Technology Capital Markets Monthly Update March, 2018
PIPER JAFFRAY TECHNOLOGY BANKING TEAM
Michael Kim Joel Schneider Garin Arevian MANAGING DIRECTOR MANAGING DIRECTOR MANAGING DIRECTOR Global Group Head Equity Capital Markets Vertical Market Software and SaaS Application Software Technology & Consumer Tech-Enabled Services E [email protected] E [email protected] E [email protected]
Jason Harkness Greg Klancher Andy Livadariu MANAGING DIRECTOR PRINCIPAL MANAGING DIRECTOR Internet and Digital Media Infrastructure, Security and Cloud SaaS Application Software E [email protected] E [email protected] E [email protected]
Peter Lombard Jason Myler Steven Schmidt MANAGING DIRECTOR MANAGING DIRECTOR MANAGING DIRECTOR Head of Technology M&A Vertical Market Software and Software and Financial Technology Media, Marketing Services and Tech-Enabled Services E [email protected] Information Services E [email protected] E [email protected] MACRO MARKET COMMENTARY
Feb 1, 2018 to Feb 28, 2018
• The major U.S. stock indices have traded off from the all-time highs they reached in January
• However, the NASDAQ 100 Tech Index has continued to outperform the S&P 500 and NASDAQ indices both YTD and for the month of February
• While only two Tech IPOs have priced YTD, activity is beginning to pick-up with 6 new filings, including three from what we consider to be unicorns (Dropbox, Spotify and iQIYI)
• Interest rates began to creep up in February with the 10-year treasury note approaching 3%
• Oil remained above $60 for the majority of February
• After spiking in early February, the VIX has settled in the low 20’s, more conducive for equity issuance
• Investors reacting to a more volatile market demanded more of a discount to tech follow-ons during the month of February. During the month, the average FTO discount for tech follow-ons was (8.2%), a bit steeper compared to LTM at (6.3%).
Source: Dealogic Disclosure: This is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any of these securities
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 2 Capital Markets Overview
Markets at All-Time Highs Record VIX Stability Despite Recent Spike
60% S&P 500 40.0 VIX Morgan Stanley 35 Tech Index 35.0 NASDAQ 30.0 40% NASDAQ 100 Tech Index 25.0 20.0 15.0 20% 10.0 5.0 0.0 0%
Tech Indices Outperforming Market Fund Flows Have Begun Stabilizing ($B)
$44 $38 2016 2017 2018 Monthly Monthly % $17 Index CY CY CY Close Change Change S&P 500 9.5% 19.4% 1.5% 2713.83 (109.98) (3.9%) MS 35 Tech 12.3% 39.4% 10.5% 1874.38 +5.76 0.3% ($18) ($16) ($20) ($32) NASDAQ 7.5% 28.2% 5.4% 7273.01 (138.47) (1.9%) ($44) ($50) NASDAQ 100 Tech 24.1% 36.7% 7.4% 4211.38 (16.03) (0.4%)
CBOE Vol. Index 14.04 11.04 79.8% 19.85 +6.31 46.6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018
2017-18 IPO Activity & Performance 2017-18 Follow-on Activity & Performance % Return % Return Sector # Capital ($B) 1-Day 30-Day Current Sector # Capital ($B) 1-Day 30-Day Current Business Services 5 $1.7 21% 25% 34% Business Services 7 $2.0 3% 4% (2%) Clean Technology 1 $0.1 41% 56% 135% Clean Technology 3 $0.1 2% (8%) 21% Consumer 10 $3.0 5% 9% 13% Consumer 44 $17.1 2% 4% 20% Energy & Mining 18 $6.8 5% 7% 8% Energy & Mining 45 $20.8 2% (3%) (9%) Financial 22 $5.3 8% 14% 24% Financial 108 $29.4 1% 3% 8% Health Care 45 $4.6 17% 29% 51% Health Care 250 $36.9 5% 9% 34% Industrials 16 $8.7 7% 10% 10% Industrials 83 $19.4 1% 2% 11% Media 0 $0.0 ------Media 9 $4.3 (0%) 5% (7%) Real Estate 12 $3.1 2% 7% (3%) Real Estate 58 $18.3 1% 1% (9%) Technology 35 $14.8 15% 17% 37% Technology 73 $22.4 3% 6% 15%
Total 164 $47.9 Total 680 $170.7
Sector Performance YTD 12% 8% 2% 3%
(3%) (1%)
Media Comm. & Computers Technology Services Hardware Internet Software
Source: Dealogic as of 2/28/18; Data excludes Units and transaction values <$20M
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 3 Recent Technology IPO Issuances
Last 25 Technology IPOs
