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SIIA & TripleTree's SaaS Webinar Series “Capital Markets Overview

Moderator:

Brian Klemenhagen, Senior Principal, TripleTree, LLC Panelists:

Avinoam Nowogrodski, CEO, Clarizen Venu Pemmaraju, Director, Intel Capital Seksom Suriyapa, VP, Corporate Development, SuccessFactors

SIIA & TripleTree SaaS Webinars

Cloud Computing Vertical Markets

February 23, 2010 - 12:30 pm - 1:30 pm ET Price for SIIA Members: Free; Non-members: $50

This webcast will include TripleTree’s detailed Cloud Computing market perspectives and three real-life examples of emerging vendors who are finding success building Cloud offerings with a specific vertical market focus.

More Info: http://bit.ly/CloudVerticals

“SIIA pioneered the government cloud computing dialogue with its SaaS Gov conference. Now in its

“SIIA pioneered the government cloud computing dialogue with its SaaS Gov conference. Now in its fourth year, the SIIA conference has consistently attracted top government speakers, cloud computing experts, and public sector customers to show how government agencies can take advantage of the cloud…”

-Daniel Burton, Senior Vice President, Global Public Policy, Salesforce.com

SIIA & INPUT Members: $495 Non-Members: $695 Gov IT Purchasers (with Fed ID): Free

http://www.siia.net/saasgov

Medium-sized, EBITDA-positive companies are invited to apply to present before an audience of middle-market-focused senior
Medium-sized, EBITDA-positive companies are invited to apply to present before an audience of middle-market-focused senior

Medium-sized, EBITDA-positive companies are invited to apply to present before an audience of middle-market-focused senior lenders, private equity investors, and strategic partner prospects.

Deadline to Apply: 1/15/2010

March 3, 2010 New York City

www.siia.net/aatc SIIA OnDemand & OpSource SaaS Summit have joined forces to bring you… All About

www.siia.net/aatc

SIIA OnDemand & OpSource SaaS Summit have joined forces to bring you…

All About The Cloud May 10-12, 2010 The Westin St. Francis, San Francisco, CA

Capital Markets Overview

Sponsored by TripleTree For details, please visit our website www.triple-tree.com or call (952)

253-5300.

January 14th, 2010

Introductions

Venu Pemmaraju Panelist Director Intel Capital
Venu
Pemmaraju
Panelist
Director
Intel Capital
Avinoam Nowogrodski Panelist CEO Clarizen
Avinoam
Nowogrodski
Panelist
CEO
Clarizen
Seksom Suriyapa Panelist VP of Corp. Dev. SuccessFactors
Seksom
Suriyapa
Panelist
VP of Corp. Dev.
SuccessFactors
Brian Klemenhagen Moderator Director TripleTree, LLC
Brian
Klemenhagen
Moderator
Director
TripleTree, LLC
Capital Markets Continue to Reward Pure-play Software as a Service (SaaS) Firms Compared to its
Capital Markets Continue to Reward Pure-play Software
as a Service (SaaS) Firms Compared to its Peer Group
12-Month Relative Stock Price
Performance
+85%
+85%
+45%
+45%

TripleTree

SaaS

Index

Software

license

+28% S&P

TripleTree’s Software as a Service (SaaS) index consists of the ~20 pure-play firms listed below;
TripleTree’s Software as a Service (SaaS) index consists of the ~20 pure-play firms listed below; although, the sector
is primarily comprised of private companies with TripleTree’s Software as a Service and Cloud Computing database,
consisting of more than 2,300 firms

Source: TripleTree, CapIQ, 451Group

Public SaaS Firms Receive Premium Valuations

SaaS companies trade at a premium to software license firmsPublic SaaS Firms Receive Premium Valuations Premium valuation multiples also for SaaS firms with higher market

Premium valuation multiples also for SaaS firms with higher market valuationsSaaS companies trade at a premium to software license firms Large public SaaS vendors are rewarded

Large publicmultiples also for SaaS firms with higher market valuations SaaS vendors are rewarded for attributes such

SaaS vendors

are rewarded

for attributes such as size,

TEV=Total Enterprise Value

LTM=Last Twelve Months

rewarded for attributes such as size, TEV=Total Enterprise Value LTM=Last Twelve Months Source: TripleTree CapIQ, 451Group

Source: TripleTree CapIQ, 451Group

Will the SaaS IPO Market Rebound?

