5.20.2016 Board Deck v5 (1)

DRAFT AND CONFIDENTIAL

M&A Target Review May 2016

Potential Acquisition Targets ‒ Public Companies ADBE

LNKD

WDAY

NOW

DATA

PEGA

Employees

13,893

9,732

4,900

3,991

4,603

3,168

3,400

CEO Rating (Glassdoor)

96%

98%

93%

84%

91%

98%

Would Recommend (Glassdoor)

88%

90%

72%

65%

80%

Customers

6,167K subscribers

39,726 (Corporate Solution Customers)

1,100

3,098

FY17E Revenue1

$5,826M

$3,726M

$1,549M (PS is 20% of Revenue)

FY17E Growth Rate1

21%

25%

FY17E Gross Margin1

87%

FY17E Operating Profit (Loss)1

DRAFT AND CONFIDENTIAL

VEEV

BOX

DWRE

ZEN

MKTO

HUB

2,599

1,474

1,370

1,024

1,429

983

1,312

93%

90%

87%

94%

95%

96%

69%

95%

81%

79%

82%

65%

68%

95%

92%

62%

91%

30,000+

42,600

N/A

39,000

375+

57,000

349

75,000 (paid customer accounts)

4,615

19,322

$1,367M

$967M

$850M

$799M (PS is 30% of Revenue)

$710M

$512M

$393M

$311M

$303M

$273M

$259M

33%

36%

30%

30%

17%

16%

25%

30%

31%

45%

30%

42%

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)

Market Cap

$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

Enterprise Value

$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

EV / FY17E Revenue1

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

In Exclusivity

Less Interested

Meeting Late May

Larry Ellison owns 47%

In Play

Meeting in June

In Play

CEO has no interest

In Play

CEO has no interest

In Play

Status:

“Burgundy”

2

Note: As of May 17, 2016 1. Refers to FY17E or the corresponding calendar year >90% On-premise software.

“Sonoma”

“Tuscany”

“Champagne”

DRAFT AND CONFIDENTIAL

Potential Acquisition Targets ‒ Interlopers ADBE

Facebook

Amazon

Google

HP Enterprise

IBM

MSFT

Oracle

SAP

Employees

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

CEO Rating (Glassdoor)

96%

95%

81%

94%

95%

98%

98%

67%

56%

93%

72%

94%

97%

Would Recommend (Glassdoor)

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

FY17E Growth Rate1

21%

37%

25%

(9%)

20%

46%

16%

(4%)

(3%)

(1%)

(2%)

5%

31%

FY17E Gross Margin1

87%

64%

35%

39%

55%

85%

63%

29%

50%

64%

80%

71%

59%

FY17E Operating Profit (Loss)1

$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

Enterprise Value

$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

EV / FY17E 1 Revenue

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

FY17E Revenue1

Cash and Cash Equivalents

Onshore Cash Debt

3

2

Debt / EBITDA

3

Amazon

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 Last Twelve Months Stock Performance 2015

2016

40%

20%

Salesforce (+6%) 0%

Sonoma (-10%) -20%

Champagne (-34%) -40%

Tuscany (-58%)

-60%

-80% May-15

4

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

DRAFT AND CONFIDENTIAL

Champagne Briefing

DRAFT AND CONFIDENTIAL

Champagne Overview •

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)

Q1’16 Employee Breakdown

•

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

CY15 Revenue by Geography Other 15%

Sales 21% Other 37%

219 FTEs(1)

345 FTEs 81 FTEs

R&D 34%

CY15 Revenue by Segment Overage 19%

UK 10% Germany 11%

Pro. Serv. 15% Base Sub. 66%

US 64%

Marketing 8%

1,024 employees as of 3/31/2016

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

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

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%)

Digital Commerce Remains a Significant Gap in the Salesforce Portfolio CRM

$24.7B  $41.9B (14%)

$14.7B  $18.3B (6%)

ERP

$27B  $35.3B (7%)

Sales

Service

Marketing

BI Platforms

Analytics Apps

HCM

FMS Components

$6.3B  $9.6B

$8.7B 

$5.4B 

$8.6B  $9.5B

$2.1B  $3.3B

$9.3B 

$10.6B  $13.7B

11%

$13.5B 12%

$11.2B 20%

2%

11%

$12.6B 8%

7%

$XXB (FY16)  $YYB (FY20) (% CAGR FY16-20) Salesforce TAM

IT Ops

White Space

$20.6B  $27.6B (8%)

Automation Tools

Availability & Performance

$6.6B  $10B

$3.7B  $4.9B

11%

8%

Digital Commerce

CPM Suites

Advanced Analytics

Mfg. & Operations

Enterprise Asset Mgmt.

IT Services & Support

Other IT Operation**

$4.3  $7.6B

$2.6  $3.3B

$1.4  $2.2B

$5.6  $7.2B

$1.5  $1.9B

$1.8B  $2.4B

$8.5  $10.3B

15%

6%

13%

6%

7%

7%

5%

Communities

7

BI

DRAFT AND CONFIDENTIAL

$5.5B  $7.8B (9%)

Collaboration & Social SW

Portals & UI Tools

$1.5B  $2.4B 13%

App Cloud

$22.2B  $29.8B (8%)

IT Services*

App Infra. & Middleware

Security

Consulting

$0.7B  $0.9B

$5.7B  $6.6B

$9.7B  $13.7B

$2.4B  $3.2B

$37.8B  $49.4B

7%

4%

9%

7%

7%

Portals/Empl. Self Service

App Development

$1.7B  $2.1B

4%

Web Content Management

Data Integ. & Quality

$1.5  $2.4B

$4.5B  $6.2B

12%

9%

Note: Totals include white space categories

$147.9B  $179B (5%) Implementation

$96B  $112.1B

Software Support

4%

$14.1B  $17.5B 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 Platforms Email and Mobile Channels

