Business Intellegence Report April 2014

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Business Intelligence

April 2014SECTOR REPORT

Business IntelligenceIntroductionBusiness Intelligence has become the top ranked IT priority among enterprise business leaders over the last few years1. With a number of newer, high growth technologies currently transforming the Enterprise IT landscape virtualization, cloud services and software defined networks to name a few this fact might seem surprising. But consider for a moment that the impact of most of these newer IT technologies is characterized by increased operational efficiency and cost avoidance. Business intelligence on the other hand has the power to drive both revenue growth and profit margin improvement, and at the same time make the enterprise more competitive, nimble and customer oriented. This, coupled with a wide range of newer, lighter, easier to use BI products, is now making business intelligence a need-to-have, on par with foundational systems such as ERP and CRM.

While traditional BI systems were engineered as large, centralized systems designed to amass data over time and provide rear-view-mirror reports on past events, the last few years have seen significant innovation in cloud and SaaS based delivery and also in real time analytics, enabling the enterprise to extract intelligence and use that intelligence to make decisions, on a near-instantaneous basis. With the benefit of predictive modeling, some BI applications can now even foretell future trends. Big strides have also been made in Big Data, the handling of very large volumes of structured and unstructured data, which pose their own set of challenges.

With the benefit of hindsight, it is now clear that the wave of consolidation in the Business Intelligence market several years ago, including acquisitions of three of the largest pure-play, traditional BI vendors, Hyperion Solutions (Oracle), Business Objects (SAP) and Cognos (IBM), not only ended a cycle, but also cleared the path for the emergence of a new generation of business intelligence companies. At a high level, this new generation is differentiated in several ways:

Traditional BI Next Generation

Procurement Enterprises/IT departmentPerpetual license + maintenanace

C-Suite/ business unit

Term license or subscription

Implementation CentralizedCustomized, integrated

Centralized or decentralizedOut of the box, configurable

Hosting and interface Client serverWeb interface

Cloud/SaaS

Mobile

Social/Collaborative

Hardware Proprietary, single vendor Commodity, interoperable

Data Handing Data warehousePost-processing

Real time

In memory

Data Types StructuredHomogenous

Siloed

Structured and unstructured

Heterogenous

Source: Capital IQ

As witnessed in several technology sectors, much of the innovation is being created by younger companies, a trend which we believe will continue to drive, if not accelerate, consolidation in coming years. This report looks at the evolution of the business intelligence software sector over the last few years, including advances in new product development, delivery, and usage. The report also looks at recent M&A and capital formation activity in the sector, together with transaction volume and valuation metrics. Lastly, in the Sector Spotlight we highlight a number of companies that we believe are emerging as new market leaders in next generation of Business Intelligence.

Contact:James Turino, [email protected]

Hadrien Kulik, [email protected]

Redwood Capital950 Third AvenueSuite 2001New York NY 10022www.redcapgroup.com

1 https://www.gartner.com/doc/2629220

INSIDE THIS ISSUE

1. Introduction

2. Market sizing and growth

3. Mergers & Acquisitions

4. Public Financings

5. Valuation Trends

6. Private Financing

7. Sector Spotlighy - Companies



Market sizing and growthThe global business intelligence market is projected to reach $20.81 billion in 2018, up from $13.98 billion in 2013, representing a Compound Annual Growth Rate (CAGR) of 8.28%2. Among all regions, North America is the largest, capturing 49% of the global BI market.

According to IDC, in 2012 SAP was the leader in the global business intelligence software market, with a 19.7% share, followed by IBM (14.0%) and SAS (10.3%). Among the major players in the software industry, IBM has been a major acquirer, having spent more than $16 billion for deals in the Big Data and data analytics space since 2005. With the data analytics and business intelligence solutions providing diagnostic, predictive and prescriptive applications, we expect a growing number of enterprises to focus on such offerings. Moreover, apart from the top six major players which accounted for approximately two-thirds of the Business Intelligence market in 2012, the market also comprises a large number of companies which offer point solutions. Hence, we expect consolidation to continue going forward as the big players seek larger scale and fill technology gaps in their current offerings.

The BI market is segmented into Traditional, Mobile, Cloud and Social Business Intelligence, based on product architecture and user interface. Growth of Traditional BI is projected to slow to low single-digit rates in the next few years, while, newer BI technologies, although currently a small part of the overall market, are projected to grow at rates of between 20% and 30% over the next five years. Among the fastest growing segments, Cloud based BI is estimated to grow nearly four-fold, from $0.75 billion in 2013 to $2.94 billion by 2018, for a CAGR of 31%.

Chart 1: Global intelligence market size, by technologies, 2013-2018 ($ Billion)

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Sources: Gartner, Redwood Capital

Chart 2: Global business intelligence market, by technologies, 2013-2018 (Y-O-Y %)

Cloud BI Mobile BI Social BI

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Source: Gartner, Redwood Capital

2 MarketsandMarkets, 2013



Self-Service, Cloud and SaaS

Traditional Business Intelligence is typically sold as a standalone system, or sometimes embedded into enterprise software such as ERP and CRM systems. The systems tend to be large scale, centralized platforms managed within the realm of the IT department. Because they generally involve some level of customization and systems integration, turnkey systems often carry multi-million dollar price tags and as a result address a market comprised mostly of large enterprise and government customers able to justify the upfront acquisition, ongoing maintenance and related staffing costs. Common complaints about traditional BI systems include the difficulty of making changes and creating or customizing new reports, all of which require IT and sometimes third party systems integrator involvement, with long lead times and high costs.

With more and more enterprises now avoiding the use of third party resources to develop applications because of the long lead times and high costs, readily-deployable solutions, subscription based self-service products are now experiencing very high growth. As one would expect, they have opened up the market to small and medium sized enterprise for which traditional BI systems have been typically too costly, but they have also found favor with a number of large enterprise customers. Many of these products enable users to manage their own data sets, either on premises or in the cloud, as well as create and customize their own reports with straightforward drag and drop features. In addition to being easier to deploy, configure and use, subscription licensing has made many of these products easier to procure as well, with subscription based, pay-as-you-go models avoiding much of the scrutiny associated with budgeted capital projects. Self-service BI is now enabling business leaders to manage their own BI applications, freeing them from the hurdles, costs and lead times associated with IT-managed platforms. As a result, the landscape for BI has now become more decentralized with multiple vendors often resident within the single enterprise.

A number of successful companies were founded on the premise of exploiting the market for self-service, cloud and SaaS based BI solutions, among them Birst, GoodData and Logi Analytics. In addition, companies such as Pentaho have introduced true multi-tenant cloud products]. Industry analysts generally agree that Cloud/ SaaS revenues are still quite small as little as 3% of total sector revenue by some accounts3 - but are also driving the sectors highest growth rates. As the growth potential in this segment becomes clearer, traditional and on-premise vendors have started to offer their own lighter, cloud or SaaS based solutions such that today, virtually all except the most data intensive BI applications can be delivered in a remotely hosted manner and procured on a subscription basis.

Dashboard Evolution

Among the recent technological advances in the Business Intelligence sector, there is a growing focus on reporting and dashboard functions. Dashboards were rated the top priority for expansion and innovation in a 2012 industry survey4. With more and more data available for analysis, and increasing recognition that BI must be aligned with business goals in order to be successful, the challenges are knowing which metrics are the most important, and how to make reporting features and user interfaces as intuitive as possible. We know of one company able to supply literally thousands of Key Performance Indicators (KPIs) as part of their analytics platform. But without careful consideration for understanding which KPIs are the most important to their business users, the vendor runs the risk of customers being overwhelmed and deployments failing to provide the intended results. In addition, as data analysts well know, the best insights often come not from a single, static analysis, but from iterative, what-if-scenario analyses. Giving end users the flexibility to create their own KPIs on the fly, including mash-ups of diverse metrics, and giving them the tools to create their own visualizations, have been at the forefront for many BI product roadmaps. These solutions range from interactive reporting to business query to visual data discovery, and even to such familiar tools as spreadsheets. Large companies like SAP and Oracle have been applying R&D and Corporate Development resources to the dashboarding area, and a number of smaller vendors are leading the charge with innovative solutions. The latter include QlikTech, which supports rapid deployment and intuitive, associative analysis, JackBe with strong operational dashboarding features, and Metric Insight, which focuses on KPI optimization and reporting.

3 Forrester, 20134 BI Scorecard 2012



Mobile

Part of the promise of real time business intelligence is the ability to push the power of analytics and decisioning to the front lines of the enterprise, no matter where the end user may be located. Fortunately, improvements over the past decade in mobile computing power, user interface and connectivity now enable more and more sophisticated BI applications to exist on a host of readily available smartphones, tablets and other mobile devices. Benefits of mobile BI are two-fold: northbound, gathering and uploading data from diverse locations, and southbound, pushing downloaded analytics and decisioning power to remote users in the field. Mobile applications deliver the power of BI to the front lines of the enterprise by bringing mobile workers into the flow and enabling them to make faster, better informed decisions and be more responsive.

