cloud insights - william blair & company · strategic m&a activity: corporate acquirers...

2014 Year-End Review and 2015 Outlook

Cloud InsightsM&A and Capital Markets Perspective on the Cloud Computing Industries:

• Software-as-a-Service

• Platform-as-a-Service

• Infrastructure-as-a-Service

William Blair & Company

Cloud Insights Table of Contents

Table of Contents

Summary ............................................................................................................................................................................................................................................................. 1

M&A Overview ................................................................................................................................................................................................................................................. 7

Capital Markets Overview .......................................................................................................................................................................................................................... 9

Public Company Analysis ......................................................................................................................................................................................................................... 11

Venture Capital Activity ............................................................................................................................................................................................................................ 14

William Blair & Company Selected Cloud Transactions ........................................................................................................................................................... 16

William Blair & Company Cloud Contacts ........................................................................................................................................................................................ 17

William Blair & Company SaaS Equity Research Coverage ..................................................................................................................................................... 18

Disclosures ...................................................................................................................................................................................................................................................... 19


Cloud Insights Summary 1

Summary

2014 Review and 2015 Outlook

Last year was an up-and-down (and up again) year for SaaS stocks. Despite this public equity volatility, water in the SaaS deal-making pool generally found its level in 2014. Increased late-stage venture capital investment and robust financial sponsor activity compensated for the midyear slowdown in public markets. In this issue of Cloud Insights, we look at the trends that defined the M&A and capital-raising environments in 2014 and provide our outlook for 2015.

Public equity: 2014’s volatility continues into 2015

The long-term bull market for SaaS stocks gained steam during the first several months of 2014 but was interrupted by a significant market correction in the spring. Smaller companies bore the brunt of the downturn, with many names losing as much as 50% or more of their market value. This downturn led to a significant midyear decrease in new issuances and other capital-raising activity in SaaS. In the fall, however, the SaaS market recovered, and equity markets remain open as we head into 2015.

Last year was a strong year for SaaS IPOs, with 15 new issues completed. Despite this healthy volume, aftermarket performance was mixed, with only 9 of 15 ending the year above IPO price.

We believe the sharp volatility so far in January is a sign of things to come for the remainder of the year. Given the uneven growth prospects and divergent monetary policies across the United States, Japan, Europe, and other developed economies, we expect volatility to be the defining characteristic of equity markets in 2015. Nevertheless, SaaS, and the technology sector in general, continues to be one of the few true sources of growth for investors in an environment where deflation is a very real threat.

Private capital: Late-stage venture funding surges

The volatility in equity markets over the past 10 months created ample opportunities for late-stage venture capital in SaaS. As a result, one of the defining trends of the fundraising environment has been private companies with scale staying private longer and getting late-stage private capital often from hedge funds and other institutional investors that typically invest in public companies. In addition to Box, which first filed to go public in March and subsequently raised $150 million of private capital in July, other large private SaaS companies that opted to raise over $100 million in private capital included Avalara, Docusign, and Hootsuite.

We expect this trend of high-quality companies staying private longer to continue in 2015. Although there will be windows throughout the year when equity markets will be open, the ability to raise large amounts of late-stage venture capital at attractive terms negates any sense of urgency for these companies to pull the trigger on an IPO.

Strategic M&A activity: Corporate acquirers turn focus to data analytics

SaaS M&A activity remained fairly steady throughout the year. Over the past 12 months, we have seen a few mega-deals, most notably SAP’s $8.3 billion acquisition of Concur Technologies, which was announced in September 2014, and VMware’s $1.5 billion acquisition of AirWatch, which was announced in January 2014. Although these mega-transactions grabbed headlines, we believe the SaaS M&A market was defined by steady, broad-based demand for more midsize, high-quality companies.

When thinking about the next potential area of M&A activity, it is important to understand what drives large consolidators’ acquisition strategies. Strategic M&A activity in the space is largely driven by the corporates’ individual strategic road maps and their need to keep up with other consolidators in the industry.

We believe that data analytics is one area that will likely see a meaningful uptick in M&A activity. There is undeniably strong interest among strategics of all sizes in adding deeper analytics capabilities across their product offerings. But it remains to be seen whether

Public equity volatility created ample opportunities for late-stage

private equity investments.

ACCESS TO INDUSTRY LEADERS: William Blair is committed to providing the SaaS community access to the

industry’s leading investors and corporations around the globe. To learn

more about attending our upcoming conferences, please contact Andrew

Arno ([email protected]; +1 415 248 5905).

TECHNOLOGY COMPANY GROWTH CONFERENCE MAY 14 IN SAN FRANCISCO An exclusive gathering of the late-stage tech community featuring more

than 75 presenting companies and 200-plus mid- and large-cap corporate,

business development, and strategic investors

PRIVATE EQUITY CONFERENCE SEPTEMBER 15-17 IN CHICAGO One of the largest private equity conferences in North America, featuring

presentations by 60-plus privately held companies and attended by more

than 300 private equity investors

mailto:[email protected]


Cloud Insights 2 Summary

strategic acquirers will focus more on embedded analytics or on analytics as a stand-alone application. The answer to this question will go a long way in shaping the types of acquisitions we will see in the space over the coming year.

Financial sponsors: Buyers using preemptive processes to gain an edge

There is robust activity in the buyout space, and financial sponsors are aggressively pursuing companies that are cash-flow positive and growing revenues at a clip of 20% or higher. The intense competition for companies with these characteristics has resulted in more and more sponsors using preemptive processes as a way to gain an edge.

As a sell-side advisor, we are frequently asked by clients whether engaging in a preemptive process makes sense from a strategic perspective. Before a seller agrees to go down that road (and grant access to management and confidential information), it is important to evaluate how credible the bid is and how much due diligence the bidder has done. If the bidder is well qualified and does not demand exclusivity, we believe that preemptive processes can be an attractive alternative for sellers.

2015 outlook: Continued robust activity in the mid-market

Looking ahead to the remainder of 2015, we expect the SaaS M&A and capital-raising landscape to continue to be driven by asset owners who are increasingly interested in achieving liquidity as well as investors looking to take advantage of strong debt markets and the good supply of SaaS companies with attractive growth prospects. Based on deal pipelines and our conversations with asset owners, we believe there is a widespread belief—especially among financial sponsors—that 2015 will experience a continuation of the healthy activity we saw in 2014.

William Blair continues to experience record SaaS transaction volume

William Blair is pleased to have acted as an advisor on seven acquisitions and underwriter on three SaaS IPOs, five SaaS follow-on offerings, and one convertible offering that priced during the year. These transactions included:

Vendavo’s sale to Francisco Partners

Sage’s acquisition of PayChoice ($157.8 million)

XRS’s sale to Omnitracs ($178.2 million)

Convey Compliance’s merger with Taxware

ReD’s sale to ACI Worldwide ($205.0 million)

Evolution1’s sale to Wex ($532.5 million)

NetNearU’s sale to ViaSat

The initial public offering and follow-on offering of Paylocity (aggregate value of $267.9 million)

The initial public offering of Upland ($46.2 million)

The initial public offering of Connecture ($61.0 million)

The follow-on offering of Descartes Systems ($147.5 million)

The follow-on offerings of SciQuest ($109.1 million)

The follow-on offering of RingCentral ($171.8 million)

The follow-on offering of E2open ($116.5 million)

Envestnet convertible notes offering ($172.5 million)

As always, we encourage you to contact us if you would like to discuss how to maximize your liquidity and growth opportunities in this dynamic landscape.

