Software & Services€¦ · SOFTWARE & SERVICES 3 Growing Trends in 2014 for Software and Services Enterprise Software Sees Aggressive Growth Trends in 2014 YTD • In the first half

1 SOFTWARE & SERVICES

M A R K E T M O N I T O R

S U M M E R 2 0 1 4

Software & Services


Contents Industry Update

Public Stock Performance & Valuations

M&A Activity & Valuations

Capital Raise & Public Offering Activity

Moss Adams Overview

Contact Information

Appendix

3

4

9

12

16

20

21


Growing Trends in 2014 for Software and Services Enterprise Software Sees Aggressive Growth Trends in 2014 YTD

• In the first half of 2014, Enterprise Software startups raised $5.4 billion, which is more than what they raised during all of 2013

• The largest investment was $900 million from Intel and Google Ventures investing into Cloudera, which provides software, training and support for open-source Hadoop data software

• Enterprise technology is more than an investment strategy, but it’s new technology is changing how businesses operate. Implementation of cloud computing, big data and mobility into the market place is rapidly changing business models and the way that companies operate prompting a sweeping transition

• The hotel industry is one sector that has seen an immediate shift in their business models because of such technology • Hilton Worldwide is developing new infrastructure that will allow hotel guests to will use smartphones to choose

rooms, check in and even unlock doors • Four years ago, only 1% of Marriott International visitors viewed their room or made a reservation from a mobile

phone. Today more than 40% of visitors view or purchase their room from a mobile phone

Surge in IT/Software Investments by Industrial Conglomerates

• An increasingly competitive Information Technology landscape, which has fueled the growth of the internet and technology sectors for years, is now penetrating deeper into the global, industrial economy

• Large industrial corporations, such as Caterpillar, Bosch, John Deere and BASF are increasingly funding and directly investing in tech startups across North America and Europe. Signaling that large heavy industrial conglomerates view technological innovation as a key driver of growth and profits

• Manufacturers of heavy equipment are implementing the next generation of equipment with sensors to improve quality and life of the equipment

• Sensors on excavators has increased the life-cycle from five to eight years • Companies such as ViewPoint, which develops operations software for construction companies, are creating a

universal website and presentation software in which firms can easily view all of the data • Trucking and logistics companies including YRC Worldwide are also now using big data to completely restructure

their basic pricing models

Source: IDC , Boston Consulting Group, Salesforce, IT Business Edge, Wall Street Journal, Capital IQ, Moss Adams Capital analysis.


-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Application Software63.0%

S&P 50060.4%

Internet Software & Services — Mid-Cap/Small-Cap

16.1%

Data Processing and Outsourced Services

77.9%

Internet Software & Services — Large-Cap

91.3%

Large Software Stocks Rebound After Slow Start to 2014

• Over the last three years, the Software & Services indices have generally outperformed the S&P 500 (except for Mid/Small-Cap Internet Software & Services). However, after a pull-back in the first quarter of 2014, the Large-Cap Internet Software & Services index has stabilized

Source: CapitalIQ.

Note: The software indices are comprised of the public companies included on page 6-8. Stock prices as of 8/4/2014. .

Indexed Stock Price Performance – Since September 2010 One Year


0x

5x

10x

15x

20x

25x

EV /

TTM

EB

ITD

A

ApplicationSoftware

17.3x

Internet Software &

Services15.9x

S&P 50010.6x

Data Processing

and Outsourced

Services10.8x

Application Software

10.2%

Data Processing and Outsourced

Services6.9%

Internet Software and Services

11.6%

S&P 5004.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Source: Capital IQ.

Public Market Valuations

Strong Historical Valuations Propel Growth Forecasts

• All of the Software & Services Indices EBITDA multiples are currently out-performing the S&P 500, with the Application Software index leading the way at 17.3x EBITDA

Next 12 Months: Estimated Sales Growth

• The outlook for software & services companies is encouraging. Sales are projected to increase between 6.9% and 11.6% over the next 12 months, with the most growth coming in Internet Software and Services. S&P 500 companies are projected to grow 4.9% over the next 12 months


8/4/14

Company Name

Share

Price 52 week High/Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Application Software — Large-Cap *

Salesforce.com, Inc $54.90 $67.00 / $42.11 $33,709 $35,122 $4,405 -$33 NA 27.9% NA 8.0 x NA 6.2 x 34.7 x

Autodesk, Inc. 54.15 58.68 / 34.31 12,339 10,966 2,296 392 17.1% 6.0% 18.1% 4.8 x 28.0 x 4.5 x 23.7 x

Synopsys Inc. 37.95 41.62 / 34.55 5,872 5,341 1,984 343 17.3% 7.6% 82.6% 2.7 x 15.6 x 2.5 x 8.5 x

Solera Holdings Inc. 64.08 71.15 / 50.39 4,323 5,704 938 362 38.5% 16.9% 29.2% 6.1 x 15.8 x 5.2 x 12.2 x

TIBCO Software Inc. 19.17 27.15 / 18.20 3,176 3,143 1,091 196 18.0% 3.0% 37.3% 2.9 x 16.0 x 2.8 x 11.7 x

Compuware Corporation 9.07 11.64 / 8.97 1,992 1,733 714 86 12.1% 0.6% 142.3% 2.4 x 20.1 x 2.4 x 8.3 x

Average $ 8,757 $ 1,549 $ 281 22.5% 14.9% 93.1% 5.0 x 17.3 x 5.4 x 16.2 x

Median $ 5,083 $ 983 $ 195 18.4% 10.1% 54.5% 4.7 x 15.9 x 4.5 x 12.4 x

Application Software — Mid-Cap *

Guidewire Software, Inc. $40.41 $58.00 / $33.66 $2,726 $2,295 $329 -$2 NA 12.7% NA 7.0 x NA 6.2 x 37.8 x