($ in millions, except per share data) Filing Offer Pricing Deal Market Deal / % Price Performance Date Issuer Range Price vs Range Value Value Market Secondary 1-Day 30-Day Current Subsector 2/7/18 Huami Corp $10.00 - 12.00 $11.00 In Range $110 $544 20% 0% 2% --- 1% Hardware 1/18/18 ADT Inc 17.00 - 19.00 14.00 Below 1,470 9,015 16% 0% (12%) (17%) (21%) Technology Services 12/22/17 iClick Interactive Asia Ltd 8.00 - 9.00 8.00 In Range 35 382 9% 0% 13% (10%) (17%) Technology Services 12/14/17 Casa Systems Inc 15.00 - 17.00 13.00 Below 90 963 9% 0% 11% 58% 69% Hardware 11/16/17 SailPoint Technologies Holdings Inc 9.00 - 11.00 12.00 Above 276 855 32% 29% 8% 20% 91% Technology Services 11/16/17 Stitch Fix Inc 18.00 - 20.00 15.00 Below 138 1,311 10% 0% 1% 56% 45% Software 11/15/17 Jianpu Technology Inc 8.50 - 10.50 8.00 Below 180 1,146 16% 0% 5% (6%) (13%) Software 11/14/17 SendGrid Inc 13.50 - 15.50 16.00 Above 151 521 29% 0% 13% 20% 70% Software 11/9/17 Bandwidth Inc 20.00 - 22.00 20.00 In Range 83 272 31% 0% 6% 6% 35% Software 11/8/17 Sogou Inc 11.00 - 13.00 13.00 In Range 658 4,505 15% 0% 4% (10%) (28%) Internet 11/2/17 Aquantia Corp 10.00 - 12.00 9.00 Below 71 230 31% 0% 6% 29% 67% Hardware 10/31/17 Altair Engineering Inc 11.00 - 13.00 13.00 In Range 179 680 26% 33% 41% 72% 104% Technology Services 10/26/17 ForeScout Technologies Inc 20.00 - 22.00 22.00 In Range 134 698 19% 0% 16% 30% 47% Software 10/19/17 Sea Ltd 12.00 - 14.00 15.00 Above 989 4,021 25% 0% 8% 0% (29%) Software 10/18/17 MongoDB Inc 18.00 - 20.00 24.00 Above 221 983 22% 0% 34% 24% 47% Software 10/17/17 Qudian Inc 19.00 - 22.00 24.00 Above 1,035 7,066 15% 5% 22% (12%) (40%) Software 10/11/17 CarGurus Inc 13.00 - 15.00 16.00 Above 173 1,645 11% 73% 72% 81% 125% Software 10/5/17 Switch Inc 14.00 - 16.00 17.00 Above 611 3,669 17% 0% 23% 7% (20%) Technology Services 9/27/17 Roku Inc 12.00 - 14.00 14.00 In Range 252 1,200 21% 43% 68% 34% 168% Hardware 9/21/17 Secoo Holding Ltd 11.50 - 13.50 13.00 In Range 111 556 20% 0% (23%) (39%) (12%) Software 9/19/17 Despegar.com Corp 23.00 - 26.00 26.00 In Range 382 1,521 25% 32% 22% 19% 10% Software 7/19/17 Calyxt Inc 15.00 - 18.00 8.00 Below 64 157 41% 0% 41% 56% 135% Clean Tech 6/29/17 Tintri Inc 10.50 - 12.50 7.00 Below 67 156 43% 0% 4% (2%) (28%) Comm. & Computers 6/21/17 Altice USA Inc 27.00 - 31.00 30.00 In Range 2,152 21,750 10% 81% 9% 4% (36%) Comm. & Computers 6/6/17 ShotSpotter Inc 10.00 - 12.00 11.00 In Range 35 69 51% 0% 31% 16% 74% Hardware
Mean $387 $2,557 23% 12% 17% 18% 34% Median $173 $963 20% 0% 11% 17% 35%
Subsector Breakdown Since 2017 Pricing Breakdown
2 Software 5 100%
Hardware 3 2 75% 15 8 7 1 Technology Services 31 50% 2 1
Comm. & Computers 12 12 25% 1 5 3 2 Internet 4 0% Software Hardware Technology Comm. & Internet Services Computers Performance by Subsector
59% 67% 37% 22%
(11%) Internet Technology Services Comm. & Computers Software Hardware
Source: Dealogic as of 2/28/18; Data excludes Units and transaction values <$20M
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 4 Recent Technology IPO Issuances
Priced IPOs
. Huami (HMI), a manufacturer of wearable fitness devices, priced a $110mm IPO on 2/7/18. The Company offered 40mm ADS’s at the middle of the $10-$12 range at $11/ADS. HMI’s post-deal market cap was $654mm and the stock finished its first day of trading +2.3%.
Filed IPOs
. Spotify (SPOT), a media-digital company focused on streaming music platform, filed a $1,000mm IPO on 2/28/18. This will be one of the first major direct listings.
. iQIYI Inc (IQ), a media-digital content company focused on the production and distribution of online video, filed a $1,500mm IPO on 2/27/18. Terms are not yet disclosed.
. Dropbox Inc (DBX), a provider of cloud-based file-hosting services that allows users to share and access documents, photos and videos from anywhere filed a $500mm IPO on 2/23/18. Terms are not yet disclosed.
. IBEX Holdings Ltd (IBEX), a provider of technology-enabled customer lifestyle experience filed a $75mm IPO on 2/23/18. Terms are not yet disclosed.
. Sunlands Online Education (STG), a Chinese Provider of online post-secondary and professional education filed for an IPO for an undisclosed amount on 2/23/18.
. Zscaler Inc (ZS), a software company engaged with security solutions filed for a $100mm IPO on 2/16/18. Terms are not yet disclosed.
