Horizon Partners Q4 2013 Newsletter

Digital Media & Internet
Quarterly Market Update: Q4 2013

Contact Us
Mike Firmage
Managing Director
650.861.9090
mfirmage@horizonpartners.com
I. Executive Summary (3)
II. Sector Trends (4)
III. M&A Overview (11)
IV. Market Performance (18)
V. IPO Overview (23)
VI. Deals Outlook (29)
Sandy Kory
Managing Director
650.776.8806
skory@horizonpartners.com
Allen Carey
Associate
415.635.7877
acarey@horizonpartners.com
1821 Union Street San Francisco, CA 941231

Landscape of Digital Media & Internet Industry
2
Diversified
Automation/Analytics/SaaS
E
N
T
E
R
P
R
I
S
E
C
O
N
S
U
M
E
R
Marketing Technology Digital Media
B2C
Social Networking
Comparison Shopping
Traditional MediaGaming
Online Media

 M&A activity in Digital Media & Internet slowed in 2013, with aggregate volume and value of deals declining 4.0% y/y and 8.7% y/y, respectively. However, in 2013’Q4, the volume and value
of deals rose 3.3% y/y and 12.1% y/y, respectively
 In the mid-market space, deal volume decreased 9.2% y/y in 2013, while aggregate deal value fell 6.0% y/y. In 2013, Q4 was the busiest quarter with 43 mid-market deals, accounting for
more than 33% of all such deals during the year. The aggregate value of mid-market deals surged 46.5% y/y during 2013’Q4. In fact, the average value of mid-market deals continued to rise
in 2013, reaching $160 mn, its highest level since 2009
 Big-ticket deals (>$500 mn) raised $51.8 bn in 36 transactions in 2013 compared with $56.8 bn through 38 deals in 2012
 During 2013’Q4, deals were priced at an average EV/Revenue multiple of 2.7x , in line with the previous quarter but higher than the 20-quarter average of 2.5x
Executive Summary
3
Sector Trends
M&As in Digital Media & Internet in 2013
Market Performance and IPOs
 The S&P Software index moved in tandem with the NASDAQ, but outperformed the S&P500; this indicates upbeat sector performance. The CBOE Volatility Index (VIX) fell to a near one-year
average of 14.7%. Improvement in investor confidence and interest in the sector continues to stimulate primary market activity
 For IPOs, 2013 remained a remarkable period, with 82 offerings raising $8.5 bn compared with $5.6bn* through 64 offerings in 2012. In 2013, Q4 was the busiest quarter for IPO activity since
2008. The quarter witnessed 33 IPOs, nearly double compared with the previous quarter and around five times more than 2012’Q4
 In 2013’Q4, IPOs exhibited impressive performance, registering the strongest one-day and one-week gains in the last 12 quarters and trending above the five-year averages. The pipeline is
strong with announced IPOs totaling more than $2.2 bn YTD**
 Disruptive technologies such as cloud, big data, social media and embedded systems are causing a paradigm shift in the business-consumer ecosystem. Developments in online commerce,
mobile apps, social engagement, content marketing and video are redefining consumers’ online engagement and, thereby, creating new ways for businesses to connect with their audience
 Marketers are perceiving content marketing as a vehicle for long-lasting consumer engagement and effective customer targeting. Content marketers are using a multitude of platforms to
engage target audiences, with social media being the most preferred channel
 Companies offering content solutions are partnering with technology firms to deliver innovative offerings that enhance the users’ digital experience
 Businesses are seeking cloud adoption in an Everything-as-a-Service era for continuous innovation and business agility to yield competitive advantage. Majority of businesses remain inclined
toward Software-as-a-Service, as evident from its high adoption rate
*2012 deal value excludes the $16 bn Facebook IPO; **Data up to February 13, 2014

5
Cloud Computing
2012 2016
Big Data Analytics
2012 2016
$5.4 bn $48 bn
Social Media
Embedded Systems Mobile Handset Shipment Tablet Shipment
2012 2016
2012 2016 2012 2016 2012 2016
1,482 mn 1,858 mn 85 mn 304 mn
Disruptive technologies cause paradigm shift in
business-consumer ecosystem
‘Digital Consumerism’ is radically changing business environment
Source: KMPG, NASSCOM
$109 bn $206.6 bn 3,132 mn accounts 4,870 mn accounts
$1.2 tn $2.4 tn