ACI Worldwide, Inc. 18.46 21.98 / 15.33 2,140 2,845 973 211 21.7% 12.7% 47.7% 2.9 x 13.5 x 2.6 x 9.1 x

Synchronoss Technologies, Inc. 40.17 41.40 / 25.28 1,667 1,596 389 100 25.7% 26.2% 60.2% 4.1 x 15.9 x 3.3 x 9.9 x

Advent Software, Inc. 32.23 36.11 / 25.42 1,659 1,897 392 94 24.1% 5.3% 48.0% 4.8 x 20.1 x 4.6 x 13.6 x

Monotype Imaging Holdings Inc. 29.87 33.25 / 22.93 1,166 1,085 175 59 34.0% 14.9% 33.0% 6.2 x 18.3 x 5.4 x 13.8 x

Jive Software, Inc. 7.09 13.87 / 6.53 496 403 161 (57) NA 15.6% NA 2.5 x NA 2.2 x NA

Average $ 1,595 $ 415 $ 77 21.0% 16.5% 41.9% 3.8 x 16.5 x 3.5 x 14.7 x

Median $ 1,372 $ 392 $ 74 21.7% 12.3% 33.0% 3.3 x 16.3 x 3.1 x 13.2 x

Application Software —Small-Cap *

PROS Holdings, Inc. $25.56 $41.35 / $19.00 $729 $685 $152 $3 2.2% 30.4% 830.6% 4.5 x NM 3.5 x 22.2 x

Kofax Limited 7.24 09.22 / 5.55 664 570 288 31 10.8% 7.7% 54.5% 2.0 x 18.4 x 1.8 x 11.9 x

Epiq Systems, Inc. 14.14 16.80 / 11.68 509 792 462 61 13.2% 14.4% 82.3% 1.7 x 13.0 x 1.5 x 7.1 x

Diligent Board Member Services, Inc. 3.50 05.35 / 2.35 295 240 70 18 25.7% 15.3% 29.9% 3.4 x 13.3 x 3.0 x 10.3 x

Telenav, Inc. 4.96 07.32 / 4.91 200 63 150 (24) NA 2.0% NA 0.4 x NA 0.4 x NA

Single Touch Systems Inc 0.38 00.70 / 0.29 56 57 9 (2) NA 19.3% NA 6.6 x NA 5.5 x NM

Average $ 350 $ 232 $ 17 10.5% 9.3% 124.5% 2.4 x 12.9 x 2.1 x 16.2 x

Median $ 240 $ 136 $ 16 8.1% 12.4% 35.4% 1.8 x 13.0 x 1.7 x 12.0 x

Total Application Software Average $ 3,754 $ 761 $ 131 18.8% 13.7% 83.7% 3.7 x 15.9 x 3.7 x 15.7 x

Median $ 1,612 $ 427 $ 60 17.3% 10.2% 43.8% 3.3 x 15.7 x 3.1 x 12.7 x

TTM Data NTM Est. Growth EV Multiple

Source: CapitalIQ. Note: Not meaningful (NM) if EV/Sales is greater than 15x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Public Companies: Valuation Metrics $ millions, except per share data

*Selected companies. Average & Median represents the entire sector of companies identified in the Appendix on page 21

* *

* *

* *

8/4/14 TTM Data NTM Est. Growth EV Multiple


8/4/14

Company Name

Share


Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Data Processing and Outsourced Services — Large-Cap/Mid-Cap *

Visa Inc. $212.16 $235.50 / $172.21 $131,987 $127,923 $12,446 $8,013 64.4% 9.0% 15.3% NM 16.0 x 9.4 x 13.8 x

Paychex, Inc. 40.86 45.95 / 36.80 14,836 14,285 2,519 1,088 43.2% 7.8% 6.7% 5.7 x 13.1 x 5.3 x 12.3 x

The Western Union Company 17.02 19.50 / 14.60 8,890 11,040 5,587 1,402 25.1% 2.5% -1.9% 2.0 x 7.9 x 1.9 x 8.0 x

Jack Henry & Associates Inc. 58.92 60.84 / 49.08 4,982 4,945 1,197 408 34.1% 7.6% 5.9% 4.1 x 12.1 x 3.8 x 11.5 x

VeriFone Systems, Inc. 33.82 38.26 / 18.69 3,691 4,438 1,750 181 10.3% 9.1% 89.7% 2.5 x 24.6 x 2.3 x 13.0 x

Average $ 21,420 $ 4,693 $ 1,521 29.9% 4.2% 24.0% 3.4 x 13.6 x 4.0 x 10.9 x

Median $ 9,616 $ 2,554 $ 556 25.1% 6.9% 15.3% 3.0 x 13.1 x 3.0 x 11.1 x

Data Processing and Outsourced Services — Small-Cap *

Syntel, Inc. $87.28 $97.23 / $70.90 $3,645 $3,017 $881 $291 33.0% 11.8% -2.0% 3.4 x 10.4 x 3.1 x 10.6 x

Heartland Payment Systems, Inc. 47.08 50.44 / 36.73 1,687 1,834 2,194 162 7.4% -69.2% 4.7% 0.8 x 11.3 x 2.7 x 10.8 x

Sykes Enterprises, Incorporated 20.68 23.29 / 16.57 908 794 1,302 125 9.6% NA 10.7% 0.6 x 6.3 x NA 5.7 x

Higher One Holdings, Inc. 4.13 10.96 / 3.47 203 295 220 52 23.4% 8.0% 12.4% 1.3 x 5.7 x 1.2 x 5.1 x

Average $ 1,118 $ 847 $ 118 16.7% 3.4% 16.2% 1.5 x 8.7 x 1.7 x 7.9 x

Median $ 769 $ 747 $ 107 13.0% 5.4% 13.2% 1.3 x 8.6 x 1.5 x 7.7 x

Total Data Processing and Outsourced Services Average $ 12,139 $ 2,935 $ 879 24.1% 3.9% 21.1% 2.5 x 11.4 x 3.0 x 9.8 x

Median $ 3,779 $ 1,485 $ 291 21.8% 6.9% 14.4% 2.3 x 10.6 x 2.3 x 9.8 x


Source: CapitalIQ.


