarterly

34


20% 20%

9%

13%

5%6% 6% 6%

3%

12%

<= 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

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EV/Revenue

2.1x 2.5x 2.5x 3.2x 3.1x

15.2x

18.4x 18.9x 19.2x21.0x

2Q13 3Q13 4Q13 1Q14 2Q14


THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• The median public market EV/Revenue multiple of public Internet providers closed 2Q14 at 3.1x, a marked improvement over 2Q13’s 2.1x.

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

• 2Q14 only served to further reinforce this reality, 40% of companies closed the quarter with an EV/Revenue multiple of 2.0x or less, while 21% closed thequarter with a market multiple of 7.0x EV/Revenue or higher.

• Among the Internet companies boosting the highest EV/Revenue public market multiples in 2Q14 were a large number of relatively recent IPO’s that arecapturing a significant share of online advertising dollars. Examples include Twitter (25.9x); Yelp (16.1x); Qihoo (13.0x); and LinkedIn (10.4x).

Median EV/Revenue Multiple Distribution – 2Q14Median EV/Revenue and EV/EBITDA Multiples – Quarterly

35


3.0x

1.6x 1.9x

3.8x

7.7x

6.8x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

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0.9x1.3x

3.3x 3.1x

5.7x

8.4x

<= 0% > 0%<= 10%

> 10%<= 20%

> 20%<= 30%

> 30%<= 40%

> 40%

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THE SEG INTERNET INDEX: PUBLIC MARKET MULTIPLES

• Public Internet companies with TTM revenue growth of 40% or higher were rewarded with a notably higher median EV/Revenue multiple (8.4x) thantheir slower growing peers. Among those growing 40%+ were: Trulia (118.0%, 7.5x EV/Revenue); Zillow (69.1%, 17.5x EV/Revenue); Yelp (68.4%, 16.1xEV/Revenue); LinkedIn (51.3%, 10.4x EV/Revenue).

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

• Also unlike their SaaS counterparts, public Internet companies with EBITDA margins above 40% posted a median EV/Revenue multiple of 6.8x in 2Q14,119% higher than the overall Index median. By comparison, public SaaS companies with EBITDA margins above 30% (not enough companies with 40%+)posted a median EV/Revenue multiple of 3.6x, 45% below the SaaS median market valuation.

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

• With few exceptions, many of the most profitable public Internet companies also reported stellar TTM revenue growth. Among them were SouFunHoldings (44.2% revenue growth, 56.5% EBITDA margin); Facebook (62.4% revenue growth, 52.3% EBITDA margin); Baidu.com (47.7% revenue growth,40.6% EBITDA margin); and Yandex (37.2% revenue growth, 39.0% EBITDA margin).


36


Ad Tech & Lead Gen Commerce Content & Media Gaming

Infrastructure Services Social Travel

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

• Representative companies in each Internet category are referenced below.

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

THE SEG INTERNET INDEX BY PRODUCT CATEGORY

37


6.7%

6.6%

13.9%

30.2%

6.4%

8.1%

9.9%

15.0%

Ad Tech &Lead Generation

Commerce

Content & Media

Gaming

Infrastructure

Services

Social

Travel

27.5%

15.0%

9.5%

11.9%

10.0%

37.8%

62.4%

14.5%


Commerce

Content & Media

Gaming

Infrastructure

Services

Social

Travel

1.9%

(15.5%)

(39.5%)

(45.7%)

14.5%

5.2%

22.5%

(19.3%)


Commerce

Content & Media

Gaming

Infrastructure

Services

Social

Travel

2.0%

23.5%

(9.4%)

(13.3%)

(0.7%)

23.1%

(26.5%)

(6.1%)


Commerce

Content & Media

Gaming

Infrastructure

Services

Social

Travel

THE SEG INTERNET INDEX BY PRODUCT CATEGORY:FINANCIAL PERFORMANCE

2Q14 Median YoY Change in Revenue Growth2Q14 Median TTM Revenue Growth

2Q14 Median YoY Change in EBITDA Margin2Q14 Median TTM EBITDA Margin

38


THE SEG INTERNET INDEX BY PRODUCT CATEGORY:PUBLIC MARKET MULTIPLES

• Public Internet companies comprising the Services and Social product categories closed Q2 with revenue growth rates more than twice the median(37.8% and 62.4%, respectively).

• Public Internet companies comprising the Social category closed 2Q14 with the highest median EV/Revenue multiple, 10.4x, or 189% higher than themedian market valuation of the second highest category . Facebook and LinkedIn led the ascent, after demonstrating social networking could beextremely profitable.

• The success social media Internet providers have had monetizing their services, largely through advertising, is taking share away from many in the AdTech & Lead Generation space, with marketers clearly attracted to the scalability and ROI of advertising in Facebook and LinkedIn. As a result of theseshifting advertising budgets, the median TTM revenue growth of the Ad Tech & Lead Generation product category remained virtually flat at 1.2% YoY in2Q14.

• Companies within the Gaming product category continued to be very profitable in Q2. At the close of the quarter, the Gaming product category posted amedian EBITDA margin of 30.2%, 3x higher than the median for all public Internet companies. However, the category continued to be extremelycustomer visits driven, leading to low visibility about future performance, which kept trading multiples muted.

• Despite poor financial performance, the Content & Media product category median EV/Revenue spiked 57% YoY to 3.6x in 2Q14. The category waslargely driven by outperformance of Netflix and Pandora, two companies who are demonstrating incredible staying power in the face of stiff competitionfrom companies with deep pockets.

2.4x

0.9x

3.6x

3.6x

1.7x

3.5x

10.4x

2.9x


Commerce

Content & Media

Gaming

Infrastructure

Services

Social

Travel

Median 2Q14 YoY Change in EV/Revenue2Q14 Median EV/Revenue Multiples

39


SOFTWARE INDUSTRY M&A MARKET UPDATE


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

• There were 476 software M&A transactions in 2Q14. Deal activity over the past three years has remained consistently robust.

• Software M&A spending dropped to $24.2 billion in 2Q14, the second highest quarterly deal spend since 2Q07. Oracle’s $5.3 billion acquisition of MICROSSystems was the largest for the quarter.

• In addition to MICROS, Q2 featured thirteen other On-premise/SaaS/Internet mega deals (EV > $500M), including FNI’s acquisition of Optimum TelecomAlgeria ($5.1B EV, 2.9x EV/Revenue multiple estimate); Priceline’s purchase of OpenTable ($2.5B, 12.6x estimate); NPC Group’s acquisition of Viber Media($1.65B, 7.0x estimate); Tuition Build’s acquisition of Limelight Networks ($548 million, 3.3x estimate) and Swisscom’s acquisition of PublicGroupe ($510million, 1.7x).

• The average software M&A purchase price has increased each of the past three quarters, reaching $54M in 2Q14.

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

2Q14 SOFTWARE / SAAS M&A DEAL VOLUME AND SPENDING

41


• The median on-premise software exit multiple in 2Q14 was 2.3x,precisely the same as the past three quarters.

• Historically, a 2.3x revenue exit multiple is at the upper end of thevaluation range for on-premise software companies. That quarterlymedian valuation was beaten only twice since 2007, in 3Q10 and2Q11, when it climbed to 2.5x before receding the following quarter.

SOFTWARE M&A EXIT MULTIPLES

• On a TTM basis, 40% of all on-premise software targets in 2Q14 wereacquired for 2.0x TTM revenue or less, and 65% for 3.0x or less.

• Most targets receiving an exit multiple of 3.0x or higher belonged tocurrently “hot” software product categories experiencing rapidmarket adoption and growth, including big data integration, networkinfrastructure and security.

• Noteworthy smaller on-premise acquisitions in 2Q14 includedNeopost’s acquisition of supply chain management vendor Systems &Programming Solutions ($20.0 million, 2.0x TTM revenue), andVerisae’s acquisition of workforce management software providerViryaNet ($18.7 million, 1.7x TTM revenue).

Median EV/Revenue Exit Multiple DistributionMedian Exit Multiples

42


by Sizeby Ownership Structure

SOFTWARE M&A: BY OWNERSHIP STRUCTURE AND SIZE

• Of the deals announced in 2Q14 with an ascertainable exit multiple,almost four out of five software M&A transactions featured privately-held targets.

• Privately-held sellers in the second quarter were paid a marginallyhigher multiple than their public counterparts (2.4x TTM revenue vs.2.3x)

• Public buyers in 2Q14 paid a median 2.4x TTM revenue for theirtargets in 2Q14, compared to a median of 1.2x paid by private buyers.

• Buyers with revenue greater than $200 million paid a median 3.1xTTM revenue for their targets, compared to a median 1.7x TTMrevenue purchase price paid by sub-$200 million buyers.

• On a TTM basis, software M&A transactions with the highest exitmultiples featured a large public or private buyer (greater than $200million in revenue) acquiring a small target (less than $20 million). InQ2, this match-up produced a median 3.7x EV/Revenue exit multiple.

43


SOFTWARE M&A: BY VERTICAL AND HORIZONTAL MARKETS

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

• Consistent with the past five quarters, horizontal software providers accounted for about two-thirds of all software M&A transactions in 2Q14.

• The median exit valuation of horizontal software companies was 2.4x TTM revenue in 2Q14, consistent with the prior two quarters. Second quarterhorizontal transactions included Hyland Software’s acquisition of document process automation solution provider ReadSoft for $184.0 million (1.6xrevenue); SpaceClaim’s acquisition of engineering software solution provider Systems Software for $85 million (6.0x revenue); and inContact’s acquisitionof human resources and workforce management optimization software provider Uptivity Inc. for $50.2 million (2.6x revenue).

• After fluctuating widely over the prior four quarters, the median exit valuation of vertical software companies was 2.1x TTM revenue, in line with historicnorms.

• Q2’s more noteworthy vertical software deals included Vista Equity Partners' acquisition of financial services software provider Misys for $2.1 billion (3.2xrevenue); Dassault Systemes’s acquisition of mining operations solutions provider Gemcom Software for $360.0 million (4.0x revenue); and Informa’sacquisition of 3D medical software provider Primal Pictures for $18.8 million (3.3x revenue).

44


SOFTWARE M&A ACTIVITY BY PRODUCT CATEGORY

• Mobile was the most active productcategory in the second quarter accountingfor 21.7% of all software M&Atransactions. Distant runner-ups wereFinancial Services (5.6%), CRM, Marketing& Sales (5.4%), BI, Risk & Compliance(5.4%), Real Estate (4.2%), and Healthcare(3.5%)

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

• BI, Risk & Compliance transactionsaccounted for 5.4% of all software M&Aactivity in 2Q14, but only 2.5% in 2Q13.

• Healthcare deals accounted for 3.5% ofsoftware M&A activity in 2Q14compared with 7.0% in 2Q13.

• Messaging, Conferencing &Communications transactionsaccounted for 2.1% of software M&Aactivity in 2Q14 versus 5.0% in 2Q11.

• Development Tools & IT AssetManagement accounted for 1.6% of allsoftware M&A activity in 2Q14compared with 4.6% in 2Q13.

45


SOFTWARE M&A EXIT VALUATIONS BY PRODUCT CATEGORY

Median EV/Revenue Exit Multiples by Software Product Category

• Among the 32 on-premise software product categories we track, ten had both sufficient deal activity and deal data to ascertain a category TTM revenuemultiple in 2Q14.

• On a TTM basis, Financial Services software transactions garnered the highest median exit multiple (4.0x) among our ten categories in Q2, led by NPCGroup’s 2Q14 acquisition of Mercury Payment Systems (7.0x EV/Revenue) and Davis + Henderson’s 3Q13 acquisition of Harland Financial Services (5.8xEV/Revenue).

• Engineering & PLM software was a close second, posting a respectable 2.8x median EV/Revenue exit multiple in Q2. Notable Engineering & PLM Softwaredeals included 1Q14’s acquisition of AutoNavi Holdings by Alibaba Group (8.2x revenue); 2Q14’s acquisition of SpaceClaim by Ansys (6.0x revenue); and4Q13’s acquisition of Delcam by Autodesk (3.1x revenue).

46


Median SaaS EV/Revenue Exit MultiplesSaaS M&A Volume

• There were 108 SaaS M&A transactions in 2Q14, slightly above the deal volume of the past four quarters.

• The median TTM EV/Revenue exit multiple of SaaS transactions retreated to 4.0x in 2Q14 from 4.6x the prior quarter.

• SaaS transactions in the second quarter with especially noteworthy exit multiples included The Priceline Group’s acquisition of OpenTable ($2.6 billion,12.6x TTM revenue estimate); Acxiom’s acquisition of LiveRamp ($310.0 million, 10.0x revenue); and Bematech’s acquisition of UNUM Technology ($17.7million, 4.0x revenue).

• The median SaaS exit multiple was 74% greater than the median on-premise software exit multiple in 2Q14 (4.0x vs 2.3x).

SaaS M&A: DEAL VOLUME AND MEDIAN EXIT MULTIPLES

47


• CRM, Marketing & Sales, and SystemsManagement were the most active SaaSM&A product categories, accounting for13.0% and 10.2%, respectively, of all SaaSM&A transactions in the second quarter.

• After five quarters of lackluster deal volume,SaaS transactions in the CRM, Marketing &Sales product category came roaring back,comprising 13.0% of Q2’s total SaaS M&Aactivity, compared to only 2.1% for all of2013. The resurgence in the category’squarterly deal volume is largely attributableto strong customer demand for marketingbig data and marketing analytics.

• The Systems Management and HR &Workforce Management product categoriesalso exhibited strength in 2Q14, eachaccounting for 10.2% and 9.3%,respectively, of total quarterly deal volume.Both categories benefited from rapidlyramping enterprise adoption of SaaSdeployed solutions, which is placingincreasing pressure on large, on-premiselegacy vendors to catch up.