6
Digital Trends Reshaping the Way Businesses
Engage with Consumers
6
New ways in which consumers engage online and businesses connect with them
Source: Edison Research; Centre for Media Research; Kleiner, Perkins, Caufield and Byers
 Digital media publishers are increasing focus on
optimizing website content and advertisements for
mobile devices
31% growth in worldwide smartphone
usage
100 hours of video/minute added on
YouTube each day
5 mn photos added on Instagram
each day
14x time spent online via mobile
compared to desktop
102 bn app downloads in 2013 (up 60%
from 2012)
2 bn user count crossed on Facebook
45% consumers searching for local
products use mobile first
Consumer
Engagement…
…Is Driving Online
Media Trends
 Marketing analytics solutions are being increasingly
used to extract insights from digital information –
documents, Tweets, posts, pictures and video
 Online businesses and marketers are looking for
innovative ways to engage with customers through
mobile apps
 Consumers frequently use digital word of mouth to
make decisions; Social media and review sites become
important for marketers
 91% of in-house marketers use content marketing;
Focus is shifting to the integrated use of multiple online
platforms
 Video content is increasingly becoming an important
medium of communication with target audiences
 New ways to access information: trend is emerging in
wearable devices, such as Google Glass and Jawbone

Technology companies form partnerships to
enhance consumer experience
 Content providers that help consumers navigate the marketplace are scouting innovative ways to enhance user experience
 Partnerships with emerging technologies allow technology companies to automate customer acquisition and monetization
7
Select indicative partnerships
 Allows restaurants on Locu to distribute
menus and daily specials to Yelp
 Facebook partners with PayPal to autofill
billing info in mobile commerce apps
 Google partners with VMware to deliver
subscription Desktop-as-a-Service (DaaS)
 Incorporate Yelp's listings and reviews of
local businesses into results on Yahoo's
search engine
 Allows Facebook users to book restaurant
reservations online
 Visa rewards and discounts tie-up with
Foursquare check-ins
 Google partners with ComScore to offer
real-time metrics for marketers
Source: Street Fight Insights, TechCrunch; The Wall Street Journal; The Next Web; MediaWeek

Content marketing – capitalizing on engagement
8
Increasing Influence of digital channels
1.3%
5.4%
4.1%
4.1%
11.4%
5.5%
14.0%
28.9%
25.3%
1.0%
3.9%
5.5%
6.9%
7.5%
9.0%
9.0%
12.9%
15.1%
29.2%
Other
Branded niche or vertical
communities
Search Engine Optimization
Contextual targeting through ad
networks
Conversion rate optimisation
Marketing automation
Social CRM*
Big Data
Mobile Marketing
Content Marketing
Most Significant Commercial Digital Marketing Trends
2014
2013
 Marketing companies are expected to spend $135 bn on new
digital marketing collateral in 2014
 78% of CMOs believe custom content is the future of marketing
 Internet advertising would constitute nearly 25% of the ad
market by 2015
 The social commerce market is estimated at $30 bn by 2015
 Leading global retailers are spending 20–25% of their advertising
budget on social media channels
 Mobile technologies would be used to reduce cost of a financial
transaction by up to 80%
 Nearly 90% of top global banks use social networking to achieve
customer engagement
 Nearly 50% companies use content marketing strategies
 33% of traffic from Google’s organic search results goes to the
first item list
 B2B companies that blog generate 67% more leads than those
that do not
“Marketers will use dynamic content to deliver highly personalized
experiences to the right audience at the right time”
– WebDAM
*Newly added survey option
Source: Smart Insights User Survey 2013; KPMG; WebDAM; Chitika Insights
Upcoming Trends Driving Marketing Mix

Marketing technologies driven by content
marketers’ multi-platform focus
9
Social media continues to be at the top spot for content marketing
SocialMedia
ArticlesonOwnWebsite
eNewsletters
Blogs
In-personEvents
CaseStudies
Videos
ArticlesonOtherWebsites
WhitePapers
Webinars/Webcasts
Infographics
ResearchReports
Microsites
BrandedContentTools
MobileContent
PrintMagazines
eBooks
Books
MobileApps
DigitalMagazines
Podcasts
VirtualConference
LicensedContent
Filings
PrintNewsletters
Games
87%
81% 80%
76% 76%
73% 73%
68%
64%
62%
51%
44%
40%
38% 38%
35% 34%
30%
28% 27% 26% 25% 25% 24%
22%
10%
Digital Media Traditional Print
Source: Content Marketing Institute B2B Marketers’ Survey 2014
14%
14%
14%
15%
16%
22%
22%
34%
40%
55%
73%
81%
85%
91%
Foursquare
Tumblr
Vine
StumbleUpon
Flickr
Instagram
Vimeo
Pinterest
SlideShare
Google+
YouTube
Facebook
Twitter
LinkedIn
% of B2B marketers using a social media sites to
distribute content
% of B2B Marketers claiming to use a channel for marketing

