Cybersecurity Monthly Snapshot | February 2016

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Cybersecurity Snapshot February 2016

Advisors & Dealmakers In Cybersecurity

Momentum Partners, LLC •  Advise. Network. Invest.

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Momentum’s Watch List Announced at RSA Conference Each Quarter We Add 10 Companies With Significant Input From Our Vast Security Network.

Highlights

1 2016 Sandbox Innovation Winner

4 2015 Sandbox Innovation Finalists

3 2015 Sandbox Innovation Finalists

5 Companies Have Raised Next Round

1 Company Has Been Acquired Q3 2015 Q2 2015

Q1 2016 Q4 2015

Source: Capital IQ, Crunchbase, 451 Group.

Date Target Acquirer Sub-Sector EV ($M) EV / Rev

2/29/16 Incident Response 100.0 NA

2/26/16 Automated Risk

Assessment NA NA

2/25/16 Web Security NA NA

2/24/16 Penetration

Testing NA NA

2/23/16 Endpoint Security / Application Control NA NA

2/18/16 Transaction Verification 12.5 NA

2/17/16 Multi-Factor

Authentication NA NA

2/8/16 Enterprise

Management Services

0.4 NA

2/8/16 Threat Intelligence 45.0 NA

2/1/16 Incident Response 30.0 NA

Cybersecurity M&A

EMS Assets

Strategic Deal Flow Commentary

M&A Activity

§  10 transactions with total a disclosed deal value of $188 million

§  Incident Response / Orchestration bookended the month beginning with FireEye’s acquisition of Invotas and ending with IBM’s acquisition of Resilient Systems

§  Cyber strategic activity overall has held last year’s record pace, while we’ve experience a ~12% decline in the broader TMT M&A market

§  Valuation expectations in the private markets are starting to rationalize lagging the severe valuation declines in the public markets

Financing Activity

§  35 transactions with total disclosed amount raised of $956 million; excluding Symantec, total amount raised was $456 million with a median amount raised of $7.4 million

§  Later stage investors are becoming more discerning resulting with Series A Boards now considering dual track processes (i.e., M&A + Series B Financing)

February Deal Flow M&A Activity For The Month of February.

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Date Company Select Investors Funding

Stage Amount

($M)

2/29/16 .406 Ventures Series A 6.4

2/27/16 NA Convertible Note 0.1

2/25/16 NA Series B N/A

2/25/16 Rembrandt Venture Partners, Carmel Ventures, Lightspeed Venture Partners Series A 9.0

2/25/16 Menlo Ventures, QED, IA Ventures, Allegis Capital Series B 20.0

2/23/16 PICO Venture Partners, Founders Group Series A 5.0

2/23/16 Accenture, AT&T, Mitsui, Nokia, Soros, Temasek, Cisco, Innovation Endeavors, Alcatel-Lucent, Bessemer, Marker Series B 23.0

2/2316 Environnemental Technologies Series B 4.2

2/22/16 Kleiner Perkins Series A 8.0

2/18/16 83 North Seed 4.0

2/18/16 Christopher Davis, Wesley Clover Seed 1.1

2/18/16 Trivest Partners Private Equity NA

2/17/16 Qihoo 360 Technology, Shanghai Ziyou Investment Management Series A 100.0

2/16/16 NA Venture 1.0

2/11/16 DuKlaw Ventures Seed 4.3

2/10/16 Qumra Capital, Entrée Capital, Genesis Partners, NTT DOCOMO Ventures, Phoenix Insurance Series B 25.0

2/10/16 Sutter Hill Ventures, Clear Venture Partners, Battery Ventures, Amplify Partners Series B 17.0

Note: Bold denotes lead investors. Source: Capital IQ, Crunchbase.

Date Company Select Investors Funding

Stage Amount

($M)

2/10/16 Hewlett Packard Ventures, Ten Eleven Ventures, YL Ventures, Moshe Lichtman Series A 8.0

2/10/16 Lazarus Hedge Fund Series A 7.0

2/9/16 DH Capital, Vectis Life Sciences, Brooke Private Equity Associates

Convertible Note 1.6

2/9/16 NA Series C 3.0

2/9/16 NA Venture 7.8

2/9/16 Trinity Ventures, Passion Capital, Storm Ventures, Ten Eleven Ventures Series B 14.0

2/5/16 NA Common Stock 2.5

2/4/16 Goldman Sachs, Accel, Bay Partners, Hummer Windblad, Canvas Ventures, NEA Private Equity 30.0

2/4/16 Innovation Endeavors, Oryzn Capital Series A 3.5

2/4/16 Silver Lake Partners Private Equity 500.0

2/3/16 Providence Equity Partners ($80M Secondary / $16M Primary) Private Equity 96.0

2/3/16 NA Series F 14.0

2/3/16 Georgian Partners, Edison Partners, Cisco, Northleaf Capital Partner, Venturelink Series C 19.5

2/2/16 Cypress Growth Capital Seed 2.8

2/1/16 Elephant Series A 8.0

2/1/16 NA Private Equity 0.3

2/1/16 Foundation Capital, Eddy Shalev, Gilat Opponent Venture 10.0

2/1/16 NA Seed 0.2

Cybersecurity Investing (VC & PE)

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February Deal Flow Venture Capital & Private Equity Activity For The Month of February.