Best regards,

Andrew Arno [email protected]

There is intense competition among financial sponsors for SaaS

companies with strong revenue growth and positive cashflow.

mailto:[email protected]



2014 SaaS Mergers & Acquisitions

During 2014, 287 SaaS M&A transactions were announced, up from 231 announced M&A transactions in 2013. Dollar volume for 2014 was up, with $19.9 billion in total disclosed transaction value, versus $12.4 billion during 2013(1).

Notable SaaS Mergers & Acquisitions

Date Trans. Value Enterprise Enterprise Value

Announced Completed ($ MM) Value ($ MM) Target Company Acquirer Company LTM Revenue LTM EBITDA

12/22/14 - - - DataLogix Oracle - -

12/01/14 12/01/14 - - Vidible AOL - -

11/11/14 11/18/14 $325.0 $325.0 Xtime Cox Automotive 8.1x -

11/03/14 11/25/14 $400.0 $400.0 bswift Aetna 10.0x -

10/23/14 - $840.0 $840.0 Digital River Siris Capital 2.2x 57.3x

09/18/14 12/04/14 $8,468.0 $7,651.6 Concur Technologies SAP America 11.5x 235.8x

09/02/14 10/01/14 $310.0 $310.0 BeyondTrust Software Veritas Capital 3.1x -

09/02/14 10/31/14 $178.2 $177.5 XRS Omnitracs 3.6x 30.6x

08/11/14 10/01/14 $270.0 $360.0 Ooyala Telstra 6.8x -

08/08/14 - $890.0 $890.0 SafeNet Gemalto NV 2.6x 20.7x

06/16/14 07/16/14 $532.5 $532.5 Evolution1 WEX - -

04/07/14 05/30/14 $480.6 $ 445.9 Vocus GTCR 2.2x NM

03/18/14 05/12/14 $930.0 $930.0 TravelCLICK Thoma Bravo - -

02/24/14 03/14/14 $420.0 - BlueKai Oracle 6.6x -

01/22/14 02/24/14 $1,540.0 $1,540.0 AirWatch VMware 15.4x

Sources: CapitalIQ, public news sources, and third-party estimates (1) Non-U.S. targets are not included in William Blair’s total transaction volume statistics



SaaS Equity Performance

The broad SaaS group was up 1.1% in 2014, with the large-cap SaaS group up 4.7%, midcap SaaS down 8.2%, and small-cap SaaS group down 17.3%. Additionally, the NASDAQ, which was up 13.4%, overperformed the broad SaaS group.

SaaS Equity Performance

Index 2014 December

Large-cap SaaS +4.7% +2.6%

Midcap SaaS (8.2%) +5.1%

Small-cap SaaS (17.3%) +5.8%

All SaaS +1.1% +3.2%

NASDAQ +13.4% +0.2%

S&P 500 +11.4% +0.3%

SaaS Capital Markets

Capital markets activity in 2014 remained strong, with 15 IPOs and 9 follow-on offerings priced, compared with 12 IPOs and 10 follow-on offerings priced in 2013. Selected initial public offerings and follow-on offerings in 2014 included(1): Initial Public Offerings:

New Relic, a provider of software analytics, completed its initial public offering of $132.2 million.

Workiva, a cloud-based platform for real-time data analysis, raised $115.9 million in its initial public offering.

Upland Software, a provider of cloud-based enterprise work management software, completed an initial public offering of $46.2 million. William Blair is pleased to have served as a bookrunner on the offering.

HubSpot, a cloud-based marketing and sales software platform, completed an initial public offering of $143.8 million.

Yodlee, a provider of digital financial services in the cloud, completed an initial public offering of $84.1 million.

Zendesk, a provider of a SaaS customer service platform, completed an initial public offering of $115.0 million.

Paycom Software, a provider of cloud-based HCM software solutions, completed an initial public offering of $115.0 million.

Opower, a provider of cloud-based utility software, completed an initial public offering of $133.0 million.

Amber Road, a provider of global trade management solutions, completed an initial public offering of $110.5 million.

Castlight Health, a provider of software for healthcare costs, completed an initial public offering of $204.2 million.

Paylocity, a provider of cloud-based payroll and HCM software, completed an initial public offering of $137.7 million. William Blair is pleased to have served as a bookrunner on the offering.

Follow-On Offerings:

Paylocity, a provider of cloud-based payroll and HCM software, raised $130.2 million in a follow-on offering. William Blair is pleased to have served as a bookrunner on the offering.

Benefitfocus, a provider of cloud-based benefits software solutions, completed a follow-on offering of $109.9 million.

Descartes Systems Group, a provider of federated network and logistics technology solutions, completed a follow-on of $147.5 million. William Blair served as an underwriter on the transaction.

SciQuest, a provider of business automation solutions, completed two follow-on offerings for an aggregate value of $109.1 million. William Blair served as an underwriter on the transaction.

Veeva Systems, a provider of cloud-based software solutions for life sciences, completed a follow-on of $363.6 million.

RingCentral, a provider of SaaS solutions for business communications, completed a follow-on of $171.8 million. William Blair served as an underwriter on the transaction.

E2open, a provider of on-demand software solutions for supply chain management, completed a follow-on of $116.5 million. William Blair served as an underwriter on the transaction.

Workday, a provider of cloud human resources and finance applications, completed a follow-on of $614.1 million.

(1) Overallotment included in transaction size where applicable



SaaS Venture Capital

In 2014 there were 398 SaaS venture investments with a total disclosed transaction value of $5.9 billion. Year-over-year, 2014 showed a slight decrease in activity compared with 2013, in which 408 transactions were announced. Total disclosed dollar volume in 2014 was up versus $3.9 billion in 2013. Notable venture investments in 2014 included:

Notable SaaS Venture Capital

Announced Date

Size ($ MM) Company Description Investors

12/17/14 $35.0 Skytap Automation solutions to develop, test, demo, and train new and existing apps in the cloud

Insight Venture Partners; Madrona Venture Group; WRF Capital; Ignition Partners; OpenView Venture Partners

11/19/14 $50.0 Bigcommerce Provides software services to online retailers and merchants

Softbank; Telstra Ventures; American Express; General Catalyst; Revolution Growth

11/10/14 $150.0 Avalara Cloud-based software that delivers tax compliance solutions

Warburg Pincus

10/31/14 $120.0 Slack Technologies

Platform that enables team communication in one place

Accel Partners; Kleiner Perkins Caufield & Byers; Google Ventures; Andreessen Horowitz; The Social+Capital Partnership

10/10/14 $400.0 Mozido Operates a cloud-based mobile payments platform

Wellington Management Company; MasterCard Incorporated

10/6/14 $60.0

Alteryx Provides data blending and analytics software Insight Venture Partners; Sapphire Ventures; Toba Capital

09/24/14 $150.0 Qualtrics Provides online data collection and analysis services

Accel Partners; Insight Venture Partners; Sequoia Capital

09/04/14 $60.0 HootSuite Media Provides web-based social media management solutions

Accel Partners; Difference Capital Financial; Fidelity Investments; Insight Venture Partners; OMERS Ventures

08/18/14 $50.0 Medallia Provides customer experience management solutions

Sequoia Capital

08/15/14 $45.0 Alfresco Software Provides enterprise content management solutions

