The Lighthouse February 2014 Software Business Services Internet & Digital Media A Pharus Advisors, LLC Publication | www.pharus.com February 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 24 6. Pharus Overview 25 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, April have an interest in any of the securities or companies discussed herein. All rights reserved by Pharus Advisors. LLC. 2013 Copyright Pharus Advisors, LLC. Executive Contacts Telephone Email New York Office 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 February 2014 Software & Business Services Internet & Digital Media 1. Capital Market Trends Relative Performance of Major Stock Indices through February 28, 2014 (Base = 100, 3/1/2013) 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 28-Feb-14 1 Year 3 Months 1 Month Dow Jones 16,321.71 16.1% 1.5% 4.0% Nasdaq 4,308.12 36.3% 6.1% 5.0% S&P 500 1,859.45 22.8% 3.0% 4.3% Russell 2000 1,183.03 29.8% 3.5% 4.6% Pharus Advisors, LLC | www.pharus.com 3 February 2014 Software & Business Services Internet & Digital Media 2. Public Market Valuations Historical Median TEV/Revenue Multiples Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Application Software Customer Relationship Management (CRM) 6.9x 6.9x 6.5x 6.8x 7.3x 7.2x Accounting / ERP 3.7x 3.7x 3.9x 4.3x 4.1x 4.2x Retail Software 2.0x 2.0x 2.0x 2.1x 2.0x 2.1x Supply Chain Management 4.7x 4.8x 4.9x 5.0x 5.4x 5.3x Human Capital Management 12.4x 12.2x 11.2x 12.3x 13.5x 13.6x Knowledge / Content Manangement 4.6x 4.9x 4.9x 5.2x 5.2x 6.5x EMS / Infrastructure Software Business Intelligence 2.8x 2.7x 3.4x 3.4x 3.1x 3.3x Security Software 7.2x 5.7x 6.1x 7.2x 7.6x 7.3x System and Network Management Software 2.5x 2.6x 3.0x 3.0x 2.9x 3.0x Integration / Middleware 4.1x 3.5x 3.5x 3.5x 3.1x 3.3x Platform / OS 2.5x 2.5x 2.7x 2.7x 2.6x 2.7x Financial Solutions & Services Bank Processing 3.5x 3.8x 3.9x 4.1x 3.9x 3.9x Capital Market Rating Services 5.3x 5.2x 5.5x 5.6x 5.5x 5.4x Consumer Rating Services 3.8x 3.9x 4.1x 4.2x 4.2x 4.3x Payment Processing 3.3x 3.5x 3.7x 3.8x 3.4x 3.3x Insurance Solutions 1.8x 2.0x 2.3x 2.4x 2.2x 2.4x Investment Solutions 3.3x 4.1x 4.3x 4.3x 4.1x 3.8x Online & Digital Media Digital Media & Advertising 4.1x 4.2x 3.6x 3.5x 3.3x 3.6x Online Retailers 1.6x 1.7x 2.5x 2.5x 2.1x 2.1x Other Online Companies 2.8x 2.6x 2.9x 3.0x 3.9x 4.1x Social Networking & Gaming 1.8x 1.9x 1.9x 1.9x 2.5x 2.8x Business Services IT Integration & Consulting 1.5x 1.6x 1.6x 1.7x 1.6x 1.7x Education & Training 0.8x 0.6x 0.8x 0.8x 0.7x 0.6x IT Services 2.7x 2.7x 2.7x 3.2x 3.1x 3.2x Call Center 0.8x 0.9x 0.9x 0.9x 0.8x 0.8x Medians: Application Software 4.3x 4.6x 4.7x 5.1x 5.0x 5.0x EMS / Infrastructure Software 3.5x 3.5x 3.4x 3.7x 3.1x 3.5x Financial Solutions & Services 3.5x 3.6x 3.8x 3.9x 3.7x 3.4x Online & Digital Media 2.5x 2.5x 2.6x 3.0x 3.0x 3.3x Business Services 1.1x 1.1x 1.2x 1.2x 1.2x 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 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Pharus Advisors, LLC | www.pharus.com 4 February 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) 7.2x 5.9x 81.0x 43.9x Accounting / ERP 4.2x 4.1x 14.6x 11.1x Retail Software 2.1x 1.9x 11.7x 9.7x Supply Chain Management 5.3x 5.3x 24.1x 20.9x Human Capital Management 13.6x 10.2x 141.5x 38.2x Knowledge / Content Manangement 6.5x 6.7x 17.3x 21.8x EMS / Infrastructure Software Business Intelligence 3.3x 2.8x 17.6x 13.4x Security Software 7.3x 6.8x 15.3x 15.7x System and Network Management Software 3.0x 3.0x 12.8x 11.6x Integration / Middleware 3.3x 