While a few companies such as Roambi have been founded to focus exclusively on the mobile BI segment, more and more mainstream vendors are adding mobile extensions of their core products, enabling them to deliver a full suite offering over an increasingly wide range of end user devices. Although Mobile BI may be a separately identified market segment today, we believe lines will start to blur as mobile becomes increasingly a feature of full-suite offerings. That said, there are challenges in delivering Mobile BI to the enterprise user, including:

Multiple devices The large and growing array of mobile devices now commercially available, and the ever growing expectation that mobile and field workers will be able to use their own device for enterprise applications, gives rise to both integration and security issues. Fortunately, technologies such as HTML 5 are making it easier to deliver web content to a wide range of devices, and a number of software solutions aimed at the Bring Your Own Device (BYOD) market are making it increasingly feasible to extend enterprise applications to consumer mobile devices without sacrificing interface functionality or network security.

Real time connectivity Even though an analytics engine might be able to deliver real time intelligence, mobile network constraints, including coverage and bandwidth limitations, may affect the end users ability to access and act on that intelligence in real time. In addition, limited processing power available on most mobile devices means that most of not all processing and analytics still needs to be performed centrally. This makes connectivity an even greater issue in the successful deployment of Mobile BI. For this reason, more and more mobile BI applications have the ability to go from online to offline and back without interruption, loss of data or user functionality.

Security As more and more enterprise applications are being pushed out to mobile devices, mobile hacking is on the rise, and the increasing ubiquity of enterprise application-enabled mobile devices is not going unnoticed by hackers. The number of new mobile malware families were up sharply in 2012, the majority of them targeting Android devices (Chart 6). Malicious Android apps alone are anticipated to top the 1 million mark this year, and Infonetics expects that nearly all enterprises will experience significant mobile device security incidents by the end of next year.

Chart 3: New android malware (000)

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Since 2012, the number of mobile malware programs has skyrocketed, with around 95% targeting Android devices. Source: McAfee Labs



Social BI

We observe the term Social Business Intelligence commonly being used to describe two different things:

Extracting intelligence from unstructured data sources such as Facebook pages, survey responses, blogs, posts, tweets and the like. For the purpose of this report, this activity is covered in Unstructured Data below.

Analytics activities that rely on knowledge base sharing, multiple human inputs and/or collaboration among a group of users. We use the term Social Business Intelligence in this second context.

In contrast to other, more siloed forms of business intelligence, the social element introduces an added dimension by enabling groups of analysts to share information, either through social platforms, shared knowledge bases, collaborative applications or wikis. These groups may be entirely within the enterprise (i.e. different departments or branch offices), or may be comprised of peer groups more broadly dispersed across an entire industry. Is Social BI a separate category of business intelligence or ultimately a feature embedded into broader offerings? While there are a handful of companies founded as pureplay social BI vendors, many of the large BI providers such as SAP, Oracle and TIBCO have introduced social elements such as instant messaging and shared knowledge bases in the last few years. The lines are being further blurred by a substantial number of collaboration software vendors that have embedded business intelligence features. As a result, it is likely that other vendors will follow and that Social BI will become more of a feature than a standalone product in the long term. Its significance, however, should not be underestimated. While Traditional BI developed siloed models to draw intelligence from (mostly structured) data, Social BI adds a critical dimension by enabling extracted intelligence to be further refined, harnessed and exploited among collaborative groups through shared knowledge across siloes.

Unstructured Data

Historically, BI was built on discrete, structured data: a purchase, a phone call, financial transaction, demographic datum, survey response, cookie. The wealth of intelligence resident in unstructured data has given rise to a vibrant group of vendors with advanced technologies for analyzing unstructured media such as text, speech, photos and video. For the user interested in mining written feedback from a web site or call center commentary, for example, there are now solutions that use semantic and/or IVR technology to provide augmented intelligence well beyond what traditional BI platforms can deliver. Social content in particular, rich in unstructured data, is of growing interest to marketers seeking to capture more subjective yet critical insights.

Complexities in unstructured data mining include capturing, integrating and interpreting data from multiple sources, especially with much of the data coming through diverse channels, including both textual (keyed and handwritten) and non-textual media such as video, audio, photos and speech. In addition, capturing the nuances of unstructured data pose a whole set of challenges unto themselves. Not only understanding what is said, but how it is said, may be critical to the correct interpretation of a survey response, for example. Companies such as Clarabridge and Temis have developed sophisticated software products that enable marketers to gather, analyze and visually report on many kinds of customer feedback.

Big Data

For the purposes of this report, we consider Big Data to comprise enterprise solutions that provide analytics of very large (not uncommonly petabyte scale or more) sets of diverse, structured and unstructured data, in real time. While the term may be somewhat overused in todays market, Big Data is a Holy Grail of sorts because at last it gives the data intensive enterprise a comprehensive and instantaneous view, after assimilating a diverse array of inputs. As a result, Big Data is a significant growth area, and most of the large enterprise software providers and systems integration firms now have dedicated businesses aimed at exploiting this opportunity. SAPs Hana and Oracles Exalytics appliances, launched in 2010 and 2011, respectively, are two of the better known in-memory platforms aimed at the real time, Big Data analytics market, and a number of smaller vendors are emerging, especially around some of the key open source technologies developed to address challenges in Big Data processing, storage and analytics. Understandably, many of the addressable use cases for Big Data are in industries which produce both very large amounts of data as well as data from multiple, heterogeneous sources. These include financial services, health care, retail and telecom, to name a few.



One extreme example of Big Data is PRISM, in which an estimated 1.4bn records are collected for analysis each day, however companies such as Google, Facebook and large mobile communications providers are having to grapple with larger, and rapidly increasing, volumes of data on a daily basis.

Big Data presents significant challenges, especially in applications requiring real time analysis. As the chart below shows, continued Moores Law-driven decline in the price of memory and newer in-memory products are now serving to make the real time analysis of very large volumes of data more feasible economically while opening up substantial new business opportunities in the sector.

Chart 4: Newer technologies enabling more Big Data to be processed in real time

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Source: Redwood Capital

This is due in large part to the increased use of NoSQL databases (Not only SQL), in-memory data storage, and distributed file and cache systems. These technologies are transforming the BI landscape from traditional, row based data warehouse architectures to systems which can ingest any type of structured or unstructured data and provide instantaneous analytics in real time.

The need for real-time analytics in Big Data has driven the use and development of in-memory storage and processing. An in-memory database (IMDB) is a database that uses a systems main memory for data storage, rather than a traditional disk-based mechanism. In-memory storage has been around for a long time, but was traditionally used in smaller scale, specialized applications. This is due to inherent limitations of server based in-memory storage which restricted the quantities of data that could be analyzed in real time, and as a consequence, larger volumes of data were typically relegated to warehouse based, non-real-time analytic engines. Newer products are now providing increasingly large scale in-memory storage and processing platforms, serving to make in-memory more of a standard in the analytics industry.

Because of the large and ever-increasing scale of data captured for Big Data analysis, database systems have had to evolve to be able to handle very high transaction volumes and support flexible dynamic data structures. NoSQL databases are well suited for this task because they are intended to simply capture all data without categorizing and parsing the data into a fixed schema. As a result they maintain a low predictable latency well suited to real time applications. They mainly rely on highly optimized key-value stores rather than tabular relations used in traditional relational databases. They can execute simple queries very quickly and are extremely scalable. These NoSQL databases come in a variety of data models (key-value pair, document oriented, columnar, graph): more than 120 open source key-value databases have been listed as of today, but some recent notable ones include MongoDB, Couchbase, Basho Technologies (Riak), Apache CouchDB and Neo Technology (Neo4j).

However, due to the lack of support for complex query patterns and the changing nature of the data in NoSQL databases, analysis has become a new challenge, and companies now often require specific data warehouse software, or seek to combine NoSQL databases with more traditional SQL solutions to mine and extract value out of massive streams of unstructured data. New relational database management systems (dubbed NewSQLs) have started to emerge in an effort to provide the same scalability and performance as NoSQL while supporting relational data models and using SQL as their primary interface.



The other downsides of most NoSQL databases today is their lack of mature management and monitoring tools, as well as shortcomings in their support of the full range of properties that are usually desirable for good transaction processing engines. Both these issues are in the process of being overcome by both the open source NoSQL communities and a handful of vendors that are attempting to commercialize the various NoSQL databases, such as Couchbase, DataStax, Sqrrl Data, MongoDB or Aerospike. NoSQL databases such as MongoDB or CouchDB can now be configured to run mostly in-memory.

Rapid increases in data volumes have given rise to innovative ways of handling real time Big Data. These include distributed file systems, in which data is stored over a gridded network of servers that can expand as needed to accept larger volumes without creating bottlenecks (for example, Amazon S3, IBMs GPFS and Hadoops HDFS). These systems have strong advantages in that they can scale as the data volume grows, reducing the need for large upfront investment in warehouse infrastructure, and in addition they generally use off the shelf hardware, which helps to contain capital expenditures when they do need to scale. The distributed model also tends to improve the reliability of the system as it scales, with the failure of any single server having less of an impact on the grid as a whole.

