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SaaS Update December 2018 CONFIDENTIAL DISCLAIMER: THE INFORMATION IN THIS PRESENTATION IS MADE AVAILABLE FOR INFORMATIONAL PURPOSES ONLY. NONE OF THE INFORMATION CONTAINED IN THIS PRESENTATION CONSTITUTES A SOLICITATION OR OFFER BY ARROWROOT ADVISORS OR ITS AFFILIATES TO BUY OR SELL ANY SECURITIES OR OTHER FINANCIAL INSTRUMENTS OR PROVIDE ANY INVESTMENT ADVICE. THE INFORMATION IN THIS PRESENTATION IS LIMITED TO THE DISSEMINATION OF GENERAL INFORMATION REGARDING PRODUCTS AND SERVICES. THE INFORMATION AND SERVICES PROVIDED IN THIS PRESENTATION ARE NOT PROVIDED TO AND MAY NOT BE USED BY ANY PERSON OR ENTITY IN ANY JURISDICTION WHERE THE PROVISION OR USE THEREOF WOULD BE CONTRARY TO APPLICABLE LAWS, RULES OR REGULATIONS OF ANY GOVERNMENTAL AUTHORITY OR REGULATORY OR SELF-REGULATORY ORGANIZATION OR CLEARING ORGANIZATION OR WHERE ARROWROOT ADVISORS IS NOT AUTHORIZED TO PROVIDE SUCH INFORMATION OR SERVICES. SOME PRODUCTS AND SERVICES DESCRIBED IN THIS PRESENTATION MAY NOT BE AVAILABLE IN ALL JURISDICTIONS OR TO ALL CLIENTS. . Table of Contents I. SaaS Market Trends and Transaction Activity 3 II. SaaS Public Comps Valuation Benchmarking 8 III. Arrowroot Bios and Experience 22 SaaS Market Trends and Transaction Activity Shift to SaaS Gathers Pace Source: Wall Street Research 20.0 1.5 7.2 8.9 0.7 3.0 2.3 3.9 0.8 50.9 2.9 16.7 17.5 1.7 6.7 9.5 6.9 2.4 CRM Collaboration Office Suites ERP P&PM SCM Content Services Other Applications Business Intellegence SaaS Spend ($ billion) 2016 Spend 2021E Spend Vertical 2016 On-Prem to SaaS Penetration 2021E On-Prem to SaaS Penetration % Increase / (Decrease) CRM 59% 77% 18% Collaboration 56% 61% 5% Office Suites 41% 71% 30% ERP 31% 45% 14% P&PM 29% 49% 20% SCM 27% 38% 11% Content Services 26% 49% 23% Other Applications 13% 12% -1% Business Intellegence 5% 10% 5% SaaS continues to gain ground as a delivery model, accounting for 32% of all application spend in 2016, up from 6% in 2007. It is expected to reach 45% by 2021. Penetration rates vary, but SaaS already makes up over a third of consumption in several markets. SaaS M&A Transactions (Jan '17 May '18) Source: Ernst & Young Valuations are highest for software assets in business intelligence, Internet of Things and security; CRM and ERP witnessed most deal activity 5.4x 3.5x 3.9x 3.7x 4.3x 3.3x 4.6x 3.6x 5.3x 4.7x 4.7x 5.6x 4.8x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x BI COL CRM DIG ERP HCM INF INT IoT MKT PYMT SEC SCM US & CAN Software M&A Deal Multiples - TEV / Revenue (Median) BI Business Intelligence and Data Analytics; COL Collaboration and Communication; CRM Customer Relationship Management; DIG Digital and Social Media; ERP Enterprise Resource Planning; HCM Human Capital Management; INF Infrastructure and Networking; INT Consumer Internet; IoT Internet of Things; MKT Marketing; PYMT Payments; SEC Security; SCM Supply Chain Management. Deal values have risen 35% in H1 2018 vs. H1 2017 Current trends indicates that overall Software M&A activity in 2019 is expected to remain heightened, outside of unforeseen macro- economic challenges or political uncertainty Financing dry