8

Social

Ads

Web & Analytics

CMS

Commerce

Sales

Service

DRAFT AND CONFIDENTIAL

Champagne is a Scarce Asset and the Only Scaled Cloud Player in Commerce ​Forrester Wave B2C

​Gartner MQ for Digital eCommerce 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

Champagne

Champagne

9

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

SaaS Solution

DRAFT AND CONFIDENTIAL

Our Competitors Have Made Substantive Bets in the Space eCommerce Market Share: IBM 4%

Key Observations:

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

Oracle 5%

SAP / Hybris 16%

• High barriers to market entry • Our competitors continue to invest in eCommerce • Leading technology vendors include Champagne and Hybris

Other 66%

Key Acquisitions:

10

Source: Gartner Enterprise Software Market Share

• IBM / Oracle: marked by legacy technologies Digital River 6% DWRE Champagne 3%

• Small vendors lack growth and enterprise capabilities • No independent vendor (outside of Champagne) has demonstrated an ability to drive substantial scale

Strategic Rationale and Key Considerations Strategic Rationale

•

Gap in Core CRM Offering ─ ─ ─

•

─ ─ ─

•

─

•

─

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

Synergies ─

11

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 ─

•

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 ─

─

Key Considerations •

Relevant to Sales, Communities, Marketing, and Service Increases up-sell potential among installed base Provides lightweight CMS capabilities

Customer Focus

Opportunity to leverage cross cloud integrations, particularly with Service Cloud, Marketing Cloud, and Communities Ability to streamline opex and invest in GTM

DRAFT AND CONFIDENTIAL

Synergy Challenges ─ ─

•

Ongoing Market Competition ─ ─ ─

•

Highly fragmented market Homebuilt solutions are difficult to penetrate Large incumbents now offering cloud solution (IBM, Oracle)

Market Focus ─ ─

•

Limited ability to leverage our core AEs to sell this; requires a specialist sale Long sales and implementation cycle

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

DRAFT AND CONFIDENTIAL

Champagne Focused on Unifying Customer Experience Key Benefits of Unified Experience

12

•

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

DRAFT AND CONFIDENTIAL

Prior Acquisitions Play a Key Role in Future Growth Store / POS

13

Predictive Intelligence

Order Management

•

Acquired Tomax in January 2015 for $53M in cash

•

Acquired CQuotient in October 2014 for $22M in cash

•

Acquired Mainstreet Commerce in January 2014 for $19M in cash

•

Office in Salt Lake City, Utah

•

Office in Cambridge, MA

•

Office in Deerfield Beach, FL

•

170 employees, including 100 engineers

•

•

•

Provides mobile point-of-sale technology that accelerates the delivery of digital in the store

Some capabilities included as part of Champagne commerce platform for no additional charge

Provides mission-critical order management functionality that supports all stages of an order

•

Delivers Personalization to enhance customer engagement

•

•

Positions Champagne at the center of every major trend in retail

•

Transform data into actionable intelligence for customers

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 ​Targeting 30%+ Subscription Revenue Growth Over Next 3 years

14

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

Acquired Tomax (~$21M in CY15 revenue)

DRAFT AND CONFIDENTIAL

Champagne Focused on Land and Expand 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

Total Customers Increasing Along with Average Revenue Per Customer (ARPC)

DRAFT AND CONFIDENTIAL

​Strong Enterprise Customer Growth Coupled With Substantial Increase in ARPC Due to “Land and Expand” Strategy 2014 2015

3-year customer CAGR (’12-’15) of 30%

Customers with >$100M GMV: 22

30

Customers with >$200M GMV: 10

15

Customers with >$300M GMV:

16

Note: ARPC reported by company and includes professional services revenue

4

8

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% of FY16 Revenue

17

Note: Change in DR not included in Change in NWC

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

63

Services

141

155

R&D

345

421

Sales

128

147

Marketing

81

Link (Alliances) Customer Success G&A TOTAL

•

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

95

•

Nearly half of QBRs are based in EMEA

9

14

•

82

98

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

138

151

•

1,024

1,220

R&D investment is high relative to public comparable SaaS vendors

•

Under investment in Sales and Enablement represents a potential opportunity

Regional Director: 11 QBR: 55 SE: 30

18

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

Key Observations

BDR: 15 Ops and Enable: 17

DRAFT AND CONFIDENTIAL

Positive Glassdoor Ratings Show Strong CEO Approval Key Concerns

19

•

Difficult and sometimes bureaucratic decision-making processes

•

Internal communication / crossfunctional collaboration is difficult

•

Engineering spread across different locations and time zones

•

Growth pains

DRAFT AND CONFIDENTIAL

Champagne Management Thomas Ebling, President, CEO & Chairman

Wayne Whitcomb, CTO

• CEO and board member since 2009 • Chairman of the Board since July 2014 • Previously served as CEO of Lattice Engines,

• Chief Technology Officer since 2004 and co-founder

Tim Adams, CFO

Rama Ramakrishnan, Chief Data Scientist

of Daylight

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

ProfitLogic and Torrent Systems

• CFO since June 2014 • Previously served as CFO of athenahealth • Held various financial leadership positions at

• • • •

Jeff Barnett, COO

Elana Anderson, SVP of Marketing

• COO since January 2013 • Joined Daylight in 2005 as EVP of Field Ops • Held sales and sales management positions at Siebel

• Former VP of Strategy and Product Management at

Constitution Medical and Keystone Dental

Rohit Goyal, SVP of Engineering

• Former Co-founder and VP Engineering of neoSaej • Former Director of Software at Enterasys • Co-inventor on six patents 20

