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North America Equity Research

12 July 2013

Software Technology
The Source Code V47- Claims Management Software
Stocks in our coverage are surging higher with the market as the pre-announcement period has been very quiet. CHKP and FTNT put out earnings call notices giving investors some confidence, but we would note our industry conversations indicate the June quarter was bumpy. So, even if revenue results are decent, it was probably not an easy accomplishment in our view. We have also seen a noticeable turn in RAX, one of our four favorite names, but remind everyone that this name will likely be volatile as shown by the stock reaction to the latest Amazon price cut on dedicated hosting. This week we take a look at another of GWRE's product segments the claims software space.  Spotlight: Closer look at North American claims management market. As a follow-up to Source Code V34 “P&C Policy Management,” we are profiling the North American P&C claims management space in this Spotlight, a space where Guidewire is a clear leader. We recap current challenges in the P&C space, how claims management tools address these challenges, market sizing, and Guidewire’s competitive strength.  Recent Buzz: SNCR (OW/PT $35) was down 12% on a competitor downgrade. We believe SNCR is on target and expect an in-line 2Q. Investor narrative around Rackspace has turned as evidenced by the first decline in short interest since April. Investors are looking at the potential of group stabilization and what it could do for the stock. But continued price cuts by Amazon showed just how volatile the name can be as this week’s announcement moved the stock by as much as 8% intraday.  News That Matters: It was a relatively quiet week of news, as we gear up for 2Q earnings. ICANN Board approved 2013 registry agreement for new gTLDs, which is important for VRSN. Microsoft (covered by JPM Software analyst John DiFucci) announced it is focusing its engineering efforts around OS, Apps, Cloud and Devices and aims to facilitate a “holistic” view of the company’s product lines.  Metrics That Matter: This week we updated two of our quarterly macro economic metrics. The first one is for US unemployment rate for 2Q which came in at 7.6%, slightly ahead of JP Morgan estimate of 7.5% and the second update is for Euro and Yen currencies vs. USD at the end of 2Q which were USD 1.31 per EUR and 98.76 JPY per USD as compared to JPM estimate of USD 1.30 per EUR and 100.00 JPY per USD. And lastly, in our monthly metrics, we introduce Jun-13 metrics. Some major updates from the June metrics include: NFIB index for small business optimism which declined 0.9 points in June, Semiconductor revenues for the month of June which was 3.2% up from last month and Manufacturing data which showed expansion in US and contraction in Europe, although Europe showed some improvement from last month.

Software Technology Sterling Auty, CFA
AC

(1-212) 622-6389 sterling.auty@jpmorgan.com Bloomberg JPMA AUTY <GO>

Lauren Choi
(1-212) 622-6102 lauren.choi@jpmorgan.com

Saket Kalia, CFA
(1-212) 622-6477 saket.kalia@jpmorgan.com J.P. Morgan Securities LLC

 Earnings season begins next week: Next week we start our earnings season
with one company CHKP on Thursday.

See page 19 for analyst certification and important disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com

Sterling Auty, CFA (1-212) 622-6389 sterling.auty@jpmorgan.com

North America Equity Research 12 July 2013

Table 1: Next Week Earnings Preview

JPM Company CHKP Rating OW PT $53 Call Info Jul 18, 8:30 AM (ET) Dial-In: 1 201.689.8261

Calendar 2Q13 Quarter Estimates JPM $331.8 $0.81 Street $336.4 $0.81 Preannounced/Guidance $320-350 $0.76-0.84 J.P. Morgan View All eyes will be on the product revenue line that we still have forecast to decline 7% y/y. We believe the company had a decent finish to the quarter, but was very back-end loaded. Given the run in the stock, that number along with implied bookings will have to be positive to keep the shares moving higher.

Revenue (in $M) EPS

2

com North America Equity Research 12 July 2013 Spotlight: Closer Look at North American Claims Management Market As a follow-up to Source Code V34 “P&C Policy Management. etc). accurate service when paying claims. and geographical informational systems for example can make claims management systems more efficient and reduce insurance leakage. and hundreds of players in each region. etc). how claims management tools address these challenges. specialty. with about half in North America We estimate the worldwide market for claims management software and services is worth $2-$2.5x for the services. On the bottom line.5B. We believe customer retention is important in the insurance industry because the longer customers pay a premium.5B.Sterling Auty. From the customer perspective. further pressuring DWP growth. A customer is probably not too happy when they are making an insurance claim. process. a space where Guidewire is a clear leader. New product introductions are important too. the claims management system has to be easy to use for insurance agents in order to provide timely. Claims Management Is a Big and Growing Market We estimate the claims management market is worth $2-$2. From the P&C carriers’ perspective. we believe customer retention and new product introductions are key to growth. the P&C insurance market is a stable and mature industry. We recap current challenges in the P&C space.” we are profiling the North American P&C claims management space in this Spotlight. which could drive claims (ie payouts to policy holders) up. whether it is from a fender-bender with their car or for more serious damages to their property. there seems to be a growing number of catastrophes (Hurricane Sandy.auty@jpmorgan. On the top line. new technologies like fraud analytics. with direct written premium (DWP) trending in line with GDP. business intelligence. CFA (1-212) 622-6389 sterling. That is based on our estimate of pricing to be 4-6 bps for every $1B in DWP for the recurring license portion. and pay claims when customers need to make a claim against their insurance policy. It is also a very fragmented market with multiple sub-markets (personal. Claims Management Is another Key Element to Improving Customer Service & Retention Pressures on the top line and bottom line of P&C carriers We believe property & casualty insurance carriers’ top and bottom lines are pressured as an industry. The services 3 . plus ~1. the more profitable they will be even with periodic claims. which places different strains on claims management systems. Retention and new products are key to driving top line Because of the industry dynamics we described above. policyholders want to interact with their insurance similar to their interaction with other vendors through portals or mobile devices. and be more technically savvy for vendors to improve retention P&C carriers use their claims management system to accept. Claims management tools need to be more interactive with customers. For this reason. commercial. and Guidewire’s competitive strength. as we believe some sub-segments of insurance could have different growth/competitive profiles. market sizing.