powder is at record levels, leading to increased PE participation in deals PE participation across M&A has remained robust in 2018, particularly for portfolio add-ons (buy and build strategies to create larger players with broader product suites) Software vendors have accelerated their push towards cloud-based solutions as they look to bolster their offerings in high-growth areas like Artificial Intelligence, Machine Learning and IoT Notable Software Transactions in 2018 Source: Wall Street Research Acquiror Target Target Sector Target Description Deal Summary Strategic Rationale Marketing Analytics Cloud-based, programmatic online advertising software platform Ann. Date: Deal Value: $1,600m Rev. Multiple: n/a Enhances the value and delivery of AT&T's ad-supported premium video content portfolio Travel Develops SaaS airline commerce solutions supporting personalized offers Ann. Date: 11/14/18 Deal Value: $360m Rev. Multiple: 9.0x Positions Sabre as the broadest end-to- end NDC-enabled retailing, distribution and fulfillment solution set in market Enterprise Software Provider of integrated cloud- based CPM and BI solutions Ann. Date: 6/11/18 Deal Value: $1,550m Rev. Multiple: 13.6x Expand portfolio of services and accelerate ability for customers to migrate finance functions to the cloud Retail Commerce Provider of cloud-based digital commerce platform Ann. Date: 5/21/18 Deal Value: $1,680m Rev. Multiple: 11.2x Fills gap in e-commerce platform that works within B2B and B2C context Construction Provider of construction software solutions Ann. Date: 4/23/18 Deal Value: $1,200m Rev. Multiple: 7.7x Extends ability to provide integrated project, jobsite and business workflows across the construction lifecycle Web Design Online website creation platform Ann. Date: 4/26/18 Deal Value: $365m Rev. Multiple: n/a Creates a cohesive solution for entrepreneurs looking to build online / offline businesses Healthcare Healthcare IT company providing applications and data analytics solutions Ann. Date: 3/7/18 Deal Value: $1,100m Rev. Multiple: 8.6x Creates the market's largest vertically integrated cloud-based platform supporting value-based care Highly strategic deals continue to attract premium multiples, supporting the thesis that acquirors continue to "buy vs. build" in order to stay competitive in their respective marketplaces Key SaaS Trends and Themes by Sector Source: Capital IQ Healthcare Tech Consumers expected to begin creating their own health-management ecosystems Strong focus on vertically-integrated solutions, data security and improving interoperability Increasing competition within the non- emergency medical transportation sub-sector Education Tech Technology spend by higher ed institutions is accelerating Widespread industry fragmentation supports consolidation Legacy publishers have struggled to adopt e-learning and other EdTech solutions Travel Tech Booking software market for aviation/ hospitality is saturated, but tourism segment remains relatively untapped Airlines seeking to bypass Global Distribution System (GDS) & agency costs, particularly for corporate travel FinTech AI concepts and predictive analytics are being