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

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

DRAFT AND CONFIDENTIAL

Standalone P&L (US $ in millions)

2013A

Actual 2014A

Subscription Professional Services Total Revenue Consensus Estimates Management Plan

95.7 10.9 $106.6

145.9 14.7 $160.6

Calendar Year Ending December, 31 CorpDev Estimates 2015A 2016E 2017E 2018E 201.0 36.3 $237.3

270.3 41.0 $311.3 $303.0 $313.0

354.2 42.2 $396.4 $383.0 $399.0

456.5 43.3 $499.8

2019E 580.3 44.5 $624.8

Cost of Sales Subscription Professional Services Total COS

16.8 9.7 26.4

25.2 13.1 38.4

34.8 24.1 58.9

50.7 30.6 81.3

66.6 31.7 98.3

85.8 32.5 118.3

109.1 33.4 142.5

Subscription Professional Services Overall Gross Profit

79.0 1.2 80.2

120.7 1.5 122.2

166.1 12.2 178.3

219.6 10.4 230.0

287.6 10.4 298.1

370.7 10.8 381.5

471.2 11.1 482.3

Operating Expenses: Research & Development Sales & Marketing General & Administrative Total Operating Expenses

17.2 48.1 18.1 83.4

25.8 65.2 27.9 118.9

46.0 84.7 36.8 167.5

64.0 105.0 42.6 211.6

81.6 135.8 50.6 268.0

95.6 165.4 55.6 316.6

112.9 200.4 62.9 376.3

($3.2)

$3.2

$10.9

$18.4 $11.0 $19.3

$30.1 $19.0 $30.6

$64.9

$106.0

14.7 0.0 ($17.9)

26.6 1.1 ($24.5)

36.7 4.8 ($30.7)

46.1 2.9 ($30.5)

53.3 1.9 ($25.1)

60.8 1.9 $2.2

68.1 1.9 $36.0

$9.0 8.5%

$3.6 2.3%

$14.9 6.3%

$24.4 7.8%

$46.4 11.7%

Revenue Mix Subscription Professional Services

90% 10%

91% 9%

85% 15%

87% 13%

89% 11%

91% 9%

93% 7%

Revenue Growth (Y-o-Y) Subscription Professional Services Overall

41% (6%) 34%

52% 35% 51%

38% 148% 48%

34% 13% 31%

31% 3% 27%

29% 3% 26%

27% 3% 25%

Gross Margin Subscription Professional Services Overall

82% 11% 75%

83% 10% 76%

83% 34% 75%

81% 25% 74%

81% 25% 75%

81% 25% 76%

81% 25% 77%

Operating Expenses R&D as % of revenue S&M as % of revenue G&A as % of revenue SBC as % of revenue

16% 45% 17% 14%

16% 41% 17% 17%

19% 36% 16% 15%

21% 34% 14% 15%

21% 34% 13% 13%

19% 33% 11% 12%

18% 32% 10% 11%

(3%) (17%)

2% (15%)

5% (13%)

6% (10%)

8% (6%)

13% 0%

17% 6%

Non-GAAP Operating Profit Consensus Estimates Management Plan SBC Amort of Intangibles GAAP Operating Profit OCF OCF Yield Growth & Margin Analysis

21

Non-GAAP Operating Margin GAAP Operating Margin

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

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

Synergy Overview (SUBJECT TO FURTHER REVIEW) Impact

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

• $33M of cost savings in FY20

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

• $18M of revenue in 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

• $43M of revenue 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

• $46M of revenue 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

• $54M of revenue 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

• $187M of revenue in FY20

DRAFT AND CONFIDENTIAL

DRAFT AND CONFIDENTIAL

Pro Forma P&L (US$ in millions) Champagne Standalone Revenue Subscription Professional Services Total Standalone Revenue YoY Growth 1 Plus: Increased Services Revenue Plus: Increased Subscription Revenue Total Pro Forma Adjusted Revenue YoY Growth 1 Standalone Gross Profit Subscription Gross Profit Pro Serv Gross Profit Total Standalone Gross Profit

Q4E

71.1 9.9 $81.1

79.5 10.5 $90.0

Salesforce Fiscal Year Ending January 31, FY17E STUB FY18E FY19E FY20E 150.6 20.5 $171.1

362.8 42.4 $405.1

465.3 43.2 $508.5

591.5 44.5 $636.0

30%

26%

25%

0.0 0.8

0.0 2.6

0.0 3.3

12.2 40.1

16.2 134.6

21.2 327.4

$81.8

$92.6

$174.4

$457.8

$659.6

$984.9

47%

44%

Key Commentary •

Assumes transaction close of August 1

49%

•

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

57.8 2.2 59.9

64.6 2.3 66.9

122.3 4.5 126.8

294.6 10.6 305.2

377.8 10.8 388.6

480.3 11.1 491.4

Synergy Gross Profit Subscription Gross Profit Pro Serv Gross Profit Total Synergy Gross Profit

0.6 0.0 0.6

2.2 0.0 2.2

2.8 0.0 2.8

34.1 0.0 34.1

114.0 0.3 114.3

276.8 0.8 277.5

Total Adjusted Gross Profit

60.6

69.1

129.7

339.2

502.9

769.0

•

Research & Development Sales & Marketing General & Administrative Champagne Standalone Operating Expenses

16.6 27.2 10.9 54.8

18.5 30.3 12.2 60.9

35.1 57.5 23.1 115.7

83.5 139.0 51.5 273.9

96.6 167.8 55.9 320.4

114.5 203.5 63.6 381.6

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

•

Adjusted OpEx Plus: Incremental Synergy R&D Plus: Incremental Synergy S&M Plus: Incremental Synergy G&A Less: Headcount Cost Synergies Adjusted Operating Expenses Adjusted Operating Profit