Accel Partners; Mayfield Fund; SAP Ventures; Sageview Capital

08/01/13 $165.0 HootSuite Media Provides social media management solutions to execute campaigns across social networks

Accel Management; Insight Venture Partners; OMERS Ventures

07/23/14 $50.0 Deem Provides Commerce-as-a-Service based solutions to enable sales functions

Hony Capital; PointGuard Ventures

07/22/14 $70.0 AppDynamics Develops application performance management products

Battery Ventures; Institutional Venture Partners; Kleiner Perkins Caufield & Byers; Lightspeed Venture Partners; and three others

07/07/14 $150.0 Box Provides cloud-based mobile optimized enterprise content collaboration

TPG Growth; Coatue Management

06/10/14 $50.0 Plex Systems Provides SaaS enterprise resource planning for manufacturing organizations

Accel Partners; T. Rowe Price Group

05/13/14 $90.0 Attensity Provides text analytics solutions enabling business users to analyze real-time data

-

05/08/14 $100.0 Anaplan Provides cloud-based planning, forecasting, and analytics solutions

Draper Fisher Jurvetson; MeriTech Capital Partners; Granite Ventures; Salesforce.com; Sands Capital Management; Shasta Ventures; and two others

04/28/14 $100.0 New Relic Provides cloud-based application performance management solutions

T. Rowe Price Group; BlackRock; Wellington Management Company; Passport Management

04/09/14 $100.0 InsideSales.com On-demand applications and services Acadia Woods Partners, LLC ; EPIC Ventures ; Hummer Winblad Venture Partners ; Kleiner Perkins Caufield & Byers ; Polaris Partners ; and five others

03/18/14 $160.0 Cloudera Designs and develops Apache Hadoop-based enterprise analytic data management software

T. Rowe Price Group; MSD Capital; Google Ventures

03/04/14 $85.0 DocuSign Cloud-based electronic signature solution Accel Partners; BBVA Ventures; Comcast Ventures; EDB Investments Pte. Ltd.; Frazier Technology Ventures; Google Ventures; Ignition Partners; Kleiner Perkins Caufield & Byers; and twelve others

02/05/14 $125.0 Domo Provides an executive management platform as a SaaS solution for managers and executives

Greylock Partners; Institutional Venture Partners; T. Rowe Price Group; Salesforce.com; Fidelity Investments; TPG Growth; and five others

01/17/14 $250.0 Dropbox Operates a cloud storage platform that allows users to upload and store data

BlackRock

Sources: Capital IQ and VentureSource



PaaS and IaaS Activity

Activity in the PaaS and IaaS sectors included:

Notable PaaS and IaaS Mergers and Acquisitions

Date Trans. Value Implied Enterprise Enterprise Value

Announced Completed ($ MM) Value ($ MM) Target Company Acquirer Company LTM Revenue LTM EBITDA

12/05/14 - $306.9 $248.5 Actuate Open Text 2.3x -

11/17/14 11/17/14 $21.6 $21.6 Isocket The Rubicon Project - -

10/21/14 10/21/14 - - Firebase Google - -

07/31/14 09/02/14 $1,200.0 $1,200.0 ViaWest Shaw Communications - 13.0x

07/23/14 08/11/14 $170.0 $170.0 Axeda PTC - -

07/14/14 07/11/14 - - PowerCloud Systems Comcast - -

07/11/14 07/04/14 - - InMage Systems Microsoft - -

06/03/14 06/03/14 - - Gazzang Cloudera - -

05/07/14 05/07/14 - - Stackdriver Google - -

02/06/14 02/28/14 - - Azuki Systems Ericsson - -


Notable PaaS and IaaS Venture Capital

Announced Date

Size ($ MM) Company Description Investors

10/07/14 $101.2 Mirantis Operates as a vendor of OpenStack services and technology

August Capital; Insight Venture Partners; Sapphire Ventures; Ericsson; Intel Capital; WestSummit Capital

09/18/14 $105.0 Violin Memory Develops memory-based storage systems NA

06/17/14 $50.0 Kony Provides a multi-channel application development platform

Insight Venture Partners; Hamilton Lane Advisors; SoftBank Capital; Georgian Partners; Delta-v Capital 2009 Holdings; Telstra Applications and Ventures Group

04/17/14 $60.0 Apigee Designs and develops application programming interface management products

Bay Partners; Focus Ventures; Norwest Venture Partners; SAP Ventures; BlackRock; Wellington Management Company; Accenture; Third Point ; Pine River Capital Management

03/19/14 $38.0 Platfora Develops data management software based on Hadoop

Battery Ventures; Cisco System; Allegis Capital; Sutter Hill Ventures; In-Q-Tel.; Tenaya Capital; Andreessen Horowitz; Citi Ventures



Cloud Insights M&A Overview 7

M&A Overview

M&A Activity Detail

Number of Transactions Dollar Value

2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014

Annual Disclosed 14 30 20 47 41 67 $2,826 $3,432 $11,694 $13,789 $12,385 $19,909

Annual Undisclosed 25 82 68 137 190 220 - - - - - -

Total 39 112 88 184 231 287 $2,826 $3,432 $11,694 $13,789 $12,385 $19,909

Source: Capital IQ

Annual M&A Detail

($ in millions)

2009 2010 2011 2012 2013 2014

Transaction Value $2,826 $3,432 $11,694 $13,789 $12,385 $19,909

Number of Transactions 39 112 185 184 231 287

Source: Capital IQ

$0

$5,000

$10,000

$15,000

$20,000

$25,000

0

50

100

150

200

250

300

Number of TransactionsTransaction Value

Number of TransactionsTransaction Value


Cloud Insights 8 M&A Overview

M&A Valuation Analysis

($ in millions) Annual

2009 2010 2011 2012 2013 2014

Volume

Number of Announced Transactions 39 112 185 184 231 287

Number of Disclosed Transactions 14 30 54 47 42 67

Total Dollar Volume $2,826 $3,432 $11,694 $13,789 $12,385 $19,909

Average Transaction Size $202 $114 $217 $300 $295 $297

EV/LTM Revenues


Mean 4.03x 5.04x 4.78x 5.15x 6.35x 4.50x

Median 4.60x 2.83x 3.70x 3.59x 4.30x 2.88x

EV/LTM EBITDA


Mean 47.7x 19.0x 48.0x 48.0x 48.3x 71.1x

Median 47.7x 19.0x 42.3x 42.3x 68.8x 30.6x

Source: Capital IQ

M&A Activity By Target Ownership

(Percentage of Transactions)

2007 2008 2009 2010 2011 2012 2013 2014

Private – V.C. Backed 57% 52% 62% 50% 44% 45% 48% 66%

Private – Independent 26% 35% 31% 48% 54% 51% 49% 32%

Public 17% 13% 7% 2% 2% 4% 3% 2%

Source: Capital IQ

0%25%50%75%

Private – V.C. Backed Private – Independent Public

0.0%

25.0%

50.0%

75.0%


Cloud Insights Capital Markets Overview 9

Capital Markets Overview

Annual SaaS Public Offering Activity ($ Volume by IPO, Follow-On and Convertible Debt)

($ in millions)