75

80

85

90

95

100

105

Stock Price Performance Public Markets Have Rebounded Recently From A Rough January & Early February, Cybersecurity Included.

Note: Market data as of February 29, 2016. Source: Capital IQ.

Company Price Change (%) Company Price Change (%)

$19.14 1% $3.37 9%

$12.86 22% $144.79 3%

$83.07 5% $46.84 7%

$37.47 14% $24.97 4%

$16.94 20% $13.29 2%

$28.40 1% $2.94 14%

$2.76 1% $43.60 6%

$43.87 15% $19.31 3%

$11.54 1% $36.41 12%

$9.36 23% $13.75 11%

February Stock Price Performance

LTM Indexed Stock Performance

February Indexed Stock Performance

0%

-2%

-1%

-3%

-2%

High Growth Security

Low Growth Security

S&P 500

NASDAQ

HACK

Index

60

70

80

90

100

110

120

130

Feb-15 Mar-15 April-15 May-15 June-15 July-15 Aug-15 Sept-15 Oct-15 Nov-15 Dec-15 Jan-16

2/1 2/5 2/9 2/13 2/17 2/21 2/25 2/29

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-25% -20% -18%

-9% -9%

Public Company Trading Analysis High Growth & Low Growth Public Security Comps.

Note: NM – Not Meaningful, NA – Not Available; as of February 29, 2016; * performance since IPO. Source: Capital IQ.

Company Name Stock Price LTM Price

Performance Market Cap

($M) Enterprise Value

($M) 2014-15E

Revenue Growth 2015E-16E

Revenue Growth

EV / Revenue EV / EBITDA P / E

CY2015 CY2016 CY2017 CY2015 CY2016 CY2017 CY2016

High Growth Security (>20% CAGR) Palo Alto Networks 144.79 12.0% 12,795 12,328 55.6% 35.9% 10.7x 7.9x 6.1x 59.3x 33.8x 23.4x 70.2x

Splunk 43.60 (18.8%) 5,655 4,646 48.3% 32.1% 7.0x 5.3x 4.1x NM NM 49.5x NM

Fortinet 28.40 (2.8%) 4,874 3,982 31.0% 24.1% 3.9x 3.2x 2.7x 23.7x 18.0x 14.2x 41.9x

FireEye 16.94 (48.3%) 2,811 2,348 46.4% 33.3% 3.8x 2.8x 2.3x NM NM NM NM

Proofpoint 46.84 (6.5%) 1,928 1,868 35.7% 31.2% 7.0x 5.4x 4.2x NM NM 51.2x NM

Imperva 43.87 2.4% 1,417 1,153 42.9% 30.3% 4.9x 3.8x 3.0x NM NM 41.0x NM

CyberArk 37.47 10.9% 1,186 948 56.1% 28.8% 5.9x 4.6x 3.7x 21.2x 21.3x 15.8x 43.2x

Qualys 24.97 (36.1%) 860 681 23.0% 19.9% 4.1x 3.5x 2.9x 12.0x 10.8x 8.7x 32.6x

Rapid7* 13.29 (16.9%) 553 466 43.8% 35.3% 4.2x 3.1x 2.5x NM NM NM NM

Imprivata 11.54 (18.0%) 289 238 22.8% 16.2% 2.0x 1.7x 1.5x NM NM NM NM

Mean 40.5% 28.7% 5.4x 4.1x 3.3x 29.0x 21.0x 29.1x 47.0x Median 43.3% 30.8% 4.6x 3.6x 2.9x 22.4x 19.7x 23.4x 42.6x

Low Growth Security (<20% CAGR) Check Point Software 83.07 5.8% 15,024 13,739 9.0% 8.0% 8.4x 7.8x 7.3x 14.7x 13.9x 12.9x 18.3x

Symantec 19.31 (24.6%) 12,594 12,065 (7.0%) (41.4%) 2.2x 3.3x 3.3x 7.1x 9.8x 8.8x 18.0x

Trend Micro 36.41 29.8% 4,970 3,679 8.7% 19.0% 3.4x 3.0x 2.8x 10.8x 10.1x 8.6x 27.8x

