Reports 2016 CTRM Market Update | Page 4

2016 CTRM Market Update 2016 Market Trends Update Commodity prices fell throughout the year in 2015, driven in large part by declining economic growth in the Asia-Pac region, and over-investment in commodities infrastructure during the previous 5 years of high prices and growing demand. en the changes across the industry driven by regulatory and structural change, we expect pent-up demand to start to flow through later in the year, with overall spend expected to be up slightly from 2015 to $1.65B. Faced with the steadily declining prices and increasing costs, 2015 was marked by producers, merchants and traders cutting budgets and reducing or delaying spending, impacting the global spend for IT solutions, including CTRM software products. Based on our analysis, we believe the market for CTRM solutions, 3rd party implementation services and 3rd bespoke solutions development, support and services to $1.59B in 2015. This interim market size update provides estimates and forecasts of total CTRM market size through the year 2020, categorized along three dimensions – by revenue component, by commodity, and by geographic region. Given the overall current difficult conditions in commodity markets, ComTech does expect H1 2016 to continue the trend set in 2015 – moderate deal flow, but lower revenues on a per deal basis than in previous years; though some segments will be impacted more than others in this regard. However, giv- CTRM Market Revenue Forecast By Revenue Component Reviewing total CTRM market revenue-by-revenue components, results for 2015 were essentially flat to 2014, though overall license sales were down slightly. The key events, trends and issues reflected in this analysis were as follows: / While procurement activity (in the form of RFPs etc.) appeared to be good in most regions outside of the Asia-Pacific markets, and potentially actually higher than in 2014 in Europe, it appears that reduced IT budgets resulted in fewer deal closures, lower average deal prices and a higher number of Saas/Hosted solutions being deployed than previously forecast. / Adoption of SaaS/Hosted solutions exceeded expectations and that market component increased more rapidly than forecast. Additionally, the movement from recognized license revenues to annual recurring revenues associated with SaaS/hosted solution deployment also increased, reflecting a growing tendency for vendors to negotiate new deals (regardless of the technology deployment method) as an annual payment that includes license and support & maintenance fees. / License revenue was lower than expected in 2015 due to greater adoption of SaaS/Hosted solutions, increasing use of annualized license/S&M agreements, andfewer than expected large deals; mid-sized deals (those less than $1MM in first year total revenue) and lower revenue deals dominated the market in 2015. / The estimated market share of the 6 largest vendors declined in 2015 to 67% from 71% in 2014 due to the increased numbers of deals done in the mid-tier and lower market segments. © Commodity Technology Advisory LLC, 2016, All Rights Reserved. 4