The combination of distributed architectures and in-memory processing has paved the way to the rise of in-memory data-grids (IMDGs) or in-memory distributed caches. These grids have been in use for some time by large internet companies to improve performance of web and mobile applications, but are now being used more and more to manage data for analytics purposes. In-memory processing results in greater data integrity and analytical accuracy, as data is less exposed to manipulation and movement while still in memory. In some cases the transaction processing and analytics applications can reside on the same server grid. Other applications are able to manage the volume and recency of data retained for real time analysis with older data relegated to a warehouse.

Several database management systems now combine this distributed architecture with NoSQL logic in an integrated way, making it easier for enterprises to implement business intelligence applications based on big data. Examples include Basho, DataStax, FoundationDB, NuoDB, Sqrrl, as well as HBase (based on Hadoop, modeled after Googles BigTable), Facebooks Cassandra, LinkedIns Voldermort and Amazons DynamoDB.

Open source framework Hadoop, developed by the open source Apache Software Foundation, is rapidly emerging as a standard in processing data-sets for Big Data. Hadoop is an open source framework for the distributed processing and storage of very large sets of structured and unstructured data across clusters of computers, tightly integrated with HDFS (Hadoop Distributed File System). It solves the problem of how to handle extreme volumes of disparate data in a scalable, cost-effective manner. The distributed architecture enables it to efficiently scale up from single servers to thousands of machines using standard off the shelf hardware, and also provides a high level of reliability.

Originally, Hadoop was an open source implementation of MapReduce, a programming model created at Google in response to the problem of managing web search indexes and processing large data sets with a parallel, distributed algorithm on a cluster. But as the Hadoop project has matured, further components have been developed and added to enhance its usability and functionality. Just as people refer to Linux as more than just the Linux kernel, the name Hadoop is now being used to represent the entire ecosystem around the core MapReduce and HDFS functionalities, including programmability tools like Pig and Hive, data access tools like HBase, Sqoop and Flume, coordination and workflow tools like Zookeeper and Oozie, and management and deployment tools like Ambari and Whirr. All these Hadoop-related modules are gathered by Apache under the BigTop project umbrella, and as with Linux, they are often packaged directly into Hadoop distributions (essentially, pre-configured software bundles).

Hadoop adoption has spawned a number of independent companies developing their own Hadoop distributions, including Cloudera, Hortonworks and MapR Technologies, as well as companies providing innovative applications for specific uses with Hadoop, such as Datameer, Karmashpere and RainStor. In addition, all the leading enterprise software vendors have incorporated Hadoop into their big data solutions, demonstrating that open source is becoming a larger presence in the Big Data marketplace: IBM with InfoSphere BigInsights, EMC with Greenplum (later incorporated into GoPivotal), Oracle with their Big Data Appliance, SAP with the HANA Platform and Microsoft with Windows Azure HDInsight (including some integration in Office 365). Some of the vendors who made their name in big data before Hadoop matured now also offer Hadoop connectors to their existing analytical database systems, including Vertica (HP) and Aster Data.



Even though commercial vendors and the open source community are actively working on lowering the barriers to entry to Big Data, one of the major impediments to mainstream adoption remains the scarcity of skilled human resources around these new, more complex technologies. In addition to processing data, people with solid grounding in statistics, mathematics, data visualization and business-related issues are needed to efficiently transform the data into truly valuable business intelligence. McKinsey & Company estimates that, by 2018, the US could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions5.

Predictive Analytics

If knowledge extraction through data-driven business intelligence is now becoming a must-have, what are the implications for applications that can predict future trends? Predictive analytics is not new, however advances in data science and statistical modeling much of it from the academic world - continue to expand its applicability and addressable market. While predictive analytics has been applied traditionally to risk management and marketing applications, a small but growing number of companies is expanding the universe of use cases to such diverse areas as financial instrument performance, life sciences research and human resource management. Predictive Analytics is still a small part of todays market, but one in which we expect to see significant growth, highly correlated to Big Data.

Enterprise Performance Management

With literally hundreds if not thousands of use cases in Business Intelligence, and more and more analytics functionality embedded in a diverse array of enterprise software products, its difficult to draw boundaries around the sector. Next generation analytics in particular is permeating more and more enterprise software, whether as an add-on, upgrade, new release feature or module. One area of BI that is more easily demarcated is Enterprise Performance Management. Sometimes called Business Performance Management or Corporate Performance Management, these solutions are designed to measure and report operational KPIs within the enterprise. Many combine data integration, analytics and predictive modeling to both assess historical performance and provide tools for future planning purposes. A cross section of companies reveals a number of approaches. Adaptive Planning, Host Analytics and Tagetik, for example, focus on KPI consolidation for the purposes of financial analysis, predictive planning and budgeting. MooD International extends into service performance, IT security and risk management for enterprise, government and even military arenas. RiverLogic helps companies optimize costs of sales, including supply chain, capital expenditures and network design. Board International provides a toolkit for companies to quickly and inexpensively create their own applications without the need for programming. In each case EPM vendors not only provide data driven intelligence, but also provide the means to use intelligence constructively to manage operations and financial performance on an ongoing basis. In this regard, EPM is differentiated in both extracting intelligence on historical data and the ability to apply that intelligence to enterprise operations. We believe the combination of data science and practical applications lends EPM strong prospects commercially and therefore consider it an important sector to watch.

5 http://www.mckinsey.com/insights/business_technology/big_data_the_next_frontier_for_innovation



Mergers & AcquisitionsM&A Activity 2009-2013

As noted previously, the year 2007 witnessed major consolidation in the traditional Business Intelligence sector, starting with Oracle acquiring the fourth-largest BI vendor, Hyperion Solutions in April 2007 for $3.3 billion. In October 2007, SAP announced the acquisition of Business Objects, the leader in business intelligence software, for EUR4.8 billion (approx. $6.8 billion), marking a clear shift in SAPs strategy of refraining from inorganic growth. IBM in turn modified its own strategy of abstaining from acquiring applications software companies to avoid partner disruptions, launching a $5 billion bid in November 2007 for the third-largest BI vendor, Cognos. Notably, Cognos had beefed up its business intelligence portfolio to include financial performance analytics capabilities by acquiring Applix just prior to the deal with IBM.

There has yet to be a year since 2007 exceeding that years aggregate dollar volume, with most of the sector M&A in the last few years focused on more innovative, Next Generation targets. As a result, only three transactions have been valued in excess of $1 bn in the last five years (SPSS to IBM in 2009, Netezza to IBM in 2010 and Endeca to Oracle in 2011). Transaction volume has increased steadily, however, from 16 in 2009 to 49 in 2013, and the presence of many smaller players developing innovative solutions continues to offer ample scope for further consolidation (see table below). This is reflected in the fact that aggregate dollar volume for disclosed deals declined to $565 million in 2013, the lowest figure over the past five years.

Year Deal VolumeTotal Disclosed

ValueMean Deal

ValueMedian

Deal ValueMean Revenue

MultipleMean EBITDA

Multiple

2013 49 565 35 19 2.9x n.a.2012 47 791 53 10 2.7x 83.1x2011 31 1,828 203 23 7.6x 57.5x2010 29 2,640 240 20 4.9x 40.4x2009 16 1,228 205 30 1.5x 11.2x

Source: Capital IQFigures in $ million

Geographically, North America and Europe have dominated M&A deal activity in the business intelligence space, with these two regions together accounting for close to 90% of the deal volume and close to 100% of the deal value, consistently, over the years. These trends are a testimony to the concentration of major players in the data analytics and business intelligence space in these regions, in our view. In 2013, North America accounted for 35 deals compared to 31 in 2012. Dollar volume in North America grew by 9.0% to $483 million in 2013 from$443 million in 2012. Meanwhile, in Europe deal volume declined to 11 in 2013 from 12 in 2012, while disclosed transaction values declined 76.8% y/y to $80 million.

Chart 5: Deal Volumes Chart 6: Transaction Values

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M&A Valuation Trends

Notably, deal activity has rebounded over the past five years, with deal volumes steadily increasing each year from 2009 levels. Median dollar values, however have remained in the sub- $30 million range over the past few years, mirroring the high level of activity and strategic interest in smaller, more innovative technologies. We note that cloud-based M&A targets have generally commanded higher multiples as more and more customers have gravitated towards cloud offerings due to their cost-effectiveness and efficient delivery method, providing substantial revenue visibility and therefore, increased valuations to the cloud players.



Over the past two years, mean LTM revenue valuations have been relatively stable at around 2.8x. In 2013, the mean revenue multiple for disclosed deals was 2.9x, with deals ranging from 1.2x-6.3x (the latter Datawatchs acquisition of Panopticon Software). In 2012, the mean revenue multiple for disclosed deals was 2.7x, with deals ranging from 0.5x to 7.1x (the latter KEYWs acquisition of Sensage). The mean dollar value for 2013 and 2012 was $35 million and $53 million, respectively, in both cases far lower than mean values of over $200 million for the prior three years. This is attributable to the higher level of activity among smaller, more innovative companies, as well as fewer large transactions as the bigger end of the market consolidates.

