R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
SunTrust Robinson Humphrey
State of the Software Market
February 2017
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
2
Table of Contents
SECTION I.
SECTION II.
SECTION III.




APPENDIX.
Macro Economic and Capital Markets Themes Impacting Software
Review of the Software Exit Environment
Public Software Company Operating and Valuation Metrics
A. Application Software
B. Infrastructure Software
C. Security and Storage Software

STRH Public Software Company Universe
Page 3
Page 12
Page 27
Page 39
Page 47
Page 53

Page 59
R0
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B0
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R 102
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Section I.
Macro Economic and Capital Markets Themes Impacting Software
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4
$14.9
$15.0
$14.9
$14.6
$14.4$14.4
$15.0
$16.8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Indexed GDP Growth1.1%
0.8%
(0.3%)
(2.8%)
(3.5%)
(4.1%)
(3.3%)
(0.2%)
1.6%
2.7%
3.1%
2.7%
1.9% 1.7%
1.2%
1.7%
2.8%
2.5%
2.4%
1.3% 1.3%
1.0%
1.7%
2.7%
1.6%
2.4%
2.9%
2.5%
3.3% 3.0%
2.2% 1.9%
1.6%
1.2%
1.7%
1.9%
2.2%
2.2%
2.2%
2.2%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Economic outlook
remains in-line with
30 year average
30 year average
GDP growth = 2.5%
12 quarters to return to pre-
recession nominal GDP levels
($ in trillions)
Economic Decline
8 Quarters of Recovery
22 Consecutive Quarters of Sustained “Growth”
Outlook (1)
= Actual GDP in declining quarters
= Actual GDP in recovery and growth quarters
= Projected GDP (1)
= 1% – 5% range of GDP growth from low point
= Actual GDP
= Projected GDP (1)
GDP Growth – Slow and Steady Since the Great Recession
…While Growth is
Expected to
Remain In-Line
with Historical
Levels for
Several Quarters
Nominal GDP has
Recovered
Beyond Pre-
Recession Highs…
Historical and Projected GDP Year-Over-Year GDP Growth Source: Bureau of Economic Analysis, Bureau of Labor Economics and STRH analysis
Note: GDP denominated in 2009 dollars
(1) GDP growth based on the Federal Reserve of Philadelphia’s quarterly survey of economist estimates
Economic Decline
8 Quarters of Recovery
22 Consecutive Quarters of Sustained “Growth”
Outlook (1)
19 – Industry and
GDP (Economic
Analysis Updated)
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B127
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G128
B37
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G164
B0
R0
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B201
R164
G169
B173
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R 102
G 102
B 102
R246
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B91
R0
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5
(20%)
(10%)
0%
10%
20%
30%
40%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Growth (Decline)Median IT Multiplier Over Time
Overall median:


1990 – 2000 median:


2001 – 2010 median:


2010 – Present median:
3.2x

4.5x

2.0x

1.6x
= Change in Investment in IT Equipment & Software
= GDP Growth (2009 Dollars)
= Projected Change in Investment in IT Equipment & Software
= Project GDP Growth
The IT Spending Multiplier on GDP – SaaS Driving IT Efficiency?
Growth of
Investment in IT
Equipment and
Software
Consistently
Outstrips GDP
Growth
Source: Bureau of Economic Analysis and STRH analysis
Note: GDP growth based on the Federal Reserve of Philadelphia’s quarterly survey of economist estimates. IT Spending growth estimated
by applying historical growth multiplier to Federal Reserve GDP growth estimates
Shift to SaaS
potentially
driving lower
capex?
19 – Industry and
GDP (Economic
Analysis Updated)
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
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B232
6
0
20
40
60
80
12/07
6/08
12/08
6/09
12/09
6/10
12/10
6/11
12/11
6/12
12/12
6/13
12/13
6/14
12/14
6/15
12/15
6/16
12/16
VIX Volatility Index
Quarter Average
(200)
(150)
(100)
(50)
0
50
100
150
200
12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16
Source: Capital IQ, Chicago Board Options Exchange and STRH analysis; includes data through 12/31/16

Denotes percentage of days with a move greater than 50 points
New U.S.
Administration
Heightened
Concerns on
Terrorist
Activity
Concerns of
Unknown
Federal Reserve
Actions on
Rates
Diverging
Monetary
Policies
World
Currency
Devaluations
Weakening
Global Growth
Inflation
Concerns
CBOE Volatility Index (“VIX”) Absolute Value of 1 Day Change in NASDAQ 2008
2009
2010
2011
2012
2013
2014
= Up day movement
= Up day median: 20.0 points
= Down day movement
= Down day median: (20.6) points
Q4 ‘16 market volatility
increased 7% over the
preceding quarter
12%
9%
20%
8%
6%
Capital Markets Have Become Less Volatile
2015
18%
23%
27%
2016
29%
19 – Industry and
GDP (Market
Volitility)
% of All Days in Range
VIX
2008-2010
2011-2013
2014-2016
> 35%
21%
4%
0%
25% - 35%
27%
9%
3%
< 25%
52%
87%
96%
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
7
22.3
99.8
7.0
54.0
0
20
40
60
80
100
120
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Basis Points (bps)(20%)
0%
20%
40%
60%
80%
100%
120%
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Interest Rate Trends Debt Markets vs. Nasdaq 5-Year Performance Five Year Performance: Debt Markets vs. NASDAQ
Source: Capital IQ, Federal Reserve Bank of St. Louis, ICE Benchmark Association, S&P Dow Jones Indices and STRH analysis; includes data through 12/31/16
(1) Consists of 100 credit facilities drawn from the S&P Leveraged Loan Index to mirror the market-weighted performance of the largest institutional leveraged loans
(2) Bank of America Merrill Lunch’s benchmark index for high yield corporate bonds
(3) As of 12/31/16
5-Year Min
95%
Nasdaq
S&P Leveraged
Loan 100 (1)
BAML HY Master II (2)
Today (3)
19 – Industry and
GDP (Loan Indices
vs Nasdaq)
19 – Industry and
GDP (LIBOR data)
3-Month Libor
Fed Funds Rate
25%
43%
Strong debt market recovery since
pull back in late 2015
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
8
CEO Confidence is Driving Analyst Sentiment and the Market
Source: Capital IQ, Thomson Financial, SCD, company filings, company press releases, the 451 Group and STRH analysis
(1) FactSet, CEO Confidence Board Index
(2) Represents Pre-Election (11/7/2016) to 2/17/2017 Analyst Consensus Rating Change
7 – Companies
Taken Private
DB pull: Strategic vs
Sponsor Deals
CEO Confidence is Near All-Time Highs (1)…
…Which has Pushed Stocks Higher
…Sell-Side Analyst Sentiment is Positive (2) …
• The CEO confidence index is a measure of a
CEO’s view on the economy as it relates to
hiring, industry concerns, economic worries,
and short-term/long-term outlook
• The index surged post election from 50 to 65,
its highest level in nearly six years, citing
improvement in the U.S. economy and
prospects in emerging markets
<50
“Bearish”
>50
“Bullish”
• Since the election, 67% of all software
companies in STRH’s index have either received
an increase in rating or no change in rating by
sell-side analysts
• Increased global economic outlook bodes well
for software as increased IT spending and
capital spending will help drive spending
growth across the sector
STRH Public Company Universe:
155 Companies
43.3%
28.8%
22.0%
(5.0%)
6.0%
17.0%
28.0%
39.0%
50.0%
Feb-16
Jun-16
Oct-16
Feb-17
STRH Software
Nasdaq
S&P 500
LTM Stock Performance
42%
15%
35%
41%
37%
41%
26%
34%
21%
44%
39%
25%
38
Companies
39
Companies
46
Companies
32
Companies
SaaS Apps
Perp. Apps
Infrastructure
Sec. & Storage
% Increased Rating
% No Rating Change % Decreased Rating
• Over the LTM, software companies have
outperformed the broader markets by a wide
margin
• Since the election, STRH’s software index is up
10%, pushing the median EV / 2017E revenue
multiple for the index to 3.6x (3.0x on the day
before the election, a 19% increase)
65
0
10
20
30
40
50
60
70
80
90
100
12/08
12/09
12/10
12/11
12/12
12/13
12/14
12/15
12/16
Election Day
R0
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B0
R0
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R164
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B173
R 64
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B 64
R 102
G 102
B 102
R246
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B91
R0
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B223
R173
G201
B232
9
Election Effects on the Equity Markets – Charting the Last Six Election Cycles
Source: Capital IQ, Wall Street research and STRH analysis
Note: Large cap stocks based on the S&P 500 index; small / mid cap stocks based on the S&PMidCap 400 index
Pre-election is defined as beginning of given year until day before election; post-election is defined as from the day of the election until the end of the given year
Annual Performance During Election Year by Market Cap Major Average Performance Nasdaq
S&P 500
Dow Jones
Industrial Average
Large Small / Mid 1996
Pre-
Election
Post-
Election
14%
4%
11%
5%
2000
Pre-
Election
Post-
Election
(2%)
(8%)
21%
(2%)
2004
Pre-
Election
Post-
Election
2%
7%
5%
10%
2008
Pre-
Election
Post-
Election
(33%)
(10%)
(33%)
(7%)
2012
Pre-
Election
Post-
Election
11%
(0%)
12%
2%
19 – Industry and
GDP (Election
Impact on Equity
Markets)
2016
Pre-
Election
Post-
Election
6%
5%
10%
12%
0%
100%
200%
300%
400%
500%
600%
700%
Jan-95
Jan-97
Jan-99
Jan-01
Jan-03
Dec-04
Dec-06
Dec-08
Dec-10
Dec-12
Dec-14
Dec-16
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
10
Great
Recession
Technology
Bubble
(15%)
(10%)
(5%)
0%
5%
10%
15%
20%
25%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Median Software License Revenue Growth
Software License
Revenue Growth
Trends (1)
Software Players Have Recognized the Importance of Improving Recurring Revenue Mix
Source: Capital IQ and STRH Analysis. Comp set performance as of 12/31/16. Comp set includes currently and previous public software companies

