Technology M&A Update Q4 2017 - BKD.com

TECHNOLOGY MERGERS & ACQUISITIONS PERSPECTIVES Q4 2017

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OVERVIEW & OUTLOOK Overall economic conditions have continued to strengthen in the U.S. but tempered slightly during the fourth quarter of 2017 as a result of a refined pace of inventory accumulation and a strong surge in imports. Despite this unexpected slowdown, BKD Corporate Finance (BKDCF) believes there will be continued strong buyer interest and attractive valuation levels for technologyenabled companies entering 2018. Companies in the U.S. technology industry have continued to support strong deal values throughout the previous year, with valuation multiples for tech companies of all sizes consistently outpacing other industry sectors. A strong impact was felt for technology stocks, as well as the S&P, from optimism gained from tax reform and the new administration in Washington, with the trend expected to continue. Middle-market technology-enabled companies also continued to be strong private equity (PE) targets. According to PitchBook, the IT sector accounted for 18 percent of 2017 deal flow for middle-market PE firms. Technology-based managed service, integration and consulting companies with recurring revenue models drove the highest deal values, with software, business intelligence and data companies following suit. Middle-market PE firms have continued to raise more than $100 billion in capital commitments each year for the past five years, so deployable capital will remain readily available for well-run companies contemplating a transaction. These buyers will continue to execute on buy-andbuild strategies to create value for investors, driven by the availability of financing and the rapidly evolving nature of the technology industry. Strategic acquirers in the space also will continue to utilize M&A as a tool amid slower organic growth prospects as they look to expand capabilities in attractive end-markets. Many strategic acquirers will seek tech-enabled companies to execute on growth strategies in an increasingly tech-centric world. Both strategic and financial buyers will be driven by the desire to supplement limited organic growth, capture synergies and put excess capital to work.

Total Technology Deals

Median Deal Value ($ in millions)

CONTENTS Active Buyers Industry Highlights Public Comparables Industry Segment Trends IT Managed Services, Integration & Consulting Cloud Software & SaaS E-Commerce Services Customer Relationship Management (CRM) Business Intelligence & Data Digital Advertising & Marketing BKD Services About BKD Corporate Finance

ABOUT BKDCF Founded in 1994, BKD Corporate Finance helps companies and stockholders go beyond their numbers by creating value through investment banking solutions that include mergers, acquisitions, sales, recapitalizations, management buyouts and financings.

TECHNOLOGY CONTACTS 2017

2016

1,754

1,747

$35

$27

Kevin Brynestad Managing Director 303.861.4545 [email protected] Jeff Johnson Vice President 303.861.4545 [email protected]

Source: S&P Capital IQ; Technology category includes Software and Services, Internet Software and Services, IT Services and Application Software and all relevant segments.

bkdcorporatefinance.com

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ACTIVE BUYERS 2017 Deal Metrics by Buyer Type Strategic Buyers

Financial Buyers

Undisclosed Buyers

1,582 Deals $48B in Deal Value

123 Deals $12B in Deal Value

Deals by Buyer Type 2017 Strategic Buyer

Financial Buyer

Undisclosed

Mixed

90.2%

42 Deals $15M in Deal Value 7.0%

Mixed Buyers

7 Deals $8B in Deal Value

Top 15 Strategic Buyers in 2017 Buyer # of Deals Cisco Systems, Inc. (NasdaqGS:CSCO) 7 Togetherwork Holdings, LLC 6 Microsoft Corporation (NasdaqGS:MSFT) 6 Accenture plc (NYSE:ACN) 6 Zayo Group Holdings, Inc. (NYSE:ZAYO) 5 j2 Global, Inc. (NasdaqGS:JCOM) 5 TIBCO Software Inc. 4 ServiceNow, Inc. (NYSE:NOW) 4 Genpact Limited (NYSE:G) 4 Airbnb, Inc. 4 The Descartes Systems Group Inc. (TSX:DSG) 3 Upland Software, Inc. (NasdaqGM:UPLD) 3 Tekplay Systems Limited 3 VMware, Inc. (NYSE:VMW) 3 Professional DataSolutions, Inc. 3 66 TOTAL 3.8% % TOTAL DEALS IN 2017