implemented across the industry Regulations to drive wave of consolidation within the specialty finance sector Lending and payments start-ups taking bulk of U.S. venture investment share Governance, Risk & Compliance SMBs present the most lucrative market opportunity and white space for penetration Strong bolt-on activity by both strategics and PE to fill platform gaps Smaller providers quicker to address customer pain points more with more efficient solutions Marketing Analytics With the explosion in big data, MarTech strategies becoming increasingly core to firms Push for personalized content and targeting across all channels to improve conversion Brands / publishers continue to consolidate to gain scale in ecommerce SaaS Public Comps Valuation Benchmarking Public Comps Software Bellweathers Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Alphabet Inc. 742,541 640,111 4.9x 4.7x 4.0x 16.3x 12.8x 10.7x 30.3% 36.6% 20.4% Microsoft Corporation 840,304 792,461 6.9x 6.7x 6.1x 16.7x 15.9x 14.3x 41.4% 42.1% 16.8% IBM 109,719 142,435 1.8x 1.8x 1.8x 8.4x 7.6x 7.2x 21.1% 23.6% 0.1% Oracle Corporation 178,937 177,639 4.4x 4.5x 4.4x 11.0x 9.5x 9.3x 40.5% 46.8% 2.3% Cisco Systems, Inc. 213,423 196,475 3.9x 3.9x 3.8x 13.0x 10.9x 10.6x 30.0% 35.4% 4.3% SAP SE 122,938 126,318 4.6x 4.5x 4.2x 17.8x 13.8x 12.5x 25.9% 32.7% 3.6% salesforce.com, inc. 107,972 108,913 8.7x 8.2x 6.8x 92.6x 34.3x 27.5x 9.4% 24.0% 23.5% HP Inc. 34,627 34,748 0.6x 0.6x 0.6x 7.2x 7.3x 7.0x 8.3% 8.1% 5.4% Mean 4.5x 4.4x 3.9x 22.9x 14.0x 12.4x 25.9% 31.2% 9.5% Median 4.5x 4.5x 4.1x 14.6x 11.9x 10.7x 28.0% 34.0% 4.8% High 8.7x 8.2x 6.8x 92.6x 34.3x 27.5x 41.4% 46.8% 23.5% Low 0.6x 0.6x 0.6x 7.2x 7.3x 7.0x 8.3% 8.1% 0.1% Software Bellweathers Source: Capital IQ as of 12/14/18 Public Comps Enterprise Software Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) International Business Machines Corporation 109,719 142,435 1.8x 1.8x 1.8x 8.4x 7.6x 7.2x 21.1% 23.6% 0.1% Oracle Corporation 178,937 177,639 4.4x 4.5x 4.4x 11.0x 9.5x 9.3x 40.5% 46.8% 2.3% SAP SE 122,938 126,318 4.6x 4.5x 4.2x 17.8x 13.8x 12.5x 25.9% 32.7% 3.6% Adobe Inc. 121,096 121,992 13.5x NA 11.0x 38.6x NA 24.7x 35.0% NA 23.6% Automatic Data Processing, Inc. 60,495 61,333 4.5x 4.5x 4.2x 20.1x 20.0x 17.1x 22.5% 22.2% 6.8% Intuit Inc. 54,098 53,191 8.8x 8.3x 7.7x 30.4x 21.8x 21.6x 28.8% 38.1% 12.3% The Sage Group plc 8,175 8,995 3.9x 3.9x 3.6x 14.5x 13.5x 14.1x 26.5% 28.6% 2.2% Constellation Software Inc. 14,449 14,394 5.1x 4.7x 4.1x 36.4x 18.8x 15.7x 14.0% 25.2% 18.3% Open Text Corporation 9,097 10,930 3.8x 3.9x 3.8x 13.0x 10.5x 10.0x 29.2% 36.6% 4.5% Ellie Mae, Inc. 2,265 1,993 4.2x 4.2x 3.9x 29.3x 15.6x 13.8x 14.2% 26.6% 10.6% Nutanix, Inc. 8,007 7,479 6.3x 6.0x 4.7x NM NM NM (22.7%) (5.2%) 25.2% Upland Software, Inc. 621 763 5.8x 5.2x 4.2x 26.6x 14.6x 11.4x 21.6% 35.4% 38.5% Agilysys, Inc. 362 329 2.5x 2.4x 2.1x NM 30.1x 35.7x (4.8%) 8.0% 10.5% QAD Inc. 786 661 2.0x 2.0x 1.9x 80.7x 27.8x 27.6x 2.5% 7.2% 7.1% Mean 5.1x 4.3x 4.4x 27.2x 17.0x 17.0x 18.2% 25.1% 11.8% Median 4.5x 4.5x 4.2x 23.4x 15.1x 14.1x 22.1% 26.6% 8.8% High 13.5x 8.3x 11.0x 80.7x 30.1x 35.7x 40.5% 46.8% 38.5% Low 1.8x 1.8x 1.8x 8.4x 