Technology, Media & Telecom INFRASTRUCTURE SOFTWARE SECTOR REVIEW | Q3 2018 Investment banking services are provided by Harris Williams LLC and Solebury Capital LLC, registered broker-dealers and members of FINRA and SIPC, and Harris Williams Ltd, which is private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams is a trade name under which Harris Williams LLC and Harris Williams Ltd conduct business. INFRASTRUCTURE SOFTWARE SECTOR REVIEW | Q3 2018 HW Infrastructure Software Introduction TECHNOLOGY, MEDIA & TELECOM HARRIS WILLIAMS (“HW”) AS A FIRM Jeff Bistrong (“TMT”) GROUP Managing Director • Founded in 1991 • 35 professionals across Boston, San Francisco, and London [email protected] Office: (617) 654-2102 • 300+ professionals across eight offices globally • 47 closed transactions in the last 24 months • 140+ closed transactions in the last 24 months Internet and Digital Media Software / SaaS Tyler Dewing • 20th record year in 2017 • Consumer Internet • Enterprise Software Managing Director • Digital Media and Content • Data and Analytics [email protected] Office: (617) 654-2133 • 10 industry groups • eCommerce and Retail • Data Center and Managed • Mobile Services • Online Marketing • IT and Tech-Enabled Services Sam Hendler Managing Director TMT Vertical Focus Areas [email protected] Office: (617) 654-2117 • Education Technology • Membership Management 2017 • Fintech • Public Sector Software 2017 • Healthcare IT • Supply Chain, Transportation Thierry Monjauze • Human Capital Management and Logistics Managing Director • Internet and Digital Media • Infrastructure and Security [email protected] • Manufacturing Technology Software Office: +44 (0) 20 7518 8901 1,2,3,4 Mike Wilkins OBSERVATIONS ON KEY INFRASTRUCTURE SOFTWARE TRENDS Managing Director [email protected] • Led by big moves from strategic buyers, including Microsoft, IBM, and Salesforce, year to date 2018 has been an Office: (415) 217-3411 active period for infrastructure software with over 200 transactions in Q3 2018 alone • The public markets have also continued to be favorable, with nearly 25 initial public offerings in the last 24 Julien Oussadon months Director [email protected] • Software targeted at teams – developers, marketers, and professional services – that are lightweight, easy to use, Office: +44 (0)20 7518 8909 and can be purchased and deployed over the web are witnessing increased demand and bypassing the traditional IT and enterprise buying processes Erik Szyndlar Director • Security remains top of mind for both large and small organizations as large scale cloud adoption leaves them [email protected] with connected devices and increased exposure to threats Office: (415) 217-3418 • While industrial tech and infrastructure tech companies continue to make separate investments in their IoT platforms, this area will come increasingly into focus with resulting partnerships and M&A, especially as billions of Priyanka Naithani Vice President intelligent devices are connected to the cloud, and organizations look for platforms that can turn these massive [email protected] amounts of data into real-time business value Office: (617) 654-2115 TECHNOLOGY, MEDIA & TELECOM PAGE | 1 INFRASTRUCTURE SOFTWARE SECTOR REVIEW | Q3 2018 Infrastructure Software Taxonomy SOFTWARE DEVELOPMENT / DEVOPS IT OPERATIONS MANAGEMENT SECURITY Solutions that enable the Solutions that help to manage Solutions that protect software software development lifecycle, the provisioning, capacity, and systems against malicious including planning, creating, performance, and availability attacks, unauthorized access testing, and deploying software of an organization's IT and resource use, and other applications and systems infrastructure external and internal risks Infrastructure / Application IT GRC and Service and Identity and Continuous Integration Version Test App / Database Operations Network / App / Advanced Threat SIEM / Security Lifecycle Asset Support Access / Continuous Delivery Management Management Performance Analytics Data Security Protection Analysis Management Management Management Management Monitoring Select Market Participants Select Market Participants Select Market Participants DATA MANAGEMENT CLOUD MANAGED SERVICES COLLABORATION / COMMUNICATION Solutions that integrate, Solutions that manage cloud Solutions that enable groups cleanse, migrate, and manage security, computing, storage, and teams to communicate, data across platforms to network operations, and share, coordinate, cooperate, produce accurate and application stacks to automate and solve problems for the consistent