Withdrawn IPOs
Source: Dealogic Disclosure: This is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any of these securities
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 5 Recent Technology Equity Issuances
Last 25 Technology Follow-ons
($ in millions, except per share data) Follow-on Offer Deal Market Deal / % Price Performance Date Issuer Type Price Value Value Market Secondary % FTO 1-Day 30-Day Current Subsector 2/28/18 Crown Castle International Corp Bought $109.10 $847 $44,792 2% 0% (1%) (3%) --- (4%) Comm. & Computers 2/28/18 GoDaddy Inc Bought 59.50 1,007 9,281 11% 100% (1%) (0%) --- 2% Internet 2/27/18 Bright Scholar Education Holdings Ltd Marketed 19.00 190 2,242 8% 0% (6%) (5%) --- (3%) Technology Services 2/21/18 Shopify Inc Bought 137.00 658 14,335 5% 0% (4%) (3%) --- (0%) Software 2/16/18 Instructure Inc Accelerated 39.50 99 1,276 8% 0% (4%) 7% --- 11% Software 2/8/18 EverSpin Technologies Inc Accelerated 7.00 25 117 22% 0% (19%) (1%) --- 8% Hardware 2/8/18 Leaf Group Ltd Accelerated 7.50 25 164 15% 0% (17%) (1%) --- 7% Media 2/7/18 JinkoSolar Holding Co Ltd Accelerated 18.15 75 174 43% 0% (11%) 0% --- 1% Clean Tech 2/1/18 Fusion Telecommunications International Inc Accelerated 3.20 41 81 51% 0% (11%) 0% (9%) (1%) Comm. & Computers 1/31/18 Ultra Clean Holdings Inc Accelerated 21.00 100 747 13% 0% (9%) 3% (8%) (6%) Hardware 1/26/18 GDS Holdings Ltd Accelerated 26.00 329 3,380 10% 27% (3%) 6% 7% (8%) Software 1/25/18 Rapid7 Inc Accelerated 22.00 114 1,004 11% 71% (0%) 14% 11% 23% Comm. & Computers 1/18/18 Inspired Entertainment Inc Accelerated 7.95 36 171 21% 100% (15%) (3%) (30%) (33%) Software 1/17/18 Sequans Communications SA Accelerated 1.60 20 169 12% 0% (22%) 14% 0% 3% Hardware 12/12/17 Iron Mountain Inc Accelerated 37.00 617 10,102 6% 0% (9%) 4% (2%) (15%) Technology Services 12/7/17 Globalstar Inc Bought 1.20 46 1,600 3% 100% (6%) 11% 6% (20%) Comm. & Computers 12/7/17 Tellurian Inc Accelerated 10.00 115 2,586 4% 0% (17%) (2%) 11% (14%) Software 12/6/17 Attunity Ltd Accelerated 6.75 23 125 18% 0% (7%) (4%) 3% 8% Software 12/4/17 BlackLine Inc Bought 34.40 155 1,892 8% 100% (4%) (1%) 2% 31% Software 12/4/17 GoDaddy Inc Bought 47.32 344 7,890 4% 99% 0% (3%) 7% 28% Internet 11/30/17 Limelight Networks Inc Bought 4.60 69 533 13% 100% (14%) 8% (4%) (6%) Internet 11/29/17 SMART Global Holdings Inc Accelerated 33.50 109 753 15% 100% (9%) (10%) 1% 5% Hardware 11/29/17 Tribune Media Co Bought 40.76 285 3,605 8% 100% (1%) 1% 4% 3% Media 11/29/17 Gray Television Inc Accelerated 14.50 250 1,026 24% 0% (10%) (1%) 16% (4%) Media 11/27/17 IQVIA Holdings Inc Bought 102.25 767 21,586 4% 100% (0%) (1%) (4%) (4%) Software
Mean $254 $5,185 14% 40% (8%) 1% 1% 1% Median $114 $1,276 11% 0% (7%) (1%) 2% (0%)
Subsector Breakdown Since 2017 File-to-Offer Breakdown
Technology Comm. & 7 Software Hardware Services Computers Internet Media Software 13 35 Comm. & Computers
18 Hardware
Internet (5%)
Media (7%) 24 26 (8%) (7%) (9%) Technology Services (12%)
Performance by Subsector
30% 34% 24% 14% 15%
(7%) Media Technology Services Comm. & Computers Hardware Internet Software
Source: Dealogic as of 2/28/18; Data excludes Units and transaction values <$20M
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 6 Recent Technology Equity Issuances
Priced Follow-ons
. Crown Castle International Corp (CCI), a holding company for group operating and leasing wireless infrastructure including towers, transmission networks and broadcast transmission companies, priced a $847.2mm 100% primary bought deal. The deal priced on 2/28/18 at $109.10/share, representing a discount to last trade of (0.9%). CCI had a post-deal market cap of $45,639mm.
. GoDaddy Inc (GDDY), an operator of a domain marketplace and provider of web hosting services issued a ~$1,007mm 100% secondary bought deal. The deal priced on 2/28/18 at $59.50/share, representing a discount to last trade of (0.52%). GDDY had a post-deal market cap of $9,281mm and the stock gained +2.2% in one day.
. Shopify (SHOP), a software-e-commerce company offering solutions to set up e-commerce online shops and retail point-of-sale platforms, issued a $657.6mm bought deal. The deal priced on 2/20/18 at $137/share, representing a file-to-offer discount of (4.1%). SHOP had a post-deal market cap of ~$15 billion and the stock finished the week flat.