0.0 4.8 0.0 (0.2) 59.5 1.1

0.1 6.6 0.1 (0.9) 66.8 2.3

0.1 11.5 0.1 (1.1) 126.2 3.4

1.6 54.7 0.8 (10.7) 320.2 19.0

5.4 126.1 2.7 (21.4) 433.2 69.7

13.2 239.7 6.6 (32.9) 608.2 160.8

Assumes headcount expenses equal 70% of operating expenses; preliminary harmonization of 10% starting in FY18

•

Unbilled backlog writedown assumes 27 month period

(5.0) (25.0) 1.3 0.0 ($27.6) (3.0) (35.7) ($66.3)

(5.0) 0.0 1.3 0.0 ($1.4) (4.4) (35.7) ($41.6)

(10.0) (25.0) 2.5 0.0 ($29.1) (7.4) (71.4) ($107.8)

(55.0)

• 5.0 (22.4) $52.3 0.0 (26.8) $25.5

5.0 (26.7) $139.0

Integration and transaction expenses comparable to Exact Target

$2.4

$3.6

$52.3

$139.0

Less: Integration Costs Less: Transaction Fees Plus: Public Company Cost Savings Less: Headcount Harmonization PF Non-GAAP Operating Profit (excl. Write-downs) Less: Deferred Revenue Writedown Less: Unbilled Backlog Writedown PF Non-GAAP Operating Profit (incl. Write-downs)

23

Q3E

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

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

$5.9

5.0 (19.2) ($50.1) (7.4) (98.1) ($155.6) $4.9

$139.0

DRAFT AND CONFIDENTIAL

AVP Current Offer Price (per share $) Implied Premium to Current Price Implied Premium to: 30-day average trading price 60-day average trading price 90-day average trading price 180-day average trading price 52 week high 52 week low

$43.00 5/18/2016

$

43.24 39.99 39.77 46.22 75.56 28.04

Implied equity value ($M) Net debt ($M) Implied enterprise value Implied Multiples: EV / Revenue CY16E CY17E

24

(1%) 8% 8% (7%) (43%) 53% $1,759 (196) $ 1,563

Rev. ($M) $311 $396

Potential Indicative Offer Range $

58.05 35%

$

34% 45% 46% 26% (23%) 107% $2,385 $ (196) $ 2,189 $

60.20 40%

$

62.35 45%

$

64.50 50%

$

66.65 55%

$

68.80 60%

39% 51% 51% 30% (20%) 115%

44% 56% 57% 35% (17%) 122%

49% 61% 62% 40% (15%) 130%

54% 67% 68% 44% (12%) 138%

59% 72% 73% 49% (9%) 145%

2,475 $ (196) 2,279 $

2,565 $ (196) 2,369 $

2,655 $ (196) 2,459 $

2,745 $ (196) 2,549 $

2,835 (196) 2,639

5.0x 3.9x

7.0x 5.5x

7.3x 5.8x

7.6x 6.0x

7.9x 6.2x

8.2x 6.4x

8.5x 6.7x

PF BS Cash Used in Deal Debt Issued Total Sources

$1,759 $0 $1,759

$2,000 $385 $2,385

$2,000 $475 $2,475

$2,000 $565 $2,565

$2,000 $655 $2,655

$2,000 $745 $2,745

$2,000 $835 $2,835

Champagne Equity Value Total Uses

$1,759 $1,759

$2,385 $2,385

$2,475 $2,475

$2,565 $2,565

$2,655 $2,655

$2,745 $2,745

$2,835 $2,835

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

Value of Synergies Per CRM Management

$73.05

$75.00

$67.60

$66.05

$67.60

$69.75

$57.30

$60.00 $53.10

$57.55

$57.55

$48.65

$47.35

$45.00

$48.35

$50.15

Current (1): $42.51

$38.05 $30.00

$31.50

$26.47

$15.00

$0.00 12-Month Trading CY2013 Range

PV of Analyst Price CY2013 Targets (2)

Street CY'16

Street CY'17

(4)

0

Revenue

UMC Transactions

CY2013

CY2013

Revenue

26

Precedent

Selected Public Companies CY2013 (3) Tech Premiums

(4)

Management CY'16 Revenue

(4)

Management CY'17 Revenue

(4)

NTM Revenue

(4)

DCF Perpetuity Growth

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

3.0% - 5.0%

Equity Discount Rate:

Statistic:

Statistic:

Statistic:

Statistic:

Statistic:

Statistic:

WACC Range:

$320.6

11.5% - 14.5%

13.0% $44.27 $303.8 $383.0 $311.3 $396.4 ____________________ 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. 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.

Growth Rate Range:

