1 Q3 2020 Sector Update Software Important disclosures appear at the back of this report GP Bullhound LLP is authorized and regulated by the Financial Conduct Authority GP Bullhound Inc is a member of FINRA 2 GP Bullhound is a leading technology advisory and investment firm highly focused in the SaaS sector. Our quarterly report provides quantitative insights into public and private market valuations across the transaction spectrum and qualitative insights into company business models, technology and trends. We feature many of the leading SaaS companies and CEOs across interesting sub-sectors. Q3 has been a rollercoaster in a year unique in terms of the challenges for people in their private and professional lives. The pandemic continues to cause uncertainty across geographies but has reinforced the need for digital transformation across the board. Political uncertainty in the US has caused further chaos in the public markets, as it is unclear who will emerge victorious. Amid the turmoil, clear winners and losers have emerged in the 'new' economy that now exists, with cloud-based software solutions being the most obvious winner. Nowhere is this more evident than in the public markets. The GPB SaaS Index has grown impressively, trading at all-time highs versus Q1 and Q2 2020. There has also been enormous appetite for software IPOs, with a host of private companies tapping into this market sentiment and listing for the first time in Q3. Snowflake, Palantir, Asana and many more have gone public in a combination of traditional IPOs and direct listings, gaining access to capital and providing liquidity to longstanding shareholders. In the private markets, strategic M&A for the highest quality assets remains robust, with premium valuations holding up; however, assets that are not highly strategic are staying in market longer. Going into Q4, appetite for M&A is increasing as strategic acquirers have shored up their own balance sheets, and PE backers have fortified their portcos and are ready to aggressively look for high-quality inorganic growth opportunities. However, COVID-19 and the upcoming US election mean that the deal environment will be fluid and ever changing over the next few months. With 16 transactions in the past 12 months, our Software practice recently raised $1bn+ for our clients in new capital and exit proceeds. Some of our recent advisory transactions and investments are showcased below: Software perspectives EXECUTIVE SUMMARY INVESTMENT BY Accel - KKR Partnerize INVESTMENT BY CVC EcoVadis INVESTMENT BY Wavecrest Growth & Beringea Edited ACQUIRED BY Dude Solutions Assetic Motif ACQUIRED BY Charles Schwab AllyO ACQUIRED BY HireVue $50M $200M $29M UNDISCLOSED UNDISCLOSED UNDISCLOSED 3 Key sector takeaways SaaS CEO commentary 1 Contents 2 Recent software transaction trends Public market SaaS analysis Key SaaS metrics Appendix A: GP Bullhound SaaS index 3 4 5 6 Appendix B: Software public comparables by category 7 Appendix C: GP Bullhound credentials & team 8 4 Section 1 Key sector takeaways 5 GP Bullhound’s views on current trends in software KEY TRENDS Changed spending patterns lift demand for real-time customer intelligence 1 Increased demand for cloud-based supply-chain management software QR codes increasingly adopted by payment processing software platforms Blended-learning LMS software boosts global corporate and academic e-learning Enterprises and SMBs shift to cloud-based data warehousing solutions Software-focused SPACs take precedence over IPOs for public equity raises 2 3 4 5 6 6 GP Bullhound’s views on current trends in software KEY TRENDS 1 Changed spending patterns lift demand for real-time customer intelligence ▪ COVID-19 has adversely affected income levels across the globe and the prolonged period of financial uncertainty has dramatically shifted consumer spending patterns towards essentials such as grocery and household supplies, with major cut- backs on discretionary categories such as apparel, footwear and travel. − In addition to the changes in products consumed, consumption channels and loyalty preferences have changed as consumers convert to online and other contactless methods of shopping such as Buy Online Pick-up In Store (BOPIS) and move towards products that are easily available and organic. These shifts necessitate real-time insights into changing customer preferences and monitoring of customer experience