Activity in 2014 year to date

Trends for deal activity thus far in 2014 have started out strong. In January 2014, Dassault Systmes, a developer of 3D design software, announced an agreement to acquire Accelrys, a provider of scientific lifecycle management software, for approximately $750 million. The deal enabled Dassault Systmes to gain access to Accelrys tools for automating scientific discovery and target the addressable $4 billion scientific lifecycle management market. The transaction is valued at 3.9x revenue and 58.2x EBITDA.

Activity in 2013 and 2012

In 2013 the 49 M&A transactions in Business Intelligence was two more than the level achieved in 2012. However, the total dollar value of $565 million declined for the third year in a row.

In the largest deal of the year, Apple acquired Topsy Labs in December 2013, reportedly for $200 million, although deal multiples were undisclosed. Topsy Labs is a social media analytics firm, which offers tools to analyze content on Twitter such as how often a term is tweeted, detect an influential person on a particular topic and measure the exposure of an event or campaign. Topsy then monetizes the analysis by selling it to its customers. According to industry analysts, Apple will utilize Topsy Labs to comprehend trends on social media and make recommendations to its customers for finding apps, movies and music to be bought, thereby offering incremental revenue potential. Apple could also apply Topsys search technology for indexing vast amounts of unstructured data on Twitter to its Siri voice search.

In the second-largest deal of the year, salesforce.com acquired EdgeSpring in June 2013, a provider of business intelligence analytics solutions for $133.7 million in cash and stock. Just a month prior to the deal, EdgeSpring had raised $11 million in a round of financing from Kleiner, Perkins, Caufield & Byers and Lightspeed Venture Partners. Interestingly, the EdgeSpring deal came immediately after salesforce.coms announcement to acquire ExactTarget, an e-mail marketing vendor. In our view, salesforce.coms push into digital marketing will be well complemented by the addition of EdgeSprings analytics tools.

Another major deal during the year was the acquisition of Kapow, a provider of data integration and analytics software by business process applications provider Kofax for $47.5 million in cash in July 2013. The acquisition enables Kofax to improve its ability to integrate its applications with third party software for content import and export and data validation. Notably, the Kapow transaction followed Kofaxs acquisition of business intelligence and analytics software provider Altosoft in March 2013. These deals reflect Kofaxs push into business intelligence and the expansion of its product portfolio for analyzing multichannel data. Kofax acquired Altosoft for $13.5 million in cash at a somewhat high valuation (4.0x LTM revenue multiple vs. median multiple of 2.5x for the full year). The valuation for Kapow was in line with the median revenue multiple for the year.

Also in 2013, Software AG announced the acquisition of JackBe, a US-based provider of real-time visual analytics and intelligence software. The deal enabled Software AG to offer mashup and real-time analytics solutions, allowing users to collate data from various sources including Excel spreadsheets, data warehouses and news feeds and visualize it within real-time dashboards. The integration of JackBes technology with Software AGs solutions enabled enterprises to generate an integrated, real-time view of business operations such as inventories, orders etc. through a dashboard visualization layer.

Two of the 2013 acquisitions by Yahoo! laid emphasis on image search and recognition techniques. In August 2013 and October 2013, internet giant Yahoo! acquired image-recognition companies IQ Engines and LookFlow, respectively, in a bid to integrate the technologies into its photo and video hosting and sharing service, Flickr.



At the time of the deal, IQ Engines possessed two image-recognition application programming interfaces (APIs) and was also working on a mobile photo album application to organize images on a smartphone into categories based on automatically generated tags. Yahoo! also acquired LookFlow to improve photo discovery on Flickr as LookFlow uses machine learning to enable people to search and explore images.

The largest deal of 2012 was the acquisition of Torex Retail Holdings, a provider of information technology solutions for retail and convenience stores by MICROS Systems, for $272.4 million. The deal enabled MICROS to expand outside its market in North America into Europe. Further, Torexs presence in retail expanded MICROS product portfolio to include retail, restaurant and hotel solutions under one umbrella.

The second largest deal of the year was the unsolicited offer by Actian, a provider of data management solutions for Pervasive Software, a provider of data management and integration software at $8.50/share in August 2012. Actian raised the offer price twice before the deal was finally accepted and completed in April 2013 at $9.20/share at a total value of $162.9 million.

In contrast to 2012, 2011 witnessed more than twice the dollar volume ($1.8 billion) on fewer deals (31), however a single transaction the acquisition of Endeca by Oracle for $1.1 billion accounted for 60% of the years total disclosed dollar volume. Among the other 30 transactions, mean size for disclosed deals was $91 million, very much in line with 2010 (excluding the IBM-Netezza deal for $1.7 billion).



Public FinancingsRocket Fuel IPO

The IPO market in the US has seen a revival, driven by the easy monetary policy and a gradual recovery in the countrys economy. In August 2013, Rocket Fuel, a provider of artificial intelligence advertising solutions for digital marketers filed for an Initial Public Offering (IPO) for listing on the NASDAQ stock exchange. The IPO offering comprised 4 million shares and the companys initial offer price range was $24-$27 per share. Rocket Fuel subsequently increased the offer price range to $27-$29 per share, eventually pricing the IPO at the higher end at $29, and raised $116 million from the IPO. The underwriters to the issue also had a 30-day option to purchase up to 0.6 million additional shares at the IPO price from some existing shareholders to cover over-allotments. Rocket Fuels IPO was priced at 5.9x Rocket Fuels LTM (June-ended 2013) revenues, which was at a premium compared to Eloquas $92 million IPO at approximately 4.4x LTM revenues in August 2012. Rocket Fuel offers solutions to automate the process of purchasing ad slots and enable its clients to decrease their marketing efforts. The company aimed to utilize the proceeds of the IPO for working capital requirements, general corporate purposes, investing in its core technology and also to repay debt.

Investors bid up the share price of Rocket Fuel to $56.1 at the end of its first trading day on 20 September, 2013, resulting in a 93% gain on the IPO price. We believe the overall jump in the share price post the IPO is a reflection of positive investor and analyst sentiment in the potentially high-growth and niche programmatic ad buying solutions for real-time bidding. Moreover, the companys stellar revenue growth at a 2010-2012 CAGR of 154% had also increased investor optimism. Despite the strong Q3 top-line growth and a better-than-expected top-line outlook, concerns over ongoing losses and restriction of the use of cookies by users had pulled back the share price, only to rebound on positive analyst sentiment.

Tableau Software IPO

One example of investor interest in the dashboard area was the successful May 2013 IPO of Tableau Software, a provider of interactive data visualization software. The company raised $254 million through the issuance of 8.2 million shares after raising the range twice, from $23-$26 initially, to an ultimate price of $31 per share. The stock gained 63.7% on the first day of trading and has nearly tripled from its issue price. A major reason for the strong stock performance has been Tableaus strong operating performance and positive analyst sentiment and expectations of market share gains in data visualization, progress in overseas markets and access to larger deals.

Debt Offerings

Public debt offers dried up in 2013 with five offers in the year compared to 11 in 2012. The total offer value also fell significantly in 2013 to $2.2 billion, following a $ 7.8 billion raised in 2012. In June 2013, Audatex North America (a wholly owned subsidiary of Solera Holdings) raised $850 million through the issue of 6% senior notes due 2021. Audatex provides automotive claims, underwriting and information solutions to the insurance carriers, repair shops and government agencies. Audatex planned to use the issue proceeds to repay its existing debt of $850 million senior notes with a coupon of 6.75% and due 2018.



Global M&A Deals in Business Intelligence (2009 to 2014 YTD March)

Announced Date

Target/Issuer Buyers/InvestorsTrans. Value

Revenue [LTM]

EBITDA [LTM]

Revenue Multiple

EBITDA Multiple

Major Business Focus [Target/Issuer]

03/26/14 Fieldglass SAP - - - - - Intelligent solutions for finding and managing human capital

03/25/14 2020 Imaging - 0.1 - - - - Visualization solutions for command and control domain

03/19/14 Knotice IgnitionOne - - - - - Data management platform to unite customer data, analytics and message delivery

03/18/14 KitLocate Yandex - - - - - Develops and provides location aware applications

03/18/14 Matrix-Data Market Metrics 13.3 - - - - Online business intelligence solutions to the financial services industry

03/10/14 Biond ConsultingPricewaterhouseCoopers LLP, Canada, Investment Arm

- - - - - Implementing business intelligence solutions

03/05/14 APE Software Components Axis Corporate - 1.0 - - - Business intelligence software solutions

03/05/14 L-3 Data Tactics L-3 Communications Holdings - - - - - Big data analytics and cloud computing solution services

02/24/14 Cloudant International Business Machines - - - - - Data hosting and analytics solutions based on open-source BigCouch and CouchDB for businesses01/30/14 Accelrys Dassault Systemes 746.4 166.3 11.0 3.9x 58.2x Scientific business intelligence software and solutions

01/20/14 Coactiva Aspiren Callcredit Information Group - - - - - Big data analytics and business intelligence cloud-based software solutions in the UK