Denotes percentage of total revenue that is contributable to total recurring revenue, including SaaS subscriptions, subscription, maintenance and other recurring revenue

(1) Includes perpetual license, SaaS and Subscription revenue
26%
40%
Improving Mix of
Recurring Revenue Across
the Software Market
19 – Industry and
GDP (Brexit)
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
11
2.1x
2.2x
1.2x
2.3x
1.8x
2.5x
1.0x
2.6x
4.2x
7.8x
11.0x
10.3x
5.7x
11.6x
13.1x
15.2x
6.5x
13.9x
21.8x
42.6x
2.1x
2.2x
1.2x
2.3x
1.8x
2.5x
1.0x
2.6x
4.2x
7.8x
11.0x
10.3x
5.7x
11.6x
13.1x
15.2x
6.5x
13.9x
21.8x
42.6x
4,941
1,114
2,812
1,269
5,845
Index
Value
Chart Legend
EV / LTM EBITDA
Note: Sphere size corresponds to relative multiple value of performance group
EV / LTM Revenue
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
Major Index Valuations – Then and Now
Index
Value
Source: Capital IQ and STRH analysis
Note: Bubbles represent aggregate LTM revenue and LTM EBITDA multiples for the respective index
(1) Tech Bubble peak as of 3/23/00 and trough as of 10/9/02
(2) Great Recession peak as of 10/10/07 and trough as of 3/9/09
7,286
14,079
6,547
20,822
11,120
Great Recession (2007 – 2009)
Tech Bubble (2000 – 2002)
Today
Peak(1)
Trough(1)
Peak(2)
Trough(2)
As of 2/24/17
19 – Market Volatility
5
8
2.3
4.

R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
Section II.
Review of the Software Exit Environment
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
13
276
M&A Deals
$90.0B
M&A Volume
4.6x
Median LTM
Rev. Multiple
548
Software Exits 2015 + 2016
17
IPOs
$21.8B
(1)

Market Cap
5.2x
Median NTM
Revenue
Multiple
(2)
255
M&A Deals
$172.9B
(3)
M&A Volume
3.5x
Median LTM
Rev. Multiple
Source: Thomson Financial, Capital IQ, company filings, company press releases, the 451 Group and STRH analysis
(1) Represents total market Cap based on 17 IPOs between 1/1/15 and 12/31/16 at time of IPO pricing
(2) Based on NTM Revenue and enterprise value at time of IPO pricing
(3) Includes Dell take private of $60B+
Perpetual
SaaS
Equity-Specific
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
14
$47.3
$100.0
$90.0
$108.0
$105.0
$150.0
$110.0
$190.0
2.2x
3.6x
3.8x
3.5x
3.6x
3.6x
4.0x
4.0x
2009
2010
2011
2012
2013
2014
2015
2016
Median Transaction Value ($ in Millions)
Median EV / Revenue Multiple
Total Deal
Volume ($B)
Number of Transactions (1) Deal Size & Median Valuation (2) % SaaS
2016 Was a Banner Year for Software – Shift to SaaS Complete
Source: SDC, Capital IQ, Company filings, the 451 Group, Thomson Financial and STRH analysis. Includes data through 12/31/16
(1) Represent software M&A deals where the disclosed or estimated transaction value is known; excludes small asset sales and deals less than $5M in value
(2) Total, deal volume and size represent transaction enterprise values and are calculated from publicly disclosed information
47%
34%
47%
35%
17%
26%
51%
57%
$19.6
$48.5
$51.6
$52.3
$48.1
$69.0
$135.0
$127.9
1 – Consistent M&A Deal Flow
DB Pull: X year Deal Query
% SaaS: Comes from final column of DB pull
Total Deal Volume: On dashboard of excel
spreadsheet

48
57
77
94
92
101
110
120
53
65
72
77
75
75
83
87
21
22
26
20
30
38
48
48
10
16
9
15
17
22
18
17
132
160
184
206
215
236
259
272
2009
2010
2011
2012
2013
2014
2015
2016
Applications
Infrastructure
Security
Storage
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
15
$10.8
$30.1
$32.6
$24.7
$31.1
$36.7
Total
$98.0
$98.6
$8.9
$18.4
$19.0
$23.4
$21.2
$32.3
$28.8
$29.2
$19.6
$48.5
$51.6
$48.1
$52.3
$69.0
$135.0
$127.9
2009
2010
2011
2012
2013
2014
2015
2016
All Others
$35.2
Dell/EMC
$62.8
M&A Volume by Transaction Size Valuation by Deal Size (2) Deals over $1 Billion in Transaction Size Represent Over 67% of Total Software M&A Volume Since 2009
($ in billions)
= Total transaction volume of all deals > $1 billion
= Total transaction volume of all deals < $1 billion
= Median EV / Revenue for all deals > $1 billion
= Median EV / Revenue for all deals < $1 billion
2 – Billon Dollar Deal
Charts
Bain & Vista / Vertafore
Vista Equity / Marketo
Salesforce / Demandware
Thoma Bravo / QlikTech
Symantec / Blue Coat
Microsoft / LinkedIn
FP & Evergreen / Dell Software
KKR / Epicor
Oracle / NetSuite
Micro Focus / HP Software
TPG / McAfee
Broadcom / Brocade
Symantec / LifeLock
Roper / Deltek

2016 – The Year of the Billion Dollar Software Deal
Source: SDC, Capital IQ, Company filings, the 451 Group, Thomson Financial and STRH analysis; includes data through 12/31/16
(1) Represents Billion dollar deals done by sponsor or sponsor-back companies
(2) Represents LTM Revenue multiple where transaction values are known
Infor / Lawson
Apax / Epicor
Providence / Blackboard
NCR / Radiant Systems
Blackstone / Emdeon
Datatel / SunGuard Ed.
HP / Autonomy
Bain Capital / MYOB
Oracle / Endeca
Oracle / RightNow
SAP / SuccessFactors
SSI Investments / SkillSoft
ABB / Ventyx
SAP / Sybase
Symantec / Verisign (IAM)
IBM / Sterling Commerce
Hexagon / Intergraph
HP / 3PAR
Intel / McAfee
HP / ArcSight
IBM / Netezza
KKR / Visma
EMC / Isilon Systems
Attachmate / Novell
Oracle / Taleo
Dell / SonicWALL
Vista Equity / Misys
Dell / Wyse Technology
SAP/ Ariba
Apax & JMI / Paradigm
Microsoft / Yammer
Dell / Quest Software
VMWare / NICRA
Roper / Sunquest
IBM / Kenexa
Thomas Bravo / Deltex
Red Prairie / JDA Software
Cisco / Meraki
Oracle / Sun
EMC / Data Domain
Adobe Systems / Omniture
Emerson / Avocent
VMware / Airwatch
H&F / Renaissance Learning
Charterhouse / Skillsoft
SAP / Fieldglass
Permira / TeamViewer
Priceline / OpenTable
SanDisk / Fusion-io
Oracle / MICROS Systems
Skillsoft / SumTotal Systems
Thoma Bravo / Compuware
Micro Focus / Attachmate
SAP / Concur
Vista Equity / TIBCO
Vista Equity / ACS
Oracle / Datalogix
Fiserv / Open Solutions
Oracle / Acme Packet
Bain / BMC Software
Vista Equity / Websense
Salesforce / Exact Target
SAP / Hybris
Thoma Bravo / Intuit FS
Schneider / Invensys
Cisco / Sourcefire
KKR / Mitchell
OpenText / GXS
Advent / UNIT4
H&F/ Applied Systems
NCR / Digital Insight
Oracle / Responsys
SS&C / Advent Software
Bain / Blue Coat Systems
Permira / Informatica
LinkedIn / lynda.com
Raytheon / Websense
EMC / Virtustream
Cox / DealerTrack
Carlyle Group / Veritas
TPG Capital / Ellucian
Vista Equity / Solera
Dell / EMC
EQT Partners / IFS
15 Other Billion Dollar Deals
%
Sponsor (1)
58%
27%
40%
58%
0%
23%
47%
50%
3.5x
3.5x
3.7x
4.5x
3.7x
6.8x
5.1x
4.0x
2.2x
3.7x
4.0x
3.5x
3.6x
3.5x
3.9x
4.0x
2009
2010
2011
2012
2013
2014
2015
2016
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
16
59
50
44
37
26
17
36
19
4
7
15
17
14
9
12
40
36
38
30
13
24
15
15
15
21
17
12
5
12
9
33
33
35
29
31
21
5
16
26
14
10
6
10
7
6
132
119
117
96
70
62
56
50
45
42
42
35
29
28
27
IBM
MSFT
Oracle Dell EMC CSCO
ADSK
HP
SAP
CRM
Vmware
CA
Symantec
Infor
BMC
ADBE
20
19
23
19
19
19
16
19
13
24
24
20
21
14
17
13
12
11
15
7
4
14
16
14
4
16
12
11
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2010
2011
2012
2013
2014
2015
2016
Total Consolidator Activity By Quarter (2) Number of Acquisitions by Consolidator (1) Consolidator M&A Activity Returns as the Stalwarts are Refocused Attention on Inorganic Initiatives
2004-2007
2008-2011
2012-2016
2012-2016 = 282
2008-2011 = 302
2004-2007 = 366
Number of Deals Timeframe
5 – Consolidator
Activity
DB Pull:
Consolidator M&A
Activity Deals
Evolving Consolidator M&A Activity – Pace of Deal Volume Slowing?
Source: SDC, Capital IQ, Company filings, the 451 Group, Thomson Financial and STRH analysis; includes data through 12/31/16
(1) Includes all announced software transactions, regardless of size or if valuation was disclosed; does not include non-software transactions
(2) The total number of acquisitions per quarter is derived from the number of acquisitions by consolidator chart above
Median: 20
Median: 19
Median: 22
Median: 16
Median: 14
Median: 12
Median: 12
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
17
2 – Billon Dollar Deal
Charts
Chart Legend
EV / LTM EBITDA
Note: Sphere size corresponds to relative multiple
value of performance group
EV / LTM Revenue
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
Software M&A Valuations by Buyer Type & Deal Size


