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April 2015 Update and Q1 Review

Cloud InsightsM&A and Capital Markets Perspective on the Cloud Computing Industries:

• Software-as-a-Service

• Platform-as-a-Service

• Infrastructure-as-a-Service

William Blair & Company

Cloud Insights Table of Contents

Table of Contents

Summary ............................................................................................................................................................................................................................................................. 1

M&A Overview ................................................................................................................................................................................................................................................. 5

Capital Markets Overview .......................................................................................................................................................................................................................... 7

Public Company Analysis ............................................................................................................................................................................................................................ 9

Venture Capital Activity ............................................................................................................................................................................................................................ 12

William Blair & Company Selected Cloud Transactions ........................................................................................................................................................... 14

William Blair & Company Cloud Contacts ........................................................................................................................................................................................ 15

William Blair & Company SaaS Equity Research Coverage ..................................................................................................................................................... 16

Disclosures ...................................................................................................................................................................................................................................................... 17


Cloud Insights Summary 1

Summary

SaaS Mergers and Acquisitions

During first quarter 2015, 118 M&A transactions were announced, up from 54 during first quarter 2014. Dollar volume for first quarter 2015 decreased year-over-year with $1.4 billion in total disclosed transaction value, versus $4.0 billion during first quarter 2014. William Blair is pleased to have served as an advisor on Trax’s majority recapitalization from Strattam Capital. Notable M&A transactions in first quarter included the following:

Q1 2015 – Selected SaaS Mergers and Acquisitions

Date Trans. Value Enterprise Enterprise Value /

Announced Completed ($ MM) Value ($ MM) Target Acquirer(s) LTM Revenue LTM EBITDA 3/24/15 - $215.0 $215.0 PSI Systems Stamps.com 3.6x -

3/24/15 3/24/15 - - Playbook Labs Intuit - -

3/16/15 - $24.9 $24.9 SimpleSignal Vonage - -

3/3/15 3/3/15 - - Subspace Box - -

3/3/15 - - - deCarta Uber - -

2/26/15 - - - Trax Technologies Strattam Capital - -

2/24/15 2/24/15 - - Red Hot Labs (Toro) Google - -

2/13/15 - $88.0 $88.0 HealthLine Systems Healthstream - -

2/10/15 - $270.2 $270.2 Saba Software Vector Capital - -

2/5/15 - $274.1 $249.9 E2open Insight Venture Partners 3.2x NM

1/28/15 - $149.1 $149.1 Premier Healthcare Exchange Performant Financial - -

1/12/15 1/12/15 $75.0 $75.0 Tomax Demandware - -

1/8/15 1/5/15 $125.0 $125.0 NetProspex Dun & Bradstreet - -

Sources: Capital IQ, public news sources, and third-party estimates


Cloud Insights 2 Summary

SaaS Equity Performance

In March, the SaaS index continued to decline, underperforming the Nasdaq, dropping 2.2% compared with a decline of 2.1% for the NASDAQ. The large-cap group decreased 2.7%, midcap fell 0.8%, and small-cap declined by 0.5% for the month.

Indexed Stock Price Performance

Index 2015 YTD March 2015

Large-cap SaaS 5.0% (2.7%)

Midcap SaaS 7.7% (0.8%)

Small-cap SaaS (0.9%) (0.5%)

All SaaS 4.8% (2.2%)

NASDAQ 3.5% (2.1%)

S&P 500 0.5% (2.3%) Note: All indices are weighted by current market capitalization Source: FactSet

SaaS Capital Markets

The first quarter included one SaaS IPO, four follow-on offerings, and one filing.

Initial Public Offerings Box, an online file sharing and personal cloud content management service, completed an initial public offering of $201.3

million. Follow-ons

Zendesk, a cloud-based customer service platform, completed a follow-on offering of $223.2 million. Hubspot, a marketing software developer, completed a follow-on offering of $175.1 million. Q2 Holdings, a provider of secure cloud-based banking solutions, completed a follow-on of $101.2 million. Paycomm, a provider of cloud-based human capital management software solutions, completed a follow-on offering of

$125.7 million.

Filings Callidus Software, a provider of enterprise software to telecommunications, insurance, banking, and technology companies,

filed an S-1 with the SEC to raise $59.8 million in a follow-on offering.


Cloud Insights Summary 3

SaaS Venture Capital

During first quarter 2015, 81 SaaS venture investments were announced, down from 89 in first quarter 2014. Dollar volume for the first quarter 2015 decreased year-over-year, with $1.2 billion in total disclosed transaction value versus $1.6 billion during first quarter 2014.

Notable SaaS Venture Capital

Announced Date

Size ($ in MM) Company Description Investors

3/26/15 $160.0 Slack Technologies Collaborative communications platform

Institutional Venture Partners, Index Ventures, Horizons Ventures, DST Global

3/25/15 $110.0 FinancialForce.com Cloud enterprise resource planning solutions

Technology Crossover Ventures, Salesforce Ventures

3/17/15 $65.0 Birst Cloud-based business intelligence and analytics solutions

Hummer Winblad Venture Partners, Sequoia Capital, Wellington Management, Northgate Capital Group, DAG Ventures

2/25/15 $111.0 Xero Online accounting and business services platform

Accel Partners, Matrix Capital

2/24/15 $74.7 Benefitfocus Cloud-based SaaS solutions for insurance carriers and brokers

Mercer

2/2/15 $41.0 Apttus SaaS solutions for revenue and lifecycle management

K1 Investment Management, ICONIQ Capital, Salesforce Ventures

1/29/15 $55.0 Volusion Shopping cart software Main Street Capital

1/28/15 $31.0 Datadog Cloud-based performance data collector

Index Ventures, OpenView Venture Partners, Contour Venture Partners, RTP Ventures, Amplify Partners