to recognise and prevent churn. ▪ Customer intelligence software providers are progressively leveraging AI / ML technology for real-time analysis of increasingly granular data that can be processed through unsupervised learning for new, unique consumer insights on purchase patterns and preference trends, thus helping to improve customer acquisition, value creation and retention. Since the onset of the pandemic, organisations have refocused AI / ML efforts, with a ~7% increase in focus on consumer insights and consumer experience. ▪ Recognition of the demand for customer intelligence software is validated by the consolidation and fundraising activity in the space. − Sprinklr, a key customer experience management software provider with a huge focus on customer insights, raised $200m on a $2.7bn valuation in Q2 2020. − Socialbakers, an AI-powered provider of customer intelligence and insights, was acquired by Astute, a customer engagement platform, to provide an end-to-end customer engagement software solution amidst the height of pandemic-driven demand volatility. Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020 7 ▪ The pandemic-driven increase in e-commerce sales, alongside contactless payments being embraced globally, has led to the growth of payment processing software solutions. The payment processing software market is now expected to grow by ~$46bn+ in 2020-2025, representing a CAGR of ~10%. ▪ Since the onset of the pandemic, new payment technology, specifically QR codes and digital wallets, has seen a 10% boost in users, forcing key payment processing platforms, such as Alipay and PayPal, to provide QR code purchase processing functionality. In addition to convenience and customer engagement, the use of QR codes helps merchants access user information that can be leveraged for personalised offers and messaging, as well as tailored rewards programmes. ▪ Smartphone saturation over the past few years has helped push the adoption of QR code payments forward in the US. COVID-19 has forced widespread usage of QR code payments, with restaurants leading the charge. GP Bullhound’s views on current trends in software KEY TRENDS 2 ▪ The change in demand across products and channels has accelerated the need for supply chain management (SCM) software. It facilitates smooth functioning of complex production and delivery processes an0d provides data-driven insights for optimisation. SCM software is also used to provide visibility into supply-chain links. As a result, the SCM software market is poised to grow by ~$9bn+ in 2020-2024, representing a CAGR of ~11%. ▪ Businesses that traditionally used on-premise SCM software are now moving to cloud-based SaaS solutions for both supply chain planning and execution applications. Demand for SCM SaaS solutions has sky-rocketed, where planners can use real-time data to reduce latency, manage disruptions and use manual hours to manage exceptions. ▪ Data-powered autonomous supply chains enable the creation of predefined scenarios that can be automatically implemented when a particular event is triggered, making organisations more resilient and adaptable. Increased demand for cloud-based supply-chain management software 3 QR codes increasingly adopted by payment processing software platforms Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020 8 GP Bullhound’s views on current trends in software KEY TRENDS 4 Blended-learning LMS software boosts global corporate and academic e-learning ▪ Lockdowns and social distancing have caused a paradigm shift in learning for students and workers alike, with learning management system (LMS) software being heavily used amidst the pandemic. With industrial and emerging economies rapidly adopting e-learning, the global LMS software market is poised to grow by ~$12bn in 2020-2025 at a ~14% CAGR. ▪ Synchronous learning capabilities are in demand by organisations that need live instructor-led classes for increased engagement, whereas asynchronous learning is convenient for generic training programmes that students and employees can complete at their own pace through channels of their choice. Customers now demand tools offering a blend of both, with companies such as Docebo, LearnUpon and Instructure leading the market. ▪ Smaller customers, specifically SMBs, demand one-stop-shop platforms that enable blended learning as well as some level of built- in course authoring capabilities that are more affordable than best-in-breed point solutions. 