7.6x 7.2x (22.7%) (5.2%) 0.1% Enterprise Software Source: Capital IQ as of 12/14/18 Public Comps Marketing Software Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) salesforce.com, inc. 107,972 108,913 8.7x 8.2x 6.8x 92.6x 34.3x 27.5x 9.4% 24.0% 23.5% Adobe Inc. 121,096 121,992 13.5x NA 11.0x 38.6x NA 24.7x 35.0% NA 23.6% Criteo S.A. 1,658 1,224 0.5x 1.3x 1.2x 4.9x 4.0x 3.9x 10.9% 32.0% (33.8%) HubSpot, Inc. 5,295 5,047 10.6x 10.0x 7.9x NM 96.1x 66.9x (7.8%) 10.4% 30.0% ChannelAdvisor Corporation 279 232 1.8x 1.8x 1.7x NM 28.7x 22.0x (1.7%) 6.2% 7.0% CDK Global, Inc. 6,211 8,605 3.8x 3.8x 3.6x 11.5x 10.2x 9.4x 33.2% 37.1% 2.8% SITO Mobile, Ltd. 29 24 0.6x 0.5x 0.4x NM NM NM (41.5%) (26.1%) 16.6% Mean 5.6x 4.3x 4.7x 36.9x 34.7x 25.7x 5.3% 13.9% 10.0% Median 3.8x 2.8x 3.6x 25.0x 28.7x 23.4x 9.4% 17.2% 16.6% High 13.5x 10.0x 11.0x 92.6x 96.1x 66.9x 35.0% 37.1% 30.0% Low 0.5x 0.5x 0.4x 4.9x 4.0x 3.9x (41.5%) (26.1%) (33.8%) Marketing Software Source: Capital IQ as of 12/14/18 Public Comps Data Analytics Software Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Splunk Inc. 15,925 14,934 9.3x 8.6x 6.9x NM 60.7x 42.6x (15.9%) 14.1% 30.5% Teradata Corporation 4,431 4,160 1.9x 1.9x 1.9x 27.0x 12.6x 10.6x 7.0% 15.4% (0.1%) Tableau Software, Inc. 10,934 9,977 9.3x 10.1x 7.3x NM NM 46.7x (8.6%) (1.5%) 24.1% Verint Systems Inc. 3,049 3,437 2.8x 2.8x 2.6x 20.9x 12.1x 10.6x 13.5% 22.8% 8.0% Inovalon Holdings, Inc. 2,128 2,981 5.9x 5.6x 4.7x 29.2x 18.7x 14.7x 20.1% 29.7% 18.7% Pegasystems Inc. 3,947 3,741 4.4x 4.2x 3.9x NM 51.7x 54.0x (2.8%) 8.1% 6.3% MicroStrategy Incorporated 1,469 770 1.5x 1.5x 1.5x 31.5x 20.9x 24.6x 4.9% 7.4% 0.7% PROS Holdings, Inc. 1,161 1,101 5.8x 5.6x 4.9x NM NM NM (20.8%) (11.0%) 15.9% Datawatch Corporation 167 162 3.9x 3.6x 2.9x NM 95.2x 56.8x (15.5%) 5.7% 21.7% Mean 5.0x 4.9x 4.1x 27.2x 38.8x 32.6x (2.0%) 10.1% 14.0% Median 4.4x 4.2x 3.9x 28.1x 20.9x 33.6x (2.8%) 8.1% 15.9% High 9.3x 10.1x 7.3x 31.5x 95.2x 56.8x 20.1% 29.7% 30.5% Low 1.5x 1.5x 1.5x 20.9x 12.1x 10.6x (20.8%) (11.0%) (0.1%) Data & Analytics Source: Capital IQ as of 12/14/18 Public Comps SC / Logistics Software Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Manhattan Associates, Inc. 3,039 2,946 5.3x 5.3x 5.2x 19.4x 19.0x 23.0x 27.2% 28.0% (2.6%) The Descartes Systems Group Inc 2,184 2,201 8.4x 8.0x 7.2x 25.9x 23.5x 20.6x 32.2% 34.0% 13.3% Kinaxis Inc. 1,346 1,188 8.4x 7.7x 6.4x 40.0x 27.9x 22.4x 20.9% 27.7% 17.8% SPS Commerce, Inc. 1,482 1,292 5.3x 5.2x 4.8x 43.5x 25.2x 21.0x 12.3% 20.8% 10.8% American Software, Inc. 319 238 2.1x 2.1x 2.0x 20.1x 15.5x 12.9x 10.3% 13.5% 5.2% Amber Road, Inc. 231 242 2.9x 2.9x 2.7x NM 48.7x 41.6x (9.9%) 5.9% 7.2% Park City Group, Inc. 145 133 5.7x 5.7x 4.5x 28.6x 24.9x 16.0x 20.0% 22.9% 20.8% Tecsys Inc. 133 117 2.3x 2.1x 1.7x 36.9x 26.6x 15.1x 6.1% 8.0% 10.6% Coupa Software Incorporated 3,905 3,670 15.3x 14.5x 11.7x NM NM NM (14.4%) 7.1% 29.6% Mean 6.3x 6.0x 5.1x 32.5x 27.5x 21.4x 9.7% 17.5% 14.4% Median 5.5x 5.5x 4.6x 32.8x 25.2x 20.6x 11.3% 17.1% 12.0% High 15.3x 14.5x 11.7x 43.5x 48.7x 41.6x 32.2% 34.0% 29.6% Low 2.1x 2.1x 1.7x 20.1x 15.5x 12.9x (14.4%) 5.9% 5.2% SC/Logistics Software Public Comps