Sources: Capital IQ and PitchBook


Cloud Insights 4 Summary

PaaS and IaaS Activity

Notable PaaS and IaaS Mergers and Acquisitions

Date Trans. Value Implied Enterprise Enterprise Value

Announced Completed ($ MM) Value ($ MM) Target Company Acquirer Company LTM Revenue LTM EBITDA

3/11/15 3/11/15 - - ColocationZone Lightower Fiber Networks - -

2/11/15 - - - Mortar Data Datadog - -

2/10/15 2/10/15 - - Nodejitsu Go Daddy Software - -

1/4/15 - $675.0 $675.0 Latisys Zayo Group - -

Sources: Capital IQ and VentureSource

Notable PaaS and IaaS Venture Capital

Announced Date

Size ($ in MM) Company Description Investors

2/3/15 - DR Fortress Carrier-neutral data center and cloud services provider

Koa Capital Partners



Cloud Insights M&A Overview 5

M&A Overview

M&A Activity Detail

Number of Transactions Dollar Value ($ in MM)

2010 2011 2012 2013 2014 LTM 3/15 2010 2011 2012 2013 2014

LTM 3/15

Annual Disclosed 30 20 47 58 68 72 $3,432 $11,694 $13,789 $12,385 $20,038 $17,331

Annual Undisclosed 82 68 137 119 221 279 - - - - -

Total 112 88 184 177 289 351 $3,432 $11,694 $13,789 $12,385 $20,038 $17,331

Source: Capital IQ

Annual M&A Detail

($ in millions)

2009 2010 2011 2012 2013 2014 LTM 3/15

Transaction Value $2,826 $3,432 $11,694 $13,789 $12,385 $20,038 $17,331

Number of Transactions 39 112 185 184 231 289 351

Source: Capital IQ

$0 $5,000 $10,000 $15,000 $20,000 04080120160200

Transaction Value # of Transactions

$0

$5,000

$10,000

$15,000

$20,000

$25,000

0

50

100

150

200

250

300

350

400

Number of TransactionsTransaction Value

Number of TransactionsTransaction Value


Cloud Insights 6 M&A Overview

M&A Valuation Analysis

($ in millions) Annual

2009 2010 2011 2012 2013 2014 LTM 3/15

Volume

Number of Announced Transactions 39 112 185 184 231 289 351

Number of Disclosed Transactions 14 30 54 47 42 68 72

Total Dollar Volume $2,826 $3,432 $11,694 $13,789 $12,385 $20,038 $17,331

Average Transaction Size $202 $114 $217 $300 $295 $295 $168

EV/LTM Revenues


Mean 4.03x 5.04x 4.78x 5.15x 6.35x 4.88x 3.49x

Median 4.60x 2.83x 3.70x 3.59x 4.30x 3.22x 2.88x

3 EV/LTM EBITDA


Mean 47.7x 19.0x 48.0x 48.0x 48.3x 71.1x 83.9x

Median 47.7x 19.0x 42.3x 42.3x 68.8x 30.6x 43.9x

Source: Capital IQ

M&A Activity by Target Ownership

(Percentage of Transactions)

2007 2008 2009 2010 2011 2012 2013 2014 LTM 3/15

Private – V.C. Backed 57% 52% 62% 50% 44% 45% 48% 66% 90%

Private – Independent 26% 35% 31% 48% 54% 51% 49% 32% 8%

Public 17% 13% 7% 2% 2% 4% 3% 3% 1%

Source: Capital IQ

0%25%50%75%

Private – V.C. Backed Private – Independent Public

0.0%

25.0%

50.0%

75.0%

100.0%


Cloud Insights Capital Markets Overview 7

Capital Markets Overview

Annual SaaS Public Offering Activity ($ Volume by IPO, Follow-on, and Convertible Debt)

($ in millions)

2008 2009 2010 2011 2012 2013 2014 LTM 3/15

Initial Public Offerings - $194.9 $486.5 $722.6 $1,945.8 $1,489.3 $1,830.0 $1,462.8

Follow-on Offerings $177.0 $457.9 $631.3 $594.0 $1,317.0 $1,878.0 $2,055.4 $1,577.7

PIPEs $251.0 - - - - - - -

Convertible Debt Offerings - - $1,029.6 - $200.0 $3,794.3 $172.5 $172.5

Sources: Capital IQ and Dealogic

-$2,500$2,500

Initial Public Offerings Follow-On Offerings PIPEs Convertible Debt Offerings

$0

$2,000

$4,000

$6,000

$8,000


Cloud Insights 8 Capital Markets Overview

SaaS Public Equity Offering Detail (Last 12 Months)

Company Filing Date Pricing Date

Filing Range

Offer Price

Offering Size ($ in MM)

Primary as % of Offering Dilution

Market Cap Post Offering ($ in MM)

% Change Pricing to Offer Price Discount to

First Day

First Week

To Date

Filing Price

Last Sale

IPOs Priced

Box 03/24/14 01/22/15 $11.00 - $13.00 $14.00 $201.3 100.0% 12.2% $1,630.2 65.9% 34.3% 34.4% - -

New Relic 11/10/14 12/09/14 $18.00 - $20.00 $23.00 $132.2 100.0% 12.3% $1,059.1 47.8% 32.3% 35.0% - -

Workiva 10/17/14 12/11/14 $13.00 - $15.00 $14.00 $115.9 100.0% 18.2% $553.4 (1.8%) (1.5%) (12.3%) - -

Connecture 10/20/14 12/11/14 $12.00 - $14.00 $8.00 $61.0 87.0% 30.6% $173.4 10.0% 13.3% 18.8% - -

Upland 09/04/14 11/05/14 $12.00 - $14.00 $12.00 $46.2 100.0% 26.8% $172.0 (18.8%) (10.0%) (34.0%) - -