# of SaaS Initial Public Offerings (IPO) in the Period

12

Taleo Synchronoss SaaS IPO volume increased by SuccessFactors SaaS IPO volume fell by 75% Salary.com
Taleo
Synchronoss
SaaS IPO
volume
increased by
SuccessFactors
SaaS IPO
volume fell by
75%
Salary.com
140%
7
PROS
WebEx
Omniture
Visual Sciences
5
LoopNet
Ultimate Soft.
Vocus
HireRight
RightNow
3
Salesforce.com
DealerTrack
LivePerson
DemandTec
Kintera
OpenTable
eCollege
Constant Contact
?
Kenexa
NetSuite
Concur
AthenaHealth
BlackBoard
LogMeIn
Filed; but no IPO
Filed; but no IPO

@

IPO---

Median Revenue:

Median Market Cap:

$36 million

$54 million

$50 million

$67 million

$199 million

$297 million

$331 million

$342 million

* This chart considers only pure-play SaaS companies; all transactions on a trailing twelve i

th

TTM b

SaaS M&A Deal Volume & Valuations on the Rise Again

M&A Activity (Pure-play SaaS Vendors)*
M&A Activity (Pure-play SaaS Vendors)*
Historical SaaS Median M&A Revenue Multiples*
Historical SaaS Median M&A Revenue
Multiples*
150% Increase in SaaS M&A Over Last Half Year
150% Increase
in SaaS M&A
Over Last Half
Year

f Deals

150% Increase in SaaS M&A Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial

TEV/Revenue

in SaaS M&A Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics  

Acquires

M&A Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics   Financial
M&A Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics   Financial

Acquires

Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics   Financial Metrics
Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics   Financial Metrics
Over Last Half Year f Deals TEV/Revenue Acquires Acquires Acquires Financial Metrics   Financial Metrics

Acquires

Financial Metrics

 

Financial Metrics

 

Financial Metrics

 

Enterprise Value:

$1,727m

Enterprise Value:

$140m

Enterprise Value:

$183m

Revenue (TTM):

$335.5m

Revenue (TTM):

$35m

Revenue (TTM):

$30.0m

EBITDA (TTM):

$34.3m

EBITDA (TTM):

Breakeven

EBITDA (TTM):

NA

TEV/REV:

5.2x

TEV/REV:

4.0x

TEV/REV:

6.1x

TEV/EBITDA:

50.3x

TEV/EBITDA:

N/A

TEV/EBITDA:

N/A

* This chart considers only pure-play SaaS companies; all transactions on a trailing twelve i

th

TTM b

Fast-Growing, Multi-Billion Dollar Market Still Defined by Private Companies

Market Size and Growth
Market Size and Growth
$14B+ TripleTree** Analysts $17B $12B
$14B+
TripleTree**
Analysts
$17B
$12B
Size and Growth $14B+ TripleTree** Analysts $17B $12B Analysts estimate the SaaS market reached $12 billion

Analysts estimate the SaaS market reached $12 billion in 2009*Size and Growth $14B+ TripleTree** Analysts $17B $12B TripleTree calculates the SaaS market was $14+ billion

TripleTree calculates the SaaS market was $14+ billion inestimate the SaaS market reached $12 billion in 2009* 2009** Projected 10%+ Market Share Private Company

2009**

Projected 10%+

Market Share
Market Share

Private Company Landscape

2009** Projected 10%+ Market Share Private Company Landscape No one vendor controls more than 10% of
2009** Projected 10%+ Market Share Private Company Landscape No one vendor controls more than 10% of

No one vendor controls more than 10% of the market2009** Projected 10%+ Market Share Private Company Landscape More than half of the SaaS market is

More than half of the SaaS market is defined by private companiesLandscape No one vendor controls more than 10% of the market Market share is divided among

Market share is divided among thousands ofthan half of the SaaS market is defined by private companies Hundreds of small private companies

private companies Market share is divided among thousands of Hundreds of small private companies Niche, best-of-breed

Hundreds of small private companiesprivate companies Market share is divided among thousands of Niche, best-of-breed players across every category A

Niche, best-of-breed players across every categoryamong thousands of Hundreds of small private companies A small percentage of firms have scaled beyond

A small percentage of firms have scaled beyond $100 millioncompanies Niche, best-of-breed players across every category * IDC **Based upon TripleTree proprietary database in revenue

* IDC

**Based upon TripleTree proprietary database

in revenue

Avinoam Nowogrodski CEO, Clarizen ani@clarizen.com Copyright © 2007-2009, Clarizen Inc. All Rights Reserved Copyright ©

