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MINNEAPOLIS | BOSTON | CHICAGO | HOUSTON | LONDON | LOS ANGELES | NEW YORK | SAN FRANCISCO | ZÜRICH Piper Jaffray Software Activity Update Fourth Quarter 2017 Michael Kim Head of Technology Investment Banking Piper Jaffray & Co.

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Page 1: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

MINNEAPOLIS | BOSTON | CHICAGO | HOUSTON | LONDON | LOS ANGELES | NEW YORK | SAN FRANCISCO | ZÜRICH

Piper JaffraySoftware Activity Update Fourth Quarter 2017

Michael KimHead of Technology Investment BankingPiper Jaffray & Co.

Page 2: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

2PIPER JAFFRAY

Piper Jaffray Software Team OverviewGlobal Reach

Our firm consists of 1,300+ professionals in 59 offices globally including Minneapolis (HQ), San Francisco, Charlotte, New York,

Chicago, Seattle, Boston, Aberdeen, London, Hong Kong and Zürich

Technology Office Locations: San Francisco, CA Minneapolis, MNBoston, MA

24 investment bankers focused on Software, Financial Technology, Tech-Enabled

Services, BPO and Internet & Digital Media

Recent Transactions

Technology Team

Michael KimHead of Technology Investment BankingApplication Software

[email protected]

Peter LombardManaging Director

Head of Technology Mergers & [email protected]

Garin ArevianManaging Director

Vertical Applications & Tech-Enabled [email protected]

Jason Harkness Managing Director

Internet and Related [email protected]

Andy LivadariuManaging Director

Application [email protected]

Jason MylerManaging Director

Vertical Applications & Tech-Enabled [email protected]

Steven SchmidtManaging Director

Financial and Application [email protected]

Greg KlancherPrincipal

Infrastructure & Security [email protected]

Domestic Expertise

Sell-Side Advisor

Undisclosed

has been acquired by

$109,167,123

Follow-On Offering

Joint Bookrunner

Undisclosed

Buy-Side Advisor

has acquired a majority stake in

has purchased a majority stake in

Undisclosed

Buy-Side Advisor

has been acquired by

$120,000,000

Sell-Side Advisor

Co-Manager

Initial Public Offering

$67,004,000

Initial Public Offering

$254,150,000

Co-Manager

Sell-Side Advisor

Undisclosed

has been acquired by

$132,825,000

Co-Manager

Initial Public Offering

has been acquired by

Sell-Side Advisor

Undisclosed

has been acquired by

Undisclosed

Sell-Side Advisor

has merged with

Undisclosed

Sell-Side Advisor

portfolio company ofInitial Public

Offering

$150,880,000

Co-Manager

Initial Public Offering

$884,400,000

Co-Manager

Initial Public Offering

$120,000,000

Co-Manager

Page 3: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

3PIPER JAFFRAY

Supporting Clients – Leading Industry Conferences and Events

Silicon Valley Technology Crossover Investor SummitMay 18, 2017 | Menlo Park, CA

Technology SelectSeptember 5–6, 2017 | Laguna Niguel, CA

15 of the highest growth late-stage private technology companies had their own suite at the Rosewood Sand Hill as 15 of the top

public and crossover investors visit for one-on-one’s

30+ of the most notable public technology companies will be paired with major institutional investors in one-on-one meetings providing

direct insights and feedback

Technology Ski SummitJanuary 9–11, 2018 | Aspen, CO

Technology Growth EquityOctober 4, 2017 | New York, NY

30 senior representatives from leading software and internet companies, venture capital and private equity firms focused on the

technology and business services sectors

50+ leading privately held software and internet companies and 100+ leading technology growth equity and strategic investors meet for one-on-one meetings attended by CEO's/CFO's and investors

Page 4: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

4PIPER JAFFRAY

Pricing Date Company Deal Description Deal Amount ($M)

11/14/17

Send Grid is a Denver, Colorado-based provider of mobile and cloud-based email service platform designed that delivers customer communication which drives engagement and business growth

The Company sold 8,200,000 shares at a price of $16 per share on the New York stock exchange under the ticker symbol of SEND

$151

11/9/17

Bandwidth is a Raleigh, North Carolina-based provider of cloud-based data and voice communications services that offers voice over internet protocol, mobile, internet access, conferencing and managed networks

The Company sold 4,000,000 shares at a price of $20 per share on the Nasdaq stock exchange under the ticker symbol of BAND

$83

10/26/17

Forescout is a San Jose, Calif.-based developer of network access control and policy compliance management solutions designed to integrate network security, mobility and IT management

The Company sold 5,280,000 shares at a price of $22 per share on the Nasdaq stock exchange under the ticker symbol of FSCT

$134

10/18/17

MongoDB is a New York-based provider of an open source database system with a No-SQL database designed for large-scale grid deployments that allows companies to more easily manage and store data

The Company sold 8,000,000 shares at a price of $24 per share on the Nasdaq stock exchange under the ticker symbol of MDB

$221

Snapshot Of Select Software Initial Public Offerings During Q4 2017

Source: Public news releases, Pitchbook and CapitalIQ.

Page 5: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

5PIPER JAFFRAY

Source: Dealogic.Deals, current market cap, and offer to current data as of December 29, 2017.Includes all IPOs and FOs since 2015 greater than $20MM.

Recent Software IPO and Follow-On PerformanceRecent Technology Follow-onsRecent Software IPOs

PricingDate

IssuerDeal Val ($MM)

Mkt Cap ($MM)

Deal Val /Mkt Cap

CurrentMkt Cap ($MM)*

% SellingShdr

% Price FTO

Offer /30-Day

Offer /Current*

12/6/17 Attunity Ltd $23 $145 16% $140 0% (6.5%) 3% 3%

12/4/17 BlackLine Inc $155 $1,892 8% $1,734 100% (3.9%) 2% (5%)

11/16/17 Veritone Inc $26 $427 6% $373 0% (20.6%) (1%) 1%

11/15/17 Everbridge Inc $20 $762 3% $840 100% (8.8%) 6% 10%

11/15/17 Talend SA $111 $1,218 9% $1,092 100% (3.7%) (0%) (7%)

11/15/17 Appian Corp $88 $1,281 7% $1,904 100% (12.9%) 3% 55%

9/27/17 Cloudera Inc $254 $2,227 11% $2,101 78% (10.5%) (9%) (3%)

9/14/17 Quintiles IMS Holdings Inc $476 $20,667 2% $19,636 100% (0.2%) 5% (6%)

9/7/17 Alteryx Inc $170 $1,262 13% $1,139 100% (6.8%) (3%) (8%)

9/6/17 2U Inc $206 $2,542 8% $2,231 4% (3.2%) 20% (4%)