1B worldwide. so applying that math gets us to ~$2. consistent with the distribution of direct written premium. Guidewire is the clear leader in the space with its ClaimCenter product. as that system is more integrated into the P&C’s core systems and is the system of record for the carrier. with 60 customers in production. ClaimCenter is continuing to extend this lead by signing 4-5x more new customers in 2012 than its nearest competitor with 18. Gartner estimates ~9% of Guidewire’s customers are on a current version. For example. that means North America represents ~$1B in total market size. and similarly only a couple of Accenture’s customers were on their latest release. and Continuing to Extend Lead with Customer Wins Source: Gartner 4 . First. by our estimates. this would equate to roughly 50% market share in claims management. and thus help drive market growth. Guidewire is the Clear Leader Guidewire has the largest number of customers in production. there is still room for existing customers to upgrade to more current versions of software. or 3x its nearest competitor. Based on customer count. a sign of the healthy growth in this market. these six vendors had 116 customers in production in North America. and is capitalizing on its leadership position in the market.auty@jpmorgan.200 worldwide P&C carriers worldwide. cover more DWP. Second. We estimate worldwide DWP to be ~$1. which we estimate is about 20% penetrated. We estimate this back-of-the-envelope by assuming ~1. Figure 1: Guidewire the Clear Leader in Claims. We think this shows Claimcenter is keeping up with customer demands. 27% growth in number of deals signed in 2012. We estimate North America makes up about half of worldwide DWP. We believe upgrades bring more capability.Sterling Auty. up 27% from 2011.com North America Equity Research 12 July 2013 intensity for claims is slightly lower than policy management. CFA (1-212) 622-6389 sterling. though we note this is a very rough estimate without sales information. of which ~50% are in North America. and still room for growth for two reasons The six claims management vendors in Figure 1 below signed 33 new North American deals in 2012.5T. and is winning the most deals As we show in Figure 2 below. and with similar pricing. We believe growth can continue for two reasons. Just as important.

compared to tier 1 customers who can afford to rely on older systems given their market share. CFA (1-212) 622-6389 sterling. is their newest introduction Guidewire Live.auty@jpmorgan. Guidewire leads by 3x in tier 2 carriers. Third. is analytics with its good catastrophe management tools that offer heat maps and integration with third-party data (for example weather services) which make insurers more prepared to respond.Sterling Auty. tier 2 between $1-$5B. and by 2x in tier 3. By the same token. The vendors that were excluded because of no new customer wins were Aon eSolutions. Pegasystems and MphasiS Wyde. Second. which recall we estimate fraud to consume 2-4% of global DWP or approximately $50B per year. is fraud detection.com North America Equity Research 12 July 2013 Guidewire is a leader in all tiers of P&C insurance Figure 2 below shows how the 116 North American customers are spread across the three tiers of P&C insurance carriers. rather than best-of-breed solutions. and tier 3 less than $1B. Guidewire is virtually neck-and-neck with Accenture with 8 and 9 tier 1 customers respectively. First. Figure 2: Guidewire's Leadership in Claims Crosses All Segments of the Market Source: Gartner Market is consolidating to select few vendors. we think partially from desire for suite Gartner’s Marketscope excluded six vendors in this version because they either did not win any new customers in North America or did not have at least three live customers in production in North America. Stone River was excluded because it did not have the minimum number of live customers in North America (note Stone River is headquartered in Oakland. indicating the market is consolidating to a smaller number of providers. 5 . CA). we see three areas that the company has invested in for innovation. This is not surprising as tier 2 and tier 3 customers are usually quicker to adopt more recent technologies. MajescoMastek. We think part of the reason for the consolidation to less vendors is the desire for customers to consolidate vendors and buy suite solutions. Insurity. The three tiers are separated by the amount of direct written premium for an individual carrier. Competitive Landscape Guidewire is adding innovative products to maintain/grow its leadership Based on our analysis of Guidewire’s Claimcenter. an admirable achievement for a much smaller and younger provider. with tier 1 with more than $5B.

Like Guidewire. Accenture benefits from having a full insurance suite with Claims Components and Duck Creek Policy Administration. We believe this has given Accenture the reputation in the market of being a "large customer" provider. Accenture is Guidewire's most formidable competitor in claims management as we show in Figure 3 below with its "Strong Positive" rating. How is Accenture different in claims management? Just as in policy management (refer to Source Code V34). CFA (1-212) 622-6389 sterling. Guidewire has received a "Strong Positive" rating. with 14 of their 16 North American customers in one of those two tiers. Accenture has a larger presence in tier 1 and tier 2 customers.com North America Equity Research 12 July 2013 which will allow existing customers to benchmark performance against other customers. This is a new and innovative offering in P&C insurance.Sterling Auty. Figure 3: Gartner Vendor Ratings Source: Gartner 6 . a distinction it has received for six consecutive years by Gartner. We think this is helping it capture more share than smaller point providers. and while it is still nascent. As we show in Figure 3 below. making it more challenging to go down-market. could help Guidewire extend its leadership position in claims mangement.auty@jpmorgan.

12% yoy SAAR should drive 15% organic growth rate Transaction revenue should grow 2-3x the SAAR. Valuation: EV/FCFF of 26. A threat would be if lenders and nonbank companies that are looking at mobile payment opportunities form a competitive solution.7-4B. Action: Buy the stock as recent SAAR data suggest healthy auto sales. by our estimates. Opportunities Consolidation – fragmented market Management utilizing a solid balance sheet to create shareholder value through acquisitions that bolster long-term growth and cash flow potential. Threats Lenders look for alternative in transaction business Technology has significantly changed since the company first began its credit application network. CFA (1-212) 622-6389 sterling. potentially providing 20-30% growth and.Sterling Auty. Upsell / Cross-sell into healthy dealers Auto dealers are in better financial position than they have been in five years. Source: J. providing opportunity to invest in solutions to help them grow. in our view. and TRAK is best positioned to capitalize. Morgan. including dealer management systems (DMS) into the automotive industry. making replacement sales more challenging. should lead to 15% organic growth. but the stock has faded. 7 . in our view. as well as a leading SaaS software provider of solutions. Embedded software competitors Reynolds & Reynolds and ADP lock in customers for long-term contracts.com North America Equity Research 12 July 2013 Top Picks DealerTrack (TRAK) Description: Provider of transaction-based solutions.P. including the largest credit application network. Positives Large ~$3-5B industry Transaction revenue addressable market approximately $630 million and subscription software market $2. Risks/Challenges Health of auto industry Transaction revenue is 60% of total and 70% correlated with auto sales. unlike its five-year correlation to this data. SaaS should accelerate in 2013 as divestitures annualize. combined with subscription revenue.2x as compared to SaaS of 20x and peer group of 18x.auty@jpmorgan.