Hubspot 09/25/14 10/08/14 $19.00 - $21.00 $25.00 $143.8 100.0% 18.5% $759.1 20.4% 22.6% 34.6% - -

Yodlee 06/30/14 10/02/14 $11.00 - $13.00 $12.00 $84.1 100.0% 24.1% $339.8 12.0% 2.1% (23.2%) - -

Zendesk 04/10/14 05/14/14 $8.00 - $10.00 $9.00 $115.0 100.0% 17.8% $631.7 49.2% 81.8% 168.8% - -

Follow-Ons Priced

Zendesk 07/01/14 07/16/14 - $22.75 $223.2 89.5% 10.4% $1,936.2 2.9% (1.9%) 6.3% (1.1%) (2.4%)

Hubspot 06/23/14 06/26/14 - $37.00 $175.1 20.5% 3.0% $1,204.4 12.9% 7.9% (9.1%) (6.2%) (0.8%)

Convertible Priced

Envestnet 12/08/14 12/09/14 - - $172.5 - - $1,629.8 - - - - -

Note: William Blair clients highlighted Sources: FactSet and Dealogic as of March 31, 2015 (1) Non-U.S. targets are not included in William Blair’s total transaction volume statistics


Cloud Insights Public Company Analysis 9

Public Company Analysis

Year to date, the SaaS index was up 4.8%, outperforming the Nasdaq, which was up 3.5%.

The large-cap group increased 5.0%; midcap increased 7.7%; and small-cap declined 0.9%.

SaaS Indexed Stock Price Performance (2015 Year-to-Date)

Note: Groupings based on market caps at December 31, 2014 Mkt. Cap > $3 billion consists of: ATHN, BOX, CNQR, DWRE, MDSO, N, CRM, NOW, TRAK, ULTI, VEEV, WDAY Mkt. Cap $1 billion to $3 billion consists of: CSLT, CSOD, CTCT, CVT, ELLI, FLTX, HUBS, LOGM, MKTO, NEWR, PAYC, PCTY, QLYS, RP, RNG, SNCR, ZEN Mkt. Cap < $1 billion consists of: AMBR, BNFT,BV, CNXR, ECOM, EOPN, FIVN, HGN, IL, JIVE, LPSN, MRIN, MIXT, OPWR, QTWO, RALY, SQI, SPSC, SREV, TNGO, TWOU, TXTR, UPLD, WK, WIX, YDLE Source: FactSet as of March 31, 2015

Valuation Overview

Note: Groupings based on market caps at December 31, 2014; data points represent median multiples Sources: FactSet and Capital IQ as of March 31, 2015

85

90

95

100

105

110

115

1/1/15 1/16/15 1/31/15 2/15/15 3/2/15 3/17/15

Large-cap (+5.0%) Midcap (+7.7%) Small-cap (-0.9%) NASDAQ (+3.5%)

3/31/15

7.6x28.5x

38.9x

5.6x

26.9x32.3x

2.3x

19.1x

38.8x

EV / 2015E Revenue EV / 2015E EBITDA EV / 2015E FCF

Large-cap Midcap Small-cap


Cloud Insights 10 Public Company Analysis

Comparable Company Analysis – Groupings Based on Market Caps at December 31, 2014

Market Market Enterprise Enterprise Value/Revenue

Enterprise Value/EBITDA

Enterprise Value/FCF

'14E-'15E 2014E

Close 3/31/15

Cap ($MM) 12/31/14

Cap ($MM) 3/31/15

Value ($MM)

Revenue Growth

EBITDA Margin LTM 2014E 2015E LTM 2014E 2015E LTM 2014E 2015E

Large-cap

athenahealth $119.39 $5,550.3 $4,560.2 $4,653.7 6.18x 6.18x 5.06x nmf 31.0x 28.9x nmf nmf nmf 22.2% 19.9%

Box $19.75 - $2,302.9 $2,014.3 9.31x 9.51x 7.25x nmf nmf nmf nmf nmf nmf 31.1% (51.8%)

DealerTrack Holdings $38.52 $2,403.5 $2,094.0 $2,650.8 3.10x 3.10x 2.43x 25.0x 13.7x 11.9x nmf nmf 24.7x 27.7% 22.6%

Demandware $60.90 $2,089.3 $2,222.8 $1,979.9 12.33x 12.33x 8.49x nmf nmf nmf nmf nmf nmf 45.2% 5.4%

Medidata Solutions $49.04 $2,590.5 $2,668.4 $2,636.5 7.87x 7.87x 6.57x nmf 35.8x 28.2x nmf 57.3x 50.2x 19.7% 22.0%

NetSuite $92.76 $8,377.6 $7,171.2 $6,995.4 12.58x 12.58x 9.69x nmf nmf nmf 42.2x nmf nmf 29.7% 9.6%

Salesforce.com $66.81 $37,424.6 $42,157.1 $43,359.3 8.07x 8.24x 6.76x nmf 45.2x 35.8x 42.0x 50.4x 41.3x 21.9% 18.2%

ServiceNow $78.78 $10,062.2 $11,683.1 $11,458.0 16.79x 16.79x 11.58x nmf nmf nmf 56.6x nmf nmf 45.0% 7.6%

Ultimate Software Group $169.96 $4,165.3 $4,861.8 $4,753.6 9.40x 9.40x 7.70x nmf 39.3x 31.5x nmf nmf nmf 22.0% 23.9%

Veeva Systems $25.53 $3,449.0 $3,334.1 $2,936.2 9.37x 9.64x 7.56x 40.2x 34.2x 25.5x nmf nmf 36.6x 27.5% 28.2%

Workday $84.41 $15,261.1 $15,869.1 $14,505.1 18.41x 19.07x 13.03x nmf nmf nmf nmf nmf nmf 46.3% (13.6%)