7/19/17 USA Technologies Inc $43 $234 18% $210 0% (14.3%) 18% 16%

6/13/17 Donnelley Financial Solutions Inc $150 $711 21% $753 100% 7.8% 6% 8%

6/6/17 Upland Software Inc $40 $448 9% $446 0% (2.5%) 0% 2%

5/26/17 Asure Software Inc $30 $154 19% $180 0% (7.7%) 11% 8%

5/24/17 MINDBODY Inc $141 $1,268 11% $1,189 0% (0.9%) 1% (3%)

5/24/17 Quintiles IMS Holdings Inc $590 $18,532 3% $19,636 100% 0.0% 8% 6%

5/24/17 BlackLine Inc $132 $1,712 8% $1,836 100% 3.4% 15% 8%

5/23/17 Trade Desk Inc $252 $2,128 12% $2,121 100% 3.9% 4% (4%)

5/18/17 Shopify Inc $576 $8,955 6% $8,492 0% 1.3% (4%) (5%)

4/11/17 Coupa Software Inc $128 $1,288 10% $1,536 93% (0.6%) 30% 15%

4/5/17 Everbridge Inc $74 $563 13% $679 84% 2.3% 14% 23%

3/15/17 Talend SA $108 $826 13% $1,003 100% 7.1% 4% 22%

2/27/17 Trade Desk Inc $259 $1,441 18% $2,121 100% 6.4% 5% 41%

Mean $176 $3,073 11% $3,104 63% -3.08% 6% 8%

Median $132 $1,268 10% $1,189 100% -2.50% 4% 3%

PricingDate

IssuerPricing

to Range

Deal Value ($MM)

Mkt Cap ($MM)

Deal Val / Mkt Cap

CurrentMkt Cap ($MM)*

% Selling Shrs

% Price FTO

Offer /30-Day

Offer /Current*

11/14/17 SendGrid Inc Above $151 $653 23% $1,008 0% 10% 20% 50%

11/9/17 Bandwidth Inc In Range $83 $352 24% $407 0% (5%) 6% 16%

10/26/17 ForeScout Technologies In Range $134 $814 16% $1,209 0% 5% 30% 45%

10/18/17 MongoDB Inc Above $221 $1,175 19% $1,501 0% 26% 24% 24%

6/29/17 Tintri Inc Below $67 $216 31% $225 0% (39%) (2%) 4%

4/27/17 Cloudera Inc Above $259 $1,921 13% $2,101 0% 15% 49% 7%

4/12/17 Yext Inc Above $133 $940 14% $1,200 0% 22% 25% 21%

4/6/17 Okta Inc Above $215 $1,543 14% $2,173 0% 21% 48% 34%

3/23/17 Alteryx Inc In Range $145 $788 18% $1,139 0% 8% 10% 39%

3/16/17 MuleSoft Inc Above $254 $2,142 12% $3,212 0% 31% 31% 47%

10/27/16 BlackLine Inc Above $168 $839 20% $1,836 0% 21% 58% 110%

10/5/16 Coupa Software Inc Above $153 $866 18% $1,536 0% 20% 40% 61%

9/29/16 Nutanix Inc Above $274 $2,196 12% $3,053 0% 33% 55% 26%

9/22/16 Apptio Inc Above $110 $597 19% $689 0% 14% 25% 8%

9/22/16 Gridsum Holding Inc Above $100 $373 27% $255 0% 13% 23% (34%)

9/20/16 Trade Desk Inc Above $97 $688 14% $2,121 0% 20% 47% 178%

9/15/16 Everbridge Inc In Range $104 $323 32% $679 17% 0% 30% 103%

7/28/16 Talend SA Above $109 $503 22% $1,003 0% 13% 61% 93%

6/22/16 Twilio Inc Above $173 $1,233 14% $2,634 0% 15% 172% 94%

6/9/16China Online Education Group

In Range $52 $374 14% $321 0% 0% 3% (16%)

4/21/16 SecureWorks Corp Below $112 $1,129 10% $753 0% (15%) (1%) (34%)

12/9/15 Atlassian Corp plc Above $531 $4,382 12% $7,932 0% 20% 29% 68%

11/18/15 Mimecast Ltd In Range $78 $540 14% $1,509 0% (9%) (1%) 168%

Mean $162 $1,069 18% $1,674 1% 10% 34% 48%

Median $134 $814 16% $1,209 0% 14% 29% 39%

Page 6: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

6PIPER JAFFRAY

16.4%

22.0%

23.6%

28.6%

35.9%

36.5%

40.0%

42.2%

49.9%

64.1%

19.4%

25.1%

28.2%

SUB-SECTOR

SaaS High Growth

CRM / Marketing

BI / Data Analytics

Infrastructure / IT Management

Moderate Growth SaaS

Human Capital Management

Contact Center

Large-Cap Technology

Security Software

HR Outsourcing

Software Stock PerformancePerformance in CY 2017 By Sub-Sector

Source: Capital IQ.Note: Represents stock performance between 12/30/16 and 12/29/17.

CY 2017 Performance

Page 7: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

7PIPER JAFFRAY

IPO Valuation Breakpoint Analysis 2014 – 2017, At Pricing

Source: Capital IQ.

Forward Year Revenue Growth vs. Revenue Multiple

$ in millions

Summary Statistics - Software IPOs 2014-2017

Metric Median Median Median Median

Growth Profile: Less than 20% 20.0% - 30.0% 30.0% - 40.0% Greater than 40.0%

Number of Deals 5 19 18 11

Operating Metrics:

LTM Revenue $159.3 $103.2 $120.3 $65.1

MRQ Revenue $41.3 $28.3 $35.6 $25.4

LTM Gross Margin 62.2% 67.3% 72.3% 62.4%

LTM EBITDA $19.8 ($24.2) ($25.5) ($42.6)

LTM EBITDA Margin 12.4% (17.8%) (25.8%) (38.9%)

MRQ EBITDA $4.0 ($6.7) ($6.3) ($9.5)

CAC Ratio 0.91 0.54 0.53 0.51

Pricing Statistics:

Forward Year Rev. Multiple 4.3x 3.7x 5.8x 5.6x

% Change from Offer to:

One Day 12.0% 30.6% 27.4% 49.2%

One Month 10.4% 29.4% 27.1% 43.8%

Current (12/29/2017) (43.5%) 46.0% 80.5% 73.4%

4.3x3.7x

5.8x 5.6x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

Less than 20% 20.0% - 30.0% 30.0% - 40.0% Greater than 40.0%

Forw

ard

Year

Rev

enue

M

ultip

le

Forward Year Revenue Growth

Page 8: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

8PIPER JAFFRAY

Historical Public Software Company IPO Statistics 2014–2017

Source: Capital IQ.(1) EV / EBITDA multiples less than 0.0x or greater than 50.0x deemed not meaningful.