Healthcare IT Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Cerner Corporation 18,705 18,333 3.5x 3.4x 3.2x 14.6x 11.7x 10.7x 24.1% 29.2% 7.3% athenahealth, Inc. 5,401 5,355 4.1x 4.0x 3.6x 20.2x 14.4x 12.6x 20.2% 27.7% 9.9% Veeva Systems Inc. 13,384 12,332 15.2x 14.4x 12.1x 60.0x 39.7x 33.9x 25.3% 36.3% 21.9% Allscripts Healthcare Solutions, Inc. 1,717 3,931 1.9x 1.8x 1.8x 43.1x 9.5x 8.9x 4.4% 19.3% 10.2% Medidata Solutions, Inc. 4,385 4,281 7.0x 6.7x 5.7x 47.9x 28.1x 22.9x 14.6% 24.0% 17.4% Inovalon Holdings, Inc. 2,128 2,981 5.9x 5.6x 4.7x 29.2x 18.7x 14.7x 20.1% 29.7% 18.7% HMS Holdings Corp. 2,876 2,992 5.1x 5.0x 4.7x 24.4x 19.5x 17.9x 20.8% 25.7% 11.1% Mean 6.1x 5.8x 5.1x 34.2x 20.2x 17.4x 18.5% 27.4% 13.8% Median 5.1x 5.0x 4.7x 29.2x 18.7x 14.7x 20.2% 27.7% 11.1% High 15.2x 14.4x 12.1x 60.0x 39.7x 33.9x 25.3% 36.3% 21.9% Low 1.9x 1.8x 1.8x 14.6x 9.5x 8.9x 4.4% 19.3% 7.3% Healthcare IT Source: Capital IQ as of 12/14/18 Public Comps Financial Software Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Fiserv, Inc. 30,977 35,579 6.1x 6.1x 5.8x 19.0x 16.5x 15.3x 32.2% 37.1% 4.2% SS&C Technologies Holdings, Inc. 11,477 17,430 6.3x 5.0x 3.7x 19.7x 13.9x 9.8x 32.1% 36.1% 67.7% MSCI Inc. 13,453 14,629 10.4x 10.2x 9.5x 19.5x 18.7x 17.2x 53.4% 54.5% 10.2% Black Knight, Inc. 6,724 8,106 7.4x 7.3x 6.7x 21.6x 14.9x 13.6x 34.3% 48.6% 7.0% Jack Henry & Associates, Inc. 10,336 10,221 6.5x 6.5x 6.3x 21.1x 18.6x 18.7x 30.9% 35.0% 5.2% Envestnet, Inc. 2,392 2,695 3.4x 3.3x 3.0x 32.1x 17.2x 14.8x 10.9% 19.3% 15.1% Q2 Holdings, Inc. 2,163 2,045 9.1x 8.5x 6.7x NM NM NM (5.3%) 8.0% 25.6% Bottomline Technologies (de), Inc. 2,172 2,195 5.4x 5.3x 4.9x 53.5x 22.1x 20.5x 10.1% 24.0% 10.3% BlackLine, Inc. 2,158 2,033 9.4x 9.0x 7.3x NM NM NM (4.8%) 5.7% 25.6% ACI Worldwide, Inc. 3,235 3,846 3.8x 3.6x 3.5x 23.5x 13.9x 12.6x 16.1% 26.2% 3.5% Mean 6.8x 6.5x 5.7x 26.2x 17.0x 15.3x 21.0% 29.4% 17.4% Median 6.4x 6.3x 6.0x 21.3x 16.8x 15.1x 23.5% 30.6% 10.3% High 10.4x 10.2x 9.5x 53.5x 22.1x 20.5x 53.4% 54.5% 67.7% Low 3.4x 3.3x 3.0x 19.0x 13.9x 9.8x (5.3%) 5.7% 3.5% Financial Software Public Comps Communication Software Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Nuance Communications, Inc. 4,319 6,053 3.0x 2.9x 2.9x 16.7x 10.0x 9.5x 17.7% 29.3% 3.6% NICE Ltd. 7,006 7,011 5.1x 4.8x 4.4x 20.5x 16.1x 14.8x 24.8% 29.9% 9.0% Synchronoss Technologies, Inc. 255 453 1.3x 1.4x 1.3x NM 40.0x 8.6x (15.8%) 3.4% (7.5%) MobileIron, Inc. 483 381 2.1x 2.0x 1.8x NM NM 28.8x (22.2%) 0.4% 10.0% Twilio Inc. 9,487 9,171 16.3x 14.6x 11.0x NM NM 194.9x (13.5%) 4.2% 44.4% Mean 5.5x 5.1x 4.3x 18.6x 22.0x 51.3x (1.8%) 13.4% 11.9% Median 3.0x 2.9x 2.9x 18.6x 16.1x 14.8x (13.5%) 4.2% 9.0% High 16.3x 14.6x 11.0x 20.5x 40.0x 194.9x 24.8% 29.9% 44.4% Low 1.3x 1.4x 1.3x 16.7x 10.0x 8.6x (22.2%) 0.4% (7.5%) Communication Software Source: Capital IQ as of 12/14/18 Public Comps IT Security Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Cisco Systems, Inc. 213,423 196,475 3.9x 3.9x 3.8x 13.0x 10.9x 10.6x 30.0% 35.4% 4.3% Check Point Software Technologies Ltd. 16,940 15,170 8.0x 7.9x 7.6x 16.0x 14.7x 14.3x 49.9% 53.9% 3.6% VeriSign, Inc. 18,895 19,500 16.2x 16.1x 15.3x 