technology, media, & telecom · technology, media, & telecom quarterly software sector...
Post on 23-Apr-2018
214 Views
Preview:
TRANSCRIPT
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is private limited company incorporated under English law with its registered office at5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. HarrisWilliams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
www.harriswilliams.com
TECHNOLOGY, MEDIA, & TELECOMQUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
PAGE |
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
CONTENTS
DEAL SPOTLIGHT
M&A TRANSACTIONS – 4Q 2016
SOFTWARE M&A ACTIVITY
SOFTWARE SECTOR OVERVIEWS
SOFTWARE PRIVATE PLACEMENTS OVERVIEW
SOFTWARE PUBLIC COMPARABLES OVERVIEW
TECHNOLOGY IPO OVERVIEW
DEBT MARKET OVERVIEW
APPENDIX: PUBLIC COMPARABLES DETAIL
TMT CONTACTS
UNITED STATES
Jeff BistrongManaging Directorjbistrong@harriswilliams.com
Sam HendlerManaging Directorshendler@harriswilliams.com
Mike WilkinsManaging Directormwilkins@harriswilliams.com
EUROPE
Thierry MonjauzeManaging Directortmonjauze@harriswilliams.com
TO SUBSCRIBE PLEASE EMAIL:*tmt_reader@harriswilliams.com
HARRIS WILLIAMS & CO. OVERVIEW
HARRIS WILLIAMS & CO. (HW&CO.) GLOBAL ADVISORY PLATFORM
SOFTWARE / SAAS
Enterprise Software
Data and Analytics
Infrastructure and Security Software
IT and Tech-enabled Services
Data Center and Managed Services
INTERNET & DIGITAL MEDIA
AdTech and Marketing Solutions
Consumer Internet
Digital Media and Content
eCommerce
Mobile
HW&CO. TECHNOLOGY, MEDIA & TELECOM (TMT) GROUP FOCUS AREAS
SELECT RECENT HW&CO. TMT TRANSACTIONS
TMT VERTICAL FOCUS AREAS
25 year history with over 120 closed transactions in the last 24 months
Approximately 250 professionals across eight offices in the U.S. and Europe
Strategic relationships in India and China
10 industry groups
KEY FACTS
1
HW&Co. OfficeNetwork Office
Education
Energy, Power, and Infrastructure
Fintech
Healthcare IT
Public Sector and Non-Profit
Supply Chain, Transportation, and Logistics
Manufacturing
Professional Services
has been recapitalized by
has been acquired by has been acquired by
Baarsma B2C trades as:
has been acquired byhas been acquired by has been acquired byhas been acquired byhas been
recapitalized byhas acquired
has received a majority investment from
has received a majority investment from
has been acquired by
PAGE |
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
CASE STUDY: MINISTRY BRANDS
HW&CO. DEAL CONTACTS
Ministry Brands is the leading provider of an end-to-endSaaS-based technology platform to member-centricorganizations, including faith-based organizations and K-12private education institutions, serving over 60,000customers.
Ministry has successfully demonstrated that integratingpayment platforms with membership managementsoftware (CRM, ERP) can create a true differentiator in themarketplace and result in significant synergies and growthopportunities.
With the recapitalization from Insight, and havingcompleted over 35 acquisitions historically, Ministry ispositioned as the largest and most active consolidator inthe membership management software and paymentssector.
HW&Co.’s TMT Group advised Genstar Capital and Providence Strategic Growth on the majorityinvestment in Ministry Brands by Insight Venture Partners.
2
a portfolio company of
and
has received a majority investment from
Date Closed:
12/2/2016
Relevant Sectors:
SaaS
Fintech / Payments
Membership Management
Ministry represents a key client relationship, with HW&Co. advising on the successful recapitalization of the company by Genstar Capital in 2015 before advising on the majority investment from Insight Venture Partners.
KEY RELATIONSHIP
Enterprise Software
Jeff BistrongManaging Director
jbistrong@harriswilliams.com
Office: (617) 654-2102
Tyler DewingDirector
tdewing@harriswilliams.com
Office: (617) 654-2133
Priyanka NaithaniVice President
pnaithani@harriswilliams.com
Office: (617) 654-2115
Mike WilkinsManaging Director
mwilkins@harriswilliams.com
Office: (415) 217-3411
Andy LeedVice President
aleed@harriswilliams.com
Office: (617) 654-2107
recapitalized bymajority investment
from
PAGE | 3
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SELECT SOFTWARE M&A TRANSACTIONS – 4Q 2016
Roper Technology’s acquisition of Deltek
Deltek is a leading global provider of enterprise software and information solutions for project-based businesses that serve nichemarkets, including government contractors and professional services firms.
Approximately 22,000 organizations and millions of users spanning 80 countries use Deltek’s solutions to research and identifybusiness opportunities, recruit talent, optimize resources, streamline operations, and deliver projects profitably and on time.
The acquisition of Deltek complements Roper’s recent acquisitions of Aderant and ConstructConnect and significantlyenhances Roper’s reach and capabilities in application software.
Ent. Value: $2,800M
Revenue: $535M
EV / Rev: 5.2x
EV / EBITDA: 14.0x
December 28, 2016
Oracle’s pending acquisition of Dynamic Network Services
Dyn is a leading Internet Performance and DNS provider that enables faster access, reduced page load times, and higher end-user satisfaction by monitoring, controlling, and optimizing Internet applications and cloud services.
Global network drives 40 billion traffic optimization decisions daily for more than 3,500 enterprise customers, including a numberof major digital brands such as Netflix, Twitter, Pfizer, and CNBC.
Dyn’s DNS solution is a natural extension to Oracle’s existing cloud computing platform and will provide Oracle’s enterprisecustomers with complete Infrastructure-as-a-Service and Platform-as-a-Service solutions.
Ent. Value: $700M
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
Pending
Vista Equity Partners’ pending acquisition of SunGard Public Sector and SunGard K-12 Education
SunGard’s Public Sector and K-12 Education segments provide a comprehensive set of technology solutions purpose-built toaddress the public safety and public administration needs of government entities as well as K-12 school districts.
The segments’ solutions help public administrations and school districts reduce administrative complexities and improveproductivity by enabling effective management of HR and finance functions.
As part of the acquisition, SunGard Public Sector will become a new independent company under the ownership of VistaEquity, while SunGard K-12 Education will become part of Vista-owned PowerSchool.
Pending
Ent. Value: $850M
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
Francisco Partners’ acquisition of Prometheus Group
Prometheus Group is a leading global provider of enterprise asset management and plant maintenance software solutions,enabling improved efficiency and effectiveness of maintenance, planning, scheduling, and execution.
The company serves hundreds of blue-chip customers, including 70% of the top 10 companies globally in its core verticals,which include the chemical, utility, mining, manufacturing, and oil and gas markets.
Francisco Partners will leverage its deep understanding of the market to support Prometheus Group in identifying newtechnologies and complementary solutions to drive organic and inorganic growth.
Ent. Value: NA
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
November 8, 2016
Hearst’s acquisition of CAMP Systems
CAMP Systems is a leading provider of enterprise software solutions for managing and tracking the maintenance of aircraftused in business aviation as well as enterprise information systems for managing service centers.
The company’s mission-critical solutions enable more than 19,000 aircraft, 30,000 engines, and 1,300 maintenance facilitiesglobally to comply with global regulations and guidelines regarding aircraft maintenance and safety.
The acquisition is in line with Hearst’s strategy of growing its data and information-based solutions and entering new marketsthrough its Hearst Business Media unit.
Ent. Value: NA
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
December 7, 2016
PAGE | 4
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SOFTWARE ACQUISITION ACTIVITY – STRATEGIC ACQUIRERS
MOST ACTIVE STRATEGIC ACQUIRERS OF SOFTWARE ASSETS BY VOLUME
GLOBAL STRATEGIC ACQUIRER SOFTWARE M&A ACTIVITY BY VOLUME
The 10 most active strategic software acquirers registered 75 acquisitions in 2016, with Google and IBM each completing 14 acquisitions during the year.
Commensurate with its acquisition strategy focused on expanding its cloud offering, Google capped off a year of strong activity with the acquisition of Qwiklabs, a public cloud infrastructure training platform that the company will use to foster cloud adoption and utilization.
Global strategic software M&A remained in line with prior quarters, registering 350 transactions in 4Q 2016.
Strategic acquirers continue to be active, while also integrating the historically high volume of M&A transactions from 2015. Disruptive technologies continue to feed much of the strategic M&A activity. 352 352 333 327 324
371340
309
402454 437 434
406
341 359 350
1Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16
712
510 8 7
3 25 5
5
9
5
89
59 9
7 9
286
10
94
14 8 5 3
12
13
18 310
63
33 1
14
14
9
9 7
8 6 22 4
2016
2015
2014
2013
2012
(# of Transactions)
(# of Transactions)
Note: Includes control investments only.
PAGE | 5
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SOFTWARE ACQUISITION ACTIVITY – PRIVATE EQUITY
MOST ACTIVE PRIVATE EQUITY BUYERS OF NEW SOFTWARE PLATFORMS BY VOLUME
GLOBAL NEW PLATFORM PRIVATE EQUITY SOFTWARE M&A ACTIVITY BY VOLUME
The 10 most active software investors completed 46 platform investments in 2016, with Vista Equity and Thoma Bravo continuing to be among the most active investors with 13 and 7 new software platform investments, respectively.
Among the top 10 software investors, the most popular investment areas included niche vertical SaaS applications, business productivity software, IT security, and big data /analytics software.
Globally, private equity software M&A registered 81 new platform acquisitions in 4Q 2016, representing a 72% increase over 4Q 2015 results.
Software continues to account for a significant portion of overall private equity activity and key industry players continue to raise significant capital to devote to both M&A and growth investing in the sector. Included among private equity groups closing new funds in 2016 are Vista Equity, Thoma Bravo, Francisco Partners, Accel Partners, KKR, and Technology Crossover Ventures.
96
3 2 3 1 2 4 3 2
7
34
23 5 2
1 3 3
9
5
36 3 4
4 4 3 3
6
5
7 5 7 3 7 4 32
13
7
45 3
5 12 2 4
2016
2015
2014
2013
2012
41 3847 45 43
32
48 47 4454 56
47 50
61
7481
1Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16
(# of Platform Transactions)
(# of Platform Transactions)
Note: Includes control new platform investments only. Excludes add-on acquisitions.