which combined with estimate upside potential could drive share outperformance Positives Large addressable market. Morgan. high-tech customers can see anywhere from 6-20% gross margin improvement over five years. MODN’s two main markets (Life Sciences and High Tech) spend ~$17B on technology in the sales. creates better growth and profitability The company estimates that for every $1B of sales. could get troughs in growth. regulatory compliance. etc. giving customers the choice. marketing. Generates incremental revenue for customers. Source: J. 94% revenue coverage next 12 months Backlog plus deferred revenue we estimate gives them 94% coverage on FY13 revenue estimates. for example. if sales cycles lengthen.auty@jpmorgan. The bulk of an average implementation is 9-12 months. 8 . channel strategy. most companies leave $40-120M on the table per year. Threats Potential SaaS-only competitor. So if sales cycles lengthen. CFA (1-212) 622-6389 sterling. so. We estimate about a third of this (or ~$5B) could be devoted to revenue management. so we believe there is lots of penetration opportunity in the high-tech vertical. it could impact forward revenue estimates. Opportunities Deeper penetration into segments of High Tech and Life Sciences We know of just one customer in the software industry.P. Action: Buy the stock as we believe the market will reward the stock with a higher multiple for this secular story. we believe this multiple could expand to 4x (compared to peers at 4-7x). That growth drops to the bottom line. it could potentially pressure share gains. focused in Life Sciences and High Tech. MODN offers its solutions on both a traditional license basis and SaaS basis.Sterling Auty. and finance departments. contract management/compliance. Valuation: Stock is trading at 4. Vertical industry expansion Can add other industries where pricing is complex or discounting prevalent. Go down market with SaaS simplified offering.com North America Equity Research 12 July 2013 Model N (MODN) Description: Leading provider of software that helps customers maximize and grow revenue (revenue management) through pricing analysis.3x FY14E EV/S. incentive/rebate management. Risks/Challenges Revenue growth tied to Implementation. But when SaaS-only vendors enter the market.

5 million up to 400 new top-level Accelerating growth shares from the Network domains in 2013 and 7% organic growth in 2013E Solutions acquisition beyond. Too cheap.P. Large tech or social eCommerce. Source: J. 9 .com North America Equity Research 12 July 2013 Web. tough economic times. high. local and Mobile Cyclical New Entrants Attacking $19B market for Selling marketing solutions SMB typically suffers in Barriers to entry not very small business Internet. local.Sterling Auty. Valuation: Trading at 11. in our opinion. unlocked at the end of October and the company Visibility has 7M primary shares. should accelerate to double registered that come digits in next few years. for social networks. Action: Buy stock because we believe valuation will re-rate higher as operating metrics keep improving. real estate on the Internet acquisition could add focus on providing small Web. Positives Opportunities Risks / Challenges Threats Market.com applied for . 80-90% recurring subscription revenue.web incremental $144M in business online solutions. Shelf registration domain and could benefit revenue General Atlantic (GA) still from adoption of potentially has an estimated 8. Morgan. CFA (1-212) 622-6389 sterling.auty@jpmorgan. and and in mobile.4x 2014E earnings for a company that we believe will generate consistent double-digit earnings growth.com (WWWW) Description: Putting small business on the Internet. Competition: similar solutions could gTLD program adds new VistaPrint and impact do-it-yourself part of Network Solutions ConstantContact increasing WWWW business. Social. network company offering advertising.

It lowers pricing frequently. Because it is open source. In our experience. Morgan. leases network equipment. Public cloud market is ~40% grower The public cloud IaaS market is expected to grow at ~40% CAGR through 2016. More computing is moving to the cloud.auty@jpmorgan. Action: Buy the stock as we believe the public cloud business will re-accelerate in 2H13. as the company invests in cloud opportunity. cannibalizing RAX’s larger. where the range of applications could be limited. this sometimes creates big ranges in expectations. which would still be a discount to its three-year average of 15x. RAX is targeting 47%+ EBITDA margins. Long-term margin target of 47% leavea a lot of runway EBITDA margins have been in the 30-35% range. Risks/Challenges Public cloud could cannibalize managed hosting business As more computing moves to the cloud. showing company is taking share. Hybrid cloud is a nice differentiator.P. more profitable business. RAX resells data center space. which could potentially create tough comparables despite solid business performance.P. and provides service so customers can focus on their core business. Morgan Internet analyst Doug Anmuth) Web Services (AWS) is the #1 provider of public cloud services. Company does not give detailed guidance. which are usually larger deal sizes. But because of its “Fanatical” service model. Opportunities Openstack could be a gamechanger in public and private cloud RAX runs its public cloud on an open-source platform called OpenStack. Source: J. we think the multiple can get to 13x. and RAX is a pure play. Positives Move to cloud is secular trend. customers can prevent vendor-lock in on other systems. The combination of RAX's managed hosting and public cloud business gives customers the choice to put different applications on dedicated hosting versus public cloud. and RAX has grown 15-20%. RAX is a pure play in the space. compared to others that are small parts of larger businesses. which we think will drive multiple expansion. and the managed hosting growth will stabilize. and run it in the private and public clouds.com North America Equity Research 12 July 2013 Rackspace Hosting (RAX) Description: Rackspace is a cloud-computing provider in the managed hosting and public cloud infrastructure-as-a-service (IaaS) markets. RAX has historically not given quarterly or annual revenue guidance (though it started in 2Q13).Sterling Auty. in our opinion. Amazon (covered by J. Longer term. This differentiates from pure-play public cloud. Valuation: Stock is trading at 9. there could be a risk that more customers opt for public cloud rather than managed hosting. Enterprise is still an opportunity RAX’s historical stronghold has been in small business (SMB). CFA (1-212) 622-6389 sterling. We note this stock.2x FY14E EBITDA and has approximately 10% short interest. We believe RAX can participate in this growth. but potentially high reward opportunity. 10 . represents a very high risk. it has started to penetrate enterprises. which could commoditize the public cloud. Threats Amazon continues to lower pricing frequently. RAX has been gaining share in Managed hosting IDC forecasts the complex managed hosting market to grow at 7-8% CAGR through 2016. leaving a lot of runway for growth.

We believe the dedicated hosting part of Rackspace business will see growth stabilize over the next two quarters. we feel comfortable that our estimates for 2Q and 2H is achievable. We are getting a number of investor calls looking at the name on the long side as we believe the valuation under 10x EV/EBITDA is attractive. but we continue to highlight to investors that we believe the risk associated with it is high as evidenced by the 8% intraday hit the stock took when Amazon announced the price cut to its dedicated server pricing. We would buy on weakness. The stock continues to be one of our four favorite stocks. Also because Verizon pays SNCR based on a combination of active. CFA (1-212) 622-6389 sterling. the company is on track to their 2Q guidance. and that the cloud business has the potential for re-acceleration. we think there is enough catalysts for the stock to work in the 2H.Sterling Auty. Investors looking for the bottom in Rackspace The short interest in Rackspace according to Bloomberg declined in the June 28 report.com North America Equity Research 12 July 2013 Recent Buzz SNCR (OW/PT $35) down 12% on competitive downgrade We fielded a number of calls this week on Synchronoss post a competitor downgrade. the first notable reduction since April. We believe with Verizon live now. If that happens we believe the stock will react favorably. subscription and storage fees. With Verizon Cloud. 11 .auty@jpmorgan. Vodafone and the Indian carrier going live in 4Q or 1Q 14. dormant.