. Instructure Inc (INST), a cloud-based learning management platform for academic institutions and companies worldwide, issued a $98.8mm 100% primary follow-on. The deal priced on 2/16/18 at $39.50/share, representing a file-to-offer discount of (4.1%). INST had a post-deal market cap of $1,374mm and the stock finished its first day +7.1%.
. Leaf Group Ltd (LFGR), a media-digital content provider offering online properties that publish media content, including text articles, videos, photographs and designed visual formats, issued a $25.3mm 100% primary follow-on. The deal priced on 2/8/18 at $7.50/share, representing a file-to-offer discount of (17.1%). LFGR has a post-deal market cap of $190mm and the stock traded (0.7%) the first day but +4.7% on the week.
. EverSpin Technologies Inc (MRAM), a developer and manufacturer of magnetic-based memory and sensors, issued a $25.2mm 100% primary follow-on. The deal priced on 2/8/18 at $7.00/share, representing a file-to-offer discount of (19.3%). MRAM has a post-deal market cap of $142mm and the stock traded (0.6%) the first day but +10.4% on the week.
Priced Convertibles
. Okta Inc (OKTA), an on-demand identity and access management service that enables enterprises to accelerate the secure adoption of their web-based applications, both in the cloud and behind the firewall issued a senior unsecured convertible on 2/23/18. The $300mm convertible priced at 0.250%.
. Q2 Holdings Inc (QTWO), a software-financial technology company providing cloud-based virtual banking solutions issued a senior unsecured convertible on 2/22/18. The $200mm convertible priced at 0.750%.
Source: Dealogic
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 7 Select Software Public Comps (Val. Metrics)
2018E EV/REV 2019E EV/REV
SaaS High Growth 9.1x SaaS High Growth 7.4x CRM / Marketing 6.5x CRM / Marketing 5.5x Human Capital Mgmt 6.2x Human Capital Mgmt 5.2x Large-Cap Technology 5.1x Large-Cap Technology 4.9x Infrastructure / IT Mgmt 5.0x Infrastructure / IT Mgmt 4.3x Security 4.1x BI / Data Analytics 4.1x BI / Data Analytics 3.9x Security 3.7x Contact Center 3.8x HR Outsourcing 3.5x Moderate Growth SaaS 3.4x Contact Center 3.4x HR Outsourcing 3.3x Moderate Growth SaaS 3.2x
0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 0.0x 2.0x 4.0x 6.0x 8.0x
2018E Rev Growth 2019E Rev Growth
SaaS High Growth 27.2% SaaS High Growth 24.4% CRM / Marketing 24.7% CRM / Marketing 22.4% Human Capital Mgmt 18.3% Human Capital Mgmt 17.8% Infrastructure / IT Mgmt 17.1% Infrastructure / IT Mgmt 13.7% BI / Data Analytics 12.1% BI / Data Analytics 11.1% Security 10.4% Moderate Growth SaaS 11.1% Moderate Growth SaaS 10.0% Security 9.6% Contact Center 9.7% Contact Center 9.4% HR Outsourcing 7.2% Large-Cap Technology 7.6% Large-Cap Technology 6.0% HR Outsourcing 6.6%
0.0% 10.0% 20.0% 30.0% 0.0% 10.0% 20.0% 30.0%
Source: Capital IQ as of 2/28/2018. Note: Figures represent the median of each comparable group.
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 8 Appendix Select Software Public Comps
SaaS High Growth
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 SaaS High Growth BlackLine, Inc. $2,328 $2,215 98% 177 77% 2 26% 25% 9.9 8.0 NM NM HubSpot, Inc. 4,204 3,959 97% 376 80% 17 29% 24% 8.2 6.6 NM NM New Relic, Inc. 3,980 3,747 99% 330 82% (1) 28% 25% 8.9 7.1 NM NM RealPage, Inc. 4,346 4,829 95% 671 59% 149 25% 11% 5.8 5.2 22.1 18.7 ServiceNow, Inc. 28,128 27,125 97% 1,933 74% 409 32% 29% 10.6 8.3 41.5 29.1 Workday, Inc. 26,716 24,939 97% 2,143 71% 312 24% 23% 9.4 7.6 NM 40.7
75th Percentile $21,123 $19,912 98% $1,618 79% $271 29% 25% 9.8x 7.9x 36.7x 34.9x Median $4,275 $4,394 97% $523 75% $83 27% 24% 9.1x 7.4x 31.8x 29.1x Mean $11,617 $11,136 97% $938 74% $148 27% 23% 8.8x 7.1x 31.8x 29.5x 25th Percentile $4,036 $3,800 97% $341 72% $5 25% 23% 8.4x 6.7x 26.9x 23.9x
Business Intelligence / Data Analytics
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Business Intelligence / Data Analytics Alteryx, Inc. $2,030 $1,836 95% $132 83% ($5) 36% 32% 10.3x 7.8x NM NM Cegedim SA 671 943 88% 561 46% 41 3% 5% 1.6x 1.5x 9.2x 7.9x Datawatch Corporation 115 86 74% 38 90% (1) 12% NA 2.0x NA NM NA Inovalon Holdings, Inc. 1,733 1,505 67% 449 66% 93 5% 8% 3.2x 3.0x 12.9x 11.7x MicroStrategy Incorporated 1,465 789 65% 505 81% 95 0% 2% 1.6 1.5 12.3 10.9 MongoDB, Inc. 1,629 1,341 95% 139 72% (69) 36% 35% 6.5 4.8 NM NM Splunk Inc. 13,241 12,071 96% 1,271 80% (213) 25% 28% 7.8 6.1 NM 38.0 Tableau Software, Inc. 6,659 5,656 94% 877 87% 64 11% 13% 5.8 5.1 NM NM The Descartes Systems Group Inc 2,043 2,064 85% 227 73% 81 13% 9% 7.7 7.1 22.1 19.8 Verint Systems Inc. 2,512 2,912 87% 1,112 63% 168 7% 5% 2.4 2.3 9.9 8.9 Workiva Inc. 968 911 85% 208 71% (19) 13% 14% 3.9 3.4 NM NM
75th Percentile $2,278 $2,488 94% $719 82% $87 19% 25% 7.1x 5.8x 12.9x 17.7x Median $1,733 $1,505 87% $449 73% $41 12% 11% 3.9x 4.1x 12.3x 11.3x Mean $3,006 $2,738 85% $502 74% $21 15% 15% 4.8x 4.3x 13.3x 16.2x 25th Percentile $1,217 $927 79% $174 69% ($12) 6% 6% 2.2x 2.4x 9.9x 9.4x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 10 Select Software Public Comps (Cont.)