Avinoam Nowogrodski CEO, Clarizen ani@clarizen.com

Copyright © 2007-2009, Clarizen Inc. All Rights Reserved

Copyright © 2007-2009, Clarizen Inc. All Rights Reserved

Enterprise Customers Suppliers
Enterprise
Customers
Suppliers

Partners

Enterprise Customers Suppliers Partners Visibility Resource Management Budget Management Time Management Delivery

Visibility

Resource

Management

Budget

Management

Time

Management

Delivery

Management

400% annual growth Market over the Web and sell over the phone $35 per user/month,
400% annual growth Market over the Web and sell over the phone $35 per user/month,

400% annual growth

400% annual growth Market over the Web and sell over the phone $35 per user/month, simple

Market over the Web and sell over the phone

annual growth Market over the Web and sell over the phone $35 per user/month, simple revenue

$35 per user/month, simple revenue model

the Web and sell over the phone $35 per user/month, simple revenue model Enterprise deals with
the Web and sell over the phone $35 per user/month, simple revenue model Enterprise deals with

Enterprise deals with 100s of seats

500 customers

Software Other Industrial Consulting Legal, finance Media Public service IT services Initial focus: Services Time

Software

Other

Industrial

Consulting

Legal, finance

Media

Public

service

IT

services

Initial focus: Services Time management/ coordination are big issues Now leveraging this beachhead to enter
Initial focus: Services
Time
management/
coordination are
big issues
Now leveraging this
beachhead to enter
other sectors
Do you need to raise funds? How much money do you need? What will be

Do you need to raise funds?How much money do you need? What will be the valuation? What do you plan

How much money do you need?Do you need to raise funds? What will be the valuation? What do you plan to

What will be the valuation?Do you need to raise funds? How much money do you need? What do you plan

What do you plan to do with the funding?How much money do you need? What will be the valuation? Will you get strategic assets

Will you get strategic assets beyond funding?be the valuation? What do you plan to do with the funding? Is the timing right?

Is the timing right?the funding? Will you get strategic assets beyond funding? Do you have the support of your

Do you have the support of your existing investors?to do with the funding? Will you get strategic assets beyond funding? Is the timing right?

What are your alternatives?Will you get strategic assets beyond funding? Is the timing right? Do you have the support

Case for change Team Differentiation Scalability Traction

Case for changeTeam Differentiation Scalability Traction

TeamCase for change Differentiation Scalability Traction

DifferentiationCase for change Team Scalability Traction

ScalabilityCase for change Team Differentiation Traction

TractionCase for change Team Differentiation Scalability

ani@clarizen.com Copyright © 2007-2009, Clarizen Inc. All Rights Reserved Copyright © 2007-2009, Clarizen Inc. All

ani@clarizen.com

Copyright © 2007-2009, Clarizen Inc. All Rights Reserved

Copyright © 2007-2009, Clarizen Inc. All Rights Reserved

Investing in

GLOBAL

INNOVATION

Investing in GLOBAL INNOVATION

Intel Capital Mission

Make and manage financially attractive investments in support of Intel’s strategic objectives

STRATE FINANCI GIC AL
STRATE
FINANCI
GIC
AL

A Stage Agnostic and Long-term Investor

Technology Focus

Mobile Internet Client Enhance mobile platform capabilities through WiMAX eco-system enabling, mobile apps &
Mobile Internet
Client
Enhance mobile platform capabilities
through WiMAX eco-system enabling,
mobile apps & content framework,
comms / compute SoC elements
Digital Home Content distribution over IP, digital media, gaming, education, connected home applications
Digital Home
Content distribution over IP, digital
media,
gaming, education, connected home
applications
Digital MVS Enterprise
Digital
MVS
Enterprise

(Manageability/Virtualization/Securit y), Cloud Computing, Storage & Information

Software and Mgmt, vPro / PES, HPC. Application and Infrastructure Services
Software and
Mgmt, vPro / PES, HPC.
Application and Infrastructure
Services

Services, Internet and Cloud Computing, Software for CMDs, Visual Computing for graphics intensive software.