2008 2009 2010 2011 2012 2013 2014

Initial Public Offerings - $194.9 $486.5 $722.6 $1,945.8 $1,489.3 $1,830.0

Follow-On Offerings $177.0 $457.9 $631.3 $594.0 $1,317.0 $1,878.0 $2,055.4

PIPEs $251.0 - - - - - -

Convertible Debt Offerings - - $1,029.6 - $200.0 $3,794.3 $172.5

Sources: Capital IQ and Dealogic

-$2,500$2,500

Initial Public Offerings Follow-On Offerings PIPEs Convertible Debt Offerings

$0

$2,000

$4,000

$6,000

$8,000


Cloud Insights 10 Capital Markets Overview

SaaS Public Equity Offering Detail

Company Filing Date

Pricing Date

Filing Range

Offer Price

Offering Size(1) ($ in MM)

Primary as % of Offering Dilution

Market Cap Post Offering ($ in MM)

% Change Pricing to Offer Price Discount to

First Day

First Week

To Date

Filing Price

Last Sale(2)

IPO Priced

New Relic 11/10/14 12/09/14 $18.00 - $20.00 $23.00 $132.2 100.0% 12.3% $1,059.1 47.8% 32.3% 51.5% - -

Workiva 10/17/14 12/11/14 $13.00 - $15.00 $14.00 $115.9 100.0% 18.2% $553.4 (1.8%) (1.5%) (4.3%) - -

Connecture 10/20/14 12/11/14 $12.00 - $14.00 $8.00 $61.0 87.0% 30.6% $173.4 10.0% 13.3% 12.6% - -

Upland 09/04/14 11/05/14 $12.00 - $14.00 $12.00 $46.2 100.0% 26.8% $172.0 (18.8%) (10.0%) (20.3%) - -

Hubspot 09/25/14 10/08/14 $19.00 - $21.00 $25.00 $143.8 100.0% 18.5% $759.1 20.4% 22.6% 34.4% - -

Yodlee 06/30/14 10/02/14 $11.00 - $13.00 $12.00 $84.1 100.0% 24.1% $339.8 12.0% 2.1% 1.7% - -

Zendesk 04/10/14 05/14/14 $8.00 - $10.00 $9.00 $115.0 100.0% 17.8% $631.7 49.2% 81.8% 170.8% - -

Five9 03/03/14 04/03/14 $9.00 - $11.00 $7.00 $81.0 100.0% 21.7% $322.3 9.1% 5.1% (36.0%) - -

Paycom Software 03/10/14 04/14/14 $18.00 - $20.00 $15.00 $115.0 60.3% 13.1% $762.1 2.3% 7.1% 75.5% - -

OPOWER 03/03/14 04/03/14 $17.00 - $19.00 $19.00 $133.0 100.0% 12.9% $901.7 21.1% 14.1% (25.1%) - -

2U 02/21/14 03/27/14 $11.00 - $13.00 $13.00 $119.3 78.2% 20.4% $508.7 7.5% (0.1%) 51.2% - -

Q2 Holdings 02/12/14 03/19/14 $11.00 - $13.00 $13.00 $116.0 80.5% 22.4% $415.4 16.7% 16.2% 44.9% - -

Amber Road 02/10/14 03/20/14 $10.50 - $12.50 $13.00 $110.5 56.3% 19.2% $323.6 30.8% 18.5% (21.4%) - -

Castlight Health 02/10/14 03/13/14 $9.00 - $11.00 $16.00 $204.2 100.0% 14.5% $1,385.1 148.8% 70.8% (26.9%) - -

Paylocity Holdings 01/30/14 03/18/14 $14.00 - $16.00 $17.00 $137.7 66.3% 10.9% $831.7 41.4% 33.9% 53.6% - -

Follow-On Priced

Paylocity Holdings 11/21/14 12/11/14 - $26.25 $130.2 22.1% 2.2% $1,342.1 (2.6%) 1.1% (0.5%) (12.6%) (1.6%)

Benefitfocus 07/01/14 07/16/14 - $38.50 $109.9 0.0% 0.0% $996.8 (0.1%) 10.0% (14.7%) (18.9%) (3.2%)

Descartes Systems Group 06/23/14 06/26/14 - $13.50 $147.5 100.0% 14.6% $997.3 11.4% 328.9% 18.2% (13.2%) (7.5%)

SciQuest 03/24/14 03/26/14 - $26.75 $92.3 100.0% 12.6% $727.8 (1.5%) 116.4% (46.4%) (9.5%) (0.9%)

Veeva Systems 03/18/14 03/25/14 - $26.35 $363.6 6.4% 0.7% $3,427.3 (0.3%) 119.7% (3.2%) (22.0%) (3.4%)

Ringcentral 02/26/14 03/05/14 - $21.50 $171.8 34.9% 4.3% $1,416.6 1.6% 169.3% (32.3%) (2.8%) (2.5%)

E2open 01/14/14 01/23/14 - $25.00 $116.5 45.2% 7.3% $751.6 (1.8%) 131.6% (63.3%) 8.9% (4.5%)

Workday 01/13/14 01/14/14 - $89.00 $614.1 100.0% 3.8% $16,505.2 2.1% (34.9%) (10.6%) 1.3% (2.5%)

Cvent 01/06/14 01/16/14 - $35.50 $215.6 12.3% 1.8% $1,495.3 2.2% 63.1% (24.5%) (3.7%) (3.8%)

Convertible Priced

Envestnet 12/08/14 12/09/14 - - $172.5 - - $1,629.8 - - - - -

William Blair clients highlighted Sources: FactSet and Dealogic as of December 31, 2014 (1) Includes the overallotment where applicable (2) Indicates closing price just before pricing


Cloud Insights Public Company Analysis 11

Public Company Analysis

The SaaS index was up 1.1% in 2014, underperforming the NASDAQ.

During 2014, the large-cap SaaS group was up 4.7%, while the midcap and small-cap SaaS groups were down 8.2% and 17.3%, respectively.

SaaS Indexed Stock Price Performance

Note: Groupings based on market caps at December 31, 2013 Mkt. Cap > $3 billion consists of: ATHN, CNQR, MDSO, N, CRM, NOW, ULTI, VEEV, WDAY Mkt. Cap $1 billion to $3 billion consists of: BNFT, CSOD, CVT, TRAK, DWRE, FLTX, MKTO, RP, RNG, SPSC, SNCR Mkt. Cap < $1 billion consists of: AMBR, BV, CNXR, CSLT, CTCT, ECOM, ELLI, EOPN, FIVN, HGN, HDP, HUBS, IL, JIVE, LOGM, LPSN, MIXT, MRIN, NEWR, OPWR, PAYC, PCTY,

QLYS, QTWO, RALY, SQI, SREV, TNGO, TWOU, TXTR, UPLD, WIX, WK, YDLE, ZEN Source: FactSet as of December 31, 2014

Valuation Overview

Note: Market cap groupings based on December 30, 2013; data points represent median multiples Source: FactSet as of December 31, 2014

60

70

80

90

100

110

120

130

1/1/14 1/31/14 3/2/14 4/1/14 5/2/14 6/1/14 7/1/14 7/31/14 8/31/14 9/30/14 10/30/14 11/29/14 12/30/14

Large-cap (+4.7%) Midcap (-8.2%) Small-cap (-17.3%) NASDAQ (+13.4%)