Mean 10.31x 10.43x 7.83x nmf 33.2x 27.0x 47.0x 53.9 x 38.2 x 30.8% 8.4%

Median 9.37x 9.51x 7.56x nmf 35.0x 28.5x 42.2x 53.9 x 38.9 x 27.7% 18.2%

Midcap

Castlight $7.76 $1,056.4 $713.0 $520.5 11.41x 11.41x 6.82x nmf nmf nmf nmf nmf nmf 67.3% (158.9%)

Constant Contact $38.21 $1,162.5 $1,227.8 $1,065.1 3.21x 3.21x 2.74x 28.6x 17.6x 14.1x 36.7x 32.2x 27.3x 17.0% 18.3%

Cornerstone OnDemand $28.89 $1,885.1 $1,556.7 $1,499.7 5.69x 5.68x 4.43x nmf nmf nmf 48.6x nmf nmf 28.2% 0.1%

Cvent $28.04 $1,150.5 $1,160.4 $992.9 6.98x 6.98x 5.57x nmf 55.1x 54.1x nmf nmf nmf 25.3% 12.7%

Ellie Mae $55.31 $1,159.0 $1,612.6 $1,537.4 9.52x 9.52x 7.47x 48.8x 33.6x 38.8x nmf nmf nmf 27.4% 28.3%

Fleetmatics Group $44.85 $1,339.6 $1,699.7 $1,548.9 6.69x 6.69x 5.36x 26.6x 21.0x 16.8x 39.2x 45.7x 43.9x 24.7% 31.9%

HubSpot $39.51 $1,055.0 $1,288.0 $1,117.3 9.64x 9.64x 6.93x nmf nmf nmf nmf nmf nmf 39.2% (22.8%)

LogMeIn $55.99 $1,203.1 $1,369.7 $1,168.6 5.26x 5.26x 4.46x 56.6x 22.8x 20.7x 21.7x 17.5x 17.9x 18.0% 23.0%

Marketo $25.62 $1,348.5 $1,077.2 $970.7 6.47x 6.47x 4.72x nmf nmf nmf nmf nmf nmf 37.1% (13.1%)

New Relic $34.70 $1,604.2 $1,632.7 $1,427.9 14.74x 22.60x 10.58x nmf nmf nmf nmf nmf nmf 113.6% (30.0%)

Paycom $32.06 $1,417.4 $1,871.4 $1,873.2 12.41x 12.41x 9.49x nmf nmf 54.5x nmf nmf nmf 30.8% 17.9%

Paylocity $28.64 $1,314.0 $1,445.9 $1,356.5 10.61x 10.58x 8.13x nmf nmf nmf nmf nmf nmf 30.2% 3.7%

Qualys $46.48 $1,257.8 $1,576.4 $1,449.2 10.85x 10.85x 8.61x nmf 45.7x 33.1x nmf 48.5x 44.1x 26.1% 23.7%

RealPage $20.14 $1,728.9 $1,589.5 $1,582.6 3.91x 3.91x 3.47x 54.2x 22.4x 19.3x 43.3x 48.1x 31.4x 12.6% 17.4%

RingCentral $15.33 $1,016.3 $1,054.1 $938.0 4.27x 4.27x 3.33x nmf nmf nmf nmf nmf nmf 28.2% (8.8%)

Synchronoss $47.46 $1,772.5 $2,027.1 $1,979.2 4.33x 4.33x 3.47x 16.3x 12.8x 10.2x nmf nmf 33.1x 24.8% 33.8%

Zendesk $22.69 $1,775.0 $1,885.5 $1,770.0 13.93x 13.93x 9.38x nmf nmf 48.4x nmf nmf nmf 48.5% 22.0%

Mean 8.23x 8.69x 6.17x 38.5x 28.9x 31.0x 37.9x 38.4 x 33.0 x 35.2% (0.0%)

Median 6.98x 6.98x 5.57x 38.7x 22.6x 26.9x 39.2x 45.7 x 32.3 x 28.2% 17.4%

Small-cap

2U $25.58 $797.1 $1,049.2 $962.3 8.73x 8.73x 6.63x nmf nmf nmf nmf nmf nmf 31.6% (13.4%)

Amber Road $9.25 $260.1 $240.8 $203.0 3.13x 3.13x 2.61x nmf nmf nmf nmf nmf nmf 19.8% 3.9%

Bazaarvoice $5.65 $627.4 $449.1 $401.3 2.16x 2.18x 1.99x nmf nmf nmf nmf nmf nmf 9.7% (6.0%)

BenefitFocus $36.79 $839.3 $1,047.0 $1,044.9 7.60x 7.60x 6.02x nmf nmf nmf nmf nmf nmf 26.3% (31.9%)

ChannelAdvisor $9.69 $537.1 $241.7 $177.1 2.09x 2.09x 1.85x nmf nmf nmf nmf nmf nmf 13.0% (23.1%)

Connecture $10.35 $195.3 $224.6 $249.4 2.95x 2.95x 2.45x nmf nmf 22.4x nmf nmf nmf 20.6% 2.3%

Five9 $5.56 $219.0 $275.0 $244.4 2.37x 2.37x 2.04x nmf nmf nmf nmf nmf nmf 16.2% (22.1%)

Halogen $9.18 $186.0 $201.1 $118.3 2.09x 1.80x 1.41x nmf nmf nmf nmf nmf nmf 27.6% (15.4%)

IntraLinks Holdings $10.34 $667.8 $590.6 $617.0 2.41x 2.41x 2.28x 51.2x 17.8x 17.7x 47.5x nmf nmf 5.7% 13.5%

Jive Software $5.13 $431.7 $381.6 $274.1 1.53x 1.53x 1.39x nmf nmf nmf 55.6x nmf nmf 10.3% (1.0%)

