Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

ServiceNow ecosystem - True Blue Partners - Review of key investment and mergers and acquisition trends

252 views

Published on

A comprehensive review of the investments and M&A in the ServiceNow ecosystem. Review of M&A transaction by ServiceNow and the potential impact of these on the App Developer and IT consulting ecosystem. Review of Key transactions it the ITSM market and ServiceNow app and IT services ecosystem.

Published in: Business
  • Be the first to comment

ServiceNow ecosystem - True Blue Partners - Review of key investment and mergers and acquisition trends

  1. 1. M&A and Investment Trends in the ServiceNow Ecosystem Eric Wu Analyst ewu@truebluepartners.com 669-900-4614 Sunil Grover Managing Partner sgrover@truebluepartners.com 669-900-4024 October 2018 Dashuai “Josh” Li Analyst dli@truebluepartners.com 669-900-4658
  2. 2. © 2018 True Blue Partners, LLC. All rights reserved. | Our services include: M&A advisory, private equity recapitalizations, and co-investments Exclusively focused on Information Technology and related ecosystems - SaaS/Enterprise Application Software - Managed Services - System Integrators/IT Services - Tech-enabled Services - Technology Solutions Co-Investments in Enterprise SaaS Software and IT Services Companies - Minority investments from firm’s balance sheet where we can align ourselves with entrepreneurs and provide value-added services Serving entrepreneurs in the lower mid-market High impact, value-added role 2 True Blue Partners Overview Steadfast partners for entrepreneurs in Information Technology Past clients
  3. 3. © 2018 True Blue Partners, LLC. All rights reserved. | 3 Deep Expertise in Information Technology Proven track record in SaaS, Software, and IT Services M&A* Has been acquires by Has been acquired by Has acquired *Includes deals done prior to the formation of TBP Has been acquired by Has been acquired by Has been acquired by Has sold assets to Has been recapitalized by Has made an investment in Has been acquired by Has been acquired by Has been acquired by Has acquired Has been acquired by Managed Services Unit M&A experience from multiple perspectives ⁻ Sell-side and buy-side advisor ⁻ Buying for and selling to financial buyers – new platforms ⁻ Buying for and selling to strategic buyers ⁻ Controlling owner ⁻ Founder operator ⁻ Minority owner ⁻ Carve outs ⁻ Tuck-ins ⁻ Mid-market ⁻ Bulge bracket Active Engagements: ⁻ Project Orion ⁻ $20m Growth Equity Raise ⁻ $40m ARR SI Company in the Salesforce ecosystem ⁻ Project Picasso ⁻ Under LOI Discussion ⁻ Supply chain management software provider in the SAP ecosystem ⁻ Project York ⁻ Under LOI Discussion ⁻ Stream data analytics and machine learning platform Under LOI discussion Project Picasso Growth Equity Raise Project Orion Has made an investment in SaaS Implementation Services Managed Services Under LOI discussion Project York
  4. 4. © 2018 True Blue Partners, LLC. All rights reserved. | In-depth ecosystem reports and reviews 4 TBP is Active in the Leading Software Ecosystems Notable Transaction Spotlights Active presence at events and conferences
  5. 5. © 2018 True Blue Partners, LLC. All rights reserved. | 5 Select Co-Investments TBP has a rapidly growing network of operators and value-added co-investors Later-StageEarly-Stage Round: Seed Description: Enterprise payment processor; Raised $6m Series A round led by Blue Run Ventures Round: Seed Description: AI-driven customer interaction analysis software Round: Seed Description: CRM and collaboration software for CPAs Round: Seed Description: Tracking and sampling solution for semiconductor component manufacturers Round: Series B Description: CPQ implementation services; Co-invested with Salesforce Ventures Round: Series B Description: Marketing analytics software; Co- invested with Salesforce Ventures Round: Recapitalization Description: Incident management and operations management software for properties Round: Growth Description: Pure-play Oracle implementation services; recapitalized by Tailwind Equity Sample Exited Investments Sample Current Investments Round: Growth Description: Mobile device management and security platform Round: Growth Description: Association and event management software Round: Seed Description: AI powered travel assistant that manages business travel for individuals and teams
  6. 6. © 2018 True Blue Partners, LLC. All rights reserved. | 1. True Blue Partners Overview 2. ServiceNow Overview a. ServiceNow M&A History b. ServiceNow App Ecosystem c. ServiceNow Ventures Investments d. ServiceNow Services Providers 3. ITSM Transactions 4. Valuations for Public Enterprise SaaS Companies 5. Appendix: TBP Case Studies 6 Contents
  7. 7. © 2018 True Blue Partners, LLC. All rights reserved. | ServiceNow well positioned to benefit from the migration to Multi-Cloud Industry vertical app solutions will thrive on the NOW platform. Horizontal solutions on NOW platform run the risk of being cannibalized by ServiceNow. Several case studies from Force.com ecosystem (Apttus vs. Steelbrick) Many of ServiceNow competitors, such as BMC Software, Solarwinds and CA Technologies, acquired using a lot of leverage. Pace of innovation questionable. IBM and HP risk losing market share in the cloud. Key Takeaways 7
  8. 8. ServiceNow Overview
  9. 9. © 2018 True Blue Partners, LLC. All rights reserved. | 9 Multi-Cloud  The Next Frontier Innovation frontier moving from elastic cloud to managing multiple cloud environments 0 0 0 0 0 0 The Evolution of Computing Client server distributed technologies Internet www technologies Mobile any where, any time, any user technologies Cloud and elastic cloud technologies Mainframe technologies Multi-cloud best in class integration technologies Centralized Distributed Internet Cloud Mobile Multi-Cloud Cloud PaaS & IaaS Cloud Applications Multi-cloud defined a best-of-breed approach to delegate different types of workloads to different cloud providers. For example one may build an application’s CRM workflows on Salesforce’s Force.com but use Google Cloud for machine learning, while hosting .NET applications that use SQL Server on Microsoft Azure and collecting all data through API calls. Or, an enterprise may use Salesforce Cloud for CRM and Workday for HCM. Enterprises need to support multiple cloud environments running mission critical applications
  10. 10. © 2018 True Blue Partners, LLC. All rights reserved. | 10 Leading mobile apps have “native apps” on both platforms, same for enterprise apps Nov 2011 Sept 2013 Apr 2012 Dec 2010 Mar 2012 Dec 2010 Sept 2014 Apr 2012 May 2009 Mar 2011 Many mobile apps start native on a platform for better integration, faster performance, and higher reliability, and then migrate to other platforms to gain additional market traction Same is proving true for enterprise cloud apps Multiplatform Apps: Learning from Mobile Apps