($ in Millions) 2014 Median 2015 Median 2016 Median 2017 Median

Number of Deals 20 12 11 10Deal StatisticsDeal Size $115.0 $101.7 $108.7 $147.9

Post-Deal Market Cap $664.2 $620.3 $771.3 $1,091.1

Deal Size / Post-Deal Market Cap 17.3% 16.4% 14.1% 13.6%

Financial Metrics at IPO

LTM Revenue $84.6 $107.6 $112.3 $145.9

Current Year Revenue $99.0 $117.3 $122.6 $163.3

Forward Year Revenue $132.0 $144.5 $165.6 $208.0

Forward Year Revenue Growth 29.7% 30.2% 35.1% 31.7%

MRQ Revenue $24.9 $30.1 $47.2 $38.5

LTM EBITDA ($15.0) ($18.9) ($29.3) ($54.6)

LTM EBITDA Margin (23.5%) (18.1%) (17.8%) (31.0%)

MRQ EBITDA ($4.7) ($4.7) ($6.7) ($12.7)

MRQ EBITDA Margin (22.0%) (16.4%) (10.5%) (29.9%)

Valuation Metrics at IPO

Current Year Revenue Multiple 5.2x 5.4x 4.2x 6.3x

Current Year EBITDA Multiple(1) 23.0x 35.6x 14.1x 47.4x

Forward Year Revenue Multiple 4.0x 4.1x 3.0x 4.9x

Forward Year EBITDA Multiple 24.6x 34.9x 20.4x 43.9x

Page 9: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

9PIPER JAFFRAY

7.1% 7.2% 7.3%

10.0% 11.5% 12.1%

16.5% 18.3%

24.1% 27.8%

0.0% 10.0% 20.0% 30.0%

Large-Cap Technology

HR Outsourcing

Contact Center

Moderate Growth SaaS

Security

BI / Data Analytics

Infrastructure / IT Management

Human Capital Management

CRM / Marketing

SaaS High Growth

Comparable Public Software Comps (Valuation Metrics)

Source: Capital IQ.Note: Figures represent the median of each comparable group.

2018E EV / REV 2019E EV / REV

2018E Rev Growth 2019E Rev Growth

6.6% 7.3%

9.3% 11.3% 11.6%

12.7% 13.9%

17.4% 22.4%

24.6%

0.0% 10.0% 20.0% 30.0%

HR Outsourcing

Large-Cap Technology

Contact Center

BI / Data Analytics

Moderate Growth SaaS

Security

Infrastructure / IT Management

Human Capital Management

CRM / Marketing

SaaS High Growth

3.1x3.5x3.5x

3.9x4.2x

4.5x4.7x

5.4x5.9x

7.1x

0.0x 2.0x 4.0x 6.0x 8.0x

Contact Center

Moderate Growth SaaS

HR Outsourcing

BI / Data Analytics

Security

Infrastructure / IT Management

Large-Cap Technology

CRM / Marketing

Human Capital Management

SaaS High Growth

2.6x3.2x3.4x

3.8x3.9x

4.1x4.4x4.6x

5.0x5.6x

0.0x 2.0x 4.0x 6.0x

Contact Center

Moderate Growth SaaS

HR Outsourcing

Infrastructure / IT Management

BI / Data Analytics

Security

CRM / Marketing

Large-Cap Technology

Human Capital Management

SaaS High Growth

Page 10: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

10PIPER JAFFRAY

SaaS Valuation Framework

Source: Capital IQ as of 12/29/2017, Thomson Reuters, Company Filings.*Piper Jaffray estimate using EBITDA as proxy for FCF.

Given the rapid maturity of the business model, free cash flow conversion combined with revenue growth provides a clearer understanding of valuation for SaaS companies

AVG EV/Rev8.5x

AVG Rev Growth + FCF Margin50.8%

AVG EV/Rev6.2x

AVG Rev Growth + FCF Margin31.8%

AVG EV/Rev2.5x

AVG Rev Growth + FCF Margin13.2%

AMBR

APTIBNFT

DATA

ECOM

LPSNMODN

SREV

CALD

CSOD

GWRE

HUBSTYLULTI ZEN

BLKB

BL

BOX

COUP

MB

NEWR

PCTY

QTWO

TWLO

TWOU

ADBE

CRM

NOW

SPLKWDAY

ELLI

PAYC

SHOP

TEAM

VEEV

HDP

y = 15.846x + 0.8012R² = 0.8177

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

0% 10% 20% 30% 40% 50% 60% 70%

2018

E E

V /

Rev

enue

2018E FCF Margin + Revenue Growth

Page 11: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

11PIPER JAFFRAY

Best & Worst Performing Software Stocks Top and Bottom 20 2017 Performers

Source: Capital IQ.Note: Dates between 12/30/16 and 12/29/17.

Bottom 20 Performers Top 20 Performers

68.8%

69.3%

70.2%

70.5%

72.3%

72.7%

73.1%

75.3%

75.4%

76.6%

78.0%

81.2%

87.5%

88.1%

89.0%

104.5%

135.0%

142.0%

142.0%

150.0%

Talend SA

Instructure, Inc.

Adobe Systems Incorporated

Callidus Software Inc.

Red Hat, Inc.

Datawatch Corporation

TriNet Group

Five9, Inc.

ServiceNow, Inc.

Paycom Software, Inc.

Model N

Varonis Systems, Inc.

Qualys, Inc.

HubSpot, Inc.

Atlassian Corporation

New Relic, Inc.

RingCentral, Inc.

HortonWorks

Upland Software

eGain Corporation

(1.4%)

(1.5%)

(2.5%)

(3.3%)

(7.6%)

(8.3%)

(9.0%)

(9.1%)

(11.3%)

(14.5%)

(16.2%)

(16.5%)

(18.2%)

(19.2%)

(24.2%)

(30.5%)

(33.4%)

(33.5%)

(37.3%)

(45.6%)

8x8 Inc.

Citrix Systems, Inc.

Akamai Technologies, Inc.

NetScout Systems, Inc.

IBM

j2 Global, Inc.

CyberArk Software, Ltd.

Benefitfocus, Inc.

Zix Corporation

WageWorks, Inc.

SecureWorks Corp.

Cornerstone OnDemand, Inc.

Twilio, Inc.

Amber Road, Inc.

Castlight Health

SPS Commerce, Inc.

Marin Software Incorporated

MicroStrategy Inc.

ChannelAdvisor Corporation

ServiceSource International, Inc.