Moderate Growth SaaS
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Moderate Growth SaaS Amber Road, Inc. $251 $264 88% $79 52% $0 8% 10% 3.1x 2.8x NM NM athenahealth, Inc. 5,687 5,772 88% 1,220 53% 222 10% 10% 4.3x 3.9x 16.3x 13.8x Bandwidth Inc. 484 450 97% 163 45% 22 16% 14% 2.4x 2.1x NM NM Benefitfocus, Inc. 757 822 65% 253 51% 13 9% 13% 2.9x 2.6x 29.3x 22.4x Callidus Software Inc. 2,386 2,244 99% 253 61% 28 19% 21% 7.5x 6.2x 43.0x 29.9x Castlight Health, Inc. 476 387 75% 131 64% (26) 17% 19% 2.5x 2.1x NM NM ChannelAdvisor Corporation 235 184 70% 123 79% 5 5% 6% 1.4x 1.3x 28.4x 20.2x Cornerstone OnDemand, Inc. 2,371 2,244 95% 482 70% 30 4% 11% 4.5x 4.0x 25.2x 17.3x Guidewire Software, Inc. 6,170 5,505 96% 528 60% 110 19% 15% 8.1x 7.1x 36.1x 36.1x j2 Global, Inc. 3,585 4,179 81% 1,118 85% 458 10% 6% 3.4x 3.2x 8.5x 7.6x LivePerson, Inc. 860 803 96% 219 73% 11 10% 11% 3.3x 3.0x 36.9x 27.2x LogMeIn, Inc. 6,195 5,943 86% 990 80% 331 16% 7% 5.2x 4.9x 13.2x 12.0x RingCentral, Inc. 4,929 4,748 95% 502 76% 31 26% 23% 7.5x 6.1x NM NM Salesforce.com, inc. 87,125 84,426 98% 10,480 74% 1,985 20% 20% 6.7x 5.6x 30.1x 24.3x ServiceSource International, Inc. 330 286 91% 239 32% 20 2% 5% 1.2x 1.1x 13.9x 10.3x SPS Commerce, Inc. 1,040 871 93% 221 67% 34 10% 10% 3.6x 3.3x 20.4x 17.1x The Ultimate Software Group, Inc. 7,291 7,135 95% 941 62% 221 18% 18% 6.4x 5.4x 25.7x 21.5x WageWorks, Inc. 2,112 1,464 65% 462 63% 125 10% 9% 2.8x 2.6x 8.7x 7.7x Zix Corporation 223 190 61% 66 81% 18 4% 7% 2.8x 2.6x 9.4x 8.3x
75th Percentile $5,308 $5,126 96% $735 75% $173 17% 16% 5.8x 5.1x 29.7x 23.3x Median $2,112 $1,464 91% $253 64% $30 10% 11% 3.4x 3.2x 25.2x 17.3x Mean $6,974 $6,732 86% $972 65% $191 12% 12% 4.2x 3.7x 23.0x 18.4x 25th Percentile $480 $419 78% $191 56% $16 9% 8% 2.8x 2.6x 28.7x 11.1x
Contact Center
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Contact Center 8x8, Inc. $1,682 $1,521 95% $284 77% $17 17% 21% 4.6x 3.8x NM 39.6x eGain Corporation 211 208 97% 58 62% 1 10% 8% 3.2 3.0 41.1 NA Five9, Inc. 1,701 1,679 95% 200 58% 18 16% 17% 7.2 6.1 NM 43.3 LivePerson, Inc. 860 803 96% 219 73% 11 10% 11% 3.3 3.0 36.9 27.2 NICE Ltd. 6,160 6,082 99% 1,332 65% 362 8% 7% 4.2 3.9 14.5 13.1 Verint Systems Inc. 2,512 2,912 87% 1,112 63% 168 7% 5% 2.4 2.3 9.9 8.9
75th Percentile $2,310 $2,604 97% $905 71% $130 15% 16% 4.5x 3.9x 37.9x 39.6x Median $1,692 $1,600 96% $251 64% $18 10% 9% 3.8x 3.4x 25.7x 27.2x Mean $2,188 $2,201 95% $534 66% $96 11% 12% 4.2x 3.7x 25.6x 26.4x 25th Percentile $1,066 $982 95% $205 62% $13 9% 7% 3.3x 3.0x 13.3x 13.1x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 11 Select Software Public Comps (Cont.)