PAGE | 6
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
Application Software
Pending Silver Lake Partners Cegid Group ERP and business management software for midsized companies. $719 2.3x
Pending NICE Systems Ltd. inContact, Inc. Contact and data center software solutions for security-sensitive organizations. $864 3.7x
Pending H.I.G. Capital Lionbridge Technologies, Inc. Localization, translation, and global marketing software solutions for brands. $430 0.8x
Pending TPG Capital Mediware Information Systems, Inc. Enterprise software solutions for healthcare and human serv ices providers and payers. NA NA
Pending Siemens AG Mentor Graphics Corp. Electronic design software for the semiconductor, automotive, and transportation industries. $4,097 3.6x
Pending Permira Advisers LLP P&I Personal & Informatik AG Human resource management, payroll accounting, and time management software. $852 6.3x
Pending Vista Equity Partners SunGard Data Systems Enterprise software solutions for the public sector and K-12 education sector. $850 NA
12/28/16 Roper Technologies, Inc. Deltek, Inc. Enterprise application software for project-based organizations. $2,800 5.2x
12/07/16 The Hearst Corp. CAMP Systems International, Inc. Maintenance tracking and serv ice center management software for the aviation industry. NA NA
12/06/16 Sequential Technology Synchronoss (Activation Business) Device activation streamlining software and serv ices for mobile carriers. $209 NA
11/22/16 Kerridge Commercial Systems Ltd. Integrity Software ERP, payroll, and human resources software for retailers. NA NA
11/01/16 ION Investment Group Ltd. Reval Holdings, Inc. Treasury and risk management platform for enterprises. NA NA
10/21/16 EQT Partners AB Press Ganey Holdings, Inc. Patient experience and performance software analytics for healthcare organizations. $2,285 6.6x
10/18/16 Vista Equity Partners GovDelivery Holdings, Inc. Government-to-citizen communication software and serv ices. $153 NA
10/03/16 ONEX Corp. Science Info. Business / Thomson Reuters Intellectual property and scientific information software and serv ices. $3,550 3.6x
10/03/16 Dassault Systèmes SA CST Computer Simulation Technology AG High performance software for the simulation of electromagnetic fields. $242 NA
$851 3.6x
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
APPLICATION SOFTWARE – M&A MARKET SUMMARY
APPLICATION SOFTWARE M&A VOLUME (GLOBAL)
NOTABLE APPLICATION SOFTWARE M&A TRANSACTIONS
Application Software M&A remained robust, registering 307 transactions in 4Q 2016 and approaching 2015 highs.
4Q 2016 median reported Application Software M&A revenue multiples increased to 2.7x, slightly above historical averages.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
1.3x
1.4x 1.5x
1.6x
2.5x2.5x
2.1x
2.3x2.3x
1.4x
2.5x
2.3x
2.5x2.4x
2.5x
2.3x
2.7x
Notable up market Application Software deals include Siemens’ pending $4.1 billion acquisition of Mentor Graphics, Roper’s $2.8 billion acquisition of Deltek, EQT’s $2.3 billion acquisition of Press Ganey, and ONEX’s $3.6 billion acquisition of Thomson Reuters’ Intellectual Property & Science operations.
MEDIAN
298
244 246 252 251
227
282 271
289
272
319 320 316 314
281
298 307
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
PAGE | 7
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SaaS
Pending Vista Equity Partners Cvent, Inc. SaaS-based event management and email marketing software. $1,342 6.7x
Pending Verizon Fleetmatics Group Plc SaaS-based fleet management software solutions. $2,183 7.0x
Pending Synchronoss Technologies, Inc. Intralinks Holdings, Inc. Web-based document exchange platform. $785 2.7x
Pending Guidewire Software, Inc. ISCS, Inc. SaaS-based software platform for insurance accounting and document management. $160 NA
Pending Oracle Corp. NetSuite, Inc. SaaS-based business management application solutions. $8,759 10.3x
Pending Model N, Inc. Revitas, Inc. SaaS-based contract, revenue, and compliance management software. $60 NA
Pending Thunder Software Technology Co., Ltd. Rightware Oy SaaS-based user interface technology platform for the automotive sector. $67 NA
Pending GE Digital Energy, Inc. Serv iceMax, Inc. Cloud-based field serv ice management platform. $915 NA
01/03/17 SCISYS Group ANNOVA Systems GmbH SaaS-based news management software tools for broadcasters. $29 4.0x
12/19/16 Adobe Systems TubeMogul, Inc. Web-based advertising optimization and brand measurement platform. $492 2.3x
12/15/16 Mercer LLC Thomsons Online Benefits Ltd. SaaS-based employee benefits and employee engagement software. NA NA
12/02/16 Insight Venture Partners Ministry Brands LLC SaaS-based technology platform for faith-based and educational organizations. $1,410 8.2x
11/09/16 Evolent Health, Inc. Aldera Holdings, Inc. Web-based administration and private portal software for healthcare payers. $34 NA
11/09/16 Criteo Corp. HookLogic, Inc. Web-based performance marketing platform. $250 2.2x
11/08/16 Francisco Partners Prometheus Group Enterprises LLC SaaS-based enterprise asset management and plant maintenance software. NA NA
11/01/16 salesforce.com, inc. Krux Digital, Inc. Cloud-based database management and monitoring platform. $768 NA
10/03/16 Evolent Health, Inc. Valence Health, Inc. Cloud-based clinical integration and health plan software and serv ices. $145 1.7x
09/22/16 GI Partners Daxko LLC SaaS-based provider of operational and financial management solutions. $240 5.3x
$371 4.6x
HW&CO. CONFIDENTIAL
HW&CO. CONFIDENTIAL
55
38
49 47
45 46
60
54 53
65
68 70
55
52 51 52 54
NOTABLE SAAS M&A TRANSACTIONS
5.8x
4.6x
5.3x
4.4x
5.3x
5.6x 5.7x
4.4x
3.5x
3.9x
4.4x4.2x
4.6x4.9x
5.6x5.4x
4.8x
SAAS – M&A MARKET SUMMARY
SAAS M&A VOLUME (GLOBAL)
SaaS M&A registered 54 acquisitions in 4Q 2016, in line with the volumes over the prior four quarters.
Median reported SaaS transaction revenue multiples decreased to 4.8x in 4Q 2016, but remain in line with historical averages.
Traditional on-premisesoftware providers continue to drive SaaS M&A spending as they seek to increase recurring subscription revenue and streamline operating efficiencies.
Category-leading public SaaS companies continue to be attractive M&A targets for both private equity and strategic acquirers, as evidenced by the recent Cvent, Fleetmatics, Intralinks, and NetSuite transactions.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
MEDIAN
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
PAGE | 8
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
Data and Analytics
Pending Google, Inc. Apigee Corp. Digital business acceleration and data analytics platform for application management. $470 5.1x
Pending salesforce.com, inc. BeyondCore, Inc. One-click automated business analysis for healthcare and manufacturing companies. NA NA
Pending BC Partners Brainspace Corp. Information governance, compliance, and enterprise knowledge sharing for law firms. NA NA
Pending Golden Gate Capital NeuStar, Inc. Real-time information and analytics software and serv ices. $2,699 2.3x
Pending Guidewire Software, Inc. EagleEye Analytics, Inc. Predictive analytics software for the property and casualty insurance industry. $42 NA
Pending Intel Corp. Nervana Systems, Inc. Software solutions for data analysis, computation, and machine learning. $408 NA
Pending Informa Plc Penton Business Media, Inc. Information, data, and marketing software and serv ices. $1,557 NA
12/23/16 The Descartes Systems Group, Inc. Datamyne, Inc. Trade data intelligence software for analyzing import and export trade activ ity. $53 NA
12/16/16 ARM Holdings Allinea Software Ltd. Software development and performance analysis software for high-performance users $22 NA
12/01/16 Morningstar, Inc. PitchBook Data, Inc. Web-based platform for data, research, and analysis on private and public companies. $225 7.2x
11/30/16 Predictive Safety LLC Data Connect Corp. Trade show data management, imaging, and on-site registration platform. NA NA
11/28/16 Verisk Analytics, Inc. Intellistance LLC Market intelligence and analytics software solutions for the insurance industry. NA NA
11/16/16 Verint Systems, Inc. OpinionLab, Inc. Software solutions for collecting and analyzing customer feedback. $84 4.2x
11/15/16 General Electric Co. Bit Stew Systems, Inc. Industrial data and operations management platform. $153 NA
10/04/16 BSM Technologies Mobi Corp. Appointment scheduling, routing, and analytics software for fleet optimization. $25 NA
10/03/16 Quintiles Transnational Holdings, Inc. IMS Health Holdings, Inc. Data analytics software and serv ices for the healthcare industry. $12,895 4.2x
10/01/16 Inovalon Holdings, Inc. Creehan & Co. Corp. Data and analytics software for pharmacy customer and operations management. $130 4.8x
$153 4.5x
NOTABLE DATA AND ANALYTICS M&A TRANSACTIONS
74
64
71 74
64 67
72 76
99
89
105
112
102
82
87
99 98
DATA AND ANALYTICS – M&A MARKET SUMMARY
DATA AND ANALYTICS M&A VOLUME (GLOBAL)
Data and Analytics M&A registered 98 transactions in 4Q 2016, representing a 20% increase over 1Q 2016.
4Q 2016 median reported sector transaction multiples remained in line with last quarter and consistent with historical averages from the past two years.
As the volume of complex data available to enterprises increases, strategic buyers are actively pursuing real-time information and business intelligence solutions to enhance their software solutions.
