MobileSoftwareLandscape SelectCompaniesMarketing&AdvertisingMarketing&Advertising Commerce&PaymentsCommerce&Payments Content&EntertainmentContent&Entertainmentyy

Social&MessagingSocial&Messaging EnterpriseEnterprise HealthHealth

InfrastructureInfrastructure

Development Platforms Security Converged Communications

AnalyticsLBS

Acquired Public

BriefMobileSoftwareMarketUpdate&Ecosystem

2Q132Q13

B dW kBradWeekesVicePresident

Disclaimer

TheinformationcontainedinthisReportisobtainedfromsourceswebelievetobereliable,butnorepresentationorguaranteeis, p gmadeabouttheaccuracyorcompletenessofsuchinformation,ortheopinionsexpressedherein.NothinginthisReportisintendedt b d ti f ifi ittobearecommendationofaspecificsecurityorcompanyorintendedtoconstituteanoffertobuyorsell,orthesolicitationofanoffertobuyorsell,anysecurity.SoftwareEquityGroupLLCmayy , y y q y p yhaveaninterestinoneormoreofthesecuritiesorcompaniesdiscussedherein.FinancialdataprovidedbyCapitalIQ.

MobileSoftwareLandscape SelectCompaniesMarketing&AdvertisingMarketing&Advertising Commerce&PaymentsCommerce&Payments Content&EntertainmentContent&Entertainmentyy

Social&MessagingSocial&Messaging EnterpriseEnterprise HealthHealth

InfrastructureInfrastructure

Development Platforms Security Converged Communications

AnalyticsLBS

Acquired Public

PublicMarketPerformanceofSelectMobileSoftwareProviders

14.5x ObservationsObservations

EV/RevM lti lEV/RevM lti l

Majorityofhighperformingmobilecompanieshavedemonstratedanabilitytomonetizethroughadvertisingandstandtobemajorbeneficiariesoftheforecastedgrowthinmobileadvertisingspend

14.5x13.7x

9.6x8.1x

7.1x 6.7xMultipleMultiple

MillennialMediasEV/Revenue(2.9x)hascomedownconsiderablyfromitsIPOwhenithit17.9x,ascompetitionwithGoogleandFacebookformobileaddollarsintensifies

4.7x3.9x 3.9x 3.3x 2.9x 2.9x 2.8x

1.5x 1.2x 0.8x 0.6x 0.5x 0.3x 0.1x 0.1x

Securityfirmsareperformingextremelywell,benefitingfromenterprisesecurityconcernsasBYOD continuestogainmomentum

122%

TTMTTM

Operahassucceededwhilemanyofitspeers,whowerealsoalreadyinmobilebeforeAppledramaticallyalteredthemobileecosystemwiththeiPhone,failedmiserably.Operahaspivoteditsbusiness

d l ff tti d li i it l73% 69% 66%55%

42% 36% 36% 34%23% 19% 19% 16% 12% 11%

TTMRevenueGrowth

TTMRevenueGrowth

model,offsettingdeclinesinitslegacybusinessofmobilebrowserswithrapidlygrowingadvertisingandbandwidthmanagementrevenue

Gameprovidersarestrugglingdueto0% 0% 0%

3%11%

34%

inconsistentperformance,lackofdifferentiationanddifficultyinmonetizingmobileaswellastheyhavehistoricallydoneontheweb

Some legacy mobile software providersSomelegacymobilesoftwareprovidersarestrugglingtoadjusttheirbusinessmodelsfromcarriercentrictoappstore/OEMcentric