12/31/14

9.1x

36.3x

47.7x

6.0x20.9x

57.5x

3.5x

20.5x

27.8x

EV / 2014E Revenue EV / 2014E EBITDA EV / 2014E FCF

Large-cap Midcap Small-cap


Cloud Insights 12 Public Company Analysis

Comparable Company Analysis – Groupings Based on Market Caps at December 31, 2013

Market Market Enterprise Enterprise Value/Revenue

Enterprise Value/EBITDA

Enterprise Value/FCF

'14E - '15E 2014E

Close 12/31/14

Cap ($MM) 12/31/13

Cap ($MM) 12/31/14

Value ($MM)

Revenue Growth

EBITDA Margin LTM 2014E 2015E LTM 2014E 2015E LTM 2014E 2015E

Large-cap

athenahealth $145.70 $5,001.9 $5,550.3 $5,657.8 7.96x 7.57x 6.17x nmf 40.6x 34.3x nmf nmf nmf 22.7% 18.6%

Medidata Solutions $47.75 $3,236.5 $2,590.5 $2,570.4 8.02x 7.63x 6.28x nmf 34.6x 26.2x nmf 47.6x 46.7x 21.4% 22.1%

NetSuite $109.17 $7,693.9 $8,377.6 $8,218.5 16.01x 14.84x 11.36x nmf nmf nmf 53.9x nmf nmf 30.6% 8.6%

Salesforce.com $59.31 $33,279.6 $37,424.6 $38,849.4 7.66x 7.39x 6.06x nmf 41.8x 32.1x 43.2x 47.7x 37.4x 21.9% 17.7%

ServiceNow $67.85 $7,770.7 $10,062.2 $9,852.4 16.16x 14.53x 10.38x nmf nmf nmf nmf nmf nmf 39.9% 6.5%

Ultimate Software Group $146.82 $4,279.0 $4,165.3 $4,064.4 8.43x 8.04x 6.59x 59.2x 34.2x 26.7x nmf nmf nmf 21.9% 23.5%

Veeva Systems $26.41 $3,999.9 $3,449.0 $3,056.1 10.57x 10.09x 7.96x 48.5x 36.3x 29.0x 47.8x 51.3x 33.7x 26.8% 27.8%

Workday $81.6 $14,536.4 $15,261.1 $13,915.9 19.78x 18.37x 12.62x nmf nmf nmf nmf nmf nmf 45.5% (13.6%)

Mean 11.82x 11.06x 8.43x 53.8x 37.5x 29.7x 48.3x x

48.9x 39.3x 28.8% 13.9%

Median 9.50x 9.06x 7.27x 53.8x 36.3x 29.0x 47.8x 47.7x 37.4x 24.7% 18.2%

Midcap BenefitFocus $32.84 $1,412.6 $839.3 $820.3 6.43x 6.05x 4.77x nmf nmf nmf nmf nmf nmf 26.7% (35.5%) Cornerstone OnDemand $35.20 $2,773.9 $1,885.1 $1,881.5 7.77x 7.20x 5.48x nmf nmf nmf nmf nmf nmf 31.3% 0.1% Cvent $27.84 $1,463.1 $1,150.5 $967.8 7.24x 6.82x 5.44x nmf 58.0x 46.8x nmf nmf 56.1x 25.4% 11.8% DealerTrack Holdings $44.31 $2,113.7 $2,403.5 $2,986.0 4.02x 3.53x 2.92x 30.9x 15.6x 12.9x 39.9x nmf 28.1x 20.7% 22.6% Demandware $57.54 $2,218.7 $2,089.3 $1,830.2 12.89x 11.80x 8.54x nmf nmf nmf nmf nmf nmf 38.1% 6.3% Fleetmatics Group $35.49 $1,594.1 $1,339.6 $1,203.4 5.53x 5.21x 4.18x 24.1x 17.0x 13.3x nmf 50.9x 33.0x 24.6% 30.7% Marketo $32.72 $1,429.9 $1,348.5 $1,236.8 9.11x 8.33x 6.15x nmf nmf nmf nmf nmf nmf 35.4% (17.1%) RealPage $21.96 $1,816.0 $1,728.9 $1,736.8 4.39x 4.29x 3.91x 49.3x 24.9x 20.2x 34.2x 57.5x 29.9x 9.6% 17.3% RingCentral $14.92 $1,143.2 $1,016.3 $895.4 4.40x 4.10x 3.24x nmf nmf nmf nmf nmf nmf 26.8% (9.3%) SPS Commerce $56.63 $1,046.2 $921.8 $781.0 6.48x 6.14x 5.04x nmf 45.0x 36.0x nmf 58.8x 43.6x 21.9% 13.6%

Synchronoss Technologies $41.86 $1,258.6 $1,772.5 $1,708.5 4.03x 3.76x 3.13x 15.1x 11.0x 8.9x 18.6x nmf 29.8x 20.0% 34.3%