Page 12: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

12PIPER JAFFRAY

Announced Date

Acquirer Target Deal Description Deal Amount ($M)

12/18/17 Oracle acquires Aconex, an Australian-based cloud solution that manages

team collaboration for construction projects, in a continued effort toexpand its cloud-computing services

$1,260

11/29/17 Bullhorn, an Insight Venture Partners company, acquires Peoplenet to

help accelerate its cloud-based strategy for staffing firms with solutions for time, attendance, and expense management

N/A

11/27/17 Marlin Equity will help Bazaarvoice bring its innovative consumer-

generated content, advertising and personalization to market faster and more efficiently

$520

11/27/17 Thoma Bravo offers Barracuda shareholders $27.55 per share for

Barracuda to continue growing its email security and management, network and application security, and data protection solutions

$1,612

11/13/17 Vista Equity Partners will help Jamf accelerate its growth and innovation

through focused investment and strategic acquisitions that drive its mission to help organizations manage Apple devices

N/A

10/31/17 The GPSi acquisition is consistent with Ingersoll Rand's strategy to help

customers solve climate and industrial challenges including energy and fuel efficiency, food waste and productivity

N/A

10/23/17 BroadSoft provides software and services that enable mobile, fixed-line

and cable service providers that will strengthen Cisco’s ability to sell its products to big telecom providers

$2,288

10/17/17 Intralinks, a leading global provider of cloud-based virtual data room and

highly secure team collaboration solutions, will be an independent privately owned portfolio company of investment funds affiliated with Siris

$1,082

Snapshot Of Select Software M&A Transactions During Q4 2017

Source: Public news releases, Pitchbook and CapitalIQ.

Page 13: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

13PIPER JAFFRAY

Software M&A ActivityQ1 2014 – Q4 2017

Source: S&P Capital IQ.Note: Software transactions greater than 10 million USD in enterprise value.

# of Deals 48 55 48 45 47 54 50 49 29 42 38 33 31 39 30 34

( USD in millions)

$11,957 $12,062

$23,829

$9,861 $11,740$13,482

$22,438

$15,304

$18,421

$53,011

$33,046

$11,545 $11,374$8,709

$10,991

$15,101

4.2x

7.0x

5.2x

10.5x

5.6x

4.5x 5.0x

7.3x

4.7x

5.9x

6.1x

6.0x

7.8x

3.5x 3.5x4.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Average EV / REV Multiple

Page 14: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

14PIPER JAFFRAY

Public Target M&A Activity in SoftwareQ1 2014 – Q4 2017

Source: S&P Capital IQ.Note: Software transactions greater than 10 million USD in enterprise value.

( USD in millions)

# of Deals 7 7 7 8 6 11 10 12 6 18 13 6 8 5 5 4

$3,070

$6,775

$12,690

$2,957

$6,125 $5,807$6,967

$9,085$11,721

$40,761

$26,207

$4,631

$1,160$2,478 $3,304 $3,204

2.6x

6.2x6.7x

2.6x

4.4x

3.1x

4.9x

3.3x

5.0x

5.3x

4.9x

2.9x

2.4x

3.1x2.9x

4.4x

0.0x

2.0x

4.0x

6.0x

8.0x

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Average EV / REV Multiple

Page 15: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

15PIPER JAFFRAY

Private Target M&A Activity in SoftwareQ1 2014 – Q4 2017

Source: S&P Capital IQ.Note: Software transactions greater than 10 million USD in enterprise value.

( USD in millions)

# of Deals 41 58 41 37 41 43 40 37 23 24 25 27 23 34 25 30

$8,887

$5,287

$11,139

$6,904

$5,615

$7,675

$15,472

$6,220 $6,700

$12,251

$6,839 $6,914

$10,214

$6,232

$7,687

$11,897

4.6x

7.3x

4.9x

13.4x

6.0x

5.0x

5.0x

9.3x

4.6x

6.5x

7.2x 7.0x

8.3x

3.6x 3.7x 3.7x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Average EV / REV Multiple

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16PIPER JAFFRAY

Acquirer

Target

Announced Date 7/28/16 11/10/16 11/20/16 1/24/17 3/7/17 4/18/17 7/25/2017 10/23/2017 12/18/2017

Deal Amount $9,300 $540 $2,334 $3,700 $614 $850 $850 $2,288 $1,260

EV / LTM REV 10.8x 2.5x 3.5x 17.4x 5.6x 13.3x 9.7x 5.3x 10.0x

# of Deals 33 43 38 35 40 33 31 36 24 29 22 29 20 11 14 23

Strategic Public Acquirer M&A Activity in SoftwareQ1 2014 – Q4 2017

Source: S&P Capital IQ.Note: Software transactions greater than 10 million USD in enterprise value.

Notable Recent Announced Transactions ($ millions)

( USD in millions)

$6,722$9,583

$19,764

$5,289$8,247 $6,348

$11,302$7,040

$17,689

$40,912

$21,282

$9,935 $8,321

$1,582$5,076

$8,570

4.9x

6.6x5.2x

10.0x

6.4x5.9x

4.9x

9.1x

4.7x6.9x

10.8x

6.0x

9.3x

6.0x

4.4x5.4x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

$0$5,000

$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Average EV / REV Multiple

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17PIPER JAFFRAY

$4,795

$2,360$3,600

$3,982

$3,388 $2,870

$9,543

$7,827

$722

$11,434

$8,778

$1,150$2,586

$5,716

$2,269

$4,745

1.7x

8.0x

4.6x3.0x

3.8x 3.6x

3.7x 4.3x

0.0x

4.3x

3.1x

7.9x

3.6x2.7x

0.9x

3.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Average EV / REV Multiple

# of Deals 8 7 6 5 5 12 9 8 4 10 8 2 4 15 3 5

Private Equity M&A Activity in SoftwareQ1 2014 – Q4 2017

Source: S&P Capital IQ.Note: Software transactions greater than 10 million USD in enterprise value.