  11. 11. © 2018 True Blue Partners, LLC. All rights reserved. | Expanding beyond one ecosystem can sometimes be very costly; many companies have raised financing before the move 11 It no longer makes sense for companies to limit themselves to one ecosystem Multiplatform Examples in Enterprise SaaS
  12. 12. © 2018 True Blue Partners, LLC. All rights reserved. | 12 Enterprise Software/SaaS Landscape ServiceNow expanding horizontally; vertically-focused solutions are another key opportunity Business Applications Administrator Tools Platform & Infrastructure CRM ERP Marketing Sales Customer Service Finance & Accounting Project Mgmt Production HCM Talent Payroll & Benefits Workforce Security Infrastructure Application Endpoint Infrastructure/ App Performance BI/Analytics Industry Vertical ITSMMobility Life Sciences Rapid Mobile App Dev. MDM, EMM Supply Chain Procurement Designed to be representative, not exhaustive Const. & Real Estate MAM Retail BPM
  13. 13. © 2018 True Blue Partners, LLC. All rights reserved. | IT Service Management refers to the management of IT ticketing within an enterprise. • Example: An employee’s computer requires a software update so he/she submits a ticket to IT for repair • Enterprises use ITSM to manage thousands of such tickets 13 IT Service Management (ITSM) End-to-end management of IT Service Catalog Service Strategy • Identification & active prevention of incidents • Reduced turnaround time for problems & incidents • Service Automation • Repeatable process-based solutions • Optimization of IT costs • Removal of redundancies in support, apps, & hosting • Reduced negative impact from IT incidents • Increased employee productivity What is ITSM? How IT Organizations Benefit: How Businesses Benefit: BMC acquired by KKR on 5/29/18 for an undisclosed amount SolarWinds acquired by Thoma Bravo and Silver Lake on 10/21/15 for 4.6B Broadcom Acquires CA Technologies on 7/11/18 for 21.8B
  14. 14. © 2018 True Blue Partners, LLC. All rights reserved. | 14 ServiceNow Product Overview ServiceNow has emerged as the underlying glue that supports best-of-breed cloud solutions “I think the most sophisticated customers need all three platforms – ServiceNow, Workday, Salesforce. And those platforms have to work effectively with one another to crate those seamless experiences.” - John Donahoe CEO of ServiceNow System of engagement | Workflow orchestration | Task mgmt
  15. 15. © 2018 True Blue Partners, LLC. All rights reserved. | 15 ServiceNow Timeline 2017 Luddy creates a forms-based workflow system for the enterprise 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fred Luddy, CTO of Peregrine Systems, starts ServiceNow First service catalog First customers in Asia Pacific and Europe First $1 million customer 200+ customers Industry-first cloud-based discovery First cloud-based orchestration platform Frank Slootman joins as President & CEO IPO: June 29, 2012 Amount raised: $209.7m Launches the ServiceNow Store Reaches $1 billion in annual revenue 3,300+ customers More than 30% of the Global 2000 John Donahoe, Ex- eBay CEO, named President & CEO Launches App Showcase Wins Techworld Award for Best Saas Product of 2013 Frank Slootman remain as Chairman 10 customers Hits 2.1 billion in annual revenue Series A Series B Series C Venture Growth Growth $2.5m $5m $6m $41.3m $17.8m $10.9m Jun 2005 Aug 2006 Apr 2009 Nov 2009 Feb 2012 Mar 2012 Key Stats IPO LTM 2018 Revenue $177.6m $2.093B Gross Margin % 64.7% 74.8% 1-Year CAGR - 38.3% Revenue Multiple - 14.15x June 30, 2012 March 31, 2018
  16. 16. © 2018 True Blue Partners, LLC. All rights reserved. | With a 5-year CAGR of 54%, ServiceNow is growing faster than the leading $Bn+ SaaS companies like Salesforce, Workday, Veeva, and Atlassian ServiceNow’s growth beats other ITSM providers’ by even larger margins Furthermore, ServiceNow is expanding into new markets - human resources, customer service, and security 16 The Fastest Growing Enterprise SaaS Company Among all $Bn+ SaaS companies and ITSM software companies 43% 42% 31% 42% 25% 2% -2% -7% -19% 54% 53% 53% 41% 28% 5% -3% -6% -14% ServiceNow Workday Veeva Atlassian Salesforce Microsoft CA IBM HPE bmc 3-Year CAGR 5-Year CAGR 5-Year CAGR 3 and 5-Year CAGR of Comparable SaaS and ITSM Providers SaaS ITSM 3-Year CAGR Sold by Before privatization: 3-year CAGR: 4.8% 5-year CAGR: 4.9% As of May 2018 for $8.6 Billion to
  17. 17. © 2018 True Blue Partners, LLC. All rights reserved. | ServiceNow took 13 quarters after IPO to reach $1B ARR vs. 17 quarters for Salesforce Over a larger timeframe, the difference in post-IPO growth rates becomes significant 17 ServiceNow vs. Salesforce Revenue Growth Comparison ServiceNow is growing at a faster rate than Salesforce was after their respective IPOs 263 546 1,319 2,562 3,006 261 546 589 +1 +12 +24 +36 +48 Salesforce vs. ServiceNow Quarterly Revenues, # of Quarters Post-IPO (in millions of $) Salesforce reaches $10 billion in revenue run rate Salesforce reaches $5 billion in revenue run rate ServiceNow hits $1 billion in revenue run rate Salesforce reaches $1 billion in revenue run rate IPO Year Total Growth 23 Quarters Post-IPO Compound Annual Growth Rate 2012 938% 49.6% 2004 829% 46.4% Q3 2012 Q2 2015 Q2 2018 Q3 2004 Q2 2007 Q2 2010 Q2 2013 Q4 2016 Q1 2018 Quarters after IPO ServiceNow hits $2 billion in revenue run rate Salesforce reaches $2 billion in revenue run rate
  18. 18. ServiceNow M&A History
  19. 19. © 2018 True Blue Partners, LLC. All rights reserved. | 19 ServiceNow M&A Snapshot 10 20 30 40 50 60 70 80 90 100 110 120 $130 6/5/2012 6/5/2013 6/5/2014 6/5/2015 6/5/2016 6/5/2017 6/5/2018 ServiceNow made 4 acquisitions in 2017 totaling $64m, nearly double 2016’s $38m ServiceNow Share Price & Acquisitions Acquisitions by Size $ Spent on Acquisitions ($m) Cash, Cash Equivalents, and ST Investments ($m) 0.0 13.3 100.0 1.6 34.1 63.6 2012 2013 2014 2015 2016 2017Date Target TBP Brief EV ($m) EV/Rev TBP Reference May 2018 Parlo AI and natural language understanding - - 10 employees Apr 2018 Vendorhawk Saas Subscription management - - 3 employees Oct 2017 SkyGiraffe Enterprise mobility platform; $10m raised 32 - 35 employees Sep 2017 Telepathy UX design 5.0 +5.0 - 40 employees May 2017 Qlue Messaging-based customer engagement 6.6 - 5 employees Jan 2017 DxContinuum Predictive business analytics; $4m raised 15 - 25 employees Jun 2016 BrightPoint Cyber security software; $8m raised 19.6 - 30 employees Apr 2016 ITapp ITSM software; $1m raised 14.5 - 25 employees Feb 2015 Intréis ITSM services 1.6 - 10 employees Jul 2014 Neebula Systems IT discovery and mapping; $5m raised 100 0.2x 25 employees Jul 2013 Mirror42 Performance mgmt software 13.3 - 12 employees 5 4 1 1 <$10m $10-20m $20-50m >$50m 68 315 635 669 801 899 1779 1750 68 119 366 252 412 401 727 705 0 300 600 900 1,200 1,500 1,800 2011 2012 2013 2014 2015 2016 2017 Q2 2018 Total Cash & ST Investments Cash & Equivalents
