November 20th & 21st, 2014

Students: Rajeev Chanderraj, Frances Fan, Zane Keller

Recommendation

Long Copart (CPRT), Short Tableau (DATA)

Long: Copart (CPRT) Short: Tableau (DATA)

Share information Market Cap: $4.3 billion Float: 90% Current price: $34.18 Valuation Net debt: $144mn P/E and EV/NOPAT: 25x Recommendation Intrinsic value: $40-43 (excl. real estate) Margin of safety: 15-25% (excl. real estate)

“Turning crashes into cash” “Big Data meets big float”

Share information Market Cap: $5.8 billion Float: 57% (including both share classes) Current price: $84.83 Valuation Net cash: $644mn EV/Sales: 16x EV/EBITDA: 516x Recommendation Intrinsic value: $30-35 Downside potential: 60-65%

Company Overview – Copart (CPRT)

…

Turning crashes into cash

Copart is the #1 online marketplace in the U.S. for salvaged vehicles 80% of unit volume is salvaged autos: “An eBay for wrecked cars” Top 3 player in Canada (20% of revenue), recently entered Europe and Brazil

Industry dynamics – what are the primary drivers of vehicle remarketing?

Vehicle miles driven: increased 2.3% per annum from 1971-2013 Weather: bad weather is good, hurricanes are great Cost of auto repair and salvage value: both are increasing

A winner-takes-most, duopolistic market: sellers attract buyers, and vice versa

Sellers Insurers

Lenders

Car dealers

Buyers Recyclers

Dismantlers

Rebuilders

Source: U.S. Department of Transportation (vehicle miles driven)

Copart Investment Theses

Scalable, asset-light business

model

Hidden real estate value

We estimate that Copart has $2-5 per share in hidden real estate value The board recently considered converting to a REIT However, we do not include this extra value in our valuation

Defensive business

model

1

Copart’s asset-light business model is scalable and leads to high returns 15 year return figures: 15% ROA, 21% ROIC, 19% ROE Shares have returned 17% p.a. since CPRT’s IPO Copart is now expanding its business to Europe and South America

Copart is insensitive to economic cycles and possess a wide moat A strong network business: sellers attract buyers, and vice versa Revenue depends upon car crashes; insensitive to macro conditions Additionally, the company benefits from natural disasters

2

3

Scalable, Asset-light Business Model 1

Copart transformed the industry by developing an online marketplace model Copart rarely buys cars; its primary asset is car lots 80% of revenue is derived from transaction fees

Transaction fees float with vehicle value – an inflation hedge Similar to an exchange; requires minimal to no capital

Copart is horizontally expanding into similar product types

RVs, boats, ATVs, construction equipment, jets skis

The company is now growing internationally, temporarily depressing earnings Opened facilities in Germany and Spain in 2013 Opened Dubai location in 2012 Acquired 5 locations in Brazil in 2013

Copart is expanding this model horizontally and geographically

CPRT’s inflation-hedged model is well suited for

emerging markets

Most of Copart’s lots were purchased in the 1980s – mid 2000s Some of these lots have appreciated significantly We estimate the company has $2-5 per share in hidden real estate value

How can Copart realize this hidden value?

1) REIT conversion: considered by Copart’s board in 2013, but legally difficult 2) Sale leaseback: a good option for most lots 3) Sell high-value lots and lease more remote lots

Hidden Value in Real Estate 2

Copart has meaningful, unrecognized value in its real estate

Undervalued Real Estate: Las Vegas, NV

A 29 acre lot in NE Las Vegas: at purchase (1999)

Source: Google Earth

Undervalued Real Estate: Las Vegas, NV

A 29 acre lot in NE Las Vegas: today (2014)

Source: Google Earth

Undervalued Real Estate: Rancho Cucamonga, CA

A 39 acre lot near Los Angeles: at purchase (1999)

Source: Google Earth

Undervalued Real Estate: Rancho Cucamonga, CA

A 39 acre lot near Los Angeles: today (May 2014)