Source: Thomson Financial, SCD, company filings, company press releases, the 451 Group and STRH analysis
Data represents period 2011-present. Only includes companies with EV / revenue and EV / EBITDA valuation observations
Note: Valuation multiples represents LTM Revenue and LTM EBITDA multiples
(1) As of 12/31/16
Buyer Profile for All Deals 2011-2016
(1)
Sponsor or Sponsor-Backed Acquiror
Strategic Acquiror
Number of Deals: 45
Number of Deals: 50
Number of Deals: 400
Number of Deals: 875
Transaction SizeGreater than $1 BillionLess than $1 Billion12.0x
13.9x
14.5x
20.4x
3.2x
.6x
4.0x
6.2x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
18
4.6x
5.2x
2.6x
4.7x
2.2x
3.7x
1.3x
3.8x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Strategic Aquiror > $1bn
Strategic Aquiror < $1bn
Sponsor Aquiror > $1bn
Sponsor Aquiror < $1bn
18.6x
20.0x
29.4x
14.3x
9.6x
17.6x
9.8x
13.2x
0.0x
10.0x
20.0x
30.0x
40.0x
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Strategic Aquiror > $1bn
Strategic Aquiror < $1bn
Sponsor Aquiror > $1bn
Sponsor Aquiror < $1bn
…with Median EV
/ EBITDA
Multiples
Following Similar
Trends
Median EV /
Revenue
Multiples are in
Line with Levels
prior to the
Financial Crisis…
LTM M&A Valuations by Buyer Type Over Time
EV / LTM Revenue EV / LTM EBITDA Source: 451 Group, S&P Capital IQ and STRH Analysis. Excludes asset divestitures
Note: Data represents 1/1/04 through 12/31/16. Only includes companies with EV / revenue and EV / EBITDA valuation observations
(1) No >$1bn Sponsor acquired transactions took place in 2009; (2) Strategic acquiror; (3) Sponsor or sponsor-backed acquiror
(4) Transaction size greater than $1 billion; (5) Transaction size less than $1 billion
(2) (4)
(2) (5)
(3) (4)
(3) (5)
(2) (4)
(2) (5)
(3) (4)
(3) (5)
2 – Billon Dollar Deal
Charts
(1)
(1)
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
19
2.5x Δ
1.7x Δ
Chart Legend
EV / Revenue
Note: Sphere size corresponds to
relative multiple value of
performance group
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
Software M&A Valuation by Business Performance Metrics
Source: Thomson Financial, SCD, company filings, company press releases, the 451 Group and STRH analysis
Data represents period 1/1/07-12/31/16. Only includes companies with EV / revenue and EV / EBITDA valuation observations
11 – M&A Valuations vs Growth & EBITDA
DB Pull: Bubbles_M&A_Deals

LTM Revenue Growth at Time of Acquisition
LTM Rev Growth at Acquisition
<10%
10% - 20%
20% - 35%
>35%
Number of Deals: 83
Number of Deals: 67
Number of Deals: 36
Number of Deals: 43
Median Deal Size: $300 mm
Median Deal Size: $225 mm
Median Deal Size: $150 mm
Median Deal Size: $139 mm
Number of Deals: 60
Number of Deals: 35
Number of Deals: 23
Number of Deals: 9
Median Deal Size: $281 mm
Median Deal Size: $675 mm
Median Deal Size: $283 mm
Median Deal Size: $218 mm
Number of Deals: 78
Number of Deals: 33
Number of Deals: 22
Number of Deals: 16
Median Deal Size: $104 mm
Median Deal Size: $209 mm
Median Deal Size: $611 mm
Median Deal Size: $626 mm
EV / Revenue: 2.3x
EV / Revenue: 3.5x
EV / Revenue: 4.8x
EV / Revenue: 6.5x
<15%EBITDA Margin at Time of Acquisition>25%15% - 25%EV / Revenue: 4.1xEV / Revenue: 2.9xEV / Revenue: 2.4x1.6x
2.3x
3.1x
3.3x
3.3x
4.1x
5.3x
4.0x
5.0x
6.9x
3.2x
8.5x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
20
0.0x
2.5x
5.0x
7.5x
10.0x
12.5x
15.0x
17.5x
20.0x
$0
$25
$50
$75
$100
$125
$150
$175
$200
EV / Revenue Acquisition MultipleTarget Revenue
Infrastructure, Security and Storage
Applications (Perpetual)
Applications (SaaS)
Dispersion of Revenue Size
M&A Deal Distribution by Target LTM Revenue
46%
Majority of software
companies are acquired early
in their revenue lifecycle
% of Deals
23%
21%
6%
4%
M&A Deal Distribution by Transaction Value
M&A Deal Distribution by LTM Revenue Multiple (1)
61%
11%
28%
Software M&A Across Target Company Lifecycles
Source: Thomson Financial, company filings, company press releases, the 451 Group and STRH analysis
Data represents period 2008-through 12/31/16. Only includes companies with EV / revenue valuation observations
(1) Transactions up to $200M in LTM Revenue
14%
13%
15%
19%
9%
10%
9%
6%
5%
< $25
$25 - $50
$50 - $100 $100 - $200 $200 - $300 $300 - $500 $500 - $1B
$1B - $2B
> $2B
M&A Deal Size
39%
25%
16%
4%
16%
19%
21%
28%
9%
23%
48%
16%
16%
5%
15%
$0 - $25
$25 - $50
$50 - $100
$100 - $150
$150 - $200
LTM Revenue
Applications (SaaS)
Applications (Perp.)
Infrastructure,
Security & Storage
8%
29%
24%
14%
24%
16%
38%
30%
8%
8%
11%
25%
20%
13%
31%
0.0x - 1.5x
1.5x - 3.0x
3.0x - 4.5x
4.5x - 6.0x
6.0x+
EV / LTM Revenue Acquisition Multiple
Applications (SaaS)
Applications (Perp.)
Infrastructure, Security &
Storage
3 – Acquisition Lifecycle & Scatter Plot
DB Pull: Scatter Plot Deals
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
21
109
118
120
136
115
115
139
116
23
42
64
70
100
121
120
156
2009
2010
2011
2012
2013
2014
2015
2016
Perpetual
SaaS
$16,065
$41,980
$39,980
$31,648
$30,491
$3,583
$6,545
$11,583
$16,417
$21,815
$32,658
$36,313
$118,811
$16,174
$54,060
$73,801
While SaaS M&A
Multiples Continue to
Outpace Perpetual
License Models, 2016
Saw a Slight Drop-off in
EV / LTM Revenue
Multiples as Compared
to 2015
Median EV / LTM Revenue Valuation Multiples – SaaS vs. Perpetual License
Number of Deals – SaaS vs. Perpetual License
Total Volume ($ in millions) Perpetual
License
SaaS
SaaS vs. Perpetual License Software M&A Activity
Note: Represent software M&A deals where the disclosed or estimated transaction value is known; excludes small asset sales and deals less than $5M in value
SaaS includes on-demand and subscription-based pricing models. Includes data through 12/31/16
Source: Company filings, the 451 Group, Wall Street research and SunTrust Robinson Humphrey analysis
4 – Perpetual vs. SaaS Activity
DB Pull: Perpetual vs On-Demand
2.0x
3.9x
3.7x
3.5x
3.3x
3.4x
3.6x
3.4x
4.3x
3.5x
4.5x
3.6x
4.4x
4.0x
4.7x
4.6x
2009
2010
2011
2012
2013
2014
2015
2016
Perpetual
SaaS
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
22
Enterprise Value / LTM Revenue (1)
Premium Multiples are
being Paid for High
Growth Companies and
Best of Breed
Technologies
2 – Billon Dollar Deal
Charts
Demise of the “Private Company Discount” Theory
Source: Company filings, company press releases, SDC, the 451 Group and STRH analysis
Note: Annual Public Company EV & EV / LTM revenue data based on 4 quarter trailing average. Excludes public company divestitures
Includes data through 12/31/16
Public M&A = acquisitions of public companies; Private M&A = acquisitions of privately held companies; Public Companies = median of all public companies that comprise the STRH
Software & Systems comp universe
2016 High Multiple Public
Co. M&A Deals:
• Netsuite
• Demandware
• LinkedIn
• Marketo
• Cvent