Consumer Internet Web-based consumer apps, services and infrastructures (social, e-comm, search, advertising)
Consumer Internet
Web-based consumer apps, services and
infrastructures (social, e-comm, search,
advertising)
Manufacturing, Memory Advanced Materials, Fab Equipment, and Digital Health
Manufacturing,
Memory
Advanced Materials, Fab Equipment,
and Digital Health

EDA Tools; Memory Ecosystem & Disruptive Technologies; Digital Health Apps & Devices

Clean Technology Distributed Generation and
Clean
Technology
Distributed Generation and

Storage, Transportation, Consumption Efficiency, Transmission and Distribution

Intel Capital Investments

Dollars

Invested

New

Investments

International

Dollars

Exits

2007

2008

YTD 2009*

Since 1991

$639M $1.59B $291M $9.5B+ 1,050+ 77, $554M 62, $436M 26, $89M Companies 56% 35% 62%
$639M
$1.59B
$291M
$9.5B+
1,050+
77, $554M
62, $436M
26, $89M
Companies
56%
35%
62%
36%
Excluding VMWare
Excluding Clearwire
11 IPOs,
2 IPOs,
2 IPOs
175 IPOs,
23
19
10
241

Acquisitions

Acquisitions

Acquisitions

Acquisitions

*As of Nov. 15,

2009

What We See for 2010

Q1-Q3 2009 – portfolio maintenance and triageWhat We See for 2010 Q4 2009 – focus shifts to new deal opportunities Stabilized environment

Q4 2009 – focus shifts to new deal opportunitiesSee for 2010 Q1-Q3 2009 – portfolio maintenance and triage Stabilized environment more conducive to financing

Stabilized environment more conducive to financingtriage Q4 2009 – focus shifts to new deal opportunities Entrepreneurs AND VCs much more reasonable

Entrepreneurs AND VCs much more reasonableStabilized environment more conducive to financing 1H 2010 – Pipeline is robust Expect new deal count

1H 2010 – Pipeline is robustenvironment more conducive to financing Entrepreneurs AND VCs much more reasonable Expect new deal count to

Expect new deal count to pick upenvironment more conducive to financing Entrepreneurs AND VCs much more reasonable 1H 2010 – Pipeline is

Successful Investments & Exits

Investments Exits: Mergers & Acquisitions US US (USA) Acquired by Irdeto China Japan (Sweden) Acquired
Investments
Exits: Mergers & Acquisitions
US
US
(USA)
Acquired by Irdeto
China
Japan
(Sweden)
Acquired by Sun
Korea
US
(USA)
Acquired by Cisco
US
Taiwan
US
(Israel)
Acquired by NDS Group
(India)
Acquired by GTL
Vietnam
India
Chile
(USA)
Acquired by Virgin USA
(USA)
Acquired by Macrovision
*Other marks and brands are property of their respective owners

SuccessFactors (SFSF) Solves the Execution Gap

Strate Execution Result gy People Busines s Performan s
Strate
Execution
Result
gy
People
Busines
s
Performan
s

ce

Alignme

nt

At IPO

June 2008

Oct 2009

User

2.0

3.7

s

M+

M+

Custome

1,400

1,950

rs

+

+

Largest

85

300

Deployment

K

K

5.4

2,800 M+

+ 420

K

Software M&A Volume/Aggregate Value

The volume of software M&A has fallen materially since the credit crisis became acute in October 2008Software M&A Volume/Aggregate Value A modest recovery in volume and aggregate value began in Q2 2009

A modest recovery in volume and aggregate value began in Q2 2009since the credit crisis became acute in October 2008 Source: Industry research, public documents and SDC

recovery in volume and aggregate value began in Q2 2009 Source: Industry research, public documents and

Source: Industry research, public documents and SDC as of 1/8/10 Note: Divestitures included as private company transactions

Software M&A Valuation Dynamics

Deal volume improving, BUT valuations significantly below historical norms

New Normal?
New
Normal?

Common Board Room Themes in M&A

2010 Outlook: Risk? or Recovery?Common Board Room Themes in M&A Is now exactly the right time to consider a sale?

Is now exactly the right time to consider a sale? Or exactly the wrong time? right time to consider a sale? Or exactly the wrong time?

“I already squeezed out costs… where can I find growth?” (Hint:right time to consider a sale? Or exactly the wrong time? M&A) “Can I spend all

M&A)

“Can I spend all my free cash now?”out costs… where can I find growth?” (Hint: M&A) “Is it ok to issue my [undervalued]

“Is it ok to issue my [undervalued] stock?”(Hint: M&A) “Can I spend all my free cash now?” “Once in a lifetime” deals are

“Once in a lifetime” deals are out there — and cash is cheap cash is cheap

SaaS Consolidation Wave to Come?

