SOFTWARE SECTOR REPORT Q4 2019 EXECUTIVE SUMMARY Software 2019 » The global software sector remains one of the most active sectors, with ~$63Bn in financing deal value and ~$110Bn in M&A deal value during 2019 - 848 financings, 16% higher than 2018 - 1,453 M&A transactions, 5% higher than 2018 » Significant M&A activity in Q4 includes major acquisitions in the cybersecurity sector: Thoma Bravo’s $3.8Bn acquisition of Sophos and F5 Network’s $1.0Bn acquisition of Shape Security » Financial Software had some of the largest financing deals in Q4 ‘19 led by the $1.7Bn financing of Paytm and $500MM financing of Chime; the Business Intelligence & Analytics sector saw high financing volume » Software sector trading performance remained healthy, as the IGV tech-software index outperformed the S&P 500 by 7.2% in 2019 – Sales & Marketing software index grew 49.7% LTM, outperforming all other software sub segments » Technical Application software companies traded at 9.7x and 28.7x for 2019 Revenue and EBITDA, respectively, among the highest in software » Momentum and growth rates remain healthy with the Business Intelligence & Analytics subsector leading 2019E/2018A revenue growth at 31.0% Select Q4 Active Investors Select Q4 Active Buyers Notes: Sources: Pitchbook, 451 Research, Capital IQ. 2 GCA OVERVIEW The GCA Software team KEY GCA STATS SECTOR COVERAGE GCA US TEAM AI / Machine Learning Josh Wepman Rupert Sadler Managing Director Managing Director 23 Offices Globally [email protected] [email protected] BI / Analytics Collaboration Software Kevin Walsh Chris Gough Managing Director Managing Director Senior Bankers Covering [email protected] [email protected] 25 Software CRM Cybersecurity Glen Kruger Saif Malik Managing Director Director Senior Bankers Covering Enterprise Content Management [email protected] [email protected] 60 Technology Enterprise Resource Planning Infrastructure Management GCA EXECUTIVE TEAM 90+ Software Transactions in the Last Three Years Todd Carter Geoff Baldwin Marketing Technology Co-CEO, Managing Co-CEO, Managing Director Director Head of M&A SaaS / Cloud Enablement [email protected] [email protected] Technology-Related 220+ Deals in the Last 3 Years Supply Chain Management Vertically Focused Software 3 GCA OVERVIEW Deep software sector expertise with demonstrated success advising large-cap public and private companies on complex assignments Notes: The above transactions represent a compilation of past and current deals that GCA entities, including GCA Advisors, LLC, GCA Corporation and GCA Altium, have advised on. Generally, GCA Corporation advises Asian-based transactions, while GCA Advisors, LLC advises U.S.-based transactions and GCA Altium advises UK/European-based transactions. At times, multiple GCA 4 entities may be retained to advise on the same transaction. GCA OVERVIEW Selected 2019 Transactions Notes: The above transactions represent a compilation of past and current deals that GCA entities, including GCA Advisors, LLC, GCA Corporation and GCA Altium, have advised on. Generally, GCA Corporation advises Asian-based transactions, while GCA Advisors, LLC advises U.S.-based transactions and GCA Altium advises UK/European-based transactions. At times, multiple GCA 5 entities may be retained to advise on the same transaction. DEAL DASHBOARD Software $63.2 Billion 848 1,453 $109.8 Billion 2019 Financing Deal Value (1)(2) 2019 Financing Transactions (1)(2) 2019 M&A Transactions 2019 M&A Deal Value Select Financing Transactions Quarterly Financing Deal Value (1)(2) Quarterly M&A Deal Value Select M&A Transactions (3) Company Amount ($MM) $Bn $Bn Acquirer Target EV ($MM) $23 $82 $1,660 $18 $4,201 $17 $17 $15 $14 $15 $57 $12 $14 $575 $39 $3,820 $32 $30 $22 $24 $19 $19 $500 $1,811 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 $400 $1,484 Quarterly Financing Deal Count (1)(2) Quarterly M&A Deal Count $400 $1,028 225 201 222 227 375 384 349 187 198 343 363 361 359 161 155 167 298 $290 226 $720 $284 $580 $235 $540 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Last 12 Months Software Price Performance vs. S&P 500 (4) 40% SPY IGV 35% 36.2% 30% 29.0% 25% 20% Financing Activity by Quarter 15% 10% 5% 0% (5%) (10%) Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Notes: Sources: Capital IQ, PitchBook, 451 Research and Dow Jones VentureSource. Market Data as of 12/31/2019. 