The Lighthouse August 2014 Software Business Services Internet & Digital Media A Pharus Advisors, LLC Publication | www.pharus.com August 2014 Software & Business Services Internet & Digital Media Table of Contents 1. Capital Market Trends 3 2. Public Market Valuations 4 3. Public Market Universe 13 4. M&A Transactions 15 5. Recent Transactions 23 6. Pharus Overview 24 If you would like to be included on (or removed from) the distribution list for the Software & Services version of The Lighthouse, please contact Nathan Bullock at: [email protected]. The information contained herein is obtained from sources we believe to be reliable but its accuracy and completeness, and that of the opinions based thereon, is not guaranteed. Pharus Advisors, or one or more of its partners, may have an interest in any of the securities or companies discussed herein. All rights reserved by Pharus Advisors. LLC. 2014 Copyright Pharus Advisors, LLC. Executive Contacts Telephone Email Michael E. Goodman, Co-Founder & Sr. Managing Director 212-904-0102 [email protected] Kenneth M. Harrell, Co- Founder & Sr. Managing Director 212-904-0101 [email protected] Pharus Advisors, LLC | www.pharus.com 2 August 2014 Software & Business Services Internet & Digital Media 1. Capital Market Trends Relative Performance of Major Stock Indices through August 31, 2014 (Base = 100, 7/31/2013) 140 130 120 110 100 90 Dow Jones Industrial Average (^DJI) - Index Value NASDAQ Composite Index (^COMP) - Index Value S&P 500 Index (^SPX) - Index Value Russell 2000 Index (^RUT) - Index Value As of Change % Index 31-Aug-14 1 Year 3 Months 1 Month Dow Jones 17,098.45 15.4% 2.3% 3.2% Nasdaq 4,580.27 27.6% 8.0% 4.8% S&P 500 2,003.37 22.7% 4.1% 3.8% Russell 2000 1,174.35 16.2% 3.5% 4.8% Pharus Advisors, LLC | www.pharus.com 3 August 2014 Software & Business Services Internet & Digital Media 2. Public Market Valuations Historical Median TEV/Revenue Multiples Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Application Software Customer Relationship Management (CRM) 6.7x 6.0x 6.0x 6.6x 6.3x 5.1x Accounting / ERP 4.3x 4.1x 4.0x 4.0x 4.2x 4.2x Retail Software 3.1x 2.6x 2.3x 2.5x 2.0x 2.1x Supply Chain Management 5.1x 4.9x 4.7x 5.0x 4.7x 4.6x Human Capital Management 9.9x 7.2x 7.9x 9.3x 8.2x 8.6x Knowledge / Content Manangement 6.2x 5.6x 5.3x 6.5x 6.0x 5.9x EMS / Infrastructure Software Business Intelligence 2.7x 2.5x 2.8x 2.9x 2.7x 2.8x Security Software 6.9x 5.0x 5.9x 6.2x 5.3x 5.8x System and Network Management Software 3.2x 2.6x 2.7x 2.9x 2.5x 2.5x Integration / Middleware 3.0x 3.0x 3.1x 3.0x 2.9x 3.0x Platform / OS 2.8x 2.8x 2.8x 2.8x 2.9x 3.0x Financial Solutions & Services Bank Processing 3.9x 3.8x 3.8x 3.9x 3.8x 3.9x Capital Market Rating Services 5.3x 4.9x 5.3x 5.6x 5.4x 5.1x Consumer Rating Services 4.1x 4.4x 4.3x 4.2x 4.3x 4.4x Payment Processing 3.3x 3.2x 3.0x 3.1x 3.0x 3.0x Insurance Solutions 2.4x 2.6x 2.5x 2.4x 2.1x 2.6x Investment Solutions 4.6x 4.5x 4.7x 5.0x 4.9x 4.9x Online & Digital Media Digital Media & Advertising 3.2x 2.5x 2.5x 2.9x 2.6x 2.4x Online Retailers and Offers 2.0x 1.7x 1.8x 2.7x 2.7x 2.9x Other Online Companies 3.7x 3.8x 3.4x 3.8x 3.8x 3.4x Social Networking & Gaming 3.0x 2.8x 2.6x 2.6x 2.4x 2.7x Business Services IT Integration & Consulting 1.6x 1.6x 1.6x 1.6x 1.5x 1.5x Education & Training 0.7x 0.7x 0.7x 0.7x 0.7x 0.7x IT Services 2.9x 2.3x 2.5x 2.8x 2.6x 2.5x Call Center 0.8x 0.8x 0.8x 0.9x 0.9x 0.9x Medians: Application Software 5.1x 5.1x 4.9x 5.2x 5.1x 5.0x EMS / Infrastructure Software 3.4x 2.8x 3.0x 3.2x 3.2x 3.1x Financial Solutions & Services 3.5x 3.8x 3.5x 3.8x 3.6x 3.6x Online & Digital Media 3.1x 2.8x 2.6x 2.9x 2.6x 2.6x Business Services 1.2x 1.1x 1.2x 1.4x 1.3x 1.2x 6.0x 5.0x Application Software 4.0x EMS / Infrastructure Software 3.0x Financial Solutions & Services 2.0x 1.0x Online & Digital Media 0.0x Business