Businesses seek cloud adoption in an Everything-as-
a-Service era
10
SaaS market to expand at a CAGR of 15.5% over 2011–15
Source: Everest Group Cloud Connect Enterprise Cloud Adoption Survey 2013; Gartner and IDC
7.7
8.8
10
11.3
12.9
2.8
3.3
3.9
4.6
5.4
1.1 1.3 1.6 1.9 2.2
0.3 0.4 0.5 0.6 0.7
2011 2012 2013 2014 2015
SaaS Market Forecast
North America Europe Asia Latin America
35%
21%
26%
17%
13%
6%
21%
25%
16%
18%
10%
15%
28%
33%
25%
30%
42%
23%
16%
21%
33%
35%
35%
56%
Business Process as a Service
(BPaaS)
Hybrid Cloud (IaaS)
Public Cloud (IaaS)
Platform as a Service (PaaS)
Private Cloud (IaaS)
Software as a Service (SaaS)
Enterprise Cloud Adoption Trends by Cloud Layer
Already Adopted
Adopt in near future
Adopt in distant future
No plans to adopt
 SaaS enjoys the highest adoption rate, with 56% of the respondents
being existing users and 38% planning to adopt the service
 Overall, 94% of the respondents showed interest in SaaS, higher than
any other cloud service, indicating bright prospects
 The global SaaS market is expected to grow to $21.5 bn by 2015, with
North America accounting for 64%

13.3
15.1
8.9
6.3 6.1
12.2
14.5
8.8
6.1
21.3
29.7
17.8 16.8 16.9
32.3
18.5
21.5
24.6
20.4 20.3
8.5
27.5
20.4
22.8
728
707
636
559
477 475
523
558
699 701
678 690
782
732
757 757 761
802
742 730
678
716
766 754
0
100
200
300
400
500
600
700
800
900
$0
$5
$10
$15
$20
$25
$30
$35
$40
08'Q1 08'Q2 08'Q3 08'Q4 09'Q1 09'Q2 09'Q3 09'Q4 10'Q1 10'Q2 10'Q3 10'Q4 11'Q1 11'Q2 11'Q3 11'Q4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4
Deal Value in $ bn (LHS) Deal Volume (RHS)
M&A activity in Digital Media & Internet slows in
2013
 In 2013’Q4, the volume of deals in the Digital Media & Internet space rose 3.3% y/y, but declined a marginal 1.6% q/q. On the other hand,
the aggregate deal value increased 11.4% q/q and 12.1% y/y
 In 2013, the number of deals fell 4.0% to 2,914 from 3,035 in 2012 due to subdued performance in 2013’Q1 (678 deals). During the same
period, the aggregate deal value declined 8.7% y/y
 The average deal raised $100 mn in 2013, maintaining the uptrend over the five-year average of $74 mn
12
Deal volumes decline marginally in latest quarter
Source: Capital-IQ; Note: Deals refer to announced , closed and effective deals
Average Annual Deal Value

Mid-market M&A activity decelerates in 2013;
ticket size continues the uptrend
 Deal volume in the mid-market Digital Media & Internet space rose 22.9% y/y in 2013’Q4, but declined 9.2% y/y in 2013
 The aggregate value of mid-market deals surged 46.5% y/y in 2013’Q4, but decreased 6.0% y/y in 2013
 The average mid-market deal raised $160 mn in 2013, the highest since 2009
13
Mid-market deal activity surges to two-year high in latest quarter
Source: Capital-IQ; Note: Deals in range $50-$500 mn are considered Mid Market Deals; Deal statistics refer to deals with disclosed values only
5.8 5.4
5.9
3.5
1.9
3.7
5.9
4.5
2.6
6.0
7.1
5.5
8.8
8.3
6.4
4.8
5.8
6.8
4.2
5.0
3.5
5.3
4.3
7.4
37
40
35
27
14
24
33
28
23
36
46
41
51
47
43
36
31
43
32 35
25
29
31
43
0
5
10
15
20
25
30
35
40
45
50
55
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
Deal Value in $ bn (LHS) Deal Volume (RHS) Average Annual Deal Value

