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M&A Target Review May 2016 DRAFT AND CONFIDENTIAL

M&A Target Review

May 2016

DRAFT AND CONFIDENTIAL

M&A Target Review May 2016 DRAFT AND CONFIDENTIAL
DRAFT AND CONFIDENTIAL Potential Acquisition Targets ‒ Public Companies ADBE LNKD WDAY NOW DATA PEGA
DRAFT AND CONFIDENTIAL Potential Acquisition Targets ‒ Public Companies ADBE LNKD WDAY NOW DATA PEGA

DRAFT AND CONFIDENTIAL

Potential Acquisition Targets Public Companies

ADBE LNKD
ADBE
LNKD
WDAY
WDAY

NOWAcquisition Targets ‒ Public Companies ADBE LNKD WDAY DATA PEGA VEEV BOX DWRE ZEN MKTO HUB

Targets ‒ Public Companies ADBE LNKD WDAY NOW DATA PEGA VEEV BOX DWRE ZEN MKTO HUB

DATATargets ‒ Public Companies ADBE LNKD WDAY NOW PEGA VEEV BOX DWRE ZEN MKTO HUB 13,893

PEGA VEEV BOX DWRE ZEN
PEGA
VEEV
BOX
DWRE
ZEN
MKTO
MKTO
HUB
HUB
13,893 9,732 4,900 3,991 4,603 3,168 3,400 2,599 1,474 1,370 1,024 1,429 983 1,312 96%
13,893
9,732
4,900
3,991
4,603
3,168
3,400
2,599
1,474
1,370
1,024
1,429
983
1,312
96%
98%
93%
84%
91%
98%
93%
90%
87%
94%
95%
96%
69%
95%
88%
90%
72%
65%
80%
81%
79%
82%
65%
68%
95%
92%
62%
91%
39,726
75,000 (paid
6,167K
(Corporate
1,100
3,098
30,000+
42,600
N/A
39,000
375+
57,000
349
customer
4,615
19,322
subscribers
Solution
accounts)
Customers)
$1,549M
$799M
$5,826M
$3,726M
(PS is 20% of
Revenue)
$1,367M
$967M
$850M
(PS is 30% of
Revenue)
$710M
$512M
$393M
$311M
$303M
$273M
$259M
21%
25%
33%
36%
30%
30%
17%
16%
25%
30%
31%
45%
30%
42%
87%
87%
74%
75%
70%
90%
71%
87%
70%
74%
74%
73%
70%
76%
$1,876M
$564M
$8M
$165M
$42M
$63M
$115M
$60M
$126M
$(106M)
$18M
$(27M)
$(21M)
$(22M)
$49,085
$18,076
$15,690
$12,757
$6,483
$4,060
$2,027
$2,926
$4,238
$1,645
$1,759
$2,381
$1,342
$1,770
$46,904
$16,082
$14,228
$12,339
$6,383
$3,252
$1,833
$2,556
$3,892
$1,504
$1,563
$2,127
$1,254
$1,664
8.1x
4.3x
9.2x
9.0x
6.6x
3.8x
2.3x
3.6x
7.6x
3.8x
5.0x
7.0x
4.6x
6.4x
Less
Meeting Late
Larry Ellison
Meeting in
In Exclusivity
In Play
In Play
Interested
owns 47%
CEO has no
interest
In Play
CEO has no
interest
In Play
May
June
“Burgundy”
“Sonoma”
“Tuscany”
“Champagne”

Status:

2

“Sonoma” “Tuscany” “Champagne” Status: 2 Note: As of May 17, 2016 1. Refers to FY17E or

Note: As of May 17, 2016

1.

Refers to FY17E or the corresponding calendar year >90% On-premise software.

DRAFT AND CONFIDENTIAL Potential Acquisition Targets ‒ Interlopers ADBE Amazon Amazon Facebook Google HP Enterprise
DRAFT AND CONFIDENTIAL Potential Acquisition Targets ‒ Interlopers ADBE Amazon Amazon Facebook Google HP Enterprise

DRAFT AND CONFIDENTIAL

Potential Acquisition Targets Interlopers

ADBE
ADBE
Amazon
Amazon
Amazon
Amazon
Facebook Google HP Enterprise IBM MSFT Oracle SAP
Facebook
Google
HP Enterprise
IBM
MSFT
Oracle
SAP
Facebook Google HP Enterprise IBM MSFT Oracle SAP 3 13,893 36,450 230,800 110,000 41,467 13,598 64,115

3

13,893 36,450 230,800 110,000 41,467 13,598 64,115 240,000 377,757 118,000 132,000 78,230 30,641 96% 95%
13,893
36,450
230,800
110,000
41,467
13,598
64,115
240,000
377,757
118,000
132,000
78,230
30,641
96%
95%
81%
94%
95%
98%
98%
67%
56%
93%
72%
94%
97%
87%
95%
64%
82%
87%
92%
91%
59%
58%
84%
66%
84%
89%
$5,826
$19,895
$134,143
$213,651
$12,226
$26,123
$87,214
$50,767
$79,314
$92,664
$37,324
$24,895
$20,678
21%
37%
25%
(9%)
20%
46%
16%
(4%)
(3%)
(1%)
(2%)
5%
31%
87%
64%
35%
39%
55%
85%
63%
29%
50%
64%
80%
71%
59%
$1,872
$5,593
$4,569
$58,778
$2,321
$14,360
$29,222
$4,637
$15,306
$27,623
$16,228
$7,561
$7,690
$45,804
$192,063
$329,801
$536,152
$54,221
$315,036
$423,589
$35,175
$172,909
$338,461
$154,139
$95,798
$191,971
7.9x
9.7x
2.5x
2.5x
4.4x
12.1x
4.9x
0.7x
2.2x
3.7x
4.1x
3.8x
9.3x
$4,098
$18,552
$15,859
$55,840
$11,054
$20,621
$73,450
$8,505
$14,869
$105,338
$50,767
$6,951
$14,138
15%
N/A
26%
11% 4
99%
90%
41%
N/A
N/A
2%
21%
N/A
86%
$1,917
$8,951
$17,612
$79,908
$5,417
$0
$7,379
$16,139
$45,557
$46,767
$40,106
$9,840
$11,145
1.4x
1.8x
1.9x
1.0x
2.0x
0.0x
0.3x
2.1x
2.4x
1.6x
2.7x
1.5x
1.5x

Note: As of May 17, 2016

1. Refers to FY17E or the corresponding calendar year

2. Total debt includes capitalized leases

3. Onshore refers to the location of each company’s primary operations

4. Includes long-term marketable securities of $177B (total cash, cash equivalents and all marketable securities of $232B).