* *

* *

Note: Not meaningful (NM) if EV/Sales is greater than 15x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.



8/4/14

Company Name

Share


Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Internet Software and Services — Large-Cap *

Google Inc. $582.27 $614.44 / $418.00 $390,758 $340,770 $65,142 $19,424 29.8% 11.5% 48.3% 5.2 x 17.5 x 4.7 x 11.8 x

LinkedIn Corporation 202.50 257.56 / 136.02 24,801 22,439 1,847 196 10.6% 35.9% 237.1% NM NM 8.9 x 33.9 x

Electronic Arts Inc. 34.18 38.64 / 20.47 10,751 9,021 3,840 366 9.5% 7.3% 151.3% 2.3 x 24.6 x 2.2 x 9.8 x

Yelp, Inc. 68.57 101.75 / 46.96 4,780 4,429 297 6 2.2% 53.3% 1328.8% NM NM 9.7 x NM

AOL Inc. 39.21 53.28 / 32.19 3,146 3,179 2,365 435 18.4% 8.4% 18.5% 1.3 x 7.3 x 1.2 x 6.2 x

Take-Two Interactive Software Inc. 22.34 23.67 / 15.99 1,865 1,383 2,351 432 18.4% -39.5% -62.6% 0.6 x 3.2 x 1.0 x 8.6 x

WebMD Health Corp. 48.75 53.30 / 28.03 1,839 2,013 536 87 16.2% 9.9% 85.1% 3.8 x 23.2 x 3.4 x 12.5 x

Millennial Media Inc. 3.36 09.56 / 2.90 372 274 282 (5) NA 17.6% NA 1.0 x NA 0.8 x NA

Average $ 27,133 $ 4,675 $ 1,371 23.4% 16.8% 132.4% 3.8 x 13.4 x 4.7 x 13.4 x

Median $ 3,984 $ 988 $ 196 20.1% 12.1% 48.3% 3.7 x 13.7 x 3.4 x 11.5 x

Internet Software and Services — Mid-Cap *

Move, Inc. $14.57 $18.36 / $9.47 $578 $545 $235 $7 2.9% 15.5% 390.3% 2.3 x NM 2.0 x 16.2 x

Digital River Inc. 14.78 19.67 / 13.61 473 216 374 34 9.2% 4.7% 44.9% 0.6 x 6.3 x 0.6 x 4.3 x

Angie's List, Inc. 8.02 25.42 / 7.77 470 428 286 (23) NA 22.1% NA 1.5 x NA 1.2 x 26.4 x

IntraLinks Holdings, Inc. 7.89 12.50 / 7.81 444 456 239 11 4.7% 3.8% 240.5% 1.9 x NM 1.8 x 11.8 x

SciQuest, Inc. 15.15 32.69 / 14.46 418 303 99 0 NA 10.8% NA 3.1 x NA 2.8 x 14.9 x

Blinkx plc 0.54 03.95 / 0.45 217 89 247 31 12.5% 3.3% -19.2% 0.4 x 2.9 x 0.3 x 3.6 x

Average $ 668 $ 318 $ 32 12.1% 13.6% 165.6% 2.5 x 9.1 x 2.4 x 12.7 x

Median $ 602 $ 247 $ 25 10.7% 12.6% 68.3% 2.3 x 7.7 x 2.1 x 10.8 x

Internet Software and Services — Small-Cap *

Marchex, Inc. $10.84 $12.84 / $5.69 $459 $420 $168 $8 4.8% 10.3% 102.4% 2.5 x NM 2.3 x 25.7 x

Unwired Planet, Inc. 1.97 02.44 / 1.26 217 190 0 (29) NA NA NA NA NA 13.5 x NA

eGain Corporation 6.44 15.75 / 5.75 164 159 69 0 NA 9.6% NA 2.3 x NA 2.1 x NM

Spark Networks, Inc. 5.53 09.05 / 4.26 137 126 69 (10) NA -0.1% NA 1.8 x NA 1.8 x NA

Average $ 164 $ 109 $ (2) 10.9% 6.3% 79.2% 1.7 x 16.7 x 2.2 x 12.9 x

Median $ 167 $ 107 $ (0) 7.7% 4.7% 56.7% 1.4 x 15.8 x 1.4 x 12.6 x

Total Internet Software & Services Average $ 10,438 $ 1,888 $ 523 17.0% 12.9% 134.9% 2.7 x 12.8 x 3.2 x 13.0 x

Median $ 618 $ 257 $ 20 15.0% 11.6% 55.3% 2.3 x 12.5 x 2.2 x 11.7 x


Source: CapitalIQ.


Note: Not meaningful (NM) if EV/Sales is greater than 15x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

* *

* *

* *



2,855 2,953 2,927

3,080 2,984

3,682 3,681 3,852

3,539 3,453

3,622

3,986

3,134

3,319

4,092 4,054 3,997 4,095

$32

$43

$56 $55

$47

$71 $72 $70

$52$56

$52

$66

$44

$50

$65

$71

$55

$70

$0

$20

$40

$60

$80

$100

$120

$140

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

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

2010 2011 2012 2013 2014

Transactio

n V

alue ($

bn

)Nu

mb

er o

f Tr

ansa

ctio

ns

Number Value

4.8x

6.7x

6.4x

7.0x6.7x 6.8x 6.8x 6.9x

5.9x

6.4x6.2x 6.2x 6.4x

6.0x6.2x

7.2x7.0x

6.1x

15.0%14.2%

15.3%14.5%

16.7% 16.6% 16.9%

15.0%

12.4% 13.0%14.6%

16.7%15.3% 14.8%

13.7%

10.6%

17.0% 17.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

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

2010 2011 2012 2013 2014

EBITD

A M

argin

EV/T

raili

ng

EBIT

DA

Mu

ltip

le

EV/EBITDA EBITDA Margin

U.S. middle market M&A transaction volume in Q2 2014 rose 23% from one year ago and was up slightly compared to Q1 2014.