  20. 20. © 2018 True Blue Partners, LLC. All rights reserved. | 20 Parlo Acquisition Spotlight • On May 3, 2018, ServiceNow announced its acquisition of Parlo, Inc. • Parlo develops workforce automation solutions for customer and employee interactions with enterprises through implementing AI and natural language understanding • Products include: • IT Help Desk Bots for organizing and solving tickets • HR Bots for handling employee benefits • Customer Support Bots for Frequently Asked Questions Integration with ServiceNow’s new Virtual Agent • In May of 2018, ServiceNow launched its Virtual Agent platform which uses AI to facilitate real time requests from start to finish • The company uses the AI conversational model to facilitate customer support, employee HR and technical requests • By integrating the Virtual Agent with Parlo’s natural language processing technology, the platform will be even more comprehensive in recognizing the nuances of everyday conversation • This strategy is aligned with ServiceNow’s announcement at the Knowledge ‘18 Conference to aggressively push towards adding more AI and machine learning capabilities to their offerings Murali Subbarao Founder, CEO • Founded: 2003 • Headquarters: Sunnyvale • Employees: 10 (est.) • AI and Natural Language Understanding (NLU) Edwin Sapugay Co-Founder, CTO Parlo Overview • Jan 2018 – raises $25m, Sequoia Capital China led (Angel) • Aug 2017 – raises $16m, August Capital led (Series A) • Sep 2017 – is acquired by Baidu • Jan 2017 – is acquired by Microsoft • Oct 2016 – raises funding from Splunk Notable Transactions in the Space Customers Transaction Review ServiceNow’s second investment in the Artificial Intelligence space Partners
  21. 21. © 2018 True Blue Partners, LLC. All rights reserved. | 21 Vendorhawk Acquisition Spotlight Round Date EV ($m) Investors Seed May 2017 - Curious Capital, iNovia Capital, Social Starts, Techstars Ventures • On Apr 25, 2018, ServiceNow announced its acquisition of Vendorhawk in an all cash transaction • Vendorhawk’s platform allows enterprises manage their SaaS subscriptions in order to renew licenses, optimize spending, and track app usage • The platform has support for over 36,000 SaaS applications and enables companies to identify redundancies in SaaS subscriptions • ServiceNow plans to integrate Vendorhawk’s capabilities with their Software Asset Management Platform • Farrell Hough, the general manager for ServiceNow commented on the acquisition stating, “SaaS subscriptions can sprawl rapidly at companies, often bypassing IT,” as a result, companies are often unable to identify which apps exist and how much is being spent on them” • Vendorhawk’s platform creates a new level of transparency for enterprises across the growing SaaS landscape Patrick Lowndes Co-Founder, CEO • Founded: 2006 • HQ: Seattle • Employees: 3 • $1.32m in total funding • Cloud-based SaaS subscription management for enterprises ServiceNow expands its Software Asset Management Platform Private Placements Vendorhawk Overview Transaction Review • May 2018 – is acquired by Flexera Software LLC • May 2018 – holdings is acquired by Softline Group • Feb 2018 – is acquired by Smart ERP Solutions Inc. • Sep 2017 – is acquired by AVI Networks Inc. • Jul 2017 – is acquired by Aspera GmbH for $5.2m • Apr 2017 – is acquired by Ivanti Software Inc. Notable Transactions in the Space Premium Integrations Brian Geihsler Co-Founder, CTO
  22. 22. © 2018 True Blue Partners, LLC. All rights reserved. | 22 SkyGiraffe Acquisition Spotlight Round Date EV ($m) Investors Angel Aug 2016 6.0 SGVC; Trilogy Equity;… Series A Feb 2015 3.0 500 Startups; Trilogy Equity;… Venture Oct 2013 1.5 500 Startups; Microsoft Ventures;… - On Oct 25, 2017, ServiceNow announced its acquisition of SkyGiraffe, Inc. - SkyGiraffe provides an enterprise mobility platform that enables no-code quick deployment of mobile business applications that integrate across backend software systems (ex. Salesforce CRM, SAP ERP, Teradata Analytics) - 9 out of 10 enterprise systems are supported out of the box, leveraging the SkyGiraffe Integration Server and Distribution Server. The company claims to have brought cross-platform development cycles down to a day - The solution is delivered through on-premise, hybrid, and cloud models Large players join the Rapid Mobile Application Development (RMAD) space - SkyGiraffe was one of Microsoft Ventures’ 1st fund investments (2013) - In 2015 Microsoft released its own business app development platform, Microsoft PowerApps, viewed as a direct competitor to SkyGiraffe - Oracle unveiled Project Visual Code at OpenWorld 2016, and Google also announced the launch of its product, App Maker in Dec 2016 - ServiceNow expects SkyGiraffe to be embedded in the Now Platform in 2018 Boaz Hecht Co-Founder, CEO Android Apps review • Founded: 2012 • Offices: San Mateo; Israel • Employees: 35 (est.) • Growth rate: 10% (2015) • No-code enterprise workflow mobile application deployment Itay Braun Co-Founder, VP R&D ServiceNow takes a $32m step into rapid app development; largest acquisition since Neebula Private Placements SkyGiraffe Overview Transaction Review • Oct 2016 – is acquired by PowWow Mobile • Jul 2016 – raises $23m, Andreessen Horowitz led (Ser C) • Mar 2016 – raises $7.3m in debt ($18m total funding) • Feb 2016 – is acquired by Microsoft • Feb 2016 – raises $55m, North Bridge led (Ser C) • Apr 2015 – raises $150m from Francisco Partners (Ser C) • Jan 2014 – raises $25m, Battery Ventures led (Ser B) • Aug 2012 – is acquired by Kony Solutions Notable Transactions in the Space Customers
  23. 23. © 2018 True Blue Partners, LLC. All rights reserved. | 23 Neebula Acquisition Spotlight Round Date EV ($m) Investors Series A Jun 2009 5.0 Genesis Partners; Pitango Venture • On Jul 9, 2014, ServiceNow announced its acquisition of Neebula Systems Ltd • Core product is ServiceWatch, which automates discovery, mapping, and monitoring of IT systems • ServiceWatch provides monitoring with a top-down approach starting from the IP address and mapping down vs starting from infrastructure components and moving up • ServiceNow had raised $575m in debt through convertible notes in Q42013, and used nearly 1/3 of available cash on-hand for the acquisition • ServiceNow raised another $700m in debt in Q22017 Cash available on balance sheet Yuval Cohen Co-Founder, CEO • Founded: 2009 • HQ: Israel • Employees: 35 • Revenue: $5m • $5m in total funding • Business service management tools to manage virtual environments and IT clouds ServiceNow pays 20x revenue for APM technology in 2014 Private Placements Neebula Overview Transaction Review • Jul 2017 – is acquired by Datavail • Jan 2017 – is acquired by Cisco for $3.7b • Jun 2016 – raises $10m, Battery Ventures led (Ser A) • Oct 2015 – is taken private by Thoma Bravo for $4.5b • Jun 2015 – is acquired by Microsoft • Dec 2014 – IPOs on NYSE at a $1.4b valuation • Jul 2013 – is acquired by Idera • Jul 2011 – is acquired by Compuware for $256m Notable Transactions in the Space Customers 0 100 200 300 $400 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Used for Neebula acquisition Raised $500m in debt Ariel Gordon Co-Founder, CTO, Ex-CTO at BMC Cap Table at Exit Pitango Venture Genesis Partners Cohen (CEO) Mohaban (Co-founder) Gordon (CTO) 44% 30% 9.54% 9.54% 6.36% $44.0m $30.0m $9.5m $9.5m $6.4m