2.4% 0.4%

Top 15 Financial Buyers in 2017 Buyer Thoma Bravo, LLC Vista Equity Partners LLC Insight Venture Partners LLC ESW Capital, LLC Marlin Equity Partners, LLC HGGC, LLC GTCR, LLC Apax Partners LLP Centre Lane Partners, LLC H.I.G. Capital, LLC Clearlake Capital Group, L.P. EQT Partners AB The Wicks Group of Companies, L.L.C. Francisco Partners Management LLC K1 Investment Management, LLC TOTAL % TOTAL DEALS IN 2017

# of Deals 7 5 4 3 3 2 2 2 2 2 2 2 2 2 2 42 2.4%

Source: S&P Capital IQ


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INDUSTRY HIGHLIGHTS • The total number of deals in the technology space declined over 2016, but overall median transaction values increased. • The tech sector giants should benefit greatly from the ability to repatriate overseas cash at the reduced tax rate of 15.5 percent. At 2017 year-end, Apple, Amazon, Facebook and Microsoft had approximately $460 billion in cash held with foreign subs that could potentially be freed up for additional M&A activity. • Alphabet Inc., Cisco Systems, Inc. and Microsoft Corporation remained part of the most active strategic buyers in the technology space, each making three to seven acquisitions during 2017. • Tech startups were encouraged that the final tax reform bill left unchanged the tax treatment of stock incentives, which currently provides that stock incentives are taxed when they are exercised. Much to the dismay of the industry, an initial draft of the tax reform bill had proposed that stock incentives become taxable upon the completion of vesting. Source: Fast Company

PUBLIC COMPARABLES BKDCF has highlighted companies in six technology segments in this update: IT Managed Services, Integration and Consulting; Cloud Software and SaaS; E-Commerce Services; Customer Relationship Management (CRM); Business Intelligence and Data; and Digital Advertising and Marketing. Total enterprise value (TEV) to revenue for the past three years for these categories is presented in the chart below.

Three-Year TEV/Revenue by Industry Segment 8.00x 7.00x 6.00x 5.00x 4.00x 3.00x 2.00x 1.00x 0.00x

IT Managed Services

Digital Advertising & Marketing

E-Commerce Services

Cloud Software & SaaS

Business Intelligence & Data

Customer Relationship Management (CRM)



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IT MANAGED SERVICES, INTEGRATION & CONSULTING IT managed services, integration and consulting companies continue to be key elements in the daily operations of organizations with outsourced IT needs. As enterprise IT infrastructure requirements continue to advance, many companies are turning to outsourcing IT infrastructure, IT security, network hosting, communications, mobility and other IT-related operations. Creating a business that is an all-encompassing IT managed service provider has proven to be a strong catalyst for M&A activity during 2017, as firms seek to scale and diversify by offering a wide range of capabilities beyond a niche focus. Select transactions that illustrate this trend: • ConvergeOne, Inc. acquired Alexander Open Systems, Inc. (AOS) for $65.9 million on December 18, 2017. The deal was an add-on acquisition for ConvergeOne and Clearlake Capital. AOS provides IT consulting services through multiple service management solutions. • CloudScale365, Inc. acquired FuturTech Consulting, LLC on November 28, 2017, for an undisclosed amount. FuturTech provides IT consulting services such as managed services, network services and others. • Keywords International Limited entered into a stock purchase agreement to acquire VMC Consulting, Inc. for $49.8 million on October 24, 2017. VMC is a technology consulting outsourcing company that provides hardware, software, infrastructure and data center solutions for enterprises.

Public Comparables in millions of dollars Company Accenture CACI International Capgemini CGI Grpup Cognizant Technology CRA International CSRA Inc. DXC Technology Edgewater Technology ePlus FDM Group FTI Consulting HCL Technologies Limited Huron Consulting Group Information Services Group Insight Enterprises, Inc. Luxoft Holdings ManTech International MAXIMUS Perficient, Inc. Persidio, Inc. Resources Connection, Inc. Rimini Street, Inc. Syntel, Inc. The Hackett Group Unisys Corporation Virtusa Corporation Xerox Corporation

Ticker ACN CACI CAP.PA GIB CTSH CRAI CSRA DXC EDGW PLUS FDM FCN HCLTECH HURN III NSIT LXFT MANT MMS PRFT PSDO RECN RMNI SYNT HCKT UIS VRTU XRX

Price (2/15/18) $159.79 $150.75 $126.54 $57.72 $79.82 $43.19 $40.51 $100.14 $6.25 $73.35 $12.23 $42.68 $14.67 $40.15 $4.23 $35.18 $46.25 $51.79 $66.88 $18.86 $14.57 $15.15 $8.48 $21.91 $16.04 $11.10 $49.54 $29.79