Preliminary - Subject to Change

CONFIDENTIAL

Notice to Recipient Confidential

​“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., which are both registered broker dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ​Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. ​These materials have been prepared by one or more subsidiaries of Bank of America Corporation for the client or potential client to whom such materials are directly addressed and delivered (the “Company”) in connection with an actual or potential mandate or engagement and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with us. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise reviewed by us. We assume no responsibility for independent investigation or verification of such information (including, without limitation, data from third party suppliers) and have relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the managements of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by us in connection herewith. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Bank of America Corporation or any of its affiliates to provide or arrange any financing for any transaction or to purchase any security in connection therewith. These materials are for discussion purposes only and are subject to our review and assessment from a legal, compliance, accounting policy and risk perspective, as appropriate, following our discussion with the Company. We assume no obligation to update or otherwise revise these materials. These materials have not been prepared with a view toward public disclosure under applicable securities laws or otherwise, are intended for the benefit and use of the Company, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without our prior written consent. These materials may not reflect information known to other professionals in other business areas of Bank of America Corporation and its affiliates. ​Bank of America Corporation and its affiliates (collectively, the “BAC Group”) comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and strategic advisory services and other commercial services and products to a wide range of corporations, governments and individuals, domestically and offshore, from which conflicting interests or duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BAC Group at any time may invest on a principal basis or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions, for their own accounts or the accounts of customers, in debt, equity or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, potential counterparties or any other company that may be involved in a transaction. Products and services that may be referenced in the accompanying materials may be provided through one or more affiliates of Bank of America Corporation. We have adopted policies and guidelines designed to preserve the independence of our research analysts. The BAC Group prohibits employees from, directly or indirectly, offering a favorable research rating or specific price target, or offering to change a rating or price target to a subject company as consideration or inducement for the receipt of business or for compensation and the BAC Group prohibits research analysts from being directly compensated for involvement in investment banking transactions. The views expressed herein are the views solely of Global Corporate and Investment Banking, and no inference should be made that the views expressed represent the view of the firm’s research department. We are required to obtain, verify and record certain information that identifies the Company, which information includes the name and address of the Company and other information that will allow us to identify the Company in accordance, as applicable, with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and such other laws, rules and regulations as applicable within and outside the United States. ​We do not provide legal, compliance, tax or accounting advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by us to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or marketing of the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an independent tax advisor. Notwithstanding anything that may appear herein or in other materials to the contrary, the Company shall be permitted to disclose the tax treatment and tax structure of a transaction (including any materials, opinions or analyses relating to such tax treatment or tax structure, but without disclosure of identifying information or, except to the extent relating to such tax structure or tax treatment, any nonpublic commercial or financial information) on and after the earliest to occur of the date of (i) public announcement of discussions relating to such transaction, (ii) public announcement of such transaction or (iii) execution of a definitive agreement (with or without conditions) to enter into such transaction; provided, however, that if such transaction is not consummated for any reason, the provisions of this sentence shall cease to apply. Copyright 2016 Bank of America Corporation.

27

DRAFT AND CONFIDENTIAL

Tuscany Overview

DRAFT AND CONFIDENTIAL

Tuscany Overview •

Founded in 2003

•

HQ: Seattle, WA

•

1Q16 Employee Breakdown

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 •

G&A 16%

81 FTEs

Top Customers: Deloitte, J&J, Wal-Mart, GE, Verizon, CapitalOne, Cisco, Wells Fargo, PWC, ExxonMobil

CY15 Revenue by Segment

Subscription 1%

Professional Services 7%

219 FTEs

Sales 39%

R&D 27%

CY15 Revenue by Geography

345 FTEs

COGS 13%

International 25% North America 75%

Maintenance 29% License 63%

Marketing 5%

3,168 employees as of 3/31/2016

Tuscany Share Price

Trading Volume (MMs)

$130

25.0

20.0

$100

15.0 $70 10.0 $40

29

$10 1/02/15

5.0

0.0

4/02/15

7/02/15

10/02/15

1/02/16

4/02/16

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 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

Transition to Subscription Model ─ ─ ─ ─

Industry Leader ─

•

Key Considerations

•

Cloud Offering ─

•

Lack Head of Sales; rep productivity declining Pace of international is hurting sales productivity

Technology ─

30

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 ─ ─

•

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 ─ ─

•

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

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

DRAFT AND CONFIDENTIAL

Tuscany a Leader in BI and Analytics Platforms BI Customer Survey Rankings1 (5 = Highest, 1 = Lowest)

Tuscany

31

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

Tuscany

Qlik

TIBCO

MicroStrategy

Microsoft

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

DRAFT AND CONFIDENTIAL

The BI Market is Expected to Grow; Tuscany is WellPositioned in Data Discovery in Competitive BI Industry BI & Analytics Addressable Market $25,000

Revenue

Data Discovery Market Share

BI Market Share

12%

YoY % Change

Qlik 22% 10%

$20,000

SAP 20%

Other 25%

8% $15,000 6% $10,000

Tuscany 3%

Other Vendors 53% Tuscany 18%

4% $5,000

2%

$0

0%

2013

2014

2015

2016

2017

2018

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

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

Spotfire 7%

2019

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

Oracle 13%

Qlik 3% MicroStrategy 3% Microsoft 10% IBM 11%

SAS 12%

Tuscany has substantial 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 & Services Revenue

Online $203 $3

$200

$143

$150 $105

$100

$50

$81

$40 $14

$0

$50 $16

$61

$23

$19

$75

$95

$130 $96

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

65% 35%

67% 33%

67% 33%

71% 29%

64% 35% 1%

64% 35% 1%

63% 36% 1%

65% 34% 1%

55% 44% 2%

83% 92%

80% 85%

66% 81%

75% 77%

74% 75%

60% 75%

57% 77%

31% 68%

14% 65%

71% 29%

67% 33%

$83

$107

1Q14

69% 31%

2Q13

$101 $60

4Q13

1Q13

$73

$53

$70

3Q13

$26

$61

$35

$26

$48

$42

$30

$70

$172 $4

$46

$91

$58

$34

$42

$130 $2

$150 $2

$171 $2

Revenue Mix License Maint. & Svcs Online (SaaS)

66% 34%

YoY Growth License Maint. & Svcs

33

Sharp deceleration in License Revenue growth

DRAFT AND CONFIDENTIAL

Comparison of Tuscany and Qlik

34

Tuscany

Qlik

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% Direct1

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

Commentary

 Stock has fallen 40% since announcing 4Q earnings  Mostly US revenue (~75% of revenue); but growing int’l presence  Cloud product recently launched; minimal % of total revenue