Source: Google Earth

Copart’s Undervalued Real Estate: Van Nuys, CA

Surrounded by multifamily and SFH; adjacent to mass transit

Source: Google Earth

Valuing Copart’s Real Estate

1) Establish market value via highest-and-best use analysis Potential uses: industrial, office, retail, multifamily, single family Valuation established by recent land sales comps on $/acre basis

2) Estimate cost to lease a comparable property and capitalize at 10x

Lease comps based upon market rate industrial leases within 10 miles Lease costs may actually be lower if search radius is expanded

3) Calculate valuation gain from sale then leaseback An imperfect, though insightful, process

Our analysis is limited by zoning and other issues We examined <15 of Copart’s 150+ properties Analysis excludes CPRT’s international holdings

We revalue Copart’s real estate using a 3-step process

Hidden real estate value is “icing on the cake” – not

included – in our valuation

Defensive Business Model 3

Copart: a hedge against the economy and weather

Macro Weather

Strong performance in recessions:

Revenue growth: 34% in ’01 and 40% in ’08

Profit growth: 45% in ‘01 and 15% in ’08

Benefits from bad weather:

Revenue growth: 34% in ’01 and 40% in ’08

Profit growth: 45% in ‘01 and 15% in ’08

“We’re running at full speed. Sales of these vehicles will be very high. Hurricane

Katrina…I’ve never seen a storm like this in my life. That’s where Copart shines.” – Jayson Adair, President, Copart, Fiscal 1Q13 earnings call

Investment Catalysts

Management’s willingness to return capital is key

1) Imminent capital return Since ‘08, CPRT has repurchased 30% of its outstanding shares Historically, CPRT returns significant capital when it becomes unlevered

2) Increasing alignment with shareholders

In ‘13, CPRT’s President and CEO opted to be paid via options (strike = $36) Management and directors own 19% of shares outstanding, excl. options

3) Capturing value of real estate

In 2013, Copart considered converting to a REIT

$11mm $9mm $90mm

$269mm

$13mm

$740mm

$203mm

$15mm $1mm 0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% o

f S

hare

s

Ou

tsta

nd

ing

Share Repurchase Activity (including tender offers)

$10mm

Copart Valuation: DCF Methodology

Key assumptions WACC: 7.2% (Ke = 7.8%, Kd = 3.7% post tax)

Capital structure: 85% equity Terminal growth in 2019: 3% FCF exit multiple: 25x

$43 intrinsic value using a DCF valuation methodology

Copart Valuation: Multiples Methodology

$38-42 intrinsic value using EV/NOPAT and P/E multiples

Key assumptions Terminal growth in 2015: 4% WACC: 7.2% 2015e ROIC: 19%, 2015e ROE: 22%

Tableau Software is a business intelligence (BI) solutions provider ~80% of revenue comes from license, ~20% maintenance and services Company targets SMEs, rather than large enterprises, using a “land and expand” strategy

This makes customer acquisition costs much higher

Industry dynamics Market size: BI market reached $14bn in 2013, expected to grow 9% from 2013-2017

Despite rapid growth, Tableau has <1% market share

Highly competitive market Data Visualization competitors: Qlik, Tibco

Spotfire, Microstrategy, etc. Traditional large vendors: IBM, Oracle,

Microsoft, SAP, SAS, etc.

IBM

TDC

MSFT

Live Query Engine

In-memory Data Engine

VizQL Compiler

Drag & Drop User Interface

Access the data Analyze the data Share results

Sources: Macquarie Capital (USA), RBC Capital Markets

How Tableau’s Product Works

Company Overview – Tableau (DATA)

Big data, big float

DATA’s competitors are high-powered and very well funded

Short Tableau (DATA)

“Big Data” meets big float

The Looming Wave of Class

A Shares

A Broken, but Repairable,

Business Model

Tableau’s business model faces two main challenges: Reliant upon high upfront license fees instead of a SaaS model License fee growth has slowed, but expense growth has not Tableau’s product is relatively undifferentiated