Average transaction size driven by large deals
 In 2013, the number of transactions decreased in all three
segments
 Big ticket deals (>$500 mn) raised $51.8 bn in 2013, down 8.5%
over the previous year
 The average deal raised $99.9 mn in 2013, higher than any
comparable period in the past five years
14
High-value deals decline; average transaction size reaches new high
Source: Capital-IQ; Note: Deal statistics refer to deals with disclosed values only
838
609
725 761 719
629
139
99
146
177
141
128
16
18
30
31
38
36
2008 2009 2010 2011 2012 2013
Deal Volume
Deals (<=$50 mn) Deals (~$50-$500 mn) Deals (>$500 mn)
15.3 20.4
46.8 48.6
56.6 51.820.6 16.0
21.2
28.2
21.8
20.5
7.6 5.3
7.0
7.8 8.3
6.8
2008 2009 2010 2011 2012 2013
Deal Values ($ bn)
Deals (>$500 mn) Deals (~$50-$500 mn) Deals (<=$50 mn)
2008,
$43.8mn
2009,
$57.4mn
2010,
$83.2mn
2011,
$87.3mn
2012,
$96.6mn
2013,
$99.9mn
30
40
50
60
70
80
90
100
110
120
100 120 140 160 180 200 220
AverageDealSize($mn)
Deal Volume (Deals >$50 mn)
* Bubble Size reflects Deal Value
(Disclosed deals > $50 mn)

M&A activity marked by higher purchase multiples
 In 2013'Q4, M&A deals entailed an average acquisition EV/Revenue multiple similar to that of the previous quarter and above the 20-quarter
average of 2.5x
 The average revenue size of the acquired company declined sharply to $72 mn in 2013’Q4
 Between 2012 and 2013, the average acquisition EV/Revenue multiple fell to 2.6x from 2.7x, while the average revenue size of the target
company declined to $115.4 mn from $126 mn
15
Acquisition multiple higher than five-year average
Source: Capital-IQ; Note: Multiples based on non-cancelled deals with reported multiples only
3.0
2.8
2.3 2.1
2.4
2.1 2.0 2.1
2.6
2.7
3.1
2.1
2.9
2.4
3.4
2.4 2.4
3.2
2.2
3.1
2.1
3.0
2.7 2.7
204
43
92 59 42
163 175
65
45 87 64 50
104 114
82 70
62
46
194
202
73 103
214
72
-800
-600
-400
-200
0
200
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
EV/Revenues (LHS) Average Target LTM Revenues (RHS)

2013’Q4: Announced transactions
16
Source: Capital-IQ; Note: Deal list refer to deals with disclosed values only
Date Announced Target Acquirer Status Deal Value ($ mn) Target Rev. ($ mn) EV/REV.
Dec 20 Responsys Oracle Corporation Closed 1,566.6 194.3 8.2x
Dec 19 Dealer.com Dealertrack Technologies Announced 994.3 NA NA
Dec 19
Pacific Bell Telephone Company, 499,402
Square Foot Data Center
Carter Validus Properties Closed 134.5 NA NA
Dec 18 Sofort AG Klarna AB Announced 199.0 NA NA
Dec 18 NMTI Holdings Amadeus Americas Announced 500.0 NA NA
Dec 16 Total Specific Solutions (TSS) B.V. Constellation Software Closed 330.3 239.5 1.4x
Dec 12 Easynet Group MDNX Group Limited Closed 179.7 NA NA
Dec 11 Macromill Bain Capital Private Equity Closed 507.6 177.7 2.5x
Dec 09 ValueClick IAC Search Closed 80.0 NA NA
Dec 04 Stayz Pty Limited HomeAway Pty. Closed 194.8 22.9 8.5x
Dec 02 Digital Insight Corporation NCR Corp. Closed 1,650.0 330.0 5.0x
Dec 02 Alaric Systems Limited NCR Limited Closed 78.4 NA NA
Dec 02 Topsy Labs Apple Closed 200.0 NA NA
Nov 27 PT. Aprisma Indonesia Wirecard AG Announced 120.2 NA NA
Nov 26 Applied Systems Hellman & Friedman Announced 1,800.0 NA NA
Nov 22 Liazon Corporation Towers Watson & Co. Closed 215.0 NA NA
Nov 21 Scout24 Holding GmbH Hellman & Friedman Announced 2,021.2 NA NA
Nov 18 Unit 4 N.V. Advent International Corporation Announced 1,741.2 623.0 2.6x
Nov 14 MapMyFitness Under Armour Closed 150.0 NA NA
Nov 07 Delcam Autodesk Development B.V. Closed 264.6 74.8 3.1x
Nov 07 JobKorea Co. H&Q Korea Partners Co. Closed 90.0 NA NA
Select list