DRAFT AND CONFIDENTIAL Share Price Dislocation Over the Last Twelve Months 4 Last Twelve Months
DRAFT AND CONFIDENTIAL Share Price Dislocation Over the Last Twelve Months 4 Last Twelve Months

DRAFT AND CONFIDENTIAL

Share Price Dislocation Over the Last Twelve Months

4

Last Twelve Months Stock Performance

2015 2016 40% 20% Salesforce (+6%) 0% Sonoma (-10%) -20% Champagne (-34%) -40% Tuscany (-58%)
2015
2016
40%
20%
Salesforce (+6%)
0%
Sonoma (-10%)
-20%
Champagne (-34%)
-40%
Tuscany (-58%)
-60%
-80%
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Champagne Briefing DRAFT AND CONFIDENTIAL

Champagne Briefing

DRAFT AND CONFIDENTIAL

Champagne Briefing DRAFT AND CONFIDENTIAL

Champagne Overview

DRAFT AND CONFIDENTIAL

Champagne Overview DRAFT AND CONFIDENTIAL • Founded in 2004 • HQ: Burlington, MA • 2015 Revenue:
Champagne Overview DRAFT AND CONFIDENTIAL • Founded in 2004 • HQ: Burlington, MA • 2015 Revenue:

Founded in 2004

HQ: Burlington, MA

2015 Revenue: $237M (48% Y-o-Y growth including Tomax acquisition); $216M (34% Y-o-Y organic growth excluding Tomax)

2016E Revenue: $311M (31% Y-o-Y growth)

2016E Margins & Cash Flow: 6% Operating Margin ($18M); $24M OCF

Current Enterprise Value: $1,563M (5.0x CY2016E revenue)

Pricing: 1%-4% of Gross Merchandise Value (GMV)

Customers: 349 live customers and 1,590 sites as of Q1’16

Key Capabilities: eCommerce, lightweight CMS, POS, OMS,

Personalization

Q1’16 Employee Breakdown Sales 21% Other 219 FTEs (1) 37% 345 FTEs 81 R&D 34%
Q1’16 Employee Breakdown
Sales
21%
Other
219
FTEs (1)
37%
345
FTEs
81 R&D
34%
FTEs
Marketing
8%

1,024 employees as of 3/31/2016

CY15 Revenue by Geography Other 15% UK 10% Germany 11% US 64%
CY15 Revenue by Geography
Other
15%
UK
10%
Germany
11%
US
64%
CY15 Revenue by Segment Overage 19% Pro. Serv. 15% Base Sub. 66%
CY15 Revenue by Segment
Overage
19%
Pro. Serv.
15%
Base Sub.
66%
Q4’15 Earnings Report on 2/9. Shares fell 9% due to 2 deals pushing into Q1
Q4’15 Earnings Report on
2/9. Shares fell 9% due to 2
deals pushing into Q1 and
macro softness in Europe
Q2’15 Earnings Report on
8/4. Shares fell 12%
due to poor revenue
guidance and higher than
expected losses
Q3’15 Earnings Report on
11/2. Shares fell 18% due to
reduced revenue guidance
from “lower than expected
volumes among a small group
of specialty apparel customers”
Marketing
(8%)
6

(1) Includes 128 FTEs in Sales, 81 FTEs in Customer Success and 9 FTEs in Alliances.

Digital Commerce Remains a Significant Gap in the Salesforce Portfolio CRM $24.7B  $41.9B (14%)
Digital Commerce Remains a Significant Gap in the Salesforce Portfolio CRM $24.7B  $41.9B (14%)

Digital Commerce Remains a Significant Gap in the Salesforce Portfolio

CRM $24.7B  $41.9B (14%) Sales Service Marketing $6.3B  $9.6B $8.7B  $5.4B 
CRM
$24.7B  $41.9B
(14%)
Sales
Service
Marketing
$6.3B  $9.6B
$8.7B 
$5.4B 
11%
$13.5B 12%
$11.2B 20%
Digital
Commerce
$4.3  $7.6B
15%
BI $14.7B  $18.3B (6%) BI Platforms Analytics Apps $8.6B  $9.5B $2.1B  $3.3B
BI
$14.7B  $18.3B (6%)
BI Platforms
Analytics Apps
$8.6B  $9.5B
$2.1B  $3.3B
2%
11%
CPM
Advanced
Suites
Analytics
$2.6  $3.3B
$1.4  $2.2B
6%
13%
ERP $27B  $35.3B (7%) HCM FMS Components $9.3B  $10.6B  $13.7B $12.6B 8%
ERP
$27B  $35.3B (7%)
HCM
FMS Components
$9.3B 
$10.6B  $13.7B
$12.6B 8%
7%
Mfg.
Enterprise
& Operations
Asset Mgmt.
$5.6  $7.2B
$1.5  $1.9B
6%
7%

DRAFT AND CONFIDENTIAL

$XXB (FY16) $YYB (FY20) (% CAGR FY16-20)

Salesforce TAM White Space IT Ops $20.6B  $27.6B (8%) Automation Availability Tools & Performance
Salesforce TAM
White Space
IT Ops
$20.6B  $27.6B (8%)
Automation
Availability
Tools
& Performance
$6.6B  $10B
$3.7B  $4.9B
11%
8%
IT Services
Other IT
& Support
Operation**
$1.8B  $2.4B
$8.5  $10.3B
7%
5%
Communities $5.5B  $7.8B (9%) Collaboration & Social SW Portals & UI Tools Portals/Empl. Self
Communities
$5.5B  $7.8B (9%)
Collaboration
& Social SW
Portals
& UI Tools
Portals/Empl.
Self Service
$1.5B  $2.4B
$1.7B  $2.1B
$0.7B  $0.9B
13%
4%
7%
Web Content
Management
$1.5  $2.4B
12%
Note: Totals include white space categories
App Cloud $22.2B  $29.8B (8%) App App Infra. Security Development & Middleware $5.7B 
App Cloud
$22.2B  $29.8B (8%)
App
App Infra.
Security
Development
& Middleware
$5.7B  $6.6B
$9.7B  $13.7B
$2.4B  $3.2B
4%
9%
7%
Data Integ.
& Quality
$4.5B  $6.2B
9%
IT Services* $147.9B  $179B (5%) Consulting Implementation Software Support $96B  $112.1B $37.8B 
IT Services*
$147.9B  $179B (5%)
Consulting
Implementation
Software
Support
$96B  $112.1B
$37.8B  $49.4B
4%
$14.1B  $17.5B
7%
6%
*IT Services is not included in core Salesforce TAM
DRAFT AND CONFIDENTIAL Commerce Fills Key Cloud Gap, Particularly for Marketing CRM Comprehensive Marketing Cloud
DRAFT AND CONFIDENTIAL Commerce Fills Key Cloud Gap, Particularly for Marketing CRM Comprehensive Marketing Cloud

DRAFT AND CONFIDENTIAL

Commerce Fills Key Cloud Gap, Particularly for Marketing

CRM

Comprehensive Marketing Cloud Platforms

Email and Web & Mobile Social Ads CMS Commerce Sales Service Analytics Channels
Email and
Web &
Mobile
Social
Ads
CMS
Commerce
Sales
Service
Analytics
Channels
Marketing Cloud Platforms Email and Web & Mobile Social Ads CMS Commerce Sales Service Analytics Channels
Marketing Cloud Platforms Email and Web & Mobile Social Ads CMS Commerce Sales Service Analytics Channels
Marketing Cloud Platforms Email and Web & Mobile Social Ads CMS Commerce Sales Service Analytics Channels
Marketing Cloud Platforms Email and Web & Mobile Social Ads CMS Commerce Sales Service Analytics Channels

8

DRAFT AND CONFIDENTIAL Champagne is a Scarce Asset and the Only Scaled Cloud Player in
DRAFT AND CONFIDENTIAL Champagne is a Scarce Asset and the Only Scaled Cloud Player in

DRAFT AND CONFIDENTIAL

Champagne is a Scarce Asset and the Only Scaled Cloud

Player in Commerce

Forrester Wave B2C

Champagne
Champagne

9 Source: Forrester Wave B2C, Gartner Digital Commerce Magic Quadrant.

Gartner MQ for Digital eCommerce

Champagne
Champagne
Quadrant. ​ Gartner MQ for Digital eCommerce Champagne SaaS Solution Key Commentary • Champagne is the