In deal value terms, U.S. middle market M&A activity in Q2 2014 grew approximately 40% from a year earlier and was up more than 27% compared to the prior quarter.

Significant amounts of cash on corporate balance sheets and in private equity funds, coupled with strong debt markets, continues to drive deal activity.

Q2 2014 EBITDA multiples of middle market transactions declined after enjoying two quarters of transactions that were valued almost one full turn of EBITDA higher.

EBITDA multiples are approximately where they were one year ago and inline with where they have been for most of the last two years.

Q2 2014 EBITDA margins of reportable transactions were virtually unchanged from last quarter but are still more than 2% higher than they were one year ago.

Middle Market M&A: Volume and Values Up Slightly Over Last Quarter, Up Significantly Over Last Year

U.S. Middle Market M&A 1 U.S. Middle Market M&A Valuations 2

1) Middle market M&A includes transactions with undisclosed values, and disclosed values where EV < $500 million. 2) Middle market M&A includes transactions with disclosed EBITDA, where EV < $500 million and EV/EBITDA < 10x. Note: transactions with disclosed EBITDA represent <5% of all transactions. Source: S&P Capital IQ.


Rev EBITDA EV/Rev EV/EBITDATransactions

& Deal Size Rev EBITDA EV/ Rev EV/EBITDA

Number of Targets/Transactions Represented 27 27 13 27 8

Mean $581.9M $115.4M 31.52x 4.69x 17.0x

Median $37.5M $19.4M 1.52x 2.40x 15.2x

Date Acquirer/Investor Target Target Description Deal Size

TTM

Revenue

TTM

EBITDA

7/28/2014 Zillow, Inc. Trulia, Inc. Provides tools to research homes and neighborhoods for consumers 3,305.4$ 14.82x NM

7/17/2014 Q-Free ASA Open Roads Consulting, Inc. Intelligent transportation systems and critical asset protection solutions 12.5 0.98x 13.9x

7/9/2014 Teleperformance S.A. Aegis Business Group, Inc. Provides identity and access management solutions 610.0 1.53x -

7/8/2014 Progressive Digital Media Group PLC Current Analysis, Inc. Market intelligence and advice for telecommunications 19.6 1.51x -

7/8/2014 Top Image Systems Ltd. eGistics, Inc. Document storage & management solutions for healthcare organizations 18.0 1.70x 11.8x

7/1/2014 Optimal Payments Plc Meritus Payment Solutions, Inc. Provides payment and transaction processing solutions 211.4 2.84x 16.3x

6/30/2014 Tolt Solutions, Inc. MNS Holdings LLC Managed services of retail and distributed enterprise network 28.2 0.84x -

7/1/2014 Optimal Payments Plc Global Merchant Advisors, Inc. Online payment processing solutions to retail and eCommerce merchants 15.0 1.81x 3.3x

6/22/2014 Oracle Corporation MICROS Systems, Inc. Enterprise applications solutions for food & beverage, hotel and retail 5,262.5 3.44x 17.5x

6/13/2014 CleanTech Innovations, Inc. Initial Koncepts, Inc. Provides IT consulting and staffing service 213.4 23.20x NM

6/12/2014 The Priceline Group Inc. OpenTable, Inc. Offers restaurant reservation solutions 2,613.1 12.58x 41.5x

6/13/2014 Tuition Build Inc. Limelight Networks, Inc. Provides content delivery and related services 660.5 3.25x NM

6/10/2014 VERISAE, INC. ViryaNet Ltd. Integrated mobile & Web-based software for workforce management 19.5 1.69x -

5/23/2014 Neopost S.A. Systems & Programming Solutions, Inc. Develops and markets multi-carrier shipping software solutions 20.0 2.00x -

5/12/2014 NPC Group, Inc. Mercury Payment Systems, LLC Payments technology and services for small and medium sized businesses 1,650.0 6.96x 17.7x

5/12/2014 Claims Services Group, Inc. Pittsburgh Glass Works, Insurance & Services Division Develops software and business management tools 280.0 4.76x 14.2x

5/7/2014 Perficient Inc. Trifecta Technologies, Inc. Provides eCommerce, mobile, Web, and cloud solutions 13.7 1.71x -

5/6/2014 inContact, Inc. Uptivity Inc. Contact center workforce optimization and management solutions 46.6 2.40x -

5/1/2014 CrowdGather, Inc. Plaor Inc. Offers Mega Fame Casino, a social casino game for iOS, Android, and desktops 5.2 20.60x NM

4/27/2014 VerticalScope Inc. PbNation, LLC Interactive community on the Internet for sport of paintball 1.4 3.63x -

4/29/2014 PROACTIS Holdings PLC Intesource, Inc. Web-based e-sourcing solutions; reverse auctions, vendor management, etc. 3.9 0.78x -

4/28/2014 Numerex Corp. Omnilink Systems, Inc. Platform to track and monitor the location and condition of people and vehicles 37.5 2.88x -

4/28/2014 KPIT Technologies Limited I-Cubed, Inc. Enterprise information technology consulting company 24.2 2.42x -

4/14/2014 West Corporation Reliance Communications, Inc. Provides communication solutions for the education market 75.0 2.78x -

4/8/2014 Alaska Dispatch Publishing LLC Anchorage Daily News, Inc. Offers online news for the Anchorage, Alaska community 34.0 1.24x -

4/6/2014 GTCR, LLC Vocus Inc. Cloud-based marketing and public relations software 480.6 2.37x NM

4/2/2014 John Wiley & Sons Inc. Profiles International, Inc. Provides employment assessments and human resource management solutions 51.0 1.89x -

EV Multiple

Source: CapitalIQ.