2013’Q4: Announced transactions
17
Source: Capital-IQ; Note: Deal list refer to deals with disclosed values only
Target Acquirer Status Deal Value ($ mn) Target Rev. ($ mn) EV/REV.
Nov 07 Living Social Korea Groupon Closed 260.0 NA NA
Nov 05 GXS Group Open Text Corporation Closed 1,165.0 487.0 2.4x
Nov 05 Celcite Management Solutions Amdocs Limited Closed 129.0 NA NA
Oct 30 Soluto Asurion Closed 130.0 NA NA
Oct 30 Aggregate Knowledge NeuStar Closed 119.0 NA NA
Oct 30 ServiceMesh Computer Sciences Corporation Closed 295.0 NA NA
Oct 30 iWeb Group Internap Network Services Corp. Closed 145.0 NA NA
Oct 28 RagingWire Data Centers NTT Communications Corporation Closed 350.0 85.0 5.2x
Oct 28 Shanghai SynaCast Media Tech. Co.
Suning Commerce Group Co., Hony Capital
(Beijing) Co.
Announced 422.3 NA NA
Oct 27 Decision Insight Information Group Europe DMG Information Announced 121.2 111.5 1.1x
Oct 24 Shanghai Youzu Information Technology Co. Susino Umbrella Co. Announced 635.8 NA NA
Oct 23 Wirtualna Polska SA Grupa o2 sp. z o.o. Closed 123.7 59.4 2.1x
Oct 16 Shang Game Co.. Ourpalm Co. Announced 133.5 1.2 NM
Oct 15 Supercell Oy SoftBank Corp.; GungHo Online Entertainment Closed 1,530.0 103.6 29.0x
Oct 15 TLO, LLC TransUnion Corp. Closed 154.0 NA NA
Oct 10 Shanghai 37wan Network and Technology Co. Wuhu Shunrong Auto Parts Co. Announced 321.5 NA NA
Oct 07 Beijing Tianya Co. NQ Mobile Announced 127.5 NA NA
Oct 03 Procurian Accenture Closed 375.0 140.0 2.7x
Oct 03 Service Repair Solutions Claims Services Group Closed 289.0 NA NA
Oct 01 The 41st Parameter Experian Effective 324.0 NA NA
Oct 01 Confio Software SolarWinds Worldwide Closed 103.0 15.4 6.7x
Select list

Promising market performance
19
S&P Software outweighs S&P500; decreasing volatility signals higher investor confidence
Source: Bloomberg; Returns calculated based on index level on February 21, 2014
S&P Software moves in tandem with NASDAQ, but outperforms S&P500
90
100
110
120
130
140
150
02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14
S&P 500 NASDAQ Composite S&P Select Software
Index Returns Last 3-month Last 6-month LTM
S&P 500 2.2% 11.8% 22.2%
NASDAQ Composite 7.4% 18.4% 36.1%
S&P 500 Software Industry Index 9.2% 17.6% 34.4%
Investor sentiments remain optimistic ahead of decreasing volatility
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14
CBOE Volatility Index Average Volatility
Volatility near one-year average; investor confidence expected to
boost capital market activity

Trading comparables – digital media
20
Source: Capital-IQ; Note: All values as of February 21, 2014
Market data Operational Data Trading Multiples
Company % of 52 Market Revenues 2yr Rev. LTM EBITDA EV/Revenues EV/EBITDA
Name Share Price Week High Cap. EV LTM CAGR (%) Margin (%) LTM CY+1 LTM CY+1
All values are in $ mn, except share price and per share data
Digital Media
AOL 43.64 81.9% 3,467 3,382 2,320 2.6% 18.1% 1.5x 1.4x 8.0x 6.6x
Yahoo 37.29 89.4% 37,829 35,704 4,680 -3.1% 25.8% 7.6x 7.9x 29.6x 25.0x
Google 1203.79 99.3% 404,535 353,620 59,825 25.6% 30.1% 5.9x 5.1x 19.6x 13.7x
Trulia 30.73 58.3% 1,146 1,151 144 93.2% -4.1% 8.0x 4.7x NM NM
TripAdvisor 96.92 98.9% 13,785 13,671 945 21.8% 32.9% 14.5x 11.5x 44.0x 28.6x
Shutterstock 98.00 99.0% 3,437 3,227 236 39.9% 19.9% 13.7x 10.4x NM 45.9x
LinkedIn 192.62 74.8% 23,217 20,892 1,529 71.1% 10.9% 13.7x 9.9x NM 40.2x
Bankrate 19.86 85.8% 2,020 2,087 457 3.8% 23.7% 4.6x 3.9x 19.2x 14.0x
Demand Media 5.59 57.3% 477 421 401 13.0% 15.8% 1.0x 1.1x 6.7x 4.9x
Facebook 68.59 97.8% 174,887 163,914 7,872 45.6% 49.9% 20.8x 14.5x 41.7x 24.3x
Gannett 28.84 94.8% 6,572 7,985 5,161 -0.8% 20.2% 1.5x 1.3x 7.6x 5.4x
IAC/InterActiveCorp 74.36 97.8% 6,112 6,171 3,023 21.2% 18.0% 2.0x 1.9x 11.3x 9.6x
WebMD Health 47.57 92.5% 1,860 1,987 515 -4.0% 16.4% 3.9x 3.5x 23.6x 12.9x
Yelp 91.82 94.7% 6,383 5,993 233 67.3% 1.0% 25.7x 16.7x NM NM
Zillow 78.88 76.6% 3,090 2,795 198 72.9% -2.8% 14.1x 9.5x NM NM
j2 Global 48.95 87.0% 2,245 2,192 521 25.6% 43.3% 4.2x 3.7x 9.7x 8.5x
RetailMeNot 43.00 98.6% 2,268 2,143 210 61.5% 33.7% 10.2x 7.9x 30.3x 21.6x
Netflix 432.23 98.0% 25,850 25,181 4,375 16.8% 6.3% 5.8x 4.7x NM 44.6x
Mean 8.8x 6.6x 20.9x 20.4x
Median 6.8x 4.9x 19.4x 14.0x
Min 1.0x 1.1x 6.7x 4.9x
Max 25.7x 16.7x 44.0x 45.9x
Comparables