Notable Data and Analytics transactions include salesforce.com’s pending acquisition of BeyondCareand Google’s pending $470 million acquisition of Apigee.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
1.8x
1.1x
0.9x
1.4x
1.3x
1.9x 1.9x
2.7x
3.3x
2.8x
2.0x
2.6x2.6x
1.9x
3.1x
2.4x2.5x
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
MEDIAN
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
PAGE | 9
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
Infrastructure Software
Pending CA Technologies Automic Software GmbH Information technology and business systems automation software. $635 NA
Pending Broadcom Ltd. Brocade Communications Systems, Inc. Data storage and networking software and solutions. $5,501 2.3x
Pending Investcorp Calligo Ltd. Data protection, network security, and privacy software for enterprises. $20 NA
Pending Cisco Systems, Inc. CloudLock, Inc. Cloud data security software for protection against malware and data security breaches. $293 22.2x
Pending Francisco Partners & Elliott Capital Dell Software, Inc. Security, systems, information management, and data analytics software. $2,000 NA
Pending Oracle Corp. Dynamic Network Serv ices, Inc. Internet performance management and optimization software. $700 9.0x
Pending Open Text Corp. EMC (Enterprise Content Div ision) Enterprise information management software and serv ices. $1,620 NA
Pending Proofpoint, Inc. FireLayers, Inc. Enterprise-level security, compliance, and IT governance software for applications. $55 NA
Pending Micro Focus International Plc HPE (Software Div ision) Diversified enterprise software, including application lifecycle management and analytics. $6,268 NA
Pending Vista Equity Partners Infoblox, Inc. Network infrastructure automation software and security solutions. $1,233 3.4x
Pending Symantec Corp. LifeLock, Inc. Threat detection, identify alerts, and remediation software for consumers and enterprises. $2,096 3.2x
Pending TPG Capital McAfee, Inc. Anti-v irus, data protection and encryption, and database security software. $4,314 NA
Pending KKR & Co. LP Optiv Security, Inc. Information security and compliance management software for enterprise clients. NA NA
Pending Oracle Corp. Palerra, Inc. Cloud security automation platform. NA NA
12/19/16 Akamai Technologies, Inc. Cyberfend, Inc. Cloud-based bot and automation detection software. NA NA
10/06/16 BCE, Inc. Q9 Networks, Inc. Outsourced data center infrastructure solutions. $793 NA
10/04/16 Akamai Technologies, Inc. Soha Systems, Inc. Cloud-based security software platform focused on application networking systems. $60 NA
09/30/16 AVAST Software AVG Technologies NV Anti-v irus and internet security software. $1,380 3.2x
$1,233 3.3x
67
38
61
56 55 53
48
56
47 45
50
36
52
44
57
60
75
2.3x
1.9x
1.7x
1.2x
2.4x2.5x
2.9x
2.4x
2.7x
3.0x
3.2x3.3x
2.6x
2.9x
2.6x2.7x
3.1x
NOTABLE INFRASTRUCTURE SOFTWARE M&A TRANSACTIONS
INFRASTRUCTURE SOFTWARE – M&A MARKET SUMMARY
INFRASTRUCTURE SOFTWARE M&A VOLUME (GLOBAL)
Infrastructure Software M&A volumes registered a high point in 4Q 2016 with 75 transactions, representing a 25% increase over the prior quarter.
4Q 2016 median reported Infrastructure Software M&A revenue multiples increased to 3.1x, representing the highest median multiple over the last four quarters.
As data security breaches continue to make global headlines, strategic acquirers are actively pursuing IT and network security assets to capitalize on heightened enterprise focus.
Oracle continues to invest in its cloud platform, with the acquisitions of cloud security provider, Palerra, and internet performance management platform, Dyn, both complementary to the company’s cloud services and security strategy.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
MEDIAN
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
4Q '1
6
PAGE | 10
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
6% 4% 6% 5% 6% 4% 2% 4% 2% 4% 4% 2% 4% 2% 2% 1% 2%
21% 28% 31%
19% 29%
17% 14%
24%
7%
22% 28%
16% 22%
17% 11% 8%
17%
31% 31%
30%
22%
19%
33%
26%
26%
24%
33% 26%
17%
32%
26%
25% 21%
32%
15% 17% 13%
34% 15% 26%
20%
16%
11%
22% 17%
29%
14% 39%
28%
20%
20%
27% 21% 21% 21%
31% 20%
37% 30%
55%
18% 25%
36% 28%
15%
33%
50%
29%
4Q-12 1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16
Seed Series A Series B Series C Series D / or later
PRIVATE PLACEMENT CAPITAL RAISED BY ROUND (AS PERCENTAGE OF TOTAL REPORTED PRIVATE PLACEMENT CAPITAL)
Private placement activity in the software sector slowed in 4Q 2016, with 788 transactions. Total capital raised also declined, reaching $7.5 billion, down from $11.2 billion in 3Q 2016.
PRIVATE PLACEMENT ACTIVITY BY SOFTWARE SECTOR
In 4Q 2016, there was an even split on private placement capital invested across early stage (seed – B) and late stage (C – later) rounds.
Notable private placements across stages include Wavefront’s $52 million series B raise, Prevalent’s $60 million series C raise, and Stripe’s $150 million series D raise.
PRIVATE PLACEMENTS BY SOFTWARE SUB-SECTOR AND NEW CAPITAL RAISED
740
820 829
912
829
940 952
1013 997 1033
960
756869
896
826788
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16
$ i
n M
illio
ns
Vo
lum
e
Application Software SaaS Data & Analytics Infrastructure Software Total New Capital (Reported)
PAGE | 11
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SELECT RECENT SOFTWARE PRIVATE PLACEMENTS
ROUND INVESTORS (CURRENT ROUND) DESCRIPTIONCOMPANYDATEROUND
SIZE ($MM)
SECTORTOTAL RAISED ($MM)
Pending InfrastructureLate
Stage$200 $366 General Atlantic; GIC; Temasek Holdings
Prov ider of an open architecure communication
platform for professionals and businesses.
12/15/16Data &
AnalyticsC $60 $107 New Enterprise Associates; Andreessen Horowitz
Prov ider of an open source processing engine for
analyzing and managing big data.
12/15/16 SaaS B $20 $37 AXA Strategic Ventures; MassMutual Ventures; H&Q Asia PacificProv ider of SaaS-based policy-issuance and
management software for insurance agencies.
12/14/16 Application B $34 $56 Prov idence Strategic Growth; Wellington Financial; Toba
Capital; Recruit Holdings; Kennet Partners
Prov ider of AI-driv en lead engagement software for
marketing and sales organizations.
12/13/16 InfrastructureLate
Stage$18 $71
North Bridge Venture Partners; Exeter Venture Management
Company LLC; Sigma Partners; Sigma Prime Ventures LLC
Prov ider of cloud-integrated storage solutions, including
backup, disaster recov ery, and data archiv ing.
12/12/16Data &
Analytics B $20 $34
Spark Capital; Battery Ventures; Contour Venture Partners; Core
Capital Partners; IDEA Fund Partners; Salesforce Ventures
Prov ider of a SaaS-based data analytics platform for
gathering in-application customer experience
feedback.
12/08/16 SaaSLate
Stage$50 $151 ICONIQ Capital
Prov ider of web-based project management software
for the construction industry.
11/30/16 SaaS C $52 $77 Goldman Sachs Growth Equity; FirstMark Capital; Volition
Capital; F-Prime Capital
Prov ider of supply chain management software for the
life sciences industry.
11/16/16 SaaSLate
Stage$44 NA Susquehanna Growth Equity
Prov ider of programmatic tracking and reporting
software for shippers and logistics prov iders.
11/16/16Data &
Analytics B $30 $50 Sagev iew Capital LP
Prov ider of front-office software for SMBs, including
customer data and analytics solutions.
11/15/16 SaaS D $27 $58 LLR Partners, Inc.Prov ider of v aulted repository and electronic
transaction management serv ices.
11/15/16 SaaS D $39 $67 Goldman Sachs Capital PartnersProv ider of online project management and resource
planning software.
Note: Financial information presented above represents reported capital raised only.
PAGE | 12
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
PUBLIC SOFTWARE VALUATION MULTIPLES BY SECTOR
EBITDA MULTIPLE ANALYSIS 4Q 2015 VS. 4Q 2016
9.2x
7.4x
6.0x 6.1x
4.9x4.5x
4.9x4.7x 4.4x
5.3x
3.7x
5.5x
3.8x3.2x
4.8x
2.6x
1.1x
7.1x
6.0x5.8x
5.5x 5.3x
4.6x 4.6x 4.6x 4.5x
4.0x 4.0x 3.9x3.3x 3.2x 3.2x
2.9x
1.1x
4Q 2015 4Q 2016
53.2x
27.1x
32.7x
17.0x 16.2x 15.5x
19.8x
27.7x
12.8x
39.5x
15.7x
22.6x
14.2x
17.4x 16.4x
10.0x
15.0x
44.5x
23.9x
32.8x
15.4x
18.1x
14.8x
18.8x
31.8x
15.8x
26.9x
15.3x
18.9x
14.2x15.6x 14.5x
25.6x
17.0x
4Q 2015 4Q 2016
REVENUE MULTIPLE ANALYSIS 4Q 2015 VS. 4Q 2016STOCK PERFORMANCE (1- & 3-YEAR)
0.8%
6.6%
17.6%
11.6%
18.9%
9.6%
7.8%
(0.6%)
9.6%
3.6%
14.5%
(3.4%)
(6.6%)
7.7%
(19.6%)
17.5%
(5.1%)
24.0%
16.0%
(20.5%)
39.6%
30.8%
27.7%
39.8%
7.0%
24.0%
21.2%
23.6%
30.9%
(21.7%)
23.3%
(20.9%)
(22.8%)
(35.9%)
1 Yr Stock 3 Yr Stock
Large-Cap SaaS
SCM & Logistics
HCM
Financial
PLM & Engineering
Enterprise
Public Sector / Non-Profit
Small-Cap SaaS
Bellwethers
Marketing
IT Operations Mgmt.
IT Security
Data & Analytics
Communication
HCIT
Data Storage
Energy
PAGE | 13
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
`
KEY METRICS BY SECTOR – COMPARABLE PUBLIC SOFTWARE COMPANIES
7.1x
6.0x
5.8x
5.5x
5.3x
4.6x
4.6x
4.6x
4.5x
4.0x
4.0x
3.9x
3.3x
3.2x
3.2x
2.9x
1.1x
Large-Cap SaaS
SCM & Logistics
HCM
Financial
PLM & Engineering
Enterprise
Public Sector / Non-Profit
Small-Cap SaaS
Bellwethers
Marketing
IT Operat ions Mgmt.