TTMTTM

RevenueTTM

GrossTTM

EBITDA EV/ EV/Forward

EV/Forward

EV/YTD

Stock

PublicMarketPerformanceofSelectMobileSoftwareProviders

Company Ticker Market Cap EVTTM

RevenueRevenue

GrowthGross

MarginEBITDA Margin

EV/ Revenue

EV/ EBITDA

EV/ Revenue

EV/ EBITDA

StockReturn

Bango BGO $127.9 $124.6 $17.6 -34.4% 19.1% -22.1% 7.1x n/a n/a n/a -7.7%BSQUARE BSQR $30.6 $11.2 $96.7 0.3% 18.2% 1.5% 0.1x 7.6x n/a n/a -9.5%Glu Mobile GLUU $151.3 $130.1 $85.1 19.3% 90.2% -10.4% 1.5x n/a 1.4x n/a -6.0%Google GOOG $292,076.9 $249,354.9 $53,499.0 33.8% 57.7% 31.4% 4.7x 14.8x 4.0x 10.9x 21.7%Gree TSE:3632 $2 070 0 $1 918 9 $1 648 9 11 5% 85 7% 40 4% 1 2x 2 9x n/a n/a -40 2%Gree TSE:3632 $2,070.0 $1,918.9 $1,648.9 11.5% 85.7% 40.4% 1.2x 2.9x n/a n/a -40.2%Facebook FB $60,157.5 $52,946.5 $5,489.0 35.9% 72.7% 23.9% 9.6x 40.4x 7.4x 14.2x -11.1%Millennial Media MM $692.8 $559.3 $194.2 68.7% 40.9% -0.9% 2.9x n/a 1.9x 27.8x -33.2%Myriad Group MYRN $154.2 $156.6 $54.5 -2.9% 22.7% -11.1% 2.9x n/a n/a n/a -3.9%NQ Mobile NQ $419.0 $304.3 $109.0 122.4% 69.9% 5.5% 2.8x 51.2x 1.5x 4.9x 34.0%OpenTable OPEN $1,457.0 $1,360.4 $167.8 15.6% 74.5% 29.2% 8.1x 27.8x 7.0x 15.4x 24.5%Opera OB:OPERA $942 3 $890 9 $231 1 35 9% 43 9% 27 2% 3 9x 14 2x n/a n/a 34 8%Opera OB:OPERA $942.3 $890.9 $231.1 35.9% 43.9% 27.2% 3.9x 14.2x n/a n/a 34.8%Qihoo 360 Technology QIHU $5,668.4 $5,367.4 $369.6 72.6% 89.4% 17.9% 14.5x 81.0x 8.1x 29.6x 55.0%Pandora Media P $3,216.4 $3,140.9 $471.9 55.2% 32.0% -8.2% 6.7x n/a 4.6x 121.3x 93.9%SmithMicro SMSI $39.5 $11.2 $44.8 -10.5% 80.6% -42.8% 0.3x n/a 0.2x n/a -34.2%Synchronoss Technologies SNCR $1,184.7 $1,127.4 $287.4 19.4% 58.5% 21.8% 3.9x 18.0x 3.1x 9.2x 42.7%Tangoe TNGO $575.7 $545.3 $165.2 41.5% 54.2% 8.7% 3.3x 38.1x 2.7x 16.4x 20.0%TeleCommunication Systems TSYS $137 1 $237 8 $482 1 10 8% 33 5% 7 9% 0 5x 6 3x 0 5x 5 0x 9 7%TeleCommunication Systems TSYS $137.1 $237.8 $482.1 10.8% 33.5% 7.9% 0.5x 6.3x 0.5x 5.0x -9.7%TeleNav TNAV $207.5 $20.0 $209.2 0.4% 68.9% 11.3% 0.1x 0.8x 0.1x 3.0x -34.5%Velti Plc VELT $127.0 $157.9 $259.6 22.8% 51.6% -1.9% 0.6x n/a 0.7x 17.2x -70.5%Yelp YELP $2,240.6 $2,146.1 $156.3 66.0% 92.9% -2.8% 13.7x n/a 8.9x 74.8x 76.5%Zynga, Inc ZNGA $2,207.0 $1,038.3 $1,223.9 0.5% 72.9% 11.7% 0.8x 7.2x 1.2x 20.9x 16.3%

M $292 076 9 $249 354 9 $53 499 0 122 4% 92 9% 40 4% 14 5x 81 0x 8 9x 121 3x 93 9%Max $292,076.9 $249,354.9 $53,499.0 122.4% 92.9% 40.4% 14.5x 81.0x 8.9x 121.3x 93.9%Median: $692.8 $559.3 $209.2 19.4% 58.5% 7.9% 2.9x 14.8x 2.3x 15.9x -3.9%Average $17,804.0 $15,311.9 $3,107.8 27.8% 58.6% 6.6% 4.2x 23.9x 3.3x 26.5x 7.6%Min $30.6 $11.2 $17.6 -34.4% 18.2% -42.8% 0.1x 0.8x 0.1x 3.0x -70.5%

PublicmobilesoftwaremedianandaverageEV/Revenuemultiplesasof2Q13were2.9xand4.2x,respectably

Leadingfirmswithstrongmobileofferings(Yelp,Facebook,Pandora,Opera,OpenTable,Google)aretradingnotablyhigher,withmedianandaverageEV/Revenuemultiplesof7.4xand7.8x,respectably

YoY revenuegrowthforleadingmobilesoftwarefirmsisinexcessof30%,andinsomecasesapproaching100%

MobileSoftwareM&AVolume

M&A Volume by YearM&A Volume by Year MobilesoftwareM&Aishittinganotherinflectionpointand M&AVolumebyYearM&AVolumebyYearisonpacetoreach338transactionsin2013,up44%YoY

MobilesoftwareM&Aiscurrentlydrivenby: Therapidlyevolvingandfragmentedmobileadtechl d d i b i t ti ith d