5 Enterprises and SMBs shift to cloud-based data warehousing solutions ▪ Per IDC, 125m petabytes of data is forecast to be created, captured and consumed worldwide through 2024 in structured, semi- structured and unstructured format. This data needs to be aggregated from various sources, cleaned, indexed, and backed up to support queries for analytics and reporting. The data warehousing market is forecast to reach ~$24bn by 2030, with companies such as Snowflake, Teradata, Cloudera, Pivotal Software, SAP, Solver and Yellowbrick. ▪ Traditionally, on-site infrastructure was used for data storage and management; however, rapidly increasing amounts of data increased the costs of on-site data warehousing, leading to cloud solutions offered as data warehousing as a service (DWaaS) that are scalable, agile and affordable with pay-per-use models. ▪ As businesses unlock the insights hidden in vast amounts of data, warehousing software built on architecture that enables running analytical queries for AI-powered analytics and insights is being adopted by large and small enterprises for improved topline growth, customer experience and operational efficiency. Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020 9 GP Bullhound’s views on current trends in software KEY TRENDS 6 Software-focused SPACs take precedence over IPOs for public equity raises ▪ COVID-19 has created volatility in the public markets for tech stocks. To mitigate market risk, long-standing private tech unicorns are now looking to exit into public markets via special purpose acquisition companies (SPACs) instead of traditional IPOs. By enabling valuations to be set by SPAC management instead of the market, these companies seek to avoid pricing volatility in public markets. ▪ The market remains receptive to SPACs, as shown by the $150m IPO of Software Acquisition Group Inc. II, a SPAC led by Jonathan Huberman aiming to invest in vertical enterprise software companies owned by private equity or venture capital. ▪ Although SPACs have been around for past few decades, they returned to the limelight last year when Chamath Palihapitiya of Social Capital took Richard Branson's space tourism company Virgin Galactic public via his first SPAC. Another notable Social Capital acquisition is Opendoor, an instant sale home platform that was valued at $4.8bn and went public in mid-September. Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020 10 Section 2 SaaS CEO commentary 11 Fairmarkit INTELLIGENT SOURCING PLATFORM FOR ORGANISATIONS TO MORE EFFICIENTLY PURCHASE THE GOODS AND SERVICES THEY NEED |Q&A WITH THE CO-FOUNDERS 1. Why is the Fairmarkit solution need today? Companies do not have the bandwidth to address their non- contractual or ‘tail’ spend. Fairmarkit bridges that gap for our customers, streamlining the purchasing process with existing vendors, as well as finding new vendors. 2. What are the key benefits that your customers are seeing? Our customers see 7%+ in savings, and a 60% reduction in cycle time employee touch / time. 3. What are the next steps in the product evolution? We want to help customers offload contract spend and payments to us. We see a future where customers pay Fairmarkit and then we pay their suppliers – like a modern treasury. Supply chain management is really heating up and being recognised by companies as an extremely important business process to streamline. | MISSION Enable organisations to more efficiently purchase the goods and services they need with automation, increased transparency and actionable insights. | LONG-TERM VISION Accelerate the digital transformation of companies’ procurement, and automate the procurement process using data and intelligent sourcing. | SCALE Fairmarkit works with some of the world’s largest companies across a range of sectors including financial services, transportation, internet technology and healthcare. Victor Kushch Co-Founder Kevin Frechette Co-Founder Tarek Alaruri Co-Founder 12 NetMotion SECURE REMOTE ACCESS PLATFORM EMPOWERING COMPANIES TO SUPPORT WORKFORCES AND DELIVER A SUPERIOR USER EXPERIENCE |Q&A WITH MANAGEMENT 1. Why is the NetMotion solution needed today? Now more than ever, companies need to ensure to provide employees with a seamless and powerful remote access technology solution. NetMotion's platform allows companies to manage all remote access needs through one unified platform with best-in-class SDP, VPN and digital experience monitoring (DEM) product offerings. 