IT Security
Data & Analytics
Communication
HCIT
Data Storage
Energy
EV / LTM REVENUE MULTIPLE NTM REVENUE GROWTH LTM EBITDA MARGINNTM EBITDA GROWTH NTM REVENUE GROWTH LTM EBITDA MARGINNTM EBITDA GROWTH
COMPARABLE COMPANY SET MEDIANS CORRELATION WITH EV / REVENUE MULTIPLE
26% 99% 15% 32% - 28%
17% 29% 16% - 25% -
23% 100% 15% 63% 13% 38%
13% 19% 35% 61% - 86%
7% 18% 27% - - 79%
10% 18% 30% 78% 82% 31%
16% 35% 23% 44% 28% 76%
29% 76% 10% 58% - 27%
3% 22% 31% 79% 72% 39%
21% 87% 12% 68% - 88%
8% 40% 25% 75% - 43%
21% 38% 23% 39% - 68%
3% 9% 22% 54% - 83%
20% 85% 21% 98% - -
14% 29% 19% 17% 66% -
15% 236% 7% 19% - -
- 1% 16% 28% - 92%
PAGE | 14
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SUMMARY OF TECHNOLOGY IPOS
Technology IPO activity slowed in 4Q 2016, with only three companies going public, as market volatility ahead of the U.S. presidential election prompted some startups to delay going public.
Notable technology IPOs included Trivago, which raised $287 million and priced at $11 in December, BlackLine Systems, which raised $146 million with a market cap of $839 and priced at $17 in October, and Coupa Software, which raised $133 million with a market cap of $866 million and priced at $18 in October.
MARKET CAP AT IPO (LTM) REVENUE GROWTH (1YR PRIOR TO IPO)OFFERING SIZE AT IPO (LTM)
RECENT U.S. IPO ACTIVITY (BY OFFERING SIZE)
23%
46%
31%
< 25% 25 - 75% > 75%
36%
36%
29%
$0-50M $50-500M $500M-$1B $1B+
7%
43%
36%
14%
$0 - 50M $50 - 100M $100 - 250M $250M +
(All tech IPOs over the last 12 months) (All tech IPOs over the last 12 months) (All tech IPOs over the last 12 months)
6
16
13 13
11
18
7
11
5
15
3
8
0
2
9
3
1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16
$0 - 50M $50 - 100M $100 - 250M $250M +
2013 Total: 48 2014 Total: 47 2016 Total: 142015 Total: 31
PAGE | 15
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
(150.0%)
(125.0%)
(100.0%)
(75.0%)
(50.0%)
(25.0%)
0.0%
25.0%
50.0%
75.0%
100.0%
125.0%
150.0%
Circle Size Denotes Revenue ($)
% R
eve
nu
e G
row
thSto
ck
Pe
rfo
rma
nc
e
KEY PERFORMANCE METRICS FOR RECENT SOFTWARE IPOS
IPO DATE
OFFER PRICE
OFFERING SIZE ($M)
OFFER TO CURRENT
(23.9%)(33.5%)
22.2%
51.4%
79.0%
14.7%
(24.4%)
92.3%
23.3%
53.8%
15.8%
66.0%
38.9%
62.5%
6.8%
28.1%
308.2%
70.2%
107.0%
24.3%
48.5% 29.5%
117.1%
22.6% 33.4% 20.5%
84.3%
64.6% 49.3% 33.1%
(150.0%)
(50.0%)
50.0%
150.0%
250.0%
350.0%
450.0%
7/16/15 10/6/15 11/12/15 11/18/15 11/18/15 12/9/15 4/21/16 6/22/16 7/28/16 9/15/16 9/22/16 9/29/16 10/5/16 10/27/16 12/15/16
$16.0 $17.0 $16.0 $9.0 $10.0 $21.0 $14.0 $15.0 $18.0 $12.0 $16.0 $16.0 $18.0 $17.0 $11.0
$620.0 $3,146.0 $422.2 $2,708.5 $540.1 $4,382.2 $1,129.4 $1,233.0 $503.5 $323.1 $596.6 $1,958.5 $866.0 $838.6 $287.2
$103.2 $425.0 $70.4 $243.0 $77.5 $462.0 $112.0 $150.0 $94.5 $90.0 $96.0 $237.9 $133.2 $146.2 $287.2
(23.9%) (33.5%) 22.2% 51.4% 79.0% 14.7% (24.4%) 92.3% 23.3% 53.8% 15.8% 66.0% 38.9% 62.5% 6.8%
MARKET CAP AT OFFER ($M)
PAGE | 16
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
26.4%
5.4%
9.3%
9.7%
11.7%
13.1%
24.4%
Other
Food & Beverage
Services & Leasing
Automotive
Insurance
Healthcare
Computers & Electronics
63% 60%
50%
57%
55%
60%
66%
60% 58%
51%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
4.1x 4.0x
3.4x
3.8x 3.8x
4.3x
4.7x 4.7x
5.6x
4.5x
3.3x
4.2x 4.3x4.5x
4.8x
5.3x 5.3x 5.3x
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
FLD/EBITDA SLD/EBITDA Other Sr Debt/EBITDA Sub Debt/EBITDA
LBO LOAN VOLUME BY INDUSTRY MEDIAN LBO DEBT PERCENTAGES
DEBT MARKET OVERVIEW
MIDDLE MARKET LBO LOAN MULTIPLES MIDDLE MARKET LBO VOLUME BY QUARTER
2016 New-Issue LBO Loan Volume: $3.7 billion Percentage of Total Purchase Price
Median middle market LBO loan multiples in 2016 remained in line with the prior two years at 5.3x leverage.
Middle market LBO loan volume increased slightly to $0.9 billion in 4Q 2016.
Technology companies were the largest recipients of LBO loans in 2016, representing 24.4% of new issuance.
As lenders remain selective about which assets they pursue, the median LBO debt percentage declined for the third straight year, reaching 51% in 2016.
Defined as Issuers with EBITDA of $50 Million or LessDefined as Issuers with EBITDA of $50 Million or Less
$1.0B
$2.0B
$1.2B
$1.6B$1.5B
$1.8B
$1.2B
$1.9B$2.0B
$0.4B
$0.9B
$1.2B
$0.7B
$0.9B
3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16
Institutional Pro Rata
PAGE | 17
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
DEEP TMT EXPERIENCE ACROSS SOFTWARE VERTICALS
Advertising & Marketing Technology Education TechnologyeCommerce Energy, Power & Infrastructure Technology
FinTechERP and Business Management Software Healthcare IT Human Capital Management
Infrastructure Software Internet and Digital Media Legal TechnologyIT Services
Non-Profit Software Supply Chain, Transportation & LogisticsSecurity Software
Please click here if you would like to contact HW&Co. in order to discuss any particular sector.
PAGE | 18
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
SELECT HW&CO. TMT TRANSACTIONS
acquired by acquired acquired by acquired by acquired by recapitalized by acquired by
acquired byacquired by acquired by
acquired byacquired by acquired by
minority investment
fromacquired by acquired by
acquired by
majority investment
fromacquired by
acquired bymerged with merged with acquired by acquired by
acquired by
significant equity
investment from
acquired a majority
stake inacquired by
acquired by
acquired by acquired by acquired byacquired by acquired by
acquired by
recapitalized byacquired by acquired by
acquired by acquired byacquired by
acquired by
acquired by majority
recapitalization by
acquired by
acquired by acquired by
recapitalized byacquired by
acquired byacquired by
acquired
acquired bysignificant equity
investment fromacquired by acquired
acquired by
significant equity
investment from
acquired by acquired by
acquired by acquired by
acquired by acquired byacquired byacquired byminority investment
from
acquired byacquired by
strategic investment
fromacquired byacquired by acquired byacquired by
acquired by acquired byacquired by acquired by
acquired by
and
acquired by acquired by acquired byacquired by
investment from recapitalized by
acquired by
acquired by
strategic investment
from
acquired by acquired by
growth equity
investment from
sold its Kline Towers
Division to
acquired by
acquired by