Valuation Matters

1

Tableau’s free float may increase by up to 25% in ’15, potential selling from: 4.8mn exercisable employee options 3.2mn Class B share held by NEA to convert to Class A 1.6mn Class A share held by Meritech to float to the market Stock came under pressure in March due to insider selling

2

3

Tableau’s valuation is extreme Current valuation assumes profit will double for 7-8 years EV/Sales: 16x, EV/EBITDA: 516x

The Looming Wave of Class A Shares

Tableau’s free float may increase by up to 25% in ‘15

What are the Class B shares? Held by executives, directors

and NEA 10:1 voting power (85% of total) 1:1 conversion to Class A

Who are the VC funds in the deal? 1) NEA Fund 11 (‘04 vintage)

Owns 3.2mn of B shares Invested in ’04 Raising a $2.6bn new fund

2) Meritech Fund V (‘05 vintage)

Owns 1.5mn A shares

69.3mn 100%

44.6mn 64.4%

24.7mn 35.6%

Total shares outstanding

Class A Class B

1.6mn

3.2mn

4.8mn Meritech

NEA

Employee options

Employee exercisable options

24.4%

100%

Potential float Current total float

9.6mn

39.3mn

1

Major VC shareholders are likely to exit Tableau soon

Tableau’s VC backers are likely to exit soon

The Looming Wave of Class A Shares

Tableau’s stock also came under pressure in March due to insider selling

Source: Factset

-10%

10%

30%

50%

70%

90%

DATA Russell 3000 Growth

IPO at $31, 9.4mn shares (3.2mn by insiders)

5/15/13

Follow-on at $65, 7.7mn shares (all insiders)

11/7/13

NEA distributes 4.8mn shares to its LPs

2/26 & 3/4, 2014

Follow-on at $89, 4mn shares

3/20/14

1

Tableau relies upon upfront, one-time license fees Perpetual license fees make up 80% of revenue However, fee growth has declined from 111% p.a. in ‘12 to 58% in ‘14 While SG&A is increasing as a percent of revenue

A Broken, but Repairable, Business Model 2

Tableau must switch to a SaaS model; this will be disruptive

Meanwhile, Tableau’s market share remains < 1%

Competitors’ Product Offerings

Tableau’s product is relatively undifferentiated

Valuation Matters

Tableau’s valuation implies unrealistic expectations

Source: Factset, Macquaire Capital (USA)

Tableau’s valuation is extreme EV/Sales: 16x, EV/EBITDA: > 516x What growth does this imply?

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

0x

5x

10x

15x

20x

25x

30x

FY 1

4E

EV/R

even

ue

FY14E revenue growth

What does the sell-side have to say about Tableau? “Big Data Rocket” – FBN Securities, Sept. 2013

“Elite of the Elite” – UBS, Feb. 2014

“The Oil of the 21st Century” – JMP, June 2013

“The LeBron of Software” – RBC, May 2014

18 buys, 8 holds, no sells

Can Tableau meet these lofty

expectations?

Assuming Tableau deserves a 25-45x terminal P/E…

Tableau must double earnings every year, for the next 7-8 years

3

Tableau Comparables

DATA is priced well above its peers

SAP 22%

Oracle 15%

IBM 12%

SAS 12%

Microsoft 9%

Qlik 3%

Tibco 1%

Tableau 1%

Others 25%

Business Intelligence Market Share

Sources: Macquarie Capital (USA), RBC Capital Markets

…especially relative to market share Qlik and Microstrategy have ~6% market share Tableau has <1% market share

However, Tableau’s market cap is higher than

both Qlik and Microstrategy combined

Tableau Valuation: Multiples Methodology

$30-35 intrinsic value using EV/Sales multiple

Key assumption EV to Sales: 4.0 – 5.0x

Tableau Valuation Using Multiples (all figures $ million unless otherwise stated)

EV/Sales Methodology

LTM Sales 351

Fair EV/Sales multiple 5.0x

Intrinsic enterprise value 1,756

Plus: cash 645

Intrinsic equity value 2,400

Diluted shares outstanding (mn) 69

Intrinsic value per share $34.80

Recommendation

Long Copart (CPRT), Short Tableau (DATA)