which is RAX’s larger business. since the cuts are geared towards the dedicated business rather than the shared (ie public cloud) infrastructure business.htm Amazon Web Services (AWS) cuts prices again AWS announced on 7/9 that is cutting prices on dedicated EC2 compute instances by up to 80%.org/en/news/announcements/announceme nt-03jul13-en. To learn more please follow the link to ICANN press release below: http://www. Cloud and Devices and aims to facilitate a “holistic” view of the company’s product lines. Windows and Office will fall under new leadership. Apps. This agreement is intended to enhance the security and stability of the Domain name System while bolstering the competition in domain name industry. This could be negative for Rackspace (RAX/OW).com North America Equity Research 12 July 2013 News That Matter ICANN Board approves 2013 registry agreement for new gTLDs The New gTLD program committee of the ICANN board of directors approved the new registry agreement on 7/3. Amazon has done 20+ price cuts over the last few years on its various cloud products. some questions remain MSFT (covered by JPM Software analyst John DiFucci) formally announced the details of a long-awaited reorganization that focuses the company’s engineering efforts around OS. Microsoft announces restructuring. 12 . while longtime Office leader Kurt DelBene is retiring. so this is not surprising. CFA (1-212) 622-6389 sterling. Notably.icann. This has brought the new gTLD applicants closer to a point where they can see their names go online. The new registry agreement includes a Trademark clearinghouse where the trademark holder can protect there rights. We believe the new organizational structure reflects MSFT’s efforts to more clearly define its strategy – though that strategy still lacks clarity.Sterling Auty. in our opinion.auty@jpmorgan.

2 7.5% TBD TBD TBD 4.3% 148.7 5.4 -8. Many of these metrics are critical to the way that we build or validate the revenue forecasts for the companies listed.9 19.6% 2011 575980 0. so we believe the change in total US tax returns is a relevant metric for this business The budget to vendors that sell into Telco's come from capex.9% 23.6% 116.3% 62.4 -23.2% 65.8% 26.1 6.1% 70.8% 305. Relevant Stocks ADSK.2 14.7 7.1% 17.1% 0. 2007 576530 3.4% 356.1% 17.4% 3.0% 63.5 30.1% 221.4% 17.1% 14.4 -1.4% 2010 571220 -3.0 -3.4 8.9 2009 593610 -2.6% TBD Feb/March 2014 January 2014 Rovi generates an estimated ~25% of total revenue from licensing IP to TV manufacturers based on shipments. INTU generates ~35% of revenue from its consumer tax business.5% 2012 593360 3.2 3.2% 20. MENT SNPS. Highlighted in gray are new updates and the value within bracket is the old value.4 3.1 -7. CFA (1-212) 622-6389 sterling. CDNS. We believe this will provide a concise resource to track these metrics.2% 19.4 TBD 12.1 13.0E 2.8 -1. and architects in the US This tracks the amount of total donations by most major sources (individuals.1 37.6% Gartner 13 .1 9.5 0.1 6.4% 159. and sometimes the metric for which vendors price solutions. ANSS BLKB Why Relevant? Tracks the number of mechanical engineers.2 13.6E 9.9% 216.1 28.0% 380. VRSN.0% 144. This tracks the health of EDA industry. and has shown a 90%+ correlation over the last 10+ years.com North America Equity Research 12 July 2013 Metrics That Matter Below you will find a table containing metrics that we believe are most important to the companies that we follow. corporations.4 8.6% 17. civil engineers.3% INTU DOX. MENT ROVI Tower Watson JPMorgan proprietary model JPMorgan proprietary model Display Search US Internal Revenue Services (IRS) JP Morgan Analyst Rod Halls Estimate Zenith Optimedia Zenith Optimedia 25.4 -1.6 14.3 2.1% 3.9% 19. and WWWW. NSR.2% 14.3% 69.0% 316.5% 16.6% 2008 605960 5. VRSN.9 -6. EDA spending typically comes out of semiconductor research and development (R&D) budgets. and we will likely expand this section going forward.8% 314.6E 8.0% 142. WWW ROVI. and WWWW. CDNS. CSGS ROVI.4 1.3E 18.7 63.8% 20. WBSN.1% 307. Table 2: Annual Metrics that Matter Annual Metrics Engineers Employed (US) yoy change Giving USA (in $ Bil) yoy change Top 500 Assets Under Management (in $ Tril) yoy change JPM Semi R&D Spending Tracker ($ Bil) yoy change EDA Spending ($ Bil) yoy change Flat Panel TV Shipments (in millions) yoy change US Individual Income Tax Returns (in millions) yoy change Global Wireless Capex ($ Bil) yoy change US Total Advertising Spending ($ Bil) yoy change US Internet Advertising Spending ($ Bil) yoy change Security Spend ($ Bil) yoy change Source: Shown Above. WWW CHPK.8 13. IMPV TBD 0.7 1.4% 3.6 -8.0 3.8% 19.1% 143.5% 2013E Next Update May 2014 June 2014 October 2013 Source US Bureau of Labor Statistics Giving USA ADVS.0 16.9 15. Assets under management (AUM) are the lifeblood of investment managers.8 22.auty@jpmorgan.3% 63. PMTC.9 32.7 -2. 90.0 3.7% 209.8% 290.2% 4.1% 3.8 6.8 -1.4 -17.0% 386. VRSN. CMVT.1% 22.5 -0.9% 11.4% 378.9 -4.3% 73. FTNT.5% 30.4% 78.1 -14.6% 145.6% 350. etc) in the US.0 -3.0 4.0% 303. We track this to keep an eye on spending levels for security companies.Sterling Auty.0% 369.0% 53.6 40.4 5.0% 142. Online advertising spending is an important metric for ROVI. SSNC SNPS.6 -2. VRSN.5 11.3% 4.3 14.8% 13.0 12. This is a gauge of how spending is at their customers. Online advertising spending is an important metric for ROVI.3% 347.0% 72.4% 36.7 18.4 2.