acquired by
GFI Energy Group
a division of
acquired by
B2C
recapitalized by
acquired byminority investment
from
acquired by
and
majority investment
from
acquired by
acquired by
and
majority investment
fromacquired by
PAGE | 19
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY UNIVERSE
SA
AS
HO
RIZ
ON
TAL
INFR
ASTR
UC
TUR
E
SO
FTW
AR
EV
ER
TIC
AL
AP
PLI
CA
TIO
N S
OFT
WA
RE
Software Bellwethers Google Microsoft Oracle IBM Cisco SAP Adobe Salesforce HP
Communication Software Nuance NICE Synchronoss BroadSoft Twilio Jiv e MobileIron
Enterprise Software Oracle IBM SAP Adobe ADP Intuit Amadeus Constellation Sage Open Text
Human Capital Management (HCM) ADP Paychex Workday Ultimate Paycom Cornerstone Paylocity Benefitfocus Xactly Halogen
Marketing Software Adobe Salesforce Criteo HubSpot Callidus Bazaarv oice ChannelAdv isor
PLM & Engineering Software Dassault Autodesk Hexagon AB Synopsys Ansys Cadence PTC AspenTech Nemetschek AVEVA
Supply Chain & Logistics Software Trimble Manhattan Descartes Coupa SPS Kinaxis CommerceHub American Park City Amber Road
Energy Software AVEVA Silv er Spring PSI EnerNOC
Financial Software Fiserv MSCI Jack Henry SS&C Oracle FSS Black Knight Env estnet Blackline Q2 Holdings
Healthcare IT (HCIT) Cerner athenahealth Veev a Medidata Allscripts HMS Quality Systems Ev olent Health Inov alon Model N
Public Sector / Non-Profit Software Constellation Tyler Tech Blackbaud NIC 2U K12 Instructure
Large-Cap SaaS (≥ $2Bn Mkt Cap) Salesforce Check Point Serv iceNow Workday Ultimate athenahealth Veev a Guidewire Proofpoint Medidata
Large-Cap SaaS (cont'd) Paycom LogMeIn RealPage Cornerstone ZenDesk
Small-Cap SaaS (≤ $2Bn Mkt Cap) Atlassian Ebix Xero Limited HubSpot CyberArk Alarm.Com RingCentral SPS Q2 Holdings Qualys
Small-Cap SaaS (cont'd) Callidus Mimecast Benefitfocus Box Fiv e9 MINDBODY Instructure Rapid7 Hortonworks Workiv a
Small-Cap SaaS (cont'd) Bazaarv oice Xactly AppFolio Model N Castlight Health Amber Road Apptio
Data & Analytics Verisk Splunk Tableau Teradata Pegasystems Verint MicroStrategy PROS Holdings Inov alon
IT Operations Management Citrix CA Red Hat Serv iceNow F5 Networks VMware Arista Micro Focus NetScout Software AG
IT Operations Management (cont'd) Progress New Relic Radware Apptio
Data Storage NetApp Iron Mountain CommVault Barracuda Pure Storage Box Nimble Storage Nutanix Carbonite
IT Security Cisco Symantec Check Point Palo Alto VeriSign Fortinet Gemalto Trend Micro Proofpoint FireEye
IT Security (cont'd) CyberArk Qualys Mimecast Varonis Rapid7 Cheetah Mobile SecureWorks
PAGE | 20
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
SOFTWARE BELLWETHERS
Alphabet Inc. GOOGL $474,361 $499,762 94.5% 1.9% 41.3% 20.3% 0.5% 32.6% 5.6x 5.6x 4.8x 17.2x 26.2x
Microsoft Corporation MSFT 428,205 483,160 96.9% 12.0% 66.1% (5.8%) 14.2% 32.0% 5.0x 4.4x 4.1x 15.8x 28.6x
Oracle Corporation ORCL 157,419 157,859 91.5% 5.3% 0.5% (0.6%) 2.8% 41.6% 4.2x 4.1x 4.0x 10.2x 17.9x
IBM Corporation IBM 191,566 157,832 97.7% 20.6% (11.5%) (4.3%) (1.0%) 21.1% 2.4x 2.4x 2.4x 11.3x 13.3x
Cisco Systems, Inc. CSCO 116,923 151,697 94.6% 11.3% 34.7% (1.4%) (0.3%) 31.2% 2.4x 2.4x 2.3x 7.7x 14.3x
SAP SE SAP 109,137 107,302 93.2% 9.3% (0.8%) 4.7% 5.8% 28.7% 4.5x 4.3x 4.0x 15.8x 28.5x
Adobe Systems Incorporated ADBE 49,058 51,190 92.7% 9.6% 71.9% 23.5% 21.3% 31.1% 8.4x 6.9x 5.8x 26.9x 43.8x
salesforce.com, inc. CRM 48,584 46,491 81.0% (12.7%) 24.0% 25.5% 26.5% 13.4% 6.1x 4.9x 4.1x 45.8x NM
HP Inc. HPQ 26,414 25,309 91.3% 25.3% 16.8% (52.8%) (2.9%) 7.8% 0.5x 0.6x 0.6x 7.0x 9.5x
Median $116,923 $151,697 93.2% 9.6% 24.0% (0.6%) 2.8% 31.1% 4.5x 4.3x 4.0x 15.8x 22.1x
COMMUNICATION SOFTWARE
Nuance Communications, Inc. NUAN $6,205 $4,340 72.5% (25.1%) (2.0%) 0.9% 5.5% 21.2% 3.2x 3.0x 2.9x 15.0x NM
NICE Systems Ltd. NICE 3,482 4,090 98.5% 20.0% 67.9% 5.9% 31.1% 22.7% 3.6x 2.7x 2.4x 15.8x 27.1x
Synchronoss Technologies, Inc. SNCR 2,050 1,736 76.7% 8.7% 23.3% 14.9% 28.5% 21.0% 3.2x 2.5x 2.1x 15.4x NM
BroadSoft, Inc. BSFT 1,181 1,243 85.2% 16.7% 51.0% 28.8% 19.7% 14.5% 3.6x 3.0x 2.6x 24.8x 123.7x
Twilio, Inc. TWLO 2,168 993 40.7% NA NA 87.9% 109.6% NM 13.0x 6.2x 4.7x NM NM
Jiv e Software, Inc. JIVE 239 340 94.8% 6.6% (61.3%) 4.8% 0.6% NM 1.2x 1.2x 1.2x NM NM
MobileIron, Inc. MOBL 245 330 78.5% 3.9% NA 12.2% 12.5% NM 1.5x 1.4x 1.2x NM NM
Median $2,050 $1,243 78.5% 7.7% 23.3% 12.2% 19.7% 21.1% 3.2x 2.7x 2.4x 15.6x 75.4x
ENTERPRISE SOFTWARE
Oracle Corporation ORCL $157,419 $157,859 91.5% 5.3% 0.5% (0.6%) 2.8% 41.6% 4.2x 4.1x 4.0x 10.2x 17.9x
IBM Corporation IBM 191,566 157,832 97.7% 20.6% (11.5%) (4.3%) (1.0%) 21.1% 2.4x 2.4x 2.4x 11.3x 13.3x
SAP SE SAP 109,137 107,302 93.2% 9.3% (0.8%) 4.7% 5.8% 28.7% 4.5x 4.3x 4.0x 15.8x 28.5x
Adobe Systems Incorporated ADBE 49,058 51,190 92.7% 9.6% 71.9% 23.5% 21.3% 31.1% 8.4x 6.9x 5.8x 26.9x 43.8x
Automatic Data Processing, Inc. ADP 45,986 46,372 98.9% 21.3% 45.0% 7.1% 9.4% 22.3% 3.9x 3.5x 3.3x 17.4x 30.4x
Intuit Inc. INTU 30,064 29,417 96.6% 18.8% 50.2% 12.4% 10.1% 30.4% 6.3x 5.7x 5.3x 20.8x 36.5x
Amadeus IT Group AMS-ES 22,264 19,981 89.6% 3.0% 6.2% 0.1% 12.4% 37.8% 5.0x 4.4x 4.2x 13.2x 25.9x
Constellation Software Inc. CSU-CA 9,683 9,641 93.8% 9.6% 114.9% 17.3% 16.2% 24.8% 4.7x 4.0x 3.5x 18.8x 46.6x
Sage Group plc SGE-GB 9,175 8,742 81.5% (9.0%) 21.0% 0.4% 0.8% 29.8% 4.1x 4.1x 3.8x 13.8x 29.7x
Open Text Corporation OTEX 8,875 8,090 92.5% 29.0% 34.4% 2.7% 13.4% 34.7% 4.7x 4.2x 4.1x 13.6x 7.0x
Median $38,025 $37,894 92.9% 9.6% 27.7% 3.7% 9.8% 30.1% 4.6x 4.1x 4.0x 14.8x 29.1x
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 21
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
HUMAN CAPITAL MANAGEMENT SOFTWARE
Automatic Data Processing, Inc. ADP $45,986 $46,372 98.9% 21.3% 45.0% 7.1% 9.4% 22.3% 3.9x 3.5x 3.3x 17.4x 30.4x
Paychex, Inc. PAYX 21,885 21,846 97.9% 15.1% 33.7% 7.8% 7.6% 42.8% 7.1x 6.6x 6.2x 16.7x 28.1x
Workday, Inc. WDAY 11,797 8,261 70.8% (17.1%) (20.5%) 36.7% 34.3% NM 8.1x 6.0x 4.8x NM NM
Ultimate Software Group, Inc. ULTI 5,457 5,288 81.4% (6.7%) 19.0% 27.2% 30.6% 8.9% 7.4x 5.6x 4.6x 83.1x 199.5x
Paycom Software, Inc. PAYC 2,635 2,734 85.9% 20.9% NA 50.5% 37.6% 20.8% 8.6x 6.2x 5.0x 41.3x 68.3x
Cornerstone Ondemand, Inc. CSOD 2,367 2,377 88.6% 22.5% (20.6%) 28.0% 19.0% NM 5.8x 4.9x 4.1x NM NM
Paylocity Holding Corp. PCTY 1,459 1,541 60.4% (26.0%) NA 50.3% 33.1% 5.1% 5.8x 4.4x 3.6x 114.2x NM