Infrastructure / IT Management
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Infrastructure / IT Management Atlassian Corporation Plc $12,608 $11,925 94% $741 79% $139 31% 27% 12.3x 9.7x 42.7x 35.9x Box, Inc. 3,304 3,182 98% 506 73% (17) 23% 23% 5.1x 4.1x NM NM CA, Inc. 14,634 14,589 96% 4,164 86% 1,337 3% 1% 3.4x 3.4x 8.9x 8.6x Citrix Systems, Inc. 13,560 12,937 97% 2,825 87% 979 2% 3% 4.5 4.4 13.5 12.7 Cloudera, Inc. 3,195 2,916 82% 337 56% (105) 27% 19% 6.3 5.3 NM NM Commvault Systems, Inc. 2,357 1,909 81% 687 87% 81 10% 11% 2.5 2.3 17.9 13.6 Constellation Software Inc. 17,602 17,444 98% 2,479 38% 475 20% 14% 5.9 5.1 22.6 19.7 Hortonworks, Inc. 1,305 1,233 82% 262 69% (79) 25% 24% 3.8 3.0 14.1 6.8 Micro Focus International plc 8,994 13,136 71% 1,930 84% 759 67% (2%) 3.1 3.2 8.2 7.4 MuleSoft, Inc. 4,061 3,713 96% 296 73% (48) 38% 33% 9.1 6.8 NM NM NetScout Systems, Inc. 2,333 2,249 69% 1,070 72% 245 (7%) 3% 2.3 2.2 11.1 10.1 Nutanix, Inc. 5,895 5,393 94% 941 58% (78) 18% 23% 4.8 3.9 NM NM Pegasystems, Inc. 4,530 4,305 89% 841 67% 117 13% 8% 4.5 4.2 31.7 26.1 Progress Software Corporation 2,258 2,196 87% 398 88% 154 2% 1% 5.4 5.4 11.4 11.4 Red Hat, Inc. 27,440 25,881 98% 2,777 85% 725 16% 13% 8.0 7.1 28.9 23.6 ServiceNow, Inc. 28,128 27,125 97% 1,933 74% 409 32% 29% 10.6 8.3 41.5 29.1 Software Aktiengesellschaft 3,942 3,776 87% 1,082 76% 345 3% 3% 3.4 3.3 10.9 10.3 Talend S.A. 1,377 1,291 98% 149 77% (20) 35% 26% 6.4 5.1 NM NM Tintri, Inc. 153 167 66% 138 60% (89) (8%) 16% 1.5 1.3 NM NM Twilio Inc. 3,185 2,894 96% 399 54% 4 28% 24% 5.7 4.6 NM NM Upland Software, Inc. 496 534 93% 89 65% 22 7% 6% 4.4 4.1 12.4 11.4 VMware, Inc. 53,197 45,778 80% 7,922 86% 2,115 10% 8% 5.3 4.9 14.5 12.5
75th Percentile $13,322 $13,087 97% $1,932 85% $458 28% 24% 6.2x 5.3x 25.8x 21.7x Median $4,002 $3,745 94% $791 74% $128 17% 14% 5.0x 4.3x 14.1x 12.5x Mean $9,753 $9,299 89% $1,453 72% $339 18% 14% 5.4x 4.6x 19.3x 16.0x 25th Percentile $2,339 $2,209 82% $352 65% ($19) 4% 4% 3.5x 3.3x 11.3x 10.2x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 12 Select Software Public Comps (Cont.)