    

Company retained Morgan Stanley to assess strategic alternatives Activist investor Elliott Management owns 8.8% Stock has risen 25% since Elliott Management disclosed its stake Heavy Europe / APAC exposure (65% ex-US) Cloud product recently launched; minimal % of total revenues

DRAFT AND CONFIDENTIAL

Tuscany Standalone Non-GAAP P&L ($ in millions)

Revenue License Maintenance Professional Services Maintenance & Services Subscription Total Revenue

2014

Calendar Year Ending December 31, 2015 2016 2017 2018

2019

'15-'19E CAGR

280 --133 -$413

415 187 43 230 9 $654

491 283 55 337 22 $850

580 393 70 463 59 $1,102

668 521 80 601 115 $1,384

762 666 91 757 183 $1,702

16% 37% 21% 35% 115% 27%

279 99 --378 91.6%

415 154 9 9 587 89.8%

486 246 12 17 762 89.6%

574 342 15 49 980 89.0%

661 453 18 98 1,230 88.9%

754 579 20 156 1,509 88.7%

16% 39% 21% 106% 27%

Sales & Marketing Research & Development General & Administrative Total Operating Expenses Operating Profit % Margin

198 90 36 325 $53 12.9%

312 149 59 520 $67 10.3%

416 209 74 700 $63 7.4%

507 242 88 837 $143 13.0%

609 277 97 983 $247 17.9%

749 340 111 1,200 $309 18.2%

25% 23% 17% 23% 46%

Growth & Margin Analysis Y/Y Revenue Growth License Maintenance Professional Services Maintenance & Services Subscription Overall

-------

48% --73% -58%

18% 51% 28% 47% 153% 30%

18% 39% 27% 37% 172% 30%

15% 33% 15% 30% 95% 26%

14% 28% 14% 26% 59% 23%

OpEx as % of Revenue Sales & Marketing Research & Development General & Administrative

48% 22% 9%

48% 23% 9%

49% 25% 9%

46% 22% 8%

44% 20% 7%

44% 20% 7%

Operating Margin

13%

6%

7%

13%

18%

18%

Gross Profit License Maintenance Professional Services Subscription Total Gross Profit % Margin Operating Expenses:

35

Key Commentary •

Revenue growth triangulated from WS consensus estimates and management’s forecast

•

Gross profit margins according to management’s guidance and historical trends

•

Opex margins triangulated from WS consensus estimates and management’s forecast

•

Professional Services is 50/50 training and hourly project work; ProServ ~10% margin, training ~30% margin

•

Tuscany Online – SaaS offering of Tuscany Server • • • •

•

925 new customers in 1Q16 ARPC: $5,000 Average Number of Seats: 10 Pricing: $500 Annually Per Seat

S&M and R&D as % of revenue is trending downward as company has taken a more conservative stance on spending, abandoning growth-at-any-cost approach; focus on rep productivity

DRAFT AND CONFIDENTIAL

Tuscany Pro Forma Non-GAAP P&L ($ in millions)

Q3

Q4

Salesforce Fiscal Year Ending January 31, FY2017PF FY2018 FY2019

FY2020

Total Standalone Revenue

$235

$249

$484

$1,124

$1,408

$1,732

Pro Forma Adjustments: Less: License Revenue Attrition from Disruption Less: License Revenue Transitioning to Subscription Less: Reduced New Maintenance Revenue Plus: New Subscription Revenue (From Transition) Plus: Revenue Synergies from Cross Sell Pro Forma Adjusted Revenue Total Subscription Revenue

(7) (7) (0) 1 0 $222 $7

(7) (24) (1) 3 1 $220 $12

(14) (31) (1) 3 1 $442 $19

(6) (283) (25) 92 38 $939 $193

0 (623) (166) 437 155 $1,211 $713

0 (769) (382) 948 354 $1,884 $1,493

Standalone Gross Profit

$211

$223

$433

$999

$1,251

$1,535

Pro Forma Adjustments: Less: License Revenue Attrition GP Less: Reduced New Maintenance Revenue GP Plus: New Subscription Revenue (From Transition) GP Plus: Revenue Synergies GP Pro Forma Adjusted Gross Profit

(12) (0) 0 0 $199

(31) (1) 2 0 $194

(43) (1) 3 1 $393

(286) (22) 76 31 $798

(617) (145) 372 132 $993

(761) (332) 806 301 $1,549

Operating Expenses Sales & Marketing Research & Development General & Administrative Standalone Operating Expenses

$113 55 20 188

$118 57 21 196

$231 113 42 385

$515 245 89 849

$620 282 98 999

$762 346 113 1,221

(3) 1 0 187 $12

(4) 1 0 193 $1

(7) 2 0 380 $13

(26) 53 57 933 ($135)

(40) 127 64 1,151 ($158)

(49) 191 74 1,437 $112

8 65 ($61)

8 0 ($7)

15 65 ($67)

35 0 ($170) 480 680

10 0 ($168)

0 0 $112

$153 ($129)

$169 ($58)

$322 ($187)

$888 ($221)

$1,211 ($168)

$1,884 $112

Less: Cost Synergies Plus: Incremental S&M Spend Plus: Headcount Harmonization Adjusted Operating Expenses Adjusted Operating Profit Less: Integration Costs Less: Transaction Fees PF Non-GAAP Operating Profit Headcount Reduction for $50M OP Loss Headcount Reduction for Break Even Pro Forma Adjusted Revenue with DR Writedown Pro Forma Adjusted Op Profit with DR Writedown