52 Week Low High $114.82 $162.60 $112.10 $159.40 $99.37 $135.03 $48.50 $58.00 $57.00 $80.13 $31.77 $49.31 $27.38 $40.65 $67.76 $102.95 $5.58 $7.98 $60.25 $97.75 $8.94 $14.51 $31.65 $45.27 $12.43 $16.24 $29.53 $47.45 $2.95 $4.63 $32.10 $53.19 $40.15 $67.85 $33.50 $53.31 $57.12 $72.71 $16.20 $20.29 $12.75 $19.74 $12.05 $17.40 $6.48 $10.40 $15.82 $26.33 $13.24 $20.69 $6.90 $15.15 $25.72 $50.00 $26.64 $37.42 Median Average

TTM Revenue 35,858 4,398 15,869 8,748 14,810 370 5,064 20,151 111 1,413 307 1,782 7,617 725 257 6,704 878 1,649 2,467 459 2,785 590 202 924 262 2,744 965 10,265 $1,715 $5,299

TTM EBITDA 5,854 373 1,839 1,452 2,961 25 841 3,164 5 100 58 160 1,720 97 16 238 93 126 375 51 217 46 19 250 41 45 67 1,458 $143 $775

Enterprise Value 95,672 4,809 23,305 17,703 42,883 330 9,584 34,588 80 1,086 1,274 1,883 19,673 1,220 277 1,786 1,484 1,871 4,184 721 2,203 467 590 2,094 465 471 1,497 12,060 $1,828 $10,152

EBITDA Margin 16.3% 8.5% 11.6% 16.6% 20.0% 6.6% 16.6% 15.7% 4.9% 7.1% 19.0% 9.0% 22.6% 13.3% 6.1% 3.5% 10.6% 7.7% 15.2% 11.1% 7.8% 7.9% 9.2% 27.1% 15.6% 1.6% 6.9% 14.2% 10.9% 11.9%



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EV to Sales 2.7x 1.1x 1.5x 2.0x 2.9x 0.9x 1.9x 1.7x 0.7x 0.8x 4.1x 1.1x 2.6x 1.7x 1.1x 0.3x 1.7x 1.1x 1.7x 1.6x 0.8x 0.8x 2.9x 2.3x 1.8x 0.2x 1.6x 1.2x 1.6x 1.6x

EV to EBITDA 16.3x 12.9x 12.7x 12.2x 14.5x 13.4x 11.4x 10.9x 14.8x 10.9x 21.8x 11.8x 11.4x 12.6x 17.6x 7.5x 15.9x 14.8x 11.2x 14.1x 10.2x 10.1x 31.9x 8.4x 11.4x 10.5x 22.5x 8.3x 12.4x 13.6x

CLOUD SOFTWARE & SAAS Although cloud computing in today’s business environment may be somewhat ubiquitous, Cloud Software and Software as a Service (SaaS) companies continue to gain popularity among a wide range of businesses as the benefits of moving to the cloud and/or leveraging a SaaS model are undeniable. Cloud software and SaaS companies allow companies to deleverage their data risk and gain both operating and cost efficiencies. Major benefits include: flexible payment structures; scalable usage; automatic real-time updates; accessibility; and capacity. An additional trend gaining strong support is the implementation of hybrid cloud systems that integrate the best of public and private cloud software and services, allowing companies to tailor their operating systems for the most cost-effective solution. M&A activity in this sector remains strong as major players such as Adobe, Microsoft, Cisco and Citrix continue to seek innovative cloud software and SaaS company solutions to expand their competitive capabilities. Select transaction highlights: • Synopsys, Inc. acquired Black Duck Software, Inc. for approximately $570 million on November 2, 2017. Black Duck provides open source logistics software solutions for open source software (OSS) adoption, governance and management. • SNC-Lavalin Group, Inc. (TSX:SNC) acquired Data Transfer Solutions, Inc. for $45 million on October 30, 2017. Data Transfer Solutions develops and provides asset management, geographic information systems (GIS) and transportation planning software solutions for government and transportation sectors. • MRI Software LLC acquired eCondoSystems, LLC on October 17, 2017 for an undisclosed amount. eCondoSystems develops cloud-based software solutions for the condominium development and sales sector.