Large-Cap Technology
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Large-Cap Technology Adobe Systems Incorporated $104,578 $100,640 98% $7,302 86% $2,949 20% 17% 11.5x 9.8x 25.7x 21.3x HP Inc. 39,038 40,179 97% 53,889 18% 4,755 6% 1% 0.7 0.7 8.6 8.3 International Business Machines Corp 144,750 178,576 85% 79,139 46% 17,155 1% 0% 2.2 2.2 9.2 9.0 Intuit Inc. 42,735 43,084 94% 5,434 84% 1,984 9% 9% 7.2 6.7 19.6 17.9 Oracle Corporation 217,020 206,548 95% 38,907 58% 16,669 4% 4% 5.1 4.9 11.0 10.3 Salesforce.com, inc. 87,125 84,426 98% 10,480 74% 1,985 20% 20% 6.7 5.6 30.1 24.3 SAP SE 127,626 126,282 86% 28,889 71% 9,897 3% 8% 4.3 4.0 12.2 11.2
75th Percentile $136,188 $152,429 98% $46,398 79% $13,283 15% 13% 7.0x 6.1x 22.6x 19.6x Median $104,578 $100,640 95% $28,889 71% $4,755 6% 8% 5.1x 4.9x 12.2x 11.2x Mean $108,982 $111,391 93% $32,006 63% $7,913 9% 8% 5.4x 4.8x 16.6x 14.6x 25th Percentile $64,930 $63,755 90% $8,891 52% $2,467 4% 3% 3.2x 3.1x 10.1x 9.7x
CRM / Marketing
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 CRM / Marketing Callidus Software Inc. 2,386 2,244 99% 253 61% 28 19% 21% 7.5 6.2 43.0 29.9 ChannelAdvisor Corporation 235 184 70% 123 79% 5 5% 6% 1.4 1.3 28.4 20.2 Coupa Software Incorporated 2,455 2,236 98% 171 68% (14) 24% 24% 9.9 8.0 NM NM Marin Software Incorporated 44 19 48% 75 57% (15) NA NA NA NA NA NA Mimecast Limited 2,008 1,920 97% 241 74% 22 26% 19% 6.3 5.3 NM 43.1 MINDBODY, Inc. 1,674 1,456 94% 183 72% 9 28% 25% 6.2 5.0 NM 39.0 Model N, Inc. 504 513 96% 142 55% (11) 7% 8% 3.4 3.1 NM 37.4 Salesforce.com, inc. 87,125 84,426 98% 10,480 74% 1,985 20% 20% 6.7 5.6 30.1 24.3 SendGrid, Inc. 1,115 977 92% 112 74% 11 25% 25% 7.0 5.6 NM NM The Trade Desk, Inc. 2,502 2,373 84% 308 79% 96 31% 25% 5.9 4.7 20.1 14.7 Zendesk, Inc. 4,464 4,120 98% 430 70% (5) 31% 28% 7.3 5.7 NM NM
75th Percentile $2,478 $2,308 98% $281 74% $25 27% 25% 7.2x 5.7x 33.3x 38.2x Median $2,008 $1,920 96% $183 72% $9 25% 22% 6.5x 5.5x 29.2x 29.9x Mean $9,501 $9,133 89% $1,138 69% $192 22% 20% 6.2x 5.1x 30.4x 29.8x 25th Percentile $810 $745 88% $132 65% ($8) 19% 19% 6.0x 4.8x 26.3x 22.2x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 13 Select Software Public Comps (Cont.)
Human Capital Management
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Human Capital Management Benefitfocus, Inc. $757 $822 65% $253 51% $13 9% 13% 2.9x 2.6x 29.3x 22.4x Cornerstone OnDemand, Inc. 2,371 2,244 95% 482 70% 30 4% 11% 4.5 4.0 25.2 17.3 Paycom Software, Inc. 5,854 5,844 98% 433 86% 130 25% 24% 10.8 8.7 27.3 22.1 Paylocity Holding Corporation 2,564 2,453 87% 334 59% 54 19% 19% 6.2 5.2 29.1 22.5 The Ultimate Software Group, Inc. 7,291 7,135 95% 941 62% 221 18% 18% 6.4 5.4 25.7 21.5 WageWorks, Inc. 2,112 1,464 65% 462 63% 125 10% 9% 2.8 2.6 8.7 7.7 Workday, Inc. 26,716 24,939 97% 2,143 71% 312 24% 23% 9.4 7.6 NM 40.7
75th Percentile $6,572 $6,490 96% $711 70% $175 22% 21% 7.9x 6.5x 28.7x 22.4x Median $2,564 $2,453 95% $462 63% $125 18% 18% 6.2x 5.2x 26.5x 22.1x Mean $6,809 $6,415 86% $721 66% $126 16% 17% 6.1x 5.2x 24.2x 22.0x 25th Percentile $2,241 $1,854 76% $383 61% $42 9% 12% 3.7x 3.3x 25.3x 19.4x
HR Outsourcing
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 HR Outsourcing Aon plc $35,711 $40,457 92% $9,998 42% $2,293 7% 5% 3.8x 3.6x 13.9x 12.7x Automatic Data Processing, Inc. 51,167 51,386 92% 12,790 43% 2,875 7% 7% 3.7 3.5 17.5 16.0 Barrett Business Services, Inc. 563 403 96% 920 61% 34 12% NA 0.4 NA 9.0 NA CBIZ, Inc. 1,008 1,156 96% 855 12% 95 5% 4% 1.3 1.2 10.8 10.2 H&R Block, Inc. 5,296 6,509 80% 3,058 49% 910 2% 3% 2.1 2.1 7.7 7.7 Insperity, Inc. 2,709 2,416 97% 3,300 17% 168 13% 10% 0.7 0.6 12.3 10.6 Instructure, Inc. 1,448 1,406 97% 159 71% (31) 30% 27% 6.8 5.3 NM NM Paychex, Inc. 23,538 22,852 89% 3,238 71% 1,453 7% 7% 6.6 6.2 15.1 14.1 TriNet Group, Inc. 3,392 3,464 98% 3,275 18% 267 (76%) 11% 4.4 3.9 12.4 11.1 WageWorks, Inc. 2,112 1,464 65% 462 63% 125 10% 9% 2.8 2.6 8.7 7.7
75th Percentile $18,977 $18,766 97% $3,294 63% $1,317 11% 10% 4.2x 3.9x 13.9x 13.0x Median $3,051 $2,940 94% $3,148 46% $218 7% 7% 3.3x 3.5x 12.3x 10.9x Mean $12,694 $13,151 90% $3,806 45% $819 2% 9% 3.2x 3.2x 11.9x 11.3x 25th Percentile $1,614 $1,421 90% $872 24% $103 5% 5% 1.5x 2.1x 9.0x 9.6x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 14 Select Software Public Comps (Cont.)