LivePerson $10.24 $770.6 $582.7 $533.3 2.54x 2.54x 2.00x 50.8x 24.4x 19.1x 24.8x nmf 59.6x 26.7% 10.4%

Marin Software $6.29 $295.9 $231.0 $166.0 1.67x 1.67x 1.44x nmf nmf nmf nmf nmf nmf 15.7% (17.1%)

Mix Telematics $6.98 $209.4 $214.9 $145.8 1.23x 1.27x 1.22x 7.5x 6.4x 5.8x 31.0x 23.0x 19.9x 3.9% 19.7%

Opower $10.13 $709.3 $513.9 $389.3 3.03x 3.03x 2.65x nmf nmf nmf nmf nmf nmf 14.4% (10.3%)

Q2 Holdings $21.14 $644.7 $770.3 $681.9 8.62x 8.62x 6.49x nmf nmf nmf nmf nmf nmf 32.8% (13.2%)

Rally Software $15.69 $286.7 $395.7 $329.1 3.76x 3.81x 3.18x nmf nmf nmf nmf nmf nmf 19.6% (25.9%)

SciQuest $16.93 $397.7 $468.3 $337.4 3.31x 3.27x 3.12x nmf 15.3x 14.6x 51.4x 35.7x 22.1x 4.7% 21.3%

ServiceSource $3.10 $392.1 $263.0 $168.7 0.62x 0.62x 0.69x nmf nmf nmf nmf nmf nmf (10.0%) (13.3%)

SPS Commerce $67.10 $921.8 $1,108.8 $978.0 7.64x 7.64x 6.25x nmf 54.1x 45.2x nmf nmf 56.6x 22.3% 14.1%

Tangoe $13.80 $506.2 $537.2 $487.5 2.29x 2.29x 2.03x 29.8x 14.4x 12.5x 30.2x 30.5x 20.2x 12.9% 15.9%

Textura $27.18 $725.1 $697.0 $630.6 10.02x 12.54x 7.01x nmf nmf nmf nmf nmf 55.4x 78.9% (9.6%)

Upland $7.01 $145.4 $107.0 $101.8 1.58x 1.58x 1.43x nmf 26.3x 29.9x 6.7x nmf nmf 10.1% 6.0%

Workiva $14.40 $529.6 $578.6 $502.4 4.46x 4.46x 3.57x nmf nmf nmf nmf nmf nmf 24.7% (24.5%)

Wix $19.16 $799.9 $729.8 $643.8 4.54x 4.54x 3.17x nmf nmf nmf 55.2x nmf nmf 43.1% (7.9%)

Yodlee $13.46 $356.6 $321.3 $250.2 2.81x 2.81x 2.31x nmf 45.4x 25.3x nmf nmf nmf 21.7% 6.2%

Mean 3.73x 3.82x 3.01x 34.8x 25.5x 21.4x 37.8x 29.7 x 39.0 x 20.1% (4.8%)

Median 2.81x 2.81x 2.31x 40.3x 21.1x 19.1x 39.3x 30.5 x 38.8 x 19.6% (7.9%)

Overall

Mean 6.54x 6.75x 5.03x 36.3x 28.8x 26.6x 39.5x 38.9 x 36.5 x 27.2% (0.6%)

Mean 5.69x 5.68x 4.46x 35.0x 25.3x 25.3x 42.1x 40.7 x 34.9 x 24.8% 5.4%

Sources: FactSet and Capital IQ as of March 31, 2015


Cloud Insights Public Company Analysis 11

Stock Price and Revenue Multiple Over Time – Groupings Based on Market Caps at December 31, 2014

Market Market 12/31/14

52-Week Low Point 52-Week High Point 3/31/15 Percent Change in Stock Price

Cap ($MM) 12/31/14

Cap ($MM) 3/31/15

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

12/31/14 to 3/31/15

52-Week Low to 3/31/15

52-Week High to 3/31/15

Large-cap

athenahealth $5,550.3 $4,560.2 $145.70 7.52x $97.30 6.14x $155.94 13.11x $119.39 6.18x (18.1%) 22.7% (23.4%)

Box - $2,302.9 - - $16.41 7.93x $24.73 13.39x $19.75 9.31x - 20.4% (20.1%)

DealerTrack Holdings $2,403.5 $2,094.0 $44.31 3.49x $36.43 3.02x $50.59 6.51x $38.52 3.10x (13.1%) 5.7% (23.9%)

Demandware $2,089.3 $2,222.8 $57.54 11.40x $44.39 10.39x $71.61 24.96x $60.90 12.33x 5.8% 37.2% (15.0%)

Medidata Solutions $2,590.5 $2,668.4 $47.75 7.67x $32.10 6.37x $52.80 13.17x $49.04 7.87x 2.7% 52.8% (7.1%)

NetSuite $8,377.6 $7,171.2 $109.17 14.77x $69.48 11.70x $114.37 21.08x $92.76 12.58x (15.0%) 33.5% (18.9%)

Salesforce.com $37,424.6 $42,157.1 $59.31 7.66x $48.18 6.97x $71.00 10.71x $66.81 8.07x 12.6% 38.7% (5.9%)

ServiceNow $10,062.2 $11,683.1 $67.85 14.43x $44.17 13.44x $81.24 23.01x $78.78 16.79x 16.1% 78.4% (3.0%)

Ultimate Software Group

$4,165.3 $4,861.8 $146.82 8.03x $109.50 7.45x $174.12 11.43x $169.96 9.40x 15.8% 55.2% (2.4%)

Veeva Systems $3,449.0 $3,334.1 $26.41 10.57x $17.11 8.84x $33.66 22.50x $25.53 9.37x (3.3%) 49.2% (24.2%)

Workday $15,261.1 $15,869.1 $81.61 19.78x $64.21 17.56x $97.40 42.49x $84.41 18.41x 3.4% 31.5% (13.3%)