Public Comparables in millions of dollars Company Adobe Systems, Inc. Aerohive Networks, Inc. Akamai Technologies, Inc. Amber Road, Inc. Athenahealth, Inc. Box, Inc. Callidus Software, Inc. ChannelAdvisor Corporation Cisco Systems, Inc. Citrix Systems, Inc. Cogint, Inc. Cornerstone OnDemand, Inc. Instructure, Inc. J2 Global, Inc. LogMeIn, Inc. Microsoft Corporation New Relic, Inc. Qualys, Inc. RingCentral, Inc. ServiceNow, Inc. ServiceSource International, Inc. Symantec Corporation Twillo Inc. Wayside Technology Group, Inc. Zix Corporation

Ticker ADBE HIVE AKAM AMBR ATHN BOX CALD ECOM CSCO CTXS COGT CSOD INST JCOM LOGM MSFT NEWR QLYS RNG NOW SREV SYMC TWLO WSTG ZIXI

Price (2/15/18) $197.13 $4.20 $66.87 $9.95 $137.74 $21.20 $35.75 $8.75 $42.09 $89.44 $3.35 $39.10 $42.05 $76.32 $130.20 $90.81 $69.22 $67.95 $57.85 $147.74 $3.46 $27.02 $30.72 $13.05 $4.09

52 Week Low High $117.83 $204.45 $3.02 $6.50 $44.65 $69.56 $6.14 $10.29 $95.01 $158.66 $15.73 $24.10 $18.38 $36.25 $8.30 $12.65 $30.36 $42.98 $73.33 $95.00 $2.60 $6.95 $33.24 $44.25 $22.00 $43.80 $70.27 $91.48 $90.35 $131.20 $63.62 $96.07 $33.10 $69.38 $33.75 $68.10 $24.25 $58.85 $83.42 $157.00 $2.61 $6.05 $24.94 $34.20 $22.80 $34.74 $12.75 $21.75 $3.88 $6.67 Median Average

TTM Revenue 7,302 153 2,503 78 1,220 479 253 123 48,096 2,825 215 482 159 1,118 802 95,652 330 231 502 1,933 239 4,739 399 442 64 $479 $6,814

TTM EBITDA 2,494 (18) 747 (11) 165 (121) 0 (10) 14,414 852 (16) (20) (44) 435 197 33,252 (40) 58 (11) 13 6 859 (46) 9 15 $9 $2,127

Enterprise Value 92,968 160 11,262 285 5,631 2,798 2,210 180 173,760 13,856 272 2,234 1,231 4,346 6,577 653,871 3,605 2,288 4,294 24,910 268 19,849 2,567 56 192 $2,798 $41,187

EBITDA Margin 34.2% -11.6% 29.8% -14.0% 13.5% -25.2% 0.1% -8.2% 30.0% 30.2% -7.6% -4.1% -27.7% 38.9% 24.6% 34.8% -12.0% 25.1% -2.1% 0.6% 2.4% 18.1% -11.5% 1.9% 22.5% 1.9% 7.3%



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EV to Sales 12.7x 1.0x 4.5x 3.7x 4.6x 5.8x 8.7x 1.5x 3.6x 4.9x 1.3x 4.6x 7.8x 3.9x 8.2x 6.8x 10.9x 9.9x 8.6x 12.9x 1.1x 4.2x 6.4x 0.1x 3.0x 4.6x 5.6x

EV to EBITDA 37.3x NM 15.1x NM 34.1x NM NM NM 12.1x 16.3x NM NM NM 10.0x 33.4x 19.7x NM 39.5x NM NM 46.1x 23.1x NM 6.6x 13.3x 19.7x 23.6x