Benefitfocus, Inc. BNFT 896 881 66.0% (18.4%) (48.6%) 31.6% 24.2% NM 4.0x 3.2x 2.7x NM NM
Xactly Corp XTLY 313 345 68.3% 29.0% NA 29.1% 22.2% NM 3.4x 2.8x 2.3x NM NM
Halogen Software, Inc. HGN-CA 99 133 77.4% 20.1% (50.1%) 11.2% 7.6% 5.8% 1.4x 1.3x 1.2x 24.2x NM
Median $2,501 $2,556 79.4% 17.6% (20.5%) 28.6% 23.2% 14.8% 5.8x 4.6x 3.9x 32.8x 49.4x
MARKETING SOFTWARE
Adobe Systems Incorporated ADBE $49,058 $51,190 92.7% 9.6% 71.9% 23.5% 21.3% 31.1% 8.4x 6.9x 5.8x 26.9x 43.8x
salesforce.com, inc. CRM 48,584 46,491 81.0% (12.7%) 24.0% 25.5% 26.5% 13.4% 6.1x 4.9x 4.1x 45.8x NM
Criteo SA CRTO 2,315 2,502 85.9% 3.7% 20.1% 34.4% (44.6%) 9.7% 1.4x 2.6x 2.1x 14.6x 31.0x
HubSpot, Inc. HUBS 1,550 1,674 78.4% (16.5%) NA 52.0% 41.4% NM 6.3x 4.4x 3.6x NM NM
Callidus Software Inc. CALD 788 1,066 78.4% (9.5%) 22.4% 20.1% 23.1% NM 4.0x 3.2x 2.7x NM NM
Bazaarv oice, Inc. BV 353 405 79.1% 10.7% (38.8%) 2.4% 4.7% 0.4% 1.8x 1.7x 1.6x NM NM
Channeladv isor Corporation ECOM 306 370 90.2% 3.6% (65.6%) 16.7% 16.8% NM 2.8x 2.4x 2.0x NM NM
Median $1,550 $1,674 81.0% 3.6% 21.2% 23.5% 21.3% 11.6% 4.0x 3.2x 2.7x 26.9x 37.4x
PLM & ENGINEERING SOFTWARE
Dassault Systemes SA DSY-FR $17,848 $19,641 85.4% (4.7%) 22.8% 3.9% 7.6% 30.2% 5.5x 5.1x 4.7x 18.3x 41.8x
Autodesk, Inc. ADSK 15,973 16,471 89.1% 21.5% 47.1% (12.0%) (0.4%) NM 7.3x 7.3x 5.9x NM NM
Hexagon AB Class B HEXA.B-SE 14,794 12,350 81.0% (4.0%) 13.2% 1.6% 2.5% 29.8% 4.3x 4.2x 3.9x 14.4x 19.7x
Synopsys, Inc. SNPS 8,195 8,835 94.9% 29.1% 45.1% 8.9% 7.3% 23.0% 3.4x 3.1x NM 14.7x 33.1x
ANSYS, Inc. ANSS 7,363 8,003 93.4% (0.0%) 6.1% 2.5% 7.8% 46.2% 7.6x 7.0x 6.7x 16.5x 30.4x
Cadence Design Systems, Inc. CDNS 7,411 7,231 90.1% 21.2% 79.9% 6.2% 7.2% 22.9% 4.1x 3.9x 3.7x 18.1x 29.5x
PTC Inc. PTC 5,765 5,349 92.7% 33.6% 30.7% (8.9%) 5.9% 11.5% 5.0x 4.8x 4.5x 43.8x NM
Aspen Technology, Inc. AZPN 4,289 4,223 98.7% 44.8% 30.8% 4.1% 3.3% 47.1% 9.1x 8.8x NM 19.3x 30.6x
Nemetschek SE NEM-DE 2,246 2,244 87.8% 16.6% 236.2% 14.2% 16.4% 27.3% 6.3x 5.4x 4.7x 23.0x 42.4x
AVEVA Group plc AVV-GB 1,327 1,485 84.7% (2.6%) (35.2%) (8.1%) (4.1%) 26.7% 4.5x 4.7x 4.5x 17.0x 36.7x
Median $7,387 $7,617 89.6% 18.9% 30.8% 3.2% 6.5% 27.3% 5.3x 4.9x 4.6x 18.1x 31.8x
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 22
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
SUPPLY CHAIN AND LOGISTICS SOFTWARE
Trimble Inc. TRMB $8,028 $7,555 97.7% 40.6% (13.1%) 1.8% 6.4% 15.9% 3.4x 3.2x 3.0x 21.6x 63.6x
Manhattan Associates, Inc. MANH 3,694 3,775 77.3% (19.9%) 80.6% 9.7% 10.7% 33.0% 6.2x 5.6x 5.0x 18.7x 31.3x
Descartes Systems Group Inc. DSG-CA 1,560 1,619 93.7% 6.5% 59.6% 9.8% 13.2% 32.9% 7.8x 6.9x 6.2x 23.9x 70.0x
Coupa Software, Inc. COUP 240 1,250 60.1% NA NA 64.6% 93.2% NM 2.9x 1.5x 1.2x NM NM
SPS Commerce, Inc. SPSC 1,087 1,191 93.4% (0.5%) 7.0% 21.8% 23.1% 10.1% 5.9x 4.8x 4.0x 58.3x 197.3x
Kinaxis, Inc. KXS-CA 1,105 1,157 88.0% 38.0% NA 18.0% 35.5% 18.1% 10.5x 7.7x 6.4x 58.1x 120.2x
CommerceHub, Inc. Class A CHUBA-US 677 642 89.9% NA NA 33.2% 32.4% 1.2% 7.7x 5.8x 5.1x NM NM
American Software, Inc. AMSWA 237 277 86.6% 1.5% 4.7% (1.6%) 6.2% 13.3% 2.2x 2.0x 1.9x 16.2x 36.4x
Park City Group, Inc. PCYG 247 246 82.7% 6.6% 25.0% 12.8% NA 15.1% 16.3x NM NM 108.0x 145.5x
Amber Road, Inc. AMBR 250 243 73.8% 78.4% NA 5.4% 17.0% NM 3.5x 3.0x 2.7x NM NM
Median $882 $1,174 87.3% 6.6% 16.0% 11.3% 17.0% 15.5% 6.0x 4.8x 4.0x 23.9x 70.0x
ENERGY SOFTWARE
AVEVA Group plc AVV-GB $1,327 $1,485 84.7% (2.6%) (35.2%) (8.1%) (4.1%) 26.7% 4.5x 4.7x 4.5x 17.0x 36.7x
Silv er Spring Networks, Inc. SSNI 575 691 86.4% (7.6%) (36.6%) 20.7% (25.6%) 15.7% 1.3x 1.7x 1.5x 8.2x 12.7x
PSI Aktiengesellschaft PSAN-DE 162 202 79.6% (8.2%) (31.1%) (10.0%) 5.0% 4.9% 0.8x 0.8x 0.8x 17.3x 24.2x
EnerNOC, Inc. ENOC 237 185 76.1% 55.8% (65.1%) 6.9% (19.9%) NM 0.6x 0.7x 0.6x NM NM
Median $406 $446 82.1% (5.1%) (35.9%) (0.6%) (12.0%) 15.7% 1.1x 1.3x 1.2x 17.0x 24.2x
FINANCIAL SOFTWARE
Fiserv , Inc. FISV $27,996 $23,069 95.3% 16.2% 80.0% 4.6% 8.0% 33.4% 5.1x 4.8x 4.5x 15.4x 25.5x
MSCI Inc. MSCI 8,622 7,415 86.8% 9.2% 80.2% 7.4% 8.9% 48.6% 7.6x 7.0x 6.5x 15.7x 29.4x
Jack Henry & Associates, Inc. JKHY 6,915 6,934 97.5% 13.7% 49.9% 8.0% 6.2% 35.2% 5.0x 4.7x NM 14.2x 26.7x
SS&C Technologies Holdings, Inc. SSNC 8,296 5,801 82.7% (16.2%) 29.2% 53.5% 20.4% 34.8% 6.0x 5.0x 4.7x 17.2x 67.4x
Oracle Financial Serv ices Software Ltd. 532466-IN 3,542 3,908 77.0% (18.6%) (13.5%) 2.4% 11.4% 38.0% 5.5x 5.0x 4.6x 14.6x 22.7x
Black Knight Financial Serv ices, Inc. BKFS 5,138 2,612 89.6% 14.3% NA 9.8% 12.7% 43.5% 5.1x 4.5x 4.2x 11.8x 59.6x
Env estnet, Inc. ENV 1,751 1,518 85.0% 18.1% (12.5%) 35.5% 23.9% 9.1% 3.2x 2.6x 2.2x 35.4x NM
BlackLine, Inc. BL 1,174 1,417 96.0% NA NA 49.3% 43.1% NM 10.5x 7.3x 5.6x NM NM
Q2 Holdings, Inc. QTWO 1,056 1,158 87.8% 9.4% NA 37.6% 39.0% NM 7.6x 5.5x 4.3x NM NM
Median $5,138 $3,908 87.8% 11.6% 39.6% 9.8% 12.7% 35.2% 5.5x 5.0x 4.6x 15.4x 28.0x
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 23
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
HEALTHCARE IT
Cerner Corporation CERN $16,214 $16,082 70.2% (21.3%) (15.0%) 12.9% 11.2% 30.7% 3.4x 3.1x 2.9x 11.2x 24.6x
athenahealth, Inc. ATHN 4,368 4,150 62.8% (34.7%) (21.8%) 19.5% 23.7% 14.9% 4.2x 3.4x 2.9x 27.9x NM
Veev a Systems Inc VEEV 5,490 4,119 84.9% 41.1% 26.8% 33.0% 26.2% 21.1% 10.8x 8.6x 7.2x 51.2x 63.7x
Medidata Solutions, Inc. MDSO 2,798 2,863 85.9% 0.8% (17.9%) 14.3% 26.2% 12.7% 6.4x 5.1x 4.3x 50.3x 114.7x
Allscripts Healthcare Solutions, Inc. MDRX 3,475 1,890 65.6% (33.6%) (34.0%) 6.4% 16.2% 16.5% 2.4x 2.0x 1.9x 14.3x NM
HMS Holdings Corp. HMSY 1,567 1,537 75.7% 47.2% (20.0%) 8.4% 7.4% 21.6% 3.2x 2.9x 2.7x 14.6x 43.5x
Quality Systems, Inc. QSII 833 817 75.1% (18.4%) (37.6%) (1.0%) 4.5% 15.7% 1.7x 1.6x 1.6x 10.8x NM
Ev olent Health Inc Class A EVH 671 778 55.1% 22.2% NA 317.6% 97.1% NM 3.2x 1.6x 1.3x NM NM
Inov alon Holdings, Inc. Class A INOV 1,118 649 51.4% (39.4%) NA 11.2% 0.6% 22.3% 2.5x 2.5x 2.3x 11.1x 15.3x
Model N, Inc. MODN 176 249 63.3% (20.7%) (24.9%) 14.1% 2.5% NM 1.6x 1.6x NM NM NM
Median $2,182 $1,714 67.9% (19.6%) (20.9%) 13.5% 13.7% 18.8% 3.2x 2.7x 2.7x 14.5x 43.5x
PUBLIC SECTOR / NON-PROFIT SOFTWARE
Constellation Software Inc. CSU-CA $9,683 $9,641 93.8% 9.6% 114.9% 17.3% 16.2% 24.8% 4.7x 4.0x 3.5x 18.8x 46.6x
Tyler Technologies, Inc. TYL 5,484 5,229 79.9% (18.1%) 39.8% 29.0% 19.1% 23.2% 7.6x 6.4x 5.7x 32.8x 78.2x