Security
Market Enterprise Gross Revenue EV / EV / Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA ($ in millions, except per share data) 2/28/2018 2/28/2018 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019 Security Akamai Technologies, Inc. $11,517 $10,901 97% $2,503 65% $929 8% 9% 4.0x 3.7x 10.9x 9.7x CA, Inc. 14,634 14,589 96% 4,164 86% 1,337 3% 1% 3.4 3.4 8.9 8.6 Check Point Software Technologies L 17,073 13,225 87% 1,855 89% 1,026 5% 6% 6.8 6.4 12.6 11.8 CyberArk Software Ltd. 1,797 1,467 89% 262 84% 53 20% 17% 4.7 4.0 22.5 18.2 Everbridge, Inc. 903 846 92% 104 70% 0 31% 26% 6.2 4.9 NM NM Experian plc 14,517 17,706 91% 4,439 43% 1,615 4% 6% 3.7 3.5 10.8 10.1 FireEye, Inc. 3,178 3,059 92% 751 64% 18 9% 8% 3.7 3.5 28.8 22.8 ForeScout Technologies, Inc. 1,143 986 85% 221 73% (39) 21% 21% 3.7 3.1 NM NM Fortinet, Inc. 8,657 7,296 99% 1,495 74% 305 14% 13% 4.3 3.8 18.9 15.7 Imperva, Inc. 1,613 1,253 89% 322 80% 45 15% 15% 3.4 2.9 17.8 14.7 MobileIron, Inc. 464 371 71% 176 83% (17) 10% 10% 1.9 1.7 NM 39.5 NetScout Systems, Inc. 2,333 2,249 69% 1,070 72% 245 (7%) 3% 2.3 2.2 11.1 10.1 Okta, Inc. 3,933 3,710 99% 231 68% (65) 32% 33% 10.8 8.1 NM NM Palo Alto Networks, Inc. 15,924 14,103 97% 1,989 72% 441 22% 17% 5.8 5.0 22.5 18.3 Parkit Enterprise Inc. 12 11 78% 2 100% 1 NA NA NA NA NA NA Proofpoint, Inc. 5,417 5,283 98% 515 72% 69 23% 27% 8.0 6.3 NM 41.1 Qualys, Inc. 3,050 2,694 96% 231 78% 85 20% 18% 9.7 8.3 27.1 22.8 Radware Ltd. 945 601 95% 211 82% 14 9% 9% 2.6 2.4 24.8 18.3 Rapid7, Inc. 1,185 1,093 97% 201 72% (21) 15% 22% 4.8 3.9 NM NM SecureWorks Corp. 800 701 76% 466 52% (15) 9% 10% 1.4 1.3 NM 31.7 Splunk Inc. 13,241 12,071 96% 1,271 80% (213) 25% 28% 7.8 6.1 NM 38.0 Symantec Corporation 17,535 20,258 77% 4,739 79% 1,516 2% 7% 4.2 3.9 8.6 7.9 Trend Micro Incorporated 846,220 639,810 91% 148,811 81% 50,392 11% 6% 3.9 3.7 11.5 10.8 Varonis Systems, Inc. 1,747 1,611 95% 217 90% 10 21% 18% 6.1 5.2 NM NM VASCO Data Security International, In 481 322 80% 193 70% 18 5% 9% 1.6 1.5 17.4 15.5 VeriSign, Inc. 14,416 14,412 95% 1,165 83% 811 4% 4% 11.9 11.5 16.8 16.0 Zix Corporation 223 190 61% 66 81% 18 4% 7% 2.8 2.6 9.4 8.3
75th Percentile $13,829 $12,648 96% $1,675 82% $626 21% 18% 6.2x 5.1x 22.5x 22.8x Median $3,050 $2,694 92% $466 78% $45 10% 10% 4.1x 3.7x 16.8x 15.7x Mean $37,147 $29,290 88% $6,580 76% $2,169 13% 13% 5.0x 4.3x 16.5x 18.6x ` 25th Percentile $1,044 $916 83% $214 71% $0 5% 7% 3.4x 3.0x 10.9x 10.1x
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 15 Technology Capital Markets Monthly Update
Disclosure Piper Jaffray Companies (NYSE: PJC) is a leading investment bank and asset management firm. Securities brokerage and investment banking services are offered in the U.S. through Piper Jaffray & Co., member SIPC and FINRA; in Europe through Piper Jaffray Ltd., authorized and regulated by the U.K. Financial Conduct Authority; and in Hong Kong through Piper Jaffray Hong Kong Limited, authorized and regulated by the Securities and Futures Commission. Asset management products and services are offered through five separate investment advisory affiliates. U.S. Securities and Exchange Commission (SEC) registered Advisory Research, Inc., Piper Jaffray Investment Management LLC, PJC Capital Partners LLC and Piper Jaffray & Co., and Guernsey-based Parallel General Partners Limited, authorized and regulated by the Guernsey Financial Services Commission. Information contained in this publication is based on data obtained from sources we deem to be reliable, however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this publication is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision. Since 1895. Member SIPC and NYSE © 2018 Piper Jaffray & Co. piperjaffray.com
Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital. EV/Revenue > 20x Not Meaningful (NM). EV/EBITDA > 60x Not Meaningful (NM).
TECHNOLOGY CAPITAL MARKETS MONTHLY UPDATE 16