Services Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Pharus Advisors, LLC | www.pharus.com 4 August 2014 Software & Business Services Internet & Digital Media 2. Public Market Valuations Current & Forward Looking Market Multiples Median TEV/Revenue Median TEV/EBITDA LTM NTM LTM NTM Application Software Customer Relationship Management (CRM) 5.1x 4.3x 75.6x 31.1x Accounting / ERP 4.2x 4.2x 12.2x 11.3x Retail Software 2.1x 1.7x 9.5x 20.5x Supply Chain Management 4.6x 4.3x 22.9x 15.2x Human Capital Management 8.6x 6.6x 61.3x 31.0x Knowledge / Content Manangement 5.9x 5.0x 17.1x 11.9x EMS / Infrastructure Software Business Intelligence 2.8x 2.5x 24.0x 13.6x Security Software 5.8x 5.7x 17.5x 15.4x System and Network Management Software 2.5x 2.4x 14.0x 8.0x Integration / Middleware 3.0x 2.9x 16.6x 12.0x Platform / OS 3.0x 2.7x 9.4x 8.5x Financial Solutions & Services Bank Processing 3.9x 3.6x 12.1x 11.0x Capital Market Rating Services 5.1x 5.3x 13.0x 13.0x Consumer Rating Services 4.4x 3.6x 12.7x 11.8x Payment Processing 3.0x 2.6x 13.2x 9.5x Insurance Solutions 2.6x 2.8x 14.7x 11.7x Investment Solutions 4.9x 4.6x 17.8x 15.0x Online & Digital Media Digital Media & Advertising 2.2x 2.0x 17.5x 12.5x Online Retailers 2.9x 2.0x 17.8x 12.5x Other Online Companies 3.4x 3.0x 15.2x 10.4x Social Networking & Gaming 2.7x 2.4x 14.4x 14.5x Business Services IT Integration & Consulting 1.5x 1.3x 11.4x 8.3x Education & Training 0.7x 0.7x 9.8x 8.8x IT Services 2.5x 1.8x 10.6x 10.7x Call Center 0.9x 0.8x 7.4x 6.7x Medians: Application Software 4.8x 4.4x 17.1x 15.0x EMS / Infrastructure Software 3.1x 2.8x 16.6x 12.4x Financial IT Services 3.6x 3.1x 13.1x 11.5x Online & Digital Solutions & Services 2.5x 2.4x 14.6x 11.3x Business Services 1.1x 1.1x 10.6x 8.9x Pharus Advisors, LLC | www.pharus.com 5 August 2014 Software & Business Services Internet & Digital Media 2. Public Market Valuations Application Software ($ in millions) TEV/Revenue TEV/EBITDA TEV Market Cap LTM NTM LTM NTM Customer Relationship Management (CRM) Cvent NYSE:CVT $872 $1,062 7.0x 5.6x NM 55.1x Five9 NasdaqGM:FIVN 240 284 2.6x 2.5x NM NM Interactive Intelligence NasdaqGS:ININ 825 898 2.5x 2.5x 77.1x NM Kofax Limited LSE:KFX 626 719 2.2x 1.8x 20.3x 11.2x LivePerson NasdaqGM:LPSN 623 694 3.3x 3.0x 75.6x 25.6x Marketo NasdaqGS:MKTO 1,082 1,194 8.9x 7.2x NM NM Salesforce.com NYSE:CRM 38,079 36,577 8.0x 7.0x NM 36.6x Zendesk NYSE:ZEN 1,846 1,968 19.2x 14.0x NM NM Median 5.1x 4.3x 75.6x 31.1x Accounting / ERP American Software NasdaqGS:AMSW.A $199 $260 2.0x 1.8x 12.1x 9.3x Intuit NasdaqGS:INTU 22,199 23,614 4.9x 5.1x 15.1x 17.4x Model N NYSE:MODN 127 230 1.4x 1.5x NM NM Netsuite NYSE:N 6,488 6,697 13.6x 10.4x NM NM Oracle NYSE:ORCL 170,929 185,012 4.5x 4.3x 10.2x 8.3x QAD NasdaqGS:QADA 257 317 0.9x 0.9x 15.9x 11.3x Sage LSE:SGE 7,647 7,049 3.5x NA 11.8x NA SAP DB:SAP 94,493 93,045 4.2x 4.1x 12.3x 11.4x Textura NYSE:TXTR 666 733 11.3x 8.3x NM NM Median 4.2x 4.2x 12.2x 11.3x Retail Software Borderfree NasdaqGS:BRDR 321 441 2.8x 2.1x NM 32.4x NCR NYSE:NCR 9,219 5,742 1.5x 1.3x 9.5x 8.6x Median 2.1x 1.7x 9.5x 20.5x Supply Chain Management Aspen Technology NasdaqGS:AZPN $3,483 $3,750 8.9x 7.9x 26.2x 19.3x BasWare HLSE:BAS1V 537 554 3.3x NA 53.7x NA ClickSoftware Technologies NasdaqGS:CKSW 220 262 1.9x 1.6x NM 45.0x Dassault ENXTPA:DSY 15,479 16,724 5.6x 4.9x 19.5x 15.2x Descartes Systems Group TSX:DSG 1,031 1,054 6.5x 5.6x 22.9x 18.7x Manhattan Associates NasdaqGS:MANH 2,067 2,169 4.6x 4.2x 16.7x 14.2x Materialise NV NasdaqGS:MTLS 508 589 5.0x 4.5x 53.3x 68.5x Mix Telematics JSE:MIX 222 295 1.8x 1.7x 10.6x 7.2x Parametric Technology NasdaqGS:PTC 4,550 4,539 3.4x 3.3x 14.4x 11.6x SciQuest NasdaqGS:SQI 324 439 3.3x 3.0x NM 15.2x Fleetmatics Group NYSE:FLTX 1,101 1,232 5.4x 4.3x 24.8x 14.9x Median 4.6x 4.3x 22.9x 15.2x Pharus Advisors, LLC | www.pharus.com 6 August 2014 Software & Business Services Internet & Digital Media 2.