Mean 6.57x 6.11x 4.80x 29.9x 28.6x 23.0x 30.9x xx

55.7x 36.8x 25.5% 6.8%

Median 6.43x 6.05x 4.77x 27.5x 20.9x 16.8x 34.2x x

57.5x 31.4x 25.4% 11.8%

Small-cap 2U $19.66 - $797.1 $716.5 6.87x 6.54x 5.02x nmf nmf nmf nmf nmf nmf 30.2% (14.2%) Amber Road $10.22 - $260.1 $223.0 3.55x 3.49x 3.17x nmf nmf nmf na nmf nmf 10.2% 0.8% Bazaarvoice $8.04 $591.0 $627.4 $572.9 3.18x 3.12x 2.76x nmf nmf nmf nmf nmf nmf 13.2% (8.4%) Castlight $11.70 - $1,056.4 $874.2 24.12x 19.76x 10.76x nmf nmf nmf nmf nmf nmf 83.5% (173.7%) ChannelAdvisor $21.58 $945.7 $537.1 $459.5 5.63x 5.28x 4.12x nmf nmf nmf nmf nmf nmf 28.3% (21.2%) Constant Contact $36.70 $952.6 $1,162.5 $1,008.1 3.16x 3.04x 2.60x 27.3x 16.7x 13.3x 36.3x 33.4x 25.6x 17.0% 18.3% E2open $9.61 $633.8 $280.7 $256.4 3.26x 3.14x 2.63x nmf nmf nmf nmf nmf nmf 19.7% (17.3%) Ellie Mae $40.32 $738.8 $1,159.0 $1,073.6 7.39x 6.85x 5.43x 40.9x 26.7x 29.8x 50.2x nmf nmf 26.2% 25.7% Five9 $4.48 - $219.0 $184.1 1.87x 1.81x 1.51x nmf nmf nmf nmf nmf nmf 19.9% (24.4%) Halogen $8.50 $284.7 $186.0 $68.2 1.26x 1.04x 0.86x nmf nmf nmf nmf nmf nmf 20.9% (15.8%) HubSpot $33.61 - $1,055.0 $1,115.0 10.71x 9.84x 7.68x nmf nmf nmf na nmf nmf 28.1% (22.8%) IntraLinks Holdings $11.90 $670.4 $667.8 $701.5 2.79x 2.75x 2.57x nmf 18.8x 15.4x 51.7x nmf nmf 6.7% 14.6% Jive Software $6.03 $779.0 $431.7 $340.1 2.00x 1.91x 1.65x nmf nmf nmf nmf nmf nmf 15.6% (2.8%) LivePerson $14.10 $802.3 $770.6 $683.5 3.44x 3.27x 2.57x nmf 31.6x 23.8x 24.9x 41.2x 48.1x 27.1% 10.3% LogMeIn $49.34 $812.6 $1,203.1 $1,006.7 4.86x 4.56x 3.90x 51.6x 20.5x 17.6x 20.4x 16.5x 15.9x 16.8% 22.3% Marin Software $8.46 $334.1 $295.9 $224.0 2.38x 2.28x 1.91x nmf nmf nmf nmf nmf nmf 19.1% (19.8%) Mix Telematics $6.50 $368.8 $209.4 $136.2 1.16x 1.19x 1.09x 6.7x 6.3x 5.5x 50.0x 25.8x 19.0x 9.5% 19.0% Opower $14.23 - $709.3 $571.7 4.78x 4.50x 3.74x nmf nmf nmf nmf nmf nmf 20.3% (11.8%) Paycom $26.33 - $1,417.4 $1,426.1 10.40x 9.68x 7.49x nmf 57.1x 42.5x nmf nmf nmf 29.2% 16.9% Paylocity $26.11 - $1,314.0 $1,241.2 10.57x 9.82x 7.63x nmf nmf nmf nmf nmf nmf 28.8% 3.3% Q2 Holdings $18.84 - $644.7 $555.1 7.64x 7.04x 5.42x nmf nmf nmf nmf nmf nmf 30.0% (13.3%) Qualys $37.75 $745.3 $1,257.8 $1,144.4 9.08x 8.61x 7.13x nmf 40.9x 33.8x nmf 52.6x 38.1x 20.8% 21.0% Rally Software $11.37 $474.8 $286.7 $216.2 2.62x 2.51x 2.10x nmf nmf nmf nmf nmf nmf 19.5% (25.0%) SciQuest $14.45 $675.9 $397.7 $273.5 2.68x 2.65x 2.53x 58.0x 12.2x 12.6x 24.5x 27.8x 19.3x 4.9% 21.8% ServiceSource International $4.68 $679.6 $392.1 $287.3 1.05x 1.08x 1.11x nmf nmf nmf nmf nmf nmf (3.1%) (17.2%) Tangoe $13.03 $688.8 $506.2 $458.6 2.21x 2.15x 1.89x 31.7x 13.8x 11.5x 33.2x 27.1x 16.3x 13.7% 15.6% Textura $28.47 $737.4 $725.1 $659.8 10.25x 13.18x 7.41x nmf nmf nmf na nmf 44.4x 77.8% (10.2%) Upland $9.56 - $145.4 $221.9 3.68x 3.43x 2.89x nmf nmf nmf na nmf nmf 18.7% 4.9% Wix $21.00 $982.7 $799.9 $706.1 5.64x 5.04x 3.49x nmf nmf nmf nmf nmf nmf 44.4% (21.9%) Yodlee $12.20 - $356.6 $464.2 5.51x 5.25x 4.35x nmf nmf 50.2x na nmf nmf 20.8% 5.8%

Zendesk $24.37 - $1,775.0 $1,672.5 15.07x 13.38x 9.24x nmf 59.7x 45.7x na nmf nmf 44.8% 22.4%

Mean 5.77x 5.43x 4.09x 36.0x 27.7x 25.1x 36.4x x

32.0x 28.3x 24.6% (6.4%)

Median 3.68x 3.49x 3.17x 36.3x 20.5x 20.7x 34.7x x

27.8x 22.4x 20.3% (2.8%)

Overall

Mean 6.91x 6.48x 4.94x 36.9x 30.1x 25.6x 37.8x x

41.4x 33.2x 25.5% (0.2%)

Median 5.64x 5.27x 4.26x 36.3x 29.2x 26.2x 38.1x x

47.6x 33.0x 21.9% 6.1%

Sources: FactSet and Capital IQ as of December 31, 2014


Cloud Insights Public Company Analysis 13

Stock Price and Revenue Multiple Over Time – Groupings Based on Market Caps at December 31, 2013

Market Market 12/31/13

52-Week Low Point 52-Week High Point 12/31/14 Percent Change in Stock Price

Cap ($MM) 12/31/13

Cap ($MM) 12/31/14

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

Stock Price

EV/LTM Rev

12/31/13 to 12/31/14

52-Week Low to 12/31/14

52-Week High to 12/31/14

Large-cap

athenahealth $5,001.9 $5,550.3 $134.50 8.71x $97.30 6.14x $206.70 13.11x $145.70 7.96x 8.3% 49.7% (29.5%)

Medidata Solutions $3,236.5 $2,590.5 $60.50 11.22x $32.10 6.37x $68.21 13.17x $47.75 8.02x (21.1%) 48.8% (30.0%)

NetSuite $7,693.9 $8,377.6 $103.02 18.07x $69.48 11.70x $120.77 21.37x $109.17 16.01x 6.0% 57.1% (9.6%)

Salesforce.com $33,279.6 $37,424.6 $55.19 9.32x $48.18 6.97x $67.00 10.71x $59.31 7.66x 7.5% 23.1% (11.5%)

ServiceNow $7,770.7 $10,062.2 $56.01 17.78x $44.17 13.44x $71.80 23.01x $67.85 16.16x 21.1% 53.6% (5.5%)

Ultimate Software $4,279.0 $4,165.3 $153.22 10.18x $109.50 7.45x $171.96 11.43x $146.82 8.43x (4.2%) 34.1% (14.6%)

Veeva Systems $3,999.9 $3,449.0 $32.10 19.91x $17.11 9.28x $39.81 30.35x $26.41 10.57x (17.7%) 54.4% (33.7%)

Workday $14,536.4 $15,261.1 $83.16 33.61x $64.15 19.05x $116.47 42.49x $81.61 19.78x (1.9%) 27.2% (29.9%)

Midcap

BenefitFocus $1,412.6 $839.3 $57.74 12.75x $20.82 4.26x $77.00 18.43x $32.84 6.43x (43.1%) 57.7% (57.4%)

Castlight - $1,056.4 - - $9.90 23.02 x $41.95 24.62x $11.70 24.12x NM 18.2% (72.1%)

Cornerstone $2,773.9 $1,885.1 $53.31 14.91x $25.99 6.06x $61.85 17.89x $35.20 7.77x (34.0%) 35.4% (43.1%)

Cvent $1,463.1 $1,150.5 $36.39 11.75x $22.13 5.99x $44.31 14.57x $27.84 7.24x (23.5%) 25.8% (37.2%)

DealerTrack Holdings $2,113.7 $2,403.5 $48.08 4.40x $36.43 3.08x $58.84 6.51x $44.31 4.02x (7.8%) 21.6% (24.7%)

Demandware $2,218.7 $2,089.3 $64.12 20.33x $44.39 11.66x $82.23 24.96x $57.54 12.89x (10.3%) 29.6% (30.0%)

Fleetmatics Group $1,594.1 $1,339.6 $43.25 8.33x $25.43 4.48x $42.50 9.15x $35.49 5.53x (17.9%) 39.6% (16.5%)

Marketo $1,429.9 $1,348.5 $37.07 13.52x $22.02 7.32x $45.00 18.59x $32.72 9.11x (11.7%) 48.6% (27.3%)

RealPage $1,816.0 $1,728.9 $23.38 4.70x $14.87 3.01x $23.11 5.36x $21.96 4.39x (6.1%) 47.7% (5.0%)