1% This is important for the health of the industry Rovi generates ~40% of total revenue from licensing interactive program guide (IPG) product and patents to service providers Verisign generates 95%+ of total revenue from its . ANSS All.914 0.9% 0.1% 1.2% 240.4 -0.25 -34.P.92E) -30.7 7.5E) 1.0 11.0% 96.8% 312.0% 1.1% 1.3 -2.942E 7.81E) -35.0% TBD 316.2 46. our coverage universe generates ~20-30% of revenue from Europe 1Q12 2.7 3Q12 3. Morgan Economics 1.0E 0. INTU.1 2Q12 1.auty@jpmorgan.13 2.com and . SNCR.29 -9.0E 0.33 For translation purposes -1.net registry business We track the growth of all domains combined to gauge market share Tracks the health of the wireless industry. WWWW DOX. but particularly ADSK.3 1Q13 2. but particularly ADSK.com North America Equity Research 12 July 2013 Table 3: Quarterly Metrics that Matter Quarterly Metrics US Real GDP Change (at annual rate) Euro Real GDP Change (at annual rate) Relevant Stocks All All All.P.89E (0.3% 207.6 For translation purposes -6.3% 246.9E TBD 43.P.5% 192. Morgan Economics JP Morgan.4% VRSN VRSN.0 12.2 4Q12 0.0 11.net and .Sterling Auty.1% 1.28 21.37 -31.00E TBD 29.6% 98.6 (7.7 38.P.144E -0. NSR.9 2Q13E 2.7 -1.0% 1.8% 2.2% 1.3E 44.6% 77. 147.com net additions (in millions) yoy change Total Domain Names (in millions) yoy change Wireless Subscribers (in millions) yoy change Source: Shown Above Many software tools are sold on a per seat basis 8.33 4. ANSS DOX.4% 221.1% 153.76 5.2 8.5% 94.6% 97.32 -2.1% 308.25 -12.30E TBD 4.4% 169.8 7.7% 2. Morgan Economics J. Rod Hall's Global Handset Model JPMorgan Telecom Research Team (Phil Cusick) market model VeriSign ROVI TBD -0. MOTR.0 30. PMTC.00 -30.0 -0. SNCR.5E Next Update TBD TBD Source J.9% 96.80 0.3% 96.81 -7. our coverage universe generates ~40% of revenue from the US On average.59 5.4% 233.P.2% 252.802 0.6% 80.1 7. CNSI TBD VeriSign JPMorgan proprietary model TBD 14 .3 8.00E) 22.6% 1.0 47.0E 3Q13E 2.02 3. ANSS All.733 0.4E TBD J.6% 1.7 42.4% 242. ROVI Why Relevant? On average.3 -0.76 (100.75 12.1% 1.6% J.86 4. Morgan Economics US Unemployment rate (at annual rate) EUR/USD FX Rate yoy change USD/JPY FX Rate yoy change Smartphone Units ( in Millions) yoy change North American Video Subscribers (in 000s) yoy change Total .31 (1.30E) 1.4 -2.6% 97.9% 86. PMTC.0% 315.480 1. Morgan Economics J. CFA (1-212) 622-6389 sterling.0% 102.25E (0.1 -0.0 11.0% 78.6% 310.4% 97. but particularly ADSK. PMTC.

3 -33. Morgan Economics J.6 -9.9 15.252 May-13 486.9 3.6 -6.4% 23.9 1.30 -0.7 0.1% 8/1/2013 TBD TBD TBD 15.2% 15.5 8/13/2013 0. Intuit TRAK ADSK ADSK.1 0. RAX and WWWW generate significant percentages of revenue from small business INTU.4% 89.3 3.8 -1. PMTC.1% 47.5% 95.2% Apr-13 442.9 4. RAX and WWWW generate significant percentages of revenue from small business 3.8% 17.4% 48.7% 103.auty@jpmorgan.0 TBD 15 .3 5.5 3.33 1.8 -18.9% 88.4 For Translation Purposes Aspen generates 40-50% of total revenue from the energy industry INTU.8% 49.649 0.4% 2.1% 1.5 -0.3% 109.9 0.2 2.8% 50.0 -1.0% Mar-13 641. MENT All.0% 21.9 -2.2% 1.8% 111.2 -3.7 2.7% 47.9% 23. Morgan Economics National Federation of Independent Business.2% 1. PMTC.2 -0. but particularly ADSK.1% -1.com and .2 3.9% 98. and construction (AEC) industry.4 0.8 -2.3 -1.0 -3. in 000s) y/y change (over comparable period) US Auto Sales Total Annualized SA monthly change Architectural Billings Index monthly change ISM Manufacturing Survey monthly change Euro PMI Manufacturing index monthly change SIA data (in $ Bil) monthly change EUR/USD FX Rate monthly change USD/JPY FX Rate monthly change Brent Crude Oil Prices monthly change Small Business Optimism Index Intuit Small Business Employment Index monthly change Source: Shown Above Relevant Stocks VRSN Why Relevant? Verisign generates 95%+ of total revenue from its .1 -0.3% 111.31 0. PMTC.3 105. ANSS All.6% 1.30 -2.8% 1.6% Next Update 8/1/2013 Source Verisign INTU Feb 2014 3.8 1.2% 50.3 0. WWWW.0 0.9% 53.0% 51.7 -1.2 0. but particularly ADSK.8 1. ANSS SNPS.2 24.2% 46.7% 92.6% 15.9 10.com and .9% Feb-13 584. Morgan Economics J.net name additions (in thousands) monthly change TurboTax Season to Date Returns (Total ex FF.7% 54.1% Jan-13 749.P.1% 100.2 -0.4 2.7 0. ANSS AZPN INTU. PMTC.699 -6.9% 94.1% 93.9% 1.2 2. engineering.P.3 3.3 -5.9 3.com North America Equity Research 12 July 2013 Table 4: Monthly Metrics that Matter Monthly Metrics Total .2% 1.P.3% 54.7% 51.3 2.2% Jun-13 323.8% 14.4% 46.0% 90.5 0. WWWW.3% 88.1 0.3% 96.1 -9.4% 115. important for health of EDA spending Dec-12 363.6% 103.1% 1.5% 51.9 9.8% 104.8 -5.3% 7/24/2013 8/1/2013 TBD Company Reports Automotive News American Institute of Architects Institute of Supply Management Markit Semiconductor Industry Association J.31 15.5 3.7 -0.8 8/1/2013 For Translation Purposes 1.5 -1.2 -3.2 5.8% 92.9 8.7% 94.1 4.6% 94.1% 24.9 -5. CFA (1-212) 622-6389 sterling.5% 54.4 -22.5% 94.34 0.1 2.1% 94.6% 88. Manufacturing is a key vertical for design software Manufacturing is a key vertical for design software Tracks worldwide semi revenue.8 0.1 -8.5% 83.net registry business INTU generates 35% of revenue from its consumer tax business TRAK's transaction revenue is 70% correlated with SAAR numbers.0% 95.2% 23.30 0.3% 26.0 -31.2% 48. RAX 15.Sterling Auty.1% 25. Autodesk generates at least 30% of total revenue from the architectural. ANSS ADSK.9 2.2 4. CDNS.4% 50.9% 48.0% 24. RAX INTU.4% 46.4% 94.4% 52.0% 12.0% 94.