SaaS Solution

Key Commentary

Champagne is the only

independent leader, with

significant improvement since

2014

Increasing number of recognized vendors, but few that have demonstrated enterprise track

record

Oracle and IBM investing in cloud solutions

POS will be a key differentiator over the next 3-5 years

record • Oracle and IBM investing in cloud solutions • POS will be a key differentiator
DRAFT AND CONFIDENTIAL Our Competitors Have Made Substantive Bets in the Space 10 eCommerce Market
DRAFT AND CONFIDENTIAL Our Competitors Have Made Substantive Bets in the Space 10 eCommerce Market

DRAFT AND CONFIDENTIAL

Our Competitors Have Made Substantive Bets in the Space

10

eCommerce Market Share:

IBM

Oracle 4% 5% SAP / Hybris 16% Other 66% Digital River 6% 3%
Oracle
4%
5%
SAP /
Hybris
16%
Other
66%
Digital
River
6%
3%

Key Observations:

Highly fragmented market; no participant has substantial share of the eCommerce segment

High barriers to market entry

Our competitors continue to invest in eCommerce

Leading technology vendors include Champagne and Hybris

IBM / Oracle: marked by legacy technologies

Small vendors lack growth and enterprise capabilities

No independent vendor (outside of Champagne) has demonstrated an ability to drive substantial scale

Key Acquisitions:

has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share

Source: Gartner Enterprise Software Market Share

has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
has demonstrated an ability to drive substantial scale Key Acquisitions: Source: Gartner Enterprise Software Market Share
DRAFT AND CONFIDENTIAL Strategic Rationale and Key Considerations Strategic Rationale • Gap in Core CRM
DRAFT AND CONFIDENTIAL Strategic Rationale and Key Considerations Strategic Rationale • Gap in Core CRM

DRAFT AND CONFIDENTIAL

Strategic Rationale and Key Considerations

Strategic Rationale

Gap in Core CRM Offering

Relevant to Sales, Communities, Marketing, and Service

Increases up-sell potential among installed base

Provides lightweight CMS capabilities

Customer Focus

Strong interest from Salesforce customers to have a tight

integration between eCommerce and CRM

Enable a “Complete CRM” experience; enhance B2C capabilities

Outstanding B2C retail customer list

TAM Expansion

Substantial TAM opportunity of $4.3B growing to $7.6B by 2020, with SaaS solutions growing 22% through 2018

POS has potential to increase TAM by $5B

Competitive Differentiation

Champagne is the only independent Enterprise SaaS vendor that has demonstrated the ability to scale

Target already in play likely with an offer from a competitor

11

Synergies

Opportunity to leverage cross cloud integrations, particularly with Service Cloud, Marketing Cloud, and Communities

Ability to streamline opex and invest in GTM

Key Considerations

Synergy Challenges

Limited ability to leverage our core AEs to sell this;

requires a specialist sale

Long sales and implementation cycle

Ongoing Market Competition

Highly fragmented market

Homebuilt solutions are difficult to penetrate

Large incumbents now offering cloud solution (IBM,

Oracle)

Market Focus

Only focused on retail

Continued share gains by Amazon; does Amazon limit opportunity to specialty retail?

Pricing Model

Focus on GMV based business (they charge a % of online business through their platform) is likely to be pressured over time

100 person retail services team help customer GMV

through their platform) is likely to be pressured over time ─ 100 person retail services team
DRAFT AND CONFIDENTIAL Champagne Focused on Unifying Customer Experience Key Benefits of Unified Experience •
DRAFT AND CONFIDENTIAL Champagne Focused on Unifying Customer Experience Key Benefits of Unified Experience •

DRAFT AND CONFIDENTIAL

Champagne Focused on Unifying Customer Experience

Key Benefits of Unified Experience

Single view of the customer

Enables consistent experiences across all touch-points

Integrations with fulfillment vendors

Personalized across the customer journey

Leverages architecture to enable

seamless integrations through

APIs

Simple customization allowing for a branded experience

Ecosystem focused on both SI partners and ISVs

Consistent scalability, reliability

and security

• Ecosystem focused on both SI partners and ISVs • Consistent scalability, reliability and security 12

12

• Ecosystem focused on both SI partners and ISVs • Consistent scalability, reliability and security 12
DRAFT AND CONFIDENTIAL Prior Acquisitions Play a Key Role in Future Growth Store / POS
DRAFT AND CONFIDENTIAL Prior Acquisitions Play a Key Role in Future Growth Store / POS

DRAFT AND CONFIDENTIAL

Prior Acquisitions Play a Key Role in Future Growth

Store / POS

Acquisitions Play a Key Role in Future Growth Store / POS 13 Predictive Intelligence Order Management
Acquisitions Play a Key Role in Future Growth Store / POS 13 Predictive Intelligence Order Management
Acquisitions Play a Key Role in Future Growth Store / POS 13 Predictive Intelligence Order Management

13

Predictive Intelligence

Role in Future Growth Store / POS 13 Predictive Intelligence Order Management • Acquired Mainstreet Commerce
Role in Future Growth Store / POS 13 Predictive Intelligence Order Management • Acquired Mainstreet Commerce
Role in Future Growth Store / POS 13 Predictive Intelligence Order Management • Acquired Mainstreet Commerce

Order Management

Store / POS 13 Predictive Intelligence Order Management • Acquired Mainstreet Commerce in January 2014 for
Store / POS 13 Predictive Intelligence Order Management • Acquired Mainstreet Commerce in January 2014 for
• Acquired Mainstreet Commerce in January 2014 for $19M in cash • Office in Deerfield
• Acquired Mainstreet Commerce in
January 2014 for $19M in cash
• Office in Deerfield Beach, FL
• Provides mission-critical order
management functionality that
supports all stages of an order
• Enable retailers to deliver a “buy
anywhere, fulfill anywhere”
consumer experience
• Primary driver of acquisition is to
accelerate omni-channel consumer
experience
DRAFT AND CONFIDENTIAL Champagne Revenue Growth Driven By New Customers and Comparable Customer GMV Growth
DRAFT AND CONFIDENTIAL Champagne Revenue Growth Driven By New Customers and Comparable Customer GMV Growth

DRAFT AND CONFIDENTIAL

Champagne Revenue Growth Driven By New Customers and Comparable Customer GMV Growth

Targeting 30%+ Subscription Revenue Growth Over Next 3 years

Targeting 30%+ Subscription Revenue Growth Over Next 3 years 14 Note: Company no longer reports overages
Targeting 30%+ Subscription Revenue Growth Over Next 3 years 14 Note: Company no longer reports overages
Targeting 30%+ Subscription Revenue Growth Over Next 3 years 14 Note: Company no longer reports overages
Targeting 30%+ Subscription Revenue Growth Over Next 3 years 14 Note: Company no longer reports overages

14 Note: Company no longer reports overages as of Q1’16; organic growth estimates from Oppenheimer

Acquired Tomax (~$21M in CY15 revenue)
Acquired Tomax (~$21M in CY15 revenue)
DRAFT AND CONFIDENTIAL Champagne Focused on Land and Expand Average Value of a Customer Over
DRAFT AND CONFIDENTIAL Champagne Focused on Land and Expand Average Value of a Customer Over