SaaS M&A BY PRODUCT CATEGORY

48


Date Buyer SellerEnterprise

Value (mm)TTM Revenue

(mm) EV/Rev

06/25/14 Autodesk, Inc. (NasdaqGS:ADSK) Shotgun Software Inc. - - -

06/24/14 Indeed, Inc. MoBolt, Inc. - - -

06/24/14 DataBank IMX, LLC Cogniserv, LLC - - -

06/23/14 Learfield Sports, LLC SIDEARM Sports Inc. - - -

06/20/14 Oracle Corporation (NYSE:ORCL) LiveLOOK, Inc. - - -

06/20/14 Nest Labs, Inc. Dropcam, Inc. $555.0 - -

06/20/14 Telvent DTN, LLC RevCo, LLC - - -

06/19/14 Twitter, Inc. (NYSE:TWTR) Afterlive.tv Inc - - -

06/17/14 Paychex, Inc. (NasdaqGS:PAYX) NETtime Solutions, LLC - - -

06/17/14 Informatica Corporation (NasdaqGS:INFA) StrikeIron, Inc. - - -

06/16/14 Box INC. Greply Inc. - - -

06/13/14 Solocal Group SA (ENXTPA:LOCAL) Leadformance SAS - - -

06/13/14 Tuition Build Inc. Limelight Networks, Inc. (NasdaqGS:LLNW) $548.1 $168.6 3.3x

06/12/14 CloudLock, Inc. Innovode Ltd - - -

06/12/14 The Priceline Group Inc. (NasdaqGS:PCLN) OpenTable, Inc. (NasdaqGS:OPEN) $2,495.5 - 12.6x

06/10/14 Stamps.com Inc. (NasdaqGS:STMP) Auctane LLC $76.3 - -

06/10/14 - Bioti - - -

06/09/14 Accela, Inc. Envista Corporation, Inc. - - -

06/09/14 Moody's Analytics, Inc. WebEquity Solutions, LLC - - -

06/09/14 Connection Telecom (Pty) Ltd FatBudgie - - -

06/09/14 eFolder, Inc. CloudFinder Sweden AB - - -

06/09/14 One Source Networks Inc. Shango - - -

06/08/14 One Software Technologies (TASE:ONE) BALINK Limited - - -

06/06/14 DAXKO LLC NetVentures Corporation - - -

06/05/14 MYOB Holdings Pty Limited Kounta, Pty Ltd. - - -

06/04/14 Fleetmatics Group PLC (NYSE:FLTX) KKT Srl - - -

06/04/14 Rocap Marketing Inc. (OTCBB:ROCP) Spiral Toys, Inc. - - -

06/03/14 Acquia, Inc. TruCentric Inc. - - -

06/03/14 Cloudera, Inc. Gazzang, Inc. - - -

06/03/14 The Priceline Group Inc. (NasdaqGS:PCLN) buuteeq Inc. - - -

06/02/14 Insight Venture Partners iParadigms, LLC $752.0 - -

06/02/14 Bematech SA (BOVESPA:BEMA3) UNUM Tecnologia $17.7 $4.4 4.0x

06/02/14 Hover Networks, Inc. Voyss Solutions, Inc. - - -

06/02/14 The Descartes Systems Group Inc (TSX:DSG) CUSTOMS Info Inc. $42.2 - -

06/02/14 Loop, LLC CAR Research, Inc. - - -

05/30/14 TrialScope Inc. Deloitte Analytics LLC - - -

2Q14 SaaS M&A TRANSACTIONS

49




(mm) EV/Rev

05/27/14 XING AG (XTRA:O1BC) Bachem Ventures GmbH - - -

05/24/14 RealBiz Media Group Inc. (OTCPK:RBIZ) ReachFactor, Inc. $0.3 - -

05/23/14 Jeppesen UK Limited ETS Aviation Ltd. - - -

05/22/14 LexisNexis Claims Solutions, Inc. Authorize Transaction LLC - - -

05/21/14 Cisco Systems, Inc. (NasdaqGS:CSCO) ThreatGrid LLC - - -

05/21/14 TOTVS S.A. (BOVESPA:TOTS3) Virtual Age Soluções Em Tencologia Ltda. $34.0 - -

05/20/14 MYOB Holdings Pty Limited Dovetail Pty Ltd. - - -

05/20/14 SAP AG (DB:SAP) SeeWhy, Inc. - - -

05/20/14 Supplystream, Inc. Invenshare.com LLC - - -

05/20/14 OneShield, Inc. Clear Data Strategies, LLC - - -

05/20/14 Network for Good, Inc. GiveLink LLC - - -

05/19/14 Google Inc. (NasdaqGS:GOOGL) Divide - - -

05/16/14 Conversion Marketing Srl Conect Soft Srl - - -

05/15/14 EQUITY SA DiliTrust SAS - - -

05/15/14 Coverity, Inc. Kalistick SAS - - -

05/15/14 Trepp, LLC FM Financial Publishing, LLC - - -

05/14/14 SmartFocus SA PivotLink Corp. - - -

05/14/14 Flexiant Limited Besol Soluciones S.L. - - -

05/14/14 Intuit Inc. (NasdaqGS:INTU) Invitco Pty Limited - - -

05/13/14 MB Technologies Ltd. Cloud On Demand - - -

05/12/14 Acxiom Corporation (NasdaqGS:ACXM) LiveRamp, Inc.* $310.0 $31.0 10.0x

05/12/14 BeeksFX VPS Gallant VPS LLC $1.0 - -

05/12/14 eBoss Online Recruitment Solutions (eBoss) Acclaimd Inc. - - -

05/12/14 HD Net Limited Cloud Scale Limited - - -

05/08/14 Intuit Inc. (NasdaqGS:INTU) Lettuce, Inc. - - -

05/07/14 Google Inc. (NasdaqGS:GOOGL) Stackdriver Inc. - - -

05/06/14 Google Inc. (NasdaqGS:GOOGL) Adometry, Inc. - - -

05/06/14 Permira Advisers Ltd. TeamViewer GmbH - - -

05/06/14 Citrix Systems, Inc. (NasdaqGS:CTXS) ScaleXtreme Inc. - - -

05/06/14 RealPage, Inc. (NasdaqGS:RP) Notivus Multi-Family, LLC $4.4 - -

05/05/14 WalmartLabs, Inc. Adchemy, Inc. - - -

05/02/14 Snapchat, Inc. Live Foundry, Inc. - - -

05/02/14 Granbury Restaurant Solutions NovaPOS, Inc. - - -

04/30/14 Bynder B.V. LumaCloud LLC - - -

04/30/14 Microsoft Corporation (NasdaqGS:MSFT) InterGrid Limited - - -

04/29/14 Dun & Bradstreet Corp. (NYSE:DNB) Indicee, Inc. - - -

2Q14 SaaS M&A TRANSACTIONS (CON’T)

50




(mm) EV/Rev

04/29/14 Lanyon, Inc. Passkey International, Inc. - - -

04/29/14 Advanced Solutions International, Inc. Unxvision eSolutions Inc. - - -

04/28/14 Numerex Corp. (NasdaqGS:NMRX) Omnilink Systems, Inc. $37.5 $13.0 2.9x

04/28/14 Software AG (XTRA:SOW) metaquark GmbH - - -

04/28/14 Accolade, Inc. DocVue, Inc. - - -

04/28/14 Tridium, Inc. Controlco, DataEye Energy Analytics App - - -

04/25/14 IRIS Software Group Limited Cascade Human Resources Limited - - -

04/24/14 Warburg Pincus LLC PayScale, Inc. - - -

04/23/14 Active Operations Management International LLP RedOwl Technology Limited - - -

04/19/14 Intralinks, Inc. docTrackr, Inc. $10.0 - -

04/18/14 Tech Mahindra Limited (BSE:532755) FixStream Network Inc. $13.3 - -

04/17/14 Dun & Bradstreet Corp. (NYSE:DNB) Fliptop, Inc., Social Data Matching Business Unit - - -

04/17/14 Interactive Intelligence Group Inc. (NasdaqGS:ININ) OrgSpan, Inc. $16.2 - -

04/14/14 TargetX.com LLC Matchbox, Inc. - - -

04/14/14 Rowan Dartington & Co. Ltd. Acordias Offshore Limited - - -

04/14/14 Nuance Communications, Inc. (NasdaqGS:NUAN) AccelaRAD, Inc. - - -

04/14/14 Intapp, Inc. The Frayman Group, Inc. - - -

04/10/14 IBM (NYSE:IBM) Silverpop Systems Inc. - - -

04/10/14 Amazon.com Inc. (NasdaqGS:AMZN) Iconology, Inc. - - -

04/10/14 Bookatable Limited 2book AB - - -

04/08/14 Viewpoints, LLC PowerReviews, LLC $30.0 - -

04/08/14 - Nightingale Informatix (TSXV:NGH) - - -

04/07/14 Sensus (Bermuda 1), Ltd. Verdeeco, Inc. - - -

04/06/14 GTCR, LLC Vocus Inc. $441.7 $186.4 2.4x

04/06/14 Weld North LLC TrueNorthLogic, LLC - - -

04/03/14 Amadeus Corporate Business AG i:FAO AG (XTRA:FAO2) $93.8 $20.3 4.6x

04/03/14 j2 Global, Inc. (NasdaqGS:JCOM) Critical Software Ltd - - -

04/02/14 Gild Inc. Distill, Inc. - - -

04/02/14 RentPath Inc. Lovely, Inc. $13.0 - -

04/01/14 Telefónica, S.A. (CATS:TEF) Digital Bubble S.L. - - -

04/01/14 evvnt Ltd EventSneaker Ltd. - - -

04/01/14 Technicolor SA (ENXTPA:TCH) Cloud Takes, LLC - - -

04/01/14 Morningstar Inc. (NasdaqGS:MORN) ByAllAccounts, Inc.* $28.0 $9.3 3.0x

04/01/14 Proposal Software, Inc. Manager Insights, LLC - - -

04/01/14 Revation, Inc. North Light Software, Inc. - - -

04/01/14 Spredfast, Inc. Mass Relevance Inc. - - -

2Q14 SaaS M&A TRANSACTIONS (CON’T)

51


Internet M&A Volume

INTERNET M&A: DEAL VOLUME AND EXIT MULTIPLES

Median Internet EV/Revenue Exit Multiples

• After dropping sharply in the first quarter, Internet M&A deal volume regained some lost ground, but still fell short of 2H13.

• There were 215 Internet M&A transactions in the second quarter, a 10% increase from 1Q14’s 195 deals. We believe the increased deal volume signals arenturn to more typical quarterly deal activity in the Internet sector, following last quarter’s unremarkable deal activity. A similar rebound was witnessedin 2Q13.

• The median EV/Revenue exit multiple for Internet sellers in 2Q14 was 1.7x, virtually unchanged from the prior four quarters.

• Leading 2Q14 Internet transactions included Opera Software’s acquisition of AdColony ($350.3 million, 6.6x EV/Revenue); Dunnhumby’s acquisition ofSociomatic Labs ($205.7 million, 2.0x EV/Revenue); Shenzhen ZongYi’s acquisition of Beijing Yingcai Changlian Network Technology ($43.6 million, 5.8xEV/Revenue); Amobee Group’s acquisition of Adconion Media ($229.0 million, 1.2x EV/Revenue); Alaska Dispatch’s acquisition of Anchorage Daily News($34.0 million, 1.2x EV/Revenue); and EQS Group’s acquisition of TodayIR.com ($6.2 million, 3.2x EV/Revenue).

52


INTERNET M&A: BY PRODUCT CATEGORY

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

• Internet ad-tech remained the most active Internet M&A category, with 68 transactions in 2Q14. The second quarter’s tally was up from 1Q14’s 57 ad-techtransactions, but more in line with quarterly transaction volume during the first half of 2013. We do not anticipate a resurgence in Ad-tech and Lead gendeal activity for the remainder of the year.

• Content & Media transaction activity declined significantly in 2Q14 from the prior quarter. Here, too, the category’s quarterly deal volume represented aretreat to normalcy following high deal volumes in recent quarters.

• Other than Content and Media, all Internet categories posted increases in deal activity over the prior quarter.

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

Ad-Tech & Lead Gen 60 85 94 57 68

Commerce 39 44 49 38 41

Content & Media 34 36 42 50 41

Gaming 11 8 10 10 16

Infrastructure 41 39 39 21 25

Social Tech 19 19 22 18 24

Total 204 231 256 194 215

53


APPENDIX


THE SEG SOFTWARE INDEX COMPANIES – KEY METRICS

Company


A10 Networks, Inc. - - - 7.2x 4.0x - - - - - 31.5% 31.5% - 18.1% - 11.5% 11.5% 0.5% -3.0% -1.0%

Accretive Health 0.4x 0.4x 0.4x 0.4x 0.4x 6.2x 5.4x 5.7x 5.6x 5.2x 7.5% 5.0% -0.2% -0.2% -2.1% 6.6% 6.6% 6.5% 6.5% 6.7%

ACI Worldwide, Inc. 3.4x 3.3x 3.7x 3.4x 3.1x 19.8x 17.5x 17.3x 15.8x 14.5x 38.7% 39.7% 39.5% 29.8% 33.8% 17.2% 19.1% 21.3% 21.6% 21.0%

Activision Blizzard 2.4x 2.9x 2.0x 3.0x 3.4x 7.1x 7.7x 5.7x 9.3x 11.5x 11.8% 13.0% 7.5% -5.6% -12.7% 33.3% 37.7% 35.5% 32.3% 29.5%

Actuate Corporation 1.7x 2.0x 2.2x 1.5x 1.2x 12.1x 16.0x 18.9x 14.9x 20.6x 0.9% -1.9% -0.6% -3.1% -11.0% 14.1% 12.6% 11.5% 10.2% 5.9%

Adobe Systems Incorporated 4.7x 5.1x 6.4x 7.6x 7.4x 17.7x 22.1x 33.8x 40.7x 40.5x -1.9% -5.3% -7.9% -7.3% -3.5% 26.6% 23.3% 19.0% 18.6% 18.2%

Advent Software, Inc. 4.1x 3.7x 5.4x 4.9x 4.5x 19.7x 21.2x 29.9x 26.2x 24.5x 7.9% 6.7% 6.9% 6.7% 6.3% 20.6% 17.3% 18.1% 18.6% 18.6%