1) Criteria based on software series A and subsequent rounds of global financings greater than or equal to $20MM. 2) Financings include Software Venture and Private Equity Growth / Expansion activity. 6 3) Software M&A transactions reflect select transactions in 2019 YTD. M&A metrics are based on closed and announced transactions. 4) iShares North American Tech-Software ETF (IGV), used as proxy for software landscape. Top holdings in the ETF include ADBE, MSFT, ORCL, CRM, and INTU. RECENT STOCK PERFORMANCE Index Performance Last 12 Months 70.0% 60.0% 50.0% 49.7% 47.3% 46.3% 44.3% 40.0% 39.5% 38.0% 37.5% 34.4% 30.0% 27.2% 24.8% 24.2% 20.0% 17.7% 10.0% 0.0% (10.0%) Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 1) Sales & 2) Financial 3) Technical 4) Vertical 5) Platform 6) SaaS 7) ERP & 8) Content & 9) 10) 11) Security 12) Business Marketing Applications Applications General Storage Infrastructure Development Intelligence Business Management and Operations & Analytics Management 49.7% 47.3% 46.3% 44.3% 39.5% 38.0% 37.5% 34.4% 27.2% 24.8% 24.2% 17.7% Notes: Sources: Capital IQ. Market Data as of 12/31/19. List of companies in each sector can be found in the public comparable tables. 7 SOFTWARE PUBLIC COMPANY LANDSCAPE Sub Sector Top Players and Key Operating Stats Platform Infrastructure Security Combined Market Cap: $1,922Bn Combined Market Cap: $98Bn Combined Market Cap: $228Bn 19/18 Rev. Growth: 2.7% 19/18 Rev. Growth: 16.3% 19/18 Rev. Growth: 19.1% 19 EBITDA Margin: 31.1% 19 EBITDA Margin: 16.1% 19 EBITDA Margin: 16.3% Content & Storage Management BI & Analytics Financial Applications Combined Market Cap: $228Bn Combined Market Cap: $38Bn Combined Market Cap: $356Bn 19/18 Rev. Growth: 11.4% 19/18 Rev. Growth: 31.0% 19/18 Rev. Growth: 26.8% 19 EBITDA Margin: 16.7% 19 EBITDA Margin: 10.1% 19 EBITDA Margin: 22.0% Notes: Sources: Capital IQ. Market Data as of 1/03/20. 8 Logos shown represent largest players in each sub sector by enterprise value. Operating stats for each sector represent full list of companies shown in public comparable tables. 1) Motive Partners has acquired the investment services business of Fiserv (FISV). SOFTWARE PUBLIC COMPANY LANDSCAPE Sub Sector Top Players and Key Operating Stats Technical Applications Vertical ERP & General Business Combined Market Cap: $167Bn Combined Market Cap: $234Bn Combined Market Cap: $367Bn 19/18 Rev. Growth: 14.5% 19/18 Rev. Growth: 9.1% 19/18 Rev. Growth: 21.3% 19 EBITDA Margin: 32.9% 19 EBITDA Margin: 18.9% 19 EBITDA Margin: 14.5% Development & Operations Sales & Marketing SaaS Combined Market Cap: $218Bn Combined Market Cap: $23Bn Combined Market Cap: $808Bn 19/18 Rev. Growth: 24.9% 19/18 Rev. Growth: 20.3% 19/18 Rev. Growth: 30.1% 19 EBITDA Margin: 12.9% 19 EBITDA Margin: 2.7% 19 EBITDA Margin: 12.9% Notes: Sources: Capital IQ. Market Data as of 1/03/20. 9 Logos shown represent largest players in each sub sector by enterprise value. Operating stats for each sector represent full list of companies shown in public comparable tables. 1) LogMeIn (LOGM) is in active conversations to be acquired. TRADING COMPARABLES Valuation and Operational Metrics EV / 2019E Revenue EV / 2020E Revenue 11.2x 8.9x 8.7x 9.7x 9.7x 8.2x 9.0x 8.8x Median: 7.6x 7.4x 7.1x Median: 6.4x 7.9x 6.7x 6.0x 7.3x 7.0x 5.7x 6.5x 5.6x 6.2x 5.9x 5.1x 5.1x 3.7x 3.9x 2019E / 2018A Revenue Growth 2020E / 2019E Revenue Growth 31.0% 30.1% 21.6% 21.6% 26.8% 24.9% Median: 19.7% 17.7% Median: 14.5% 16.2% 15.6% 21.3% 20.3% 15.3% 19.1% 13.8% 13.6% 13.3% 12.6% 16.3% 14.5% 11.3% 11.4% 9.1% 3.8% 2.7% Notes: Sources: Capital IQ. Market Data as of 1/03/20. Figures represent mean values of respective comp groups. 10 List of companies in each sector can be found in the public comparable tables. TRADING COMPARABLES Valuation and Operational Metrics EV / 2019E EBITDA EV / 2020E EBITDA 26.2x 26.2x 25.9x 28.7x 27.3x 26.8x 22.1x 24.4x 23.6x Median: 22.2x 20.4x 20.3x Median: 19.8x 22.6x 21.8x 19.4x 19.4x 17.3x 14.1x 14.8x 14.7x 12.8x 10.9x 12.1x 11.4x 10.3x 2019E EBITDA Margin 2020E EBITDA Margin 32.9% 31.1% 34.6% 30.8% Median: 16.2% 22.0% Median: 16.7% 23.2% 18.9% 16.7% 16.3% 16.1% 19.5% 18.9% 14.5% 17.2% 16.1% 16.2% 15.2% 14.6% 12.9% 12.9% 10.1% 11.6% 5.3% 2.7% Notes: Sources: Capital IQ.