Notable Recent Announced Transactions ($ millions)

Acquirer

Target

Announced Date 6/1/16 6/7/16 7/13/16 8/31/16 9/7/16 1/3/17 1/19/17 5/30/17 10/17/17 11/27/17

Deal Amount $509 $3,000 $544 $1,400 $2,200 $1,150 $800 $564 $1,082 $1,612

EV / LTM REV 3.5x 4.2x 4.4x 3.3x 6.8x 2.6x 4.6x 5.9x 3.5x 3.8x

( USD in millions)

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18PIPER JAFFRAY

Announced Date Company Deal Description Deal Amount ($M)

12/8/17 Core Security SDI, a provider of intelligent identity governance and

administration, has raised $200 million in a round led by K1 investment management

$200

12/5/17 Lyft, a smartphone-based ridesharing and peer-to-peer transportation

company, has raised $1 billion followed by an additional $500 million in Series H funding led by CapitalG

$1,500

11/28/17 1QBit, a quantum computing software designed to harness the

quantum hardware technologies in order to solve intractable industry problems, has raised $35 million in a Series B funding round

$35

10/24/17 GTreasury, a provider of installed as well as SaaS treasury

management services, has raised $42 million of development capital from Mainsail Partners

$42

10/19/17 Coda, a developer of online document and spreadsheet software, has

raised $60 million in Series A funding from several private equity investors to rethink users’ notions of collaboration within documents

$60

10/18/17 Lightspeed POS, a provider of point of sale systems and eCommerce

solutions for merchants and restaurants, has raised $166 million of Series D funding led by Caisse de dépôt et placement du Québec

$166

Snapshot Of Select Software Private Placements During Q4 2017

Source: Public news releases, Pitchbook and CapitalIQ.

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19PIPER JAFFRAY

Private Placement ActivitySoftware Private VC / PE Summary: Q1 2014 – Q4 2017

Source: S&P Capital IQ.

( USD in millions)

$2,810

$4,337

$1,407

$2,111

$5,883

$1,589

$3,320

$2,097

$3,306

$4,963

$2,695

$1,816$1,573

$3,953

$2,784

$4,535

112

133121

145

136

164 161

143151

143133

121

168

196 200189

0

50

100

150

200

250

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Total Deal Value Total # of Deals

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20PIPER JAFFRAY

64% 64%59%

62% 60%65% 66%

68%

60%

54% 55%59% 59%

54%

60%55% 57%

53% 53%

Debt Market Overview

Source: S&P Global Market Intelligence1) Includes broader LBO volume beyond middle market

Middle Market LBO Debt Contribution LBO Volume by Industry – 4Q 2017

7.3%

2.8%

3.1%

4.5%

6.1%

6.3%

7.3%

9.4%

9.5%

20.5%

23.3%

Other

Retail

Environmental

Entertainment & Leisure

Chemicals

Oil & Gas

Food & Beverage

Telecom

Healthcare

Services & Leasing

Computers & Electronics

Total Transaction Volume of $11.6 Billion(1)

Middle Market LBO Loan Multiples Middle Market LBO Volume by Quarter

4.0x

3.4x3.9x 3.8x

4.2x4.7x 4.7x

5.6x

4.5x

3.3x

4.2x 4.3x4.5x

4.8x5.3x 5.3x 5.3x 5.5x

5.1x

0123456

1 Lien 2 Lien Other Senior Sub. Debt

$1.2

$1.6 $1.5

$1.8

$1.2

$1.9$2.0

$0.4

$0.9

$1.2

$0.7$0.9

$1.0

$1.8

$2.9

$1.1

Institutional Pro Ratast ndDebt Tranche / EBITDA:

Defined as Issuers with EBITDA of $50 Million or Less

Defined as Issuers with EBITDA of $50 Million or Less Defined as Issuers with EBITDA of $50 Million or Less($ In Billions)

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Appendix

Page 22: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

22PIPER JAFFRAY

SaaS High Growth

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

SaaS High Growth

BlackLine, Inc. $1,734 $1,625 81% 162 76% (3) 29% 28% 7.2 5.7 NM NM

HubSpot, Inc. 3,304 3,070 95% 346 79% 8 27% 24% 6.5 5.2 NM NM

New Relic, Inc. 3,181 2,953 95% 306 81% (10) 28% 25% 7.0 5.6 NM 46.5

RealPage, Inc. 3,672 3,866 95% 632 59% 134 25% 11% 4.6 4.1 17.6 14.9

ServiceNow, Inc. 22,519 21,574 99% 1,772 73% 366 32% 29% 8.5 6.6 32.9 23.1

Workday, Inc. 21,365 19,603 87% 1,995 70% 252 25% 23% 7.4 6.0 43.6 31.6

75th Percentile $16,942 $15,669 95% $1,487 78% $222 29% 27% 7.3x 5.9x 38.2x 35.3x

Median $3,488 $3,468 95% $489 75% $71 28% 25% 7.1x 5.6x 32.9x 27.3x

Mean $9,296 $8,782 92% $869 73% $124 28% 23% 6.9x 5.5x 31.4x 29.0x

25th Percentile $3,212 $2,983 89% $316 71% ($1) 26% 23% 6.6x 5.3x 25.3x 21.0x

Page 23: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

23PIPER JAFFRAY

Moderate Growth SaaS

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Moderate Growth SaaS

Amber Road, Inc. $202 $216 75% $78 52% ($5) 10% 12% 2.5x 2.2x NM 33.2x

athenahealth, Inc. 5,415 5,544 84% 1,179 52% 193 11% 10% 4.1x 3.7x 15.2x 13.0x

Bandwidth Inc. 407 434 93% 159 45% 21 12% 19% 2.4x 2.0x NM NM

Benefitfocus, Inc. 844 910 73% 253 51% 13 9% 13% 3.2x 2.9x 32.4x 24.8x

Callidus Software Inc. 1,951 1,775 94% 240 61% 27 18% 21% 5.9x 4.9x 36.7x 27.5x

Castlight Health, Inc. 502 416 74% 124 66% (27) 23% 21% 2.6x 2.1x NM 33.5x

ChannelAdvisor Corporation 239 186 59% 120 78% 6 10% 9% 1.4x 1.3x 26.1x 14.0x

Cornerstone OnDemand, Inc. 2,046 1,945 80% 459 70% 21 3% 12% 3.9x 3.5x 20.5x 17.3x

Guidewire Software, Inc. 5,704 5,040 89% 528 60% 110 19% 15% 7.5x 6.5x 33.1x 33.1x

j2 Global, Inc. 3,641 4,237 82% 1,053 84% 411 9% 6% 3.5x 3.3x 8.6x 7.8x

LivePerson, Inc. 685 629 76% 218 73% 20 7% 10% 2.7x 2.5x 28.5x 21.7x

LogMeIn, Inc. 6,138 5,862 88% 802 80% 257 12% 6% 5.1x 4.8x 13.3x 12.2x

RingCentral, Inc. 3,744 3,572 97% 465 76% 27 24% 23% 5.8x 4.7x NM NM

Salesforce.com, inc. 75,457 73,746 94% 9,923 73% 1,557 20% 20% 5.9x 4.9x 26.3x 21.3x

ServiceSource International, Inc. 279 241 51% 242 32% 9 3% 5% 1.0x 0.9x 11.8x 8.9x