10.8x
10.5x
8.2x
7.9x
7.6x
2009
2010
2011
2012
2013
2014
2015
2016
Public
Target
25
28
16
26
20
22
19
22
Private
Target
107
132
168
180
195
214
240
250
# of Deals1.5x
2.6x
3.5x
2.9x
2.6x
2.9x
2.6x
3.9x
3.3x
4.0x
4.5x
3.8x
4.1x
3.8x
5.0x
4.6x
1.5x
1.9x
2.1x
2.2x
2.9x
3.4x
3.4x
3.6x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
5.0x
5.5x
Median Enterprise or Transaction Value / LTM RevenuePublic Company M&A Targets
Private Company M&A Targets
Public Companies
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
23
= EV / LTM Revenue
= EV / LTM EBITDA
% 52-Week High 1-Day 30-Day Premiums Paid (1) Median Take-Private Valuation Metrics Since 2014
65
Deals
3.1x
Median
Revenue
Multiple
12.5x
Median EBITDA
Multiple
29.2%
Median
1-Day Premium
32.9%
Median
30-Day
Premium
(1.4%)
Median
% 52-Week
Premium
Software Take-Private Metrics
Source: Capital IQ, the 451 Group and STRH Analysis
(1) Represents the median share price premium paid for each respective period
7 – Companies
Taken Private
DB pull: Strategic vs
Sponsor Deals
3.5x
2.9x
2.6x
2.9x
2.6x
3.8x
15.5x
11.9x
14.6x
15.9x
12.0x
10.7x
2011
2012
2013
2014
2015
2016
34.6%
28.9%
27.0%
25.8%
30.0%
30.5%
46.8%
33.4%
37.3%
30.8%
31.0%
37.0%
9.3%
13.8%
12.5%
(2.1%)
(3.5%)
(1.4%)
2011
2012
2013
2014
2015
2016
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
24
33 IPOs
2014 – 2016
$115M
Deal Size (2)
18%
of Company
Sold in
IPO (2)
27%
First Day
Perform. (2)
SaaS (27 Companies)
Perpetual (6 Companies)
Quarterly Revenue Growth and Margin Profile: Pre / Post-IPO (1)
Pre-IPO
Post-IPO
= Quarterly Revenue Growth
= Quarterly Gross Margin
= Quarterly EBITDA Margin
Pre-IPO
Post-IPO
Recent Software IPO Metrics
Source: Capital IQ and STRH Analysis. Comp set and stock performance as of 2/24/17. Comp set includes software IPOs between 1/1/14 and 12/31/16
(1) Revenue growth is defined as the year-over-year growth based on revenue in the current quarter. Gross and EBITDA margins are presented based on the given quarter. Chart values
represent the median values for the respective metrics, normalized for time
(2) Represents median value of 33 recent software IPOs
(3) 1-day post IPO Performance
47%
39%
32%
27%
21%
(9%)
(16%)
(11%)
(8%)
(2%)
66%
65%
66%
70%
72%
- 2 Yrs
- 1 Yr
At IPO
+ 1 Yr
+ 2 Yr
45%
44%
36%
41%
27%
NA
6%
11%
2%
(1%)
82%
54%
67%
71%
65%
- 2 Yrs
- 1 Yr
At IPO
+ 1 Yr
+ 2 Yr
Median Stock Performance
(3)
27%
20%
LTM Revenue ($ in Millions)
$91
$250
LTM Gross Margin
65%
77%
Fwd. Revenue Growth
35%
31%
LTM EBITDA Margin
(15%)
14%
EV / NTM Revenue
4.8x (4.8x as of 2/24/17)
7.2x (3.8x as of 2/24/17)
Median Metrics at IPO70%
Price
At-or-Above
Filing Range
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
25
Offering
Filing Range
Offer Price
Performance
Issuer
Model
Issue Date
Deal Size ($M)
% Company
Sold
% Primary
% Secondary
Low
High
Offer Price
% Above / Below
Midpoint
(1)
1-Day Perform.
Since IPO
BlackLine
SaaS
10.27.16
$168
20%
100%
0%
$13.00
$15.00
$17.00
21%
39%
76.0%
Coupa Software
SaaS
10.05.16
$153
18%
100%
0%
$14.00
$16.00
$18.00
20%
85%
46.6%
Nutanix
SaaS
09.29.16
$274
12%
100%
0%
$11.00
$13.00
$16.00
33%
131%
86.4%
Apptio
SaaS
09.22.16
$110
18%
100%
0%
$13.00
$15.00
$16.00
14%
41%
(15.4%)
Everbridge
SaaS
09.15.16
$104
32%
83%
17%
$11.00
$13.00
$12.00
0%
27%
59.6%
Talend
SaaS
07.28.16
$109
22%
100%
0%
$15.00
$17.00
$18.00
13%
42%
51.1%
Twilio
SaaS
06.22.16
$173
14%
100%
0%
$12.00
$14.00
$15.00
15%
92%
115.1%
SecureWorks Corp.
SaaS
04.21.16
$112
10%
100%
0%
$15.50
$17.50
$14.00
(15%)
0%
(26.3%)
Xactly Corporation
SaaS
06.25.15
$65
29%
97%
3%
$10.00
$12.00
$8.00
(27%)
9%
55.0%
AppFolio
SaaS
06.25.15
$86
22%
100%
0%
$12.00
$14.00
$12.00
(8%)
17%
98.3%
MINDBODY
SaaS
06.18.15
$100
18%
100%
0%
$13.00
$15.00
$14.00
0%
(17%)
85.4%
Box
SaaS
01.22.15
$201
12%
100%
0%
$11.00
$13.00
$14.00
17%
66%
28.1%
Hortonworks
SaaS
12.11.14
$115
17%
100%
0%
$12.00
$14.00
$16.00
23%
65%
(37.9%)
New Relic
SaaS
12.11.14
$132
12%
100%
0%
$18.00
$20.00
$23.00
21%
48%
48.1%
Workiva
SaaS
12.11.14
$101
18%
100%
0%
$13.00
$15.00
$14.00
0%
(2%)
3.9%
Upland Software
SaaS
11.05.14
$46
27%
100%
0%
$12.00
$14.00
$12.00
(8%)
(19%)
0.4%
HubSpot
SaaS
10.08.14
$144
19%
100%
0%
$19.00
$21.00
$25.00
25%
20%
142.8%
MobileIron
SaaS
06.11.14
$115
17%
100%
0%
$8.00
$10.00
$9.00
0%
22%
(48.3%)
Kinaxis
SaaS
06.03.14
$93
33%
65%
35%
$12.82
$14.66
$11.91
(13%)
0%
362.8%
TrueCar
SaaS
05.15.14
$80
13%
100%
0%
$12.00
$14.00
$9.00
(31%)
12%
58.7%
Zendesk
SaaS
05.14.14
$115
18%
100%
0%
$8.00
$10.00
$9.00
0%
49%
210.2%
Sabre Corporation
SaaS
04.16.14
$721
17%
100%
0%
$18.00
$20.00
$16.00
(16%)
3%
36.2%
Paycom Software
SaaS
04.14.14
$115
15%
69%
31%
$18.00
$20.00
$15.00
(21%)
2%
268.7%
Five9
SaaS
04.03.14
$81
25%
100%
0%
$9.00
$11.00
$7.00
(30%)
9%
133.7%
Amber Road
SaaS
03.20.14
$111
42%
65%
35%
$10.50
$12.50
$13.00
13%
31%
(39.6%)
Paylocity
SaaS
03.18.14
$138
17%
71%
29%
$14.00
$16.00
$17.00
13%
41%
116.4%
Varonis Systems
SaaS
02.27.14
$121
23%
100%
0%
$17.00
$19.00
$22.00
22%
100%
25.9%
Atlassian Corporation
Perpetual
12.09.15
$531
12%
100%
0%
$16.50
$18.50
$21.00
20%
32%
39.4%
Pure Storage
Perpetual
10.06.15
$489
16%
100%
0%
$16.00
$18.00
$17.00
0%
(6%)
(32.0%)
Rapid7
Perpetual
07.16.15
$119
20%
100%
0%
$13.00
$15.00
$16.00
14%
58%
(3.7%)
Sophos Group
Perpetual
06.26.15
$637
40%
23%
77%
$3.30
$4.41
$3.54
(8%)
7%
0.2%
MYOB
Perpetual
05.01.15
$668
40%
99%
1%
$2.35
$3.14
$2.85
4%
7%
(7.2%)
Cyberark Software
Perpetual
09.23.14
$99
21%
100%
0%
$13.00
$15.00
$16.00
14%
87%
215.8%
SaaS Median
$115
18%
100%
0%
$12.82
$14.66
$14.00
0%
27%
55%
Perpetual Median
$510
