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 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 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 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 Avinoam Seksom Brian

Pemmaraju Nowogrodski Suriyapa Klemenhagen
Panelist Panelist Panelist Moderator

Director CEO VP of Corp. Dev. Director

Intel Capital Clarizen SuccessFactors TripleTree, LLC
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%
TripleTree
SaaS
Index

+45%
Software
license

+28%
S&P

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 firms

Premium
valuation
multiples also
for SaaS firms
with higher
market
valuations

Large public
SaaS vendors
are
TEV=Total rewarded
Enterprise Value

for attributes
LTM=Last Twelve Months
Source: TripleTree CapIQ, 451Group
such as size,
 Will the SaaS IPO Market Rebound?
# of SaaS Initial Public Offerings (IPO) in the 12
Period

Taleo

Synchronoss

SaaS IPO
SaaS IPO SuccessFactors
volume fell by
volume
75% Filed; but no IPO
increased by Salary.com
140%
7 PROS

WebEx Omniture

Visual Sciences
5 LoopNet

Ultimate Soft. Vocus HireRight

RightNow Salesforce.com DealerTrack 3

LivePerson Kintera DemandTec OpenTable

eCollege

Concur
Kenexa

BlackBoard
Constant Contact

AthenaHealth
NetSuite

LogMeIn
?
@
IPO---
Median Revenue: $36 million $54 million $50 million $67 million
Median Market Cap: $199 million $297 million $331 million $342 million

* This chart considers only pure-play SaaS

companies; all transactions on a trailing twelve
 SaaS M&A Deal Volume & Valuations on the Rise Again
Historical SaaS Median M&A Revenue
M&A Activity (Pure-play SaaS Vendors)*
Multiples*
150% Increase
in SaaS M&A
Over Last Half
Year

of Deals
TEV/Revenue

Acquires Acquires 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
 Fast-Growing, Multi-Billion Dollar Market Still Defined by
Private Companies
Market Size and Growth Market Share Private Company Landscape

$14B+

TripleTree**

Analysts
$17B
$12B

Analysts estimate No one vendor Hundreds of small

the SaaS market controls more than private companies
reached $12 billion 10% of the market
in 2009*
Niche, best-of-breed
More than half of the players across every
TripleTree SaaS market is category
calculates the defined by private
SaaS market was companies
$14+ billion in A small percentage
2009** of firms have scaled
Market share is beyond $100 million
divided among in revenue * IDC
**Based upon TripleTree proprietary database
Projected 10%+ thousands of
 Avinoam Nowogrodski
CEO, Clarizen ani@clarizen.com

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

 Enterprise
Visibility
Customers
Resource
Management

Budget
Management

Time
Suppliers Management

Delivery
Management

Partners
400% annual growth

Market over the Web and sell over the phone

$35 per user/month, simple revenue model

Enterprise deals with 100s of seats

500 customers
 Initial focus: Services
Other
Media
Time
Software management/
coordination are
big issues

Public
service
Now leveraging this
Industrial beachhead to enter
other sectors
IT
Consulting services
Legal, finance
Do you need to raise funds?
How much money do you need?
What will be the valuation?
What do you plan to do with the funding?
Will you get strategic assets beyond funding?
Is the timing right?
Do you have the support of your existing investors?
What are your alternatives?
Case for change
Team
Differentiation
Scalability
Traction
 ani@clarizen.com

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

 Investing in
GLOBAL
INNOVATION
 Intel Capital Mission
Make and manage financially attractive investments
in support of Intel’s strategic objectives

STRATE FINANCI
GIC AL

A Stage Agnostic and Long-term Investor

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

Digital Consumer Internet

Enterprise
MVS Web-based consumer apps, services and
(Manageability/Virtualization/Securit infrastructures (social, e-comm, search,
y), advertising)
Cloud Computing, Storage &
Information
Software
Mgmt, vPro /and
PES, HPC. Manufacturing,
Application
Services and Infrastructure Memory
Services, Advanced
and DigitalMaterials,
HealthFab Equipment,
Internet and Cloud Computing, EDA Tools;
Software Memory Ecosystem & Disruptive
for CMDs, Visual Computing for Technologies;
graphics Digital Health Apps & Devices
intensive software. Clean
Technology
Distributed Generation and
Storage,
Transportation, Consumption
Efficiency,
Transmission and Distribution
 Intel Capital Investments
2007 2008 YTD 2009* Since 1991

Dollars $639M $1.59B $291M $9.5B+

Invested
New 1,050+
Investments 77, $554M 62, $436M 26, $89M
Companies

International 56%
Dollars 62% 36% 35%
Excluding VMWare
Excluding Clearwire

11 IPOs, 2 IPOs, 2 IPOs 175 IPOs,

Exits
23 19 10 241
Acquisitions Acquisitions Acquisitions Acquisitions
*As of Nov. 15,
2009
 What We See for 2010

Q1-Q3 2009 – portfolio maintenance and triage

Q4 2009 – focus shifts to new deal opportunities

Stabilized environment more conducive to financing
Entrepreneurs AND VCs much more reasonable

1H 2010 – Pipeline is robust

Expect new deal count to pick up
Successful Investments & Exits

Investments Exits: Mergers & Acquisitions

(USA)
US US Acquired by Irdeto

China
(Sweden)
Japan Acquired by Sun
Korea

US (USA)
Acquired by Cisco

Taiwan US

US
(Israel) (India)
Acquired by NDS Group Acquired by GTL

Vietnam

India (USA)
(USA) Acquired by Macrovision
Chile Acquired by Virgin USA

*Other marks and brands are property of their respective owners

SuccessFactors (SFSF) Solves the Execution Gap

Strate Execution Result

gy People
Performan
Busines
s
s
ce Alignme
nt
At IPO June 2008 Oct 2009

User 2.0 3.7 5.4

s M+ M+
Custome 1,400 1,950 M+
2,800
rs + +
Largest 85 300 +420
Deployment K K
K
Software M&A Volume/Aggregate Value

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

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?
Common Board Room Themes in M&A

2010 Outlook: Risk? or Recovery?

Is now exactly the right time to consider a sale? Or exactly the
wrong time?
“I already squeezed out costs… where can I find growth?” (Hint:
M&A)
“Can I spend all my free cash now?”
“Is it ok to issue my [undervalued] stock?”
“Once in a lifetime” deals are out there — and cash is cheap
 SaaS Consolidation Wave to Come?

Cash on Balance Sheet from latest Quarterly filings

$14.9B $3.5B
Cash or Cash Liquid Assets
Equivalent Latest 10Q on
Latest 10Q on 09/2009
11/2009

Most recent Capital Raise activity

$500M $151M $215M

Convertible Senior Secondary Secondary
Notes Offering Offering
12-Jan-2010 25-Nov-2009 26-Oct-2009
Note: All figures in
Selected SaaS Acquisition Considerations

Platform consolidations
“Buy and Stitch”
Private Equity Platform Roll-ups
Bedford Funding: Authoria-PeopleClick
Vista Equity Partners: SumTotal
100% platform migration
TLEO-Vurv
Omniture-Visual Sciences
Salesforce.com-InstraNet

METRICS, METRICS, METRICS

Recurring revenues: Contract period, Seats, $ value, retention
New Bookings: New customer adds, Upselling
Margins……. Cash Flow
Visibility

DEFERRED REVENUES
 Q&A
Brian Klemenhagen Avinoam Nowogrodski
CEO
Senior Principal
Clarizen
TripleTree, LLC

Venu Pemmaraju Seksom Suriyapa

Investment Director VP, Corporate Development
Intel Capital SuccessFactors