338

landscape,drivenbyexperimentationwithnewadformatsandtheemergenceofprogrammaticbuying

Theneedformobileadtechproviderstoachievescaleand reach 113

224 235

andreach

BringYourOwnDevice(BYOD)anditsimpactontheenterprise

2010 2011 2012 2013(F)

M&AVolumebyProductCategoryasa%ofTotalMobileSoftwareM&AM&AVolumebyProductCategory

asa%ofTotalMobileSoftwareM&A

Exponentialincreasesinmobiledataconsumption,drivingtheneedforbandwidthmanagement

Recognitionthatmobileisnotjustanotherchanneld h i li d d i l bil l i

( )

andthatspecializedandexceptionalmobiletalentisneededtofullyleverageitspotentialandnavigateitscomplexities

Traditional software providers seeking solutions that31% 22%

24%

10%11% 17%

5% 9% 6%Social&Messaging

OtherApps(includingmobileappdevelopers)

Marketing&Advertising

Traditionalsoftwareprovidersseekingsolutionsthatcomplementtheirexistingofferings

Mobilefirstsoftwareproviderslookingtoextendtheirleadershippositionbyexpandingtheirsoftwaresuite 24%

7%14% 8%

15% 22%18%

24%Infrastructure

Enterprise

Content&Entertainment

p p y p gwithcomplementaryproductofferings

8% 8% 8%

24%16% 18%

2011 2012 2013YTD

Commerce&Payments

MobileSoftwareM&AExitMultiples

R fl ti th k t i t it d t ti l it lti l f bil ft i Reflectingthemarketimmaturityandpotential,exitmultiplesformobilesoftwarecompaniesvarydramatically

Acrossthespectrumofdealsizes,multiplesrangedfrom1.3xto8.6xTTMrevenue

Generallyspeaking,transactionsinexcessof$50Mexhibitedthestrongest,mostconsistentexitmultiples,rangingfrom4.7x 6.5xTTMrevenue

Note,atthelowend,TTMrevenueinthissegmentrangesfromapproximately$7M $10M

Inaggregate,2012averageandmedianEV/Revenueexitmultipleswere4.0xvs.2.7x,respectably

EV/RevenueExitMultiplesbyTransactionSizeEV/RevenueExitMultiplesbyTransactionSizeEV/RevenueExitMultiplesEV/RevenueExitMultiples

Median Average Median Average

2.9x2 7x

4.5x4.0x

3 5X4.7X 5.0X

5.6X

8.6X

6.4X 6.5X

2.7x

1.3X 1.6X

3.5X

1.6X

EV$10&

EV>$20&

EV>$50&

EV>$100

2011 2012

&EV

SelectActiveMobileSoftwareBuyers(Last2Years)

B T t N tBuyer Targets Notes

2Q11 2Q132Q11 2Q13

Primarilytalentacquisitionsofverysmallmobilestartups,whoseserviceswereoftenshutdownshortlyafteracquisition

Ahandfulofacquisitions,namelySummly andGhostBird,willdirectlyhelpenhanceexistingYahooproducts

MostnotableistherecentWaze acquisitionforaapproximately$1B dollars.Waze enhancesGooglesindustryleadingmobilemapsoffering

Otheracquisitionsfocusedondrivinglocalcommerce(Zagat,Zave,TxVia),productivity(QuickOffice,Sparrow,Wavii)andanalytics(Behavio)

Much like Yahoo Zynga is using acquisitions to quickly

MostnotablewastheInstragram acquisitionfor$1B i ff i (i h t

MuchlikeYahoo,Zyngaisusingacquisitionstoquicklyenhanceitsmobilecapabilities

OMGPOP,makerofDrawSomethingwasthemostexpensiveacquisition($183M)butwasshutdownafter15monthsduetomassivelosses

Otheracquisitionsfocusedprimarilyonsocialgaming

~$1B,servingasanoffensive(improvephotocapabilities)anddefensivemove(removethreatofInstagram itselfandotherswhomayacquireit)

WiththeacquisitionofParse,Facebookentersanewrealmofhelpingdevelopersmonetizemobile

Operahasusedacquisitionstoenternewmarketsasitslegacymobilebrowserbusinessdeclines

Advertising came with the acquisition of 4th screen Advertisingcamewiththeacquisitionof4th screenandmobiletheory,announcedonthesameday

BandwidthmanagementwithSkyfire,foraheftyexitmultiple(~>30x)

Tangoe hasusedacquisitionstoconsolidatethetelecomexpensemanagement(TEM)market

Aftermakingfouracquisitionsinaspanofnineth di i A t 2012 T h bmonthsendinginAugust2012,Tangoe hasbeen

inactiveontheM&Afront,focusedonintegratingitsproducts

Top10MobileSoftwareM&ATransactionsbyEnterpriseValue(EV)