2. What are the key benefits that your customers are seeing? NetMotion’s secure remote access platform was built specifically with mobile workers in mind and thus improves the end-user experience while providing unmatched visibility, analytics and management capabilities to IT & security leaders. NetMotion has an industry-leading net promoter score (NPS) of 91 and gives businesses a software-defined perimeter solution that can grow with them as they evolve toward zero trust situations. 3. What are the next steps in the product evolution? We recently unified our VPN and DEM products with our SDP solution to provide an unparalleled Secure Access Service Edge (SASE) platform. On top of that, we will also launch NetMotion as a hosted platform soon, supporting our customers in providing a superior remote access experience. | MISSION To keep remote workers safe and secure without compromising the user experience. | LONG-TERM VISION Be the partner of choice for global enterprises looking to implement and run a premier SASE solution with highly productive and happy end users. | SCALE More than 1.5m workers at more than 3,000 enterprise and government organisations rely on NetMotion’s mission-critical software solutions every single day. Christopher Kenessey CEO & President 13 Social Standards CONTEXTUALISE CONSUMER DATA TO EMPOWER EXECUTIVES TO MAKE BETTER DECISIONS |Q&A WITH THE CEO 1. Why is the Social Standards solution needed today? Our unique platform structures social media conversations similarly to how Nielsen or IRI structures sales data and benchmarks every data point to the current market norms. This enables deep and thorough analyses that can be delivered, recognised and actioned quicker than any consumer insights platform or service to date. 2. What are the key benefits that your customers are seeing? Our customers can instantly find and analyse macro level trends or choose to drill down into very targeted topics and cohorts. They can examine the benefits and concerns the consumer associates with specific products, the activities they enjoy while consuming, and the ingredients they care about. They can even discover how loyal their consumers are and directly see where they are winning and to whom they may be losing market share. 3. What are the next steps in the product evolution? We are currently developing new innovative efficiencies in how companies extract and interact with analytical insights, from social data and beyond. | MISSION To unlock the full potential of collective social intelligence. | LONG-TERM VISION To revolutionise market analytics by transforming social data into strategic insights enabling agile decision-making. | SCALE Social Standards is utilised directly by the world’s leading CPG based CXOs and PE firms. Additionally, financial institutions, such as Bank of America, rely on Social Standards to ultimately inform their 'buy’ or 'sell’ decisions. Devon Bergman CEO, Co-Founder Photo 14 Section 3 Recent software transaction trends 15 Announce Date Buyer Target Target Description Value ($m) Implied EV/LTM Rev Sep-20 Provider of a purpose-built mobile IT platform 872 4.0x Sep-20 Provider of enterprise automation software for the employee benefits & property and insurance industry 900 - Sep-20 Provider of continuous automation software 220 3.1 1 Aug-20 Developer of enterprise software products 4,700 - Aug-20 Developer of a web protection platform 775 - Aug-20 Provider of an online lending platform 850 - Aug-20 Developer of cloud-based insurance software and services 5,350 - Aug-20 Provider of healthcare technology and analytics services 1,300 - Jul-20 Developer of software-defined wide-area network products 925 7.0 Source: Capital IQ (as of 30 September 2020) Pitchbook (1) ARR multiple Notable software M&A deals & private financings M&A TRANSACTIONS ARE SLIGHTLY DOWN QUARTER OVER QUARTER Q3 2020 Mean 4.8x Announce Date Lead Investor Issuer Issuer Description Capital Raised ($m) Sep-20 Provider of a digital investment platform 52 Sep-20 Provider of SaaS logistics technology 68 Sep-20 Developer of a marketplace platform 300 Sep-20 Developer of an end-to-end cloud commerce platform 185 Sep-20 Developer of a customer experience management software platform 350 Sep-20 Developer of security