Blackbaud, Inc. BLKB 3,254 3,045 89.2% (2.8%) 70.0% 15.2% 12.2% 16.9% 4.6x 4.1x 3.8x 27.2x 99.4x
NIC Inc. EGOV 1,426 1,577 92.3% 21.4% (3.9%) 8.2% 8.4% 26.4% 4.6x 4.2x 3.9x 17.4x 31.1x
2U, Inc. TWOU 1,257 1,419 77.5% 7.8% NA 39.3% 39.6% NM 6.6x 4.7x 3.6x NM NM
K12 Inc. LRN 544 698 96.2% 95.0% (21.1%) (5.6%) 5.2% 9.0% 0.6x 0.6x NM 6.9x 87.3x
Instructure, Inc. INST 466 552 72.6% (6.1%) NA 128.0% 47.6% NM 4.6x 3.1x 2.4x NM NM
Median $1,426 $1,577 89.2% 7.8% 39.8% 17.3% 16.2% 23.2% 4.6x 4.1x 3.7x 18.8x 78.2x
LARGE-CAP SAAS (Market Cap > $2Bn)
salesforce.com, inc. CRM $48,584 $46,491 81.0% (12.7%) 24.0% 25.5% 26.5% 13.4% 6.1x 4.9x 4.1x 45.8x NM
Check Point Software Technologies Ltd. CHKP 13,287 14,772 93.9% 3.8% 30.9% 7.6% 7.0% 50.5% 7.8x 7.2x 6.9x 15.4x 21.2x
Serv iceNow, Inc. NOW 11,987 12,341 82.8% (14.1%) 32.7% 40.6% 39.4% NM 9.3x 6.7x 5.2x NM NM
Workday, Inc. WDAY 11,797 8,261 70.8% (17.1%) (20.5%) 36.7% 34.3% NM 8.1x 6.0x 4.8x NM NM
Ultimate Software Group, Inc. ULTI 5,457 5,288 81.4% (6.7%) 19.0% 27.2% 30.6% 8.9% 7.4x 5.6x 4.6x 83.1x 199.5x
athenahealth, Inc. ATHN 4,368 4,150 62.8% (34.7%) (21.8%) 19.5% 23.7% 14.9% 4.2x 3.4x 2.9x 27.9x NM
Veev a Systems Inc VEEV 5,490 4,119 84.9% 41.1% 26.8% 33.0% 26.2% 21.1% 10.8x 8.6x 7.2x 51.2x 63.7x
Guidewire Software, Inc. GWRE 3,085 3,626 77.1% (18.0%) 0.5% 13.9% 18.1% 4.5% 7.1x 6.0x 5.1x 158.0x NM
Proofpoint, Inc. PFPT 2,924 3,002 80.3% 8.7% 113.0% 39.3% 40.9% NM 8.5x 6.0x 4.7x NM NM
Medidata Solutions, Inc. MDSO 2,798 2,863 85.9% 0.8% (17.9%) 14.3% 26.2% 12.7% 6.4x 5.1x 4.3x 50.3x 114.7x
Paycom Software, Inc. PAYC 2,635 2,734 85.9% 20.9% NA 50.5% 37.6% 20.8% 8.6x 6.2x 5.0x 41.3x 68.3x
LogMeIn, Inc. LOGM 2,273 2,461 87.7% 43.9% 187.8% 26.9% 19.0% 16.2% 7.0x 5.9x 5.2x 43.3x NM
RealPage, Inc. RP 2,305 2,414 97.2% 33.6% 28.3% 19.8% 20.2% 14.8% 4.3x 3.5x 3.2x 28.8x 183.0x
Cornerstone Ondemand, Inc. CSOD 2,367 2,377 88.6% 22.5% (20.6%) 28.0% 19.0% NM 5.8x 4.9x 4.1x NM NM
Zendesk, Inc. ZEN 1,783 2,021 66.5% (19.8%) NA 54.9% 43.6% NM 6.2x 4.3x 3.4x NM NM
Median $3,085 $3,626 82.8% 0.8% 24.0% 27.2% 26.2% 14.8% 7.1x 5.9x 4.7x 44.5x 91.5x
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 24
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
SMALL-CAP SAAS (Market Cap < $2Bn)
Atlassian Corp. Plc TEAM $4,507 $1,979 68.5% (19.9%) NA 54.0% 39.7% 1.6% 9.2x 6.6x 5.1x NM NM
Ebix, Inc. EBIX 2,021 1,849 90.6% 74.0% 287.8% 12.7% 10.6% 37.8% 7.0x 6.3x NM 18.6x 20.3x
Xero Limited XRO-NZ 1,563 1,678 80.3% (10.0%) (54.1%) 47.2% 55.9% NM 9.0x 5.8x 4.4x NM NM
HubSpot, Inc. HUBS 1,550 1,674 78.4% (16.5%) NA 52.0% 41.4% NM 6.3x 4.4x 3.6x NM NM
CyberArk Software Ltd. CYBR 1,385 1,527 76.8% 0.8% NA 39.9% 29.3% 21.4% 6.8x 5.3x 4.4x 31.8x 54.9x
Alarm.com Holdings, Inc. ALRM 1,216 1,279 80.8% 66.8% NA 48.4% 21.0% 8.2% 4.9x 4.0x 3.6x 60.1x 43.9x
RingCentral, Inc. RNG 1,373 1,246 82.4% (12.6%) 12.1% 30.6% 30.6% NM 3.8x 2.9x 2.4x NM NM
SPS Commerce, Inc. SPSC 1,087 1,191 93.4% (0.5%) 7.0% 21.8% 23.1% 10.1% 5.9x 4.8x 4.0x 58.3x 197.3x
Q2 Holdings, Inc. QTWO 1,056 1,158 87.8% 9.4% NA 37.6% 39.0% NM 7.6x 5.5x 4.3x NM NM
Qualys, Inc. QLYS 1,015 1,130 79.8% (4.4%) 37.0% 21.6% 23.1% 23.8% 5.3x 4.3x 3.6x 22.4x 60.3x
Callidus Software Inc. CALD 788 1,066 78.4% (9.5%) 22.4% 20.1% 23.1% NM 4.0x 3.2x 2.7x NM NM
Mimecast Limited MIME 941 975 72.8% 86.5% NA 24.5% 30.9% NM 5.9x 4.5x 3.8x NM NM
Benefitfocus, Inc. BNFT 896 881 66.0% (18.4%) (48.6%) 31.6% 24.2% NM 4.0x 3.2x 2.7x NM NM
Box, Inc. Class A BOX 1,676 869 83.5% (0.7%) NA 33.3% 31.6% NM 4.5x 3.4x 2.8x NM NM
Fiv e9, Inc. FIVN 735 752 86.5% 63.1% NA 27.1% 21.0% NM 4.8x 3.9x 3.3x NM NM
MINDBODY, Inc. MB 781 575 92.8% 40.8% NA 38.4% 39.0% NM 6.0x 4.3x 3.4x NM NM
Instructure, Inc. INST 466 552 72.6% (6.1%) NA 128.0% 47.6% NM 4.6x 3.1x 2.4x NM NM
Rapid7 Inc. RPD 417 517 63.1% (19.6%) NA 88.9% 31.7% NM 2.9x 2.2x 1.8x NM NM
Hortonworks, Inc. HDP 407 505 37.8% (62.1%) NA 69.3% 39.7% NM 2.4x 1.7x 1.4x NM NM
Workiv a, Inc. WK 524 413 71.7% (22.3%) NA 27.0% 21.3% NM 3.0x 2.5x 2.1x NM NM
Bazaarv oice, Inc. BV 353 405 79.1% 10.7% (38.8%) 2.4% 4.7% 0.4% 1.8x 1.7x 1.6x NM NM
Xactly Corp XTLY 313 345 68.3% 29.0% NA 29.1% 22.2% NM 3.4x 2.8x 2.3x NM NM
AppFolio Inc APPF 784 277 97.3% 63.4% NA 105.5% 39.1% NM 8.0x 5.7x 4.6x NM NM
Model N, Inc. MODN 176 249 63.3% (20.7%) (24.9%) 14.1% 2.5% NM 1.6x 1.6x NM NM NM
Castlight Health, Inc. CSLT 394 245 90.0% 15.9% NA 36.0% 33.2% NM 4.2x 3.2x 2.6x NM NM
Amber Road, Inc. AMBR 250 243 73.8% 78.4% NA 5.4% 17.0% NM 3.5x 3.0x 2.7x NM NM
Apptio, Inc. Class A APTI 587 128 75.3% NA NA 22.7% 25.1% NM 3.9x 3.1x 2.6x NM NM
Median $788 $869 78.4% (0.6%) 7.0% 31.6% 29.3% 10.1% 4.6x 3.4x 2.8x 31.8x 54.9x
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 25
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
DATA & ANALYTICS
Verisk Analytics Inc VRSK $16,053 $13,592 94.4% 5.6% 23.5% 3.9% 3.0% 49.2% 7.8x 7.6x 7.2x 15.9x 29.7x
Splunk Inc. SPLK 5,862 6,939 77.8% (13.0%) (25.5%) 44.9% 35.3% NM 6.8x 5.0x 3.9x NM NM
Tableau Software, Inc. DATA 2,324 2,434 44.0% (55.3%) (38.9%) 31.2% 11.5% NM 3.0x 2.7x 2.4x NM NM
Teradata Corporation TDC 3,163 3,529 82.1% 2.8% (40.3%) (6.1%) (11.5%) 21.4% 1.3x 1.5x 1.5x 6.1x 196.1x
Pegasystems Inc. PEGA 2,717 2,748 97.0% 30.9% 46.4% 16.6% 15.6% 12.3% 3.6x 3.1x 2.7x 29.4x 76.3x
Verint Systems Inc. VRNT 2,654 2,209 85.2% (13.1%) (17.9%) (9.8%) 7.2% 13.7% 2.5x 2.4x 2.2x 18.5x NM
MicroStrategy Incorporated MSTR 1,695 1,855 95.2% 10.1% 58.9% (3.7%) 2.0% 26.2% 3.3x 3.2x 2.9x 12.6x 18.8x
PROS Holdings, Inc. PRO 659 657 83.9% (6.6%) (46.1%) (13.7%) 2.7% NM 4.2x 4.1x 3.5x NM NM
Inov alon Holdings, Inc. INOV 1,118 649 51.4% (39.4%) NA 11.2% 0.6% 22.3% 2.5x 2.5x 2.3x 11.1x 15.3x
Median $2,654 $2,434 83.9% (6.6%) (21.7%) 3.9% 3.0% 21.9% 3.3x 3.1x 2.7x 14.2x 29.7x
IT OPERATIONS MANAGEMENT
Citrix Systems, Inc. CTXS $13,833 $13,929 96.7% 18.1% 41.2% 6.0% 4.1% 25.6% 4.1x 3.9x 4.0x 15.8x 29.8x
CA, Inc. CA 12,681 13,275 90.8% 11.2% (5.6%) (0.9%) 0.7% 38.5% 3.1x 3.1x 3.0x 8.1x 16.8x
Red Hat, Inc. RHT 12,178 12,518 83.2% (15.8%) 24.4% 17.9% 14.3% 17.0% 5.2x 4.6x 4.1x 30.9x 52.0x
Serv iceNow, Inc. NOW 11,987 12,341 82.8% (14.1%) 32.7% 40.6% 39.4% NM 9.3x 6.7x 5.2x NM NM
F5 Networks, Inc. FFIV 8,956 9,453 97.6% 49.3% 59.3% 3.9% 9.3% 30.7% 4.5x 4.1x 3.8x 14.6x 25.8x
VMware, Inc. VMW 26,707 8,784 94.9% 39.2% (12.2%) 6.9% 7.3% 25.2% 3.9x 3.6x 3.4x 15.3x 7.8x