Sophos* 2.94 (16.9%) 1,327 1,539 NM NM NA 3.1x 2.7x NA 19.7x 17.5x 39.2x

AVG Technologies 19.14 (3.5%) 1,002 1,118 14.5% 4.1% 2.6x 2.5x 2.4x 7.8x 6.7x 6.5x 9.9x

Barracuda Networks 12.86 (63.2%) 683 533 16.2% 9.6% 1.7x 1.6x 1.4x 8.3x 9.6x 5.0x 33.0x

VDSI 13.75 (39.3%) 546 422 19.8% (10.0%) 1.7x 1.9x 1.7x 7.3x 13.6x 9.0x 18.1x

Mimecast* 9.36 (6.4%) 506 409 NM 15.8% 3.0x 2.6x 2.1x NA 45.4x 28.4x NM

F-Secure 2.76 6.5% 430 327 (13.9%) (2.5%) 2.0x 1.9x 1.8x 10.6x 11.0x 8.6x 24.7x

MobileIron 3.37 (62.0%) 278 181 12.9% 14.3% 1.2x 1.1x 0.9x NM NM NM NM

Mean 6.9% 3.1% 2.9x 2.9x 2.6x 9.5x 15.5x 11.7x 23.6x Median 13.0% 8.0% 2.2x 2.6x 2.2x 8.3x 11.0x 8.8x 21.5x

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Overview of Momentum Partners

Momentum Partners Advisors & Dealmakers In Cybersecurity.

Why Momentum Partners? Momentum Partners is a bespoke cybersecurity focused advisory firm based in Silicon Valley with operations globally. We employ a high-touch advisory model specifically designed to serve Founders/CEOs and their Boards – Series A to exit – where we are relentless in our pursuit for better outcomes for clients. As advisors and dealmakers in cybersecurity for two decades, we have closed over 200 deals totaling $200 Billion in value.

Cybersecurity � Enterprise IT � Cloud & SaaS � Mobile��

Mergers & Acquisitions* � Capital Raising*��

Corporate Development � Ecosystem Development

Momentum’s Cybersecurity Team Michael Tedesco Executive Chairman Founder Strategic and Capital Markets Advisor to CEOs, Founders & Boards

Eric McAlpine Managing Partner Founder Senior Advisor Cybersecurity Lead

Dino Boukouris Director Strategic Advisor Start-up Advisor VC & Private Equity

Keith Skirbe Director Strategic Advisor Mergers & Acquisitions Deep Cybersecurity Expertise

Dealmakers in Security & Enterprise IT

CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY

200+ Deals $200+ Billion

Petros Kitsos Senior Advisor Strategic Advisor Direct Investor and Board Member Deep Defense & Aerospace Expertise

Timothy Lipton Partner Founder Start-Up Advisor iCFO

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West East

Europe

LatAm

Israel

APAC

1 5 1 1 6 3 0 7

Momentum’s Global Reach

0 1 7 0 3 5 9

Com

pani

es

Exec

utiv

es

CIS

Os

Inve

stor

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, , , , *** AS OF FEBRUARY 29, 2016 ***

Relentless Coverage + Providing Meaningful Insights.

Global Sector Coverage & Reach

4

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Infrastructure Security Endpoint Security Application Security

Endpoint Protection & Anti-Virus WAF & Application Security

Vulnerability Assessment Intrusion Prevention Systems

Unified Threat Management

Network Firewall Network Monitoring

Source: Momentum Partners.

Identity & Access Management

Threat Intelligence Mobile Security

Endpoint Detection & Response

IoT Security

Transaction Security

Web Security Messaging Security

Specialized Threat Analysis & Protection

Cloud Security

SIEM

Security Incident Response

Security Operations & Incident Response

Risk & Compliance

Data Security

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Our Clients and Coverage CYBERscape: The Cybersecurity Landscape Is Vast. Advisors, Dealmakers & Thought Leaders For Two Decades.

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Advise. Network. Invest. Momentum Partners, LLC��

Momentum Capital Markets, LLC

340 Brannan Street | Suite 501 San Francisco, California 94107

Michael Tedesco Executive Chairman

[email protected]

Eric McAlpine Managing Partner

[email protected]

Keith Skirbe Director

[email protected]

Dino Boukouris Director

[email protected]

*Securities offered through Momentum Capital Markets, LLC, a division of Financial Telesis Inc. Member FINRA/SIPC.

Petros Kitsos Senior Advisor

[email protected]

Timothy Lipton Partner

[email protected]

Cybersecurity Monthly Snapshot | February 2016

Technology

Transcript of Cybersecurity Monthly Snapshot | February 2016