Trading comparables – marketing technology
21
Marketing Technology
Adobe Systems 68.22 98.3% 33,878 32,219 4,055 -1.9% 19.0% 7.9x 7.9x 41.8x 30.4x
Constant Contact 28.00 85.1% 859 735 285 15.4% 10.7% 2.6x 2.3x 24.1x 12.5x
Demandware 74.71 97.6% 2,585 2,310 104 35.4% -15.8% 22.3x 16.0x NM NM
Bazaarvoice 7.32 63.7% 539 465 176 45.1% -20.0% 2.6x 2.6x NM NM
Brightcove 9.37 57.7% 270 233 110 31.5% -1.4% 2.1x 1.8x NM NM
Jive Software 7.91 42.8% 548 448 146 37.3% -41.0% 3.1x 2.6x NM NM
Web.com 35.69 96.9% 1,701 2,250 492 57.2% 19.8% 4.6x 3.8x 23.1x 13.1x
Rocket Fuel 53.96 75.1% 1,891 1,804 241 132.1% -2.8% 7.5x 4.2x NM NM
Salesforce.com 63.59 98.4% 38,345 40,099 3,760 34.1% -0.5% 10.7x 9.9x NM NM
LivePerson 13.35 87.6% 723 631 178 15.6% 3.2% 3.5x 3.1x NM 29.0x
Marketo 38.76 86.1% 1,521 1,401 96 72.1% -42.2% 14.6x 10.4x NM NM
OpenTable 76.21 87.1% 1,787 1,673 190 16.7% 33.1% 8.8x 7.4x 26.5x 19.6x
Priceline.com 1,315.65 98.7% 68,601 63,750 6,793 24.9% 37.6% 9.4x 7.6x 25.0x 19.2x
ReachLocal 10.62 61.1% 295 215 514 17.0% 4.4% 0.4x 0.4x 9.6x 8.7x
Mean 7.2x 5.7x 25.0x 18.9x
Median 6.0x 4.0x 24.5x 19.2x
Min 0.4x 0.4x 9.6x 8.7x
Max 22.3x 16.0x 41.8x 30.4x
Comparables

Trading comparables – other notable companies
22
Other Notable Companies
Amazon.com 346.76 85.0% 159,255 152,944 74,452 24.4% 4.8% 2.1x 1.7x 43.1x 22.2x
Apple 525.25 91.3% 468,517 444,712 173,992 16.7% 32.5% 2.6x 2.4x 7.9x 7.6x
AVG Technologies 18.46 69.5% 1,005 993 407 22.3% 33.2% 2.4x 2.6x 7.4x 7.7x
eBay 54.59 94.1% 70,675 65,773 16,047 17.4% 29.7% 4.1x 3.6x 13.8x 11.0x
IBM 182.79 84.7% 198,483 227,272 99,751 -3.4% 24.4% 2.3x 2.3x 9.4x 8.2x
Intuit 77.24 98.1% 21,883 21,051 4,129 2.4% 31.4% 5.1x 4.5x 16.2x 11.0x
Oracle 38.10 98.3% 171,351 159,021 37,552 1.1% 43.4% 4.2x 4.0x 9.8x 8.2x
SAP AG 79.54 89.2% 94,933 97,014 23,159 8.7% 32.7% 4.2x 4.0x 12.8x 11.0x
Microsoft 37.98 97.4% 315,261 255,964 83,433 7.6% 38.1% 3.1x 2.9x 8.0x 8.1x
Mean 3.3x 3.1x 14.3x 10.5x
Median 3.1x 2.9x 9.8x 8.2x
Min 2.1x 1.7x 7.4x 7.6x
Max 5.1x 4.5x 43.1x 22.2x
Comparables