E-COMMERCE SERVICES According to the U.S. Census Bureau, total e-commerce retail sales as a percentage of total retail sales in the U.S. have risen from 8.5 percent during Q1 2017, to 9.1 percent during Q3 2017. Although Q4 data has not yet been released, the historical trend in e-commerce retail sales suggests this percentage will continue to increase. Customers are increasingly comfortable shopping online, and companies with a strong online presence and user-friendly e-commerce platform will drive significant value (as can be seen by the stratospheric rise of Amazon). Companies that provide ecommerce platforms and related services are in high demand as organizations seek to streamline their website design capabilities and website portability. Recent transactions in the space reflect a recognition by new and established companies alike, increasing the importance of having an e-commerce presence. This trend will continue to drive strong valuation multiples for participants as platform companies increasingly become essential to business operations. Select transaction highlights: • Target Corporation (NYSE:TGT) acquired Shipt, LLC for $550 million on December 13, 2017. Shipt operates a platform that allows users to shop grocery items, connecting members to groceries and everyday essentials, as well as providing delivery services. • Instructure, Inc. acquired Practice XYZ, Inc. for $28 million on November 22, 2017. Practice XYZ provides an interactive video learning platform for training learners at various companies, institutions and health care providers across the Web and via mobile. • Warburg Pincus LLC made a tender offer to acquire an additional 62.73 percent stake in CYREN Ltd. (NasdaqCM:CYRN) for $78.2 million on November 20, 2017. CYREN provides information security solutions for protecting web, email and mobile transactions in the U.S. and internationally. • Upland Software, Inc. (NasdaqGM:UPLD) acquired Qvidian Corporation for $50 million on November 16, 2017. Qvidian provides cloud-based sales execution solutions to sales and marketing leaders across multiple industries. • USA Technologies, Inc. (NasdaqGM:USAT) acquired Cantaloupe Systems, Inc. for $86.6 million on November 6, 2017. Cantaloupe provides cloud-based mobile solutions for cashless vending, dynamic route scheduling, automated prekitting, merchandising and inventory management.

Public Comparables in millions of dollars Ticker Company BroadVision, Inc. Commerce Hub, Inc. InnerWorkings, Inc. Kinaxis Inc. ModusLink Global Solutions, Inc. Park City Group, Inc. Pitney Bowes Inc. Shopify Inc. Web.com Group, Inc. Wix.com Ltd

BVSN CHUB.K INWK XS MLNK PCYG PBI SHOP WEB WIX

Price (2/15/18) $2.95 $18.32 $8.87 $65.78 $2.25 $11.30 $12.32 $137.56 $17.75 $71.70

52 Week Low High $2.66 $5.95 $14.85 $22.50 $8.19 $12.03 $50.28 $73.24 $1.39 $2.90 $8.10 $16.10 $9.50 $16.26 $58.63 $138.16 $17.20 $25.95 $50.90 $86.15 Median Average

TTM Revenue 6 107 1,106 129 418 20 3,550 673 749 426 $422 $718

TTM EBITDA (11) 28 46 26 (9) 4 636 (26) 162 (44) $15 $81

Enterprise Value 5 797 602 1,527 76 212 5,073 12,850 1,502 3,027 $1,149 $2,567

EBITDA Margin -168.8% 26.1% 4.2% 19.9% -2.2% 20.6% 17.9% -3.8% 21.6% -10.4% 11.1% -7.5%



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EV to Sales 0.8x 7.4x 0.5x 11.8x 0.2x 10.4x 1.4x 19.1x 2.0x 7.1x 4.6x 6.1x

EV to EBITDA NM 28.5x 13.0x 59.4x NM 50.5x 8.0x NM 9.3x NM 20.7x 28.1x

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) CRM allows businesses to organize, automate and synchronize every aspect of customer interaction, from sales transactions and marketing to customer service and support. CRM companies provide a platform or interface to manage the customer relationship and are increasingly important to ensuring improved organization; enhanced customer contact and retention; enhanced customer service; increased potential automation; and improved data analysis and reporting. Transactions in the past year for companies specifically in the CRM space are somewhat limited, as CRM functions are often integrated into other enterprise management software solutions. CRM-specific companies are gaining additional traction, however, as more firms seek a third party to assist with their CRM needs. Key transactions in the space during the past year include: • American Family Mutual Insurance Company acquired a majority state in Networked Insights, Inc. from Goldman Sachs on December 14, 2017, for an undisclosed sum. Networked develops analytics and audience targeting tools for marketers and agencies. • HGGC Fund II, L.P., a fund managed by HGGC, LLC, acquired eTouches, Inc. on May 9, 2017, for an undisclosed sum. eTouches is a cloud-based event management platform that offers a multifaceted approach to meetings and events. • TeleTech Healthcare Solutions, Inc. acquired Connextions, Inc. from OptumHealth Holdings, LLC for $80 million on April 3, 2017. Connextions is a technology and business process outsourcing company that develops and provides health care consumer engagement solutions through proprietary software “bConnected.” • Inuvo, Inc. acquired substantially all of the assets of NetSeer, Inc. as of February 6, 2017, for $67 million, an implied enterprise value to revenue multiple of 3.2x. NetSeer at the time of the transaction was operating with negative cash flow. The company develops concept-based ad targeting solutions for advertisers and publishers.