DRAFT AND CONFIDENTIAL

Champagne Focused on Land and Expand

Average Value of a Customer Over Time
Average Value of a Customer Over Time

15 Note: Cohort analysis includes 75 customers, all of which have been operating on Champagne’s digital platform for minimum of 4 years

analysis includes 75 customers, all of which have been operating on Champagne’s digital platform for minimum
Total Customers Increasing Along with Average Revenue DRAFT AND CONFIDENTIAL Per Customer (ARPC) ​ Strong
Total Customers Increasing Along with Average Revenue DRAFT AND CONFIDENTIAL Per Customer (ARPC) ​ Strong

Total Customers Increasing Along with Average Revenue

DRAFT AND CONFIDENTIAL

Per Customer (ARPC)

Strong Enterprise Customer Growth Coupled With Substantial Increase in ARPC Due to “Land and Expand” Strategy

2014 2015 Customers with >$100M GMV: 22 30 Customers with >$200M GMV: 10 15 Customers
2014
2015
Customers with >$100M GMV:
22
30
Customers with >$200M GMV:
10
15
Customers with >$300M GMV:
4
8
GMV: 10 15 Customers with >$300M GMV: 4 8 3- year customer CAGR (’12 - ’15)

3-year customer CAGR (’12-’15) of 30%

GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
GMV: 4 8 3- year customer CAGR (’12 - ’15) of 30% 16 Note: ARPC reported
16 Note: ARPC reported by company and includes professional services revenue
16 Note: ARPC reported by company and includes professional services revenue
DRAFT AND CONFIDENTIAL Champagne Monthly Billing Reduces OCF vs. Salesforce ​ Synergy Opportunity to Cash
DRAFT AND CONFIDENTIAL Champagne Monthly Billing Reduces OCF vs. Salesforce ​ Synergy Opportunity to Cash

DRAFT AND CONFIDENTIAL

Champagne Monthly Billing Reduces OCF vs. Salesforce

Synergy Opportunity to Cash Flow via Billings Structure (Annual vs. Monthly)

3% of CY15 Revenue Billing annually will drive incremental cash flow through upfront collections 15%
3% of CY15 Revenue
Billing annually will drive incremental cash flow through upfront collections
15% of FY16 Revenue

17 Note: Change in DR not included in Change in NWC

cash flow through upfront collections 15% of FY16 Revenue 17 Note: Change in DR not included
DRAFT AND CONFIDENTIAL Champagne Employee Detail Champagne Remains Focused on Expanding Reach in EMEA March
DRAFT AND CONFIDENTIAL Champagne Employee Detail Champagne Remains Focused on Expanding Reach in EMEA March

DRAFT AND CONFIDENTIAL

Champagne Employee Detail

Champagne Remains Focused on Expanding Reach in EMEA

March 2016 December 2016 (1) Subscription – Support 53 76 Subscription – Platform Ops 47
March 2016
December 2016 (1)
Subscription – Support
53
76
Subscription – Platform Ops
47
63
Services
141
155
R&D
345
421
Sales
147
Marketing
81
95
Link (Alliances)
9
14
Customer Success
82
98
G&A
138
151
TOTAL
1,024
1,220

18 Source: Champagne Management presentation (May 2016) (1) Management estimate.

Regional Director: 11

(May 2016) (1) Management estimate. Regional Director: 11 QBR: 55 SE: 30 BDR: 15 Ops and

QBR: 55 SE: 30 BDR: 15 Ops and Enable: 17

Key Observations

Customer Success team consists of

retail experts that help to drive upsell potential to make these employees billable in the future

Fully ramped QBRs have a $2M quota

Sales Org maintains ratio of ~2:1 for

SEs and 3:1 for BDRs

Nearly half of QBRs are based in EMEA

5 locations for R&D: Burlington (MA), Salt Lake City (UT), Jena (Germany), Deerfield Beach (FL), Cambridge (MA)

R&D investment is high relative to

public comparable SaaS vendors

Under investment in Sales and Enablement represents a potential opportunity

to public comparable SaaS vendors • Under investment in Sales and Enablement represents a potential opportunity
DRAFT AND CONFIDENTIAL Positive Glassdoor Ratings Show Strong CEO Approval Key Concerns • Difficult and
DRAFT AND CONFIDENTIAL Positive Glassdoor Ratings Show Strong CEO Approval Key Concerns • Difficult and

DRAFT AND CONFIDENTIAL

Positive Glassdoor Ratings Show Strong CEO Approval

Positive Glassdoor Ratings Show Strong CEO Approval Key Concerns • Difficult and sometimes bureaucratic

Key Concerns

Difficult and sometimes bureaucratic decision-making processes

Internal communication / cross-

functional collaboration is difficult

Engineering spread across different locations and time zones

Growth pains

19

collaboration is difficult • Engineering spread across different locations and time zones • Growth pains 19
collaboration is difficult • Engineering spread across different locations and time zones • Growth pains 19
collaboration is difficult • Engineering spread across different locations and time zones • Growth pains 19
DRAFT AND CONFIDENTIAL Champagne Management Thomas Ebling, President, CEO & Chairman • CEO and board
DRAFT AND CONFIDENTIAL Champagne Management Thomas Ebling, President, CEO & Chairman • CEO and board

DRAFT AND CONFIDENTIAL

Champagne Management

DRAFT AND CONFIDENTIAL Champagne Management Thomas Ebling, President, CEO & Chairman • CEO and board member

Thomas Ebling, President, CEO & Chairman

CEO and board member since 2009

Chairman of the Board since July 2014

Previously served as CEO of Lattice Engines, ProfitLogic and Torrent Systems

as CEO of Lattice Engines, ProfitLogic and Torrent Systems Wayne Whitcomb, CTO • Chief Technology Officer

Wayne Whitcomb, CTO

Chief Technology Officer since 2004 and co-founder of Daylight

Previously served as VP, Engineering at NaviSite and CMGI-MyWay

served as VP, Engineering at NaviSite and CMGI-MyWay Tim Adams, CFO • CFO since June 2014

Tim Adams, CFO

CFO since June 2014

Previously served as CFO of athenahealth

Held various financial leadership positions at Constitution Medical and Keystone Dental

positions at Constitution Medical and Keystone Dental Rama Ramakrishnan, Chief Data Scientist • Chief Data

Rama Ramakrishnan, Chief Data Scientist

Chief Data Scientist since October 2014

Founder of CQuotient (acquired by Daylight)

Former VP of Product Development at Oracle

Former Professor of Analytics at MIT Sloan

at Oracle • Former Professor of Analytics at MIT Sloan 20 Jeff Barnett, COO • COO
at Oracle • Former Professor of Analytics at MIT Sloan 20 Jeff Barnett, COO • COO

20

Jeff Barnett, COO

COO since January 2013

Joined Daylight in 2005 as EVP of Field Ops

Held sales and sales management positions at Siebel

Rohit Goyal, SVP of Engineering

Former Co-founder and VP Engineering of neoSaej

Former Director of Software at Enterasys

Co-inventor on six patents

of Software at Enterasys • Co -inventor on six patents Elana Anderson, SVP of Marketing •
of Software at Enterasys • Co -inventor on six patents Elana Anderson, SVP of Marketing •

Elana Anderson, SVP of Marketing

Former VP of Strategy and Product Management at IBM

Joined IBM in 2010 via the acquisition of Unica

Served as VP and Research Director at Forrester

Kathleen Patton, General Counsel

Elected as General Counsel in June 2015

Associate General Counsel at Stream Global Services from 2010 to 2012

• Elected as General Counsel in June 2015 • Associate General Counsel at Stream Global Services
Standalone P&L 21 Calendar Year Ending December, 31   Actual (US $ in millions) 2013A
Standalone P&L 21 Calendar Year Ending December, 31   Actual (US $ in millions) 2013A