LONG CPRT

Investment theses 1) Looming wave of Class A shares 2) Broken business model 3) Valuation matters

Catalysts • Big pressure from insider selling

SHORT DATA

Investment theses 1) Scalable, asset-light business model 2) Hidden real estate value 3) Defensive business model Catalysts • Imminent capital return • Increasing alignment with shareholders • Capturing value of real estate

Intrinsic value: $40-43 (excl. real estate)

Margin of safety: 15-25% (excl. real estate) Intrinsic value: $30-35 Downside potential: 60-65%

Long: Copart (CPRT) Short: Tableau (DATA)

Appendix Copart (NASDAQ: CPRT)

Valuation History

Source: FactSet. Data from 9/30/94 to 11/13/14

Copart valuation history from 1996 to present

Earnings-based multiples: 25x P/E, 15x EV/EBIT Cash-flow multiple: 19x P/CF Book-based multiple: 3.6x P/B

Real Estate Valuation Walkthrough

Rancho Cucamonga, CA

1) Establish market value Identify and vet appropriate comps in area

2) Establish lease cost Identify potential industrial leases in <10 miles

For the Van Nuys property: Best and highest use is retail at $575k / acre Industrial is also compelling at $550k / acre Re-lease cost is $40k / acre, or $26k after tax

Real Estate Valuation Walkthrough, Part Two

Rancho Cucamonga, CA

3) Calculate gain from sale leaseback Land has a market value of $24mn Capitalized lease expense of ($11mn) Net gain from transaction of $13mn

Summary of Real Estate Analysis

CPRT: Financial Summary

CPRT: Income Statement

CPRT: Balance Sheet

CPRT: Cash Flow Statement

CPRT WACC Assumptions

CPRT Valuation Sensitivity Analysis

Copart’s Long History of Value Creation

17% compounded annual return since inception

Source: Bloomberg. Total return data from date of Copart public offering (3/18/94) through 11/12/14

Copart’s Investors

Source: Bloomberg as of 11/13/14

Management and directors own 19% of shares outstanding

CPRT: Bloomberg EV Summary

Appendix Tableau (NASDAQ: DATA)

DATA: Income Statement

Tableau Income Statement (all figures in $ million unless otherwise noted)

Fiscal year ended December 31 2010 2011 2012 2013 9/2014 LTM

License revenues 24 44 90 160 237

Annual growth 83% 102% 78% 48%

Maintenance and services 10 18 38 73 115

Annual growth 81% 111% 92% 58%

Total revenue 34 62 128 232 351

License cost of revenues 0 0 0 1 1

As % of license revenues 0% 0% 0% 0% 0%

Maintenance and services cost of revenues 1 3 10 18 31

As % of M&S revenues 13% 16% 27% 25% 27%

Sales and marketing 16 30 62 124 188

As % of total revenue 48% 49% 49% 53% 54%

Research and development 10 18 33 61 95

As % of total revenue 28% 29% 26% 26% 27%

G&A 4 7 18 26 37

As % of total revenue 11% 11% 14% 11% 10%

Operating expenses 31 58 123 229 352

EBIT 3 4 4 4 (1)

EBIT margin 8% 6% 3% 2% 0%

Other income (loss) 0 (0) (0) (1) (1)

Profit before tax 3 4 4 3 (1)

Income tax expense (benefit) 0 1 3 (4) 2

Effective tax rate 4% 13% 66% -147% -197%

Net income 3 3 1 7 (4)

Shares outstanding 38 39 40 59 69

EPS 0.07 0.09 0.04 0.12 -0.05

DATA: Balance Sheet

Tableau Balance Sheet (all figures in $ million unless otherwise noted)