0 16. Automated network control devices Data protection solutions Brand e-commerce and digital marketing Voice and audio processors Simulation Software Developer Enterprise information technology management software Next generation firewall provider On demand demand-supply solutions Real estate search engine Provides IT security risk and compliance management solutions Global Provider of fleet management solutions delivered as SaaS HD video compression and image processing semiconductors Operates a global marketplace for commercial digital imagery Renders enterprise SaaS business model products.0 13.2 65.8 24.Sterling Auty.0 31.7% 191.3 21.0 13.0 6.5 14.9% 79.0 17.7% 190.2 16.5 49.7% 253.0 10.1% 101.4% -17.0 12.4% 97.0 18.0% 74.4% 16.0 13.0 12.8 17.5 24.auty@jpmorgan.0 15.5 46. Table 5: IPO List in the Software sector for the year.2% 4.0 14. Service Now Inc.8% 116. Provides revenue management software Provides online advertising management services Provides application lifecycle management solutions Provides analytics and data visualization software Ticker GWRE AVG BCOV BV YELP DWRE ET VCRA MM SPLK BLOX PFPT AQ ADNC EXA NOW PANW EOPN TRLA QLYS FLTX AMBA SSTK WDAY MODN MRIN RALY DATA Trading Date 1/24/2012 2/1/2012 2/16/2012 2/23/2012 3/1/2012 3/14/2012 3/21/2012 3/27/2012 3/28/2012 4/18/2012 4/19/2012 4/19/2012 4/26/2012 5/9/2012 6/28/2012 6/28/2012 7/19/2012 7/25/2012 9/19/2012 9/27/2012 10/4/2012 10/9/2012 10/10/2012 10/11/2012 3/20/2013 3/22/2013 4/12/2013 5/16/2013 IPO Price 13.0% -16.0% -23.0 16.5 55.3% 36.1% 196.0 42. Trulia Qualys FleetMatics Group PLC Ambarella Inc Shutterstock Inc Workday Inc ModelN Marin Software Rally Software Tableau Software Source: Bloomberg 16 Company Description Insurance industry software Antivirus and Internet Security Video hosting and publishing services Social Analytics Platform Social Networking e-commerce solution provider Email marketing software Instant voice communication solutions Mobile advertising and data services Online information technology search engine soln.2% 96. Infoblox Inc Proofpoint Inc Acquity Group Ltd Audience Exa Corp.6% -26.9% 132.0% 146.3% 77.9% .1 10.0 17. Name Guidewire Software Inc AVG Technologies NV Brightcove Inc Bazaarvoice Inc Yelp Inc Demandware Inc Exact Target Vocera Communications Millennial Media Inc.0 13.5 17. Splunk Inc.4 44.3% 58.0% -18. Palo Alto Networks E2open Inc.5 11.0 Current Price 7/11/2013 44.0 19.0 15.0 15.4 33.0 11. CFA (1-212) 622-6389 sterling.4 33.1 9.7% 84.8 60.com North America Equity Research 12 July 2013 IPO and M&A in the Sector Below we provide a table of recent notable IPOs in software and related sectors.8 % Change 240.4 46.1 24.0 17.0 9.8% 31.0 16.4 34.8 37.0 16.8 14.6% -12.0 9.5 31.8% 11.3% 149.0 6.0 28.0 17.0 17.

NEC SAP AG Microsoft Apple Synopsys PTC IBM DealerTrack RedPraire NCR Oracle Corp. Goldman Sachs Affiliate Source: Bloomberg. Target McAfee Skype Motorola Mobility Autonomy Blackboard Right Now Magma SuccessFactors Taleo Corp.9M $1.7x EV/Sales 5.9x EV/Sales 8. IM system.4B $1.auty@jpmorgan. Synopsys SAP AG Oracle Corp.6x EV/Sales 54x EV/Sales 3.9B $650M $871M $55M $1.3B $1. To strengthen data analytics. Synchronoss Oracle Corp.1x FY1 EV/Sales 2.5x FY1 EV/Sales 3.8x EV/Sales 9. including smart revenue solutions. Deal Value $7.6x FY1 EV/FCFF 6. Eloqua Newbay Acme Packet EBIX Inc.5B $12. Acquired for on-demand customer service solutions. Windows Phone.2B $356M $406M $220M $1. CFA (1-212) 622-6389 sterling.6x EV/Sales 11. cloud and workflow management capabilities. Cost synergies. For cloud based spend management solutions Acquired for enterprise social networking. To strengthen SAAS portfolio. Biometric authentication sensors & software. To strengthen the digital marketing footprint.3B $48.8x EV/Sales 3. For Service Lifecycle Management (SLM) For recruiting & talent management solutions.7B $820M Announcement Date 8/19/2010 5/10/2011 8/15/2011 8/18/2011 10/4/2011 10/24/2011 11/30/2011 12/3/2011 2/9/2012 3/22/2012 5/22/2012 6/25/2012 7/27/2012 3/8/2012 8/8/2012 8/27/2012 10/2/2012 11/2/2012 11/28/2012 12/20/2012 12/2/2012 2/4/2013 5/1/2013 Acquisition Multiple 3. To offer broad portfolio of solutions & services To expand retail industry leadership To create a comprehensive Customer Experience Cloud offering To add cloud based technologies expand their international reach To speed deployment of All-IP networks Taking company private.5B $10.9B $449M $4.com North America Equity Research 12 July 2013 Table 6: Key M&A events in the sector Acquirer Intel Microsoft Google HP Providence Equity Partners Oracle Corp. Support Xbox. For additional analog & verification capabilities.2x EV/maintenance 3.5B $507M $3. Lync & Outlook Wireless connectivity patent portfolio and also boost to Google TV.3x EV/Sales 23.7B $8. Convergys IM Business Ariba Yammer Authentec Springsoft Servigistics Kenexa ClickMotive JDA Retalix Ltd.8x EV/Sales Reason Acquired for security solutions.3B $1.6B $1. enhanced R&D in analog design. 17 .7x EV/Sales 17x FY13E EBITDA 9.9x EV/Sales 11x EV/ FY2 EBITDA 17.Sterling Auty. For cloud-based human capital management solutions. Taking company private.