Standalone P&L

21

Calendar Year Ending December, 31

 

Actual

(US $ in millions)

2013A

2014A

2015A

Subscription

95.7

145.9

201.0

Professional Services

10.9

14.7

36.3

Total Revenue

$106.6

$160.6

$237.3

Consensus Estimates

Management Plan

Cost of Sales

Subscription

16.8

25.2

34.8

Professional Services

9.7

13.1

24.1

Total COS

26.4

38.4

58.9

Subscription

79.0

120.7

166.1

Professional Services

1.2

1.5

12.2

Overall Gross Profit

80.2

122.2

178.3

Operating Expenses:

Research & Development

17.2

25.8

46.0

Sales & Marketing

48.1

65.2

84.7

General & Administrative

18.1

27.9

36.8

Total Operating Expenses

83.4

118.9

167.5

Non-GAAP Operating Profit

($3.2)

$3.2

$10.9

Consensus Estimates

Management Plan

SBC

14.7

26.6

36.7

Amort of Intangibles

0.0

1.1

4.8

CorpDev Estimates

2016E

2017E

2018E

2019E

270.3

354.2

456.5

580.3

41.0

42.2

43.3

44.5

$311.3

$396.4

$499.8

$624.8

$303.0

$383.0

$313.0

$399.0

50.7

66.6

85.8

109.1

30.6

31.7

32.5

33.4

81.3

98.3

118.3

142.5

219.6

287.6

370.7

471.2

10.4

10.4

10.8

11.1

230.0

298.1

381.5

482.3

64.0

81.6

95.6

112.9

105.0

135.8

165.4

200.4

42.6

50.6

55.6

62.9

211.6

268.0

316.6

376.3

$18.4

$30.1

$64.9

$106.0

$11.0

$19.0

$19.3

$30.6

46.1

53.3

60.8

68.1

2.9

1.9

1.9

1.9

$64.9 $106.0 $11.0 $19.0 $19.3 $30.6 46.1 53.3 60.8 68.1 2.9 1.9 1.9 1.9

GAAP Operating Profit

($17.9)

($24.5)

($30.7)

OCF

$9.0

$3.6

$14.9

OCF Yield

8.5%

2.3%

6.3%

Growth & Margin Analysis

Revenue Mix

Subscription

90%

91%

85%

Professional Services

10%

9%

15%

Revenue Growth (Y-o-Y)

Subscription

41%

52%

38%

Professional Services

(6%)

35%

148%

Overall

34%

51%

48%

Gross Margin

Subscription

82%

83%

83%

Professional Services

11%

10%

34%

Overall

75%

76%

75%

Operating Expenses

R&D as % of revenue

16%

16%

19%

S&M as % of revenue

45%

41%

36%

G&A as % of revenue

17%

17%

16%

SBC as % of revenue

14%

17%

15%

Non-GAAP Operating Margin

(3%)

2%

5%

GAAP Operating Margin

(17%)

(15%)

(13%)

($30.5)

($25.1)

$2.2

$36.0

$24.4

$46.4

7.8%

11.7%

87%

89%

91%

93%

13%

11%

9%

7%

34%

31%

29%

27%

13%

3%

3%

3%

31%

27%

26%

25%

81%

81%

81%

81%

25%

25%

25%

25%

74%

75%

76%

77%

21%

21%

19%

18%

34%

34%

33%

32%

14%

13%

11%

10%

15%

13%

12%

11%

6%

8%

13%

17%

(10%)

(6%)

0%

6%

32% 14% 13% 11% 10% 15% 13% 12% 11% 6% 8% 13% 17% (10%) (6%) 0%
32% 14% 13% 11% 10% 15% 13% 12% 11% 6% 8% 13% 17% (10%) (6%) 0%

Note: Uses analyst estimates for Amort of Intangibles forecast; assumes no M&A in CY2016 and CY2017

DRAFT AND CONFIDENTIAL

Key Commentary

Revenue numbers informed by Management Plan

Customers sign a minimum commitment to pay 1% - 4% of Gross Merchandise Value (GMV); average of

1.5%

Processed throughout the life of a non-cancellable

contract (average contract is 3.0 - 3.5 years)

Subscription contracts are billed on a monthly basis

Focus on larger enterprise accounts has resulted in longer sales cycles

Significant increase in PS revenue in CY15 resulting

from Tomax acquisition (January 2015)

Organic revenue growth rate of 34% Y/Y in CY15

PS as % of revenue is trending downward due to focus on building out partner ecosystem (SI Partners up ~50% Y/Y)

SBC currently ~15% of revenue, although expected to trend downwards

out partner ecosystem (SI Partners up ~50% Y/Y) • SBC currently ~15% of revenue, although expected
DRAFT AND CONFIDENTIAL Synergy Overview (SUBJECT TO FURTHER REVIEW) Reduce Rate of Headcount Growth •
DRAFT AND CONFIDENTIAL Synergy Overview (SUBJECT TO FURTHER REVIEW) Reduce Rate of Headcount Growth •

DRAFT AND CONFIDENTIAL

Synergy Overview (SUBJECT TO FURTHER REVIEW)

Reduce Rate of Headcount Growth

Post-close, Salesforce will slow the rate of hiring in R&D and G&A relative to Champagne standalone; there will be no direct headcount reductions

Reduce G&A by 10% to ~135 employees and slowing growth of R&D headcount down to 14% of standalone revenue

Bill Retail Services Resources

Champagne has a team of ~100 specialty retail experts working closely with customers that they

currently do not bill

Salesforce would likely bill for this work, and we assume we recoup 50% of their costs in FY18 / FY19 / FY20

Sales Expansion

Champagne only has 55 quota-bearing sales reps, which reflects an underinvestment in sales

Salesforce will grow QBR ranks to 130 in FY20

Cross-Sell ET

Based on a subset of Champagne customers, estimated that ET currently has 27% penetration of the Champagne customer base (average AOV of ~$300K)

Assumes ET penetration ramps to 55% in FY20

Cross-Sell Service Cloud

Based on a subset of Champagne customers, estimated that Service Cloud has 22% penetration of the Champagne customer base (average AOV of ~$700K)

Assumes that Service Cloud penetration ramps to 35% in FY20

Cross-Sell Champagne into Salesforce Retail Customers

Salesforce will be able to sell Champagne into its existing retail base

Assumes sales into 20/50/100/175 new customers in FY17/FY18/FY19/FY20

22

Impact

$33M of cost savings in FY20

$18M of revenue in FY20

$43M of revenue in FY20

$46M of revenue in FY20

$54M of revenue in FY20

$187M of revenue in FY20

FY20 • $43M of revenue in FY20 • $46M of revenue in FY20 • $54M of
Pro Forma P&L DRAFT AND CONFIDENTIAL 23 Salesforce Fiscal Year Ending January 31, (US$ in
Pro Forma P&L DRAFT AND CONFIDENTIAL 23 Salesforce Fiscal Year Ending January 31, (US$ in

Pro Forma P&L

DRAFT AND CONFIDENTIAL

23

Salesforce Fiscal Year Ending January 31,

(US$ in millions)

Q3E

Q4E

FY17E STUB

FY18E

FY19E

FY20E

Champagne Standalone Revenue

   

Subscription

71.1

79.5

150.6

362.8

465.3

591.5

Professional Services

9.9

10.5

20.5

42.4

43.2

44.5

Total Standalone Revenue

$81.1

$90.0

$171.1

$405.1

$508.5

$636.0

YoY Growth 1

 