SPS Commerce, Inc. 846 680 67% 213 67% 33 10% 10% 2.8x 2.5x 15.9x 13.3x

The Ultimate Software Group, Inc. 6,715 6,586 93% 900 62% 210 18% 17% 5.9x 5.0x 23.8x 19.9x

WageWorks, Inc. 2,496 1,848 77% 462 63% 125 10% 10% 3.5x 3.2x 11.0x 9.7x

Zix Corporation 241 208 66% 64 81% 17 8% NA 2.9x NA 9.5x NA

75th Percentile $4,579 $4,639 91% $665 75% $159 18% 18% 5.5x 4.8x 27.4x 25.5x

Median $1,951 $1,775 80% $253 66% $27 10% 12% 3.5x 3.2x 20.5x 18.6x

Mean $6,187 $6,004 80% $920 65% $159 12% 13% 3.8x 3.4x 20.8x 19.5x

25th Percentile $454 $425 73% $186 56% $15 9% 10% 2.6x 2.3x 25.7x 12.8x

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24PIPER JAFFRAY

Business Intelligence / Data Analytics

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Business Intelligence / Data Analytics

Alteryx, Inc. $1,495 $1,313 87% $118 83% ($10) 37% 32% 7.4x 5.6x NM NM

Cegedim SA 568 838 98% 558 46% 41 3% 5% 1.4x 1.3x 8.2x 7.0x

Datawatch Corporation 116 86 75% 36 88% (2) 12% NA 2.0x NA NM NA

Inovalon Holdings, Inc. 2,188 1,907 84% 431 65% 89 8% 9% 3.9x 3.6x 15.4x 14.4x

MicroStrategy Incorporated 1,510 863 64% 507 81% 111 (0%) 3% 1.7 1.7 13.5 11.7

MongoDB, Inc. 1,501 1,213 87% 139 72% (69) 36% 35% 5.9 4.4 NM NM

Splunk Inc. 11,718 10,733 98% 1,158 79% 104 25% 29% 6.9 5.4 NM 33.5

Tableau Software, Inc. 5,518 4,529 84% 878 87% 91 11% 13% 4.7 4.1 NM 49.2

The Descartes Systems Group Inc 2,195 2,217 90% 227 73% 81 13% 9% 8.2 7.6 23.7 21.2

Verint Systems Inc. 2,703 3,103 94% 1,112 63% 168 7% 5% 2.5 2.4 10.5 9.5

Workiva Inc. 897 839 90% 200 71% (17) 14% 14% 3.6 3.1 NM NM

75th Percentile $2,449 $2,660 92% $718 82% $97 19% 25% 6.4x 5.1x 15.4x 27.4x

Median $1,510 $1,313 87% $431 73% $81 12% 11% 3.9x 3.9x 13.5x 14.4x

Mean $2,765 $2,513 86% $488 74% $53 15% 16% 4.4x 3.9x 14.3x 20.9x

25th Percentile $1,196 $851 84% $170 68% ($6) 7% 6% 2.3x 2.6x 10.5x 10.6x

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25PIPER JAFFRAY

Infrastructure / IT Management

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Infrastructure / IT Management

Atlassian Corporation Plc $10,474 $9,861 85% $677 80% $127 31% 27% 10.2x 8.0x 35.3x 29.7x

Box, Inc. 2,875 2,787 88% 479 73% (25) 23% 21% 4.5x 3.7x NM NM

CA, Inc. 13,929 14,029 91% 4,078 86% 1,314 3% 1% 3.3x 3.2x 8.5x 8.3x

Citrix Systems, Inc. 13,607 12,446 92% 3,464 85% 1,186 2% 3% 4.3 4.2 12.9 12.2

Cloudera, Inc. 2,770 2,492 71% 337 56% (105) 27% 24% 5.4 4.4 NM NM

Commvault Systems, Inc. 2,425 1,927 81% 673 87% 82 10% 11% 2.5 2.3 18.0 13.8

Constellation Software Inc. 16,149 16,046 96% 2,356 38% 354 18% 16% 5.6 4.8 21.1 18.3

Hortonworks, Inc. 1,418 1,355 96% 239 67% (100) NA NA NA NA NA NA

Micro Focus International plc 10,983 15,125 87% 1,930 84% 759 67% (2%) 3.6 3.7 9.4 8.5

MuleSoft, Inc. 3,023 2,689 80% 263 73% (43) 37% 30% 6.8 5.2 NM NM

NetScout Systems, Inc. 2,698 2,683 79% 1,104 72% 238 (7%) 3% 2.7 2.6 13.2 12.1

Nutanix, Inc. 5,660 5,294 92% 854 57% (152) 18% 23% 4.7 3.8 NM NM

Pegasystems, Inc. 3,671 3,477 73% 801 67% 106 12% 14% 3.9 3.4 31.0 23.4

Progress Software Corporation 2,051 1,989 99% 398 88% 154 2% 1% 4.9 4.9 10.3 10.3

Red Hat, Inc. 22,358 20,799 92% 2,777 85% 725 17% 13% 6.4 5.7 23.2 19.0

ServiceNow, Inc. 22,519 21,574 99% 1,772 73% 366 32% 29% 8.5 6.6 32.9 23.1

Software Aktiengesellschaft 4,382 4,275 98% 1,070 76% 365 3% 3% 3.9 3.7 12.3 11.7

Talend S.A. 1,092 998 81% 138 77% (16) 30% 33% 5.2 3.9 NM NM

Tintri, Inc. 160 173 68% 138 60% (89) (8%) 16% 1.5 1.3 NM NM

Twilio Inc. 2,196 1,912 68% 366 56% (1) 24% 25% 4.0 3.2 NM NM

Upland Software, Inc. 450 489 85% 89 65% 22 7% 6% 4.0 3.8 11.3 10.4

VMware, Inc. 51,759 44,231 97% 7,093 85% 2,486 10% 8% 5.1 4.7 14.1 12.1

75th Percentile $12,951 $13,633 95% $1,891 85% $366 27% 24% 5.4x 4.8x 22.7x 18.8x

Median $3,347 $3,132 88% $739 73% $116 17% 14% 4.5x 3.8x 13.7x 12.2x

Mean $8,939 $8,484 86% $1,413 72% $352 17% 15% 4.8x 4.1x 18.1x 15.2x

25th Percentile $2,253 $1,942 80% $344 65% ($23) 3% 3% 3.9x 3.4x 11.6x 10.7x

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26PIPER JAFFRAY

Large-Cap Technology

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Large-Cap Technology

Adobe Systems Incorporated $87,631 $83,693 94% $7,302 86% $2,949 20% 17% 9.6x 8.2x 21.4x 17.7x