20%
100%
0%
$13.00
$15.00
$16.00
9%
20%
(2%)
Overall Median
$115
18%
100%
0%
$13.00
$15.00
$15.00
4%
27%
48%
100% of IPOs in 2016 Were
SaaS / Subscription
Software IPO Activity – Since 2014
Source: Company Filings, Capital IQ and STRH Analysis. Comp set includes software IPOs between 1/1/14 and 12/31/2016
(1) Represents the % the offer price is above / below the midpoint of the initial offer range
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
26
Software IPO Activity – Since 2014 (Continued)
Source: Company Filings, Capital IQ and STRH Analysis. Comp set includes software IPOs between 1/1/14 and 12/31/2016
(1) Includes Stock-based Comp add back
(2) Calculated as cash flow from operations less capital expenditures
(3) As of 2/24/17
Company Stats At IPO ($ in Millions)
Valuation At Offer Price
Valuation At First Day Close
1st Day Close vs. Offer
Current Valuation (3)
Issuer
Model
LTM
Revenue
LTM Gross
Margin
LTM
EBITDA
(1)
LTM
EBITDA
Margin
LTM Free
Cash Flow
(2)
Projected
Rev. Growth
EV /
LTM Rev.
EV /
NTM Rev.
EV /
LTM FCF
EV /
NTM FCF
EV /
LTM Rev.
EV /
NTM Rev.
EV /
LTM FCF
EV /
NTM FCF
EV /
LTM Rev.
EV /
NTM Rev.
EV /
LTM Rev.
EV /
NTM Rev.
BlackLine
SaaS
$102
81%
($15)
(15%)
$123
47%
8.7x
8.6x
7.2x
NM
11.9x
11.8x
9.9x
NM
3.2x
3.2x
11.6x
8.5x
Coupa Software
SaaS
$109
62%
($34)
(31%)
$125
50%
8.7x
6.7x
7.6x
NM
15.4x
11.8x
13.4x
NM
6.7x
5.2x
9.0x
7.0x
Nutanix
SaaS
$445
62%
($119)
(27%)
$574
75%
5.4x
3.4x
4.2x
NM
11.9x
7.5x
9.2x
NM
6.5x
4.1x
7.4x
4.9x
Apptio
SaaS
$143
64%
($21)
(15%)
$155
20%
5.0x
4.0x
4.6x
NM
6.7x
5.3x
6.2x
NM
1.7x
1.4x
2.7x
2.5x
Everbridge
SaaS
$67
67%
($4)
(6%)
$75
28%
5.0x
4.0x
4.5x
NM
6.3x
5.0x
5.7x
NM
1.3x
1.0x
6.0x
4.8x
Talend
SaaS
$89
76%
($21)
(24%)
$102
35%
5.7x
4.2x
5.0x
NM
8.1x
6.0x
7.0x
NM
2.4x
1.7x
6.5x
4.8x
Twilio
SaaS
$193
56%
($20)
(11%)
$243
46%
7.1x
5.2x
5.6x
NM
13.0x
9.6x
10.3x
NM
5.9x
4.3x
9.1x
6.8x
SecureWorks Corp.
SaaS
$342
52%
($48)
(14%)
$421
23%
3.3x
2.6x
2.7x
NM
3.3x
2.6x
2.7x
NM
0.0x
0.0x
1.8x
1.5x
Xactly Corporation
SaaS
$64
60%
($11)
(17%)
$74
21%
3.7x
3.0x
3.1x
NM
4.0x
3.2x
3.4x
NM
0.3x
0.2x
3.9x
3.4x
AppFolio
SaaS
$54
54%
($8)
(14%)
$72
51%
7.2x
4.8x
5.4x
NM
8.4x
5.7x
6.3x
NM
1.3x
0.8x
7.4x
5.8x
MINDBODY
SaaS
$77
59%
($21)
(27%)
$95
36%
9.3x
6.9x
7.5x
NM
8.1x
6.0x
6.5x
NM
(1.2x)
(0.9x)
7.1x
5.4x
Box
SaaS
$193
79%
($105)
(54%)
$280
31%
7.8x
5.7x
5.4x
NM
13.4x
9.8x
9.2x
NM
5.6x
4.1x
5.8x
4.6x
Hortonworks
SaaS
$42
34%
($83)
(199%)
$49
104%
13.3x
7.5x
11.3x
NM
23.7x
13.4x
20.1x
NM
10.4x
5.9x
2.8x
2.2x
New Relic
SaaS
$85
82%
($28)
(33%)
$104
65%
11.4x
7.9x
9.3x
NM
17.3x
12.0x
14.1x
NM
6.0x
4.1x
6.6x
5.1x
Workiva
SaaS
$106
71%
($24)
(23%)
$112
32%
5.1x
4.1x
4.8x
NM
5.0x
4.0x
4.8x
NM
(0.1x)
(0.1x)
3.1x
2.7x
Upland Software
SaaS
$60
65%
$3
5%
$65
58%
4.1x
3.1x
3.8x
NM
3.6x
2.7x
3.3x
NM
(0.5x)
(0.4x)
3.3x
2.9x
HubSpot
SaaS
$104
68%
($30)
(29%)
$111
42%
8.3x
6.5x
7.8x
NM
9.8x
7.6x
9.2x
NM
1.5x
1.2x
7.7x
5.9x
MobileIron
SaaS
$108
83%
($28)
(26%)
$114
8%
5.7x
4.9x
5.4x
NM
7.1x
6.1x
6.7x
NM
1.4x
1.2x
2.0x
1.8x
Kinaxis
SaaS
$63
71%
$16
26%
$70
15%
5.5x
4.5x
4.9x
21.2x
5.5x
4.5x
4.9x
21.2x
0.0x
0.0x
11.5x
9.3x
TrueCar
SaaS
$153
90%
($0)
(0%)
$194
44%
3.9x
2.9x
3.1x
NM
4.4x
3.2x
3.5x
NM
0.5x
0.4x
4.1x
3.6x
Zendesk
SaaS
$83
66%
($16)
(19%)
$112
55%
7.2x
4.8x
5.4x
NM
10.9x
7.3x
8.1x
NM
3.7x
2.5x
7.8x
5.8x
Sabre Corporation
SaaS
$2,431
32%
$718
30%
$2,964
(3%)
3.4x
2.7x
2.8x
12.8x
3.4x
2.8x
2.8x
13.0x
0.1x
0.0x
2.7x
2.6x
Paycom Software
SaaS
$117
82%
$13
11%
$140
30%
7.1x
5.5x
6.0x
41.6x
7.3x
5.7x
6.1x
42.5x
0.2x
0.1x
9.9x
7.7x
Five9
SaaS
$84
42%
($22)
(26%)
$102
22%
4.7x
3.9x
3.9x
NM
5.1x
4.2x
4.2x
NM
0.4x
0.3x
5.3x
4.5x
Amber Road
SaaS
$53
58%
($2)
(3%)
$62
17%
6.5x
5.5x
5.5x
NM
8.0x
6.9x
6.9x
NM
1.5x
1.3x
3.0x
2.7x
Paylocity
SaaS
$91
48%
$3
3%
$178
97%
9.2x
4.7x
4.7x
NM
13.0x
6.6x
6.6x
NM
3.8x
1.9x
6.9x
5.5x
Varonis Systems
SaaS
$75
91%
($3)
(4%)
$96
28%
7.5x
5.8x
5.8x
NM
14.5x
11.3x
11.3x
NM
7.0x
5.5x
3.8x
3.2x
Atlassian Corporation
Perpetual
$353
84%
$64
18%
$507
33%
11.8x
7.7x
8.2x
30.5x
15.8x
10.3x
11.0x
40.9x
4.0x
2.6x
11.4x
8.2x
Pure Storage
Perpetual
$274
58%
($139)
(51%)
$398
128%
13.0x
6.9x
8.9x
NM
12.3x
6.6x
8.5x
NM
(0.7x)
(0.4x)
2.8x
1.9x
Rapid7
Perpetual
$92
74%
($22)
(24%)
$101
31%
9.2x
7.4x
8.4x
NM
13.0x
10.5x
11.9x
NM
3.8x
3.1x
3.7x
3.0x
Sophos Group
Perpetual
$447
80%
$66
15%
$472
NA
5.3x
4.9x
5.0x
46.3x
5.6x
5.2x
5.3x
48.5x
0.3x
0.2x
3.6x
3.1x
MYOB
Perpetual
$227
64%
$64
28%
$246
1%
9.3x
8.4x
8.5x
24.1x
9.8x
8.8x
9.0x
25.5x
0.5x
0.5x
7.1x
4.5x
Cyberark Software
Perpetual
$76
85%
$10
13%
$85
28%
5.3x
4.2x
4.7x
21.2x
10.7x
8.5x
9.5x
43.2x
5.4x
4.3x
6.6x
5.3x
SaaS Median
$91
65%
($20)
(15%)
$112
35%
6.5x
4.8x
5.4x
21.2x
8.1x
6.0x
6.6x
21.2x
1.5x
1.2x
6.0x
4.8x
Perpetual Median
$250
77%
$37
14%
$322
31%
9.2x
7.2x
8.3x
27.3x
11.5x
8.7x
9.3x
42.1x
2.2x
1.5x
5.1x
3.8x
Overall Median
$102
66%
($16)
(15%)
$112
32%
7.1x
4.9x
5.4x
24.1x
8.4x
6.6x
6.9x
40.9x
1.5x
1.2x
6.0x
4.6x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
Section III.
Public Software Company Operating and Valuation Metrics
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
28
Median
25th Percentile
Valuation Metrics
EV / 2017E EBITDA
Key Metrics (2)
10.1%
Revenue
Growth
68.1%
Gross Margins
15.2%
EBITDA
Margins
3.7x
EV / ‘17E
Revenue
15.8x
EV / ‘17E
EBITDA
25.8x
‘17E P/E
15.2%
Cash / Market
Cap
2.9%
Capex /
Revenue
1.0x
Net Debt (3) /
EBITDA
Valuation
LTM Operating Metrics
LTM Credit Metrics
3-Year Software Universe Performance (1)
# of Public Software Companies: 155 Returns Since 2014
Software Median = 24%
NASDAQ = 45%
T
e
x
t