3.2x 15.9x 11.3x Platform / OS 2.7x 2.6x 8.5x 8.1x Financial Solutions & Services Bank Processing 3.9x 3.7x 12.2x 11.1x Capital Market Rating Services 5.4x 5.1x 12.5x 12.0x Consumer Rating Services 4.3x 3.5x 12.1x 11.1x Payment Processing 3.3x 2.7x 13.8x 9.9x Insurance Solutions 2.4x 2.8x 13.4x 11.7x Investment Solutions 3.8x 3.7x 20.5x 11.7x Online & Digital Media Digital Media & Advertising 3.6x 2.9x 23.1x 18.1x Online Retailers 2.1x 1.8x 18.0x 12.7x Other Online Companies 4.1x 3.6x 20.9x 13.6x Social Networking & Gaming 2.8x 3.0x 21.0x 18.0x Business Services IT Integration & Consulting 1.7x 1.5x 12.2x 9.6x Education & Training 0.6x 0.6x 11.6x 8.4x IT Services 3.2x 2.7x 13.0x 11.5x Call Center 0.8x 0.7x 7.1x 6.1x Medians: Application Software 4.8x 4.5x 17.3x 18.5x EMS / Infrastructure Software 3.5x 3.1x 15.7x 11.6x Financial IT Services 3.4x 3.4x 13.0x 11.1x Online & Digital Solutions & Services 3.3x 2.9x 21.0x 13.8x Business Services 1.0x 1.2x 12.0x 9.3x Pharus Advisors, LLC | www.pharus.com 5 February 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 $1,435 $1,593 12.9x 10.3x 249.8x 108.6x Interactive Intelligence NasdaqGS:ININ 1,512 1,611 4.8x 4.2x 53.8x 70.5x Kofax Limited LSE:KFX 614 696 2.2x 2.0x 17.2x 12.6x LivePerson NasdaqGM:LPSN 616 708 3.5x 3.1x 108.2x 28.4x Marketo NasdaqGS:MKTO 1,489 1,609 15.5x 11.4x NM NM Salesforce.com NYSE:CRM 39,279 37,609 9.6x 7.6x NM 43.9x Median 7.2x 5.9x 81.0x 43.9x Accounting / ERP American Software NasdaqGS:AMSW.A $222 $288 2.2x 2.1x 14.6x 10.2x Intuit NasdaqGS:INTU 21,309 22,141 5.2x 4.5x 16.4x 11.1x Model N NYSE:MODN 164 266 1.6x 2.1x 65.1x NM Netsuite NYSE:N 8,398 8,595 20.3x 15.6x NM 199.4x Oracle NYSE:ORCL 163,564 175,894 4.4x 4.2x 10.0x 8.4x QAD NasdaqGS:QADA 240 290 0.9x 0.9x 22.0x 12.0x Sage LSE:SGE 8,541 7,938 3.7x NA 12.8x NA SAP DB:SAP 98,309 96,215 4.2x 4.0x 12.9x 11.1x Textura NYSE:TXTR 592 668 14.5x 8.9x NM NM Median 4.2x 4.1x 14.6x 11.1x Retail Software Micros NasdaqGS:MCRS $3,553 $4,177 2.7x 2.6x 13.9x 11.5x NCR NYSE:NCR 8,540 5,676 1.4x 1.3x 9.6x 7.9x Median 2.1x 1.9x 11.7x 9.7x Supply Chain Management Aspen Technology NasdaqGS:AZPN $4,124 $4,342 11.8x 10.3x 42.7x 32.0x BasWare HLSE:BAS1V 652 659 3.8x NM 85.7x NA ClickSoftware Technologies NasdaqGS:CKSW 261 318 2.5x 2.3x NM 58.1x Dassault ENXTPA:DSY 12,303 14,250 4.3x NM 13.8x NA Descartes Systems Group TSX:DSG 865 895 6.3x 5.1x 22.5x 16.6x Manhattan Associates NasdaqGS:MANH 2,764 2,897 6.7x 6.1x 25.8x 21.6x Mix Telematics JSE:MIX 308 376 2.7x 2.2x 13.0x 10.0x Parametric Technology NasdaqGS:PTC 4,663 4,666 3.6x 3.4x 16.1x 12.5x SciQuest NasdaqGS:SQI 669 703 7.4x 6.0x NM 29.6x Fleetmatics Group NYSE:FLTX 1,248 1,362 7.0x 5.4x 27.7x 20.3x Median 5.3x 5.3x 24.1x 20.9x Human Capital Management Benefit Focus NasdaqGM:BNFT $1,508 $1,585 15.6x 12.3x NM NM Callidus NasdaqGM:CALD 535 555 4.8x 4.2x NM 37.3x Concur NasdaqGS:CNQR 6,800 6,991 11.6x 9.3x 204.4x 57.8x Cornerstone OnDemand NasdaqGS:CSOD 2,993 3,083 16.2x 11.1x NM NM Ultimate Software NasdaqGS:ULTI 4,617 4,697 11.2x 9.1x 78.6x 38.2x Workday NYSE:WDAY 18,473 19,878 39.4x 25.2x NM NM Median 13.6x 10.2x 141.5x 38.2x Pharus Advisors, LLC | www.pharus.com 6 Knowledge / Content Management Adobe Systems NasdaqGS:ADBE $32,422 $34,082 8.0x 8.0x 42.1x 30.6x Akamai NasdaqGS:AKAM 10,268 10,942 6.5x 5.5x 17.3x 12.9x Open Text NasdaqGS:OTEX 6,196 6,165 4.5x 3.3x 14.7x 10.3x SDL LSE:SDL 506 507 1.1x NA 12.8x NA Veeva NYSE:VEEV 4,125 4,399 22.0x 15.0x 107.3x 75.6x Median 6.5x 6.7x 17.3x 21.8x February 2014 Software & Business Services Internet & Digital Media 2.