  24. 24. ServiceNow App Ecosystem
  25. 25. © 2018 True Blue Partners, LLC. All rights reserved. | ServiceNow’s Store has the strongest ITSM focus out of various leading app stores While still in its early stages, Store has quadrupled the number of apps listed since its inception in 2015 and still has untapped growth potential Similar to Salesforce, ServiceNow is aggressively investing in companies in its ecosystem In certain areas like Customer Service Management, Salesforce and ServiceNow will be competitors We expect that ServiceNow’s ecosystem will create multiple Billion Dollar exits It no longer makes sense for point solution app companies to limit themselves to one key enterprise ecosystem Key Takeaways 25
  26. 26. © 2018 True Blue Partners, LLC. All rights reserved. | 2016 $100m annual sales 2012 Launch 2013 Launch 2015 Launch 2016 Launch 2016 Launch 2013 Launch 2015 Launch 26 A Recent History of Enterprise App Stores Salesforce pioneered the cloud app store model and proved its success; others followed 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 2005 Launch 2015 $1.5b annual sales 2017
  27. 27. © 2018 True Blue Partners, LLC. All rights reserved. | 27 ITSM in Other App Stores Many leading app stores have limited presence in IT service management Microsoft Appsource IT & Admin Customer Service Other (Productivity, Analytics, Sales, …) Oracle Cloud Marketplace Service Enterprise Performance Mgmt Other (Sales, Marketing, Commerce, …) Salesforce AppExchange IT & Admin Customer Service Other (Sales, Customer Service, HR, …) Atlassian Marketplace IT & Helpdesk Other (Project Mgmt, Workflow, Reports, …) Total count: 7,140 Total count: 9,116 Total count: 3,475 Total count: 5,982 As of July 2018
  28. 28. © 2018 True Blue Partners, LLC. All rights reserved. | 0 2 4 6 8 Avata CA bmc Confident Governance Intel Symantec Salesforce Labs Samanage SyferLock Stone Cobra 28 Salesforce AppExchange Landscape Salesforce AppExchange has some, but limited presence in IT management 17 183 5 63 32 321 122 108 478 46 193 64 146 50 275 150 216 697 Analytics Collaboration ERP Finance HR IT & Administration Marketing Customer Service Sales Free Apps Paid Apps IT & Administration Apps – Breakdown by Sub-Category Providers of the Most Popular IT Management Apps 58% Paid vs. 42% Free Apps Admin & Developer Tools 43% Data Cleansing 10% Integration 25% IT Management 15% Other 7% Total count: 596 Total count: 87 Rating (134) Rating (58) Rating (42) (38) Rating (11) Rating (11) Rating ITSM & help desk Data backup & recovery Data backup & recovery Asset location tracking Data backup & recovery Change control As of July 2018 As of July 2018
  29. 29. © 2018 True Blue Partners, LLC. All rights reserved. | 29 ServiceNow Store Landscape 272 3rd party applications with built-in integrations to ServiceNow 134 native standalone apps built by 64 companies 6 9 31 38 32 17 111 35 8 13 22 20 20 51 58 70 Software Lifecycle IT Business Mgmt Security & Risk Platform IT Operations Mgmt Service Mgmt IT Service Mgmt Other Free Apps Paid Apps Total Apps per Technology Focus # of Standalone Apps per Company 50/50 Free-to-Paid Apps As of Jul 2018 As of Jul 2018 IT Service Mgmt 31% Service Mgmt 12% IT Operations Mgmt 10% Platform 11% Security & Risk 10% IT Business Mgmt 4% Software Lifecycle 3% Other 19% Stave, 13 Plat4mation, 13 Cognizant, 6 CoFigure, 5 Vorto , 4 Yansa Labs, 4 Enable Professional Services, 4 Other, 85
  30. 30. © 2018 True Blue Partners, LLC. All rights reserved. | ServiceNow Store has quintupled its app listings from 80 at launch to 423 today While still in its early stages, Store shows tremendous growth potential 30 ServiceNow Platform and Ecosystem Which will be the first $Billion success? Designed to be representative, not exhaustive Color legend:
  31. 31. © 2018 True Blue Partners, LLC. All rights reserved. | 31 Investments in the ServiceNow Ecosystem Over $900m Invested In Ecosystem Apps Company Brief Seed, Venture Series A Series B Series C Series D Growth Total Standalone App Network Security Solutions; 1214 Employees $0.1m Jun 2003 $50.0m Sep 2012 $250.0m Nov 2015 $300.1m SaaS incident response platform; 502 employees $1.9m Jun 2010 10.7m Jan 2013 $27.2m Jul 2014 $43.8m Apr 2017 $90.0m Sep 2018 $173.6m IT incident and event management; 271 employees $6.5m Mar 2012 $20.0m May 2013 $40.0m Jun 2014 $40.0m Sep 2016 $106.5m IT incident management; 219 employees $7.1m May 2013 $14.3m Jul 2014 $31.6m Feb 2016 $40.0m Mar 2018 $92.98m Heterogeneous network security solutions; 1012 employees $76.0m Nov 2015 $84.0m Data science platform for centralizing and correlating IT alerts; 97 employees $7.0m Oct 2014 $49.0m Aug 2015 $56.0m API Integration for SaaS, on-prem, & cloud apps; 174 employees $5.0m Sep 2012 $20.0m Jan 2016 $25.0m Nov 2017 $50.0m Geo-productivity application for ITSM, ITSO, & customer service; 183 employees $7.3 Dec 2015 $33.1 Feb 2017 $40.4m Data collected from S&P CapitalIQ and Pitchbook
  32. 32. © 2018 True Blue Partners, LLC. All rights reserved. | 32 Investments in the ServiceNow Ecosystem Over $900m Invested In Ecosystem Apps Company Brief Seed, Venture, Series A Series B Series C Series D Growth Total Standalone App Mobile device management; 330 employees $35.0m Jul 2015 $35.0m Cloud management platform; 38 employees $1.0m Jun 2012 $20.0m Apr 2015 $21.0m Real time context intelligence; 47 employees $2.4m Jun 2010 $10.0m Jul 2017 $12.4m Cloud-based enterprise asset management platform; 119 employees $2.0m Oct 2015 $10.0m Jun 2017 $12.0m Appliance-based remote support solutions; 342 employees $12.0m Nov 2004 $12.0m Cloud-based contact center solutions; 81 employees $4.2m Jan 2014 $6.6m Feb 2016 $10.8m Enterprise big data & app integration; 63 employees $8.0m May 2017 $8.0m Data collected from S&P CapitalIQ and Pitchbook
  33. 33. © 2018 True Blue Partners, LLC. All rights reserved. | 33 Investments in the ServiceNow Ecosystem Over $900m Invested In Ecosystem Apps Company Brief Seed, Venture Series A Series B Series C Series D Growth Total Standalone App Telecom service management; 99 employees $6.5m Dec 2017 $6.5m AI automation & orchestration platform; 54 employees $0.5m Oct 2008 $3.0m Jun 2015 $3.5m SaaS workforce planning; 7 employees $0.8m Aug 2016 $0.8m Data collected from S&P CapitalIQ and Pitchbook
  34. 34. © 2018 True Blue Partners, LLC. All rights reserved. | 34 ServiceNow App Provider Acquisitions Date Target Buyer EV ($m) EV/ Rev TBP Description Nov 2017 McAfee - - ServiceNow-native app; Named to “Forbes 2016 Cloud 100” Dec 2016 MapAnything - - ServiceNow and Salesforce-native geolocation app Jun 2016 Cisco Systems - - Enterprise class security solutions Nov 2015 PagerDuty - - Event enrichment platform for IT operations Mar 2015 CipherCloud - - Adaptive security software solutions Jun 2014 CloudLock - - Password and encryption product for Google Drive files and documents Jan 2014 CipherCloud - - Security application for mobile phones