30%

26%

25%

Plus: Increased Services Revenue

0.0

0.0

0.0

12.2

16.2

21.2

Plus: Increased Subscription Revenue

0.8

2.6

3.3

40.1

134.6

327.4

Total Pro Forma Adjusted Revenue

$81.8

$92.6

$174.4

$457.8

$659.6

$984.9

YoY Growth 1

   

47%

44%

49%

Standalone Gross Profit

 

Subscription Gross Profit

57.8

64.6

122.3

294.6

377.8

480.3

Pro Serv Gross Profit

2.2

2.3

4.5

10.6

10.8

11.1

Total Standalone Gross Profit

59.9

66.9

126.8

305.2

388.6

491.4

Synergy Gross Profit

   

Subscription Gross Profit

0.6

2.2

2.8

34.1

114.0

276.8

Pro Serv Gross Profit

0.0

0.0

0.0

0.0

0.3

0.8

Total

Synergy Gross Profit

0.6

2.2

2.8

34.1

114.3

277.5

Total Adjusted Gross Profit

60.6

69.1

129.7

339.2

502.9

769.0

Research & Development

16.6

18.5

35.1

83.5

96.6

114.5

Sales & Marketing

27.2

30.3

57.5

139.0

167.8

203.5

General & Administrative

10.9

12.2

23.1

51.5

55.9

63.6

Champagne Standalone Operating Expenses

54.8

60.9

115.7

273.9

320.4

381.6

Adjusted OpEx

   

Plus: Incremental Synergy R&D

0.0

0.1

0.1

1.6

5.4

13.2

Plus: Incremental Synergy S&M

4.8

6.6

11.5

54.7

126.1

239.7

Plus: Incremental Synergy G&A

0.0

0.1

0.1

0.8

2.7

6.6

Less: Headcount Cost Synergies

(0.2)

(0.9)

(1.1)

(10.7)

(21.4)

(32.9)

Adjusted Operating Expenses

59.5

66.8

126.2

320.2

433.2

608.2

Adjusted Operating Profit

1.1

2.3

3.4

19.0

69.7

160.8

Less: Integration Costs

(5.0)

(5.0)

(10.0)

(55.0)

Less: Transaction Fees

(25.0)

0.0

(25.0)

Plus: Public Company Cost Savings

1.3

1.3

2.5

5.0

5.0

5.0

Less: Headcount Harmonization

0.0

0.0

0.0

(19.2)

(22.4)

(26.7)

PF Non-GAAP Operating Profit (excl. Write-downs)

($27.6)

($1.4)

($29.1)

($50.1)

$52.3

$139.0

Less: Deferred Revenue Writedown

(3.0)

(4.4)

(7.4)

(7.4)

0.0

Less: Unbilled Backlog Writedown

(35.7)

(35.7)

(71.4)

(98.1)

(26.8)

PF Non-GAAP Operating Profit (incl. Write-downs)

($66.3)

($41.6)

($107.8)

($155.6)

$25.5

$139.0

PF Non-GAAP Operating Profit (excl. Write-downs / M&A Costs)

$2.4

$3.6

$5.9

$4.9

$52.3

$139.0

(1) FY18 Revenue growth calculated off of CY16 standalone revenue

Key Commentary

Assumes transaction close of August 1

Pro-Forma Non-GAAP losses driven by one-time M&A and integration related costs

~Breakeven excluding one-time expenses

Synergies require upfront investment to drive longer

term growth

Synergy revenue subject to internal review; current synergies lead to nearly $1B in FY20 revenue

Assumes headcount expenses equal 70% of operating expenses; preliminary harmonization of

10% starting in FY18

Unbilled backlog writedown assumes 27 month period

Integration and transaction expenses comparable to Exact Target

Unbilled backlog writedown assumes 27 month period • Integration and transaction expenses comparable to Exact Target
DRAFT AND CONFIDENTIAL AVP Current Potential Indicative Offer Range Offer Price (per share $) $43.00
DRAFT AND CONFIDENTIAL AVP Current Potential Indicative Offer Range Offer Price (per share $) $43.00

DRAFT AND CONFIDENTIAL

AVP

Current

Potential Indicative Offer Range

Offer Price (per share $) $43.00 $ 58.05 $ 60.20 $ 62.35 $ 64.50 $
Offer Price (per share $)
$43.00
$
58.05
$
60.20
$
62.35
$
64.50
$
66.65
$
68.80
Implied Premium to Current Price
5/18/2016
35%
40%
45%
50%
55%
60%
Implied Premium to:
30-day average trading price
$
43.24
(1%)
34%
39%
44%
49%
54%
59%
60-day average trading price
39.99
8%
45%
51%
56%
61%
67%
72%
90-day average trading price
39.77
8%
46%
51%
57%
62%
68%
73%
180-day average trading price
46.22
(7%)
26%
30%
35%
40%
44%
49%
52
week high
75.56
(43%)
(23%)
(20%)
(17%)
(15%)
(12%)
(9%)
52
week low
28.04
53%
107%
115%
122%
130%
138%
145%
Implied equity value ($M)
$1,759
$2,385
$
2,475
$
2,565
$
2,655
$
2,745
$
2,835
Net debt ($M)
(196)
(196)
(196)
(196)
(196)
(196)
(196)
Implied enterprise value
$
1,563
$
2,189
$
2,279
$
2,369
$
2,459
$
2,549
$
2,639
Implied Multiples:
EV / Revenue
Rev. ($M)
CY16E
$311
5.0x
7.0x
7.3x
7.6x
7.9x
8.2x
8.5x
CY17E
$396
3.9x
5.5x
5.8x
6.0x
6.2x
6.4x
6.7x
PF BS Cash Used in Deal
$1,759
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
Debt Issued
$0
$385
$475
$565
$655
$745
$835
Total Sources
$1,759
$2,385
$2,475
$2,565
$2,655
$2,745
$2,835
Champagne Equity Value
$1,759
$2,385
$2,475
$2,565
$2,655
$2,745
$2,835
Total Uses
$1,759
$2,385
$2,475
$2,565
$2,655
$2,745
$2,835
24
CONFIDENTIAL CONFIDENTIAL Project Champagne Preliminary Reference Range Summary May 18, 2016
CONFIDENTIAL CONFIDENTIAL Project Champagne Preliminary Reference Range Summary May 18, 2016

CONFIDENTIAL CONFIDENTIAL

Project Champagne

Preliminary Reference Range Summary

May 18, 2016

CONFIDENTIAL CONFIDENTIAL Project Champagne Preliminary Reference Range Summary May 18, 2016
CONFIDENTIAL CONFIDENTIAL Project Champagne Preliminary Reference Range Summary May 18, 2016
CONFIDENTIAL CONFIDENTIAL Project Champagne Preliminary Reference Range Summary May 18, 2016
CONFIDENTIAL Preliminary Reference Range Summary $90.00 $85.20 For Reference Only $81.35 $75.90 $73.05 $75.00
CONFIDENTIAL Preliminary Reference Range Summary $90.00 $85.20 For Reference Only $81.35 $75.90 $73.05 $75.00