StockBuyer TargetDate EV EV/Rev Cash Earnout

5/12/2010 $5,423 4.5x $5,423

10/13/2009 $2,420 7.9x $2,420

2/04/2013 $1 645 6 0x $1 6452/04/2013 $1,645 6.0x $1,645

7/12/2011 $1,301 7.5x $651 $100 $550

6/14/2011 $1,150 1.5x $1,150

11/14/2011 $1,050 5.5x $1,050

4/09/2012 $1,000 $300 $700

6/11/2013 $966 $9666/11/2013 $966 $966

6/24/2008$790 $790

12/8/2005 $705 10.7x $705

Top10MobileSoftwareM&ATransactionsbyEV/RevenueMultiple

9/20/2010 $42 66.9x $0.5 $16.5 $25

StockBuyer Target EV EV/Rev Cash EarnoutDate

2/15/2013 $147 35.0x $76 $71

10/13/2010 $70 25.0x $70 10/13/2010 $70 25.0x $70

1/31/2012 $70 20.0x $70

11/09/2009 $674 15.0x $674

1/31/2011 $150 11.2x $100 $50

12/08/2005 $705 10.7x $705

$ $6/07/2012 $435 10.0x $435

3/26/2012 $144 10.0x $144

12/22/2011 $279 8.9x

*Note: List excludes transactions where target revenue was withheld or less than $0 (i.e. Facebook/Instagram, Google/Waze) **Note: Akamai/Cotendo multiple is an estimate

ForFurtherDiscussion.

Todiscussthemobileecosystem,M&Atransactionsand/or your mobile business, please contact me:and/oryourmobilebusiness,pleasecontactme:

Brad WeekesBradWeekes

P:858.509.2800

C: 858.945.3032C:858.945.3032

BriefSoftwareEquityGroupOverviewp

LeadersinSoftware&TechnologyAdvisoryServices

Twentyoneyear,exclusivefocusonsoftwareadvisoryservicestolowermiddlemarket(i.e.,clientrevenue$5 $50M)representingcompaniesseeking:

StrategicexitFocusonAdvice

Growthcapital Buyout Inorganicgrowthviaacquisition Fairnessopinionsandvaluations

B d d i i Advisory Boardadvisoryservices

Clientsspanvirtuallyeverytechnology,productcategory,deliverymodelandverticalmarket

Multi Focuson

AdvisoryBoutiques

Globalpresenceprovidingadviceandguidancetomorethan2,000privateandpubliccompaniesthroughoutUS,Canada,Europe,AsiaPacific,AfricaandIsrael

Industry Software

BulgeBracketFirms IPOBoutiques

Strongcrossfunctionalteamleveragingtransaction,operating,legalandengineeringexperience

g

Unparalleledsoftwareindustryreputation,trackrecordandindustryresearch

Highlyreferenceablebaseofpastclientsandbuyers/investors

Multiservice

investors

ExtensiveGlobalReach

CurrentSellsideRepresentation

SEGcurrentlyrepresentssoftwarecompaniesintheUnitedStates,Canada,France,Germany,Australia&Saudi Arabia

RecentSellsideRepresentation

SaudiArabia

Inadditiontothecountrieslistedabove,SEGhasrecentlyrepresentedsoftwarecompaniesintheUnitedKingdom,France,Netherlands,Israel,andSouthAfrica

SEGResearchDistribution

SEGsQuarterlyandAnnualSoftwareIndustryEquityReportsandMonthlyFlashReportsaredistributedtoan

l f 5 bl foptinlistof50,000publicsoftwarecompanyCEOs,softwareentrepreneurs,privateequitymanagingdirectors,VCs,hightechcorporatelawyers,publicaccountants,etc.in76countries.

Alittleaboutme

O 15 f ti l d i t t b ki Over15yearsofoperationalandinvestmentbankingexperienceinmobile,wirelessandsoftwaresectors

Nearly10yearsofoperationalexperienceinmobiley y p pspecifically,workingcloselywithanumberofvendorsinthespace

P d t l d f d i i bil i i Productleadforawardwinningmobilemusicservice Strategicconsultantformobilebrowserandwidget

runtimeproviderp

MBA,UCLAAndersonSchoolofManagementM.Eng,ElectricalEngineering,UCSDB S C t E i i UCSDB.S.,ComputerEngineering,UCSD

Todiscussthemobileecosystem,M&Atransactionsand/or your mobile business, please contact me:and/oryourmobilebusiness,pleasecontactme:

Brad WeekesBradWeekes

P:858.509.2800

C: 858.945.3032C:858.945.3032