  35. 35. ServiceNow Ventures Investments
  36. 36. © 2018 True Blue Partners, LLC. All rights reserved. | 36 ServiceNow Investments Snapshot ServiceNow has predominantly invested in ServiceNow-native apps TBP Brief Funding/Seed Series A Series B Series C-G Debt API development and management platform; supports Microsoft, Salesforce, SAP, and ServiceNow applications IPO in Mar 2017 - NYSE:MULE $2.9b valuation @IPO 2016 revenues: $188m Acquired by Salesforce in Mar 2018 Enterprise value: $6.61b 2017 revenues: $296m $4.0m $12.5m $242.5m Oct 2006 May 2007 2010-2015 HWVP Morgenthaler Vent. HWVP Morgenthaler Vent. Lightspeed Vent. HWVP Morgenthaler Vent. Lightspeed Vent. ServiceNow Bay Part. Sapphire Vent. New Enterprise Assoc. Salesforce Vent. Meritech Capital Part. Cisco; Cisco Inv. Brookside Capital Sands Capital Vent. Adage Capital Mgmt Green Bay Vent. Enterprise asset management solution for clinical, laboratory, facilities, and manufacturing verticals $2.0m $10.0m $0.5m+ Nov 2015 Jun 2017 2016-2017 ServiceNow New Enterprise Assoc. ServiceNow New Enterprise Assoc. GE Ventures Lighter Cap. Telecomm management platform on ServiceNow $6.5m Nov 2016 Dec 2017 ServiceNow Location-based services and geo- productivity solutions on Salesforce and ServiceNow $7.3m $33.1m $1.2m Dec 2015 Feb 2017 2012-2015 Greycroft Part. Salesforce Vent. Harbert Growth Part. Greycroft Part. Salesforce Vent. Harbert Growth Part. Harbert Venture Part. ServiceNow Columbus Nova Lighter Cap. NATIVE NATIVE NATIVE NATIVE Data collected from S&P CapitalIQ and Pitchbook
  37. 37. © 2018 True Blue Partners, LLC. All rights reserved. | 37 ServiceNow Investments Snapshot ServiceNow has predominantly invested in ServiceNow-native apps TBP Brief Funding/Seed Series A Series B Series C-G Debt IBM Watson AI-powered service chatbot, incident routing, and claims processing on ServiceNow May 2017 ServiceNow Advanced Data encryption software for SaaS providers, secure cloud migration, health care & financial services $3.0m $6.0m October 2016 January 2018 Engineering Capital, LLC; True Ventures Envision Ventures Management LLC; Engineering Capital, LLC; True Ventures; Industry Ventures, LLC; ServiceNow; Thomvest Ventures, Inc. Community-developed fork of the MySQL relational database management system intended to remain free under the GNU GPL; 168 employees. $3.4m $6.5m $20.0m $38.6m $27.31m February 2015 April 2012 October 2013 April 2016; Nov 2017 May 2017 Rune Capital California Technology Ventures, LLC; Finnish Industry Investment Ltd; OnCorps Capital; Open Ocean Capital Ltd.; Spintop Ventures California Technology Ventures, LLC; Finnish Industry Investment Ltd; Intel Capital; OnCorps Capital; Open Ocean Capital Ltd. California Technology Ventures, LLC; Intel Capital; Smartfin Capital; Alibaba capital Partners; Finnish Industry Investment Ltd; Open Ocean Capital Ltd.; ServiceNow Ventures European Investment Fund NATIVE Data collected from S&P CapitalIQ and Pitchbook
  38. 38. ServiceNow Services Providers
  39. 39. © 2018 True Blue Partners, LLC. All rights reserved. | 39 ServiceNow SI Acquisitions Across the Globe Almost half of all target companies were based outside of the U.S.
  40. 40. © 2018 True Blue Partners, LLC. All rights reserved. | Larger players are consolidating the SI space Fruition Partners leveraged a growth through acquisition strategy - Logicalis smc, Oct 2017 - Aspedians, May 2016 - Acquired by CSC, Aug 2015 - Manta Group, Jan 2015 Accenture has been actively acquiring ServiceNow SI’s after its acquisition of Cloud Sherpas - The company’s focus has shifted away from Oracle and Salesforce into ServiceNow Large players are starting to acquire ServiceNow capabilities - Large players started entering in 2015, and since then M&A activity in the space has gone through the roof - KPMG, Accenture, Atos, CSC/DXC, Fujitsu,… 40 Takeaways in the ServiceNow SI Space
  41. 41. © 2018 True Blue Partners, LLC. All rights reserved. | 41 Fruition Partners Becomes a ServiceNow Powerhouse - On Aug 11, 2015, CSC announced its acquisition of Fruition Partners for $148m - Fruition Partners was the largest ServiceNow-exclusive consulting firm, and the only ServiceNow Master Solutions Partner operating across North America and Europe - On Mar 1, 2016, CSC announced its acquisition of UXC Ltd for $418m - UXC specialized in Microsoft Dynamics, SAP, and Oracle consulting; it acquired Keystone for $28m in 2013 and became the largest ServiceNow partner in APAC - On May 23, 2016, Fruition Partners announced its acquisition of Aspediens for $9m cash + $6m earnout - Aspediens was the largest European ServiceNow-exclusive consulting firm with 80 employees - $12m revenue and 20%YoY growth rate (2013) - In Aug 2016, CSC announced that UXC Keystone and Aspediens would merge and operate under the Fruition brand - This ServiceNow-dedicated division now has 1,200 customers and 400 employees, and is the largest ServiceNow partner in the world - Fruition later went on to acquire Logicalis smc Marc Talluto Co-Founder, CEO Fruition Partners • Founded: 2003 • HQ: Chicago, IL • Employees: 250 • Revenue: $43m (2014); $60m (2015 est.) • 3-Year Growth: 349% • Exit Valuation: 2.5x revenue CSC merges Fruition Partners, UXC Keystone, and Aspediens under the Fruition Partners brand Acquisitions & Private Placements Fruition Partners Overview Transaction Review Customers Company/ Round Date Size ($m) Background/Investors Oct 2017 42.0 ITSM division May 2016 15.0 European ServiceNow consulting Jan 2015 - Canada ServiceNow consulting Jul 2014 - ServiceNow consulting Growth Jun 2014 5.0 - Series A Dec 2012 12.0 Trident Capital Patrick Stonelake Co-Founder Fruition Partners Partners
  42. 42. © 2018 True Blue Partners, LLC. All rights reserved. | [VALUE] revenue [VALUE] revenue [VALUE] revenue [VALUE] revenue Category 1 Acquired by CSC for $150m - ~2.5x 2015 estimated revenue as of Sep 2015 - 80% 3-Year CAGR - 2 investment rounds ($17.5m) - 2 acquisitions 42 Investment-Driven M&A Used by ServiceNow Companies Fruition leverages growth equity investments to help finance growth and acquisitions 2012 2013 2014 2015 $12m capital raise (December 2012) $5.5m capital raise (June 2014) - $3.3m revenue (2014) - 3.7% growth YoY - 33% gross margin Acquisition (July 2014) Acquisition (January 2015) - TBP estimates $4-5m revenue
  43. 43. © 2018 True Blue Partners, LLC. All rights reserved. | 43 Accenture Shifts its Focus to ServiceNow Accenture’s three latest ecosystem-driven acquisitions have revolved around ServiceNow 2014 2015 Jun 2014 Oracle EPM May 2014 Oracle Engineered Systems May 2015 Salesforce CRM consulting Jan 2016 Salesforce CRM consulting Sep 2016 Workday consulting Mar 2017 ServiceNow consulting Jan 2017 ServiceNow consulting Nov 2016 ServiceNow consulting Sep 2015 Salesforce, ServiceNow consulting 2016 2017