analysis tools 200 Sep-20 Operator of an online learning platform 500 Aug-20 Developer of an AI-driven revenue intelligence platform 200 Aug-20 Developer of an electronic trading platform 200 Aug-20 Developer of an employee management platform 145 Jul-20 Developer of a cloud communications platform 200 Jul-20 Undisclosed Developer of cloud-based call centre software 143 Jul-20 Developer of an online education and learning platform 130 Selected M&A Transactions Selected Private Financings Q2 2020 Mean 5.5x 16 Source: Pitchbook as of 30 September 2020 Note: Data includes all ‘SaaS’ M&A and private placement deals as defined by Pitchbook regardless of geography or transaction size Global software transaction trends M&A HAS SEEN AN UPTICK THROUGH Q3 Q3 SaaS deal volumes pick up pace after slower Q2 Total number of private placement transactions have increased QoQ US & Canada M&A bounces back after slower Q2 Deal volume in the US, Canada, & Europe outpaced other regions 0 100 200 300 400 500 600 $0M $20B $40B $60B $80B $100B $120B 2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3M&A Buyout M&A deals Buyout deals 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3U.S. & Canada Europe Asia Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3U.S. & Canada Europe Asia Other 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 $0M $5B $10B $15B $20B $25B $30B $35B $40B 2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3Capital invested ($Bn) Volume 17 Software direct listing & IPO landscape Source: Company SEC filings, Capital IQ as of 30 September 2020 (1) For each of the past nine quarters Listed – Q3 2020 Description (NYSE: ASAN): Web and mobile application that helps teams organise, track, and manage their work Founded: 2008 Listing Date: 30 September 2020 Reference Price/Share: $21.00 LTM 7/31/20 Gross Revenue: $181.3m Selected Metrics: • 1.2m+ paid users • 75k paying customers • 190 countries • 3.2m+ free activated accounts Description (NYSE: PLTR): Builds software platforms that help human experts perform collaborative analysis of data at scale Founded: 2003 Listing Date: 30 September 2020 Reference Price/Share: $7.25 LTM 6/30/20 Gross Revenue: $901.1m Selected Metrics: ▪ 41k downloads per week in Q2 2020 ▪ 125 customers in H1’20 ▪ Avg. revenue / customer – $24.8m Description (NYSE: U): Provides a software platform for creating and operating interactive, real-time 3D content Founded: 2004 Listing Date: 17 September 2020 Offering Price/Share: $52.00 LTM 6/30/20 Gross Revenue: $640.3m Selected Metrics: ▪ 1.5m monthly active creators ▪ 3bn+ app downloads per month ▪ Teams in 190+ countries Description (NASDAQ: SUMO): Creator of a Continuous Intelligence Platform that enables organisations to address the challenges and opportunities presented by digital transformation Founded: 2010 Listing Date: 17 September 2020 Offering Price/Share: $22.00 LTM 7/31/20 Gross Revenue: $181.4.m Selected Metrics: ▪ 120-135%1 net revenue retention range ▪ 873 petabytes of data scanned / day ▪ 49.9 quadrillion total events scanned Description (NASDAQ: FROG): Provides an end-to- end, hybrid, DevOps platform to achieve Continuous Software Release Management Founded: 2008 Listing Date: 16 September 2020 Offering Price/Share: $44.00 LTM 6/30/20 Gross Revenue: $127.9m Selected Metrics: • 5.8k+ customer • 85% of revenue from multi-product subscriptions • 139% net revenue retention Description (NYSE: SNOW): Cloud-based data warehousing company that offers storage and analytics, solving for issues that come with silo’d data and data governance Founded: 2012 Listing Date: 16 September 2020 Offering Price/Share: $120.00 LTM 7/31/20 Gross Revenue: $402.7m Selected Metrics: • 158% net revenue retention • 3,117 customers • 56 customers with $1m+ of LTM revenue Description (NASDAQ: RXT): End-to-end multi- cloud technology services company. They design, build and operate cloud environments across all major tech platforms Founded: 1998 Listing Date: 5 August 2020 Offering Price/Share: $21.00 LTM 6/30/20 Gross Revenue: $2.5bn Selected Metrics: • 95% recurring revenue • 98% net revenue retention 2019 • 2019/18 Bookings Growth: 17% • 120,000 customers Description (NASDAQ: BIGC): Bigcommerce’s platform simplifies the process of creating engaging online stores Founded: 2009 Listing Date: 5 August 2020 Offering Price/Share: $24.00 LTM 6/30/20 Gross Revenue: $128.8m Selected