E
d
i
t
s

f
r
o
m

M
a
s
t
e
r

C
o
m
p
s

Public Software Company Universe



Source: Company filings, Thomson Financial, Capital IQ and STRH analysis
Note: Valuation charts represent median, 25th percentile and 75th percentile values based on Wall Street consensus
(1) Price weighted software index based on SunTrust Robison Humphrey analysis as of 2/24/17
(2) All metrics are based on the most recent data, as of 2/24/17
(3) Includes only companies with net debt
1
7

–

C
u
s
t
o
m

C
h
a
r
t
s

(
S
e
e

I
n
s
t
.

T
a
b
)

Folder 9
EV / 2017E Revenue
By Segment
Applications by Business Model
By Segment
Applications by Business Model
75th Percentile
Chart Legend
10.5x
14.8x
18.9x
27.2x
16.7x
23.9x
Perpetual
SaaS
9.8x
13.9x
6.0x
14.3x
14.3x
22.9x
11.1x
24.0x
11.3x
17.9x
7.5x
17.7x
Inf.
Security
Storage
Apps
7.5x
1
x
17 x
16.7x
23.9x
17 x
1.8x
2.7x
4.6x
5.8x
4.0x
4.8x
Perpetual
SaaS
2.6x
2.2x
1.4x
2.5x
4.6x
4.3x
2.2x
5.8x
3.2x
3.0x
1.7x
4.5x
Inf.
Security
Storage
Apps
3.

1.7x
4.

4.0x
4.8x
3.2x
22.7%
53.2%
25.2%
19.5%
(30.3%)
2014
2015
2016
2017
Applications - SaaS
Applications - Perpetual
Infrastructure
Security
Storage
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
29
1.7x
2.8x
4.3x
5.3x
3.9x
4.0x
Perpetual
SaaS
2.2x
2.2x
1.1x
2.1x
4.3x
4.1x
2.2x
5.3x
3.0x
2.9x
1.5x
3.9x
Inf.
Security
Storage
Apps
1.4x
1.2x
3.4x
3.3x
3.0x
2.5x
Perpetual
SaaS
1.4x
1.5x
0.5x
1.5x
2.7x
3.1x
1.7x
3.7x
1.9x
2.2x
0.8x
2.8x
Inf.
Security
Storage
Apps
1.7x
1.9x
3.8x
5.4x
3.6x
3.3x
Perpetual
SaaS
1.9x
2.1x
1.0x
1.7x
3.6x
4.6x
2.2x
5.2x
2.5x
3.3x
1.2x
3.6x
Inf.
Security
Storage
Apps
By Segment
Applications by Business Model
Taking a Look at the Valuation Metrics at Major 2016 Events – EV / 2017E Revenue
Overall Median EV / 2017E Revenue
3.2x
2.3x
3.7x
Start of 2016 (January 1, 2016)
Today (February 24, 2017)
Pre-Election (November 7, 2016)
Low of 2016 (February 11, 2016)
By Segment
Applications by Business Model
3.0x
Source: Company filings, Thomson Financial, Capital IQ and STRH analysis
Note: Valuation charts represent 25th percentile, median and 75th percentile values based on Wall Street consensus; analysis does not include companies that
have been acquired and delisted
By Segment
Applications by Business Model
By Segment
Applications by Business Model
January 1, 2016
November 7, 2016
February 11, 2016
February 24, 2017
2.5x
2.5x
3.3x
1.2x
3.6x
3.6x
3.3x
1.9x
2.2x
0.8x
2.

3.0x
3.0x
2.

1.

3.9x
3.9x
4.

1.8x
2.7x
4.6x
5.8x
4.0x
4.8x
Perpetual
SaaS
2.6x
2.2x
1.4x
2.5x
4.6x
4.3x
2.2x
5.8x
3.2x
3.0x
1.7x
4.5x
Inf.
Security
Storage
Apps
3.

1.7x
4.

4.0x
4.8x
3.2x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
30
8.7x
12.4x
16.3x
25.7x
13.2x
23.3x
Perpetual
SaaS
8.1x
10.5x
6.0x
12.0x
15.0x
16.5x
11.6x
21.6x
10.6x
13.7x
7.6x
14.9x
Inf.
Security
Storage
Apps
6.0x
7.1x
6.0x
9.3x
12.2x
14.2x
13.1x
15.8x
7.9x
8.5x
8.3x
12.3x
Inf.
Security
Storage
Apps
7.5x
11.8x
14.8x
24.0x
14.0x
18.4x
Perpetual
SaaS
7.1x
9.1x
6.0x
10.2x
12.8x
17.4x
18.3x
19.0x
9.3x
11.6x
8.5x
14.1x
Inf.
Security
Storage
Apps
11.6x
7.9x
8.5x
8.

12.3x
By Segment
Applications by Business Model
Taking a Look at the Valuation Metrics at Major 2016 Events – EV / 2017E EBITDA
Overall Median EV / 2017E EBITDA
January 1, 2016
November 7, 2016
13.1x
February 11, 2016
10.0x
February 24, 2017
15.8x
By Segment
Applications by Business Model
11.9x
By Segment
Applications by Business Model
By Segment
Applications by Business Model
Source: Company filings, Thomson Financial, Capital IQ and STRH analysis
Note: Valuation charts represent 25th percentile, median and 75th percentile values based on Wall Street consensus; analysis does not include companies that
have been acquired and delisted
Start of 2016 (January 1, 2016)
End of 2016 (December 31, 2016)
Pre-Election (November 7, 2016)
Low of 2016 (February 11, 2016)
18.4x
8.5x
14. x
14.0x
23.3x
10.6x
13.7x
7.6x
14.9x
13.2x
9.