Midcap

Castlight $1,056.4 $713.0 $11.70 19.17x $6.52 8.73x $20.40 260.41x $7.76 11.41x (33.7%) 19.0% (62.0%)

Constant Contact $1,162.5 $1,227.8 $36.70 3.04x $23.99 1.94 x $43.18 3.67x $38.21 3.21x 4.1% 59.3% (11.5%)

Cornerstone OnDemand

$1,885.1 $1,556.7 $35.20 7.14x $25.99 5.69x $47.00 17.89x $28.89 5.69x (17.9%) 11.2% (38.5%)

Cvent $1,150.5 $1,160.4 $27.84 6.80x $22.13 5.99x $34.91 14.57x $28.04 6.98x 0.7% 26.7% (19.7%)

Ellie Mae $1,159.0 $1,612.6 $40.32 6.65x $23.62 4.61x $58.56 9.61x $55.31 9.52x 37.2% 134.2% (5.5%)

Fleetmatics Group $1,339.6 $1,699.7 $35.49 5.20x $25.43 4.48x $46.50 8.73x $44.85 6.69x 26.4% 76.4% (3.5%)

HubSpot $1,055.0 $1,288.0 $33.61 10.03x $25.79 8.26x $44.34 12.19x $39.90 10.05x 18.7% 54.7% (10.0%)

LogMeIn $1,203.1 $1,369.7 $49.34 4.54x $37.06 3.60x $58.16 12.19x $55.99 5.26x 13.5% 51.1% (3.7%)

Marketo $1,348.5 $1,077.2 $32.72 8.25x $22.02 6.39x $35.63 18.24x $25.62 6.47x (21.7%) 16.3% (28.1%)

New Relic $1,604.2 $1,632.7 $34.84 15.61x $29.66 13.95x $38.65 19.09x $34.70 14.74x (0.4%) 17.0% (10.2%)

Paycom $1,417.4 $1,871.4 $26.33 9.45x $12.28 5.15x $35.86 12.54x $32.06 12.41x 21.8% 161.1% (10.6%)

Paylocity $1,314.0 $1,445.9 $26.11 9.71x $15.24 6.67x $33.22 14.04x $28.64 10.61x 9.7% 87.9% (13.8%)

Qualys $1,257.8 $1,576.4 $37.75 8.57x $18.00 4.57x $52.96 11.45x $46.48 10.85x 23.1% 158.2% (12.2%)

RealPage $1,728.9 $1,589.5 $21.96 4.29x $14.87 3.01x $23.11 4.63x $20.14 3.91x (8.3%) 35.4% (12.9%)

RingCentral $1,016.3 $1,054.1 $14.92 4.07x $10.02 3.02x $18.25 8.61x $15.33 4.27x 2.7% 53.0% (16.0%)

Synchronoss Technologies

$1,772.5 $2,027.1 $41.86 3.74x $27.78 2.91x $54.05 5.20x $47.46 4.33x 13.4% 70.8% (12.2%)

Zendesk $1,775.0 $1,885.5 $24.37 13.16x $11.06 11.83x $28.20 19.58x $22.69 13.93x (6.9%) 105.2% (19.5%)

Small-cap

2U $797.1 $1,049.2 $19.66 6.50x $10.52 4.85x $25.90 8.73x $25.58 8.73x 30.1% 143.2% (1.2%)

Amber Road $260.1 $240.8 $10.22 3.44x $7.50 2.51x $18.09 8.04x $9.25 3.13x (9.5%) 23.3% (48.9%)

Bazaarvoice $627.4 $449.1 $8.04 3.18x $5.64 2.16x $9.39 3.71x $5.65 2.16x (29.7%) 0.2% (39.8%)

BenefitFocus $839.3 $1,047.0 $32.84 5.97x $19.58 3.91x $49.34 16.52x $36.79 7.60x 12.0% 87.9% (25.4%)

ChannelAdvisor $537.1 $241.7 $21.58 5.41x $8.22 1.62x $34.58 16.02x $9.69 2.09x (55.1%) 18.0% (72.0%)

Connecture $195.3 $224.6 $9.01 2.55x $8.04 1.62x $11.00 16.02x $10.35 2.95x 14.9% 28.7% (5.9%)

Five9 $219.0 $275.0 $4.48 1.79x $3.64 1.50x $8.20 5.19x $5.56 2.37x 24.1% 52.7% (32.2%)

Halogen $284.7 $158.8 $7.34 2.04x $7.59 1.88x $9.85 5.31x $9.18 2.28x 25.1% 20.9% (6.8%)

IntraLinks Holdings $670.4 $590.6 $11.90 2.74x $7.76 1.89x $12.28 2.79x $10.34 2.41x (13.1%) 33.2% (15.8%)

Jive Software $779.0 $381.6 $6.03 1.90x $4.88 1.41x $8.75 3.99x $5.13 1.53x (14.9%) 5.1% (41.4%)

LivePerson $802.3 $582.7 $14.10 3.26x $8.84 2.26x $14.70 3.87x $10.24 2.54x (27.4%) 15.8% (30.4%)

Marin Software $334.1 $231.0 $8.46 2.26x $5.87 1.54x $12.65 3.99x $6.29 1.67x (25.7%) 7.2% (50.3%)

Mix Telematics $209.4 $214.9 $6.50 1.15x $5.36 0.93x $11.94 3.01x $3.29 1.29x (49.4%) (38.6%) (72.4%)

Opower $709.3 $513.9 $14.23 4.45x $8.70 2.44x $25.87 13.19x $10.13 3.03x (28.8%) 16.4% (60.8%)

Q2 Holdings $644.7 $770.3 $18.84 7.01x $9.62 4.99x $21.96 11.17x $21.14 8.62x 12.2% 119.8% (3.7%)