  44. 44. © 2018 True Blue Partners, LLC. All rights reserved. | 44 Navigis < Cloud Sherpas < Accenture Company/ Round Date Size ($m) Background/Investors Jan 2013 - ServiceNow consulting Jan 2013 - Salesforce, Oracle CRM consulting Dec 2012 - Salesforce consulting Series C Dec 2012 40.0 Greenspring Assoc. Columbia Cap;… Mar 2012 - Salesforce consulting Series B Mar 2012 20.0 Columbia Cap; Salesforce Sep 2011 - Google consulting Jul 2011 - Google Apps partner - On Jan 15, 2013, Cloud Sherpas announced its acquisition of both Navigis Inc. and Innoveer Solutions Inc. - Innoveer provided Salesforce CRM solutions and services; the acquisition gave Cloud Sherpas a physical presence in Europe - Innoveer did one of the largest Salesforce implementations in the world for AXA - Navigis provided ITSM solutions and services, and in 2007 became the first ServiceNow implementation partner - The number of ServiceNow customers doubled in the 1st year after acquisition, and YoY revenues grew 150% - Shortly after, Cloud Sherpas announced a $12m investment into its ServiceNow division over the next 2 years - On Sep 15, 2015, Accenture announced its acquisition of Cloud Sherpas - Accenture later went on to acquire 3 more ServiceNow consulting firms: Nashco Consulting Ltd, solid-serVision.com GmbH, and Focus Group Europe Ltd. David Northington CEO Cloud Sherpas • Founded: 2008 • HQ: Atlanta, GA • Employees: 1,100+ • Revenue: $134m (2014) • 3-Year Growth: 1,247% • Salesforce, ServiceNow, and Google cloud consulting • $63m in total funding Acquisitions & Private Placements Cloud Sherpas Overview Transaction Review Customers Jim Fleming Partner Columbia Capital Sherrick Murdoff VP Partner Investments Salesforce
  45. 45. © 2018 True Blue Partners, LLC. All rights reserved. | 45 ServiceNow SI Acquisitions Many ServiceNow SI transactions being executed overseas Date Target Buyer EV ($m) EV/ Rev TBP Description Mar 2018 Linium LLC Ness Technologies Inc. - - U.S. based business process consulting ~ 350 employees Nov 2017 BITS Mexico Voleto - - Mexico-based; ~20 employees Oct 2017 Imakumo SAS Atos SE - - Paris-based; $5.1m revenue and $0.3m EBITDA (2014) Oct 2017 Logicalis Smc Fruition Partners - - Netherland-based ; 79 employees Sep 2017 Comconsult Kommunikationstechnik Materna GmbH Information & Communications - - Germany-based; customers among the top 500 companies in the German-speaking countries May 2017 Crossfuze, Business Segment I-Evolve - - US-based software implementation and consulting May 2017 AIM Consulting Group Addison Group - - Bellevue-based; 287 employees; “Best Consulting Website” and “Gold Winner for 2017” Apr 2017 RightAnswers Upland Software 19 - $17.2m in cash+$2.5m earnout Mar 2017 TeamUltra Computacenter - - UK-based ServiceNow Gold Services partner; 60 employees Mar 2017 Focus Group Europe Accenture - - UK-based; £5m revenue (2015) Jan 2017 solid-serVision.com Accenture - - Germany-based; 100 employees Jan 2017 Engage ESM Atos SE - - London-based; $20.6m revenue (2016); 72 Employees Nov 2016 Nashco Consulting Accenture - - Canada-based; 25 certified ServiceNow specialists Aug 2016 Symfoni Software Norge AS Fujitsu Services - - Norway-based; $42.2m revenue (2015) ServiceNow Registered Partner Data collected from S&P CapitalIQ and Pitchbook
  46. 46. © 2018 True Blue Partners, LLC. All rights reserved. | 46 ServiceNow SI Acquisitions Many ServiceNow SI transactions being executed overseas Date Target Buyer EV ($m) EV/ Rev TBP Description May 2016 Aspediens Fruition Partners - - Switzerland-based IT consulting Mar 2016 Crossfuze Inergex - - US-based; #1 rating in customer satisfaction from ServiceNow Oct 2015 UXC CSC Computer Sciences Australia 418 0.6x Australia-based; $697.9m revenue and $37.2m EBITDA (2015) Sep 2015 Cloud Sherpas Accenture 406 - US-based Aug 2015 Fruition Partners Computer Sciences Corp (nka:DXC Technology) 148 - US-based; 300 employees Apr 2015 Triad Technology Partners, ServiceNow ITSM Business KPMG - - US-based; $34.6m revenue (2012); initially a woman-owned small business Apr 2015 InSource, Inc. RightAnswers - - US-based; 62 employees; $17m revenue (2016) Jan 2015 The Manta Group Fruition Partners - - Canada-based; $5.8m revenue (2016) Jul 2014 Partners in IT (nka:Fruition Partners UK) Fruition Partners - - UK-based; $3.3m revenue (2013) Nov 2013 Keystone Management Solutions UXC 28 - Australia-based Oct 2013 Nobel Consulting Group RXP Services 3 - Australia-based; stock consideration Jan 2013 Navigis Cloud Sherpas - - US-based; 1 st ServiceNow implementation partner ServiceNow Registered Partner Data collected from S&P CapitalIQ and Pitchbook
  47. 47. ITSM Transactions
  48. 48. © 2018 True Blue Partners, LLC. All rights reserved. | 48 ITSM Transactions Almost one third of these companies were acquired by private equity buyers Date Target Buyer EV ($m) EV/ Revenue EV/ EBITDA TBP Description July 2018 Basefarm AS Orange Business Services SAS 408.45 3.5x - Application management and operating system management services May 2018 BMC Software, Inc. KKR & Co. L.P. - - - Enterprise service management (ESM) and mainframe service management (MSM) May 2018 Fusion PPT LLC Quality Technology, Inc. - - - IT service management and cloud computing solutions Apr 2018 Keystyle Data Solutions LLC Viewpoint, Inc. - - - Software that provides employee self-service portal and field modules to companies Apr 2018 ThinkSmart LLC Miratech Holdings, Inc. - - - Digital transaction management software to build automated workflows Feb 2018 Digital Fuel SV, LL Apptio, Inc. - - - SaaS IT management solutions for IT spending and budgets Jan 2018 FlexiSphere Technologies, Inc. DPW Holdings, Inc. - - - IT managed services for small and medium sized businesses May 2017 The Kemtah Group Incorporated Belcan Corporation - - - ITSM services Apr 2017 iMicron Web Services LLC. Techwave Consulting Inc. - - - Computing-as-a-Service public and private cloud Jan 2017 Unidesk Corporation Citrix Systems, Inc. (NasdaqGS:CTXS) - - - Application packaging and lifecycle management Oct 2016 Help Desk Technology Corporation B.I.G. Capital LLC - - - Software for IT help desk, IT service desk, and enterprise work management Mar 2016 Serena Software, Inc. Micro Focus International plc 540 3.3x 6.8x IT solutions for the Global 2000 companies Dec 2015 Corrigo Incorporated Jones Lang LaSalle Incorporated - - - Service management solutions Dec 2015 Pomeroy IT Solutions, Inc. Tolt Solutions, Inc. - - - Infrastructure managed services Oct 2015 SolarWinds, Inc. Thoma Bravo; Silver Lake 4,446 9.2x 29.6x IT and infrastructure management software Aug 2015 Boundary, Inc. BMC Software, Inc - - - Infrastructure performance monitoring solutions and services Data collected from S&P CapitalIQ and Pitchbook