RingCentral $1,143.2 $1,016.3 $18.37 7.20x $10.02 3.02x $23.65 8.61x $14.92 4.40x (18.8%) 48.9% (36.9%)

SPS Commerce $1,046.2 $921.8 $65.30 9.25x $43.84 5.86x $71.82 10.49x $56.63 6.48x (13.3%) 29.2% (21.1%)

Synchronoss $1,258.6 $1,772.5 $31.07 3.50x $25.28 2.91x $54.05 5.20x $41.86 4.03x 34.7% 65.6% (22.6%)

Small-cap

2U - $797.1 - - $10.52 4.85x $20.57 8.51x $19.66 6.87x NM 86.9% (4.4%)

Amber Road - $260.1 - - $8.09 2.96x $18.09 8.04x $10.22 3.55x NM 26.3% (43.5%)

Bazaarvoice $591.0 $627.4 $7.92 3.35x $5.85 2.17x $8.73 3.60x $8.04 3.18x 1.5% 37.4% (7.9%)

ChannelAdvisor $ 945.7 $537.1 $ 41.7 $ 12.8 $11.83 2.77x $49.90 16.02x $21.58 5.63x (48.3%) 82.4% (56.8%)

Connecture - $195.3 - - $8.11 2.77x $10.39 16.02x $9.01 2.64x NM 11.2% (13.3%)

Constant Contact $952.6 $1,162.5 $31.07 2.96x $21.08 1.94x $38.83 3.35x $36.70 3.16x 18.1% 74.1% (5.5%)

E2open $633.8 $280.7 $23.91 8.94x $5.21 1.75x $29.82 11.90x $9.61 3.35x (59.8%) 84.5% (67.8%)

Ellie Mae $738.8 $1,159.0 $26.87 5.24x $23.62 4.33x $43.73 7.75x $40.32 7.39x 50.1% 70.7% (7.8%)

Five9 - $219.0 - - $3.96 1.65x $9.35 5.19x $4.48 1.87x NM 13.1% (52.1%)

Halogen $284.7 $160.6 $12.38 4.41x $7.70 2.07x $14.25 5.32x $8.50 2.21x (31.3%) 10.4% (40.4%)

HubSpot - $1,055.0 - - $25.79 8.80x $38.60 12.19x $33.61 11.16x NM 30.3% (12.9%)

IntraLinks Holdings $670.4 $667.8 $12.11 2.84x $7.76 1.89x $12.21 2.97x $11.90 2.79x (1.7%) 53.4% (2.5%)

Jive Software $779.0 $431.7 $11.25 4.61x $5.06 1.70x $10.25 4.85x $6.03 2.00x (46.4%) 19.2% (41.2%)

LivePerson $802.3 $770.6 $14.82 4.08x $8.84 2.26x $15.12 4.24x $14.10 3.44x (4.9%) 59.5% (6.7%)

LogMeIn $812.6 $1,203.1 $33.55 3.69x $31.08 3.43x $53.38 5.70x $49.34 4.86x 47.1% 58.8% (7.6%)

Marin Software $ 334.1 $295.9 $ 10.2 $ 3.0 $7.15 2.08x $12.65 3.99x $8.46 2.38x (17.4%) 18.3% (33.1%)

Mix Telematics $ 368.8 $209.4 $ 12.4 $ 2.6 $5.90 1.15x $13.65 3.51x $6.50 1.18x (47.6%) 10.2% (52.4%)

New Relic - $1,604.2 - - $30.00 15.39x $37.50 18.37x $34.84 17.79x NM 16.1% (7.1%)

Opower - $709.3 - - $13.00 4.46x $26.00 13.19x $14.23 4.78x NM 9.5% (45.3%)

Paycom - $1,417.4 - - $12.28 5.15x $29.42 10.78x $26.33 10.40x NM 114.4% (10.5%)

Paylocity - $1,314.0 - - $15.24 6.67x $31.00 14.04x $26.11 10.57x NM 71.3% (15.8%)

Q2 Holdings - $644.7 - - $9.62 3.96x $20.48 9.31x $18.84 7.64x NM 95.8% (8.0%)

Qualys $745.3 $1,257.8 $23.11 5.98x $18.00 4.57x $40.74 9.72x $37.75 9.08x 63.3% 109.7% (7.3%)

Rally Software $474.8 $286.7 $19.45 5.41x $8.24 1.66x $24.00 8.27x $11.37 2.62x (41.5%) 38.0% (52.6%)

SciQuest $675.9 $397.7 $28.48 7.20x $13.31 2.59x $32.69 8.20x $14.45 2.68x (49.3%) 8.6% (55.8%)

ServiceSource International

$679.6 $392.1 $8.38 1.89x $2.81 0.41x $9.63 2.89x $4.68 1.05x (44.2%) 66.5% (51.4%)

Tangoe $688.8 $506.2 $18.01 3.44x $11.33 2.06x $20.08 3.93x $13.03 2.21x (27.7%) 15.0% (35.1%)

Textura $737.4 $725.1 $29.94 12.95x $13.80 5.30x $36.33 28.17x $28.47 10.25x (4.9%) 106.3% (21.6%)

Upland - $145.4 - - $8.60 3.03x $12.20 3.97x $9.56 3.68x NM 11.2% (21.6%)

Workiva - $529.6 - - $13.04 3.03x $16.53 3.97x $13.40 4.89x NM 2.8% (18.9%)

Wix $ 982.7 $799.9 $ 26.9 $ 12.1 $14.28 4.44x $32.69 16.16x $21.00 5.64x (21.8%) 47.1% (35.8%)

Yodlee - $356.6 - - $10.25 4.38x $17.97 5.99x $12.20 5.51x NM 19.0% (32.1%)

Zendesk - $1,775.0 - - $11.06 11.78x $28.20 19.58x $24.37 15.07x NM 120.3% (13.6%)

Sources: FactSet and Capital IQ as of December 31, 2014


Cloud Insights 14 Venture Capital Activity

Venture Capital Activity

The total number of venture investments decreased 3% when comparing 2014 with 2013, while dollar volume was up 47% for the same periods.

Annual Venture Capital SaaS Activity

2009 2010 2011 2012 2013 2014

Transaction Value $961 $941 $2,066 $3,255 $3,930 $5,858

# of Transactions 134 160 234 297 408 398


Quarterly Venture Capital SaaS Activity

Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14

Transaction Value $1,194 $536 $685 $840 $786 $914 $1,396 $834 $1,525 $1,503 $1,134 $1,639

# of Transactions 79 69 64 85 95 110 107 96 91 95 108 104


$0$5,000

2008 2009 2010 2011

Transaction Value # of Transactions

050100150200250300350400450

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Transaction Value($ in millions)

Number of Transactions

$0$5,000

2008 2009 2010 2011

Transaction Value # of Transactions

$0

$600

$1,200

$1,800

0

20

40

60

80

100

120

Number ofTransactions

Transaction Value($ in millions)


Cloud Insights Venture Capital Activity 15

The number of investments for 2014 decreased slightly overall compared with 2013. The median transaction size saw a meaningful increase for both earlier- and later-stage investments.