12/31/2011 12/31/2012 12/31/2013 9/30/2014

Cash & equivalents 30 39 253 645

Accounts receivable 13 31 61 67

Prepaid expenses and other current assets 1 3 7 9

Income taxes receivable 0 1 2 2

Deferred income taxes 1 2 9 9

Total current assets 45 76 332 733

PP&E 6 10 21 39

Deferred income taxes 0 0 1 1

Deposits and other assets 0 0 1 2

Total assets 51 87 355 774

Accounts payable 1 2 2 5

Accrued compensation and employee related benefits 2 4 27 27

Accrued liabilities 7 13 8 14

Income taxes payable 0 0 0 0

Deferred revenue 18 32 66 93

Total current liabilities 28 52 104 140

Deferred income taxes 1 1 - -

Deferred revenue 1 2 3 7

Other long-term liabilities 1 1 3 5

Total liabilities 32 57 110 152

Prefererred stock 20 20 0 0

Common equity (deficit) (0) 10 245 622

Total equity 20 30 245 622

Total liabilities & equity 51 67 355 774

Summary statistics:

Net cash 30 39 253 645

Shares outstanding (mn) 39 40 59 69

BVPS -$0.01 $0.25 $4.14 $9.02

Net cash / total assets 59% 59% 71% 83%

Net working capital (26) (46) (86) (119)

Capital employed (7) (4) (2) (11)

Industry Size Estimates

Source: Gartner’s estimate for the total BI opportunity, “Market Share Analysis: Business Intelligence, Analytics and Performance Management, 2012”, by Dan Sommer and Bhavish Sood, May 7, 2013, and “Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 3Q13 Update”, by Laurie Wurster, et al, September 16, 2013, IDC, Forrester Research, RBC Capital Markets

Lack of clear advantage over competitors

Tableau 8 vs. Qlikview 11 vs. Spotfire 5

• Performance – Since Tableau’s roots are in solutions for the desktop analyst, they’re very immature at an Enterprise level.

• SQL – Tableau has some very basic support for database joins and in-memory joins, but you practically need to give them your dataset pre-structured for consumption.

• Object Management - Tableau doesn’t have objects in the way MicroStrategy does and doesn’t really have a concept of Dev and Production

Source: “Data to the People: tb8.1 vs qv11.2 vs sf5.5”, http://apandre.wordpress.com/2013/09/13/tableau-8-1-vs-qlikview-11-2-vs-spotfire-5-5/

• Visualization – The visualization capabilities of Tableau are diverse and highly insightful. Features such as “word clouds” or “bubble maps” are great tools to enhance comprehension

• Community - Based on training videos, blog/forum posts, and twitter buzz – Tableau leads the community building effort

Feature Tableau 8 Qlikview 11 Spotfire 5

Enterprise ready good since 8.1 good for SMB excellent

Long-term Viability 1 product 1 product yes

Mindshare excellent good average

"Big Data" support good since 8.1 average excellent

Server in a cloud (Saas fee per year) $500/100GB None $4500/500MB

Free offline viewer Tableau Reader None Ent. Player for fee

Mac version 8.2 None None

Implementation fast above average average

Visual Drilldown good excellent good

Mapping best average good

Development weak good best

Modeling, Analytics weak weak Excellent

Integration with R 8.1 none best

60-bit 8.1 best good

Virtual Memory yes slow good

Storytelling new UI/8.2 manual manual

Multidimensional Cubes Good None average

Best among the three Worst among the three

Tableau’s Class B Investors

NEA maintains significant stake 18 months post-IPO

DATA remaining Class B shareholders

As of November 14, 2014

Holder Position Remaining shares Date

Pat Hanrahan Chief Scientist and co-founder 8,088,278 11/13/2014

Christian Chabot CEO and co-founder 6,394,000 11/10/2014

Chris Stolte Chief Development Officer and co-founder 5,865,875 11/10/2014

New Enterprise Associates LLC n.a. 3,224,128 8/20/2014

Elissa Fink Chief Marketing Officer 300,675 8/29/2014

Kelly Wright Executive VP, Sales 70,000 8/22/2014

Brooke Seawell Venture Partner, NEA 10,000 11/10/2014

Source: SEC Form 4 filings

Tableau’s Class A Investors

Meritech remains a top holder of Class A shares

DATA: Bloomberg EV Summary