$ millions

Software & Services M&A Transactions

M&A Transactions in the table are above $1 million, with revenue and/ EBITDA multiples reported since start of Q2’13


1,485

1,551

1,325

1,092

1,599 1,617

1,676 1,624

952

1,078

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2006 2007 2008 2009 2010 2011 2012 2013 2013YTD

2014YTD

Nu

mb

er o

f Tr

ansa

ctio

ns

Annual Activity YTD Activity (August 4)

Overview of Selected Transactions

Source: Company press releases,CapitalIQ.

Top Image Systems Ltd. (Nasdaq:TISA) (Israel) acquires eGistics, Inc. (Plano, TX) July 8, 2014

• eGistics, Inc., a leading provider of private cloud solutions that streamline payments business processes. The eGistics private cloud solution automates the capture, management and delivery of documents and data in a highly secure, highly scalable and compliant environment.

• Top Image Systems Ltd. (Nasdaq:TISA) acquired eGistics, Inc. for approximately $18 million on July 8, 2014. Top Image Systems will pay for the transaction 50% in cash and 50% in its shares. The transaction represents an EV multiple of 1.70x revenue and 11.8x EBITDA.

• Izhak Nakar, Founder and Active Chairman of Top Image Systems stated: "Combining TIS' industry-leading enterprise capture and workflow solutions, mobile image processing platform and broad global install base with eGistics' innovative cloud-based platform and world-class clients in the U.S. financial sector make this a very valuable and positive transaction from strategic, geographic and technological as well as from financial perspectives."

• Top Image Systems Ltd. develops and markets automated data capture solutions for managing and validating content gathered from customers, trading partners, and employees. The company provides various solutions based on its eFLOW proprietary platform that is an industry-leading document and content capture and workflow platform.

Optimal Payments Plc (AIM:OPAY) (Douglas, United Kingdom) acquires Meritus Payment Solutions, Inc. (Santa Ana, CA) July 1, 2014

• Meritus Payment Solutions, Inc. provides payment and transaction processing solutions. It offers solutions for various payment processing needs, such as credit card and debit card processing, pin-based debit card processing, check processing and verification, online gateway, electronic benefit transfer, recurring billing, gift and loyalty cards.

• Optimal Payments Plc (AIM:OPAY) acquired Meritus Payment Solutions, Inc. for approximately $210 million on July 1, 2014. The consideration consists of $150 million in cash and remaining $60 million in 8.95 million Optimal Payments’ shares. The transaction represents an EV multiple of 2.84x revenue and 16.3x EBITDA.

• Joel Leonoff, President and CEO of Optimal Payments: “The company's strong stakeholder relationships, multi-channel sales force, established presence with small and medium businesses in the U.S. and entrepreneurial spirit makes them an ideal acquisition for us. I am very excited about the combination of our businesses which immediately accelerates the Group's growth opportunities and accomplishes a stated key strategic goal for us in 2014.“

• Optimal Payments plc provides online payment solutions to Internet merchants and consumers worldwide. It operates through two segments, NETELLER and NetBanx. The company provides services to businesses and individuals to allow the processing of direct debit, electronic cheque, and credit card payments.

• In 2014, M&A activity in the mid-market Software & Services sector is on pace to have the pace to have it’s strongest year in recent history

Software Middle Market M&A*

* U.S. Middle market M&A includes transactions with EV < $500mm, and transactions with undisclosed EV.


Software – Public Company Equity Offerings

Source: CapitalIQ. U.S. Public equity offerings and public company capital raises of > $10 million from May 1, 2014

Date Capital Target Target Description Deal Size

8/4/2014 Follow-on Equity Offering Digimarc Corporation Provides media identification and management solutions $ 30.07/30/2014 IPO TransFirst Inc. Provides payment processing services 100.07/23/2014 PIPE Mattersight Corporation Provides enterprise analytics services 12.0

7/22/2014 Follow-on Equity Offering MeetMe, Inc. Owns and operates social discovery networking products 10.07/15/2014 Follow-on Equity Offering Mavenir Systems, Inc. Provides software-based telecom networking solutions 45.0

7/7/2014 IPO Yodle, Inc. Provides cloud-based marketing automation solutions 75.07/1/2014 Follow-on Equity Offering Benefitfocus, Inc. Provides cloud-based benefits software solutions 96.3

6/24/2014 IPO Cyber-Ark Software Ltd. Develops, markets, and sells IT security solutions 75.06/23/2014 Follow-on Equity Offering The Descartes Systems Group Inc Provides federated network and logistics technology solutions 128.3

6/9/2014 Follow-on Equity Offering Verint Systems Inc. Provides actionable intelligence solutions 238.86/9/2014 IPO GoDaddy Inc. Design and development of cloud-based technology products 100.0

6/4/2014 IPO Travelport Worldwide Limited Offers travel commerce marketplace services 100.06/2/2014 Follow-on Equity Offering CoStar Group Inc. Provides real estate information, analytics, and marketing services 480.0

5/29/2014 Follow-on Equity Offering Glu Mobile, Inc. Develops and publishes action/adventure and casual games 30.05/28/2014 Follow-on Equity Offering Booz Allen Hamilton Holding Corporation Provides consulting, technology, and engineering services 230.7