36

Key Commentary Business Model Transition to Subscription • Convert license revenue into recurring subscription business; 100% conversion by FY2020 • TCV = Upfront License + 3 Yrs Maintenance • ACV = TCV / Assume Contract Length (3 Yrs) • Convert maintenance revenue into recurring subscription business starting 2 years after transaction close Revenue Synergies • Revenue synergies from cross selling Tuscany offering into Salesforce install base Cost Synergies • Decelerate headcount growth in G&A and R&D • G&A Non-HC savings associated with no longer being a public company Cost Dis-Synergies • Incremental S&M to generate cross sell synergies • HC Harmonization of 10% of total employee compensation Other Adjustments • Deferred revenue write down • $387M DR Balance; 44% write down over 4 quarters • Standard integration expenses & transaction fees

DRAFT AND CONFIDENTIAL

AVP Offer Price (per share $) Implied Premium to Current Price Implied Premium to: 30-day average trading price 60-day average trading price 90-day average trading price 180-day average trading price 52 week high 52 week low

Current

Implied equity value ($M) Net debt ($M) Implied enterprise value Implied Multiples: EV / Revenue CY16E CY17E

37

$47.38

$ 60.00 27%

$ 65.00 37%

$ 70.00 48%

$ 75.00 58%

(1%) 3% (6%) (23%) (64%) 29%

25% 31% 19% (2%) (54%) 64%

35% 42% 28% 6% (51%) 78%

46% 52% 38% 14% (47%) 91%

56% 63% 48% 22% (43%) 105%

5/17/2016

$48.00 45.90 50.62 61.38 131.34 36.60

$4,060 (808) $ 3,252

Rev. ($M) $850 $1,102

Potential Indicative Offer Range

3.8x 3.0x

$5,155 $ 5,588 $ 6,022 $ 6,456 (808) (808) (808) (808) $ 4,347 $ 4,780 $ 5,214 $ 5,648

5.1x 3.9x

5.6x 4.3x

6.1x 4.7x

6.6x 5.1x

PF BS Cash Used in Deal Debt Issued Total Sources

$2,808 $2,347 $5,155

$2,808 $2,780 $5,588

$2,808 $3,214 $6,022

$2,808 $3,648 $6,456

Tuscany Equity Value Total Uses

$5,155 $5,155

$5,588 $5,588

$6,022 $6,022

$6,456 $6,456

Very preliminary cash/debt assumptions

DRAFT AND CONFIDENTIAL

Strong Employee Approval Rating of CEO

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DRAFT AND CONFIDENTIAL

Sonoma Overview

DRAFT AND CONFIDENTIAL

Company Overview • Founded: 2004

Company Overview

• Employees: 3,991 • Headquarters: Santa Clara, CA with 5 data centers in the U.S. and 10 internationally (Canada, Brazil, UK, Netherlands, Switzerland, Australia, Singapore, and Hong Kong) • Operates a single-tenant architecture to provide SaaS based IT Service Management solutions • Sonoma is used by over 30% of the Global 2000, with a total of 3,098 enterprise customers • In process of transitioning to multi-product platform while building out broader solutions portfolio

Business Highlights

• Retained 97% of ACV up for renewal in Q1 2016 • Stable levels of sales productivity with sales headcount growing ~30% annually

• Expects to generate revenue of ~$1.37B in CY2016, up 36% from CY2015 • Current enterprise value of $12.3B and market cap of $12.8B; implies CY16 revenue multiple of 9.0x

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Sonoma Provides Material Opportunity to Penetrate Enterprise and Drive Substantial Scale

DRAFT AND CONFIDENTIAL

Strong Enterprise Customer Base IT as a Channel

Enables visibility into ~33% of G2K currently with opportunity for growth across all products

Demonstrated ability to penetrate IT as a mechanism to go crossenterprise Service Management is an entrée to broad operations

Aligned Mission

Allows Salesforce to penetrate the line of business for service across all aspects of the internal and external enterprise

~$40B of incremental TAM

Substantial Scale 41

$1.4B of revenue and growth of 36%

DRAFT AND CONFIDENTIAL

Sonoma is a Leader in the Gartner MQ for ITSM Gartner MQ for ITSM

Market Share

Sonoma Sonoma

2013 to 2015 movement

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DRAFT AND CONFIDENTIAL

Sonoma is a Digital Disruptor on Par with Salesforce

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DRAFT AND CONFIDENTIAL

Sonoma Addresses an Estimated $60B Market Opportunity

1.

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2. 3.

Gartner Market Share: All Software Markets, Worldwide GRC 2020: State of the GRC Market, 2015 CapIQ; Global companies with 100 to 1,000 employees and $50 to $500M in LTM revenue

4. Sonoma Estimate 5. CapIQ; Global companies with >1,000 employees and >$500M in LTM revenue 6. ~3,000 Sonoma customers divided by 22,500 addressable enterprise customers

Sonoma – Key Strengths & Concerns Strengths

Concerns

Scale and Growth: • With revenue of $1.4B in CY16, Sonoma trails only LinkedIn and Workday in the Enterprise SaaS ecosystem • Expected CY16 growth of 36% leads all enterprise SaaS companies over $500M in revenue

•

Ability to retain management

•

Valuation: CY16 revenue multiple of 9.0x • Valuation requires conviction that Sonoma will extend beyond core ITSM and into Platform and new horizontal offerings

•

Enterprise Presence and TAM: • Extends Salesforce into the CIO / CTO with 3K enterprise customers and 653 of G2K globally • Increases Salesforce’s TAM by $10B immediately with potential exposure to an incremental $50B+

•

GTM: • CIO / CTO sale • Very enterprise focused (avg. revenue / customer of $394K) with questioned capability to penetrate mid market or SMB

