2015 HCM/Talent Management Tech & Software Market Update

2. HCM Software Market Update & Vendor Ecosystem January 2015

3. About SEG • Twenty-two year, exclusive focus on software advisory services to lower & middle market representing companies seeking: • Strategic exit • Growth capital • Buyout • Inorganic growth via acquisition • Fairness opinions and valuations • Board advisory services • Clients span virtually every technology, product category, delivery model and vertical market • Global presence providing advice and guidance to more than 2,000 private and public companies throughout US, Canada, Europe, Asia-Pacific, Africa and Israel • Strong cross-functional team leveraging transaction, operating, legal and engineering experience • Unparalleled software industry reputation, track record and industry research • Highly referenceable base of past clients and buyers / investors Focus on Advice Multi-service Multi- Industry Focus on Software Advisory Boutiques Bulge Bracket Firms IPO Boutiques Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL

4. Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL SEG’s Industry Leading HCM Software Experience 4 10 Exits Completed in Talent Management, HR & Workforce Management Software

5. HCM Vendor Ecosystem

6. Human Capital Management (HCM) Software Overview Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL • Recruiting • Learning • Compensation • Performance • Etc. • Core HRIS • Payroll • Benefits Administration • Etc. • Time & attendance • Shift scheduling / optimization • Mobile workforce Management • Expense Management • Etc. • Solutions for staffing/recruitment firms • Other HCM related technologies not falling into alternate categories

9. BRIEF MARKET UPDATE – HCM Technology

10. Healthy Labor Market Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL Jan-07, 4.6% Oct-09, 10.0% Nov-14, 5.8% Jan-07, 238K Mar-09, -826K Nov-14, 353K -1000K -800K -600K -400K -200K 0K 200K 400K 600K 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 U.S.MonthlyJobGain/Loss U.S.UnemploymentRate Unemployment Rate Net Jobs Gain/Loss • Healthy labor markets drive adoption of human capital management software products, which in turn, drives HCM software M&A volume. • The U.S unemployment rate has been steadily declining since peaking in October 2009 at 10%. According to the Bureau of Labor Statistics (BLS), the unemployment rate was 5.8% in November 2014, and is projected to have fallen to 5.6% following December 2014. • Non-farm payroll job creation in 2014 was especially strong according to the BLS, with the U.S. economy adding over 200K new jobs during 11 out of 12 months. In comparison, 200K jobs or more were created during 6 months in both 2013 and 2012, 4 months in 2011, 3 months in 2010, no months in 2009 and 2008, and only the month of January during 2007.

11. Annual HCM Software M&A Deal Volume Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL 0 10 20 30 40 50 60 70 80 90 2008 2009 2010 2011 2012 2013 2014 #ofTransactions Other WFM HR Talent • Driven by a favoring economic climate and increasingly stable labor markets, aggregate HCM software M&A deal volume in 2014 was up 56% over 2013 (100% increase for Talent Management, 43% increase for HR and 50% increase for Workforce Management) 56%

12. Talent Management Software M&A Snapshot Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL 0 2 4 6 8 10 12 14 16 #ofTransactions Quarterly M&A Volume Other Delivery On-Premise SaaS 0 5 10 15 20 25 30 35 40 45 2008 2009 2010 2011 2012 2013 2014 #ofTransactions Annual M&A Volume Other Delivery On-Premise SaaS Date Buyer Seller Enterprise Value (mm) EV/ Rev 12/02/11 SAP SuccessFactors $3,516.1 12.1x 02/08/12 Oracle Taleo $1,805.5 5.7x 08/25/12 IBM Kenexa $1,307.1 4.1x 04/26/11 Successfactors Plateau Systems* $290.0 4.2x 01/07/14 INFOR PeopleAnswers* $200.0 7.0x 12/02/11 Nice Systems Merced Systems $170.0 3.0x 03/29/10 HgCapital Stepstone Solutions* $148.1 2.2x 05/05/08 Taleo Vurv Technology $130.5 4.0x 09/01/10 Taleo Learn.com $125.0 5.2x 04/03/09 Vista Equity Partners SumTotal Systems $106.7 0.9x Date Buyer Seller Enterprise Value (mm) EV/ Rev 12/02/11 SAP SuccessFactors $3,516.1 12.1x 01/07/14 INFOR PeopleAnswers* $200.0 7.0x 07/29/08 Monster Trovix* $72.5 7.0x 02/08/12 Oracle Taleo $1,805.5 5.7x 09/01/10 Taleo Learn.com $125.0 5.2x 04/26/11 SuccessFactors Plateau Systems* $290.0 4.2x 08/25/12 IBM Kenexa $1,307.1 4.1x 06/21/11 Taleo Jobpartners* $37.4 4.0x 05/05/08 Taleo Vurv Technology $130.5 4.0x 09/29/08 Bedford Funding Authoria* $63.1 4.0x Top by Enterprise Value Top by EV/Rev

13. HR Software M&A Snapshot Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL Top by Enterprise Value Top by EV/Rev Date Buyer Seller Enterprise Value (mm) EV/ Rev 11/03/14 Aetna bswift $400.0 - 11/22/13 Towers Watson Liazon $215.0 - 09/22/14 Sage Group PAI Group $157.8 4.1x 12/17/10 Lawson Software Enwisen $75.0 5.0x Date Buyer Seller Enterprise Value (mm) EV/ Rev 10/22/13 NetSuite TribeHR* - 20.0x 12/17/10 Lawson Software Enwisen $75.0 5.0x 09/22/14 Sage Group PAI Group $157.8 4.1x 0 1 2 3 4 5 6 7 8 9 #ofTransactions Quarterly M&A Volume Other Delivery On-Premise SaaS 0 5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014 #ofTransactions Annual M&A Volume Other Delivery On-Premise SaaS