Public Comparables in millions of dollars Ticker

Company Five9 LivePerson MINDBODY NICE Systems Pegasystems, Inc. Salesforce.com, Inc. SDL plc Veeva Systems Inc. Zendesk, Inc.

FIVN LPSN MB NICE PEGA CRM SDL VEEV ZEN

Price (2/15/18) $26.10 $11.85 $32.60 $87.75 $50.00 $109.02 $5.87 $57.90 $42.60

52 Week Low High $15.77 $27.81 $6.48 $15.10 $21.57 $36.25 $67.76 $92.31 $39.65 $64.85 $80.25 $114.52 $4.65 $9.42 $41.30 $68.07 $24.49 $42.82 Median Average

TTM Revenue 189 218 171 1,332 801 9,923 396 651 431 $431 $1,568

TTM EBITDA 6 11 (8) 306 55 553 44 163 (81) $44 $117

Enterprise EBITDA Value Margin 1,435 2.9% 651 5.2% 1,312 -4.6% 5,415 23.0% 3,699 6.9% 77,705 5.6% 446 11.1% 7,426 25.0% 4,077 -18.7% $3,699 5.6% $11,352 6.3%



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EV to Sales 7.6x 3.0x 7.7x 4.1x 4.6x 7.8x 1.1x 11.4x 9.5x 7.6x 6.3x

EV to EBITDA NM 57.1x NM 17.7x 66.8x NM 10.2x 45.7x NM 45.7x 39.5x

BUSINESS INTELLIGENCE & DATA Business intelligence and data companies are crucial, as firms continue to implement and evolve their technology-driven processes to analyze swaths of data into timely, actionable information. Companies with business intelligence and data solutions are in high demand, as many organizations lack the resources and expertise of an experienced data scientist that also has the ability to code, scrub large outputs of data and apply predictive modeling tactics. Large public buyers are paying strong valuation multiples to acquire these capabilities and get a leg-up in understanding key trends within all segments of their business. Artificial intelligence (AI) also will continue to play a key role in this sector going forward as platforms continue to evolve. Key transactions during the past year have included companies that provide payment processing solutions and integrate seamlessly into back-end ERP systems, e-commerce platforms and CRM software. Being able to integrate and process data through multiple integrated systems will be key for efficient enterprises going forward. Select transactions: • Total System Services, Inc. acquired Cayan LLC for $1.1 billion on December 16, 2017. Cayan designs and develops payment technologies and processing solutions for gift cards and stored value, payment gateway and value-added services. • Iron Mountain Incorporated (NYSE:IRM) acquired IO Data Centers LLC for $1.3 billion on December 11, 2017. IO Data Centers is a data services company providing co-location and cloud services to businesses and governments worldwide. • First Data Corporation (NYSE:FDC) acquired Blue Pay, Inc. for $760 million on October 20, 2017. Blue Pay provides technology-enabled payment processing for merchants and suppliers that also includes accounting software integration, Apple Pay, batch credit card processing, ACH management and many others.

Public Comparables in millions of dollars Ticker Company Alteryx, Inc. AppFolio, Inc. Apptio, Inc. Cloudera, Inc. CoreLogic, Inc. CoStar Group, Inc. Gridsum Holding Inc. Hortonworks, Inc. Inovalon Holdings, Inc. MicroStrategy Incorporated MongoDB, Inc. NantHealth, Inc. New Relic, Inc. Open Text Corporation PROS Holdings, Inc. Sabre Corporation Splunk Inc. Tableau Software, Inc. TrueCar, Inc. Varonis Systems, Inc. Workiva Inc. Yext, Inc.

AYX APPF APTI CLDR CLGX CSGP GSUM HDP INOV MSTR MDB NH NEWR OTEX PRO SABR SPLK DATA TRUE VRNS WK YEXT

Price (2/15/18) $27.64 $40.90 $25.23 $18.10 $44.77 $345.63 $11.12 $17.95 $12.50 $135.83 $30.13 $3.04 $69.22 $35.48 $31.14 $21.57 $92.35 $81.79 $11.25 $51.95 $24.55 $11.56