CONFIDENTIAL

Preliminary Reference Range Summary $90.00 $85.20 For Reference Only $81.35 $75.90 $73.05 $75.00 Value of
Preliminary Reference Range Summary
$90.00
$85.20
For Reference Only
$81.35
$75.90
$73.05
$75.00
Value of Synergies Per
CRM Management
$69.75
$67.60
$67.60
$66.05
$57.30
$60.00
$53.10
$57.55
$57.55
$50.15
$48.65
$48.35
$45.00
$47.35
Current (1) :
$42.51
$38.05
$30.00
$31.50
$26.47
$15.00
$0.00

26

Precedent Selected Public Companies Transactions 12-Month Trading PV of Analyst Price Tech Premiums (3) Range
Precedent
Selected Public Companies
Transactions
12-Month Trading
PV of Analyst Price
Tech Premiums (3)
Range
Targets (2)
Street CY'16
Street CY'17
Management CY'16
Management CY'17
NTM Revenue (4)
Revenue (4)
Revenue (4)
Revenue (4)
Revenue (4)
Range:
Range:
Range:
Multiple Range:
Multiple Range:
Multiple Range:
Multiple Range:
Range:
$26.47 - $75.90
$43.00 - $60.00
30% - 65%
5.5x - 8.0x
4.5x - 6.5x
5.5x - 8.0x
4.5x - 6.5x
6.5x - 9.5x
Equity Discount Rate:
Statistic:
Statistic:
Statistic:
Statistic:
Statistic:
Statistic:
13.0%
$44.27
$303.8
$383.0
$311.3
$396.4
$320.6
Note: Dollars in millions, except
per share data. Per share prices rounded to nearest $0.05. Diluted shares outstanding calculated based on treasury stock method.

DCF

Perpetuity Growth

Growth Rate Range:

3.0% - 5.0%

WACC Range:

11.5% - 14.5%

Source: Wall Street research, First Call estimates and CRM management projections.

(1)

As of May 18, 2016.

(2)

Discounted by one year at indicative Champagne equity discount rate of 13.0%.

(3)

Based on trailing 30-day average share price.

(4)

Excludes the impact of amortization of intangibles, one-time charges and the impact of SFAS 123(R) stock-based compensation expense. NTM statistic based on four quarters ending March 2017.

Preliminary - Subject to Change

stock-based compensation expense. NTM statistic based on four quarters ending March 2017. Preliminary - Subject to
CONFIDENTIAL Notice to Recipient Confidential ​ “Bank of America Merrill Lynch” is the marketing name
CONFIDENTIAL Notice to Recipient Confidential ​ “Bank of America Merrill Lynch” is the marketing name

CONFIDENTIAL

Notice to Recipient

Confidential

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Tuscany Overview DRAFT AND CONFIDENTIAL

Tuscany Overview

DRAFT AND CONFIDENTIAL

Tuscany Overview DRAFT AND CONFIDENTIAL

Tuscany Overview

DRAFT AND CONFIDENTIAL

Tuscany Overview DRAFT AND CONFIDENTIAL • Founded in 2003 • HQ: Seattle, WA • Employees: 3,168
Tuscany Overview DRAFT AND CONFIDENTIAL • Founded in 2003 • HQ: Seattle, WA • Employees: 3,168

Founded in 2003

HQ: Seattle, WA

Employees: 3,168 FTEs (AEs: 309 AMER, 106 EMEA, 26 LatAm, 77 APAC)

2015 Revenue: $654M (58% Y-o-Y growth)

2016E Revenue: $850M (30% Y-o-Y growth)

2016E Margins: 7% Operating Margin

Current Enterprise Value: $3,250M (3.8x CY2016E revenue)

Customers: 42,600 customers

Top Customers: Deloitte, J&J, Wal-Mart, GE, Verizon,

CapitalOne, Cisco, Wells Fargo, PWC, ExxonMobil

1Q16 Employee Breakdown G&A 16% 219 FTEs Sales 39% 345 FTEs R&D 27% 81 Marketing
1Q16 Employee Breakdown
G&A
16%
219
FTEs
Sales
39%
345
FTEs
R&D
27%
81
Marketing
FTEs
COGS
5%
13%

3,168 employees as of 3/31/2016

CY15 Revenue by Geography

CY15 Revenue by Segment

International 25% North America 75%
International
25%
North America
75%
Subscription Professional 1% Services 7% Maintenance 29% License 63%
Subscription
Professional
1%
Services
7%
Maintenance
29%
License
63%

Tuscany Share Price

Trading Volume (MMs)

29

$130

25.0 20.0 15.0 10.0 5.0 0.0 4/02/15 7/02/15 10/02/15 1/02/16 4/02/16
25.0
20.0
15.0
10.0
5.0
0.0
4/02/15
7/02/15
10/02/15
1/02/16
4/02/16

$100

$70

$40

$10

1/02/15

DRAFT AND CONFIDENTIAL Strategic Rationale & Key Considerations Strategic Rationale • Bolster Analytics Cloud ─
DRAFT AND CONFIDENTIAL Strategic Rationale & Key Considerations Strategic Rationale • Bolster Analytics Cloud ─

DRAFT AND CONFIDENTIAL

Strategic Rationale & Key Considerations

Strategic Rationale

Bolster Analytics Cloud

Represents a beach head analytics asset

Paves way for $1B Analytics Cloud business

Provides missing data prep and semantic layer for

Analytics Cloud

Industry Leader

Tuscany has best in class visualization capabilities and self service BI

Would help enhance presence with developer /

business analyst communities

TAM Expansion

Analytics market moving toward self-service oriented analytics offerings like Tuscany’s

BI Platform TAM opportunity of $8.6B growing to $9.5B by FY2020

Synergies

Opportunity to leverage cross selling Tuscany’s

analytics product into Salesforce’s install base

Lack of sales orientation provides upside opportunity

30

Key Considerations

Transition to Subscription Model

Company has perpetual license model with annual maintenance revenue

Disruption likely to cause significant churn

Challenges in pricing new subscriptions

Significant on-going losses associated with transition to subscription and SaaS

Cloud Offering

IT departments with on-prem systems makes it challenging to move BI completely to cloud; most

vendors believe hybrid model is focus for near-term

Headcount Reduction

Too many R&D projects and personnel

Minimizing losses would require significant headcount reduction (~700 employees out of ~3,200 to breakeven); requires further study

Distribution

Lack Head of Sales; rep productivity declining

Pace of international is hurting sales productivity

Technology

Technology stack is built on OEM relationships (e.g. Redshift) without substantial owned IP / technology

Technology ─ Technology stack is built on OEM relationships (e.g. Redshift) without substantial owned IP /
DRAFT AND CONFIDENTIAL Tuscany a Leader in BI and Analytics Platforms Tuscany 31 (1) BMO
DRAFT AND CONFIDENTIAL Tuscany a Leader in BI and Analytics Platforms Tuscany 31 (1) BMO

DRAFT AND CONFIDENTIAL

Tuscany a Leader in BI and Analytics Platforms

Tuscany
Tuscany

31 (1) BMO Capital Markets based on Gartner Survey Data (December 2015)

BI Customer Survey Rankings 1

(5 = Highest, 1 = Lowest)