Allot Communications Ltd. 2.4x 2.9x 3.3x 4.2x 3.1x 37.0x 156.9x - - 554.0x 23.4% 7.2% -4.8% -7.8% -3.8% 6.6% 1.9% -5.1% -0.8% 0.6%

Allscripts Healthcare Solutions Inc. 1.9x 2.2x 2.3x 2.5x 2.4x 29.0x 50.7x 169.9x 351.8x 244.9x -3.0% -5.6% -7.4% -5.1% -4.4% 6.7% 4.4% 1.3% 0.7% 1.0%

Amdocs Limited 1.5x 1.5x 1.6x 1.7x 1.9x 7.8x 8.1x 8.6x 9.3x 10.1x 1.9% 2.6% 3.0% 3.6% 4.8% 18.6% 18.7% 18.6% 18.5% 18.4%

American Software, Inc. 1.7x 1.7x 1.9x 2.1x 2.0x 11.4x 12.1x 12.5x 12.9x 11.9x -2.1% -6.6% -6.6% -3.2% 0.1% 15.3% 14.3% 15.4% 16.5% 17.0%

ANSYS, Inc. 7.9x 8.7x 8.6x 8.0x 6.9x 16.8x 18.7x 18.4x 17.1x 14.8x 12.8% 10.5% 9.1% 7.9% 8.4% 47.1% 46.7% 46.6% 46.8% 46.8%

Aruba Networks, Inc. 2.7x 2.6x 2.6x 2.9x 2.6x 43.8x 60.8x 88.1x 169.2x 110.0x 19.3% 16.1% 13.8% 11.6% 15.8% 6.1% 4.3% 3.0% 1.7% 2.3%

Aspen Technology, Inc. 9.1x 9.4x 10.2x 11.3x 10.1x 68.6x 49.1x 44.2x 40.9x 33.6x 26.1% 28.1% 24.3% 27.3% 27.7% 13.2% 19.2% 23.0% 27.7% 30.1%

Autodesk, Inc. 3.1x 3.0x 3.7x 4.6x 4.3x 15.1x 14.8x 18.3x 24.3x 25.0x 0.8% -0.5% -0.2% -1.7% 0.1% 20.5% 20.3% 20.1% 18.8% 17.1%

AVG Technologies N.V. 2.5x 3.0x 2.3x 2.3x 2.6x 8.2x 9.0x 7.2x 6.5x 7.3x 28.2% 27.2% 19.5% 14.4% 4.8% 31.1% 33.3% 32.2% 35.0% 35.0%

Bango PLC 9.8x 9.4x 6.9x 7.6x 5.9x - - - - - - - - -13.7% -13.7% -36.2% -40.5% -40.5% -51.5% -51.5%

Barracuda Networks, Inc. - - 4.9x 7.2x 5.6x - - - - - - - - 17.5% 17.5% 2.1% 1.1% -0.1% 0.0% 0.0%

Blackbaud, Inc. 3.4x 3.7x 3.7x 3.2x 3.2x 22.2x 20.8x 19.3x 16.2x 16.1x 23.6% 22.3% 15.8% 12.6% 10.1% 15.3% 17.8% 19.1% 20.0% 19.7%

Bottomline Technologies 3.3x 3.4x 4.5x 4.6x 3.9x 36.5x 35.0x 45.5x 42.3x 31.8x 15.7% 13.6% 11.5% 11.6% 13.1% 9.1% 9.8% 9.8% 10.8% 12.2%

Broadridge Financial 1.5x 1.6x 1.9x 1.9x 2.0x 8.5x 8.5x 9.6x 9.5x 9.6x 3.8% 5.5% 6.8% 7.3% 7.2% 17.4% 18.6% 19.7% 19.9% 20.4%

Brocade Communications Systems,

Inc.1.1x 1.4x 1.5x 1.7x 1.6x 5.2x 6.2x 6.6x 7.1x 6.1x 4.8% 1.5% -0.7% -3.0% -2.8% 21.9% 22.2% 23.3% 24.4% 25.5%

BSQUARE Corporation 0.1x 0.1x 0.2x 0.2x 0.2x 8.8x 12.9x - - - 0.3% -3.5% -6.9% -9.2% -2.8% 1.5% 1.0% -1.8% -2.0% -1.3%

CA Technologies 2.4x 2.7x 3.0x 3.0x 2.6x 7.1x 7.9x 8.6x 8.6x 8.2x -3.5% -3.5% -2.8% -2.1% -2.1% 33.5% 34.1% 34.6% 34.3% 32.0%

CA, Inc. 2.4x 2.7x 3.0x 3.0x 2.6x 7.1x 7.9x 8.6x 8.6x 8.2x -3.5% -3.5% -2.8% -2.1% -2.1% 33.5% 34.1% 34.6% 34.3% 32.0%

Cadence Design Systems, Inc 2.6x 2.8x 2.5x 2.7x 2.9x 11.1x 12.2x 11.9x 13.0x 14.6x 13.8% 12.7% 10.1% 10.1% 8.8% 23.2% 22.7% 20.9% 20.9% 19.7%

Cerner Corporation 5.9x 5.9x 6.5x 6.7x 5.9x 21.0x 20.4x 24.9x 25.5x 22.4x 14.7% 12.3% 8.8% 8.8% 11.1% 28.2% 28.8% 26.2% 26.2% 26.3%

Check Point Software Tech Ltd. 6.0x 7.2x 7.7x 8.3x 8.0x 10.7x 13.0x 13.8x 15.0x 14.6x 5.7% 4.4% 3.4% 3.8% 4.5% 56.3% 55.8% 55.8% 55.4% 55.1%

Cimatron Ltd. 1.3x 1.3x 1.4x 1.8x 1.2x 8.5x 8.9x 9.0x 12.1x 8.3x 2.1% 1.6% 4.0% 4.6% 5.8% 14.7% 14.4% 15.1% 14.7% 15.0%

Cisco Systems, Inc. 1.8x 2.0x 1.8x 1.8x 2.0x 6.4x 7.1x 6.1x 6.6x 7.2x 5.1% 5.5% 4.6% 1.3% -1.4% 27.8% 28.5% 28.8% 27.1% 27.3%

Citrix Systems, Inc. 4.3x 4.6x 3.6x 3.6x 3.2x 19.0x 20.8x 16.5x 16.0x 14.1x 15.8% 16.5% 15.8% 12.8% 12.2% 22.4% 21.9% 21.9% 22.2% 22.7%

CommVault Systems, Inc. 6.0x 6.7x 5.8x 4.9x 3.2x 34.7x 38.4x 32.8x 26.9x 17.5x 21.9% 21.7% 21.4% 20.4% 18.2% 17.3% 17.6% 17.6% 18.2% 18.2%

Computer Programs and Sys, Inc. 2.9x 3.1x 3.4x 3.5x 3.3x 12.0x 12.5x 13.2x 13.2x 12.1x 6.1% 12.3% 11.2% 9.6% 8.0% 24.2% 24.9% 25.3% 26.7% 27.3%

Compuware Corporation 3.3x 2.4x 2.4x 2.3x 3.0x 24.1x 17.4x 17.1x 17.6x 22.3x -5.2% -6.0% -1.3% -2.5% -0.4% 13.8% 13.9% 14.2% 13.3% 13.2%

Constellation 3.1x 3.5x 3.6x 3.9x 3.9x 23.0x 24.8x 25.7x 30.1x 34.5x 20.4% 29.4% 36.6% 35.9% 41.7% 13.4% 13.9% 13.9% 12.8% 11.2%

CSG Systems International, Inc. 1.1x 1.2x 1.4x 1.4x 1.3x 6.0x 6.8x 8.0x 8.0x 7.8x 2.2% 2.1% 0.6% -1.2% 0.3% 18.3% 17.6% 17.1% 16.8% 16.2%

Cyan, Inc. 6.0x 3.3x 1.1x 0.9x 1.3x - - - - - - - 58.4% 21.6% 1.2% -11.9% -17.1% -20.7% -29.9% -40.8%

SEG Software Index

EV/Revenue EV/EBITDA TTM Revenue Growth EBITDA Margin

55



Company


Cyren 2.7x 2.4x 2.3x 3.0x 2.6x 182.2x - - - - 10.9% 21.2% 33.4% 34.9% 25.0% 1.5% -2.3% -2.1% -7.7% -10.6%

Dassault Systèmes 5.0x 5.3x 4.6x 4.4x 4.8x 16.0x 17.2x 14.8x 13.9x 15.7x 11.7% 8.4% 4.4% 1.9% 1.6% 31.0% 31.0% 30.9% 31.5% 30.3%

DST Systems, Inc. 1.5x 1.4x 1.6x 1.6x 1.6x 9.9x 9.5x 10.1x 10.0x 9.9x 6.4% 5.2% 4.3% 3.2% 2.1% 14.7% 14.9% 15.5% 16.2% 16.0%

Electronic Arts Inc. 1.4x 1.9x 1.7x 1.9x 2.5x 16.6x 21.2x 14.9x 31.6x 36.0x -8.4% -7.5% -7.8% -7.5% -5.8% 8.6% 9.1% 11.7% 6.1% 6.9%

EMC 2.1x 2.3x 2.1x 2.2x 2.3x 8.8x 9.7x 8.8x 9.0x 9.5x 7.4% 6.4% 6.2% 6.9% 5.9% 23.8% 23.9% 23.8% 24.2% 23.7%

EPIQ Systems, Inc. 1.9x 1.9x 2.0x 1.8x 1.7x 8.8x 9.9x 11.2x 10.6x 11.0x 25.9% 22.2% 24.9% 27.2% 23.9% 21.4% 19.1% 17.9% 16.6% 15.1%

Evertec 6.7x 7.6x 7.0x 7.4x 7.2x 17.8x 20.7x 17.9x 19.0x 18.0x 6.2% 5.4% 5.5% 4.6% 3.1% 37.6% 36.7% 39.2% 39.0% 40.0%

Evolving Systems, Inc. 2.3x 3.1x 4.0x 3.6x 3.3x 8.3x 11.6x 15.0x 15.4x 15.4x 38.2% 20.2% 4.4% -4.4% -7.4% 27.5% 27.0% 26.5% 23.8% 21.4%

F5 Networks, Inc. 3.8x 4.3x 4.1x 5.0x 4.6x 11.9x 13.8x 12.9x 16.1x 15.0x 12.9% 9.0% 7.6% 7.2% 11.3% 32.0% 31.2% 31.6% 30.8% 30.7%

Fair Isaac Corporation 2.9x 3.0x 3.2x 3.1x 3.1x 10.7x 11.4x 12.1x 11.8x 11.9x 11.7% 13.6% 9.9% 6.0% 3.9% 26.6% 26.1% 26.7% 25.9% 26.4%

FalconStor Software, Inc. 0.6x 0.4x 0.7x 0.9x 1.0x - - - - - -14.4% -14.1% -15.2% -22.2% -22.4% -15.1% -14.5% -11.5% -12.4% -10.7%

Fidessa 2.3x 2.7x 2.6x 3.1x 3.0x 11.5x 13.5x 13.4x 15.9x 15.4x -1.0% -2.1% -1.0% 0.1% 0.1% 19.9% 19.8% 19.6% 19.4% 19.4%

Fiserv 3.4x 3.5x 3.7x 3.8x 3.8x 11.7x 12.2x 12.7x 13.1x 13.0x 2.4% 5.4% 6.5% 8.5% 9.0% 29.0% 29.0% 29.0% 28.9% 29.1%

Fortinet Inc. 4.5x 4.9x 4.6x 5.0x 4.7x 23.0x 27.7x 28.3x 35.6x 35.9x 20.7% 18.0% 17.0% 15.3% 17.4% 19.7% 17.8% 16.2% 14.1% 13.1%

GameLoft SA 1.8x 2.1x 2.6x 2.5x 2.3x 12.2x 14.4x 17.3x 15.8x 14.5x 24.1% 21.8% 16.6% 12.0% 12.0% 14.6% 14.5% 15.0% 15.6% 15.6%

Gigamon, LLC 7.1x 8.2x 5.7x 6.0x 2.8x 85.5x - - - - 41.6% 41.8% 45.1% 45.1% 38.2% 8.3% -22.3% -19.5% -19.5% -25.8%

Glu Mobile, Inc. 1.5x 1.5x 2.5x 3.3x 2.4x - - - - - 26.4% 6.0% -7.4% -2.4% 18.2% -9.4% -13.7% -17.3% -13.2% -6.0%

Gree 1.5x 1.1x 1.1x 1.6x 1.4x 3.7x 3.1x 3.4x 5.0x 4.0x 11.5% -3.8% -9.7% -12.7% -12.4% 40.4% 36.1% 33.5% 31.6% 34.2%

GSE Systems Inc. 0.2x 0.2x 0.2x 0.3x 0.3x 6.3x - - - - -1.8% -9.3% -12.1% -9.0% -14.3% 3.5% -0.2% -5.0% -6.8% -8.9%

Guidance Software, Inc. 1.8x 1.8x 2.0x 2.6x 2.3x 108.0x - - - - 21.8% 10.9% -3.5% -14.6% -16.4% 1.6% -2.3% -7.9% -12.3% -10.9%

Guidewire Software, Inc. 7.9x 8.0x 9.0x 9.0x 6.7x 216.8x 110.7x 739.8x - - 25.9% 29.6% 25.1% 21.2% 21.2% 3.6% 7.2% 1.2% -1.1% -0.6%

Hewlett Packard 0.5x 0.6x 0.5x 0.6x 0.6x 4.2x 4.6x 4.7x 5.0x 5.4x -6.8% -7.7% -6.7% -5.6% -3.2% 12.1% 12.0% 11.6% 11.8% 11.7%

IBM 2.4x 2.3x 2.2x 2.2x 2.3x 9.4x 8.9x 8.5x 9.0x 8.9x -3.5% -3.5% -3.2% -4.6% -4.3% 25.5% 25.6% 25.6% 25.1% 25.4%

Imperva 7.6x 9.0x 7.3x 9.7x 3.4x - - - - - 33.5% 32.5% 32.5% 32.2% 26.4% -7.1% -10.1% -10.9% -16.5% -23.0%