52 Week Low High $14.61 $31.60 $22.84 $52.25 $10.77 $26.99 $14.50 $23.35 $36.31 $49.30 $197.18 $355.80 $6.76 $13.99 $9.10 $22.00 $10.45 $17.80 $122.91 $197.22 $24.62 $34.00 $2.60 $7.96 $33.10 $69.38 $30.88 $40.31 $21.36 $33.20 $17.30 $25.01 $54.17 $93.68 $47.30 $87.00 $10.16 $21.75 $26.35 $55.85 $13.00 $24.65 $10.58 $15.11 Median Average

TTM Revenue 118 134 189 337 1,872 930 83 262 431 505 139 102 330 2,632 169 3,599 1,158 877 314 217 200 158 $288 $671

TTM EBITDA (18) 9 (20) (372) 396 235 (11) (189) 73 81 (88) (96) (40) 732 (54) 924 (255) (146) (18) (10) (34) (59) ($19) $47

Enterprise Value 1,479 1,345 875 2,167 5,336 12,176 343 1,231 1,542 880 1,236 446 3,605 11,724 1,047 9,028 12,083 5,668 958 1,326 972 941 $1,336 $3,473

EBITDA Margin -14.9% 7.0% -10.7% -110.4% 21.1% 25.3% -12.7% -72.3% 17.0% 16.0% -63.4% -94.3% -12.0% 27.8% -31.8% 25.7% -22.1% -16.7% -5.6% -4.7% -16.8% -37.3% -12.3% -17.5%



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EV to Sales 12.5x 10.0x 4.6x 6.4x 2.9x 13.1x 4.1x 4.7x 3.6x 1.7x 8.9x 4.4x 10.9x 4.5x 6.2x 2.5x 10.4x 6.5x 3.0x 6.1x 4.9x 6.0x 5.4x 6.3x

EV to EBITDA NM 143.1x NM NM 13.5x 51.7x NM NM 21.1x 10.9x NM NM NM 16.0x NM 9.8x NM NM NM NM NM NM 16.0x 38.0x

DIGITAL ADVERTISING & MARKETING Led by behemoth Google, technology-based digital advertising and marketing companies are essential to successfully targeting today’s consumers and business leaders. M&A activity in this sector remains strong, with consolidation activity led by traditional global ad agencies and major service providers, digital design consultancies, user experience (UX) design firms, digital transformation and digital marketing/advertising firms. Trends suggest a continued convergence between assets in the advertising and marketing sectors, with some experts suggesting that digital marketing services firms are undervalued. The value of digital assets continues to climb, and the increasing prevalence of e-commerce retail throughout the world will drive strong demand for digital advertising and marketing firms. Select transactions: • FullContact Inc. acquired Mattermark on December 21, 2017, for an undisclosed amount. Mattermark researches, prospects and tracks private companies for deal professionals in the U.S. and internationally. • Branded Response, Inc. acquired Sellpoints, Inc. on December 11, 2017, for an undisclosed amount. Sellpoints operates as a consumer insights platform that enables brands and retailers to see the impact of their product selling methodologies live. Its platform acts as a pre-marketing conversion engine to build orchestrated sales online. • bpost SA/NV (ENXTBR:BPOST) acquired Radial, Inc. for $820 million on October 8, 2017. Radial provides commerce technologies, omnichannel operations and marketing solutions for retailers in the U.S. and internationally.

Public Comparables in millions of dollars Ticker Company Alphabet Inc. Baidu, Inc. Criteo S.A. Hubspot iClick Interactive Marin Software Incorporated Perion Network Ltd. QuinStreet, Inc. SendGrid, Inc. SINA Corporation Sogou Inc. Telaria, Inc. The Rubicon Project, Inc. Yandex N.V.

GOOGL BIDU CRTO HUBS ICLK MRIN PERI QNST SEND SINA SOGO TLRA RUBI YNDX

Price (2/15/18) $1072.70 $235.89 $30.25 $103.15 $6.12 $9.10 $0.95 $13.06 $23.78 $117.55 $9.45 $4.65 $1.72 $38.89

52 Week Low High $824.30 $1198.00 $166.00 $274.97 $21.00 $56.00 $56.50 $103.95 $5.05 $11.40 $7.00 $16.80 $0.88 $2.19 $3.04 $13.25 $17.50 $27.43 $68.13 $122.93 $8.08 $14.70 $1.83 $5.30 $1.53 $9.05 $21.40 $39.67 Median Average

TTM Revenue 110,855 13,365 2,297 376 111 80 281 336 103 1,584 908 177 197 1,662 $356 $9,452