information and enhance business purpose of completing a task operations Project Business Data Quality and Database Data PaaS / aPaaS / Managed Hosting Managed Backup and Communications Agile Project Data Integration Portfolio Process Governance Management Analytics iPaaS and Applications Security Disaster Recovery PaaS Management Management Management Select Market Participants Select Market Participants Select Market Participants TECHNOLOGY, MEDIA & TELECOM PAGE | 2 INFRASTRUCTURE SOFTWARE SECTOR REVIEW | Q3 2018 Select Infrastructure Software M&A Transactions1,2 Announced July 2, 2018 EQT’s pending acquisition of SUSE • SUSE provides enterprise-grade open source solutions including Linux enterprise server, Open Stack cloud technology, and software defined storage, for managing on-premise and cloud workloads. • The Company’s main product is SUSE Linux Enterprise server - an enterprise-grade supported version of open source Linux, that Enterprise Value: $2,540M EV / Rev: 6.9X competes directly with and occupies the #2 position behind Red Hat Enterprise Linux in the paid Linux market. • For EQT, SUSE provides a compelling thesis around open source and cloud, as Linux increasingly becomes the OS of choice across Rev: $366M EV / EBITDA: 22.7X public and private clouds as a result of better performance, lower TCO and ability to use commodity hardware, and reduced vendor lock-in across paid and unpaid versions, as well as an increased uptake of OpenStack-based infrastructure. Closed November 5, 2018 Broadcom’s acquisition of CA • CA provides a diversified portfolio of IT management and application development solutions across mainframe, cloud, mobile and distributed environments. • The Company’s Mainframe solutions comprise more than 50% of revenue and it is a leader in the space (only behind IBM) with nearly Enterprise Value: $19,000M EV / Rev: 4.6X 90% of the Fortune 500 as customers. • The acquisition will provide Broadcom with significant customer and product diversification, and cross sell through access to larger Rev: $4,148M EV / EBITDA: 14.3X enterprise data centers where CA’s mainframe solutions are deeply embedded and mission critical. Broadcom has since sold Veracode, the application security company acquired by CA in March 2017, whose customer base is largely midsize enterprises. Closed October 26, 2018 Microsoft’s acquisition of GitHub • GitHub is a source code management platform based on the open source Git distributed version control system. The company enables the hosting of open-source projects while providing paid support for private code repositories. • The Company’s solutions provide code review, project management, documentation, and code hosting along with many other Enterprise Value: $7,500M EV / Rev: NA developer collaboration features. Over 30 million developers utilize the platform including a large portion of the open source community. Rev: NA EV / EBITDA: NA • Microsoft paid a significant premium to for access to a large and loyal developer ecosystem which over time will provide a strong base for cross sell (especially Azure). Similar to LinkedIn, Microsoft plans to run GitHub independently. Closed October 1, 2018 Siemens’ acquisition of mendix • mendix is a low-code application development environment that empowers business users to build web and mobile applications using visual modeling tools and high level code constructs. It allows business users to tap into existing disparate applications, databases, and reusable components/templates to quickly and easily create rich and more relevant applications. Enterprise Value: $730M EV / Rev: NA • The acquisition is highly complementary to Siemens’ Mindsphere IoT platform which is enabling business users to create rich apps that tap into the physical infrastructure of their products, plants, systems, and machines. Rev: NA EV / EBITDA: NA • The acquisition will allow Siemens to combine mendix’s leadership in low code development, providing rich user experience and digital connectivity, with Mindsphere’s wealth of IoT data and physical infrastructure connectivity. Closed August 15, 2018 Thoma Bravo’s acquisition of Centrify • Centrify provides identity and access management (“IAM”) software solutions to over 5,000 organization worldwide, including more than 50% of the Fortune 50. • The Company’s solutions include privileged access management (“PAM”) where the client base is majority larger enterprises and Enterprise Value: NA EV / Rev: NA Identity as a Service (“IDaaS”) solutions where client base is largely small to midsize enterprises. 50% of sales are direct. • Thoma Bravo