10.5x
14.8x
18.9x
27.2x
16.7x
23.9x
Perpetual
SaaS
9.8x
13.9x
6.0x
14.3x
14.3x
22.9x
11.1x
24.0x
11.3x
17.9x
7.5x
17.7x
Inf.
Security
Storage
Apps
7.5x
1
x
17 x
16.7x
23.9x
17 x
6.6x
9.3x
13.2x
18.4x
11.9x
15.7x
Perpetual
SaaS
15.7x
11.9x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
31
1.9x Δ
2.1x Δ
Chart Legend
EV / 2017 EBITDA
Note: Sphere size corresponds to relative multiple
value of performance group
EV / 2017 Revenue
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
14 – Public Trading
Bubble Charts
Revenue Growth vs. EBITDA Margin – Growth Generally “Wins”
Source: Company filings, SEC Filings, Thomson Financial, Capital IQ and STRH analysis
Note: Matrix comprised of STRH equity comp set as of 2/24/17 median values shown in chart; companies without analyst forward projections are excluded; CY2017E Revenue and EBITDA
used to calculate all multiples
"Hyper Growth" Companies
Projected Revenue Growth (CY2016E-CY2017E)
Proj. Rev. Growth (CY'16E-CY'17E)
<5%
5%-15%
15%-25%
25%+
2.3x EV / Rev
3.2x EV / Rev
4.2x EV / Rev
5.2x EV / Rev
EBITDA Margin (CY2017E)>25%16 Companies
24 Companies
16 Companies
15%-25%9 Companies
10 Companies
4 Companies
4.6x
EV / Rev
ANSS, AZPN, CA, CDK, CSCO, CTXS, EGOV, INTC, MANH,
MCRO, MSTR, ORCL, PRGS, SNPS, SOW, VRSN
AVV-LN, BLKB, CDNS, CHKP, CSU, DSG, DSY, FFIV, FICO,
GIMO, INTU, MENT, MSFT, NTCT, PDFS, QLYS, RHT, RIB,
RP, SABR, SAP, TYL, UPLD, ZIXI
ADBE, BSFT, CARB, CYBR, ELLI, FTNT, GWRE, KXS, MDSO,
MYO, NEM, SGE, TREND, ULTI, VEEV, ZG
NICE, NOW, OTEX, PANW, PAYC, SNCR, SYMC, TEAM,
WAGE
9 Companies
6 Companies
2.6x
EV / Rev
AMSWA, CGM, HPE, IBM, NCR, NTAP, PTC, STX, TDC
CSOD, CUDA, CVLT, GTO, MGIC, PEGA, SPSC, TCS, VRNT,
XXIA
CALD, CRM, NTWK, NXJ
PCTY, PFPT, SOPH, SPLK, TWLO, WDAY
2.5x
EV / Rev
BAS1V, BV, EGAN, ENOC, FEYE, JIVE, LPSN, LRN, MRIN,
NQ, QADA, QTM, RDWR, RST, SDL, SREV, TNGO, VDSI
ABT, ADSK, AGYS, AMBR, APTI, AVG, BNFT, CYRN, DATA,
EXA, FSC1V, FUEL, GUID, HGN, MOBL, PRO, SCWX
FIVN, IMPV, NMBL, SY, TRUE, VRNS, WK, XTLY
APPF, BL, BOX, COUP, EVBG, HDP, HUBS, MB, MODN,
NEWR, NTNX, PSTG, RPD, TLND, TWOU, ZEN
<15%18 Companies
17 Companies
8 Companies
16 Companies
4.9x
6.6x
4.3x
1.3x
2.4x
3.2x
1.5x
2.8x
3.3x
4.2x
4.6x
5.7x
20.0x
18.9x
45.2x
8.3x
14.0x
20.9x
11.8x
15.7x
19.5x
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
32
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
SaaS Applicatons
Perp Applicatons
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
SaaS Applicatons
Perp Applicatons
Public Company: SaaS vs. Perpetual Applications Over the Last Twelve Months (1)
EV / NTM Revenue EV / LTM Revenue Median: 4.3x
Median: 3.9x
5.9x
4.1x
3.9x
4.7x
5.6x
3.5x
3.4x
4.6x
Source: Capital IQ and STRH Analysis
(1) SaaS Applications include application software with SaaS and subscription / term-based business models
6 – SaaS vs Perp
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
33
19.3%
7.4%
17.9%
17.9%
10.1%
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: 15.2%
58.8%
67.9%
71.3%
78.1%
64.7%
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: 68.1%
9.2%
25.0%
7.4%
10.8%
16.9%
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: 10.1%
(1.8%)
NA
3.1%
7.5%
2.6%
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: 0.9%
LTM Revenue Growth LTM Margin and Profitability Total Revenue Growth
Gross Margin
8 – Bubble Charts
EV & Operating
Metrics
License Revenue Growth
EBITDA Margin
Operating Metrics by Segment
Note: LTM as of 2/24/17. Operating metrics based on median values of each subsector within the SunTrust Robinson Humphrey software universe
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
All Software
16.9

7.5%
2.6%
64.7
9.2%
.

7.4
10.8%
)




.





R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
34
7.4%
7.2%
16.8%
19.5%
27.7%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 15.2%
66.4%
67.9%
67.6%
73.5%
67.8%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 68.1%
11.3%
14.8%
17.2%
7.8%
4.0%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 10.1%
(15.3%)
(1.8%)
7.2%
3.1%
0.7%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 0.9%

8 – Bubble Charts
EV & Operating
Metrics
Operating Metrics by Company Size (1)
Note: LTM as of 2/24/17. Operating metrics based on median values of each subsector within the SunTrust Robinson Humphrey software universe
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Size buckets based on LTM revenue
LTM Revenue Growth LTM Margin and Profitability Total Revenue Growth
Gross Margin
License Revenue Growth
EBITDA Margin
All Software
.

.
.
(

(1.
)
7.2%
3.1%
.






.

.

.

R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
35
$8k
$19k
$20k
$26k
$16k
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: $14K
$195k
$241k
$290k
$264k
$352k
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: $244K
$242k
$273k
$318k
$309k
$369k
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: $289K
3.8%
20.8%
11.2%
6.2%
(1.0%)
Perpetual
SaaS
Applications
Infrastructure
Security
Storage
All Software Median: 11.0%
LTM Revenue / Employee
Last Fiscal Year Employee Growth
Revenue and Employee Analysis LTM Cost Analysis Total Cost (1) / Employee
Stock-Based Compensation / Employee
8 – Bubble Charts
EV & Operating
Metrics
Revenue and Cost Analysis by Segment
Note: LTM as of 2/24/16. Operating metrics based on median values of each subsector within the SunTrust Robinson Humphrey software universe
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Total cost = cost of goods sold + operating expense – non-cash stock based compensation
All Software
11.2
(1.0)
$8K
K
K
$K
$20K
K
$
K
88K
K
$
K
3.8%
K
K
K
$3K
$
K
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
36
Prioritizing
Initiatives