IPO activity in Digital Media & Internet rebounds in
2013
 In 2013’Q4, number of IPOs in the Digital Media & Internet space reached the highest level since 2008. The quarter witnessed 33 IPOs, nearly
double compared with 2013’Q3 and around five times more than 2012’Q4
 The average IPO raised $139 mn in 2013’Q4 compared with just $26 mn in 2012’Q4
 For IPOs, 2013 remained a remarkable period, with 82 offerings raising $8.5 bn (with an average of $103 mn) vis-à-vis $5.6bn through 64
offerings (with an average of $88 mn) in 2012
24
IPO activity in 2013’Q4 accelerates to highest level since 2008
Source: Capital-IQ; Note: 2012’Q1 deal value excludes the $16 bn Facebook IPO; Deals refer to effective, closed and announced IPOs not withdrawn until date
3.2
0.7
0.2 0.4
0.2 0.1
1.9
1.1
1.7
2.8
0.9
3.1
1.8
3.4
0.7
2.4 2.4
0.5
2.5
0.2
0.6
1.1
2.2
4.6
19
25
7
10
6
5
14
10
22
22
15
32
21
28
22
25
29
17
11
7
10
20
19
33
0
5
10
15
20
25
30
35
$0
$1
$1
$2
$2
$3
$3
$4
$4
$5
$5
Deal Value in $ bn (LHS) Deal Volume (RHS)

Remarkable IPO performance
25
Investors benefit from impressive one-day and one-week gains in 2013'Q4
Source: Capital-IQ; Note: Deals refer to effective, closed and announced IPOs not withdrawn until date
23% 24%
1%
30%
39%
77%
33%
9%
19%
29%
52%
28%
33%
20%
35%
28%
43%
34% 33%
21%
33%
37%
47%
50%
Avg. One-Day Return (%)
29%
18%
-6%
22% 23%
121%
28%
12%
20% 25%
61%
29% 29%
22%
29%
20%
52%
38%
28% 25%
52%
38%
53% 56%
Avg. One-Week Return (%)
I n 2013‘Q4, IPOs register best average
one-day performance in the past 12 quarters
In 2013’Q4, IPOs register avg. one-week gains of
more than 2x that in 2012’Q4
20-Quarter Average35%
20-Quarter Average38%

IPO activity remains strong, led by record offerings
26
Source: Capital-IQ
Date Announced Company Offering Size ($ mn) IPO Price/Share ($) 1-Day Performance Business
Dec 12, 2013 Care.com 90.95 17.00 - Online marketplace for family care
Dec 02, 2013 econtext Asia Limited 57.88 0.46 - Online payment services and e-commerce solutions
Nov 25, 2013 MoPowered Group 6.5 1.62 -2.5% SaaS solutions for online retailers and e-commerce businesses
Nov 25, 2013 iBuy Group Limited 32.77 0.28 - Operates e-commerce websites focused on flash sales
Nov 22, 2013 JQW 10.93 1.15 7.5% Business-to-business e-commerce platform
Nov 22, 2013 Link Mobility Group 4.88 3.58 -19.6% Mobile services and solutions
Nov 20, 2013 Arria NLG 167.5 1.60 65.7% Software development for NLG and SaaS services
Nov 18, 2013 Veda Group Limited 310.89 1.14 40.0% Business intelligence services
Nov 18, 2013 Vocation Limited 230.44 1.72 - Education and training services
Nov 13, 2013 China Binary Sale Technology Limited 9.29 0.08 15.0% Online transaction services
Nov 11, 2013 GameAccount Network 35.88 2.18 8.2% Online gaming
Nov 08, 2013 O-uccino 4.77 34.01 88.6% Housing information services
Nov 05, 2013 EU Supply 7.96 0.36 7.3% E-commerce solutions to construction industry
Nov 05, 2013 V-cube 37.34 31.98 82.1% Visual communication platform
Nov 04, 2013 Autohome. 132.94 17.00 - Online automobile information
Nov 04, 2013 Nine Entertainment Co. Holdings Limited 571.57 1.86 -3.4% Media and entertainment
Nov 01, 2013 Hottolink 12.32 26.29 130.0% Social media data solutions and data processing application
Oct 28, 2013 Rightster Group 32.56 0.96 20.0% Online video distribution and marketing network
Oct 23, 2013 Allied Architects 11.02 16.63 130.0% Social media marketing services
Oct 22, 2013 Sungy Mobile Limited 78.54 11.22 - Mobile internet products and services
2013 closed IPOs