5/28/2014 Follow-on Equity Offering Vantiv, Inc. Provides electronic integrated payment processing services 178.95/21/2014 Follow-on Equity Offering Activision Blizzard, Inc. Publishes games 852.45/14/2014 IPO Good Technology Corporation Provides secure mobility solutions 100.05/14/2014 Follow-on Equity Offering GTT Communications, Inc. Provides cloud networking services 23.35/13/2014 Follow-on Equity Offering TechTarget, Inc. Provides specialized online content and brand advertising 31.3

5/8/2014 Follow-on Equity Offering Sajan, Inc. Provides language translation services and technology solutions 10.0

Transactions &

Deal Size

Number of Targets/Transactions Represented 21

Mean $140.3M

Median $96.3M

$ millions



7/31/2014 Growth Capital/Private Equity Kabam, Inc. Operates as a gaming company that develops free-to-play games $ 120.0

7/31/2014 Growth Capital/Private Equity PagerDuty, Inc. Alarm aggregation and dispatching service for system administrators 27.2

7/29/2014 Venture Capital Spire Inc. Offers data innovation, technology; including illegal fishing & trade monitoring 25.0

7/28/2014 Growth Capital/Private Equity Bright Computing, Inc. Develops and markets Linux cluster management software solutions 14.5

7/23/2014 Growth Capital/Private Equity Deem, Inc. Provides Commerce-as-a-Service (CaaS) based solutions 50.0

7/23/2014 Growth Capital/Private Equity SmartZip Analytics, Inc. Provides real estate analytics and predictive marketing solutions 12.0

7/22/2014 Growth Capital/Private Equity AppDynamics, Inc. Develops application performance management products 70.0

7/22/2014 Growth Capital/Private Equity iCiX North America, LLC Collaborative commerce network that enables customers to share information 25.0

7/22/2014 Venture Capital DoubleDub Inc. Offers Timehop; turns social networking activity into personalized time capsules 10.0

7/21/2014 Growth Capital/Private Equity NextNav, LLC Provides indoor and urban location services 70.0

7/21/2014 Venture Capital Quantifind, Inc. Develops business intelligence platform; automatically identifies relevant signals 12.0

7/18/2014 Venture Capital dough, Inc. Operates a visual trading platform for online investor engagement 25.0

7/17/2014 Growth Capital/Private Equity Taulia Inc. Provides dynamic discounting and self-service vendor portal solutions 27.0

7/16/2014 Growth Capital/Private Equity Pond5 Inc. Operates Pond5.com, a Web-based stock footage marketplace 61.0

7/15/2014 Venture Capital Motiga, Inc. Develops cloud-based mobile games 20.0

7/15/2014 Venture Capital Veritone, Inc. Operates as an enterprise cloud-computing company 15.0

7/15/2014 Growth Capital/Private Equity Motionsoft, Inc. Provides member management software and billing solutions 10.0

7/14/2014 Growth Capital/Private Equity Edmodo, Inc. Social network for education; enables teachers and students to connect 30.0

7/14/2014 Growth Capital/Private Equity Issuu, Inc. Offers a digital publishing platform to read magazines and newspapers 10.0

7/11/2014 Venture Capital Genius Media Group Inc. Operates a Website that acts as a guide to the meaning of rap lyrics 40.0

7/11/2014 Growth Capital/Private Equity LogRhythm, Inc. Operates as a security intelligence company 40.0

7/11/2014 Growth Capital/Private Equity iTOK, Inc. Provides technology support and computer maintenance services 18.0

7/10/2014 Growth Capital/Private Equity Malwarebytes Corporation Offers anti-malware software solutions to consumers and enterprises 30.0

7/10/2014 Venture Capital Trello, Inc. Provides a collaborative Web and mobile based applications 10.3

Recent Software & Services – Private Capital Raises

Source: CapitalIQ.

$ millions

Equity capital raises of > $10 million for U.S. private companies from June 25, 2014



7/8/2014 Venture Capital Xapo Inc. Develops and delivers online and offline security solutions for Bitcoin $ 20.0

7/8/2014 Growth Capital/Private Equity WordStream Inc. Provides Internet marketing software-search engine marketing tools 12.0

7/7/2014 Growth Capital/Private Equity ParkWhiz, Inc. Provides drivers to find available parking on their computers or mobile phones 10.0

7/3/2014 Growth Capital/Private Equity Box, Inc. Cloud-based mobile optimized enterprise content collaboration platform 150.0

7/2/2014 Venture Capital Plastiq Inc. Offers online credit card payment processing services 10.0

7/1/2014 Growth Capital/Private Equity Viewpoints, LLC Provides online consumer review platform; operates a website for user reviews 35.0

7/1/2014 Growth Capital/Private Equity Streetline, Inc. Real-time parking solutions to cities, airports, universities & parking garages 10.0

6/30/2014 Growth Capital/Private Equity Paycor, Inc. Online payroll services and human resource management solutions 110.0

6/30/2014 Growth Capital/Private Equity mBlox, Inc. Provides mobile business-to-consumer engagement solutions to businesses 43.5

6/30/2014 Growth Capital/Private Equity NetVoyage Corporation Operates as a SaaS, provides an online place to access documents 24.5

6/30/2014 Growth Capital/Private Equity Cloudian, Inc. Provides cloud storage software, enables cloud service providers and enterprises 24.0

7/8/2014 Growth Capital/Private Equity Curse, Inc. Operates an online gaming portal 16.0

6/27/2014 Venture Capital ContextLogic Inc. Provides a social platform to discover, collect, and share products with friends 50.0

6/27/2014 Growth Capital/Private Equity erecruit Holdings, LLC Staffing firm management for contract/temporary and direct hire businesses 25.0

6/27/2014 Venture Capital Keen.io Operates an analytics platform for mobile application developers 11.3

6/27/2014 Venture Capital IIX Inc. Provides network/public peering and neutral Internet exchange solutions 10.4

6/26/2014 Growth Capital/Private Equity Couchbase Inc. Database software company, designs, develops, and delivers database solutions 60.0

6/26/2014 Venture Capital Wickr Inc. Provides military-grade encryption of text, picture, audio, and video messages 30.0

6/25/2014 Venture Capital MapR Technologies, Inc. Enterprise-grade distributed data platform 80.0

6/25/2014 Growth Capital/Private Equity SilkRoad technology, inc. Provides cloud-based talent management solutions 11.4

Rev EBITDA EV/Rev EV/EBITDATransactions

& Deal Size

Number of Targets/Transactions Represented 45

Mean $63.1M

Median $24.0M

Recent Software & Services – Private Capital Raises (Cont.)