Informatica Corporation 3.8x 4.1x 4.0x 3.9x 3.4x 21.6x 21.0x 21.2x 22.6x 18.9x 2.2% 6.5% 12.8% 16.8% 17.7% 17.8% 19.4% 18.7% 17.3% 17.9%

Intuit Inc 4.5x 4.2x 4.6x 5.1x 4.6x 12.0x 12.2x 13.6x 16.3x 13.6x -4.2% 9.5% 11.5% 12.2% 15.1% 37.7% 34.7% 34.0% 31.4% 33.9%

Jack Henry & Associates, Inc. 3.6x 3.7x 4.0x 4.1x 4.0x 11.3x 11.6x 12.4x 11.9x 11.8x 8.7% 10.0% 9.9% 9.8% 9.1% 32.1% 32.2% 32.5% 34.0% 34.1%

Juniper Networks, Inc. 1.7x 1.9x 1.9x 2.4x 2.1x 11.3x 12.4x 11.6x 14.3x 12.4x 0.3% 3.1% 4.4% 7.0% 8.8% 14.8% 15.7% 16.0% 17.0% 17.0%

King Digital Entertainment - - - 3.0x 2.2x - - - 7.8x 6.0x - - - 1046.1% 555.3% 22.6% 30.9% 36.0% 38.2% 35.8%

Konami Corporation 1.2x 1.3x 1.5x 1.5x 1.5x 8.3x 10.3x 13.5x 13.3x 13.5x -15.0% -14.4% -12.9% -4.1% -3.7% 14.3% 12.8% 11.0% 11.3% 10.7%

Magic Software Enterprises Ltd. 1.2x 1.5x 1.5x 2.0x 1.8x 6.5x 7.9x 7.5x 10.2x 9.3x 10.1% 15.1% 15.2% 14.7% 17.5% 19.2% 18.4% 19.5% 19.1% 19.2%

Manhattan Associates, Inc. 3.4x 4.1x 5.0x 6.0x 5.5x 15.0x 17.4x 20.0x 23.1x 20.2x 9.3% 10.2% 10.4% 10.2% 13.1% 23.0% 23.7% 25.3% 25.8% 27.2%

Mavenir Systems, Inc. - - 3.4x 4.0x 3.1x - - - - - - - 12.0% 37.2% 41.0% -13.0% -10.3% -7.3% -3.7% -3.4%

MedAssets 3.0x 3.3x 3.2x 3.2x 3.2x 9.4x 10.6x 10.4x 10.4x 10.9x 11.0% 9.4% 6.4% 6.3% 2.3% 31.6% 31.5% 30.7% 30.6% 29.8%

Mentor Graphics Corp 1.9x 2.2x 2.4x 2.2x 2.0x 11.1x 12.4x 13.3x 10.4x 10.2x 3.4% 1.9% 0.8% 6.2% 10.7% 17.5% 18.0% 17.8% 20.7% 20.0%

Merge Healthcare 2.0x 2.0x 1.9x 1.9x 1.9x 21.1x 25.0x 27.5x 17.2x 16.7x 4.5% -0.9% -2.3% -6.9% -13.0% 9.7% 8.1% 6.7% 11.1% 11.6%

Micros Systems 2.2x 2.5x 2.7x 2.7x 2.4x 10.3x 12.6x 13.6x 13.9x 12.5x 15.1% 14.5% 11.5% 8.2% 7.7% 21.5% 19.9% 19.8% 19.7% 19.6%

SEG Software Index


56



Company


Microsoft Corporation 2.9x 2.7x 3.0x 3.0x 3.2x 7.3x 6.9x 7.6x 7.7x 8.4x 4.1% 5.6% 11.1% 14.4% 9.6% 40.0% 39.6% 39.9% 39.0% 38.5%

MicroStrategy Incorporated 1.3x 1.3x 1.8x 1.8x 1.9x 17.0x 26.2x 30.8x 26.1x 26.7x -3.6% 2.3% 4.4% 1.8% 4.7% 7.5% 5.0% 5.8% 7.0% 7.0%

Millennial Media Inc 2.4x 2.4x 2.0x 2.5x 1.3x - - - 565.2x - 68.7% 60.3% 42.9% 45.9% 45.4% -1.1% -0.8% -1.0% 0.4% -1.8%

MIND C.T.I. Ltd. 0.7x 0.8x 0.9x 1.2x 1.2x 4.0x 4.4x 6.1x 9.0x 6.8x -1.6% -9.4% -10.6% -8.6% 1.8% 18.8% 18.2% 15.3% 13.0% 17.3%

MobileIron, Inc. - - - - 6.4x - - - - - 195.1% 195.1% 195.1% 158.2% - -113.8% -113.8% -113.8% -24.5% -33.8%

Model N, Inc 4.2x 3.0x 1.0x 1.7x 1.5x 90.9x 127.2x 27.0x 80.7x - - - 20.9% 14.2% 4.7% 4.7% 2.4% 3.9% 2.1% -1.9%

MSCI, Inc. 4.9x 5.2x 5.6x 5.4x 5.2x 10.8x 11.3x 12.4x 12.5x 12.3x 3.7% 4.5% 5.8% 9.0% 12.3% 45.7% 45.8% 45.6% 43.6% 42.5%

Myriad Group AG 2.9x 3.0x 3.6x 3.9x 3.3x - - - - - -2.9% 3.0% -10.8% -23.3% -23.3% -19.0% -17.8% -17.0% -16.0% -16.0%

NetApp, Inc. 1.3x 1.6x 1.5x 1.5x 1.2x 10.4x 11.4x 10.2x 9.9x 7.6x 1.6% 3.0% 2.5% 1.2% -0.1% 13.0% 13.9% 14.6% 15.2% 16.2%

Netscout Systems, Inc. 2.4x 2.6x 2.9x 3.5x 3.6x 10.3x 11.2x 13.3x 14.9x 15.2x 13.6% 10.6% 9.0% 11.8% 13.1% 23.0% 23.1% 22.1% 23.5% 23.6%

NetSol Technologies Inc. 0.8x 1.2x 1.2x 1.3x 1.1x 1.5x 3.0x 2.7x 3.9x 7.5x 61.5% 19.9% 22.6% 2.3% -17.9% 50.1% 41.8% 43.9% 33.4% 15.2%

NeuStar, Inc 3.9x 4.2x 3.8x 2.9x 2.2x 9.4x 9.9x 9.0x 7.2x 5.7x 25.9% 17.7% 11.0% 8.5% 7.9% 41.8% 42.1% 42.0% 39.9% 38.4%

NQ Mobile Inc. 2.8x 5.8x 3.4x 4.1x 2.2x 52.9x 129.9x 115.2x 555.2x 300.4x 122.4% 117.0% 113.0% 114.3% 114.3% 5.3% 4.5% 3.0% 0.7% 0.7%

Omnicell, Inc. 1.7x 2.0x 2.0x 2.3x 2.2x 12.2x 13.8x 14.7x 16.5x 15.4x 33.5% 33.1% 27.3% 21.2% 17.3% 13.8% 14.2% 13.8% 13.8% 14.3%

Opera 3.6x 3.8x 5.5x 5.4x 4.8x 13.2x 13.6x 19.6x 20.9x 18.9x 35.9% 38.0% 36.5% 38.9% 40.7% 27.3% 27.8% 27.9% 26.0% 25.2%

Oracle Corporation 3.9x 3.7x 3.8x 4.2x 4.5x 9.0x 8.4x 8.7x 9.6x 10.2x 0.2% 1.2% 0.9% 2.0% 2.9% 43.3% 43.6% 43.5% 43.6% 43.7%

Palo Alto Networks, Inc 9.1x 7.6x 6.5x 9.5x 8.7x - - - - - 63.6% 55.3% 54.4% 49.2% 48.1% -1.3% -1.3% -1.5% -3.7% -5.2%

Pandora Media 5.4x 6.3x 8.5x 11.0x 6.7x - - - - - 55.2% 56.0% 53.5% 53.5% - -8.2% -7.5% -7.1% -7.1% -1.0%

Parametric Technology Corporation 2.3x 2.5x 2.9x 3.3x 3.3x 12.3x 12.7x 13.0x 14.9x 14.1x 1.5% 0.3% 3.3% 3.3% 3.4% 18.8% 19.9% 22.3% 22.3% 23.2%

PDF Solutions Inc 5.1x 5.7x 6.2x 5.8x 4.6x 19.5x 20.6x 20.9x 17.8x 13.1x 28.6% 22.6% 17.8% 13.3% 12.3% 26.0% 27.4% 29.5% 32.6% 34.8%

Pegasystems Inc. 2.1x 2.6x 3.2x 3.0x 2.3x 16.9x 18.3x 19.9x 18.6x 14.7x 9.7% 12.2% 15.3% 10.2% 14.2% 12.2% 14.0% 16.2% 15.9% 15.8%

Progress Software Corporation 2.7x 3.2x 3.3x 3.1x 2.7x 13.5x 16.0x 11.9x 11.1x 9.2x 34.7% 69.1% 5.2% 1.9% -5.8% 20.4% 19.9% 28.0% 28.3% 29.3%

Proofpoint, Inc. 4.8x 7.9x 8.1x 9.7x 7.2x - - - - - 28.2% 26.2% 25.3% 29.8% 33.3% -12.4% -12.1% -12.9% -12.2% -13.1%

PROS Holdings 5.6x 6.3x 6.6x 6.7x 4.6x 74.0x 96.1x 100.0x 101.6x 209.1x 21.7% 23.6% 24.6% 23.0% 22.3% 7.6% 6.5% 6.7% 6.6% 2.2%

QAD Inc. 0.5x 0.5x 0.7x 0.9x 0.9x 12.7x 12.8x 16.5x 16.9x 15.9x -0.5% 1.6% 2.8% 5.6% 9.0% 4.3% 4.2% 4.2% 5.1% 5.7%

Qihoo 360 Technology Co. Ltd 12.2x 18.3x 17.8x 17.3x 13.0x 68.2x 82.1x 67.3x 56.7x 43.5x 72.6% 78.1% 91.5% 104.0% 123.6% 17.9% 22.3% 26.4% 30.6% 29.8%

Qiwi plc 1.7x 4.3x 6.1x 5.1x 4.0x 8.2x 19.7x 27.2x 22.1x 15.8x - - - 30.9% 30.0% 20.3% 21.9% 22.4% 23.1% 25.6%

Qlik Technologies 5.5x 6.1x 4.6x 4.8x 3.6x 192.7x 475.8x 478.2x 193.7x 305.9x 20.5% 22.8% 24.2% 21.1% 19.5% 2.8% 1.3% 1.0% 2.5% 1.2%

Quality Systems, Inc. 2.1x 2.5x 2.8x 2.2x 1.9x 9.7x 11.6x 14.1x 13.6x 13.7x 7.1% 0.8% -2.1% -3.7% -3.4% 21.7% 21.6% 19.9% 16.5% 13.9%

Radware Ltd. 3.2x 3.2x 3.4x 3.4x 3.0x 15.6x 17.0x 21.0x 21.8x 21.0x 9.1% 5.7% 2.9% 2.0% 5.1% 20.4% 18.6% 16.1% 15.4% 14.4%

Red Hat, Inc. 6.1x 6.2x 5.3x 6.5x 5.3x 30.2x 30.5x 26.0x 32.5x 28.0x 16.4% 16.7% 16.0% 15.5% 15.8% 20.1% 20.2% 20.4% 20.1% 19.1%

Redknee Solutions 3.9x 3.3x 3.6x 2.6x 1.9x 93.0x 46.6x 195.9x 73.4x 33.8x -1.4% 74.4% 149.8% 226.0% 349.5% 4.2% 7.1% 1.8% 3.6% 5.6%

Riverbed Technology, Inc. 2.9x 2.8x 2.8x 3.2x 3.0x 19.1x 20.2x 22.4x 22.3x 19.8x 20.8% 23.1% 24.0% 24.4% 17.7% 15.3% 14.0% 12.7% 14.2% 15.3%

Sage Group plc 3.0x 3.0x 2.9x 3.7x 3.6x 10.7x 10.6x 10.0x 12.5x 12.3x 2.9% 2.8% 2.7% -0.5% -3.7% 28.5% 28.7% 29.0% 29.3% 29.5%

SAP AG 4.5x 4.2x 4.4x 4.2x 3.9x 13.9x 12.2x 12.5x 12.1x 11.5x 13.2% 9.8% 6.6% 3.6% 2.7% 32.2% 34.3% 35.0% 34.2% 34.4%

Sapiens International 1.5x 1.6x 2.0x 2.2x 2.1x 11.4x 12.1x 16.0x 19.6x 18.3x 44.6% 31.2% 21.5% 18.8% 17.6% 13.5% 13.3% 12.3% 11.3% 11.3%

Silver Spring Networks, Inc. 4.0x 3.7x 2.8x 2.1x 1.6x - - - - - -20.7% 8.0% 34.5% 66.1% 62.8% -51.1% -27.3% -19.8% -10.8% -7.3%

SEG Software Index


57



Company


Software AG 2.2x 2.1x 2.4x 2.4x 2.4x 8.3x 8.2x 9.4x 9.6x 9.6x -5.8% -7.9% -8.1% -7.1% -6.0% 26.2% 26.0% 25.6% 25.0% 24.8%

SolarWinds, Inc. 11.2x 9.1x 7.9x 9.2x 7.8x 24.0x 18.6x 16.6x 22.0x 20.4x 31.2% 26.8% 24.2% 24.7% 27.0% 46.7% 49.0% 47.8% 41.7% 38.1%

Splunk, Inc. 19.0x 20.7x 23.6x 28.6x 15.7x - - - - - 59.2% 54.7% 51.4% 52.1% 51.3% -12.1% -14.5% -16.4% -23.3% -31.3%

SS&C Corporation 5.6x 5.6x 5.8x 5.7x 5.7x 14.6x 14.4x 14.7x 14.4x 14.3x 68.1% 70.1% 47.5% 29.1% 14.9% 38.5% 38.8% 39.5% 39.5% 39.6%