HP Inc. 35,444 35,068 93% 52,056 18% 4,589 7% 1% 0.6 0.6 7.7 7.4

International Business Machines Corp 143,176 172,797 84% 78,366 46% 17,368 1% 0% 2.2 2.1 8.9 8.7

Intuit Inc. 40,392 40,459 98% 5,285 85% 1,968 11% 9% 6.8 6.2 18.5 17.2

Oracle Corporation 202,500 192,028 89% 38,907 58% 16,669 4% 4% 4.7 4.6 10.2 9.6

Salesforce.com, inc. 75,457 73,746 94% 9,923 73% 1,557 20% 20% 5.9 4.9 26.3 21.3

SAP SE 137,265 136,464 93% 28,616 70% 8,563 3% 7% 4.6 4.3 13.2 12.1

75th Percentile $140,220 $154,630 94% $45,482 79% $12,616 15% 13% 6.4x 5.6x 19.9x 17.4x

Median $87,631 $83,693 93% $28,616 70% $4,589 7% 7% 4.7x 4.6x 13.2x 12.1x

Mean $103,123 $104,894 92% $31,493 62% $7,666 9% 8% 4.9x 4.4x 15.2x 13.4x

25th Percentile $57,924 $57,102 91% $8,612 52% $2,458 4% 3% 3.4x 3.2x 9.6x 9.2x

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27PIPER JAFFRAY

Human Capital Management

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Human Capital Management

Benefitfocus, Inc. $844 $910 73% $253 51% $13 9% 13% 3.2x 2.9x 32.4x 24.8x

Cornerstone OnDemand, Inc. 2,046 1,945 80% 459 70% 21 3% 12% 3.9 3.5 20.5 17.3

Paycom Software, Inc. 4,729 4,697 93% 407 85% 122 25% 23% 8.7 7.0 21.9 17.9

Paylocity Holding Corporation 2,575 2,478 87% 316 59% 50 19% 19% 6.2 5.2 29.4 22.7

The Ultimate Software Group, Inc. 6,715 6,586 93% 900 62% 210 18% 17% 5.9 5.0 23.8 19.9

WageWorks, Inc. 2,496 1,848 77% 462 63% 125 10% 10% 3.5 3.2 11.0 9.7

Workday, Inc. 21,365 19,603 87% 1,995 70% 252 25% 23% 7.4 6.0 43.6 31.6

75th Percentile $5,722 $5,642 90% $681 70% $167 22% 21% 6.8x 5.6x 30.9x 23.7x

Median $2,575 $2,478 87% $459 63% $122 18% 17% 5.9x 5.0x 23.8x 19.9x

Mean $5,824 $5,438 84% $685 66% $113 16% 17% 5.5x 4.7x 26.1x 20.6x

25th Percentile $2,271 $1,897 78% $362 60% $36 10% 12% 3.7x 3.3x 21.2x 17.6x

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28PIPER JAFFRAY

HR Outsourcing

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

HR Outsourcing

Aon plc $34,478 $38,127 88% $11,935 42% $2,555 7% 5% 3.6x 3.4x 13.1x 11.9x

Automatic Data Processing, Inc. 52,150 51,777 96% 12,542 43% 2,860 7% 7% 3.8 3.5 17.7 16.1

Barrett Business Services, Inc. 485 362 93% 897 61% 36 11% NA 0.4 NA 8.1 NA

CBIZ, Inc. 863 1,037 90% 839 12% 95 5% 4% 1.2 1.1 9.6 9.1

H&R Block, Inc. 5,482 6,695 82% 3,058 49% 910 2% 3% 2.2 2.1 8.0 7.9

Insperity, Inc. 2,391 2,165 95% 3,203 17% 156 10% 10% 0.6 0.5 10.9 9.9

Instructure, Inc. 1,002 935 90% 147 71% (33) 28% 28% 4.7 3.7 NM NM

Paychex, Inc. 24,604 23,918 97% 3,238 71% 1,453 7% 7% 6.9 6.5 15.8 14.8

TriNet Group, Inc. 3,170 3,323 98% 3,239 18% 267 (0%) 11% 4.1 3.7 11.9 10.6

WageWorks, Inc. 2,496 1,848 77% 462 63% 125 10% 10% 3.5 3.2 11.0 9.7

75th Percentile $19,824 $19,612 96% $3,238 63% $1,317 10% 10% 4.0x 3.7x 13.1x 12.7x