Number of SaaS Transactions by Round


Median SaaS Transaction Size by Round

($ in millions)


60

34

16

27

4537

2622

0

10

20

30

40

50

60

70

Series A Series B Series C Later-Stage

2013 2014

$4

$12

$16

$9 $6

$15

$25

$31

$0

$5

$10

$15

$20

$25

$30

$35

Series A Series B Series C Later-Stage

2013 2014


Cloud Insights 16 William Blair & Company Selected Cloud Transactions

William Blair & Company Selected Cloud Transactions

Selected M&A Transactions

Selected Public Equity Transactions

Selected Private Equity Transactions

Not Disclosed

has been acquired by

$157,800,000

has acquired

(PAI Group, Inc)

$178,229,986


Not Disclosed

has merged with

$205,000,000


$532,500,000


Not Disclosed


Not Disclosed

has agreed to beacquired by

$130,000,000

has agreed to beacquired by

Not Disclosed


$61,042,000

Initial Public Offering

$267,929,750

Initial Public Offering& Follow-On Offering

$46,153,848


$147,487,500

Follow-on Offering

$235,153,754

Initial Public Offering& Follow-On Offerings

$171,818,346

Follow-on Offering

$186,826,425


$158,622,000


$289,875,586


$286,645,242


$695,594,375


$115,848,192


$234,939,011


$91,351,224


$266,512,000


$41,000,000

Private EquityPreferred Stock

Not Disclosed

Private EquityPreferred Stock

TM

Not Disclosed

received a significant investment from

Not Disclosed

Series EPreferred Stock

$54,000,000

Preferred Stock


Cloud Insights William Blair & Company Cloud Contacts 17

William Blair & Company Cloud Contacts

Dan Connolly is a managing director and co-head of the software investment banking practice at William Blair based in Chicago. Dan joined William Blair in 1999. Previously, Dan spent three years in the M&A group at Merrill Lynch & Company. During his career, Dan has successfully completed more than 90 acquisition and financing transactions throughout the world, for which he has received industry recognition, including the 2011 M&A Atlas Technology & Telecom Deal of the Year and the 2012 40 Under 40 M&A Advisor Recognition Award. Dan graduated from the University of Notre Dame where he was twice elected class president, and he received his M.B.A. from Harvard Business School.

[email protected] +1 312 364 8544

Chris Lane is a managing director and co-head of the software investment banking practice at William Blair based in San Francisco. Chris joined William Blair in 2013. Before joining William Blair, Chris spent 12 years with Jefferies in Silicon Valley; before that, he was at Deutsche Bank for 4 years. Chris has led many transformative M&A and capital market transactions in the technology sector, including the sales of Paradigm to Apax Partners; Radiant Systems to NCR; Layer 7 to CA; and i2 to IBM. Chris received a B.A. from Colgate University and an M.B.A. from Northwestern University’s Kellogg School of Management.


Scott Mattson is a managing director of the software and mobility group at William Blair based in Boston. Scott joined William Blair in 2011. Previously, Scott worked at Canaccord Genuity in the technology team for five years covering location technology, software, Internet, and digital media companies. Scott has significant transaction experience including merger and acquisition advisory and public and private financings. Before his investment banking career, Scott was a lieutenant in the Navy where he was responsible for the procurement, maintenance, and modernization of nuclear-powered submarines. Scott graduated with distinction from the United States Naval Academy with a B.S. in economics and earned his M.B.A. from the University of Maryland while serving in the Navy.


Andrew Arno is a director of enterprise and application software at William Blair based in San Francisco. Andrew joined the firm in 2004. From 2000 to 2002, he was an investment banking associate at WR Hambrecht+Co. in the technology group. From 1997 to 2000, he worked at The Shattan Group LLC, a boutique investment bank focused on private equity placements. He received his B.A. from Columbia University and his M.B.A. from the Haas School of Business at University of California, Berkeley.


Peter Dalrymple is a vice president in the technology investment banking group at William Blair based in Boston. Peter joined the firm in 2011. Previously, Peter spent three years in the technology investment banking group at Canaccord Genuity focused on software, Internet, and digital media companies. Before his investment banking career, he was an associate with Pelion Venture Partners and also served as the Central and Southeast European country manager for the U.S. Trade & Development Agency. Peter graduated from Bates College with a B.S. in political science and earned an M.B.A. in finance from Northeastern University.


Raphael Grunschlag is a managing director and head of European technology banking at William Blair, focusing on expanding the firm’s technology practice across Europe and the Middle East. Raphael joined the firm in 2012. He has more than 16 years of investment banking experience and has advised on more than $24 billion of transactions, across M&A, ECM, and debt financings. Before joining William Blair, Raphael served as head of European technology investment banking at Bank of America Merrill Lynch (2005-2011), led the European Internet and software team for the CSFB Technology Group (1999-2005), and previously worked at Hambrecht & Quist (1995-1999). Raphael holds a master’s degree in international affairs from Columbia University’s School of International and Public Affairs and a B.A. in Middle East and Asian languages and cultures from Columbia.


Andrew Kaye is a managing director and co-heads William Blair’s European technology practice. Andy joined William Blair in 2009 and spent 5 years based in Shanghai, China, as head of Asian Banking & Technology. Andy has held positions at CIBC World Markets where he was Regional Head and Robertson Stephens where he led several technology groups in Europe, as well as heading Israel. Andy holds an MBA with honors from Fordham University, New York and a BA in accounting and marketing from Tel Aviv. [email protected] +011 86 21 2327 2233


Cloud Insights 18 William Blair & Company SaaS Equity Research Coverage

William Blair & Company SaaS Equity Research Coverage

SaaS Equity Research

Company Ticker Analyst

athenahealth ATHN Ryan Daniels

BenefitFocus BNFT Adam Klauber

ChannelAdvisor ECOM Justin Furby

Concur Technologies CNQR Bhavan Suri

Connecture CNXR Adam Klauber

Cornerstone OnDemand CSOD Justin Furby

Demandware DWRE Justin Furby

The Descartes Systems Group DSGX Bhavan Suri

E2open EOPN Bhavan Suri

Ellie Mae ELLI Brandon Dobell

FleetMatics FLTX Bhavan Suri

HealthStream HSTM Ryan Daniels

MiX Telematics MIXT Bhavan Suri

NetSuite N Justin Furby

Paylocity PCTY Justin Furby

Rally Software RALY Bhavan Suri

RealPage RP Brandon Dobell

RingCentral RNG Bhavan Suri

salesforce.com CRM Bhavan Suri

SciQuest SQI Bhavan Suri

ServiceNow NOW Justin Furby

SPS Commerce SPSC Bhavan Suri

Textura TXTR Bhavan Suri

Ultimate Software ULTI Justin Furby

Veeva Systems VEEV Bhavan Suri

WageWorks WAGE Robert Napoli

Workday WDAY Justin Furby


William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Services Authority ("FSA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States. This material has been approved for distribution in the United Kingdom by William Blair International Limited, and is directed only at, professional clients and eligible counterparties (as defined in COBS 3.5 and 3.6 of the FSA Handbook). This advertisement is not intended to be investment advice. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com

January 22, 2015

Cloud Insights Disclosures 19

Disclosures

http://www.williamblair.com/

William Blair’s investment banking group combines signi�icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and �inancing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth �inancing, �inancial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010 - 2013, the investment banking group completed 250 merger-and-acquisition transactions worth more than $52 billion in value, involving parties in 27 countries and four continents, was an underwriter on over 20% of all U.S. initial public offerings and arranged more than $11.5 billion of debt �inancing.

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