7 22.4 19.92 $21.4 11.8 13.5 39.4 8.1 30.9 3.8 23.6 22.9 7.3 4.6 13.9 21.3 15.1 2.22 $44.9 7.58 $37.6 4.9 7.6 NM NM NM 51.5 24.9 9.9 15.9 FY2 8.0 16.1 26.8 39.Sterling Auty.0 28.6 10.2 5.6 1.8 NM 66.1 4.00 $65.1 3.42 $35.6 19.1 3.2 11.5 9.6 21.00 $38.00 $30.00 $55.7 26.8 9.3 4.3 16.9 10.4 11.5 3.1 25.87 $33.1 67.4 5.0 5.9 13.0 10.8 5.6 16.5 4.00 $20.5 18.4 17.3 14.81 $23.0 19.6 13.8 9.4 12.0 27.5 17.1 3.00 $16.35 $31.1 2.9 55.3 3.0 28.5 11.1 7.9 4.44 $26.6 7.4 22.8 12.6 3.38 $27.00 $40.com North America Equity Research 12 July 2013 Table 7: Comparables Price Info Price as of Target 7/11/2013 Price $54.6 19.8 4.2 NM NM 12.1 19.5 3.5 45.2 11.8 8.7 49.1 9.00 Average Mean Median Source: Company reports and J.3 22.00 $45.7 8.1 13.3 18.1 12.8 14.6 0.3 28.5 86.00 $48.8 23.4 12.15 $53.2 11.3 17.5 2.4 10.7 21.00 $19.5 23.30 $64.3 8.4 14.4 12.43 $26.10 $26.3 15.8 11.3 25.00 Average $39.auty@jpmorgan.4 29.12 $38.1 34.3 17.9 3.00 $48.6 Valuation EV/Sales FY1 FY2 5.3 3. CSG Systems Neustar Synchronoss Technologies Ansys Aspen Technology Autodesk Cadence Design Systems Mentor Graphics Parametric Technology Corp Synopsys Advent* Blackbaud DealerTrack Guidewire Intuit Monotype Imaging ModelN Realpage SS&C Technologies Inc.2 14.6 4.8 6.50 $17.6 EV/EBITDA FY1 FY2 9.7 16.6 21.9 20.2 7.3 12.9 24.00 $34.0 34.0 6. Company Check Point Software Tech.1 11.2 33.1 16.6 30.7 57.4 EV/FCFF FY1 9.6 6.5 4.4 1.4 18.2 10.5 12.4 21.6 41.25 $46.7 3.01 $36.1 74.2 9.5 2.4 17.9 4.5 13.5 15.1 10.70 $28.8 15.0 26.4 5.1 4.2 8.2 4.00 $25.6 1.4 4.7 2.48 $20.2 NM 26.3 10.6 12.2 15.5 11.3 14.7 4.00 $33.5 12.6 3.5 21.4 24.3 15.3 13. CFA (1-212) 622-6389 sterling.0 9.0 2.3 15.51 $40.7 2.7 NM 20.6 15.7 4.8 2.2 5.9 13.48 $78.5 10.5 5.2 3.8 19.4 18.9 14.7 NM 34.2 7.1 4.5 18.00 Average $35.6 19.6 25.1 15.7 21.00 $25.7 9.20 $26.2 41.8 7.3 8.50 $199.14 $30.6 11.3 15.3 6.8 5.9 3.4 3.3 13.6 21.3 13. Fortinet Imperva Qualys ROVI Ticker CHKP FTNT IMPV QLYS ROVI Rating OW N OW OW N Non-GAAP P/E FY1 FY2 16.3 NM 12.00 Average Akamai Technologies Equinix Rackspace Hosting Verisign. AKAM EQIX RAX VRSN WWWW DOX CNSI CSGS NSR SNCR ANSS AZPN ADSK CDNS MENT PMTC SNPS ADVS BLKB TRAK GWRE INTU TYPE MODN RP SSNC OW OW N OW N N N N OW N OW N OW N N OW N N OW OW N OW OW N OW $44.9 42.5 12.8 17.6 12.9 12.6 23.00 $22.05 $52.3 9.6 5.00 $23.com Amdocs Limited Comverse Inc.8 15.8 13.7 9.00 Average $80.1 26.3 15.5 0.1 3.8 18.4 13. Morgan estimates.P.6 17.00 $24.0 NM 94.7 1.0 13.0 20.6 8.00 $21.7 14.00 $35.8 11.9 3.2 16.4 17. Web.0 18 .1 32.3 4.0 2.5 15.4 4.4 NM 18.3 NM 21.7 21.3 23.5 15.8 11.4 9.4 15.3 25.6 20.37 $15.4 2.5 21.2 12.1 15.0 11.00 $32.1 19.9 3.6 19. Inc.1 2.7 8.9 3.35 $47.3 10.2 10.5 NM 16.2 70.7 NM 29.00 $37.8 21.1 2.40 $15.58 $51.3 3.9 7.7 9.78 $24.00 $47.49 $20.0 1.9 10.6 24.00 $22.0 3.9 4.3 17.00 $38.7 19.9 NM 27.2 14.6 7.1 11.1 8.1 18.

CFA (1-212) 622-6389 sterling. Non-Investment Banking Compensation: J. or had within the past 12 months. the following company(ies) as clients: DealerTrack Holdings Inc.com. Investment Banking (next 3 months): J. or had within the past 12 months. Morgan currently has.51/Overweight). Guidewire Software.P. Inc. 19 . Gartner: All statements in this report attributable to Gartner represent J. Rackspace Hosting.P. Morgan currently has. or had within the past 12 months. Web. Client: J.com. Morgan. Morgan’s Strategy.com North America Equity Research 12 July 2013 Companies Recommended in This Report (all prices in this report as of market close on 12 July 2013) DealerTrack Holdings Inc (TRAK/$38. and the services provided were non-investment-banking. calling 1-800-477-0406.inquiries@jpmorgan.inquiries@jpmorgan. Rackspace Hosting. Rackspace Hosting. Model N (MODN/$24.P.com.P. the research analyst denoted by an “AC” on the cover or within the document individually certifies.com. Guidewire Software. or intends to seek. Client/Non-Investment Banking. compensation for investment banking services in the next three months from DealerTrack Holdings Inc.com/disclosures/company. Model N. Rackspace Hosting. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Model N. Important Disclosures           Market Maker: JPMS makes a market in the stock of DealerTrack Holdings Inc. Model N. Web. Web. Rackspace Hosting. Guidewire Software (GWRE/$44. Web.com. or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For important disclosures for these companies. please call 1-800-477-0406 or e-mail research. and the services provided were non-securities-related: DealerTrack Holdings Inc. Client/Non-Securities-Related: J..com (WWWW/$26. Morgan currently has.21/Overweight) Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or. Each Gartner publication speaks as of its original publication date (and not as of the date of this report).P. Morgan's interpretation of data opinion or viewpoints published as part of a syndicated subscription service by Gartner. Web.Sterling Auty. Rackspace Hosting.P. Guidewire Software. or had within the past 12 months.jpmorgan.com. The opinions expressed in Gartner publications are not representations of fact. where multiple research analysts are primarily responsible for this report. Technical. Model N. including price charts. Rackspace Hosting. Guidewire Software. Client/Investment Banking: J.P. Web. or e-mailing research. Morgan– covered companies by visiting https://mm. the following company(ies) as clients. Guidewire Software.com.disclosure. Model N. and (2) no part of any of the research analyst's compensation was.com within the past 12 months. and Quantitative Research teams may screen companies not covered by J.com. are available for compendium reports and all J. Morgan currently has. Rackspace Hosting (RAX/$40.auty@jpmorgan.P. and have not been reviewed by Gartner.24/Overweight). Web.com with your request. J. with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers.37/Overweight). and are subject to change without notice. Morgan has received compensation in the past 12 months for products or services other than investment banking from Web.disclosure. Investment Banking (past 12 months): J. is. Company-Specific Disclosures: Important disclosures. Lead or Co-manager: J. Morgan expects to receive.P. Web.09/Overweight).P. Securities-Related: J. Morgan received in the past 12 months compensation from investment banking DealerTrack Holdings Inc. securities-related: Web.P. the following company(ies) as clients.P. the following company(ies) as investment banking clients: DealerTrack Holdings Inc.com.