Median $2,833 $2,744 92% $3,131 46% $211 7% 7% 3.5x 3.4x 11.0x 10.3x

Mean $12,712 $13,019 91% $3,956 45% $842 9% 9% 3.1x 3.1x 11.8x 11.3x

25th Percentile $1,349 $1,240 88% $853 24% $103 5% 5% 1.4x 2.1x 9.6x 9.6x

Page 29: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

29PIPER JAFFRAY

CRM / Marketing

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

CRM / Marketing

Callidus Software Inc. 1,951 1,775 94% 240 61% 27 18% 21% 5.9 4.9 36.7 27.5

ChannelAdvisor Corporation 239 186 59% 120 78% 6 10% 9% 1.4 1.3 26.1 14.0

Coupa Software Incorporated 1,719 1,499 83% 171 68% (14) 24% 24% 6.6 5.4 NM NM

Marin Software Incorporated 62 34 57% 80 59% (11) NA NA NA NA NA NA

Mimecast Limited 1,643 1,551 90% 222 74% 19 29% 19% 5.3 4.4 NM 41.1

MINDBODY, Inc. 1,422 1,212 84% 171 71% 4 26% 25% 5.3 4.2 NM 30.6

Model N, Inc. 462 462 94% 131 53% (18) 7% 8% 3.0 2.8 NM 33.6

Salesforce.com, inc. 75,457 73,746 94% 9,923 73% 1,557 20% 20% 5.9 4.9 26.3 21.3

SendGrid, Inc. 1,008 950 98% 103 74% 9 24% 25% 7.0 5.6 NM NM

The Trade Desk, Inc. 2,023 1,918 68% 278 79% 85 28% 25% 4.9 3.9 16.2 11.8

Zendesk, Inc. 3,435 3,118 94% 396 70% (7) 31% 28% 5.5 4.3 NM NM

75th Percentile $1,987 $1,846 94% $259 74% $23 27% 25% 5.9x 4.9x 28.9x 32.1x

Median $1,643 $1,499 90% $171 71% $6 24% 22% 5.4x 4.4x 26.2x 27.5x

Mean $8,129 $7,859 83% $1,076 69% $151 22% 20% 5.1x 4.2x 26.3x 25.7x

25th Percentile $735 $706 75% $126 64% ($9) 19% 19% 5.0x 4.0x 23.6x 17.7x

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30PIPER JAFFRAY

Contact Center

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Contact Center

8x8, Inc. $1,297 $1,129 84% $272 76% $21 16% 22% 3.4x 2.8x NM 29.4x

eGain Corporation 143 142 96% 58 63% 1 4% 9% 2.3 2.1 NM NA

Five9, Inc. 1,479 1,462 89% 189 60% 19 17% 18% 6.3 5.4 NM 48.4

LivePerson, Inc. 685 629 76% 218 73% 20 7% 10% 2.7 2.5 28.5 21.7

NICE Ltd. 5,582 5,534 99% 1,264 65% 321 7% 6% 3.8 3.6 13.3 12.2

Verint Systems Inc. 2,703 3,103 94% 1,112 63% 168 7% 5% 2.5 2.4 10.5 9.5

75th Percentile $2,397 $2,692 96% $902 71% $131 14% 16% 3.7x 3.4x 20.9x 29.4x

Median $1,388 $1,296 92% $245 64% $21 7% 9% 3.1x 2.6x 13.3x 21.7x

Mean $1,981 $2,000 90% $519 67% $92 10% 12% 3.5x 3.1x 17.4x 24.3x

25th Percentile $838 $754 85% $196 63% $19 7% 7% 2.6x 2.4x 11.9x 12.2x

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31PIPER JAFFRAY

Security

Source: S&P Capital IQ, Thomson Reuter’s Consensus, and Renaissance Capital.

EV/Revenue > 20x Not Meaningful (NM).

EV/EBITDA > 60x Not Meaningful (NM).

Market Enterprise Gross Revenue EV / EV /

Cap Value Price % Revenue Margin EBITDA Growth Revenue EBITDA

($ in millions, except per share data) 12/29/2017 12/29/2017 52 Wk High LTM LTM LTM 2018 2019 2018 2019 2018 2019

Security

Akamai Technologies, Inc. $11,155 $10,398 91% $2,456 65% $836 8% 10% 3.9x 3.5x 10.4x 9.3x

CA, Inc. 13,929 14,029 91% 4,078 86% 1,314 3% 1% 3.3 3.2 8.5 8.3

Check Point Software Technologies L 17,217 13,352 87% 1,835 89% 999 5% 6% 6.8 6.5 12.7 11.9

CyberArk Software Ltd. 1,498 1,201 74% 246 84% 53 19% 17% 3.9 3.4 16.8 13.5

Everbridge, Inc. 840 792 98% 96 70% (6) 26% 24% 6.1 4.9 NM NM

Experian plc 15,264 18,453 96% 4,439 43% 1,615 4% 6% 3.8 3.6 11.2 10.6

FireEye, Inc. 2,621 2,512 79% 734 64% 17 NA NA NA NA NA NA

ForeScout Technologies, Inc. 1,209 1,338 98% 204 72% (47) 21% 21% 5.0 4.2 NM NM

Fortinet, Inc. 7,819 6,284 96% 1,441 74% 305 14% 13% 3.7 3.3 16.3 13.6

Imperva, Inc. 1,350 1,007 76% 309 80% 47 NA NA NA NA NA NA

MobileIron, Inc. 375 292 58% 173 82% (19) NA NA NA NA NA NA

NetScout Systems, Inc. 2,698 2,683 79% 1,104 72% 238 (7%) 3% 2.7 2.6 13.2 12.1

Okta, Inc. 2,610 2,387 76% 231 68% (65) 32% 34% 7.1 5.3 NM NM

Palo Alto Networks, Inc. 13,320 11,570 92% 1,869 72% 407 24% 17% 4.9 4.2 18.8 15.2

Parkit Enterprise Inc. 11 10 70% 2 100% 1 NA NA NA NA NA NA

Proofpoint, Inc. 4,353 4,274 91% 477 72% 60 23% 28% 6.4 5.0 47.8 33.4

Qualys, Inc. 2,392 2,049 95% 220 78% 80 17% 16% 7.6 6.6 20.7 17.7

Radware Ltd. 853 522 93% 205 81% 13 9% 9% 2.3 2.1 20.7 15.8

Rapid7, Inc. 819 734 92% 188 73% (21) 20% 17% 3.0 2.6 NM NM

SecureWorks Corp. 719 619 68% 466 52% (15) 9% 10% 1.2 1.1 NM 28.0

Splunk Inc. 11,718 10,733 98% 1,158 79% 104 25% 29% 6.9 5.4 NM 33.5

Symantec Corporation 18,716 21,439 82% 4,739 79% 1,516 2% 7% 4.4 4.1 9.1 8.3

Trend Micro Incorporated 887,091 690,889 97% 147,474 82% 52,773 7% 6% 4.4 4.1 12.4 11.7

Varonis Systems, Inc. 1,352 1,223 91% 199 90% 5 19% 17% 4.9 4.2 NM NM

VASCO Data Security International, In 554 392 88% 186 70% 13 8% 7% 1.9 1.8 19.1 14.1

VeriSign, Inc. 14,199 14,240 97% 1,156 83% 806 NA NA NA NA NA 15.3

Zix Corporation 241 208 66% 64 81% 17 8% NA 2.9 NA 9.5 NA

75th Percentile $12,519 $11,152 95% $1,638 82% $606 20% 17% 5.8x 4.9x 19.0x 15.8x

Median $2,610 $2,387 91% $466 78% $53 12% 13% 4.2x 4.1x 13.2x 13.6x

Mean $38,330 $30,875 86% $6,509 76% $2,261 13% 14% 4.4x 3.9x 16.5x 16.0x` 25th Percentile $846 $763 78% $201 71% $3 7% 7% 3.1x 3.2x 10.8x 11.7x

Page 32: Piper Jaffray Software Activity Update · 2018-02-21 · PIPER JAFFRAY 2. Piper Jaffray Software Team Overview. Global Reach. Our firm consists of 1,300+ professionals in 59 offices

Piper Jaffray Companies (NYSE: PJC) is a leading investment bank and asset management firm. Securities brokerage and investment banking services are offered in the U.S. through Piper Jaffray & Co., member SIPC and FINRA; in Europe through Piper Jaffray Ltd., authorized and regulated by the U.K. Financial Conduct Authority; and in Hong Kong through Piper Jaffray Hong Kong Limited, authorized and regulated by the Securities and Futures Commission. Asset management products and services are offered through five separate investment advisory affiliates―U.S. Securities and Exchange Commission (SEC) registered Advisory Research, Inc., Piper Jaffray Investment Management LLC, PJC Capital Partners LLC and Piper Jaffray & Co., and Guernsey-based Parallel General Partners Limited, authorized and regulated by the Guernsey Financial Services Commission.

Information contained in this publication is based on data obtained from sources we deem to be reliable; however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this publication is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision.

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Date of First Use 2/18