•

Attractive Metrics: • Low attrition of ~5% - 10% annually • 36% upsell, strong land and expand • 32 month average contract length for new customers • 12% operating margin and $331M of FCF in CY16

•

Margin Structure: Single tenant database and high PS revenue (13%) could challenge LT margins

•

Signs of Deceleration: 2H15 billings growth of 42% vs. 66% in 2H14; billings growth guidance of 33% for CY16

•

Single Tenant Architecture

•

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DRAFT AND CONFIDENTIAL

DRAFT AND CONFIDENTIAL

Revenue and Customers Metrics ($ in Millions)

Customers

Revenue $350

$300

Customers

($ in 000s)

Avg Sub Rev/Customer

Subscription

$276

Professional Services

$39

$245

3,000

$284

$31 $150

$34

2,000

$28

1,914

$100 $117

$133

$150

$167

$180

$201

$223

3,098

$245

2,046

2,176

2,347

2,461

2,628

$200 $150

$267 $100

1,000

$50

$0

0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 16%

20%

$250

2,804

$32

$22

$350 $300

2,978

$38

$200

16%

16%

15%

19%

15%

14%

High mix of Professional Services revenue results in lower overall gross margin

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$318

$329

$259

$46

% PS

$292

$305

$41

$250

$50

$345

4,000

13%

$0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Q/Q Growth

7%

6%

8%

5%

7%

7%

6%

4%

Sonoma has demonstrated substantial land and expand capabilities; customer growth (26% Y/Y in Q1 2016) due to increased investment in the sales organization

DRAFT AND CONFIDENTIAL

Continued Focus on Global 2K Opportunities

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Note: Sonoma definition of ACV aligns with Salesforce “AOV” definition

Currently penetrated into 33% of G2K

DRAFT AND CONFIDENTIAL

Headcount by Department

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DRAFT AND CONFIDENTIAL

Standalone P&L (US $ in millions)

Subscription Professional Services Total Revenue

2012A

Fiscal Year Ending December 31, Actual Morgan Stanley Estimates 2013A 2014A 2015A 2016E 2017E 2018E

205 39 244

350 75 425

567 115 683

848 157 1,006

1,202 165 1,367

1,588 173 1,761

2,028 182 2,210

Cost of Sales Subscription Professional Services Total COS

59 39 99

79 63 142

128 93 221

149 123 272

202 132 334

270 142 412

345 149 494

Subscription Professional Services Overall Gross Profit

145 0 145

270 12 283

440 22 462

699 35 734

1,000 33 1,033

1,303 36 1,338

1,664 37 1,701

Operating Expenses: Research & Development Sales & Marketing General & Administrative Total Operating Expenses

33 94 28 155

62 174 47 283

106 287 67 459

147 396 88 631

196 553 120 869

233 684 146 1,063

($10)

($1)

$2

$103

$165

84% 16%

82% 18%

83% 17%

84% 16%

84% 131% 90%

71% 91% 74%

62% 54% 61%

Gross Margin Subscription Professional Services Overall

71% 0% 60%

77% 16% 67%

Operating Expenses R&D as % of revenue S&M as % of revenue G&A as % of revenue

13% 38% 12%

Operating Margin

(4%)

Operating Profit

Key Commentary •

Top-line deceleration (61% in 2014 to 29% in 2017), although business has achieved substantial scale (>$1B in revenue in 2015)

270 826 172 1,268

•

Mix of subscription revenue expected to trend upwards in coming years, bringing gross margin upwards as well

$275

$433

•

88% 12%

90% 10%

92% 8%

Significant operating margin expansion in recent years mainly driven by gross margin expansion and leverage in G&A

•

50% 36% 47%

42% 5% 36%

32% 5% 29%

28% 5% 25%

R&D & G&A as % of revenue in-line with other SaaS companies and trending downwards

•

77% 19% 68%

82% 22% 73%

83% 20% 76%

82% 21% 76%

82% 21% 77%

High CapEx (relative to Salesforce) of 8-9% in 2014 / 2015

15% 41% 11%

15% 42% 10%

15% 39% 9%

14% 40% 9%

13% 39% 8%

12% 37% 8%

(0%)

0%

10%

12%

16%

20%

Growth & Margin Analysis Revenue Mix Subscription Professional Services Revenue Growth (Y-o-Y) Subscription Professional Services Overall

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DRAFT AND CONFIDENTIAL

Pro-Serve has Challenged Sonoma’s Gross Margin

​Salesforce had a greater mix of subscription revenue, and therefore better overall margins

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FY05

FY06

FY07

FY08

FY09

FY05

FY06

FY07

FY08

FY09

FY11

FY12

FY13

FY14

FY15

FY11

FY12

FY13

FY14

FY15

Sonoma Management Team

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DRAFT AND CONFIDENTIAL

Frank Slootman President and CEO EMC, Data Domain, Borland Software Netherlands School of Economics

Fred Luddy Chief Product Officer, Founder Peregrine Systems, Enterprise Software Associates

Chris Bedi CIO JDSU, VeriSign, KPMG Consulting University of Michigan

Dave Wright Chief Strategy Officer Vmware, Mercury Interactive, Peregrine Systems

Dan McGee COO EMC, Data Domain, Aventail, Pinnacle Systems Oregon State University, Stanford (M.S.)

Michael Scarpelli CFO EMC, Data Domain, Lexar Media, HPL, PWC University of Western Ontario

David Schneider Chief Revenue Officer EMC, Data Domain, Borland Software University of California Irvine

Beth White CMO EMC, Data Domain, Aarohi, Borland Software University of Northern Arizona

Below Average Glassdoor Rankings

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DRAFT AND CONFIDENTIAL

Project Sonoma Goldman, Sachs & Co. May 18, 2016

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