Software company exits and public market trends

in 2017 Right Click Capital Management Pty Limited ACN 161 549 944 AFSL 435725

Global software sector overview Period: 1 January 2017 – 31 December 2017

2 Source: Internet DealBook 2017 annual report (USD figures in millions)

Sector 2016 2017

Total value of acquisitions 4,500.0 12,200.0

Acquisitions average deal value 166.2 167.0

Acquisitions median deal value 7.0 6.4

Australian software sector overview Period: 1 January 2017 – 31 December 2017

3 Source: Internet DealBook 2017 annual report (AUD figures in millions)

Sector 2016 2017

Total value of acquisitions 44.9 306.1

Acquisitions average deal value 15.0 21.2

Acquisitions median deal value 6.2 5.0

Note: USD figures

Top global software acquisitions 2017 1 January 2017 – 31 December 2017

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Company Buyer Deal value ($bn)

3.7

3.1

2.0

1.6

1.4

Partners Group 1.3

1.1

1.0

1.0

1.0

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Software industry M&A activity overview Global software industry M&A revenue multiples

8.5x

6.9x

4.4x 4.4x

3.1x 2.9x

<5m 5-10m 10-20m 20-50m 50-100m 100m+

Median revenue multiple by seller revenue (last 3 years)

22% 20%

15%

10%

7%

4%

22%

=<1.0x 1.0x - 2.0x 2.0x - 3.0x 3.0x - 4.0x 4.0x - 5.0x 5.0x - 6.0x >6.0x

Median revenue multiple distribution (last 3 years)

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Software industry M&A activity overview Average and median EV/Revenue multiples over the past three years

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10.2x

5.2x 5.0x

6.7x 6.1x

10.0x 9.5x

10.0x

5.6x

6.3x

10.2x

13.9x

2.6x 2.5x 2.1x

2.6x 2.6x 3.2x

2.6x 3.0x

2.5x 2.5x 2.7x 2.7x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

Average and median EV/Revenue multiples

Average EV/Rev Median EV/Rev

65.2%

9.1%

15.2%

6.1% 4.5%

60.6%

12.1% 15.2%

9.1%

3.0%

<=0% >0% <=10% >10% <=20% >20% <=30% >30% %

of c

ompa

nies

TTM EBITDA margin

TTM EBITDA margin distribution

4Q16 4Q17

SaaS public market trends Public SaaS companies are continuing to post losses due to revenue recognition requirements

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EBITDA margin

•  Median public EBITDA margin for SaaS companies has oscillated around -7% over the past four quarters, which is an improvement over the double digit loss posted in prior years

•  63% of public SaaS companies indexed continue to post losses due to revenue recognition requirements

•  Public company SaaS operating expenses have remained relatively flat over the past few quarters

Note: all 4Q17 data measured from 1 October to 31 December 2017

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SaaS public market trends Operating expenses have remained at a steady margin

Public SaaS operating expenses have remained relatively flat over the past few quarters

Note: all 4Q17 data measured from 1 October to 31 December 2017

36.6% 38.0% 38.1% 37.1% 37.8%

18.9% 19.0% 18.8% 19.8% 19.8% 17.5% 17.3% 17.3% 17.6% 17.3%

4Q16 1Q17 2Q17 3Q17 4Q17

% o

f rev

enue

S&M(% of Revenue R&D(% of revenue) G&A(% of Revenue) revenue) S&M (% of revenue) R&D (% of revenue) G&A (% of revenue)

67.4% 68.0% 68.6% 68.6% 68.7%

-6.9% -7.4% -6.9% -5.4% -5.4%

-15.7% -14.8% -12.9% -11.3% -10.7%

8.9% 6.5% 8.0% 7.9% 8.7%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

4Q16 1Q17 2Q17 3Q17 4Q17

% m

argi

n

Gross profit margin EBITDA margin Net income margin free cash flow margin

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SaaS public market trends Operating metrics have improved in recent times

Median gross margin, EBITDA margin, net income margin and free cash flow margin have all steadily improved for public SaaS companies over the quarters

Note: all 4Q17 data measured from 1 October to 31 December 2017 *Free cash flow margin is operating free cash flow divided by revenue

Free cash flow margin

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SaaS public market trends There is a trade off between growth and profitability on company valuation

Businesses growing at 40%+ are trading at a discounted revenue multiple in comparison to businesses growing at 30%-40% because the cohort tend to be losing substantial amounts of money

Note: all 4Q17 data measured from 1 October to 31 December 2017

2.4x

4.2x

5.5x

6.7x 7.1x

2.9x

4.5x

6.7x

8.4x

7.2x

<=10% >10% <=20% >20% <=30% >30% <=40% >40%

Med

ian

EV/r

even

ue

TTM revenue growth

4Q16 4Q17

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Software and services sector – implications Context for fundraising and exit planning

Growth

New benchmarks for growth being set due to the trade off between growth and profitability

Australian scale range

Early-stage revenue: $1m-$5m Mid-stage revenue: $5m-$15m Later-stage revenue: $15m+

Funding and exits

US funds seeking $15m+ investments into AU software companies at mid- and later-stage scale Continued interest from North American and European companies in acquiring regional or vertical leading software providers

Key considerations

YOY revenue growth Recurring revenue mix Technical elements such as being web-based, multi-tenanted and single version remain important considerations in valuation Greatest volume of software transactions in Australia will remain between $10m-$150m

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Right Click Partners update 2017 was a successful year with five deals completed

Company Sector Buyer/investor(s) Deal type

Software Acquisition

Software Acquisition

Marketplace Consortium Investment

Software Consortium Investment

Media Acquisition

More highlights from 2017 Snapshot of our industry hosted events and involvement in key global technology conferences

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June: we hosted Vivid Sydney Investor Seminar

September: Ben, James and Louise attended the CEC Capital Summit in Los Angeles

May: Ben, and Michael hosted our yearly Singapore Industry Tech dinner

September: everyone from the team flew down to host one of our Melbourne dinners

October: the team hosted an industry tech dinner at Park Hyatt

October: Ari, Ben and James flew up to Brisbane for our industry dinner

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Siemer/Right Click Capital www.siemerrcc.com

+61 2 9967 8800

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Sydney NSW 2000 Australia

Los Angeles 1333 Second Street, Suite

600 Los Angeles, CA 90401 United States

Beijing China Resources Building, 19 Floor, No. 8

Jian Guo Men Bei Avenue 100005 China