Stratasys, Inc. 11.3x 11.7x 12.9x 10.9x 7.7x 56.1x 64.2x 70.7x 65.5x 49.3x 60.9% 82.4% 113.4% 125.0% 101.2% 20.2% 18.3% 18.2% 16.6% 15.7%

Sungy Mobile Limited - - 10.6x 13.6x 6.4x - - 35.4x 44.7x 23.9x - - - 77.5% 76.7% 15.3% 24.6% 29.8% 30.4% 26.8%

Symantec Corporation 2.2x 2.3x 2.1x 1.9x 1.9x 8.1x 8.4x 7.3x 6.6x 6.6x 2.6% 1.8% -0.6% -3.3% -3.3% 27.1% 27.6% 28.8% 29.1% 29.1%

Synchronoss Technologies, Inc. 4.0x 4.4x 4.0x 3.6x 3.4x 18.4x 21.1x 19.8x 16.0x 14.0x 19.4% 20.3% 23.7% 27.5% 28.5% 21.8% 20.7% 20.2% 22.2% 24.0%

Synopsys Inc 2.7x 2.6x 2.5x 2.7x 2.6x 14.2x 14.3x 13.5x 14.9x 14.8x 14.5% 13.0% 11.7% 8.9% 6.0% 18.8% 18.4% 18.4% 18.3% 17.3%

Take-Two Interactive 1.1x 1.4x 1.5x 0.6x 0.6x 58.4x 15.5x 1215.9x 2.8x 3.5x 47.1% 57.6% 13.9% 130.9% 93.5% 1.9% 8.8% 0.1% 21.4% 18.4%

Tangoe, Inc. 2.8x 3.8x 3.5x 3.5x 2.8x 32.9x 42.3x 38.9x 40.8x 34.6x 41.5% 38.1% 30.8% 22.3% 17.7% 8.7% 8.9% 9.0% 8.7% 8.1%

TeleCommunication Systems 0.5x 0.5x 0.6x 0.6x 0.8x 6.2x 6.7x 7.0x 10.2x 12.1x 10.8% 2.5% -12.6% -25.7% -26.9% 7.9% 8.0% 7.9% 5.9% 6.3%

TeleNav 0.1x 0.2x 0.4x 0.3x 0.5x 0.7x 2.4x 6.3x 22.8x - -5.8% -6.7% -0.9% -6.2% -16.9% 13.6% 8.1% 6.5% 1.5% -7.4%

Teradata 3.2x 3.4x 2.5x 2.5x 2.3x 13.7x 15.0x 11.3x 10.9x 9.5x 6.9% 3.6% 2.5% 1.0% 3.6% 23.2% 22.8% 22.3% 23.1% 23.7%

The Descartes Systems Group Inc. 4.7x 4.9x 5.4x 5.6x 5.4x 16.2x 17.2x 19.1x 19.9x 19.0x 12.2% 17.1% 18.0% 19.2% 20.6% 29.1% 28.4% 28.2% 28.1% 28.2%

TIBCO Software Inc. 3.0x 3.4x 3.4x 3.0x 2.7x 16.1x 18.5x 18.7x 16.4x 15.3x 4.4% 3.3% 4.4% 4.7% 5.4% 18.6% 18.6% 18.1% 18.5% 18.0%

Trend Micro 2.7x 3.3x 3.5x 3.0x 3.0x 8.2x 9.9x 10.3x 8.9x 8.7x 2.1% 7.7% 11.3% 15.4% 13.5% 32.8% 33.0% 33.7% 33.9% 34.7%

Tyler Technologies, Inc. 5.5x 6.2x 7.8x 7.3x 5.9x 28.7x 31.2x 41.3x 38.5x 30.1x 18.1% 16.4% 14.6% 14.7% 15.2% 19.1% 19.8% 19.0% 18.9% 19.5%

Ubisoft Entertainment 0.7x 0.8x 0.8x 1.3x 1.6x 2.0x 2.2x 2.2x 3.6x 4.9x 18.4% 17.3% 16.3% -3.0% -19.8% 36.8% 37.3% 37.7% 35.6% 32.9%

Varonis Systems, Inc. - - - 14.0x 6.1x - - - - - - - - 39.7% 43.7% -5.6% -3.8% -6.5% -6.8% -11.1%

VASCO Data Security International 1.4x 1.5x 1.4x 1.3x 2.0x 9.4x 14.0x 15.0x 12.7x 18.5x -4.3% -12.5% -8.0% 0.7% 0.9% 14.8% 11.1% 9.1% 10.6% 10.9%

Verisk 7.9x 7.9x 8.0x 7.4x 6.7x 16.5x 16.6x 16.7x 16.0x 14.7x 5.3% 5.3% 3.8% 13.3% 13.3% 47.9% 47.8% 47.8% 46.1% 45.6%

VMWare, Inc. 5.7x 6.4x 5.9x 6.9x 22.9x 25.2x 22.5x 24.4x - 19.2% 16.3% 14.7% 13.1% - 24.7% 25.3% 26.4% 28.1% 29.0%

Zynga, Inc 1.1x 1.2x 2.0x 3.3x 2.8x 9.5x 7.8x 14.0x 38.7x 29.8x 0.5% -11.8% -21.3% -31.8% -27.8% 11.7% 15.0% 14.2% 8.4% 6.0%


SEG Software Index

58


THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORYBilling & Service Management 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 8.3x 9.9x 9.0x 9.2x 10.1x



EBITDA Margin 18.8% 18.7% 18.6% 18.5% 18.4%


TTM Revenue Growth (YoY) 2.2% 17.7% 4.4% 3.6% 4.8%

TTM EBITDA Growth (YoY) 2.7% 7.7% 3.4% 1.6% -0.6%

TTM Earnings Growth (YoY) 7.8% -16.7% -9.6% -4.8% -9.2%

Current Ratio 2.5 2.6 2.3 2.4 2.7

Cash as Percent of Market Cap 17.0% 20.9% 14.2% 16.1% 20.6%

Enterprise Value Growth (YoY) 22.6% 29.3% 30.7% 27.2% 33.1%

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


EV/EBITDA 16.7x 17.4x 19.4x 17.3x 17.7x



EBITDA Margin 12.2% 12.6% 11.5% 10.2% 7.0%



TTM EBITDA Growth (YoY) -9.0% -26.9% -14.2% 0.2% -2.4%

TTM Earnings Growth (YoY) 14.9% 15.6% 4.3% -10.0% -9.8%

Current Ratio 2.0 2.0 2.1 2.0 1.9


Enterprise Value Growth (YoY) -9.1% 21.3% 37.8% 11.6% -5.1%

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


EV/EBITDA 10.6x 14.4x 11.9x 11.1x 10.2x



EBITDA Margin 20.3% 20.0% 20.0% 19.6% 19.1%


TTM Revenue Growth (YoY) 0.6% -0.3% 0.1% -0.3% -1.6%

TTM EBITDA Growth (YoY) -2.5% -14.7% -3.4% -1.5% -0.1%

TTM Earnings Growth (YoY) -6.9% 1.6% -0.3% -10.3% -8.4%

Current Ratio 2.3 2.1 2.1 2.0 2.0


Enterprise Value Growth (YoY) -3.0% 6.3% 18.1% 7.0% 14.8%

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


EV/EBITDA 14.2x 14.6x 14.1x 14.9x 14.7x



EBITDA Margin 20.2% 19.9% 20.1% 20.7% 19.7%



TTM EBITDA Growth (YoY) 8.0% 9.0% 3.7% 10.1% 7.4%

TTM Earnings Growth (YoY) 13.3% 6.1% 4.0% 8.6% -1.2%

Current Ratio 2.2 2.2 2.5 2.4 2.3



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


EV/EBITDA 11.4x 12.1x 12.5x 12.5x 11.9x



EBITDA Margin 28.5% 28.7% 29.0% 29.3% 29.5%



TTM EBITDA Growth (YoY) -2.8% 1.7% 4.1% 4.2% 11.5%

TTM Earnings Growth (YoY) -17.2% -16.6% -6.8% 0.2% 16.0%

Current Ratio 1.1 1.1 1.1 1.2 1.2



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


EV/EBITDA 11.7x 12.2x 13.6x 15.8x 13.3x



EBITDA Margin 26.6% 26.1% 26.7% 25.9% 25.6%




TTM Earnings Growth (YoY) 20.6% 8.0% 4.4% 2.0% 11.0%

Current Ratio 1.5 1.4 1.6 1.3 1.2



Gaming 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 10.3x 12.4x 14.2x 11.4x 12.5x



EBITDA Margin 14.4% 13.7% 13.4% 18.5% 17.0%


TTM Revenue Growth (YoY) 15.1% 15.2% 10.7% -3.6% -4.8%


TTM Earnings Growth (YoY) 26.4% 25.3% -17.6% -18.9% -41.8%

Current Ratio 2.6 2.4 2.0 2.4 3.0



Healthcare 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 12.1x 13.2x 14.4x 15.0x 14.6x



EBITDA Margin 17.8% 17.9% 16.9% 15.2% 14.1%





Current Ratio 1.9 2.0 1.7 1.8 1.6



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


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



EBITDA Margin 32.2% 34.3% 35.0% 34.2% 34.4%




TTM Earnings Growth (YoY) -7.0% 3.3% 5.5% 11.9% 8.1%

Current Ratio 1.2 1.2 1.2 1.3 1.2



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


EV/EBITDA 13.2x 13.6x 19.7x 40.1x 21.4x



EBITDA Margin 8.7% 8.1% 7.9% 5.9% 4.2%

Net Income Margin 2.4% 2.4% 2.8% -1.4% -2.7%


TTM EBITDA Growth (YoY) 11.9% 16.0% 8.2% -12.3% 21.6%


Current Ratio 2.1 2.1 2.7 2.6 3.3



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


EV/EBITDA 17.4x 17.0x 15.0x 16.9x 19.8x



EBITDA Margin 12.6% 12.7% 7.9% 7.5% 7.8%

Net Income Margin 1.0% -2.4% -2.7% -1.4% -0.8%


TTM EBITDA Growth (YoY) 2.0% 3.6% -15.4% -12.5% -15.0%

TTM Earnings Growth (YoY) 2.9% 10.0% 6.9% -0.8% 3.3%

Current Ratio 1.5 2.1 2.3 2.6 2.7



Security 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 10.7x 13.0x 13.8x 12.7x 14.6x



EBITDA Margin 11.5% 11.1% 0.5% -3.0% -1.0%




TTM Earnings Growth (YoY) -6.1% -4.1% -13.0% 5.3% -3.6%

Current Ratio 1.4 1.3 1.4 1.6 1.8



59


THE SEG SOFTWARE INDEX METRICS BY PRODUCT CATEGORYStorage, Data Mgmt & Integration 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 9.0x 8.9x 8.7x 9.0x 8.9x



EBITDA Margin 21.9% 22.2% 23.3% 24.2% 23.7%





Current Ratio 2.2 2.4 2.5 2.6 2.4



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


EV/EBITDA 15.6x 17.3x 19.5x 21.5x 19.6x



EBITDA Margin 19.1% 21.4% 24.1% 26.8% 27.7%





Current Ratio 2.4 2.3 2.4 2.3 2.3



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


EV/EBITDA 21.0x 19.7x 16.5x 19.0x 17.8x



EBITDA Margin 23.8% 24.1% 24.2% 25.8% 25.7%





Current Ratio 1.5 1.5 1.6 1.3 1.3


Enterprise Value Growth (YoY) -10.3% -9.1% -9.1% 11.7% 6.4%

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


EV/EBITDA 11.4x 12.6x 12.9x 13.5x 13.3x



EBITDA Margin 26.4% 26.0% 26.1% 27.0% 27.2%





Current Ratio 1.4 1.3 1.3 1.3 1.5



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


EV/EBITDA 16.8x 16.7x 17.6x 16.3x 16.1x



EBITDA Margin 13.4% 13.3% 12.3% 11.3% 11.2%




TTM Earnings Growth (YoY) -8.8% 1.9% -2.4% -1.5% -0.1%

Current Ratio 1.4 1.5 1.6 2.1 1.7



60


THE SEG SaaS INDEX COMPANIES – KEY METRICS

Company


2U, Inc. - - - - 6.9x - - - - - 87.9% 87.9% - 48.8% - -40.4% -40.4% -37.1% -32.8% -32.8%

Amber Road, Inc. - - - 7.2x 6.0x - - - - - - - - 21.1% 24.4% -8.6% -19.5% -21.0% -22.3% -50.5%

Athenahealth, Inc 7.2x 8.6x 9.4x 11.0x 7.8x 64.6x 82.4x 89.3x 119.5x 84.0x 28.7% 31.3% 35.4% 40.9% 40.1% 11.1% 10.4% 10.5% 9.2% 9.2%

Bazaarvoice, Inc 2.8x 4.0x 3.3x 2.7x 2.8x - - - - - 38.3% 41.3% 32.1% 22.3% 14.5% -23.4% -28.0% -20.5% -17.4% -17.7%

Benefitfocus, Inc. - 13.0x 11.9x 14.5x 7.7x - - - - - - - - 28.2% 29.0% -7.9% -13.0% -17.7% -21.7% -26.0%

Callidus Software Inc. 2.5x 3.1x 4.3x 5.2x 4.0x - - - - - 14.5% 12.6% 16.4% 18.3% 19.6% -18.4% -16.5% -11.1% -4.0% -1.7%

Castlight Health, Inc. - - - 197.9x 64.3x - - - - - 121.5% 121.5% - 212.3% - -840.2% -840.2% -579.4% -475.6% -382.4%

ChannelAdvisors 5.8x 9.2x 11.5x 13.5x 6.7x - - - - - - - 26.0% 26.9% 28.5% -3.7% -5.2% -8.3% -15.8% -24.0%

Concur 8.7x 10.3x 9.9x 10.4x 7.6x 117.4x 112.0x 112.5x 167.7x 163.7x 22.3% 21.5% 24.1% 26.8% 30.6% 7.4% 9.2% 8.8% 6.2% 4.7%

Constant Contact 1.3x 1.7x 2.6x 2.6x 2.6x 18.4x 23.5x 30.7x 27.5x 24.9x 16.1% 14.8% 13.7% 13.2% 13.7% 7.3% 7.3% 8.5% 9.4% 10.3%