12/18/13 iLOOKABOUT The Byng Group - 3.5 -0.2 - - Visual and data intelligence business solutions12/18/13 Link Analytics KPMG - - - - - Big data analytics solutions

12/17/13 Matrix-Data Market Metrics 19.5 - - - - Business intelligence software solutions primarily to the financial services industry in the UK

12/11/13 Empresa de Business Analytics Enterprise Software Solutions Brasil 2.6 - - - - SAP business analytics solutions

12/02/13 Topsy Labs Apple 200.0 - - - - Social-media analytics company for real-time search and analytics to businesses

11/21/13 HCD Software The Reynolds and Reynolds Co - - - - - Data mining and business intelligence solutions for the automobile dealership industry

11/14/13 NationalField NGP VAN - - - - - Social business performance company focused on connecting people with data

10/16/13 Kalido Silverback Enterprise Group - - - - - Business-driven data governance software

10/01/13 Sand Technology N. Harris Computer 3.5 2.0 -2.3 1.2x NMSoftware products and services to enable users to retrieve usable business information from various amounts of data

09/25/13 Openbridge Maltem Consulting Group - 12.2 - - - Open source, digital, mobility, and business intelligence solutions

09/10/13 KXEN SAP - - - - - Predictive analytics solutions for business users08/29/13 Hstreaming Adello Group - - - - - Real time data analytics and processing solutions\08/22/13 JackBe Software - - - - - Real-time business intelligence solutions

08/07/13 H&D Ventures Starcount - - - - - Data mining for analytics and audience engagement services

08/07/13 Infochimps Computer Sciences 27.0 - - - - Cloud services for streaming data and real-time analytics

08/06/13 Asset Control Systems Marlin Equity Partners - - - - -Data management software solutions to banks, broker-dealers, hedge-funds and investment managers

07/31/13 Kapow Software Kofax 47.5 15.9 -2.2 3.0x - Big data integration platform for managing critical data from disparate sources

07/18/13 Ztelic Yahoo! Beijing Global R&D Center - - - - - Big data analysis on Chinese social networking platforms

07/17/13 Akiban Technologies FoundationDB - - - - - Designs and develops operational database systems

07/17/13 ITR Software Software Paradigms Infotech - - - - - Merchandising software solutions to the retail industry

07/16/13 Myrrix Cloudera - - - - - Open-source clustering and recommender system to provide access to large-scale big learning from data

07/09/13 Mirror42 ServiceNow - - - - - Performance management solutions for various organizations

06/27/13 Noetix Silverback Enterprise Group - - - - - Business intelligence software and services for enterprise applications

06/27/13 Raytheon Visual Analytics Raytheon - - - - - Data analytics and solutions for investigating money laundering and other financial crimes

06/21/13 Elastic Intelligence Intuit - - - - - Business intelligence components to users for accessing and integrating data from SaaS applications

06/17/13 Panopticon Software Datawatch 31.4 5.0 - 6.3x - Visual data monitoring and analysis software tools for monitoring and analysis of real-time data

06/07/13 EdgeSpring Salesforce.com 133.7 - - - - Visual analytics and business intelligence solutions

06/05/13 Great Bay SoftwareAlpine Investors; Alpine Investors IV; GrowthFire

0.0 Deployment, administration and management of 802

05/30/13 Seeneco Diasoft - - - - - Cloud service reporting and business intelligence software for businesses

05/13/13 Millbrook Guidewire Software 18.5 - - - -Business intelligence, data warehousing, and software-as-a-service solutions for the property and casualty insurance industry

05/07/13 Opera Solutions Wipro 30.0 100.0 - - - Big data predictive and prescriptive analytics to businesses and governments globally

05/02/13 GemStone/S GemTalk Systems - - - - - Distributed data store in-memory and on-disk for delivering data to applications in multiple formats

04/25/13 ParAccel Actian - - - - - Analytic database solutions and services

04/02/13 ChangeTrack Research Accenture - - - - -Analytics-based tools and services to track and measure enterprise-wide transformational change programs



Announced Date


Revenue [LTM]

EBITDA [LTM]

Revenue Multiple

EBITDA Multiple


04/01/13International Business Machines Corporation, ShowCase Business Intelligence Software Portfolio

Help/Systems - - - - - Enterprise-wide data access, analysis and reporting abilities

03/19/13 Netbreeze Microsoft Dynamics - - - - - Business intelligence solutions for large and midsized companies in Switzerland

03/14/13 Kontexto Spectral Capital 0.9 - - - - Software and services to acquire, analyze, and visualize streaming real time data

03/11/13 Hego ChyronHego 28.6 14.8 - 1.93 - Graphics and data visualization solutions for sports and broadcasting industries

03/01/13 altosoft Kofax 13.5 3.4 - 4.0x - Dashboard development, real-time event monitoring and business process optimization integration services

02/28/13 G4 Analytics Nielsen Holdings - - - - -Business intelligence and planning applications to companies in the analytics, consumer goods, and retail industries

02/18/13Bayspire Inc., Webcrossing Product Line

Elliptics - - - - - Software suite including a built-in objected-oriented NoSQL database for complex data structures

02/14/13 Motivity Solutions Cassiopae - - - - - Business intelligence software solutions to mortgage and financial services industries

02/08/13 Near Infinity Altamira Technologies - - - - - Cloud-based, big data entity analytic solutions

02/06/13Four J's Development Tools, Inc., ANTs Data Server

ANTs Software - - - - -Relational database that combines the speed of an in-memory database with the persistence of a disk-based database

02/05/13 Altius Consulting Cloudpoint - - - - -Supports business intelligence, enterprise performance management, data platform and independent software vendor solutions

02/05/13 QPR CIS QPR Software 0.1 - - - -

Solutions and consultation services in performance management, process modeling and analysis, and risk management and compliance in the Russian Federation and CIS countries

01/31/13 Quantivo Aggregate Knowledge - - - - -On-demand big-data analytics solutions and pattern-based strategies to various businesses within a cloud infrastructure

01/28/13 Angoss Software Peterson Partners 8.5 7.1 -0.3 1.2x - Predictive analytics software and solutions01/23/13 Neuralitic Guavus - - - - - Mobile data intelligence solutions12/21/12 AdGooroo Kantar Media North America - - - - - Digital marketing intelligence solutions

12/19/12 StoredIQ International Business Machines - - - - - Information governance solutions to automate information management process

12/06/12 CLIMPACT Metnext - - - - - Climate business intelligence solutions

12/05/12 NettPositive Business Analytics EFX Holdings - - - - -Analytics and business intelligence solutions for enterprises to measure, monitor, and manage their businesses

11/29/12 More IT Resources Greenplum - - - - - Virtual resource partitioning software solution

11/26/12 Hub Marketing Solutions\ Precision Dialogue - - - - -Dialogue-based customer management strategies, marketing data management and business intelligence solutions

11/07/12 Tierdata Informatica 10.2 - - - - Enterprise performance and data management software solutions

10/29/12 Recombinant by Deloitte Deloitte Consulting - - - - -Data warehousing and clinical intelligence products and solutions to healthcare providers and academic medical centers

10/23/12 Aegis Analytical Accelrys 30.0 - - - - Enterprise manufacturing intelligence solutions10/22/12 Quiterian Actuate 8.2 5.2 - 1.6x - Business analytics solutions for data insight

10/01/12 Flecto BV and RightSelect.com Solving Efeso - - - - - Performance behavior software to make behavior objective and measurable

09/24/12 Butterfly Software International Business Machines - - - - - Data analysis and migration applications to discover, analyze, and migrate data centre infrastructures

09/13/12 RivalEdge ALM Media Properties - - - - -Online service to monitor, filter, and aggregate information about news, events, and publications for law firms

09/13/12 Sensage The KEYW Holding 88.0 12.1 0.4 7.1x 202.2x Security information and event management (SIEM), and data warehousing software solutions

09/11/12 Data Scout Solutions Group Informatica 9.5 - - - -Solutions to cleanse, standardize and enrich customer information, integrate critical enterprise data and manage and view account hierarchies

09/09/12 myDIALS Adaptive Insights - - - - - Personalized business intelligence solutions

09/05/12 OneDomain WideOrbit - - - - -Media planning, research, and business intelligence software solutions to television stations, radio stations, cable networks, and agencies

09/04/12 Prelytis Access UK 5.0 - - - -Business intelligence solutions to help companies improve decision-making cycles, enterprise performance, and information chain

08/20/12 Hurley & Frank Industries Dealer.com - - - - - Social media analytics software to extract business intelligence from online conversation

08/13/12 Pervasive Software Actian 162.9 50.8 4.6 2.3x 25.6xSoftware to manage, integrate, and analyze data in the cloud or on-premises throughout the data lifecycle

08/02/12 Petris Technology Landmark Graphics - - - - - Data management and integration solutions for oil and gas companies internationally

07/11/12 SwiftKnowledge SNL Financial - - - - - Web-based business intelligence software solutions

07/10/12 BI-SAM Technologies Aquiline Capital Partners - 10.0 - - -Data management, performance, attribution, risk, GIPS, and reporting solutions for the asset management industry