Source: CapitalIQ.

$ millions

Equity capital raises of > $10 million for U.S. private companies from June 25, 2014


1,304

1,578 1,526

1,874

2,702

3,517

3,810

4,173

2,582

2,433

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2006 2007 2008 2009 2010 2011 2012 2013 2013YTD

2014YTD

Nu

mb

er o

f Tr

ansa

ctio

ns

Annual Activity YTD Activity (August 4)

Source: Company press releases, CapitalIQ.

PagerDuty, Inc. (San Francisco, CA) July 31, 2014

• PagerDuty, Inc. announced that it has received $27.2 million in its series B round of funding. The company has received a total of $39.8 million in funding till date.

• PagerDuty, Inc. will use the proceeds for investing heavily in product development, engineering, and product management to serve as the hub of all systems, people, and data across a company's entire operations, for accelerating hiring across several departments, and for simplifying information technology incident management.

• PagerDuty, Inc. provides an alarm aggregation and dispatching service for system administrators and support teams in the United States and internationally. The company offers a SaaS-based IT on-call schedule management, alerting, and incident tracking solution that collects alerts from monitoring tools, gives an overall view of monitoring alarms, and alerts an on duty engineer if there is a problem.

Bright Computing, Inc. (San Jose, CA)

July 28, 2014

• Bright Computing, Inc. announced that it has received $14.5 in series B funding. The company has raised $17.5 million till date.

• Bright Computing, Inc. will use the proceeds for to expand services for Linux cluster management and to staff up on customer service and sales, to continue investing in its flagship cluster management technology, focusing especially on the emerging Hadoop and OpenStack ecosystems.

• Bright Computing, Inc. develops and markets Linux cluster management software solutions. The company offers software solutions for managing groups of computer servers and associated equipment, including clusters for high performance computing (HPC); private, hybrid, and public clouds; grids of HPC clusters; and data centers.

• In 2014, the Public Offerings and Private Capital Raise Activity in the Software & Services sector closely tracks record levels set in 2013

Software & Services Middle Market Public Offerings & Private Capital Raises*

* Middle market Public Offerings & Capital Raises includes transactions <$500mm, and transactions. Excludes Fixed Income Offerings

Overview of Selected Capital Raises


Moss Adams Capital LLC

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Dedicated industry specialties

Mergers and acquisitions

Recapitalizations and institutional capital raises

Key Attributes

Middle market experts: independent, thoughtful client centered advice

Direct and constant senior level attention

Deep and longstanding relationships with debt and equity capital providers and corporate investors/buyers

Industry specific knowledge enhanced by proprietary access and insight into 15,000 Moss Adams clients

Moss Adams LLP

Fully integrated accounting, tax and business advisory firm

100 years old

Dominant in Western US

2,000 employees in 22 offices

16,000 nationwide mid market clients

Consulting and Tax Services include financial due diligence, valuation advisory, international tax planning and compliance, transaction structuring and IT consulting and integration

Over 300 clients represented in the Software, Technology, Mobile & Internet sector

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Firm Overview


I N D U ST R Y K N O W L ED G E M AT C H E D

W I T H AN EXPER I E N C E D T EAM

• Senior Level Attention

• Commitment to our Clients

• Professional Excellence

• Objective & Independent Advice

• Creating Value for Owners

• Global Presence & Capabilities

Premier accounting and financial

services advice for middle market

software & services companies.

Industry Expertise &

Relationships

Industry Specific

Accounting

Investment Banking &

Transaction Support

Relevant Tax Expertise

Strategic Planning & Exit Advice

Expert Teams: Software & Services Knowledge

Industry Expertise &

Relationships

Relevant Tax Expertise

Strategic Planning & Transaction

Support

Investment Banking

Industry Specific

Accounting


Direct international relationships

Moss Adams Capital has a strategic alliance with Mazars Corporate Finance, an international investment bank with 25 offices, to identify cross-border strategic buyers and private equity investors

As a founding member of Praxity, AISBL, a global alliance of independent accounting firms, Moss Adams provides access to trusted expertise in 80+ countries worldwide

Latin America and Caribbean Argentina, Brazil, Cayman islands, Chile, Colombia, Mexico, Puerto Rico, Uruguay, Venezuela

Europe Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Jersey, Latvia, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom , Ukraine

Asia China, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan, Thailand, Vietnam

Africa Algeria, Angola, Benin, Botswana, Cameroon, Cape Verde, Djibouti, Egypt, Ghana, Ivory Coast, Lesotho, Madagascar, Mauritius, Morocco, Senegal, South Africa, Tunisia, Zambia

Middle East and Indian Subcontinent India, Israel, Lebanon, Pakistan, United Arab Emirates

Australasia Australia, New Zealand

North America United States, Canada

Global Reach


Selected Software and Related Transactions

* Services for the foregoing provided by Moss Adams , its affiliates, and/or its principals.