  49. 49. © 2018 True Blue Partners, LLC. All rights reserved. | 49 ITSM Transactions Almost one third of these companies were acquired by private equity buyers Date Target Buyer EV ($m) EV/ Revenue EV/ EBITDA TBP Description Feb 2015 TeamDynamix Solutions LLC Five Elms Capital; Level Equity Management - - - IT service management solutions Feb 2015 FrontRange Solutions USA Clearlake Capital Group, L.P. - - - Hybrid IT service management and unified endpoint management software solutions Jun 2014 Autotask Corporation Vista Equity Partners; Vista Foundation Fund II - - - IT business management software solutions Mar 2014 Serena Software, Inc. HGGC, LLC; HGGC Fund II, L.P. 453 2.5x 6.4x IT solutions for the Global 2000 companies Mar 2014 Softential, Inc. InfoTech Enterprises America Inc. - - - ITSM solutions Jun 2013 Seamless Technologies Inc. Avnet, Inc. - - - ITSM solutions May 2013 BMC Software, Inc. Insight Venture; Bain Capital Private Equity; etc. 8,377 3.0x 10.6x System and service management solutions Mean 4.3x 13.4x Median 3.3x 8.7x Data collected from S&P CapitalIQ and Pitchbook
  50. 50. Valuations for Public Enterprise SaaS Companies
  51. 51. © 2018 True Blue Partners, LLC. All rights reserved. | 51 Valuation Drivers in SaaS Still driven by revenue multiples; Annualized Recurring Revenue is key Key Drivers • Revenue Growth Rate • Change in Revenue Growth Rate • Size and dynamics of target market • Leadership premium in target market • Gross margins as a proxy for future profits • EBITDA margins as a proxy for sales model efficiency Key Takeaways • No magic formula • Knowledge of target market dynamics and positioning is key • Past performance is taken as the best predictor of future results • Valuations driven by clarity and certainty of where the business is going
  52. 52. © 2018 True Blue Partners, LLC. All rights reserved. | 52 Size and Valuations The largest players tend to also be market leaders and command leadership premiums Premium for companies with EV>$10B; discount for companies with EV<$1B Plotting Enterprise Value (EV) by Revenue Multiple shows an asymptotic curve Public SaaS companies include: APPF, APTI, AYX, BLKB, BNFT, BOX, CHUB.K, COUP, CRM, CSOD, ECOM, ELLI, EVBG, FIVN, HDP, HUBS, IMPV, INST, TSX:KXS,,NEWR, NOW, OKTA, PAYC, PCTY, PFPT, QLYS, RNG, RP, SPSC, SSTI, TEAM, TLND, TTD, TWOU, ULTI, UPLD, VEEV, VRNS, WDAY, WK, NZSE:XRO, YEXT, ZEN, ZIXI 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x - 2,000 4,000 6,000 8,000 10,000 12,000 EV/Revenue Enterprise Value ($m) 4.7x 8.3x 10.7x 12.3x 4.2x 7.0x 10.8x 12.6x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x <$1b $1-2.5b $2.5-10b >$10b EV/LTMRevenue Enterprise Value Mean Median As of March 8, 2018
  53. 53. © 2018 True Blue Partners, LLC. All rights reserved. | Public SaaS companies include: APPF, APTI, AYX, BLKB, BNFT, BOX, CHUB.K, COUP, CRM, CSOD, ECOM, ELLI, EVBG, FIVN, HDP, HUBS, IMPV, INST, TSX:KXS,,NEWR, NOW, OKTA, PAYC, PCTY, PFPT, QLYS, RNG, RP, SPSC, SSTI, TEAM, TLND, TTD, TWOU, ULTI, UPLD, VEEV, VRNS, WDAY, WK, NZSE:XRO, YEXT, ZEN, ZIXI 53 Revenue Growth and Valuations Revenue growth rate a big impact on valuation Trends in revenue growth also very important. i.e. growing at a increasing or decreasing rate? 3.7x 6.9x 7.9x 10.6x 2.9x 5.7x 7.7x 10.3x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x <10% 10-20% 20-30% >30% EV/LTMRevenue Revenue Growth Mean Median As of March 8, 2018
  54. 54. © 2018 True Blue Partners, LLC. All rights reserved. | 54 Gross Margin and Valuations Gross margin as a proxy for revenue mix and quality (ex. subscription vs. services vs. reselling) Public SaaS companies include: APPF, APTI, AYX, BLKB, BNFT, BOX, CHUB.K, COUP, CRM, CSOD, ECOM, ELLI, EVBG, FIVN, HDP, HUBS, IMPV, INST, TSX:KXS,,NEWR, NOW, OKTA, PAYC, PCTY, PFPT, QLYS, RNG, RP, SPSC, SSTI, TEAM, TLND, TTD, TWOU, ULTI, UPLD, VEEV, VRNS, WDAY, WK, NZSE:XRO, YEXT, ZEN, ZIXI 6.5x 8.5x 9.5x 9.7x 6.9x 7.7x 9.6x 11.4x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x <60% 60-70% 70-80% >80% EV/LTMRevenue Gross Margin Mean Median As of March 8, 2018
  55. 55. © 2018 True Blue Partners, LLC. All rights reserved. | 55 Valuations of Companies Grouped by Target Markets The highestand lowest values in each column are highlighted in green and red, respectively. LTM LTM LTM 1-year Enterprise Value / Enterprise Gross EBITDA Revenue LTM Segment Company Value Margin Margin Revenue Growth Revenue Marketing HubSpot, Inc. 4,857.42 80% -8% 407.92 39% 11.9x Marketing The Trade Desk, Inc. 3,792.30 79% 24% 340.53 52% 11.1x Marketing Yext, Inc. 1,689.75 74% -35% 184.22 38% 9.2x Contact Center Phones RingCentral, Inc. 6,008.00 76% -2% 539.64 32% 11.1x Contact Center Phones Five9, Inc. 1,960.12 58% 3% 212.12 24% 9.2x CRM Salesforce.com, inc. 106,007.05 74% 9% 11,089.01 25% 9.6x CRM Veeva Systems Inc. 10,876.69 69% 24% 721.35 26% 15.1x CRM Zendesk, Inc. 5,913.52 70% -20% 466.40 38% 12.7x CRM ChannelAdvisor Corporation 360.31 79% -4% 125.65 8% 2.9x Mean 31% 10.3x Median 32% 11.1x ERP Workday, Inc. 26,845.91 71% -7% 2,281.83 37% 11.8x ERP Xero Limited 6,296.43 79% -5% 406.58 37% 15.5x ERP Workiva Inc. 1,008.63 71% -20% 215.87 16% 4.7x HCM The Ultimate Software Group, Inc. 8,491.48 62% 9% 988.99 20% 8.6x HCM Cornerstone OnDemand, Inc. 2,942.94 70% -5% 503.52 14% 5.8x HCM Paycom Software, Inc. 6,453.46 86% 20% 467.46 32% 13.8x HCM Paylocity Holding Corporation 3,297.66 59% 9% 356.97 26% 9.2x HCM Benefitfocus, Inc. 1,217.69 51% 0% 261.48 12% 4.7x HCM Instructure, Inc. 1,442.32 71% -27% 172.33 43% 8.4x Supply Chain SPS Commerce, Inc. 1,174.92 67% 9% 227.78 14% 5.2x Supply Chain Coupa Software Incorporated 3,480.59 68% -20% 202.00 40% 17.2x Supply Chain Kinaxis Inc. 2,090.96 70% 24% 137.62 15% 15.2x Mean 26% 10.0x Median 23% 8.9x No one-size-fits-all magic formula to determine valuation multiples Key valuation drivers are grounded in data As of Jul 16 2018
  56. 56. © 2018 True Blue Partners, LLC. All rights reserved. | 56 Valuations of Companies Grouped by Target Markets The highestand lowest values in each column are highlighted in green and red, respectively. No one-size-fits-all magic formula to determine valuation multiples Key valuation drivers are grounded in data Real Estate Ellie Mae, Inc. 3,315.03 61% 16% 441.95 16% 7.5x Real Estate AppFolio, Inc. 2,105.20 62% 11% 154.02 36% 13.7x Physical Security Everbridge, Inc. 1,369.14 70% -19% 112.03 36% 12.2x Physical Security ShotSpotter, Inc. 425.13 52% -1% 26.11 53% 16.3x Nonprofit Space Blackbaud, Inc. 5,873.43 54% 17% 807.42 8% 7.3x Nonprofit Space 2U, Inc. 5,172.93 80% -5% 314.21 39% 16.5x Mean 31% 12.2x Median 36% 12.9x LTM LTM LTM 1-year Enterprise Value / Enterprise Gross EBITDA Revenue LTM Segment Company Value Margin Margin Revenue Growth Revenue IT Process Management ServiceNow, Inc. 32,674.57 74% 1% 2,093.48 39% 15.6x IT Process Management Atlassian Corporation Plc 14,882.27 79% -2% 804.50 39% 18.5x IT Process Management Okta, Inc. 5,477.04 68% -37% 291.29 67% 18.8x IT Process Management Upland Software, Inc. 879.49 65% 19% 108.82 23% 8.1x IT Management Box, Inc. 3,574.19 73% -20% 529.43 27% 6.8x IT Management New Relic, Inc. 5,910.42 82% -8% 355.06 36% 16.6x IT Management Hortonworks, Inc. 1,434.68 69% -62% 284.90 42% 5.0x IT Management Apptio, Inc. 1,433.12 69% -9% 198.66 17% 7.2x IT Management Talend S.A. 1,742.01 77% -18% 162.54 40% 10.7x Security Proofpoint, Inc. 6,451.18 72% -6% 562.12 37% 11.5x Security Qualys, Inc. 3,286.76 78% 25% 242.59 17% 13.5x Security Varonis Systems, Inc. 2,084.74 90% -6% 231.30 32% 9.0x Security Alteryx, Inc. 2,386.54 83% -9% 145.88 53% 16.4x Security Zix Corporation 274.52 81% 21% 66.42 9% 4.1x Mean 34% 11.6x Median 37% 11.1x As of Jul 16, 2018