07/10/12 GeoIQ Environmental Systems Research Institute

- - - - - Real-time location analysis software solutions for managing and analyzing data



Announced Date


Revenue [LTM]

EBITDA [LTM]

Revenue Multiple

EBITDA Multiple


07/10/12 Geosemble Technologies TerraGo Technologies - - - - - Solutions to visualize data geographically

06/29/12 Verix The Procter & Gamble Company - - - - - Software-as-a-Service business intelligence solutions to streamline commercial operations

06/25/12 Innofactor Innofactor 3.8 4.1 0.2 0.9x 21.4x Business intelligence and data warehousing solutions based on Microsoft technology

06/11/12 CubeLogic OpenLink International - - - - - Risk management solutions to energy and investment banking sectors

06/05/12 Collective Intellect Oracle - - - - - Web-based, automated, real-time text mining and analytics software for social CRM

06/01/12 Coalition Development CRISIL 44.5 12.3 - 3.6x - Research analytics and business intelligence solutions for the financial services sector

04/30/12 Purisma SAP 2.0 4.0 - 0.5x -Solutions-driven master data management platform and commercial data integration software solutions for enterprises

04/26/12 Torex Retail Holdings MICROS Systems 272.4 - - - - Software solutions including business intelligence and data warehousing04/23/12 Teradata Corp, Certain Assets Centrica - - - - - Teradata data warehouse appliance platform

04/19/12 Ravel W2O Group - - - - - Enterprise-grade analytics solutions and software for discovering insights from big data

04/12/12 Snoobi Fonecta - 4.0 - - -Web analytics solutions focusing on business intelligence, visitor tracking, Internet marketing and advertising, and campaign management

04/03/12 LogLogic TIBCO Software 136.6 - - - -Data management solutions to monitor compliance stance, and identify gaps and errors to tighten internal controls

03/30/12 NexR KT Cloudware 4.7 - - - - Cloud computing and Hadoop data processing platforms

03/29/12 CU Data Miner Akcelerant Advisors - - - - - Business intelligence reporting and business process improvement solutions for credit unions

03/07/12 Syntergy Inc., SharePoint Solutions Metalogix Software - - - - - Web-based business intelligence software solutions

03/05/12 Fetch Technologies Connotate Technologies - - - - - Data management solutions for various industries and companies

03/02/12 Kontexto Sargas Capital 10.5 - - - - Software and services to acquire, analyze, and visualize streaming real time data

02/17/12 Jumppost Groupon - - - - - Social media platform which allows users to map the physical world around them through pictures and text

02/07/12 LeapFrogRx Model N 3.0 - - - - Cloud-based business intelligence applications for pharma and biotech

02/05/12 alqemyiQ ISIS Capital Management - - - - - Enterprise demand data management software solutions to manufacturers, retailers, and sales agents

01/23/12 Effiscience BearingPoint - - - - - SaaS business analytics solution to identify opportunities and hedge risks along the value chain

01/17/12 BigDataLabs Project X Labs - - - - - Location intelligence tools

01/17/12 CIC TNS Media Research - 4.7 - - - Social business intelligence solutions for businesses in China

12/30/11 Beyond Insight Impact Solutions Consulting - - - - - Analytic software applications and various enterprise information management capabilities

12/02/11 Potomac Fusion, A Sotera Defense Solutions

Sotera Defense Solutions - - - - - Advanced intelligence, data fusion, and visualization technologies

12/01/11 Corticon Technologies Progress Software 23.0 - - - - Business rules management solutions for companies to automate decision making processes

10/20/11 Vision.bi Keyrus (Israel) - - - - -Solutions for tracking and analyzing the BI processes and identification of bottle necks and weaknesses in the process

10/19/11 Aurix Avaya - - - - - Phonetic speech search and analytics technology solutions

10/18/11 Endeca Technologies Oracle 1,100.0 - - - - Unstructured data management, web commerce and business intelligence solutions

10/12/11 RiverGlass Allen Systems Group - - - - - Electronic discovery (eDiscovery), information collection, data management, and analysis solutions

10/07/11 Alchemex Sage South Africa 10.2 - - - - Develops Excel-based business intelligence solutions for small to medium enterprises

10/02/11 Zettapoint EMC - - - - -Storage management, business intelligence performance optimization and database consolidation solutions

09/28/11 Synaptris GBS Enterprises 1.3 - - - - Reporting and analysis solutions

08/09/11 Marketing Analytics Nielsen Holdings - - - - - Market response modeling solutions to measure the impact of marketing on sales

07/28/11 InQuira Oracle - - - - -Software platform including knowledge base management, natural language search and analytics and reporting applications

07/26/11 e2e Analytix Bodhtree Solutions - - - - - Analytical and business intelligence solutions

06/01/11 Skywire Software Thomson Elite - - - - -Enterprise software and services including business intelligence system to manage vast amounts of information

05/23/11 Firmware Technologies Visi Inc - - - - - Collaboration and communications platform to distribute large sets of data for visualization

05/09/11 Deloitte Managed Analytics Deloitte Consulting - - - - - Managed analytic solutions for user-specific reports, scorecards and dashboards

05/09/11 Tap11 AVOS Systems - - - - -Real-time business intelligence platform for companies to monitor, engage, and measure the impact of their social media campaigns

05/04/11 Analyzd Klarna - - - - - Fraud prevention, risk management and business intelligence software



Announced Date


Revenue [LTM]

EBITDA [LTM]

Revenue Multiple

EBITDA Multiple


04/18/11 @WalmartLabs Wal-Mart Stores 300.0 - - - - Big Data platforms to process data covering products and users

04/15/11 TARGIT - 10.0 - - - - Business intelligence tools to monitor and optimize performance indicators

04/08/11 Datanomic Oracle - - - - - Enterprise data management and compliance screening software solutions

04/05/11 Overtone KANA Software - - - - - Brand monitoring and engagement to various enterprises

03/22/11SAF Simulation, Analysis and Forecasting

SAP - 15.6 2.6 - -Ordering and forecasting software for the trade, logistics, and industrial sectors in Europe and North America

03/21/11 Qlik Technologies - 122.0 226.5 29.9 7.6x 57.5x User-driven business intelligence to create and share insights and analysis

03/08/11 First Coverage YouDevise - - - - - Web-based financial information management solutions

03/03/11 Aster Data Systems Teradata 259.0 - - - - Data management and advanced analytics solutions for enabling data storage and analysis of data sets

02/14/11 Vertica Systems Hewlett-Packard - - - - -Real-time analytics platforms for communications, financial services, Web 2.0 & gaming and healthcare industries

02/03/11 PredictiveMetrics SunGard Data Systems - - - - -Statistical-based predictive scoring metrics and analytical decision solutions for the B2C and B2B markets

01/23/11 Automsoft International - - - - - - Data management software solutions

01/10/11 InfoSTEP Saama Technologies 3.0 - - - -Solutions and products in the areas of business intelligence, data integration, technology and on demand

01/05/11 Obvient Strategies Ventyx - - - - - Packaged business intelligence solutions for the distributed asset industry

12/22/10 Aprimo Teradata 525.0 68.0 - 7.4x 0.0x Cloud-based integrated marketing management software solutions

12/08/10 NexR KT Corp - 0.3 - - - Cloud computing and Hadoop data processing platforms

11/16/10 CognoVision Solutions Intel - - - - - Real-time audience-measurement and retail-intelligence solutions

11/07/10 Actian Garnett & Helfrich Capital - - - - -Data management solutions to transact, analyze, and take automated actions across clients business operations

10/18/10 Data Foundations Software - - - - - Enterprise software for organizations to manage data assets10/04/10 Evolve24 Maritz Research - - - - - Business intelligence software and consulting services09/22/10 Acsellerate Solutions eCommerce Industries - - - - - On-demand sales and business intelligence solutions09/20/10 Netezza International Business Machines 1,729.8 223.3 19.7 7.1x 80.8x Data warehouse and analytics software solutions

08/05/10 Kickfire Teradata - - - - -Database appliances to enable MySQL data warehousing, business intelligence, workloads analysis and ad hoc queries

07/06/10 Greenplum EMC - - - - - Database software for business intelligence and data warehousing applications

06/17/10 BeliefNetworks Benefitfocus - - - - - Semantic intelligence and analytics software to web publishers and advertising companies

06/15/10 Coremetrics International Business Machines - - - - - Digital marketing optimization solutions06/08/10 Exalead Dassault Systemes 163.5 19.3 - 8.5x - Software for enterprise and web search markets

05/10/10 SIRA Deltek 8.9 - - - - Performance intelligence software for project-based government contractors

05/06/10 GemStone/S SpringSource - - - - - Distributed data store in-memory and on-disk for delivering data to applications in multiple formats

04/09/10 QL2 Software Hale Global 14.0 - - - - On-demand data access platform for data management solutions

03/26/10 Computer Corporation of America Rocket Software - - - - - Database management systems for enterprises