TTM EBITDA 35,781 3,784 242 (23) (28) (16) 18 11 6 417 142 (10) (9) 429 $14 $2,910

Enterprise Value 646,894 72,873 1,605 3,699 389 25 100 561 1,061 6,909 3,092 161 (55) 12,164 $1,333 $53,534

EBITDA Margin 32.3% 28.3% 10.5% -6.2% -25.2% -19.8% 6.2% 3.4% 6.0% 26.3% 15.6% -5.7% -4.3% 25.8% 6.1% 6.7%



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EV to Sales 5.8x 5.5x 0.7x 9.8x 3.5x 0.3x 0.4x 1.7x 10.3x 4.4x 3.4x 0.9x NM 7.3x 3.5x 4.2x

EV to EBITDA 18.1x 19.3x 6.6x NM NM NM 5.7x 49.7x 171.1x 16.6x 21.9x NM 6.4x 28.4x 18.7x 34.4x

BKD SERVICES

Abundant services. Sheer precision. LLP offers a full range of services and industry-focused expertise to provide you with insightful solutions and help you stay a cut above the competition.

BKD,

FINANCIAL ASSURANCE • Audit, review & compilations • Benchmarking • Internal audit • Internal control studies • SEC filings • SOX 404 compliance CONSULTING • Accounting outsourcing • Bankruptcy consulting • Budgeting & financial planning • Cost accounting • Employee benefit plan structuring & administering • ESOP feasibility analysis • Forecasts & projections FEDERAL & STATE TAX PLANNING & COMPLIANCE • Compensation planning • Corporate tax planning • Inventory tax planning • R&D tax credit enhancements • Real estate cost segregation studies • Restructuring planning • State & local tax planning FORENSICS & VALUATION CONSULTING • Bankruptcy services • Business valuations • Fraud prevention • Litigation support bkdcorporatefinance.com

INTERNATIONAL TAX STRATEGIES • DISC • Expatriate assignment services • Foreign tax credit planning • Global structuring support • Indirect global taxes • Transfer pricing INVESTMENT & FINANCIAL PLANNING • Estate & gift planning • Family tax planning • Investment management • Personal wealth planning • Retirement planning TRANSACTION SERVICES • Federal, state & local tax diligence • Financial diligence • Operations diligence • Technology diligence

GROWTH & ADVISORY INVESTMENT BANKING • Mergers & acquisitions • Company sales & divestitures • Debt & equity recapitalizations • Management buyouts • Affiliations • Succession planning • Strategic options analysis ECONOMIC DEVELOPMENT • Expansion projects • Grants & public incentives

INTERNATIONAL MARKET • Development • Exporting • Direct investment • Licensing • Acquisitions

OPERATIONS MANAGEMENT PERFORMANCE ENHANCEMENT ADVICE & KNOW-HOW (PEAK) METHODOLOGY • Business process improvement • Decision costing • Inventory optimization • Lean manufacturing • Profit improvement

TECHNOLOGY APPLICATIONS SOFTWARE • Best-Abra • MAS 90, 200 & 500 • Microsoft CRM • Microsoft Dynamics AX • Microsoft Dynamics GP IT SERVICES • IT assessments & planning • IT control reviews • Project management assistance • Security solutions & penetration testing STRATEGIC TECHNOLOGY • E-business planning • IT assessments & planning • Systems selection & implementation 11

INDUSTRY FOCUS

CONTACT US – TECHNOLOGY TEAM Kevin Brynestad Managing Director Denver, Colorado 303.861.4545 [email protected]

Jeff Johnson Vice President Denver, Colorado 303.861.4545 [email protected]

ABOUT US The professionals of BKDCF have more than 100 years of combined experience helping company owners plan for and execute their growth and exit strategies. From managing the sale of a company to negotiating the acquisition of a competitor or raising debt and equity capital to improve financial and operational flexibility, BKDCF can help you to develop a specific course of action for achieving your desired results.

Technology, Media & Telecom

Consumer Services & Products

Manufacturing & Distribution

Business Services

Construction & Engineering

Energy

Financial Services

Health Care

BKDCF, a wholly owned subsidiary of BKD, LLP, helps companies and stockholders go beyond their numbers by creating value through investment banking solutions that include mergers, acquisitions, sales, recapitalizations, management buyouts and financings. Founded in 1994, BKDCF is staffed with experienced investment bankers and financial analysts. In addition, the firm draws on the resources of BKD with its network of accountants, auditors, tax professionals, business consultants and industry-specific consultants. BKDCF is a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation.


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