24.4x 22.4x 21.5x 66.4% 71.7% 4.4% Palo Alto Networks, Inc. 17,850 16,271 6.7x 6.3x 5.3x NM 23.8x 19.9x 1.0% 26.7% 24.3% Symantec Corporation 14,362 16,965 3.6x 3.6x 3.5x 19.3x 7.9x 8.0x 20.3% 45.0% 1.6% Gemalto N.V. 5,231 5,952 1.8x 1.8x 1.7x 14.7x 10.3x 9.6x 12.2% 17.2% (0.6%) Fortinet, Inc. 12,694 11,060 6.5x 6.2x 5.4x 45.1x 24.9x 21.1x 14.3% 24.8% 17.2% Proofpoint, Inc. 5,006 4,815 7.3x 6.8x 5.5x NM 45.1x 37.0x (5.9%) 15.0% 30.4% FireEye, Inc. 3,605 3,467 4.4x 4.2x 3.9x NM 30.2x 28.3x (16.2%) 13.8% 8.9% CyberArk Software Ltd. 2,771 2,385 7.6x 7.2x 6.1x 57.4x 26.9x 23.7x 13.2% 26.9% 22.5% Cheetah Mobile Inc. 935 533 0.7x 0.7x 0.7x 4.7x 5.6x 7.7x 15.5% 13.0% 1.5% Imperva, Inc. 1,967 1,663 4.7x 4.7x 4.2x NM 37.3x 32.1x 1.4% 12.6% 10.5% Qualys, Inc. 3,214 2,888 10.8x 10.4x 8.7x 38.1x 25.9x 23.0x 28.3% 40.0% 19.8% Varonis Systems, Inc. 1,697 1,539 6.0x 5.7x 4.8x NM NM NM (8.6%) 3.5% 21.0% Rapid7, Inc. 1,599 1,500 6.4x 6.2x 5.2x NM NM NM (19.2%) (6.4%) 20.3% Mimecast Limited 2,121 2,154 7.2x 6.8x 5.6x NM 49.9x 32.9x 6.5% 13.6% 26.0% Finjan Holdings, Inc. 74 23 0.2x 0.2x 0.3x 0.3x 0.4x 0.7x 64.2% 54.8% 21.2% Mean 6.0x 5.8x 5.2x 23.3x 22.4x 19.3x 16.1% 27.2% 13.9% Median 6.4x 6.2x 5.2x 17.6x 23.8x 21.1x 13.2% 24.8% 17.2% High 16.2x 16.1x 15.3x 57.4x 49.9x 37.0x 66.4% 71.7% 30.4% Low 0.2x 0.2x 0.3x 0.3x 0.4x 0.7x (19.2%) (6.4%) (0.6%) IT Security Public Comps HR Software Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Paychex, Inc. 24,195 23,729 6.9x 6.9x 6.4x 16.6x 16.9x 15.5x 41.5% 40.6% 7.3% Workday, Inc. 36,223 35,832 13.7x 12.7x 10.2x NM 76.2x 54.3x (8.6%) 16.7% 28.0% The Ultimate Software Group, Inc. 8,002 7,878 7.2x 6.9x 5.8x 67.7x 28.8x 24.2x 10.7% 24.1% 20.3% Paycom Software, Inc. 7,817 7,766 14.7x 13.9x 11.2x 57.5x 33.2x 26.8x 25.5% 41.8% 26.7% Cornerstone OnDemand, Inc. 3,149 3,046 5.7x 5.8x 5.4x NM 33.4x 23.6x 0.1% 17.2% 8.4% Paylocity Holding Corporation 3,418 3,333 8.4x 8.0x 6.7x NM 33.7x 23.2x 9.1% 23.8% 22.2% Benefitfocus, Inc. 1,627 1,706 6.3x 6.6x 5.7x NM NM 76.7x 1.1% 3.4% 7.6% Asure Software, Inc. 86 179 2.2x 2.0x 1.7x 12.3x 9.3x 7.8x 18.3% 21.8% 38.4% Mean 8.1x 7.9x 6.6x 38.5x 33.1x 31.5x 12.2% 23.7% 19.9% Median 7.1x 6.9x 6.1x 37.0x 33.2x 23.9x 9.9% 22.8% 21.3% High 14.7x 13.9x 11.2x 67.7x 76.2x 76.7x 41.5% 41.8% 38.4% Low 2.2x 2.0x 1.7x 12.3x 9.3x 7.8x (8.6%) 3.4% 7.3% HR Software Public Comps IT Operations Management Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) VMware, Inc. 66,161 56,874 6.6x 6.4x 5.7x 24.1x 16.5x 15.3x 27.2% 38.9% 11.8% Red Hat, Inc. 31,255 30,004 9.5x 9.2x 8.0x 49.9x 34.6x 28.9x 19.1% 26.6% 16.2% Citrix Systems, Inc. 14,859 15,182 5.1x 5.1x 4.9x 16.6x 13.8x 13.6x 30.9% 37.1% 4.5% ServiceNow, Inc. 33,736 32,925 13.4x 12.6x 9.8x NM 48.5x 35.1x 2.4% 26.0% 32.0% F5 Networks, Inc. 10,247 9,208 4.3x 4.2x 4.1x 13.9x 10.8x 10.4x 30.6% 38.9% 3.8% Micro Focus International plc 7,796 11,779 4.0x 3.0x 3.2x 13.1x 8.3x 8.5x 30.5% 35.9% 18.8% Arista Networks, Inc. 17,251 15,625 7.7x 7.3x 5.9x 24.1x 19.5x 16.4x 32.0% 37.4% 26.5% NetScout Systems, Inc. 2,089 2,237 2.4x 2.5x 2.3x 16.5x NA NA 14.5% NA (5.2%) New Relic, Inc. 5,004 4,672 11.3x 10.6x 8.4x NM 69.1x 71.7x (1.4%) 15.3% 30.1% Radware