Arista Networks, Inc. ANET 6,349 6,794 97.8% 24.3% NA 36.7% 29.9% 22.4% 6.1x 4.7x 4.0x 27.1x 40.5x
Micro Focus International plc MCRO-GB 8,015 6,175 84.3% 14.5% 108.8% 7.7% 6.3% 44.3% 6.0x 5.7x 5.6x 13.6x 37.2x
NetScout Systems, Inc. NTCT 2,901 2,885 93.1% 2.6% 6.5% 88.8% 9.0% 14.9% 2.5x 2.3x 2.2x 17.1x NM
Software AG SOW-DE 2,667 2,873 82.9% 26.7% 3.9% (5.0%) (0.5%) 30.7% 2.8x 2.8x 2.7x 9.1x 17.8x
Progress Software Corporation PRGS 1,473 1,552 98.3% 33.0% 23.6% 10.4% 6.7% 25.2% 3.7x 3.4x NM 14.6x 180.5x
New Relic, Inc. NEWR 1,253 1,472 73.0% (22.5%) NA 54.9% 39.6% NM 5.6x 4.0x 3.2x NM NM
Radware Ltd. RDWR 431 638 93.4% (5.0%) (18.9%) (10.0%) 0.1% 1.6% 2.2x 2.2x 2.0x 133.3x NM
Apptio, Inc. Class A APTI 587 128 75.3% NA NA 22.7% 25.1% NM 3.9x 3.1x 2.6x NM NM
Median $7,182 $6,485 92.0% 14.5% 23.6% 9.0% 8.1% 25.2% 4.0x 3.7x 3.4x 15.3x 29.8x
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
PAGE | 26
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
APPENDIX: SOFTWARE SECTOR PUBLIC COMPANY METRICS (CONT’D)
Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth LTM EBITDA Enterprise Value / Price /
Company Ticker Value ($mm) Cap ($mm) Week High Performance Performance LTM NTM Margin LTM Rev. 2017E Rev. 2018E Rev. LTM EBITDA Earnings
DATA STORAGE
NetApp, Inc. NTAP $7,146 $9,713 90.4% 32.9% (14.3%) (7.8%) 1.2% 14.1% 1.3x 1.3x 1.3x 9.4x 30.5x
Iron Mountain, Inc. IRM 14,618 8,557 78.3% 20.3% 7.0% 9.7% 14.8% 23.6% 4.4x 3.8x 3.7x 18.6x 148.5x
CommVault Systems, Inc. CVLT 1,852 2,328 89.8% 30.6% (31.3%) 7.4% 8.5% 3.1% 3.0x 2.7x 2.5x NM NM
Barracuda Networks, Inc. CUDA 967 1,121 80.3% 14.7% (46.0%) 13.2% 9.8% 7.3% 2.9x 2.6x 2.3x 39.4x 163.2x
Pure Storage, Inc. Class A PSTG 1,696 933 69.0% (27.4%) NA 272.8% 51.7% NM 2.6x 1.7x 1.3x NM NM
Box, Inc. BOX 1,676 869 83.5% (0.7%) NA 33.3% 31.6% NM 4.5x 3.4x 2.8x NM NM
Nimble Storage, Inc. NMBL 503 674 80.0% (13.9%) (82.5%) 25.1% 28.2% NM 1.3x 1.0x 0.9x NM NM
Nutanix, Inc. Class A NTNX 1,628 454 56.8% NA NA 85.1% 63.9% NM 3.1x 1.9x 1.4x NM NM
Carbonite, Inc. CARB 402 447 83.6% 67.3% 38.6% 41.3% 15.3% 6.5% 2.1x 1.9x 1.7x 32.7x NM
Median $1,676 $933 80.3% 17.5% (22.8%) 25.1% 15.3% 7.3% 2.9x 1.9x 1.7x 25.6x 148.5x
IT SECURITY
Cisco Systems, Inc. CSCO $116,923 $151,697 94.6% 11.3% 34.7% (1.4%) (0.3%) 31.2% 2.4x 2.4x 2.3x 7.7x 14.3x
Symantec Corporation SYMC 16,369 14,893 92.9% 13.8% 1.3% (61.9%) 82.5% 19.9% 6.8x 3.7x 3.5x 34.0x NM
Check Point Software Ltd. CHKP 13,287 14,772 93.9% 3.8% 30.9% 7.6% 7.0% 50.5% 7.8x 7.2x 6.9x 15.4x 21.2x
Palo Alto Networks, Inc. PANW 10,407 11,465 70.4% (29.0%) 117.6% 43.2% 36.5% NM 7.0x 5.1x 4.1x NM NM
VeriSign, Inc. VRSN 9,824 7,955 82.7% (12.9%) 27.2% 8.2% 3.7% 65.1% 8.7x 8.4x 8.0x 13.4x 18.2x
Fortinet, Inc. FTNT 4,329 5,212 80.4% (3.4%) 57.4% 29.1% 21.4% 4.8% 3.6x 2.9x 2.6x 74.8x NM
Gemalto N.V. GTO-NL 5,531 5,209 77.3% (3.5%) (47.5%) 2.1% (0.1%) 16.8% 1.6x 1.6x 1.5x 9.5x 26.3x
Trend Micro Incorporated 4704-JP 3,652 4,998 83.2% (13.1%) 1.7% 7.5% 9.5% 31.7% 3.3x 3.0x 2.9x 10.4x 31.2x
Proofpoint, Inc. PFPT 2,924 3,002 80.3% 8.7% 113.0% 39.3% 40.9% NM 8.5x 6.0x 4.7x NM NM
FireEye, Inc. FEYE 1,767 2,036 52.9% (42.6%) (72.7%) 22.9% 11.1% NM 2.5x 2.2x 1.9x NM NM
CyberArk Software Ltd. CYBR 1,385 1,527 76.8% 0.8% NA 39.9% 29.3% 21.4% 6.8x 5.3x 4.4x 31.8x 54.9x
Qualys, Inc. QLYS 1,015 1,130 79.8% (4.4%) 37.0% 21.6% 23.1% 23.8% 5.3x 4.3x 3.6x 22.4x 60.3x
Mimecast Limited MIME 941 975 72.8% 86.5% NA 24.5% 30.9% NM 5.9x 4.5x 3.8x NM NM
Varonis Systems, Inc. VRNS 598 715 83.6% 42.6% NA 31.4% 26.4% NM 3.9x 3.1x 2.7x NM NM
Rapid7 Inc. RPD 417 517 63.1% (19.6%) NA 88.9% 31.7% NM 2.9x 2.2x 1.8x NM NM
Cheetah Mobile, Inc. CMCM 1,240 350 52.6% (40.3%) NA 34.4% 12.6% 1.8% 1.8x 1.6x 1.4x 103.9x NM
SecureWorks Corp. Class A SCWX 736 113 65.2% NA NA 27.7% 20.0% NM 1.8x 1.5x 1.3x NM NM
Median $2,924 $3,002 79.8% (3.4%) 30.9% 24.5% 21.4% 22.6% 3.9x 3.1x 2.9x 18.9x 26.3x
Large-Cap
SaaS
Small-Cap
SaaS
Data &
Analytics
IT Operations
Data Storage
IT Security
Software
Bellwethers
Communication
Enterprise
HCM
Marketing
PLM &
Engineering
SCM & Logistics
Energy
Financial
HCIT
Public Sector /
Non-Profit
Healthcare & Life Sciences
IndustrialsEnergy, Power & Infrastructure
Industrials
PAGE |
Harris Williams & Co. has a broad range of industry expertise, which create powerful opportunities. Our clients benefit form our deep-sector experience,integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information,visit our website at www.harriswilliams.com/industries.
HARRIS WILLIAMS & CO. OFFICE LOCATIONS
UNITED STATES EUROPE
NETWORK OFFICES
Beijing
Hong Kong
Mumbai
New Delhi
Shanghai
Aerospace, Defense & Government
Services
Building Products & Materials
Business Services
Consumer Specialty Distribution
Technology, Media & Telecom
Transportation & Logistics
BostonOne International PlaceSuite 2620Boston, Massachusetts 02110Phone: +1 (617) 482-7501
Cleveland1900 East 9th Street20th FloorCleveland, Ohio 44114Phone: +1 (216) 689-2400
Minneapolis222 South 9th StreetSuite 3350Minneapolis, Minnesota 55402Phone: +1 (612) 359-2700
Richmond (Headquarters)1001 Haxall Point9th FloorRichmond, Virginia 23219Phone: +1 (804) 648-0072
San Francisco575 Market Street31st FloorSan Francisco, California 94105Phone: +1 (415) 288-4260
Washington, D.C. 800 17th St. NW2nd FloorWashington, D.C. 20006Phone: +1 (202) 207-2300
FrankfurtBockenheimer Landstrasse 33-3560325 FrankfurtGermanyPhone: +49 069 3650638 00
London63 Brook StreetLondon W1K 4HS, EnglandPhone: +44 (0) 20 7518 8900
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
Technology, Media & Telecom
OUR FIRM
27
PAGE | 28
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 4Q 2016
Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is private limitedcompany incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for Englandand Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name underwhich Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US.
The information and views contained in this report were prepared by Harris Williams & Co. (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.
Copyright© 2017 Harris Williams & Co., all rights reserved.
HARRIS WILLIAMS & CO.
FactSet.
S&P Capital IQ.
PNC Capital Markets.
S&P LCD stats.
PitchBook.
HW&Co. proprietary transaction information.
SOURCES
DISCLOSURES
top related