Contact Us Moss Adams Capital LLC

2040 Main St

Suite 900

Irvine, California 92614

Richard M. Anderson

Managing Director

Burr J. Dalton

Director

Geoffrey B. Haydon

Vice President

Tyler Dale

Vice President

999 Third Avenue

Suite 2800

Seattle, Washington 98104

Harman K. Wales

Managing Director

Wiley P. Kitchell

Managing Director


Source: CapitalIQ. Note: Not meaningful (NM) if EV/Sales is greater than 15x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Public Software & Technology Products Companies: Appendix

4 Data Processing and Outsourced Services — Large-Cap/Mid-Cap. Entire sector includes: Visa Inc., Mastercard Inc., Automatic Data Processing, Inc., Paychex, Inc., Fiserv, Inc., Fidelity National Information Services, Inc., The Western Union Co., Alliance Data Systems Corp., Computer Sciences Corp., FleetCor Technologies, Inc., Total System Services, Inc., Global Payments Inc., Jack Henry & Associates Inc., VeriFone Systems, Inc., NeuStar, Inc., DST Systems Inc., Vantiv, Inc., WEX Inc., CoreLogic, Inc., Broadridge Financial Solutions, Inc.

5 Data Processing and Outsourced Services — Small-Cap. Entire sector includes: Syntel, Inc., Lender Processing Services, Inc., Convergys Corp., Euronet Worldwide Inc., Heartland Payment Systems, Inc., Cardtronics Inc., TeleTech Holdings Inc., Moneygram International Inc., Exlservice Holdings, Inc., Sykes Enterprises, Inc., CSG Systems International Inc., Higher One Holdings, Inc., Global Cash Access Holdings, Inc., Cass Information Systems Inc., Computer Services, Inc., PRGX Global, Inc., Planet Payment, Inc., ModusLink Global Solutions, Inc.

1 Application Software — Large Cap. Entire sector includes: salesforce.com, inc., Adobe Systems Inc., Intuit Inc., Citrix Systems, Inc., Autodesk, Inc., Workday, Inc., Ansys, Inc., Nuance Communications, Inc., Synopsys Inc., FactSet Research Systems Inc., SolarWinds, Inc., Cadence Design Systems Inc., Concur Technologies, Inc., Informatica Corporation, Solera Holdings Inc., TIBCO Software Inc., Splunk, Inc., Aspen Technology, Inc., PTC Inc., The Ultimate Software Group, Inc., Compuware Corporation, Verint Systems Inc., Mentor Graphics Corp.

2 Application Software — Mid-Cap. Entire sector includes: Qlik Technologies, Inc., SS&C Technologies Holdings, Inc., ACI Worldwide, Inc., VirnetX Holding Corp., Guidewire Software, Inc., RealPage, Inc., TiVo Inc., Fair Isaac Corp., Manhattan Associates, Inc., Advent Software, Inc., Blackbaud Inc., Synchronoss Technologies, Inc., MicroStrategy Inc., NetScout Systems, Inc., BroadSoft, Inc., Bottomline Technologies (de), Inc., Jive Software, Inc., Pegasystems Inc., Interactive Intelligence Group Inc., Monotype Imaging Holdings Inc., Ebix Inc.

3 Application Software — Small-Cap. Entire sector includes: Comverse, Inc., PROS Holdings, Inc., Tangoe, Inc., Ellie Mae, Inc., Accelrys Inc., Axway Software S.A., EPIQ Systems, Inc., ePlus inc., SeaChange International Inc., Diligent Board Member Services, Inc., Kofax plc, Actuate Corp., Telenav, Inc., Vringo, Inc., Guidance Software, Inc., American Software, Inc., QAD Inc., Callidus Software Inc., Digimarc Corp., Exa Corp., Mitek Systems, Inc., Single Touch Systems Inc.

6 Internet Software and Services — Large Cap. Entire sector includes: Google Inc., Electronic Arts Inc., Zynga, Inc., Take-Two Interactive Software Inc., Activision Blizzard, Inc., eBay Inc., Facebook, Inc., Yahoo! Inc., LinkedIn Corp., Equinix, Inc., Rackspace Hosting, Inc., VeriSign, Inc., Akamai Technologies, Inc., IAC/InterActiveCorp., AOL Inc., CoStar Group Inc., SunGame Corp., ValueClick, Inc., Cornerstone OnDemand, Inc., ExactTarget, Inc., j2 Global, Inc., Yelp, Inc., Dealertrack Technologies, Inc., OpenTable, Inc., Bankrate, Inc., Liquidity Services, Inc., NIC Inc., Millennial Media Inc., Web.com Group, Inc., WebMD Health Corp., Demandware, Inc.

7 Internet Software and Services — Mid-Cap. Entire sector includes: Angie's List, Inc., SPS Commerce, Inc., Stamps.com Inc., E2open, Inc., SciQuest, Inc., LogMeIn, Inc., Blucora, Inc., comScore, Inc., comScore, Inc., Envestnet, Inc., Digital River Inc., Constant Contact, Inc., LivePerson Inc., Perficient Inc., Global Eagle Entertainment Inc., Move, Inc., Dice Holdings, Inc., Internap Network Services Corp., Demand Media, Inc., Responsys, Inc., Bazaarvoice, Inc., IntraLinks Holdings, Inc., EarthLink Inc., United Online, Inc., Monster Worldwide, Inc., Blinkx plc

8 Internet Software and Services — Small-Cap. Entire sector includes: Travelzoo Inc., The Active Network, Inc., Vocus Inc., Xhibit Corp., Keynote Systems, Inc., RealNetworks Inc., QuinStreet, Inc., Saba Software, Inc., Carbonite, Inc., Sollensys Corp., Limelight Networks, Inc., XO Group Inc., Zix Corp., Support.com, Inc., Market Leader, Inc., TechTarget, Inc., eGain Corp., Brightcove, Inc., Unwired Planet, Inc., Reis, Inc., Spark Networks, Inc., Marchex, Inc., Pitooey!, Inc., iPass Inc., Virtual Piggy, Inc., Rosetta Stone, Inc., Glu Mobile, Inc., Synacor, Inc.

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