Cash on Balance Sheet from latest Quarterly filings
Cash on Balance Sheet from latest Quarterly filings
to Come? Cash on Balance Sheet from latest Quarterly filings $14.9B Cash or Cash Equivalent Latest

$14.9B

Cash or Cash Equivalent Latest 10Q on

11/2009

filings $14.9B Cash or Cash Equivalent Latest 10Q on 11/2009 $3.5B Liquid Assets Latest 10Q on

$3.5B

Liquid Assets Latest 10Q on

09/2009

Most recent Capital Raise activity
Most recent Capital Raise activity
Latest 10Q on 09/2009 Most recent Capital Raise activity $500M Convertible Senior Notes 12-Jan-2010 Note: All

$500M

Convertible Senior Notes

12-Jan-2010

Note: All figures in USD

Senior Notes 12-Jan-2010 Note: All figures in USD $151M Secondary Offering 25-Nov-2009 $215M Secondary

$151M

Secondary Offering

25-Nov-2009

Notes 12-Jan-2010 Note: All figures in USD $151M Secondary Offering 25-Nov-2009 $215M Secondary Offering 26-Oct-2009

$215M

Secondary Offering

26-Oct-2009

Selected SaaS Acquisition Considerations

Platform consolidationsSelected SaaS Acquisition Considerations “Buy and Stitch” Private Equity Platform Roll-ups Bedford Funding:

“Buy and Stitch”SaaS Acquisition Considerations Platform consolidations Private Equity Platform Roll-ups Bedford Funding:

Private Equity Platform Roll-upsConsiderations Platform consolidations “Buy and Stitch” Bedford Funding: Authoria-PeopleClick Vista Equity Partners:

Bedford Funding: Authoria-PeopleClick“Buy and Stitch” Private Equity Platform Roll-ups Vista Equity Partners: SumTotal 100% platform migration

Vista Equity Partners: SumTotalPlatform Roll-ups Bedford Funding: Authoria-PeopleClick 100% platform migration TLEO-Vurv Omniture-Visual Sciences

100% platform migrationAuthoria-PeopleClick Vista Equity Partners: SumTotal TLEO-Vurv Omniture-Visual Sciences Salesforce.com-InstraNet

TLEO-VurvVista Equity Partners: SumTotal 100% platform migration Omniture-Visual Sciences Salesforce.com-InstraNet METRICS,

Omniture-Visual Sciences Salesforce.com-InstraNetEquity Partners: SumTotal 100% platform migration TLEO-Vurv METRICS, METRICS, METRICS Recurring revenues: Contract

METRICS, METRICS, METRICSTLEO-Vurv Omniture-Visual Sciences Salesforce.com-InstraNet Recurring revenues: Contract period, Seats, $ value,

Recurring revenues: Contract period, Seats, $ value, retentionSciences Salesforce.com-InstraNet METRICS, METRICS, METRICS New Bookings: New customer adds, Upselling Margins…….

New Bookings: New customer adds, UpsellingRecurring revenues: Contract period, Seats, $ value, retention Margins……. Cash Flow Visibility DEFERRED REVENUES

Margins……. Cash FlowContract period, Seats, $ value, retention New Bookings: New customer adds, Upselling Visibility DEFERRED REVENUES

Visibilityperiod, Seats, $ value, retention New Bookings: New customer adds, Upselling Margins……. Cash Flow DEFERRED REVENUES

DEFERRED REVENUESContract period, Seats, $ value, retention New Bookings: New customer adds, Upselling Margins……. Cash Flow Visibility

Brian Klemenhagen Senior Principal TripleTree, LLC

Brian Klemenhagen Senior Principal TripleTree, LLC Venu Pemmaraju Investment Director Intel Capital Q&A Avinoam

Venu Pemmaraju Investment Director Intel Capital

LLC Venu Pemmaraju Investment Director Intel Capital Q&A Avinoam Nowogrodski CEO Clarizen Seksom Suriyapa

Q&A

Avinoam Nowogrodski CEO Clarizen

Director Intel Capital Q&A Avinoam Nowogrodski CEO Clarizen Seksom Suriyapa VP, Corporate Development SuccessFactors

Seksom Suriyapa VP, Corporate Development SuccessFactors

Director Intel Capital Q&A Avinoam Nowogrodski CEO Clarizen Seksom Suriyapa VP, Corporate Development SuccessFactors