Rally Software $286.7 $395.7 $11.37 2.62x $8.24 1.66x $16.13 6.79x $15.69 3.76x 38.0% 90.4% (2.7%)

SciQuest $397.7 $468.3 $14.45 2.68x $13.31 2.41x $27.30 8.15x $16.93 3.31x 17.2% 27.2% (38.0%)

ServiceSource International

$392.1 $263.0 $4.68 1.06x $2.81 0.41x $7.61 2.26x $3.10 0.62x (33.8%) 10.3% (59.3%)

SPS Commerce $921.8 $1,108.8 $56.63 6.10x $43.84 5.86x $70.38 9.74x $67.10 7.64x 18.5% 53.1% (4.7%)

Tangoe $506.2 $537.2 $13.03 2.16x $11.03 1.89x $17.82 3.80x $13.80 2.29x 5.9% 25.1% (22.6%)

Textura $725.1 $697.0 $28.47 10.48x $13.80 5.30x $30.53 19.81x $27.18 10.02x (4.5%) 97.0% (11.0%)

Upland $145.4 $107.0 $9.56 3.44x $6.25 1.50x $12.20 3.97x $7.01 1.58x (26.7%) 12.2% (42.5%)

Workiva $529.6 $578.6 $13.40 4.61x $12.25 3.98x $16.53 5.85x $14.40 4.46x 7.5% 17.6% (12.9%)

Wix $799.9 $729.8 $21.00 4.98x $14.28 4.07x $23.11 16.00x $19.16 4.54x (8.8%) 34.2% (17.1%)

Yodlee $356.6 $395.8 $12.20 5.21x $8.90 2.42x $17.97 5.99x $13.46 3.64x 10.3% 51.2% (25.1%)

Sources: FactSet and Capital IQ as of March 31, 2015


Cloud Insights 12 Venture Capital Activity

Venture Capital Activity

The total number of venture investments decreased slightly when comparing last 12 months ending March 2015 to the last 12 months ending March 2014, with 388 and 404 transactions respectively.

Year-over-year, first quarter 2015 experienced a decrease in investment value; first quarter 2015 witnessed 81 venture investments totaling $1.2 billion, while first quarter 2014 witnessed 89 venture investments totaling $1.6 billion.

There were 24 SaaS venture investments totaling $568 million in disclosed transaction value in March 2015, compared with 29 investments totaling $532 million in March 2014.

Annual Venture Capital SaaS Activity

2009 2010 2011 2012 2013 2014 LTM 03/15

Transaction Value $961 $941 $2,066 $3,255 $3,930 $5,801 $5,484

No. of Transactions 134 160 234 297 408 398 388


Quarterly Venture Capital SaaS Activity

Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15

Transaction Value $666 $1,194 $536 $685 $840 $786 $914 $1,396 $834 $1,525 $1,503 $1,134 $1,639 $1,208

# of Transactions 62 79 69 64 85 95 110 107 96 91 95 108 104 81


$0 $5,000

2008 2009 2010 2011


050100150200250300350400450

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Transaction Value($ in millions)

Number of Transactions

$0 $2,000 0100


$0

$600

$1,200

$1,800

0

20

40

60

80

100

120

Number ofTransactions

Transaction Value($ in millions)


Cloud Insights Venture Capital Activity 13

The number of Series A and late-stage investments decreased while the number of Series B and Series C investments increased for the last 12 months ending March 2015 compared with the last 12 months ending March 2014.

The median transaction size increased for Series A, B, and C but decreased for later-stage investments.

Number of SaaS Transactions by Round


Median SaaS Transaction Size by Round

($ in millions)


66

35

1927

3438

23 21

0

10

20

30

40

50

60

70

Series A Series B Series C Later-Stage

LTM 3/14 LTM 3/15

$4

$12

$20

$32

$7

$16 $20

$30

$0

$5

$10

$15

$20

$25

$30

$35

Series A Series B Series C Later-Stage

LTM 3/14 LTM 3/15


Cloud Insights 14 William Blair & Company Selected Cloud Transactions

William Blair & Company Selected Cloud Transactions

Selected M&A Transactions

Selected Public Equity Transactions

Selected Private Equity Transactions

Not Disclosed

has been recapitalized by

Not Disclosed

has been acquired by

$157,800,000

has acquired

(PAI Group, Inc)

$178,229,986


Not Disclosed

has merged with

$205,000,000


$532,500,000


Not Disclosed


Not Disclosed

has agreed to beacquired by

$130,000,000

has agreed to beacquired by

$61,042,000

Initial Public Offering

$267,929,750

Initial Public Offering& Follow-On Offering

$46,153,848


$147,487,500

Follow-on Offering

$235,153,754

Initial Public Offering& Follow-On Offerings

$171,818,346

Follow-on Offering

$186,826,425


$158,622,000


$289,875,586


$286,645,242


$695,594,375


$115,848,192


$234,939,011


$91,351,224


$266,512,000


$41,000,000

Private EquityPreferred Stock

Not Disclosed

Private EquityPreferred Stock

TM

Not Disclosed

received a significant investment from

Not Disclosed

Series EPreferred Stock

$54,000,000

Preferred Stock


Cloud Insights William Blair & Company Cloud Contacts 15

William Blair & Company Cloud Contacts

Dan Connolly is a managing director and co-head of the software investment banking practice at William Blair based in Chicago. Dan joined William Blair in 1999. Previously, Dan spent three years in the M&A group at Merrill Lynch & Company. During his career, Dan has successfully completed more than 90 acquisition and financing transactions throughout the world, for which he has received industry recognition, including the 2011 M&A Atlas Technology & Telecom Deal of the Year and the 2012 40 Under 40 M&A Advisor Recognition Award. Dan graduated from the University of Notre Dame where he was twice elected class president, and he received his M.B.A. from Harvard Business School.