Metrics: • 106% 2019 net revenue retention for customers with ACV’s >$2k • 4.4:1 2019 LTV:CAC Indicates Direct Listing 18 Section 4 Public market SaaS analysis 19 1x 6x 11x 16x Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 GPB SaaS Index - EV / LTM Revenues GPB SaaS Index - EV/ NTM Revenues Source: Capital IQ as of 30 September 2020 Note: GP Bullhound SaaS Index constituents can be found in Appendix A (1) YTD GPB SaaS Index EV / LTM Revenues growth rate GP Bullhound SaaS index valuations REVENUE MULTIPLE TRENDS – PAST 5 YEARS Mean: 9.6x Mean: 7.9x Current SaaS valuations remain strong against the 5-year mean Sep 2020: Multiples are up 58%+(1) YTD as COVID-19 continues to provide a bump for public software multiples As of 30 September, the SaaS Index was trading at 18.0x trailing 12-month revenues, 89% greater than the 5-year average As of 30 September, the SaaS Index was trading at 14.8x next 12-month revenues, 86% greater than the 5-year average Feb 2016: Overall market correction, global economic weakness made its way into the US causing SaaS companies to adjust their guidance Dec 2018: Trade war with China leads to the sell-off of SaaS company stocks 20 Investors are increasingly focused on KPIs outside of revenue as they evaluate business models Source: CapitalIQ, SEC Filings (1) CY20E / CY19A; (2) (S&M LTM Sep. 2019 / ((LTM Sep. 2020 Rev. – LTM Sep. 2019 Rev.) * GM%)) / 12; (3) LTM Sep. 2020 Operating Cash Flow / LTM Sep. 2020 Revenue; (4) As stated in company filings & earnings releases PUBLIC SAAS METRIC BENCHMARKING Revenue YoY growth (1) Payback period (2) Free cash flow margin (3) Net dollar retention (4) In months 42% 41% 41% 40% 39% 26% 25% 23% 22% 22% 21% 18% 18% 15% 14% 12% 11% 10% 7% 83.3 69.4 67.0 65.7 46.5 36.8 33.6 32.6 31.7 25.0 24.7 24.2 23.7 23.4 23.3 21.0 20.4 19.0 18.1 43% 30% 26% 24% 22% 19% 18% 17% 16% 12% 7% 5% 4% 3% 3% 0% -7% -10% -28% 125% 121% 120% 120% 118% 116% 113% 106% 100% 99% Slack Okta Docusign Zscaler Pluralsight Pagerduty Appian Box Hubspot Zuora 21 Source: Capital IQ as of 30 September 2020 Note: GP Bullhound SaaS Index constituents can be found in Appendix A GP Bullhound SaaS index performance INDEX VALUE 80% 90% 100% 110% 120% 130% Jul-20 Aug-20 Sep-20 GPB SaaS Index - Index Value S&P 500 NASDAQ Composite 20% 100% 180% 260% Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 GPB SaaS Index - Index Value S&P 500 NASDAQ Composite 60% 100% 140% 180% 220% Oct-19 Feb-20 Jun-20 GPB SaaS Index - Index Value S&P 500 NASDAQ Composite L1M L3M L6M L12M 80% 90% 100% 110% 120% Sep-20 Sep-20 Sep-20 GPB SaaS Index - Index Value S&P 500 NASDAQ Composite Sep-20 22 0% 100% 200% 300% 400% 500% 600% 700% 800% 0% 100% 200% 300% 400% 500% 600% 700% 800% Source: Capital IQ Note: Existing cash balances allow companies to spend over 100% of operating cash flow (1) As of Q3 2020 (2) Dollar amounts represent total cash use during the LTM period Tech giants – show me the money ▪ R&D ▪ Debt paydown ▪ Capex ▪ Dividends ▪ Share buybacks ▪ Acquisitions $34,399 $1,153 $891 $9,726 $2,595 $137,646 $79,326 $80,854 $1,732 $5,701 $83,590 $700 LTM (1) % of operating cash flow $m (2) LTM – Q3 2019 % of operating cash flow $m (2) $46,548 $1,132 $1,097 $5,760 $3,083 $125,951 $60,994 $75,089 $65,310 $1,490 $189 $4,235 ▪ Q2 was a period of cash conservation as companies sought to build liquidity cushions to soften the economic blow from arguably the most uncertain period of the pandemic to date. Going into Q3, we predicted that companies able to minimise spending and safely navigate through H1 2020 would look to deploy cash to explore growth opportunities through M&A and organic investments. The data has shown that companies are opting to go the M&A route, as deal volume has significantly picked up pace in most major regions – specifically the US and Canada. ▪ As the curtain of economic uncertainty continues to slowly lift and the market outlook becomes clearer, companies will likely continue to explore M&A through the rest of 2020; however, there will be greater levels of scrutiny placed on transactions. 23 Section 5 Key SaaS metrics 24 Key SaaS metrics DEFINITIONS & CALCULATIONS Metric Definition Calculation Normalised measurement of recurring revenue, most frequently measured with a constant value in each month of the subscription period MRR All S&M expenses for new customers. Sometimes excludes personnel management S&M costs CAC =