Ltd. 1,033 733 3.2x 3.1x 2.9x 71.7x 24.4x 19.5x 4.5% 12.8% 10.1% Apptio, Inc. 1,724 1,579 7.0x 6.8x 5.8x NM NM NM (6.2%) 5.5% 20.0% Mean 6.8x 6.4x 5.6x 28.7x 27.3x 24.4x 16.7% 27.4% 15.3% Median 6.6x 6.4x 5.7x 20.4x 19.5x 16.4x 19.1% 31.3% 16.2% High 13.4x 12.6x 9.8x 71.7x 69.1x 71.7x 32.0% 38.9% 32.0% Low 2.4x 2.5x 2.3x 13.1x 8.3x 8.5x (6.2%) 5.5% (5.2%) IT Operations Management Public Comps PLM & Engineering Software Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Autodesk, Inc. 29,691 30,201 12.7x 11.9x 9.4x NM 82.1x 31.9x (1.3%) 14.5% 24.8% Synopsys, Inc. 13,328 13,080 4.2x 4.2x 3.9x 22.5x 17.1x 14.8x 18.7% 24.3% 9.1% Cadence Design Systems, Inc. 12,445 12,240 5.9x 5.8x 5.4x 24.9x 17.0x 16.2x 23.7% 34.0% 7.9% ANSYS, Inc. 12,923 12,194 10.3x 9.8x 8.9x 26.8x 20.7x 19.3x 38.5% 47.3% 11.8% PTC Inc. 10,299 10,656 8.6x 8.4x 7.8x 79.0x 31.6x 27.4x 10.9% 26.5% 7.5% Aspen Technology, Inc. 5,968 6,086 12.5x 12.5x 10.7x 30.6x 27.6x 21.5x 40.8% 45.2% 7.2% Nemetschek SE 4,428 4,465 9.0x 8.6x 7.4x 37.6x 32.1x 27.4x 23.6% 26.9% 12.2% AVEVA Group plc 5,010 4,907 6.3x 8.2x 5.0x 34.0x 23.9x 17.9x 18.4% 34.2% 24.7% Mean 8.7x 8.7x 7.3x 36.5x 31.5x 22.0x 21.7% 31.6% 13.2% Median 8.8x 8.5x 7.6x 30.6x 25.7x 20.4x 21.1% 30.4% 10.5% High 12.7x 12.5x 10.7x 79.0x 82.1x 31.9x 40.8% 47.3% 24.8% Low 4.2x 4.2x 3.9x 22.5x 17.0x 14.8x (1.3%) 14.5% 7.2% PLM & Engineering Software Source: Capital IQ as of 12/14/18 Public Comps Non-Profit Software Source: Capital IQ as of 12/14/18 Market Cap EV EV / Sales EV / EBITDA EBITDA Margin Rev. Growth (USD mm) (USD mm) LTM CY18E CY19E LTM CY18E CY19E LTM CY18E (CY17A-CY19E) Constellation Software Inc. 14,449 14,394 5.1x 4.7x 4.1x 36.4x 18.8x 15.7x 14.0% 25.2% 18.3% Tyler Technologies, Inc. 7,235 6,963 7.6x 7.4x 6.7x 35.9x 24.8x 21.7x 21.3% 29.9% 11.2% Blackbaud, Inc. 3,128 3,528 4.2x 4.2x 4.0x 25.8x 19.1x 19.2x 16.2% 21.8% 6.1% NIC Inc. 828 647 1.9x 1.9x 2.0x 7.4x 7.6x 8.8x 25.0% 25.1% (1.2%) 2U, Inc. 3,314 2,872 7.5x 7.0x 5.2x NM NM NM (5.3%) 4.3% 38.1% Instructure, Inc. 1,330 1,158 5.9x 5.5x 4.5x NM NM NM (24.7%) (7.5%) 27.7% K12 Inc. 918 813 0.9x 0.8x 0.8x 15.9x 6.4x 6.8x 5.5% 13.1% 7.4% Mean 4.7x 4.5x 3.9x 24.2x 15.3x 14.5x 7.4% 16.0% 15.4% Median 5.1x 4.7x 4.1x 25.8x 18.8x 15.7x 14.0% 21.8% 11.2% High 7.6x 7.4x 6.7x 36.4x 24.8x 21.7x 25.0% 29.9% 38.1% Low 0.9x 0.8x 0.8x 7.4x 6.4x 6.8x (24.7%) (7.5%) (1.2%) Non-Profit Software Arrowroot Bios and Experience Arrowroot Advisors Team Bios ROBERT SANTOS has over 15 years of financial experience working with institutions, companies and entrepreneurs. Robert also serves at the CEO & CCO for Arrowroot Partners, a FINRA/SIPC member broker dealer. Robert is currently the founder of Vitreous Partners, LLC, a boutique wealth management firm working with a wide range of international and domestic clients to provide customized and specialized investment and family office services. Robert is also the portfolio manager for Vitreous Partners' fund of funds, Ladrillo, LLC, which invests in a diversified portfolio of alternative investments, including hedge funds, private equity funds, and real estate. Previously, Robert was a Director for Salem Partners, a multi-family