Cornerstone OnDemand 14.6x 17.1x 15.1x 15.7x 9.9x - - - - - 61.9% 60.2% 60.5% 57.0% 55.7% -21.9% -19.7% -17.3% -16.1% -15.5%

Cvent - 14.3x 12.0x 12.4x 8.4x - 178.8x 226.1x 667.4x 303.1x - - - 33.1% 31.9% 10.7% 8.0% 5.3% 1.9% 2.8%

DealerTrack 3.3x 4.0x 4.0x 4.5x 5.1x 25.7x 30.9x 30.6x 37.4x 57.3x 10.5% 15.1% 20.8% 23.8% 30.8% 12.9% 13.1% 13.1% 12.0% 8.9%

Demandware, Inc. 9.5x 14.2x 18.0x 21.7x 15.2x - - - - - 37.5% 33.4% 31.7% 30.5% 37.5% -10.7% -13.5% -15.8% -15.6% -14.8%

E2open, Inc 4.5x 6.9x 8.4x 9.6x 6.6x - - - - - 17.4% 0.0% -6.6% -4.9% -4.9% -3.4% -17.5% -26.8% -29.4% -29.4%

Ebix Inc. 3.7x 2.1x 2.6x 2.9x 3.0x 8.8x 5.4x 6.4x 7.8x 8.2x 20.5% 18.6% 9.8% 2.7% -2.2% 41.8% 39.2% 40.3% 37.1% 36.6%

Ellie Mae 5.0x 5.7x 5.5x 5.4x 5.1x 19.9x 24.2x 24.8x 27.4x 31.6x 69.9% 57.2% 41.2% 26.2% 16.1% 24.8% 23.6% 22.1% 19.5% 16.3%

FireEye, Inc. - 39.3x 32.7x 57.8x 23.6x - - - - - - - - 93.9% 111.5% -43.9% -61.9% -79.2% -88.4% -100.5%

Five9, Inc. - - - - 4.1x - - - - - 47.8% 47.8% - 31.8% - -22.6% -22.6% -28.6% -27.8% -28.4%

Fleetmatics 5.6x 8.9x 7.6x 7.3x 5.4x 27.8x 35.9x 28.7x 29.1x 22.4x 39.6% 38.7% 38.8% 39.2% 38.3% 20.3% 24.7% 26.6% 25.3% 24.0%

Halogen Software, Inc. 8.0x 5.7x 4.7x 4.4x 2.5x - - - - - - - - 26.3% 22.4% -11.0% -9.1% -8.8% -7.4% -8.9%

inContact, Inc. 3.2x 3.4x 3.0x 3.5x 3.4x 236.3x 243.5x 1078.5x - - 25.5% 24.9% 22.1% 17.9% 16.4% 1.4% 1.4% 0.3% -1.4% -1.2%

IntraLinks Holdings 1.5x 2.1x 2.5x 2.5x 2.1x 19.5x 170.3x - 46.1x 44.2x 4.6% 6.2% 8.0% 8.2% 8.1% 7.9% 1.2% -0.1% 5.5% 4.7%

J2 Global 4.5x 4.9x 4.6x 4.3x 4.2x 9.8x 11.0x 11.0x 10.5x 9.9x 16.0% 29.7% 36.8% 40.2% 35.9% 46.1% 44.5% 41.7% 41.3% 42.2%

Jive Software, Inc 7.0x 5.9x 4.7x 3.5x 3.0x - - - - - 41.2% 36.5% 34.1% 28.2% 25.2% -35.5% -37.0% -38.9% -41.7% -39.6%

LivePerson 2.6x 2.6x 3.1x 3.6x 2.5x 29.8x 36.0x 58.1x 101.2x 69.3x 17.0% 14.9% 14.5% 13.0% 12.3% 8.7% 7.4% 5.4% 3.5% 3.5%

Marin Software 4.2x 4.3x 3.2x 3.1x 2.8x - - - - - - - 34.5% 29.8% 30.2% -39.9% -40.6% -39.2% -38.3% -33.2%

Marketo 11.5x 15.0x 13.1x 15.3x 8.8x - - - - - - - - 64.2% 64.5% -52.8% -49.4% -42.8% -42.4% -39.1%

Medidata Solutions 7.3x 9.0x 11.1x 11.4x 7.4x 45.6x 56.0x 68.2x 99.1x 83.8x 19.2% 24.5% 26.1% 26.8% 25.5% 16.0% 16.0% 16.3% 11.5% 8.9%

Netsuite 18.7x 19.7x 18.6x 18.7x 13.2x - - - - - 31.3% 32.8% 33.5% 34.2% 34.6% -6.3% -7.8% -8.1% -8.9% -8.8%

OPOWER, Inc. - - - - 9.1x - - - - - - - - 71.4% 64.2% -17.3% -11.3% -10.9% -13.1% -16.2%

Paylocity Holding Corp. - - - 13.0x 9.4x - - - 602.0x 479.7x 39.5% 40.3% - - - 8.5% 3.3% 3.2% 2.2% 2.0%

Q2 Holdings, Inc. - - - 8.4x 6.7x - - - - - 52.3% 52.3% - 38.4% - -13.2% -13.2% -19.5% -22.9% -26.0%

Qualys, Inc. 3.4x 4.9x 5.7x 7.2x 5.6x 30.2x 39.9x 46.8x 65.6x 50.5x 19.3% 18.9% 18.5% 18.1% 19.3% 11.1% 12.3% 12.3% 11.0% 11.1%

RealPage 4.4x 4.4x 5.0x 4.2x 3.8x 27.4x 28.0x 31.6x 29.0x 26.9x 22.5% 20.7% 19.4% 17.0% 15.4% 15.9% 15.8% 15.7% 14.4% 14.0%

RingCentral, Inc. - 5.6x 6.7x 7.7x 4.8x - - - - - - - - 40.1% 38.3% -20.1% -21.3% -18.6% -20.0% -20.2%

Salesforce.com 7.4x 7.4x 9.0x 9.4x 7.8x - - - - - 32.1% 31.4% 32.1% 33.5% 35.7% -0.3% -0.5% -0.5% -1.5% -0.7%

SciQuest 6.6x 6.2x 6.8x 7.2x 4.7x 582.2x - - - 280.2x 31.5% 36.7% 37.9% 35.8% 30.6% 1.1% -0.7% -1.9% -0.2% 1.7%

Service-now.com 17.0x 17.7x 18.9x 20.9x 15.2x - - - - - 87.8% 84.5% 80.3% 74.2% 69.3% -9.4% -10.3% -9.5% -10.1% -13.1%

SPS Commerce 7.7x 9.6x 9.8x 9.0x 6.9x 89.2x 108.5x 105.0x 95.4x 72.6x 36.3% 40.2% 40.3% 35.4% 29.9% 8.6% 8.9% 9.4% 9.4% 9.5%

Tangoe 2.8x 3.8x 3.5x 3.5x 2.8x 32.9x 42.3x 38.9x 40.8x 34.6x 41.5% 38.1% 30.8% 22.3% 17.7% 8.7% 8.9% 9.0% 8.7% 8.1%

Textura Corp. 18.7x 23.3x 23.7x 12.7x 8.1x - - - - - - - 63.9% 77.3% - -55.1% -93.0% -86.0% -50.5% -49.3%

The Ultimate Software Group, Inc. 8.5x 10.5x 10.7x 10.5x 8.1x 61.7x 73.0x 73.7x 73.3x 55.3x 24.4% 24.2% 24.9% 23.5% 23.2% 13.8% 14.3% 14.5% 14.3% 14.6%

TrueCar, Inc. - - - - 5.7x - - - - - 4.7% 4.7% - 67.7% - -75.7% -75.7% -22.2% -13.1% -12.3%

Veeva Systems Inc. - - 24.8x 17.9x 10.3x - - 120.7x 92.7x 52.7x - - - 62.2% 58.3% 23.0% 21.8% 20.5% 19.4% 19.5%

Workday, Inc. 32.0x 33.8x 32.2x 34.2x 24.2x - - - - - 88.3% 77.4% 73.6% 71.4% 74.1% -31.9% -28.4% -26.0% -25.3% -24.6%

Zendesk, Inc. - - - - 14.0x - - - - - - - - 88.5% - -60.3% -60.3% -60.3% -26.2% -26.6%

Zix Corporation 4.7x 5.4x 5.2x 5.2x 3.7x 25.3x 33.2x 28.2x 23.3x 15.1x 14.4% 15.5% 14.4% 11.0% 8.3% 18.5% 16.2% 18.5% 22.4% 24.5%

TTM Revenue Growth EBITDA Margin

SEG SaaS Index


61


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


EV/EBITDA 24.1x 36.0x 58.1x 101.6x 69.3x



EBITDA Margin -0.3% -0.5% -0.5% -1.5% -0.7%




TTM Earnings Growth (YoY) -64.7% -69.3% -63.5% -42.6% -25.5%

Current Ratio 1.9 1.9 2.6 2.3 2.4


Enterprise Value Growth (YoY) -37.7% -9.1% 22.5% 27.8% 18.0%

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


EV/EBITDA 89.2x 72.2x 66.9x 62.4x 72.6x



EBITDA Margin -3.4% -7.8% -8.1% -8.9% -8.8%





Current Ratio 1.4 2.5 2.5 2.1 2.1



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


EV/EBITDA 26.6x 29.4x 31.6x 37.1x 52.7x



EBITDA Margin 12.0% 11.8% 11.8% 10.4% 8.9%

Net Income Margin 1.1% 0.2% 0.7% 0.8% -1.0%


TTM EBITDA Growth (YoY) 7.7% 9.3% 6.2% -11.1% -27.1%

TTM Earnings Growth (YoY) -3.1% -36.1% -13.4% -16.0% -20.6%

Current Ratio 1.6 2.0 2.5 2.0 2.1



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

EV/Revenue 8.5x 10.5x 10.7x 12.1x 8.7x

EV/EBITDA 61.7x 73.0x 73.7x 352.0x 267.5x



EBITDA Margin -14.7% -12.8% -10.0% -5.7% -5.3%



TTM EBITDA Growth (YoY) -11.0% -13.3% 2.1% 20.7% -4.6%


Current Ratio 1.1 1.7 1.7 1.6 1.6



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


EV/EBITDA 30.2x 42.3x 42.8x 43.6x 39.4x



EBITDA Margin -7.9% -10.3% -9.5% -13.1% -13.1%




TTM Earnings Growth (YoY) 3.2% -29.0% 76.3% -8.3% -5.6%

Current Ratio 1.7 1.5 2.2 2.2 2.3



62


THE SEG INTERNET INDEX COMPANIES – KEY METRICS

Company


1-800-FLOWERS.COM, Inc. 0.5x 0.5x 0.5x 0.5x 0.5x 8.0x 8.8x 8.3x 7.6x 9.3x 2.0% 4.0% 4.5% 4.5% 1.2% 6.4% 6.1% 6.2% 6.2% 5.2%

58.com Inc. - - 20.2x 22.3x 18.2x - - 392.4x 168.2x 118.0x - - - 67.3% 86.4% -24.4% -6.7% 5.1% 13.2% 15.5%

8x8, Inc. 4.7x 5.5x 6.3x 6.1x 4.6x 35.8x 40.0x 49.1x 63.9x 69.6x 24.5% 21.4% 21.7% 24.2% 23.9% 13.2% 13.8% 12.7% 9.6% 6.6%

Akamai Technologies, Inc. 5.0x 5.3x 5.0x 6.2x 5.7x 14.0x 14.7x 14.1x 17.4x 16.0x 18.3% 17.0% 15.2% 14.8% 16.9% 35.6% 36.0% 35.7% 35.3% 35.5%

Amazon.com, Inc. 1.8x 2.0x 2.3x 2.2x 1.8x 43.4x 45.1x 51.1x 46.2x 36.7x 24.5% 23.0% 22.5% 21.9% 22.1% 4.2% 4.4% 4.5% 4.8% 4.9%

Angie's List, Inc. 7.5x 6.5x 3.6x 3.3x 2.4x - - - - - 70.9% 67.6% 62.7% 57.7% 50.5% -24.6% -17.2% -13.0% -9.8% -7.3%

AOL, Inc. 1.2x 1.1x 1.5x 1.5x 1.3x 6.5x 4.8x 7.9x 7.9x 7.1x 0.9% 1.9% 3.3% 5.8% 7.5% 17.8% 22.6% 18.8% 18.8% 18.4%

Baidu.com, Inc. 7.5x 10.3x 11.2x 10.5x 9.3x 14.0x 20.4x 24.9x 24.3x 22.9x 47.1% 42.2% 40.7% 43.2% 47.7% 54.1% 50.7% 45.0% 43.4% 40.6%

Bankrate, Inc. 3.4x 4.3x 4.7x 4.0x 3.7x 14.2x 19.8x 21.4x 16.7x 15.5x -2.1% -10.5% -10.3% 0.1% 10.2% 23.8% 21.9% 21.8% 23.8% 23.6%

Bitauto Holdings Limited 1.9x 2.4x 4.8x 5.7x 5.7x 11.7x 13.7x 24.8x 28.3x 27.2x 51.5% 45.6% 41.0% 36.2% 38.9% 16.5% 17.7% 19.5% 20.0% 21.0%

BlueNile 0.9x 1.0x 1.2x 0.8x 0.7x 24.8x 28.0x 32.8x 21.8x 19.2x 18.0% 19.3% 12.5% 12.5% 10.3% 3.5% 3.6% 3.5% 3.5% 3.6%

Borderfree, Inc. - - - 4.9x 3.5x - - - 401.0x 316.4x - - - 35.7% 20.6% 2.4% 0.8% 0.0% 1.2% 1.1%

Brightcove Inc. 2.0x 2.6x 3.5x 2.6x 2.3x - - - - - 31.7% 27.7% 27.2% 24.9% 25.4% -9.9% -8.2% -5.6% -1.7% -0.9%