[email protected] +1 312 364 8544

Chris Lane is a managing director and co-head of the software investment banking practice at William Blair based in San Francisco. Chris joined William Blair in 2013. Before joining William Blair, Chris spent 12 years with Jefferies in Silicon Valley; before that, he was at Deutsche Bank for 4 years. Chris has led many transformative M&A and capital market transactions in the technology sector, including the sales of Paradigm to Apax Partners; Radiant Systems to NCR; Layer 7 to CA; and i2 to IBM. Chris received a B.A. from Colgate University and an M.B.A. from Northwestern University’s Kellogg School of Management.


Scott Mattson is a managing director of the software and mobility group at William Blair based in Boston. Scott joined William Blair in 2011. Previously, Scott worked at Canaccord Genuity in the technology team for five years covering location technology, software, Internet, and digital media companies. Scott has significant transaction experience including merger and acquisition advisory and public and private financings. Before his investment banking career, Scott was a lieutenant in the Navy where he was responsible for the procurement, maintenance, and modernization of nuclear-powered submarines. Scott graduated with distinction from the United States Naval Academy with a B.S. in economics and earned his M.B.A. from the University of Maryland while serving in the Navy.


Andrew Arno is a director of enterprise and application software at William Blair based in San Francisco. Andrew joined the firm in 2004. From 2000 to 2002, he was an investment banking associate at WR Hambrecht+Co. in the technology group. From 1997 to 2000, he worked at The Shattan Group LLC, a boutique investment bank focused on private equity placements. He received his B.A. from Columbia University and his M.B.A. from the Haas School of Business at University of California, Berkeley.


Peter Dalrymple is a director in the technology investment banking group at William Blair based in Boston. Peter joined the firm in 2011. Previously, Peter spent three years in the technology investment banking group at Canaccord Genuity focused on software, Internet, and digital media companies. Before his investment banking career, he was an associate with Pelion Venture Partners and also served as the Central and Southeast European country manager for the U.S. Trade & Development Agency. Peter graduated from Bates College with a B.S. in political science and earned an M.B.A. in finance from Northeastern University.


Raphael Grunschlag is a managing director and head of European technology banking at William Blair, focusing on expanding the firm’s technology practice across Europe and the Middle East. Raphael joined the firm in 2012. He has more than 16 years of investment banking experience and has advised on more than $24 billion of transactions, across M&A, ECM, and debt financings. Before joining William Blair, Raphael served as head of European technology investment banking at Bank of America Merrill Lynch (2005-2011), led the European Internet and software team for the CSFB Technology Group (1999-2005), and previously worked at Hambrecht & Quist (1995-1999). Raphael holds a master’s degree in international affairs from Columbia University’s School of International and Public Affairs and a B.A. in Middle East and Asian languages and cultures from Columbia.


Andrew Kaye joined William Blair in 2009 and spent five years based in Shanghai, China, as head of Asian banking and technology. Andy has held positions at CIBC World Markets where he was regional head and Robertson Stephens where he led several technology groups in Europe, as well as heading Israel. Andy holds an M.B.A. with honors from Fordham University, New York, and a B.A. in accounting and marketing from Tel Aviv. [email protected] +44 20 7868 4450


Cloud Insights 16 William Blair & Company SaaS Equity Research Coverage

William Blair & Company SaaS Equity Research Coverage

SaaS Equity Research

Company Ticker Analyst

athenahealth ATHN Ryan Daniels

Benefitfocus BNFT Adam Klauber

ChannelAdvisor ECOM Justin Furby

Connecture CNXR Adam Klauber

Cornerstone OnDemand CSOD Justin Furby

Demandware DWRE Justin Furby

The Descartes Systems Group DSGX Bhavan Suri

E2open EOPN Bhavan Suri

Ellie Mae ELLI Brandon Dobell

Fleetmatics FLTX Bhavan Suri

HealthStream HSTM Ryan Daniels

MiX Telematics MIXT Bhavan Suri

NetSuite N Justin Furby

Paylocity PCTY Justin Furby

Rally Software RALY Bhavan Suri

RealPage RP Brandon Dobell

RingCentral RNG Bhavan Suri

Salesforce.com CRM Bhavan Suri

SciQuest SQI Bhavan Suri

ServiceNow NOW Justin Furby

SPS Commerce SPSC Bhavan Suri

Textura TXTR Bhavan Suri

Ultimate Software ULTI Justin Furby

Veeva Systems VEEV Bhavan Suri

WageWorks WAGE Robert Napoli

Workday WDAY Justin Furby


William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States.

This material has been approved for distribution in the United Kingdom by William Blair International Limited, Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on to any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision.

William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com April 13, 2015

Cloud Insights Disclosures 17

Disclosures

April 2014 Update and Q1 Review

Cloud InsightsM&A and Capital Markets Perspective on the Cloud Computing Industries:

• Software-as-a-Service

• Platform-as-a-Service

• Infrastructure-as-a-Service

WilliamBlair’sinvestmentbankinggroupcombinessignificanttransactionexperience,richindustryknowledge,anddeeprelationshipstodeliversuccessfuladvisoryandfinancingsolutionstoourglobalbaseofcorporateclients.Weservebothpubliclytradedandprivatelyheldcompanies,executingmergersandacquisitions,growthfinancing,financialrestructuring,andgeneraladvisoryprojects.Thiscomprehensivesuiteofservicesallowsustobealong-termpartnertoourclientsastheygrowandevolve.From2010-2013,theinvestmentbankinggroupcompleted250merger-and-acquisitiontransactionsworthmorethan$52billioninvalue,involvingpartiesin27countriesandfourcontinents,wasanunderwriteronover20%ofallU.S.initialpublicofferingsandarrangedmorethan$11.5billionofdebtfinancing.

About William Blair Investment Banking

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