03/25/10 Gilon Business Insight Ness Technologies 19.9 22.0 - 0.9x -Enterprise information management solutions and consulting services for large and medium sized corporations in Israel

03/25/10 Netrics TIBCO Software 10.5 - - - - Intelligent database record matching software in the field of automated spelling and grammar correction

03/16/10 Control.IT Unternehmensberatung Taliance - 3.0 - - - Data warehousing applications to the real estate industry

03/11/10 XTAQ eg solutions 0.3 0.6 - 0.3x - Business performance measurement solutions for organizations in the UK

03/09/10 Softwareiq Fujitsu - - - - - Web based user interface for business intelligence in the area of budget analysis and reports

03/01/10 Predictive Analytics Interthinx 7.7 - - - - Scenario-based forecasting, stress testing, and predictive analytics solutions for retail lenders

02/03/10 Initiate Systems International Business Machines - - - - - Master data management software solutions for organizations

01/28/10 Siperian Informatica 130.0 24.6 -21.0 5.3x NM -

01/11/10 AgileRay Cunet - - - - - Lead performance optimization software and services for higher education and mortgage lending clients

01/08/10 Foresight TIBCO Software 30.0 - - - - Healthcare business intelligence solutions

01/04/10 Discovery Logic Thomson Reuters - - - - -Systems, data and analytics for real-time portfolio management, decision support and information visualization

01/04/10 Silver Creek Systems Oracle - - - - - Automated data mastering solutions

12/08/09 Xenos Group Actuate 33.0 16.1 1.9 1.5x 12.5x Enterprise output management solutions for organizations



Announced Date


Revenue [LTM]

EBITDA [LTM]

Revenue Multiple

EBITDA Multiple


12/01/09 Sypherlink Saama Technologies - - - - -Products and solutions based upon heuristics-matching technology for automating data discovery and mapping processes

11/03/09 Datanomic DN Capital - - - - - Enterprise data management and compliance screening software solutions

10/09/09 Jaros Technologies Noetix - - - - - Packaged business intelligence and performance solutions

09/29/09 HyperRoll Oracle - - - - - Data warehouse performance acceleration software

08/24/09 Datasynapse TIBCO Software 27.7 24.7 -8.0 1.1x NM Application service management software for data centers

07/28/09 SPSS International Business Machines 1,121.6 290.8 78.7 2.7x 10.0xPredictive analytics software and solutions for data collection, statistics, modeling, and text analytics and deployment solutions\

07/08/09 Quadrum Consulting 1Spatial 0.3 0.5 - 0.6x - Business intelligence software tools for financial, manufacturing, service, and retail sectors

06/25/09 InforSense ID Business Solutions 9.5 - - - - Enterprise business intelligence and reporting software solutions

06/02/09 TradeTrans nuBridges - - - - - On-demand business intelligence, analysis, event monitoring, and reporting services

05/05/09 Exeros International Business Machines - - - - - Data relationship discovery and management company

04/15/09 InSite Analytics Tango Management Consulting - - - - - Retail market optimization and sales forecasting models solutions

03/02/09 KPI On Line Bitam - - - - - Business intelligence solution for analytical models for organizational functions

02/12/09 Applimation Informatica 35.6 - - - - Enterprise data management solutions for Oracle, SAP, PeopleSoft, and Siebel applications

02/10/09 SwiftKnowledge - - - - - - Web-based business intelligence software solutions

01/07/09 Monitor Analytics Clearway Technologies Partners - - - - - Business intelligence software products for Microsoft Office SharePoint

Source: Capital IQFigures in $ million except multiples



Valuation TrendsPrice Performance

Chart 7: Relative performance of Business Intelligence index (%), 01/01/2009 04/01/2014Trend-1 Trend-2

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S&P 500 Index S&P 500 IT Index BI Index

Source: Capital IQ, Bloomberg, Redwood Capital

For the purpose of analyzing the returns of companies in the business intelligence sector, we have created an index, comprised of companies which are either pure-play business intelligence or heavily focused on data management, analytics and business intelligence. We have then compared the performance of this index with the S&P 500 Information technology (IT) Index and the S&P 500 Index.

As evident from the chart, the BI Index1 has outpaced both the S&P 500 and S&P 500 IT Indices by a considerable margin over the last 5 years. The outperformance began in 2009 on the back of value-hunting for IT stocks after being beaten down heavily in the second half of 2008. During this period, the BI Index generated a return of approximately 320% versus about 110% for the broader market and about 160% for the IT index, which includes all major IT stocks as its constituents. The years 2009 and 2010 were best in terms of return for the BI index, when it notched up gains of more than 100% and 50%, respectively. This can primarily be attributed to the strong performance of three companies: MicroStrategy, Teradata and Informatica. In 2009, the stock prices of both MicroStrategy and Teradata more than doubled, with Informatica, up 89%, not too far behind. Consecutive above-estimates earnings by all three companies drove the gains. In 2010, the continued strength at Teradata (up more than 30%) and Informatica (up 70%) more than compensated for the weakness at MicroStrategy (-9%). A slew of rating downgrades followed by earnings miss in the third quarter of 2010 hurt MicroStrategy, while continued strong earnings and talks of takeover of growth companies by diversified players were the key catalysts of positive performance at the other two stocks. The trend continued in 2011 as well, but only until the beginning of the second half (H2) of the year. As highlighted in the chart (Trend 1), in H2 2011, all the indices witnessed a steep plunge in their values. At this time, unprecedented events such as US debt rating being downgraded and concerns of euro-zone debt crisis spiraling out of hands were weighing on investor sentiment. In H2 2011, the IT Index was slightly negative, while S&P 500 Index was down 5%. In comparison, the BI Index, being more volatile than the two indices, shed 24% of its value, much higher than its broader counterparts.

In the following two years (2012-2013) the BI Index continued to mirror the direction of the other two indices, but was relatively more volatile and underperformed, with a return of 26% as compared to returns of 43% by the IT Index and 47% by the S&P 500 Index. Weak performance of major business intelligence stocks such as MicroStrategy (-14%) and Informatica (-18%) in 2012 weighed on the performance of the BI Index. MicroStrategy was pressured by management instability and weak earnings, while Informatica was hurt by slowdown concerns in the BI market. 2013 was a better year for the BI Index, especially the period between April-September (Trend 2), when the Index posted gains of 16% compared to approximately 7% each by the other two indices. This phenomenon was mainly driven by the IPOs of Splunk and Tableau Software, which attracted investors attention towards business intelligence stocks. However, a pull-down in the last quarter of 2013 led by names such as Teradata, Qlik Technologies and Tibco Software offset this performance, leading to the BI Index delivering lower returns than the other two indices for the full year.



A report of weaker-than-expected earnings by Qlik Technologies and bleak guidance by the other two companies raised concerns over the industry growth. Since then, the BI Index continues to trail the broader indices to date, and has been flat in 2014 compared to returns of 3% and 2% earned by the IT Index and the broader market, respectively.

Public Companies Analysis

Multiples Snapshot*

Name Price Mkt.Cap Price/Sales Price/Earnings EV/EBITDA Long term EPS growth

(%)

Revenue Growth

(Figures in $million except share price) LTM 2014 LTM 2014 LTM 2014 2014 2015

Actuate Corporation 5.97 281 2x 2x 41x 21x 15x 8x 12% -11% 2%

Teradata Corporation 49.18 7,847 3x 3x 21x 17x 12x 9x 12% 6% 5%

TIBCO Software Inc. 20.82 3,369 3x 3x 39x 18x 16x 10x 14% 8% 9%

MicroStrategy Inc. 116.73 1,319 2x 2x 16x 48x 24x 15x 25% 8% 7%

Informatica Corporation 39.31 4,293 5x 4x 50x 24x 22x 13x 14% 12% 11%

Qlik Technologies, Inc. 27.23 2,427 5x 4x n.a 108x 189x 52x 27% 18% 17%

Datawatch Corporation 27.71 286 9x 7x n.a n.a n.a n.a 29% 29% 26%

PROS Holdings, Inc. 32.25 941 6x 5x 273x 99x 94x 40x 25% 32% 20%

Splunk, Inc. 71.12 8,385 28x 21x n.a n.a n.a 903x 26% 38% 34%

Tableau Software, Inc. 77.74 4,958 21x 15x 701x n.a 447x n.a 49% 50% 35%

Rocket Fuel Inc. 40.99 1,437 6x 3x n.a n.a n.a 281x 0% 81% 61%

Average 8x 6x 163x 48x 102x 148x 21% 25% 21%

Median 5x 4x 41x 24x 23x 15x 25% 18% 17%

Sources: Capital IQ, Redwood Capital* Data as on 04/02/2014

We note that many of the BI Index stocks are growth companies with either net losses or low earnings. Splunk and Tableau Software both have robust top-line and long-term earnings growth potential and hence, are valued at a substantial premium to their peers on a Price-to-Sales basis. Although market expectations of revenue and earnings growth propel stock valuations, we note that neither factor is seen by the market in isolation. For example, Rocket Fuel with substantially high revenue growth prospects has relatively subdued long-term earnings growth prospects due to its growth investments, leading to relatively lower valuations on a Price-to-Sales basis. On the other hand, MicroStrategy with modest top-line growth prospects trades below the peer median despite its robust earnings growth potential. Even well-established players such as TIBCO Software trade well below the median multiple, on modest revenue and earnings growth. Moreover, among peers, we believe cloud-based players such as Informatica command relatively higher valuations, despite their growth prospects being below the peer median.1 The BI Index is a market-capitalization weighted index and its constituents include MicroStrategy, Tableau Software, Splunk, Rocket Fuel, Teradata Corporation, Informatica Corporation, PROS Holdings, Datawatch Corporation, Qlik Technologies, TIBCO Software and Actuate Corporation. The data has been sourced from Capital IQ.