  57. 57. Appendix: TBP Case Studies
  58. 58. © 2018 True Blue Partners, LLC. All rights reserved. | 58 Advised AST on Strategic Growth, Acquisitions, and Exit A four-year engagement yielding highly favorable outcomes for all parties Strategic Advisory 2012 - 2013 • Engagement with AST prompted by interest for liquidity • Ran broad outreach and received bids from a multi-billion $ strategic and PE- buyers • Concerned over leverage, AST decided on a stand-alone growth strategy • Invited to make equity investment; helped to develop 5-year strategic roadmap through acquisition Buy-side Advisory 2014 - 2015 • Ran a broad buy-side process • (200 prospects > 11 meetings > 2 LOIs) • Completed acquisition of Serene, a highly synergistic Oracle & Salesforce cloud implementation firm • Prepared to acquire $100m asset next and positioned the company as the largest Oracle-only cloud implementation firm Sell-side Advisory 2015 - 2016 • Developed a recapitalization opportunity with Tailwind Capital • Advised AST on sell-side and helped negotiate significant equity rollover • AST is now well capitalized and well positioned to become a leading cloud implementation firm Has been recapitalized byHas acquired
  59. 59. © 2018 True Blue Partners, LLC. All rights reserved. | 59 AST Recapitalization Case Study Timeline % change over time of S&P 500 vs Oracle Corp (NYSE:ORCL) -20 0 20 40 60 80 Dec 2015: AST is approached and engages discussion with a select group of strategic and financial buyers Jan 2017: AST recapitalization is completed. Positioned to be the largest Oracle focused cloud implementation partner Received proposals from $bn+ PE backed strategic, large multibillion IT service provider and PE stand alone Sep 2015: Buy-side process to negotiate2-LOIs AST completes buy-side acquisition to become the largest Oracle-only, multi-pillar implementation partner Apr 2012: Sell-side engagement launched. Organized broad outreach Dec 2013: After pursuing recapitalization diligence with PE, AST decides not comfortable with leverage and to pursue inorganic growth. Dec 2014: AST negotiates buy-side agreement with selected target. Transaction postponed due to target internal issues. Oracle acquires Netsuite Oracle acquires Acme Packet for $1.6b Oracle acquires Datalogix for $1.1b Oracle Corp (NYSE:ORCL) S&P 500
  60. 60. © 2018 True Blue Partners, LLC. All rights reserved. | Transaction Overview - In Jul 2017 Datavail Corporation announced its acquisition of Accelatis LLC - Accelatis was founded by Jonathan Berry in 2008; they provide a comprehensive application performance management (APM) software platform - Accelatis’ cloud-enabled software is the leading Oracle APM monitoring tool, currently being used by a long list of Fortune500 clients - Datavail is one of the largest database managed services providers in North America and is rapidly expanding into ERP managed services Significance of the Transaction - Orchestrated a liquidity event for founder/CEO and co-founder shareholders - The acquisition of Accelatis strengthens the technology portion of Datavail’s offering to deliver higher quality and higher margin managed services - 3 months prior, Datavail had just acquired AdvancedEPM, a leading Oracle EPM services firm, to bolster its strategy of offering a full end-to-end, application to database offering for the Oracle EPM stack - Jonathan Berry is now the CTO of Datavail, and leads the technology-enabled initiatives and product roadmap Role - Accelatis contacted TBP after receiving a verbal IOI with a reputable publicly traded IT services firm, and TBP was retained as the exclusive M&A advisor - TBP deployed a unique 3-tiered marketing strategy, designed to maximize the impact with key target prospects, and ran an exhaustive sell-side process across 200+ prospective buyers - Helped negotiate a favorable outcome for our client 60 Accelatis, Oracle APM provider, Sells to Datavail Helped founders achieve a significant liquidity event Has been acquired by Accelatis key APM offerings include: Infrastructure management Application monitoring Performance testing and optimization Process automation System health checks
  61. 61. © 2018 True Blue Partners, LLC. All rights reserved. | 61 Amtel Sells to NetPlus Advised Amtel in its sale to NetPlus, a PE-backed platform Has been acquired by “You’ve been a valuable partner over the years and helped us accomplish a great outcome. I look forward to continuing our partnership in my next venture.” Pankaj Gupta - Founder, CEO Transaction Overview - In Apr 2016 NetPlus announced its acquisition of Amtel - Amtel was founded by Pankaj Gupta, and is a CODiE award winning SaaS platform in the Mobile Device Management, Security and App Management space - Amtel has had a long relationship with the TBP founders; in 2014, the TBP founders made an equity investment in Amtel and provided strategic advice on developing its channel based go-to-market strategy and securing its first few channel partners, and recruiting its Chief Sales Officer Significance of the Transaction - Amtel founders were able to accomplish a great financial outcome and use the proceeds to fund the growth of their next venture without any equity dilution - Netplus enhanced its enterprise mobility management solutions to include mobile device management, mobile security management, mobile app management and mobile expense management Role - Served as the exclusive adviser to Amtel in its sale to NetPlus - Highlights success in delivering timely results and sustaining long term relationships in advising high quality companies across the Information Technology landscape
  62. 62. Appendix
  63. 63. © 2018 True Blue Partners, LLC. All rights reserved. | ServiceNow’s enterprise value CAGR is also significantly higher than that of SFDC To account for the faster growth rate, the market is placing a higher EV/Revenue multiple on ServiceNow 63 ServiceNow vs. Salesforce Enterprise Value Salesforce vs. ServiceNow Enterprise Value , Quarters after IPO (in billions of $) * As of Feb. 20, 2018 ** As of Feb. 10, 2018 10 20 30 40 50 60 70 80 1 48+48+1 +12 +24 +36 IPO Year Total Growth 22 Quarters Post-IPO Enterprise Value CAGR EV/ Revenue* Gross Margin** # of Acquisitions Completed Total Transaction Value of Acquisitions 2012 645% 46.6% 13.2x 79.7% 9 $134m 2004 433% 33.2% 7.91x 73.2% 6 $47m ServiceNow hits $21+ billion in enterprise value Salesforce reaches $76+ billion in enterprise value Q3 2012 Q3 2015 Q4 2017 Q3 2004 Q3 2007 Q3 2010 Q3 2013 Q3 2016 Q4 2017 Quarters after IPO

×