IPO activity remains strong, led by record offerings
27
Source: Capital-IQ
Date Announced Company Offering Size ($ mn) IPO Price/Share ($) 1-Day Performance Business
Oct 14, 2013 Freelancer Limited 13.97 0.47 220.0% Freelancing, outsourced and crowd sourcing services
Oct 03, 2013 Twitter 1,820.0 26.00 72.7% Online social networking and micro-blogging service
Oct 01, 2013 Wix.com 127.05 16.50 -1.2% Web development platform
Sep 30, 2013 Qunar Cayman Islands Limited 166.67 15.00 81.4% Online travel e-commerce platform
Sep 27, 2013 58.Com 187.0 17.00 41.9% Online classified advertisement services
Sep 23, 2013 OzForex Group Limited 416.0 1.89 28.0% Online foreign exchange services
Sep 18, 2013 Criteo SA 250.56 31.00 14.2% E-commerce solutions provider
Sep 09, 2013 Endurance International 252.61 12.00 - Cloud-based solutions for small- and medium-sized businesses
Sep 06, 2013 Macromac 0.8 0.16 50.0% Mobile messaging platform
Aug 26, 2013 RingCentral 97.5 13.00 - SaaS solutions for business communications
Aug 16, 2013 Rocket Fuel 116.0 29.00 93.5% Artificial-intelligence digital advertising solutions
Aug 14, 2013 Benefitfocus 130.78 26.50 102.1% Cloud-based solutions for insurance carriers
Aug 14, 2013 Chegg 187.5 12.50 - Student-first connected learning platform
Aug 13, 2013 CentralNic Group 10.83 0.85 19.1% Domain name registry services
Jul 31, 2013 RapidCloud International 1.55 0.83 28.7% SaaS solutions for web and mobile applications
Jul 23, 2013 99 Wuxian Limited 18.88 0.38 12.5% Mobile online marketplace
Jul 09, 2013 Somoto 5.64 84.81 -
Internet monetization solutions for website owners and software
developers and cloud computing solutions
Jul 08, 2013 Cvent 117.6 21.00 - Online events and meetings
Jul 02, 2013 YuMe 46.13 9.00 - Digital video brand advertising solutions
Jul 01, 2013 Control4 Corporation 64.0 16.00 - Automation and control solutions for the connected home
2013 closed IPOs

Encouraging IPO pipeline
28
Source: Capital-IQ
2014 announced IPOs
Date Announced Company Logo Offering Size ($ mn) IPO Price/Share ($) Business
Feb 13, 2014 Aerohive Networks
75.0
- Cloud-enabled Wi-Fi and routing solutions
Feb 12, 2014 CBG Holdings
138.0
- Online banking software for financial institutions
Feb 10, 2014 Amber Road
75.0
- Trade management solutions through SaaS platform
Jan 31, 2014 Coupons.com
100.0
- Digital promotion platform
Jan 30, 2014 JD.com
1,500.0
- Online retailer
Jan 30, 2014 Paylocity Holding Corporation
115.0
-
Cloud-based payroll and human capital management
software solutions
Jan 21, 2014 Sabre Corporation
100.0
- Technology solutions provider to travel and tourism industry

Optimistic outlook for deals
30
Tuck-in acquisitions and key technological trends to drive deal activity in 2014
Source: Mtech Advisors, KPMG; *Excluding Facebook IPO; **Data up to February 13, 2014
Emerging innovative
technology companies
remain hot target
 Emerging innovative players in the Digital Media & Internet space would continue to attract large companies due to rapidly
changing technology platforms
 The trend of acquisition at high multiples is expected to continue
Marketing automation and
cloud computing to be key
drivers
 The marketing structure is becoming increasingly automated. Rising focus by digital marketers and local companies on
automating certain aspects of the workflow is expected to be one of the major drivers of M&As
 Converging technologies, cloud computing and data analytics would be the key trends driving M&A activity in 2014
Consolidation among
Marketing Agencies
 There has been a substantial increase in interactive/digital marketing agencies in the past five years
 Such businesses will continue to experience consolidation, similar to the “dot com” experience a decade ago
Industry-Focused and
Content Marketing
Companies to Garner
Interest
 Companies with an industry-specific focus (healthcare, insurance, retail, communications and financial services among
others) will attract much strategic investor interest
 Given the increased focus by enterprises on content marketing, an opportunity exists for vendors with proven track
records and quantifiable ROI across multiple channels such as search, display/web, social, mobile, e-mail, video
Strong activity in primary
market
 Capital market activity is expected to accelerate in 2014, after rebounding in 2013. In 2012*, the offerings were weak
 The IPO market looks attractive with 16 IPOs YTD** with more than $2.2 bn in the pipeline, including an IPO by China’s
online retailer JD.com

31
Digital Media Interactive Marketing Mobile Software

Horizon Partners Q4 2013 Newsletter

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