office and investment bank in Los Angeles where he served on the investment committee. Prior to Salem Partners, Robert worked at JP Morgan Securities and Bear Stearns, servicing clients in the financial services industry. Robert received his BA from the University of California at Los Angeles (UCLA). KUNAL PATEL has over 10 years of professional experience, primarily in consulting and investment banking roles. Kunal has worked on a variety of client advisory assignments, ranging from debt and equity capital raises, M&A, merger integration strategy and change management. At Arrowroot Advisors, Kunal has responsibility over the deal execution process for capital raises and M&A mandates for emerging and middle market technology businesses. Prior to joining Arrowroot, Kunal founded Sixthman Services Pty, a provider of data analytics and execution support services for small and mid-sized financial services firms. Prior to Sixthman, Kunal was an Associate Director for UBS Investment Bank where he covered Industrial and Business Services clients. Kunal holds a BBA from the University of Wisconsin Madison and an MBA from Georgetown University. TAYLOR DOUGHERTY is responsible for various parts of the deal process including sourcing new clients, advisory services throughout the capital raise and M&A process, and deal execution. Taylor has extensive experience in multiple SaaS verticals including healthcare technology, advertising technology, GRC technology, and clean technology. Prior to joining Arrowroot Advisors, Taylor worked in Geneva, Switzerland with the Human Rights Council at the United Nations, where she advised diplomats on key areas of child healthcare including nutrition and safety in conflict. Taylor attended Pepperdine University in Malibu, CA where she graduated magna cum laude in Economics, French and International Studies. Our Experience Capital Raise M&A Advisory $5,000,000 Series B growth Equity Investment by Capital Raise And Investment Advisory Has Been Acquired by $50,000,000 Sale of company Capital Raise Capital Raise M&A Advisory Sell side advisory for a provider of governance, risk, and compliance software solutions Project Falcon M&A Advisory M&A Advisory Has been acquired by Capital Raise Taurus raised $6.5 million in equity capital from a venture capital firm and existing investors M&A Advisory Sell side advisory for a provider of video marketing analytics and production services $400,000,000 Financing Capital Raise $400,000,000 Financing M&A Advisory Sell side advisory for a provider of corporate travel booking software M&A Advisory Sell side advisory for a provider of predictive marketing data analytics software. Sold to strategic Project Sierra Relevant industry experience with growing momentum and traction Sell side advisory for a provider of SMB employee reputation management software. Non-binding LOI received Project Iris Project Summit Project Condor $30 million capital raise in process for a leading provider of tax and accounting software solutions to SMBs Project Verde Project Taurus Rob Santos, Managing Director rob.santos@arrowrootadvisors.com For more information, please contact: Ph: 310.566.5865