BroadSoft, Inc. 4.1x 4.9x 4.0x 4.2x 3.4x 29.6x 53.6x 91.7x 584.9x - 13.2% 9.4% 8.0% 8.3% 10.0% 13.8% 9.2% 4.3% 0.7% -1.7%

Carbonite, Inc. 2.5x 3.1x 2.6x 2.0x 1.9x - - - 92.6x 24.2x 35.9% 33.2% 31.4% 27.5% 24.2% -6.0% -3.0% -0.3% 2.2% 7.8%

Care.com, Inc. - - - 8.8x 3.1x - - - - - 86.5% 86.5% 68.0% 68.0% - -36.0% -36.0% -25.0% -25.0% -30.2%

ChangYou.com 2.2x 2.2x 2.0x 1.9x 1.7x 3.5x 3.5x 3.3x 4.0x 5.7x 28.6% 25.2% 18.7% 18.4% 11.6% 63.0% 61.4% 58.7% 47.6% 29.8%

Conversant, Inc. 3.8x 2.3x 2.3x 3.0x 2.8x 10.7x 7.3x 6.9x 8.2x 8.1x -5.5% 24.8% 24.7% 6.2% 10.7% 35.0% 31.9% 32.7% 36.1% 34.9%

Coupons.com, Inc. - - - 11.7x 8.2x - - - - - 22.8% 22.8% - 49.7% - -47.4% -47.4% -9.6% -2.1% -4.9%

Criteo Corp. - - 3.4x 3.2x 2.3x - - 99.7x 63.1x 37.9x - - - 63.3% 61.7% 4.1% 2.3% 3.5% 5.1% 6.2%

Ctrip 4.6x 6.8x 7.3x 5.9x 7.2x 27.6x 41.6x 41.8x 33.5x 47.9x 21.0% 23.6% 26.7% 29.5% 31.7% 16.7% 16.3% 17.4% 17.8% 15.0%

DangDang 0.4x 0.6x 0.5x 0.6x 0.7x - - - - - 35.6% 29.3% 24.1% 21.8% 23.6% -7.7% -6.4% -5.0% -2.3% -0.8%

DemandMedia 1.5x 1.2x 1.0x 1.0x 0.8x 8.4x 7.0x 6.6x 9.2x 10.1x 19.1% 16.7% 10.8% 3.7% -2.8% 17.6% 17.6% 15.1% 11.4% 8.3%

Digital River Inc. 0.6x 0.8x 0.8x 0.8x 0.7x 5.9x 11.1x 13.8x 9.1x 8.4x -5.8% 2.4% 4.7% 5.2% -0.7% 10.3% 7.3% 5.6% 8.3% 7.9%

eBay Inc. 4.5x 4.2x 4.0x 4.1x 3.7x 15.2x 14.4x 13.6x 13.8x 12.6x 17.4% 15.4% 15.2% 14.0% 13.9% 29.5% 29.3% 29.5% 29.7% 29.6%

eHealth, Inc. 2.0x 2.6x 4.2x 4.9x 3.3x 15.2x 22.1x 38.1x 76.7x 140.4x 6.9% 10.2% 11.1% 15.2% 15.7% 13.1% 11.6% 10.9% 6.5% 2.3%

Envivio, Inc. - 0.6x 0.8x 1.1x 0.5x - - - - - -38.8% -36.5% -18.1% 10.5% 33.2% -49.8% -43.4% -31.5% -20.8% -19.8%

Everyday Health, Inc. - - - - 4.0x - - - - 46.8x - - - 12.5% 17.1% 1.0% 1.0% 3.1% 6.8% 8.5%

Expedia 1.8x 1.5x 1.7x 2.1x 1.9x 11.8x 10.5x 12.3x 15.2x 14.3x 19.5% 19.8% 19.6% 18.4% 17.3% 15.2% 13.9% 13.9% 13.7% 13.2%

Facebook 10.0x 14.0x 16.4x 19.4x 16.3x 42.0x 31.0x 34.5x 38.9x 31.1x 35.9% 41.4% 48.2% 54.7% 62.4% 23.7% 45.2% 47.5% 49.9% 52.3%

GeekNet 0.3x 0.4x 0.6x 0.5x 0.3x - 42.6x 26.5x 68.0x 69.8x 25.2% 19.4% 21.3% 16.3% 16.9% -0.2% 1.0% 2.4% 0.8% 0.4%

Giant Interactive 3.8x 3.8x 4.6x 5.6x 6.0x 5.9x 5.9x 7.2x 8.5x 9.1x 16.8% 14.4% 11.9% 9.5% 6.4% 64.8% 64.9% 63.6% 65.7% 65.5%

Google Inc. 4.7x 4.6x 5.3x 5.7x 5.1x 14.4x 14.6x 16.6x 19.0x 17.2x 31.3% 28.1% 21.6% 19.2% 18.7% 32.6% 31.6% 31.7% 30.1% 29.8%

Groupon 1.4x 2.2x 2.3x 2.3x 1.2x 22.9x 40.2x 45.5x 41.9x 27.9x 26.8% 17.9% 11.7% 10.2% 14.9% 6.0% 5.5% 5.1% 5.4% 4.3%

GrubHub Inc. - - - - 14.8x - - - - 64.4x 35.8% 35.8% - 66.6% - 16.1% 16.1% 20.1% 21.8% 23.0%

Harmonic Inc 0.9x 1.2x 1.1x 1.0x 1.1x 20.1x 19.0x 18.3x 16.0x 17.7x -13.3% 2.1% 2.1% 1.3% 1.3% 4.7% 6.1% 6.1% 6.5% 6.5%

HomeAway 7.7x 7.6x 8.3x 10.0x 7.0x 40.1x 41.3x 46.0x 58.4x 43.1x 22.0% 21.7% 22.6% 23.6% 26.0% 19.1% 18.3% 18.0% 17.1% 16.1%


SEG Internet Index

63



Company


Interactive Intelligence, Inc. 3.6x 4.0x 4.1x 4.4x 3.1x 59.8x 56.2x 49.9x 49.4x 49.0x 20.2% 28.5% 32.7% 34.1% 25.8% 6.0% 7.1% 8.2% 8.9% 6.4%

InterActiveCorp 1.5x 1.4x 1.5x 2.0x 1.9x 9.5x 8.9x 8.6x 10.8x 10.6x 29.6% 24.1% 16.4% 7.9% 4.1% 15.5% 16.1% 17.6% 18.0% 17.5%

LifeLock, Inc. 2.4x 2.8x 3.5x 4.4x 2.6x 33.9x 64.7x 83.9x 59.1x 43.3x 44.9% 41.2% 38.2% 33.7% 31.3% 7.1% 4.4% 4.2% 7.4% 5.9%

Limelight Networks, Inc. 0.4x 0.5x 0.4x 0.5x 0.6x - - - - - 4.3% 1.7% -1.1% -3.8% -7.1% -1.4% -3.5% -5.0% -5.9% -7.0%

LinkedIn 16.8x 20.3x 17.7x 14.7x 10.4x 124.6x 159.3x 145.7x 134.5x 105.1x 79.8% 71.9% 65.6% 57.2% 51.3% 13.5% 12.8% 12.1% 10.9% 9.9%

Liquidity Services, Inc. 2.0x 1.8x 1.5x 1.4x 0.8x 10.0x 10.3x 8.3x 7.9x 5.4x 25.8% 15.4% 6.4% 2.9% 1.5% 20.2% 17.9% 18.0% 17.4% 15.0%

Mail.ru Group 6.7x 8.3x 10.2x 9.6x 7.4x 17.5x 21.0x 24.1x 22.3x 17.2x 35.8% 32.2% 30.7% 29.4% 29.4% 38.4% 39.4% 42.4% 43.2% 43.2%

MakeMyTrip 1.8x 1.8x 2.1x 3.5x 3.9x - - - - - 16.4% 15.9% 15.7% 13.2% 11.6% -6.5% -8.4% -9.3% -7.8% -5.1%

Marchex Inc. 1.5x 1.6x 1.9x 2.2x 2.4x 80.7x 73.9x 74.2x 50.4x 50.1x -13.8% -1.1% 8.2% 14.9% 27.5% 1.8% 2.1% 2.5% 4.3% 4.8%

Mecox Lane Limited 0.1x 0.3x 0.4x 0.4x 0.4x - - - - - -34.4% -36.7% -38.9% -42.4% -36.9% -17.4% -15.1% -14.7% -21.3% -15.4%

Mercadolibre, Inc. 11.8x 12.4x 10.9x 8.6x 7.5x 32.4x 35.1x 31.6x 24.5x 21.2x 22.2% 22.1% 24.0% 26.5% 23.6% 36.4% 35.4% 34.3% 35.0% 35.4%

Mitel Networks Corp. 0.7x 0.7x 1.1x 2.0x 2.0x 5.1x 6.4x 7.4x 17.0x 17.5x -5.7% - -2.1% - - 13.8% 11.6% 15.3% 11.9% 11.6%

Monster Worldwide, Inc. 0.7x 0.7x 0.8x 1.0x 0.9x 4.7x 4.4x 5.3x 7.3x 7.3x -10.1% -10.1% -10.0% -9.3% -8.6% 15.0% 15.8% 15.4% 13.9% 12.6%

NCSoft 3.2x 3.5x 4.4x 4.7x 4.5x 11.7x 9.5x 12.5x 14.7x 14.6x 34.1% 46.6% 36.3% 0.4% -5.9% 27.6% 32.2% 34.7% 31.8% 30.7%

Netease 3.7x 4.4x 4.3x 4.3x 4.2x 7.9x 9.2x 8.9x 8.8x 8.6x 8.1% 8.8% 12.6% 12.1% 12.2% 47.4% 47.6% 48.7% 49.1% 48.5%

Netflix 3.3x 3.8x 4.7x 5.4x 4.6x 94.8x 87.8x 91.9x 85.7x 61.4x 12.1% 14.1% 17.1% 21.2% 22.8% 3.5% 4.4% 5.1% 6.3% 7.4%

Orbitz 1.3x 1.6x 1.3x 1.4x 1.3x 10.0x 11.5x 9.2x 10.0x 8.6x 2.6% 6.0% 9.5% 8.8% 7.9% 13.0% 13.5% 14.1% 13.7% 14.9%

Overstock.com, Inc. 0.4x 0.5x 0.4x 0.3x 0.2x 20.8x 21.8x 18.9x 15.7x 12.9x 9.3% 13.9% 16.6% 18.6% 16.1% 2.2% 2.4% 2.4% 1.7% 1.6%

Pandora 5.4x 6.3x 8.5x 11.0x 6.7x - - - - - 55.2% 56.0% 53.5% 53.5% - -8.2% -7.5% -7.1% -7.1% -1.0%

Perfect World 0.8x 1.6x 1.2x 1.3x 0.9x 3.0x 7.5x 6.0x 6.2x 4.6x -10.5% -6.0% -0.6% 10.2% 24.5% 27.0% 21.2% 20.3% 20.9% 20.5%

PetMed Express, Inc. 0.9x 1.1x 1.1x 1.0x 1.0x 7.7x 8.8x 8.7x 7.7x 7.9x -4.4% -0.2% 0.8% 1.4% 2.4% 12.3% 12.6% 12.5% 12.4% 12.5%

Polycom, Inc. 0.9x 0.8x 0.9x 1.1x 1.1x 11.1x 11.3x 11.1x 12.6x 11.2x -2.9% -5.1% -3.7% -1.7% -2.0% 8.0% 7.4% 8.0% 8.7% 9.7%

Priceline 6.5x 7.6x 8.3x 8.6x 8.2x 17.8x 20.9x 22.0x 22.8x 21.7x 20.6% 22.3% 27.3% 29.1% 29.1% 36.7% 36.4% 37.8% 37.6% 37.6%

Qihoo 12.2x 18.3x 17.8x 17.3x 13.0x 68.2x 82.1x 67.3x 56.7x 43.5x 72.6% 78.1% 91.5% 104.0% 123.6% 17.9% 22.3% 26.4% 30.6% 29.8%

QuinStreet 0.9x 1.2x 1.1x 0.9x 0.7x 7.5x 10.9x 11.0x 9.8x 10.0x -16.8% -17.6% -12.8% -9.5% -7.7% 12.1% 11.0% 10.2% 9.0% 7.3%

ReachLocal, Inc. 0.7x 0.5x 0.5x 0.4x 0.2x 21.1x 16.8x 16.6x 17.2x 27.4x 19.6% 17.5% 15.3% 13.0% 9.4% 3.2% 3.2% 3.1% 2.6% 0.9%

Renren Inc 1.3x 2.3x 2.2x 2.2x 1.7x - - - - - 30.5% 35.8% 20.3% -1.8% -17.1% -27.7% -46.7% -54.1% -58.4% -71.0%

Rocket Fuel - 11.4x 8.6x 7.5x 3.0x - - - - - - - - 125.7% 115.9% -8.5% -7.7% -7.7% -4.3% -4.8%

Rovi Corporation 6.1x 5.3x 5.4x 5.3x 5.4x 22.2x 19.6x 22.6x 15.7x 15.4x -29.9% -28.6% -29.7% 2.3% 11.9% 27.6% 26.9% 24.1% 33.7% 35.0%

SeaChange International Inc. 1.6x 1.7x 2.1x 1.8x 1.4x 27.0x 15.7x 18.5x 32.1x 935.2x -3.2% -1.8% -0.4% -6.9% -13.5% 5.9% 10.8% 11.4% 5.6% 0.1%

ShoreTel, Inc. 0.7x 0.8x 1.3x 1.5x 1.1x - - 647.7x 46.3x 26.1x 36.4% 27.1% 20.6% 17.0% 9.9% -3.1% -2.2% 0.2% 3.1% 4.4%

Shutterfly 2.5x 2.8x 2.5x 2.1x 1.8x 19.7x 23.9x 22.4x 19.3x 18.0x 31.3% 32.0% 31.1% 22.3% 20.7% 12.5% 11.8% 11.0% 11.0% 9.8%

Shutterstock, Inc. 7.8x 8.9x 11.0x 11.5x 8.9x 37.0x 40.8x 53.5x 57.7x 48.8x 38.4% 38.4% 39.6% 38.9% 40.4% 21.0% 21.8% 20.6% 20.0% 18.2%