Private FinancingPrivate Financings Overview (2009 to 2013)

Year # of Trans Total Capital Raised Average Trans Size Median Trans Size

2013 145 1,400.7 10.6 4.0

2012 126 871.1 7.6 3.0

2011 98 764.7 9.1 3.8

2010 93 477.0 5.5 2.5

2009 62 251.3 4.3 3.0

Total 524 3,764.9 7.9 3.0Sources: Capital IQ

The business intelligence industry has raised a total of $3.8 billion since 2009 from 524 private placement deals. During this time, the sector has been gaining increasing attention from investors, reflected in deal activity (both in terms of volume and dollar value) which has increased every year since 2009. Mean and median deal sizes have also increased over this period, with average transactions more than doubling from $4.3 million in 2009 to $10.6 million in 2013. Clustrix and iSign Media were the most active companies during this period, raising $54.5 million and $11.5 million, respectively. International expansion was seen as a major theme and was quoted as the purpose in many of the biggest deals during the period.

The data for 2014 year to date shows that investor interest in the industry has not abated and we could see total capital raised during the current year easily surpass the previous years highs. In the first three months, there have been 45 deals and a total of $1.3 billion has been raised, compared to 34 deals and a total of $236 million for the first three months of 2013. While the median deal value has risen slightly to $4.55 million, the average deal value has gone up significantly to reach $35.06 million. In the biggest deal of the year by far, Cloudera raised $740 million from Intel Capital.

2013 was the busiest of the past five years for private placement transactions in the sector. Deal volume was up by 15% over 2012, to 145 and total capital raised grew by 61% to $1.4 billion, crossing $1 billion for the first time. Average deal value crossed $10 million ($10.61 million) and median deal value crossed $4 million ($4.02 million), also a first for both in the last five years. 2013 saw the return of bigger deals as there were three transactions with values greater than $100 million. MongoDB raised $150 million in a deal that reportedly valued it at $1.2 billion. The company planned to use the funds to further develop its core product and its new managed services offerings.

In 2012 transaction volume increased 29% from 2011, to 126. This was despite the total funds raised during the year increasing only 14%. Deal sizes contracted during the year and the largest transaction was of $65 million by Cloudera. This was Clouderas sixth round of capital raising in four years. Another large financing in 2012 was Rocket Fuels $50 million round from existing and new investors.

While deal volume stayed fairly similar in 2011 compared to 2010, total deal value increased by a big margin (+61%) to $765 million. Capital raised from a single transaction crossed $100 million for the first time in three years. OSISoft sold a minority stake to VC investors for a consideration of $135 million, with the proceeds earmarked for international expansion.

Deal activity increased significantly in 2010 with deal volume increasing 50% and total funds raised almost doubling. Perth based Firmware Technologies raised $37 million in September to facilitate listing on the Frankfurt Stock Exchange and fuel further growth through both organic and inorganic routes. Additionally, 1010data received a $35 million equity investment from Norwest Venture Partners, also to be used to drive further growth.

2009 was the least active period for the industry during the last five years, with as few as 62 deals consummated and $251 million raised. Additionally, the deals announced during the year were smaller in size and the largest deal of the year was of AudienceScience (a global digital marketing technology company) raising $20 million from its existing investors. AudienceScience planned to use the funds for growth, research & development and international expansion.



Intels investment in Cloudera

In March 2014, Cloudera raised a total of $900 million from multiple investors. Out of this, it raised 160 million from T. Rowe Price Group, MSD Capital and Google Ventures. The remaining funds ($740 million) were provided by Intel Capital for an 18% stake in the company, valuing Cloudera at $4.1 billion. The deal is interesting for a number of reasons. After its investment in Cloudera, Intel planned to stop development of its own customized version of Hadoop, proving its confidence in Hadoop and Clouderas solution. Also, the deal came on the back of Hortonworks announcing a $100 million investment, valuing it at over $1 billion and the two deals show the valleys interest and optimism for Big Data analysis market.



Global Private Placement Deals in Business Intelligence (2009 to 2014 YTD March)

Date Target/Issuer Amount Round of Financing Buyers/Investors Major Business Focus [Target/Issuer]

03/27/14 Cloudera 740.0 - Intel Capital Enterprise analytic data management

03/19/14 Platfora 38.0 3

Battery Ventures; Cisco Systems, (NasdaqGS:CSCO); Allegis Capital; Sutter Hill Ventures; In-Q-Tel,; Tenaya Capital; Andreessen Horowitz; Citi Ventures,

Data management software

03/18/14 Cloudera 160.0 - T. Rowe Price Group, (NasdaqGS:TROW); MSD Capital, L.P.; Google Ventures

Enterprise analytic data management

03/07/14 Rifiniti 2.2 - Hub Angels Investment Group; Nauta Capital Real-time business intelligence03/05/14 Oilfield Intel - Seed - Data management software03/05/14 iWebGate 0.2 - - Network security management 03/05/14 Opentracker 0.0 - Rockstart Accelerator Website statistics measurement 03/05/14 Social Honey 0.0 - Rockstart Accelerator Web solution to source ratings and reviews

02/28/14 Lotame Solutions 15.0 4 Battery Ventures; Emergence Capital Partners; TrueBridge Capital Partners; R.J. Finlay & Co.; Sozo Ventures

Data management software

02/28/14 Radius Networks 0.8 - - Mobile proximity technologies02/28/14 Nebulab Technologies 0.0 - Geekdom, LC, Investment Arm Cloud based data visualisation software02/27/14 TipBit 8.6 1 Ignition Partners Personal business intelligence tools02/26/14 DataRPM 6.0 1 InterWest Partners; CIT GAP Funds Business intelligence and analytics02/26/14 Argos Risk 1.3 - - Online business-to-business credit risk management tools02/25/14 LLC CityAds Media 5.0 1 Klever Internet Investments Limited Data management software02/24/14 Transzap - - Accel-KKR Internet-based financial workflow solutions02/24/14 ProspX 2.4 - - Business intelligence solution

02/18/14 Akita - - The National Digital Research Centre Limited, Investment Arm

Real-time big data sales tools for sales processes

02/18/14 Crayon Data 1.2 - SPRING SEEDS Capital Pte Ltd; Jungle Ventures Business and technology platform that democratizes the use of big data

02/13/14 Klipfolio 1.6 - BDC Venture Capital; CommonAngels; Acadia Woods Partners, ; BOLDstart Ventures; Mistral Venture Partners

Cloud-based Web and mobile dashboard solutions

02/11/14 Platfora - - Citi Ventures, Data management software02/10/14 InfiniDB 7.5 - McDonnell Ventures Analytic data platforms

02/07/14 NuoDB 16.2 - Hummer Winblad Venture Partners; Morgenthaler; Longworth Venture Partners; Dassault Systemes SA (ENXTPA:DSY)

Executive management platform as a SaaS solution

02/05/14 Domo 125.0 3

Greylock Partners; Institutional Venture Partners; T. Rowe Price Group, (NasdaqGS:TROW); Salesforce.com, Inc (NYSE:CRM); Fidelity Investments; TPG Growth; GGV Capital; Morgan Stanley Investment Management ; Viking Global Investors L.P.; Mercato Partners; Dragoneer Investment Group,

Enterprise analytics services

02/03/14 Secure Earth Technologies 2.8 - - Embedded systems and software solutions02/03/14 DataFox Intelligence 1.5 Seed Cavalry Management Group; Google Ventures Retail intelligence01/31/14 Deposco 5.0 - - SaaS for supply chain01/30/14 WhereScape 10.0 - Pioneer Capital Partners Data warehousing software solutions01/29/14 wiseio 4.1 1 Voyager Capital Big data analytics solutions01/29/14 BlueConic 4.0 1 Sigma Prime Ventures SaaS-based online customer engagement platform

01/28/14 Altiscale - - Accel Partners; Sequoia Capital; General Catalyst Partners; AME Cloud Ventures

Cloud services for Hadoop dial tone operations

01/28/14 Zikk Software - - Wadi Ventures Network monitoring software solutions01/28/14 Naehas 2.0 - - Data management software

01/27/14 Autogrid Systems 12.8 3 Foundation Capital; Voyager Capital; E.ON SE, Investment Arm

Software systems for energy sector for forecasting and demand management

01/22/14 MemSQL 35.0 2 Accel Partner

Documents

Business Intellegence Report April 2014