28.5% 28.2%
29.0%
29.4%
30.0%
29.9% 29.3%
30.5%
32.1%
33.0% 33.4%
33.8%
35.4%
35.0%
34.2%
33.7%
33.7%
32.2%
25%
27%
29%
31%
33%
35%
37%
39%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
Median Software S&M as % of Revenue
15.2%
15.9%
12.0%
8.2%
9.0%
< $100 mm
$100 mm - $500 mm
$500 mm - $1 bn
$1 bn - $2 bn
> $2 bn
16.8%
11.5%
12.0%
11.4%
15.3%
SaaS Applications
Perpetual License
Applications
Infrastructure
Security
Storage
17.2%
17.9%
14.3%
20.1%
14.3%
< $100 mm
$100 mm - $500 mm
$500 mm - $1 bn
$1 bn - $2 bn
> $2 bn
17.0%
16.1%
19.1%
17.9%
22.5%
SaaS Applications
Perpetual License
Applications
Infrastructure
Security
Storage
20.7%
35.8%
29.9%
32.7%
27.6%
< $100 mm
$100 mm - $500 mm
$500 mm - $1 bn
$1 bn - $2 bn
> $2 bn
32.5%
22.6%
34.7%
37.6%
48.4%
SaaS Applications
Perpetual License
Applications
Infrastructure
Security
Storage
Cost-Cutting
Investing in
Platforms
LTM Cost Structure
Historical Cost Detail on LTM Basis
Research & Development Sales & Marketing General & Administrative Subsector Size (1) Subsector Size (1) Subsector Size (1) 12 – Historical Cost
Data
Cost Structure Detail
Note: LTM as of 12/31/16 Operating metrics based on median values of each sector within SunTrust Robinson Humphrey’ software universe (detailed in each section)
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Size buckets based on LTM revenue
All Software
14.7%
14.5%
15.3% 15.3%
15.2%
15.4%
15.0%
15.7%
16.2%
16.4%
16.4%
17.0%
16.9%
17.5%
17.7%
17.9%
17.3%
17.5%
12%
14%
16%
18%
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
Median Software R&D as % of Revenue
12.3%
12.6%
13.1%
12.7%
12.1%
12.6%
12.4%
12.6%
12.7%
13.2%
14.2%
13.7%
13.8%
13.8%
13.6%
13.9%
13.9%
12.9%
10%
11%
12%
13%
14%
15%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
Median Software G&A as % of Revenue
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
37
34.0%
30.5%
6.7%
R&D %
S&M %
G&A %
15.6%
20.2%
11.8%
R&D %
S&M %
G&A %
Security Infrastructure Perpetual Apps Storage SaaS Apps < $100M
$100M – $500M
$500M - $1B
$1B - $2B
> $2B
Cost Structure Matrix (1)
20.7%
17.9%
14.3%
20.1%
14.3%
Note: LTM as of 12/31/16 Operating metrics based on median values of each sector within SunTrust Robinson Humphrey’ software universe (detailed in each section)
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Size buckets based on LTM revenue
17.0%
16.1%
19.1%
17.9%
22.5%
Median:
Median:
32.5%
16.8%
17.2%
15.2%
35.8% 15.9%
29.9% 12.0%
32.7%
8.2%
27.6%
9.0%
22.6%
11.5%
34.7%
12.0%
37.6%
11.4%
48.4%
15.3%
12 – Historical Cost
Data
16.0%
30.9%
16.0%
R&D %
S&M %
G&A %
15.3%
32.7%
17.1%
R&D %
S&M %
G&A %
16.9%
28.7%
21.7%
R&D %
S&M %
G&A %
42.6%
36.9%
12.8%
R&D %
S&M %
G&A %
24.7%
33.9%
9.1%
R&D %
S&M %
G&A %
22.1%
20.7%
20.3%
R&D %
S&M %
G&A %
10.7%
21.3%
11.1%
R&D %
S&M %
G&A %
16.9%
29.5%
7.5%
R&D %
S&M %
G&A %
17.8%
16.7%
18.5%
R&D %
S&M %
G&A %
22.3%
43.0%
15.5%
R&D %
S&M %
G&A %
19.1%
32.2%
11.6%
R&D %
S&M %
G&A %
18.5%
32.7%
8.7%
R&D %
S&M %
G&A %
14.1%
28.7%
9.1%
R&D %
S&M %
G&A %
17.6%
41.6%
18.8%
R&D %
S&M %
G&A %
19.6%
39.3%
13.5%
R&D %
S&M %
G&A %
39.2%
61.5%
18.9%
R&D %
S&M %
G&A %
12.3%
36.6%
8.2%
R&D %
S&M %
G&A %
12.9%
15.3%
7.5%
R&D %
S&M %
G&A %
17.2%
77.1%
29.7%
R&D %
S&M %
G&A %
29.5%
57.8%
15.2%
R&D %
S&M %
G&A %
10.6%
39.6%
11.4%
R&D %
S&M %
G&A %
NA
NA
NA
R&D %
S&M %
G&A %
13.1%
12.4%
17.3%
R&D %
S&M %
G&A %
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
38
Cash Balances of Software & Systems Companies
The Widening
Gap Between the
Largest
Consolidators and
the Rest of the
Field has Become
a Hallmark Trait
of Today’s
Technology
Market
Uses of Cash (2)
Cash Balances Swell (1)
Software & Systems Companies with the Top 10 Cash Balances…
All Other
Software Co.’s
15%
Top 10 Software Co.
Cash Balances
85%
Aggregate Software
Co. Cash
$369 billion
10 Largest Software &
Systems Co. Cash Balances
1) Microsoft
2)
Cisco Systems
3)
Oracle
4)
Intel
5)
Hewlett-Packard
6)
IBM
7)
VMware
8)
Symantec
9)
SAP
10) Adobe
Distribution of Cash
66%
Increase
Aggregate Cash Balance of the Public Software &
Systems Company Universe
146%
Increase
10 – Cash
Concentration
…Spent 55% of EBITDA on M&A
Transactions…
(3)
…Whereas the Rest Spent 46% of EBITDA
on M&A Transactions
(3)
Concentration of War Chests with Public Company Consolidators
Note: “Cash” includes cash equivalents and short term investments
Source: Capital IQ, Thomson Financial, company filings and SunTrust Robinson Humphrey analysis
(1) Software cash balances 12/31/09 vs. cash balances 12/31/16
(2) Based on LTM financial metrics as of 12/31/16
(3) Excludes equity and debt financing of M&A transactions
All Software
$118
$40
$64
$31
$131
$19
$11
$9
EBITDA
Share Repurchase
M&A
Dividends
Revenue
EBITDA
Share Repurchase
M&A
Top 10
All Other
($ in Billions)
($ in Billions)
$127
$312
$34
$57
2009
Today
2009
Today
Top 10
All Other
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
Section III.
A. Application Software
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
40
Application
Software
Recent Segment M&A Activity
Segment M&A Activity
Application Software 2016 M&A Activity by Segment
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
13.5x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
3.4x
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
13.2x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
3.3x
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
13.4x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.
3.4
6.3x
3.5x
Chart Legend
EV / LTM EBITDA
Note: Sphere represents median multiple for each
respective year
EV / LTM Revenue
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
M&A Segment Summary
Source: Company filings, Information Week, the 451 Group, TechCrunch, other publicly available news sources, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
13.9x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
4.0x
10.1x
17.3x
32.2x
8.3x
16.0x
28.3x
8.8x
13.1x
11.0x
14.4x
1.0x
1.9x
5.3x
1.8x
3.6x
5.4x
2.8x
3.4x
6.3x
4.0x
 Roper acquired Deltek, a provider of enterprise
software and information solutions for project-based
businesses in the professional services and government
contracting markets
 GE Digital acquired ServiceMax, a leading provider of
cloud-based field service management solutions

Insight Venture Partners acquired Ministry Brands, a
provider of SaaS-based solutions for churches,
ministries and other faith-based organizations
 Hearst Business Media acquired CAMP Systems, a
provider of SaaS solutions for managing and tracking
the maintenance of planes used in business aviation
 Vista Equity Partners acquired the SunGard Public
Sector and Education assets from FIS, which provide
solutions addressing public admin needs of
government agencies and K-12 school districts
 Salesforce acquired Krux, a provider of SaaS-based
real-time audience data management and targeting
solutions
 Adobe acquired TubeMogul, a provider of advertising
software that allows brands to plan, buy and measure
global advertising
 GI Partners completed a majority investment with
Daxko, a leading provider of SaaS solutions to
member-based health and wellness organizations
20
26
25
20
24
11
23
34
20
27
27
27
25
30
31
23
29
35
33
23
3.5x
4.0x
2.9x
2.8x
3.2x
4.1x
2.2x
3.9x
3.6x 3.5x
4.4x
2.9x
3.7x
4.1x
4.7x
2.6x
3.0x
5.2x
4.1x 4.0x
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2012
2013
2014
2015
2016
No. of Transactions
Median EV/Rev Multiple
6
14
21
25
54
PLM /
EDA
HCM
SCM
CRM
ERP
R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
41
4.4%
27.0%
11.7%
24.4%
11.7%
9.9%
CRM
ERP
HCM
PLM
SCM
Vertical
All Software Median: 15.2%
All Applications Median: 13.4%
66.6%
60.0%
66.1%
83.9%
52.1%
56.1%
CRM
ERP
HCM
PLM
SCM
Vertical
All Software Median: 68.1%
All Applications Median: 64.3%
23.3%
7.2%
25.7%
4.7%
9.0%
14.8%
CRM
ERP
HCM
PLM
SCM
Vertical
All Software Median: 10.1%
All Applications Median: 10.3%
(5.3%)
0.5%
NA
3.1%
(8.7%)
(4.7%)
CRM
ERP
HCM
PLM
SCM
Vertical
All Software Median: 0.9%
All Applications Median: 0.9%
.


Application
Software
8 – Bubble Charts
EV & Operating
Metrics
Operating Metrics by Subsector
LTM Revenue Growth LTM Margin and Profitability Total Revenue Growth
Gross Margin
License Revenue Growth
EBITDA Margin
Note: LTM as of 2/24/17. Operating metrics based on median values of the Application Software sector within the SunTrust Robinson Humphrey software universe
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
9.0
(5.3%)
3.1
(.

(.
)

0.5%

.

52.1%

4.4

.

.

.

.

R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
42
4.5%
7.4%
23.2%
19.5%
24.7%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 15.2%
All Applications Median: 13.4%
62.4%
63.3%
58.7%
71.2%
72.1%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 68.1%
All Applications Median: 64.3%
14.1%
13.9%
19.8%
6.7%
5.1%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 10.1%
All Applications Median: 10.3%
(7.6%)
(10.7%)
(1.3%)
(19.3%)
1.0%
<$100M
$100-500M
$500M-1B
$1B-2B
>$2B
All Software Median: 0.9%
All Applications Median: 0.9%
8 – Bubble Charts
EV & Operating
Metrics
Operating Metrics by Company Size (1)
LTM Revenue Growth LTM Margin and Profitability Total Revenue Growth
Gross Margin
License Revenue Growth
EBITDA Margin
Note: LTM as of 2/24/17. Operating metrics based on median values of the Application Software sector within the SunTrust Robinson Humphrey software universe
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Size buckets based on LTM revenue
Application
Software
.

(
.
)
.
.






.

24.7%



7.

.

R0
G70
B127
R245
G128
B37
R255
G164
B0
R0
G117
B201
R164
G169
B173
R 64
G 64
B 64
R 102
G 102
B 102
R246
G198
B91
R0
G161
B223
R173
G201
B232
43
Application
Software
12 – Historical Cost
Data
Cost Structure Detail
Note: LTM as of 12/31/16. Operating metrics based on median values of each sector within SunTrust Robinson Humphrey’s software universe (detailed at the end of this section)
Source: Company filings, Thomson Financial, Capital IQ and SunTrust Robinson Humphrey analysis
(1) Size buckets based on LTM revenue
LTM Cost Structure
Historical Cost Detail on LTM Basis
Research & Development Sales & Marketing General & Administrative Subsector Size (1) Subsector Size (1) Subsector Size (1) 15.6%
15.0%
15.7%
16.0%
16.5%
16.1% 16.0% 15.9%
16.2%
16.0% 16.1%
16.4%
16.4%
16.5% 16.4%
16.3%
16.8%
16.5%
14%
15%
16%
17%
18%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
2014
2015
2016
Median A