01 36.92 Price Target ($) 25. Model N (MODN.auty@jpmorgan. 20 . price data adjusted for stock splits and dividends. 2008. TRAK US) Price Chart 85 68 51 Price($) 34 OW N OW $35 OW $40 Date 29-Feb-08 12-Aug-08 02-Oct-12 03-Jul-13 Rating Share Price ($) OW N OW OW 20. 2013.Sterling Auty. MODN US) Price Chart 40 32 OW $25 24 Price($) 16 Date 15-Apr-13 Rating Share Price ($) OW 19. CFA (1-212) 622-6389 sterling.79 28.00 8 0 Mar 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Source: Bloomberg and J. Morgan. Morgan. Initiated coverage Apr 15.24 Price Target ($) 35.com North America Equity Research 12 July 2013 DealerTrack Holdings Inc (TRAK.P.00 40. Initiated coverage Feb 29.P. price data adjusted for stock splits and dividends.00 17 0 Oct 06 Jul 07 Apr 08 Jan 09 Oct 09 Jul 10 Apr 11 Jan 12 Oct 12 Jul 13 Source: Bloomberg and J.47 15.

com North America Equity Research 12 July 2013 Web.00 81.33 52.98 55.00 05-Dec-12 OW 50 13-Feb-13 22-Feb-13 09-May-13 OW 25 0 Jun 09 Mar 10 Dec 10 Sep 11 Jun 12 Mar 13 Source: Bloomberg and J. Initiated coverage Dec 05.00 55.auty@jpmorgan.67 15. 2012. Initiated coverage Dec 20. WWWW US) Price Chart 44 33 OW $18 Price($) 22 OW $20 Date Rating Share Price ($) 10.00 75. Rackspace Hosting (RAX.Sterling Auty. 2011. price data adjusted for stock splits and dividends. CFA (1-212) 622-6389 sterling.P.P. price data adjusted for stock splits and dividends.94 OW Price Target ($) 18. 21 . Morgan.00 20-Dec-11 OW 26-Oct-12 11 0 Nov 08 Aug 09 May 10 Feb 11 Nov 11 Aug 12 May 13 Source: Bloomberg and J. Morgan. RAX US) Price Chart 125 OW $75 OW $81 100 OW $83 Price($) 75 OW $55 Date Rating Share Price ($) 66.24 OW OW Price Target ($) 83.59 74.com (WWWW.00 20.

our Overweight rating falls into a buy rating category. Fortinet. 2012. regulatory or policy reasons.com North America Equity Research 12 July 2013 Guidewire Software (GWRE.] Neutral [Over the next six to twelve months. DealerTrack Holdings Inc (TRAK). if applicable. Sterling P: ANSYS. For purposes only of FINRA/NYSE ratings distribution rules. J. NR = Not Rated Explanation of Equity Research Ratings.P. Morgan Equity Research Ratings Distribution. Synopsys Inc (SNPS). and our Underweight rating falls into a sell rating category.K. Inc.53 Price Target ($) 30. Equinix (EQIX).P. CFA (1-212) 622-6389 sterling. UW = Underweight. Amdocs (DOX).69 32. Comverse Inc (CNSI). Model N (MODN). the price target. we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. Initiated coverage Mar 05. Rackspace Hosting (RAX). Inc. we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. Aspen Technology (AZPN). our Neutral rating falls into a hold rating category.auty@jpmorgan. the price target.P. SS&C Technologies (SSNC). each stock’s expected total return is compared to the expected total return of a benchmark country market index.] Not Rated (NR): J. small.Sterling Auty. Imperva (IMPV).and mid-cap equity research.25 41. Intuit (INTU). Morgan's continuing coverage of the stocks. we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. no longer should be relied upon.00 28 05-Sep-12 29-May-13 OW 14 0 Jan 12 Apr 12 Aug 12 Nov 12 Mar 13 Jul 13 Source: Bloomberg and J. Morgan ratings or designations: OW = Overweight. (PMTC).com. Morgan’s research website. N= Neutral. The previous rating and. Akamai Technologies.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 44% 56% 42% 76% Neutral (hold) 44% 50% 50% 66% Underweight (sell) 12% 40% 8% 55% *Percentage of investment banking clients in each rating category. Morgan has removed the rating and. the current analysts may or may not have covered it over the entire period. www. An NR designation is not a recommendation or a rating. 2013 J.com (WWWW) J.00 40. for this stock because of either a lack of a sufficient fundamental basis or for legal. (AKAM). Coverage Universe: Auty. Guidewire Software (GWRE). The chart(s) show J. Morgan uses the following rating system: Overweight [Over the next six to twelve months. GWRE US) Price Chart 70 56 OW $30 Price($) 42 OW $40 OW $45 Date 05-Mar-12 Rating Share Price ($) OW OW 21. Parametric Technology Corp. if applicable. (ANSS). price data adjusted for stock splits and dividends. Autodesk (ADSK). Qualys (QLYS). Rovi (ROVI). Please note that stocks with an NR designation are not included in the table above. the certifying analyst’s coverage universe can be found on J. CSG Systems (CSGS).P. Web.jpmorganmarkets. Blackbaud Inc (BLKB). Neustar (NSR). In our Asia (ex-Australia) and U. If it does not appear in the Important Disclosures section of this report. VeriSign (VRSN).] Underweight [Over the next six to twelve months.P. 22 . Designations and Analyst(s) Coverage Universe: J. Advent Software (ADVS).P.P.00 45. Check Point Software (CHKP). Cadence Design Systems (CDNS). Morgan. Inc (FTNT). as of June 28. not to those analysts’ coverage universe.

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