14. Workforce Management Software M&A Snapshot Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL Top by Enterprise Value Top by EV/Rev Date Buyer Seller Enterprise Value (mm) EV/ Rev 09/18/14 SAP Concur $7,651.6 11.5x 10/14/14 HgCapital Allocate Software $145.3 2.3x 04/03/14 Amadeus i:FAO $93.8 4.6x 12/09/11 LDC Workplace Systems $60.2 4.0x 05/06/14 inContact Uptivity $50.2 2.6x 09/13/11 Verint Systems GMT $42.0 - 08/01/09 Concur Etap-On-Line $40.0 3.7x Date Buyer Seller Enterprise Value (mm) EV/ Rev 09/18/14 SAP Concur Technologies $7,651.6 11.5x 04/03/14 Amadeus i:FAO $93.8 4.6x 12/09/11 LDC Workplace Systems $60.2 4.0x 08/01/09 Concur Etap-On-Line $40.0 3.7x 05/06/14 inContact Uptivity $50.2 2.6x 10/14/14 HgCapital Allocate Software $145.3 2.3x 0 1 2 3 4 5 6 7 8 #ofTransactions Quarterly M&A Volume Other Delivery On-Premise SaaS 0 5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014 #ofTransactions Annual M&A Volume Other Delivery On-Premise SaaS

15. Public SaaS Companies: HCM Software *Data set – January 9, 2015 Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL Category Name Market Cap EV TTM Revenue TTM Gross Margin TTM EBITDA Margin TTM Revenue Growth EV/ Revenue EV/ EBITDA Forward EV/ Revenue Forward EV/ EBITDA YTD SEG SaaS Index $948.7 $844.3 $142.0 65.5% -6.9% 29.1% 5.6x 61.1x 4.8x 33.8x -10.8% CRM & Marketing $1,073.0 $905.3 $157.9 68.5% -6.7% 28.4% 5.0x 90.9x 4.1x 30.5x -8.6% ERP & Supply Chain $948.7 $807.9 $120.5 68.2% -8.7% 30.6% 5.5x 60.7x 4.4x 27.5x -18.9% Vertically Focused $1,122.3 $940.2 $145.3 62.3% 7.9% 38.1% 6.4x 46.2x 5.2x 27.1x -8.2% Human Capital Management $1,445.0 $1,372.2 $128.7 59.9% -14.8% 31.8% 7.0x 59.3x 5.3x 42.7x -3.4% SaaS Other $557.9 $644.3 $163.9 64.6% -11.2% 23.9% 4.4x 74.5x 3.8x 75.5x -12.8% Company Name Ticker Market Cap EV TTM Revenue TTM Gross Margin TTM EBITDA Margin TTM Revenue Growth EV/ Revenue EV/ EBITDA Forward EV/ Revenue Forward EV/ EBITDA YTD Benefitfocus BNFT $692.3 $673.4 $127.5 34.8% -37.5% 31.8% 5.3x n/a 4.2x n/a -51.7% Callidus Software CALD $776.6 $748.4 $128.7 59.9% -1.4% 19.8% 5.8x n/a 4.8x 42.7x 22.3% Cornerstone OnDemand CSOD $1,701.4 $1,697.8 $242.1 71.2% -15.8% 45.2% 7.0x n/a 5.3x 166.1x -40.0% Halogen Software TSX:HGN $168.8 $122.9 $54.2 73.0% -14.8% 18.9% 2.3x n/a 1.9x n/a -37.7% Paylocity Holding PCTY $1,445.0 $1,372.2 $117.4 50.2% -5.1% 40.1% 11.7x n/a 9.0x n/a 21.0% The Ultimate Software Group ULTI $4,177.3 $4,076.5 $482.4 59.6% 14.2% 23.5% 8.5x 59.3x 7.0x 28.5x -3.4% Workday WDAY $16,191.3 $14,846.2 $703.5 65.1% -22.7% 72.2% 21.1x n/a 14.4x n/a 6.5% Median: $1,445.0 $1,372.2 $128.7 59.9% -14.8% 31.8% 7.0x 59.3x 5.3x 42.7x -3.4% • SaaS HCM companies are performing well in the publics markets. Currently, the SEG SaaS HCM Index, which includes the companies listed below, is outperforming the remaining SEG SaaS Indices on a EV/Revenue basis (7.0x TTM revenue). • The index is outperforming all others despite posting the poorest median TTM gross margin and EBITDA margin percentages. • Valuations in the group have been buoyed by strong revenue growth rates (31.8%), which most closely correlates to SaaS company valuation, and strengthening labor markets.

16. Key Trends Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved CONFIDENTIAL • Current M&A market extremely active • Valuations strong for strategic acquisition targets • Private equity helping to buoy valuations and accelerate deal flow • HCM M&A market will likely remain quite robust for the next few quarters

17. Contact Information Kris Beible (858) 509-2800 kbeible@softwareequity.com www.softwareequity.com The information contained in this Report is obtained from sources we believe to be reliable, but no representation or guarantee is made about the accuracy or completeness of such information, or the opinions expressed herein. Nothing in this Report is intended to be a recommendation of a specific security or company or intended to constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any security. Software Equity Group LLC may have an interest in one or more of the securities or companies discussed herein. Financial data provided by Capital IQ. This Report may not be reproduced in whole or in part without the expressed prior written authorization of Software Equity Group, L.L.C. Software Equity Group registers each Report with the U.S. Copyright Office and vigorously enforces its intellectual property rights.

2015 HCM/Talent Management Tech & Software Market Update

Allen Cinzori

2015 HCM/Talent Management Tech & Software Market Update