Tuscany Qlik TIBCO Micro- Microsoft Strategy Ease of Use 5.0 4.0 3.0 2.0 1.0 Analysis
Tuscany
Qlik
TIBCO
Micro-
Microsoft
Strategy
Ease of Use
5.0
4.0
3.0
2.0
1.0
Analysis Complexity
5.0
4.0
3.0
1.0
2.0
Customer Experience
5.0
2.0
1.0
3.0
4.0
Business Benefits
5.0
4.0
4.0
2.0
1.0
Product Quality
5.0
2.0
3.0
1.0
4.0
User Enablement
5.0
4.0
1.0
3.0
2.0
Enterprise Standardization
1.0
3.0
2.0
5.0
4.0
Sales Experience
5.0
2.0
3.0
4.0
1.0
Support
5.0
1.0
3.0
4.0
3.0
Average
4.6
2.9
2.6
2.7
2.4
5.0 4.0 Sales Experience 5.0 2.0 3.0 4.0 1.0 Support 5.0 1.0 3.0 4.0 3.0 Average
DRAFT AND CONFIDENTIAL The BI Market is Expected to Grow; Tuscany is Well- Positioned in
DRAFT AND CONFIDENTIAL The BI Market is Expected to Grow; Tuscany is Well- Positioned in

DRAFT AND CONFIDENTIAL

The BI Market is Expected to Grow; Tuscany is Well- Positioned in Data Discovery in Competitive BI Industry

$25,000

$20,000

$15,000

$10,000

$5,000

$0

BI & Analytics Addressable Market Revenue YoY % Change 2013 2014 2015 2016 2017 2018
BI & Analytics Addressable Market
Revenue
YoY % Change
2013
2014
2015
2016
2017
2018
2019

12%

10%

8%

6%

4%

2%

0%

The BI & Analytics market is expected to grow in a tough competitive environment

32 Source: Gartner and Nomura Research (Aug 24, 2015)

Other Vendors

53%

Data Discovery Market Share Qlik 22% Tuscany 18% Spotfire
Data Discovery Market Share
Qlik
22%
Tuscany
18%
Spotfire

7%

Tuscany commands a key player in the data discovery market, but the space is fragmented and there is room to gain share

BI Market Share

SAP Other 20% 25% Tuscany 3% Qlik 3% MicroStrategy 3% Microsoft SAS 10% 12%
SAP
Other
20%
25%
Tuscany
3%
Qlik
3%
MicroStrategy
3%
Microsoft
SAS
10%
12%

IBM

11%

Oracle

13%

Tuscany has substantial runway to gain share against larger competitors by offering better user experience and richer feature functionality

runway to gain share against larger competitors by offering better user experience and richer feature functionality
DRAFT AND CONFIDENTIAL License Revenue Growth Has Decelerated Recently; Cloud Nascent $250 License Revenue Maintenance
DRAFT AND CONFIDENTIAL License Revenue Growth Has Decelerated Recently; Cloud Nascent $250 License Revenue Maintenance

DRAFT AND CONFIDENTIAL

License Revenue Growth Has Decelerated Recently; Cloud Nascent

$250

License Revenue Maintenance & Services Revenue Online $203 $3 $200 $171 $172 $2 $4 $70
License Revenue
Maintenance & Services Revenue
Online
$203
$3
$200
$171
$172
$2
$4
$70
$150
$143
$150
$2
$130
$61
$2
$73
$42
$53
$105
$46
$100
$91
$81
$35
$75
$30
$61
$23
$130
$50
$26
$107
$50
$40
$19
$101
$95
$96
$16
$83
$14
$70
$58
$60
$48
$42
$34
$26
$0
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
Revenue Mix
License
66%
67%
69%
71%
65%
67%
67%
71%
64%
64%
63%
65%
55%
Maint. & Svcs
34%
33%
31%
29%
35%
33%
33%
29%
35%
35%
36%
34%
44%
Online (SaaS)
1%
1%
1%
1%
2%

YoY Growth

License Maint. & Svcs 83% 80% 66% 75% 74% 60% 57% 31% 14% 92% 85%
License
Maint. & Svcs
83%
80%
66%
75%
74%
60%
57%
31%
14%
92%
85%
81%
77%
75%
75%
77%
68%
65%

33

Sharp deceleration in License Revenue growth

DRAFT AND CONFIDENTIAL Comparison of Tuscany and Qlik Tuscany Qlik Headquarters Seattle, WA Radnor, PA
DRAFT AND CONFIDENTIAL Comparison of Tuscany and Qlik Tuscany Qlik Headquarters Seattle, WA Radnor, PA

DRAFT AND CONFIDENTIAL

Comparison of Tuscany and Qlik

Tuscany

Qlik

Headquarters Seattle, WA Radnor, PA (Founded in Sweden) Employees 3,168 (1,397 S&M; 857 R&D; 212
Headquarters
Seattle, WA
Radnor, PA (Founded in Sweden)
Employees
3,168 (1,397 S&M; 857 R&D; 212 G&A)
2,511 (452 R&D)
CEO Rating (Glassdoor)
98%
92%
Would Recommend (Glassdoor)
81%
83%
Customers
42,600
38,000
FY16A Deferred Revenue
$196M
$168M
FY16A Indirect / Direct Sales %
25% Indirect / 75% Direct 1
50% Indirect / 50% Direct
FY17E Revenue
$850M
$710M
FY17E Growth Rate
30%
16%
FY17E Gross Margin
90%
87%
FY17E Operating Profit
$63M
$59M
Enterprise Value
$3,252M
$2,552M
EV / FY17E Revenue
3.8x
3.6x
 Company retained Morgan Stanley to assess strategic alternatives
 Stock has fallen 40% since announcing 4Q earnings
 Activist investor Elliott Management owns 8.8%
Commentary
 Mostly US revenue (~75% of revenue); but growing int’l presence
 Stock has risen 25% since Elliott Management disclosed its stake
 Cloud product recently launched; minimal % of total revenue
 Heavy Europe / APAC exposure (65% ex-US)
 Cloud product recently launched; minimal % of total revenues
34
DRAFT AND CONFIDENTIAL Tuscany Standalone Non-GAAP P&L 35   Calendar Year Ending December 31,  
DRAFT AND CONFIDENTIAL Tuscany Standalone Non-GAAP P&L 35   Calendar Year Ending December 31,  

DRAFT AND CONFIDENTIAL

Tuscany Standalone Non-GAAP P&L

35

 

Calendar Year Ending December 31,

 

'15-'19E

($ in millions)

2014

2015

2016

2017

2018

2019

CAGR

Revenue

   
 

License

280

415

491

580

668

762

16%

Maintenance

--

187

283

393

521

666

37%

Professional Services

--

43

55

70

80

91

21%

Maintenance & Services

133

230

337

463

601

757

35%

Subscription

--

9

22

59

115

183

115%

Total Revenue

$413

$654

$850

$1,102

$1,384

$1,702

27%
27%

Gross Profit

   
 

License

279

415

486

574

661

754

16%

Maintenance

99

154

246

342

453

579

39%

Professional Services

--

9

12

15

18

20

21%

Subscription

--

9

17

49

98

156

106%

Total Gross Profit

378

587

762

980

1,230

1,509

27%

%

Margin

91.6%

89.8%

89.6%

89.0%

88.9%

88.7%

Operating Expenses :

   
 

Sales & Marketing

198

312

416

507

609

749

25%

Research & Development

90

149

209

242

277

340

23%

General & Administrative

36

59

74

88

97

111

17%

Total Operating Expenses

325

520

700

837

983

1,200

23%

Operating Profit

$53

$67

$63

$143

$247

$309

46%
46%

%

Margin

12.9%

10.3%

7.4%

13.0%

17.9%

18.2%

Growth & Margin Analysis

 

Y/Y Revenue Growth

     
 

License

--

48%

18%

18%

15%

14%

Maintenance

--

--

51%

39%

33%

28%

Professional Services

--

--

28%

27%

15%

14%

Maintenance & Services

--

73%

47%

37%