SINA Corporation 5.6x 7.8x 7.7x 6.0x 3.6x 98.1x 297.8x 128.9x 69.0x 43.0x 12.3% 14.7% 16.0% 25.7% 29.4% 5.7% 2.6% 6.0% 8.7% 8.5%

Sohu.com Inc. 1.7x 1.7x 1.6x 1.7x 1.2x 5.3x 5.8x 5.7x 7.5x 9.2x 27.0% 28.1% 29.6% 31.2% 27.0% 31.6% 30.0% 28.0% 22.4% 13.4%

Sonus Networks, Inc 1.9x 2.7x 2.2x 2.3x 2.3x - - - 93.1x 94.6x -1.4% 8.9% 8.9% 12.3% 12.3% -9.8% -3.2% -3.2% 2.5% 2.5%

SouFun Holdings Ltd. 4.9x 6.2x 9.6x 10.6x 6.7x 9.8x 12.3x 17.8x 18.6x 11.9x 28.0% 34.9% 43.2% 48.1% 44.2% 49.7% 50.7% 53.6% 57.1% 56.5%


SEG Internet Index

64



Company


Stamps.com 4.3x 4.8x 5.1x 4.2x 3.5x 17.3x 18.4x 18.6x 14.6x 12.5x 11.6% 13.5% 11.3% 10.5% 8.0% 24.7% 26.3% 27.3% 28.7% 28.3%

Synacor, Inc 0.4x 0.4x 0.3x 0.3x 0.3x 6.0x 6.8x 7.5x 9.7x 24.4x 16.9% 1.7% -3.5% -8.3% -10.4% 7.0% 5.3% 4.3% 3.5% 1.2%

Tencent Holdings 8.1x 9.8x 10.8x 12.6x 11.9x 21.2x 26.8x 30.7x 36.8x 35.2x 50.3% 45.1% 40.2% 37.7% 36.6% 38.2% 36.7% 35.3% 34.2% 33.9%

The Rubicon Project, Inc. - - - - 5.5x - - - - - 54.0% 54.0% - 46.9% - 6.6% 6.6% 1.7% 2.2% -3.1%

TheStreet.com, Inc. 0.4x 0.4x 0.5x 0.8x 0.6x - - - - - -10.6% -4.5% 4.5% 7.4% 11.4% -2.6% -3.3% -3.5% -0.7% -0.5%

Travelzoo 2.2x 2.4x 1.6x 1.7x 1.4x 11.7x 13.7x 9.1x 10.1x 8.3x 2.2% 2.3% 5.7% 4.7% 1.5% 19.2% 17.4% 17.1% 17.2% 16.8%

Tree.Com, Inc. 1.6x 1.5x 1.9x 2.0x 1.4x 80.9x 33.3x 36.7x 27.6x 21.3x 71.1% 108.9% 97.6% 79.8% 63.8% 1.9% 4.5% 5.3% 7.1% 6.7%

Tremor Video, Inc. 3.6x 3.8x 1.3x 1.0x 0.9x - - - - - - - - 25.3% 25.9% -5.5% -1.4% -1.9% -5.5% -6.5%

TripAdvisor Inc 10.3x 12.2x 13.0x 13.5x 12.5x 25.7x 31.3x 35.9x 40.9x 38.7x 20.5% 22.8% 23.3% 23.8% 23.0% 39.9% 38.9% 36.2% 32.9% 32.3%

Trulia, Inc. 10.1x 13.5x 11.6x 8.6x 7.5x - - - - - 87.8% 81.1% 93.3% 111.1% 118.0% -5.3% -0.7% -2.6% -7.1% -10.4%

Tucows Inc. 0.7x 0.8x 0.9x 1.1x 1.1x 12.2x 15.2x 14.8x 16.4x 15.3x 14.8% 12.2% 13.7% 13.3% 14.7% 5.3% 5.0% 6.4% 6.6% 7.2%

Twitter, Inc. - - 45.4x 44.3x 25.9x - - - - - - - - 109.8% 112.5% -5.8% -5.4% -10.6% -80.0% -76.9%

VeriSign 6.8x 6.8x 7.5x 7.4x 6.4x 11.1x 11.0x 12.0x 12.1x 10.5x 13.6% 13.3% 12.1% 10.5% 8.1% 60.7% 61.9% 62.5% 61.0% 61.0%

VistaPrint 1.5x 1.7x 1.7x 1.5x 1.2x 15.6x 18.4x 17.7x 13.3x 11.2x 16.3% 14.4% 12.4% 9.6% 6.5% 9.5% 9.1% 9.7% 11.4% 11.1%

WebMD Health Corp. 2.3x 2.7x 2.8x 3.5x 3.4x 31.9x 28.3x 22.6x 24.5x 20.7x -10.9% -3.4% 2.9% 9.7% 12.8% 7.1% 9.7% 12.2% 14.3% 16.2%

Wix.com Ltd. - - 11.6x 12.2x 6.2x - - - - - - - - 84.2% 88.5% -30.5% -27.1% -28.5% -31.8% -37.2%

XO Group 1.6x 1.9x 2.2x 1.8x 1.7x 10.6x 12.1x 13.1x 13.8x 14.2x 2.5% 3.1% 4.3% 3.6% 4.9% 15.3% 16.1% 16.8% 13.2% 11.7%

Xoom 6.3x 8.4x 7.5x 6.4x 4.7x - 195.6x 97.2x 69.2x 53.1x - - 52.9% 52.7% 53.1% -2.3% 4.3% 7.7% 9.3% 8.9%

Xunlei Limited - - - - 3.8x - - - - 16.0x 71.6% 71.6% 71.6% 24.2% - 37.0% 37.0% 37.0% 26.5% 23.9%

Yahoo! Inc. 5.0x 5.5x 7.1x 7.8x 7.1x 18.6x 20.8x 28.4x 35.5x 37.5x -1.7% -3.1% -4.1% -6.1% -4.7% 27.1% 26.6% 24.9% 22.0% 19.0%

Yandex 8.3x 10.4x 11.0x 9.7x 7.9x 19.0x 23.5x 25.7x 23.9x 20.3x 40.3% 37.1% 37.3% 37.3% 37.2% 43.8% 44.2% 42.7% 40.7% 39.0%

Yelp, Inc. 11.6x 18.2x 21.5x 24.2x 16.1x - - - 6203.7x 3101.0x 66.0% 66.6% 67.7% 69.4% 68.4% -2.7% -1.1% -0.3% 0.4% 0.5%

Youku 7.9x 8.4x 9.3x 9.2x 6.8x - 354.3x 173.3x 92.4x 58.4x 96.3% 95.8% 88.1% 68.7% 57.4% -0.6% 2.4% 5.4% 10.0% 11.7%

YuMe, Inc. - 2.4x 1.6x 1.1x 0.9x - 41.0x 32.0x 39.1x 55.1x - - - 29.5% 31.2% 7.1% 6.0% 5.0% 2.9% 1.6%

YY, Inc. 6.5x 9.8x 10.2x 11.5x 9.3x 32.6x 46.4x 41.4x 39.9x 30.2x 151.5% 132.1% 121.9% 122.4% 117.8% 20.0% 21.1% 24.5% 28.8% 30.8%

Zillow 12.8x 19.6x 16.0x 15.1x 17.5x 210.1x - - - - 71.3% 69.9% 69.5% 69.1% 69.1% 6.1% -1.6% -5.5% -2.8% -2.9%


SEG Internet Index

65


THE SEG INTERNET INDEX METRICS BY PRODUCT CATEGORYAd Tech & Lead Generation 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 16.7x 20.4x 25.3x 24.1x 22.1x



EBITDA Margin 6.6% 6.0% 5.3% 7.1% 6.7%

Net Income Margin 3.5% -0.1% -0.5% 0.2% -0.9%




Current Ratio 2.4 2.0 2.4 2.9 2.7



Commerce 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 15.2x 16.4x 18.9x 18.9x 16.0x



EBITDA Margin 5.3% 5.2% 5.4% 7.3% 6.6%





Current Ratio 1.6 1.7 1.6 2.0 2.0



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


EV/EBITDA 14.6x 20.8x 22.6x 24.6x 18.4x



EBITDA Margin 15.4% 16.1% 15.9% 13.7% 13.9%




TTM Earnings Growth (YoY) 85.8% 24.8% 48.2% -33.5% -56.6%

Current Ratio 1.9 2.0 2.4 2.6 2.9



Gaming 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 6.9x 7.8x 8.0x 8.6x 9.2x



EBITDA Margin 34.9% 36.5% 35.0% 33.0% 30.2%





Current Ratio 2.4 2.4 2.2 2.2 2.5



Infrastructure 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 13.1x 15.2x 16.5x 16.9x 17.6x



EBITDA Margin 6.5% 7.2% 6.3% 6.5% 6.4%

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


TTM EBITDA Growth (YoY) -26.7% -14.8% 10.1% 8.8% 17.9%


Current Ratio 3.1 3.1 3.2 2.7 2.4



Services 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 17.6x 23.0x 29.5x 27.7x 24.2x



EBITDA Margin 6.6% 4.4% 6.5% 7.3% 8.1%

Net Income Margin 0.3% 0.6% -0.2% 0.5% -1.3%




Current Ratio 2.2 1.7 1.5 2.1 2.3



Social 2Q13 3Q13 4Q13 1Q14 2Q14

EV/Revenue 8.3x 11.9x 16.4x 14.7x 10.4x

EV/EBITDA 37.3x 38.7x 37.9x 39.7x 31.1x



EBITDA Margin 13.5% 12.8% 12.1% 10.9% 9.9%





Current Ratio 4.6 3.8 4.6 9.7 9.6


Enterprise Value Growth (YoY) n/a n/a n/a 105.7% 83.6%

Travel 2Q13 3Q13 4Q13 1Q14 2Q14


EV/EBITDA 11.8x 13.7x 12.3x 15.3x 14.3x



EBITDA Margin 16.0% 15.1% 15.6% 15.4% 15.0%



TTM EBITDA Growth (YoY) 0.7% -2.1% 3.2% 3.4% 10.1%

TTM Earnings Growth (YoY) -2.3% -11.5% 20.0% 18.2% 33.6%

Current Ratio 1.7 1.8 1.6 1.5 1.5



66


PUBLIC SELLERS

Buyer Seller

Purchase Price

(mm)

Enterprise Value

(mm) EV/Rev EV/EBITDA

TTM Rev

Growth

Oracle Corporation (NYSE:ORCL) MICROS Systems, Inc. (NasdaqGS:MCRS) $5,262.5 $4,604.1 3.4x 17.5x 7.7%

Hyland Softw are UK Ltd ReadSoft AB (OM:RSOF B) $197.0 $183.9 1.6x 30.1x 2.2%

Tuition Build Inc. Limelight Netw orks, Inc. (NasdaqGS:LLNW) $660.5 $548.1 3.3x - -7.1%

The Priceline Group Inc.

(NasdaqGS:PCLN)

OpenTable, Inc. (NasdaqGS:OPEN) $2,613.1 $2,495.5 12.6x 41.5x 18.2%

Aurea Softw are FZ-LLC Update Softw are AG (XTRA:UP2) $53.7 $34.6 0.7x - 3.5%

67


MEGA DEALS

Buyer Seller

Purchase Price

(mm)

Enterprise Value

(mm) EV/ Rev

EV/

EBITDA

TTM Rev

Growth

Oracle Corporation (NYSE:ORCL) MICROS Systems, Inc. (NasdaqGS:MCRS) $5,262.5 $4,604.1 3.4x 17.5x 7.7%

The Priceline Group Inc.

(NasdaqGS:PCLN)

OpenTable, Inc. (NasdaqGS:OPEN) $2,613.1 $2,495.5 12.6x 41.5x 18.2%

NPC Group, Inc. Mercury Payment Systems, LLC $1,650.0 $1,650.0 7.0x 17.7x -

Relativity Media LLC Fullscreen, Inc. $1,000.0 $1,000.0 - - -

Insight Venture Partners; GIC Special

Investments Pte. Ltd.

iParadigms, LLC $752.0 $752.0 - - -

Nest Labs, Inc. Dropcam, Inc. $555.0 $555.0 - - -

Tuition Build Inc. Limelight Netw orks, Inc. (NasdaqGS:LLNW) $660.5 $548.1 3.3x - -7.1%

Zhejiang Rongxin Netw ork Technology

Co., Ltd.

Hangzhou Handsome Electronics Group Co. Ltd. $531.7 $531.7 - - -

IMS Health Holdings, Inc. (NYSE:IMS) Cegedim SA, Information Solutions and Customer Relationship

Management Business

$523.2 $523.2 0.9x 6.0x -

68


MOST ACTIVE BUYERS

Buyer Seller

Purchase Price

(mm)

Enterprise Value

(mm) EV/Rev EV/EBITDA

TTM Rev

Growth

Google Inc. (NasdaqGS:GOOGL) Appurify, Inc. - - - - -

mDialog Corp. - - - - -

Divide - - - - -

Quest Visual, Inc. - - - - -

Stackdriver Inc. - - - - -

APPETAS, INC. - - - - -

Adometry, Inc. - - - - -

Rangespan Limited - - - - -

Dropbox Inc. Parastructure, Inc. - - - - -

MobileSpan, Inc. - - - - -

Photo Lab Inc. - - - - -

Aria Glassw orks, Inc. - - - - -

HackPad Inc. - - - - -

Loom, Inc. - - - - -

Tw itter, Inc. (NYSE:TWTR) Afterlive.tv Inc - - - - -

Namo Media, Inc. - - - - -

Gnip, Inc. - - - - -

Apps & Zerts, Inc. - - - - -

Accela, Inc. Envista Corporation, Inc. - - - - -

IQM2, Inc. - - - - -

Des Lauriers Municipal Solutions, Inc. - - - - -

Intuit Inc. (NasdaqGS:INTU) Check, Inc. $360.0 $360.0 - - -

Invitco Pty Limited - - - - -

Lettuce, Inc. - - - - -

69


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2Q 2014 Software Valuations and M&A Activity

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