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MARTECH
BAROMETER
Q2 2018 MARKET REVIEW
2
SECTOR-LED SPECIALISTS IN M&A AND FUNDRAISING
Years ofRI DEALS 3 Sectors
Deals inPast 2 Years
25+ 30+
50 People
15 Nationalities 3 Offices 1,000+ Buyers& Investors
100%Referenceable
3
Performance Marketing Programmatic Performance Marketing Programmatic Analytics
eCommerce Tech Hybrid Cloud eCommerce Mobility UX
has been
acquired by
has been
acquired byhas made a $20m
growth equity
investment into
has been
acquired by
THE BEST COMPANIES IN MARKETING AND TECHNOLOGY WORK
WITH US TO ACHIEVE GREAT RESULTS
has received a Series B
funding round from
has been
acquired by
has been
acquired byhas been
acquired by
has been
acquired by
has been
acquired by
4
MARTECH HIGHLIGHTS: Q2 2018
Welcome to the Q2 2018 edition of the MarTech Barometer – Results International’s quarterly review of the global marketing
technology sector.
Highlights this quarter include:
• The RI AdTech index gained 42%, the highest quarterly increase on record; driven by a resurgence in AdTech M&A, led by the
acquisition of AppNexus by AT&T for a reported $1.6bn (despite rumours of an IPO), adding another telco into the competitive
mix alongside Verizon and SingTel to dethrone the big three: Google, Facebook and Amazon
• Large software players continued investing in their MarTech and eCommerce stacks; Oracle acquired Grapeshot (for $454m) to
add contextualisation to its measurement capabilities (after buying Moat last year) and Adobe acquired Magento for $1.7bn,
increasing the attractiveness of independent eCommerce platforms Shopify (which helped drive the RI MarTech index up 75%
over the last 12 months) and BigCommerce (which raised $64m this quarter)
• This MarTech and eCommerce M&A activity has driven the demand for complementary implementation and tech-enabled
execution services, such as e2y (digital commerce consultancy) which was acquired this quarter by Dimension Data (Results
International acted as exclusive financial advisors to e2y)
• The pressure and uncertainty surrounding GDPR caused some AdTech players to exit the EU; Verve (US-based location-based
mobile marketing) shut down its European operations in April, and Drawbridge (US-based cross-device targeting), having
shuttered its EU AdTech division in March, divested its advertising business to Gimbal in May, exiting the AdTech space. Now
implemented, the actual impact of GDPR will become evident in the coming quarters
The MarTech and AdTech sectors remain active and the outlook is exciting. As such, now is a good time to be contemplating
fundraising, exit or growth through acquisition in the MarTech or AdTech space – if you are, please do get in touch.
5
RI GLOBAL MARTECH INDICES
60
80
100
120
140
160
180
200
220
AdTech MarTech Data Diversified Internet NASDAQ Composite Index
LAST
12
MO
NTH
SH
AR
E P
RIC
E P
ER
FO
RM
AN
CE (
%)
75.0%
(4.5%)
11.1%
38.9%
22.3%
Q2 2018 PERFORMANCE
AdTech 42.2%
MarTech 22.6%
Diversified Internet 18.8%
Data 13.0%
NASDAQ comp 9.3%
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18
Notes: Based on share prices as at 30th June 2018; indices weighted by market capitalisationSources: Capital IQ and Results analysis
6
MARTECH: SHARE PRICE PERFORMANCE
(33.0%) (31.8%) (29.4%)
(58.4%)(45.2%)
(33.9%)
(58.5%)
(5.6%)
62.2%
(44.6%)
87.2%
55.6%62.8%
45.3%
11.1%
(18.7%)
90.7%
133.9%
47.3%
67.9%
45.1%
15.3%
(9.2%)
19.0%
36.1%
21.5%
75.6%
3.8%
28.7%
(100%)
(50%)
-
50%
100%
150%
27.1%
(4.0%)
(18.4%)
(35.7%)(28.1%)
17.3%
(2.9%)
9.0% 7.4%
58.3%
89.0%
38.8%
48.7%
29.2%
(11.2%)(14.8%)
15.8%
35.7%
(5.8%)
17.1%
52.9%
31.9%
9.6%
21.9%
1.2%8.9%
17.4%
(9.9%)
21.6%
(60%)
(40%)
(20%)
-
20%
40%
60%
80%
100%
LAST
12
MO
NTH
SQ
2 2
01
8
ADTECH DATA DIVERSIFIED INTERNETMARTECH
(1)
(1)
(1)
(1)
(1)
(1) Company has IPO’d within the last 12 months, the share price movement represents the change between the stock’s respective IPO date (see slide 7) and 30th June 2018Note: Based on share prices as at 30th June 2018Sources: Capital IQ and Results analysis
7
MARTECH: SELECTED STOCKS - PERFORMANCE SINCE IPO
COMPANYIPO
DATEDESCRIPTION
RAISED
($M)INDICATIVE PRICE
RANGE ($)
IPO LISTING
PRICE ($)
INCREASE VS.
RANGE
DAY 1
INCREASE
CURRENT
INCREASE(1)EV ($M)
EV /
REVENUEEV / EBITDA
IPO CURRENT IPO CURRENT IPO CURRENT
NasdaqGM
Feb-18
Marketing
measurement & data
analytics
70 13.0-15.0 13.0 (7.1%) 2.8% 12.5% 423 418 2.7x 2.7x n.m. n.m.
NasdaqGMDec-17
Cross-platform ad
optimisation & DSP30 8.0-9.0 8.0 (5.9%) 12.5% (2.8%) 458 297 n.a. 1.7x n.a. 48.6x
AIMDec-17
Native in-video
advertising35 n.a. 0.83 n.a. 1.2% (18.9%) 36 13 n.m. 1.7x n.m. n.m.
TSEDec-17
End-to-end AdTech
stack16 10.8-12.0 12.0 5.1% 99.0% 49.7% 189 274 n.a. 1.6x n.a. 21.9x
NYSE
Nov-17Email marketing
automation131 13.5-15.5 16.0 10.3% 12.5% 75.9% 591 1,288 5.4x 9.1x 52.8x n.m.
NYSE
Apr-17
Local search
marketing & content
management
116 8.0-10.0 11.0 22.2% 21.9% 15.0% 939 2,057 5.7x 9.3x n.m. n.m.
NasdaqGSSep-16
Big data & marketing
automation87 10.5-12.5 13.0 13.0% 21.2% (37.2%) 353 233 n.a. 1.6x n.a. 11.9x
NasdaqSep-16 Agency focused DSP 84 16.0-18.0 18.0 5.9% 67.2% 175.7% 721 4,257 3.9x 9.8x 18.5x 31.6x
NYSE
May-15eCommerce
platform131 14.0-16.0 17.0 13.3% 51.1% 632.9% 1,172 14,979 7.3x 14.7x n.m. n.m.
(2)
(2)
(2)
(2)
(2)
(2)
Note: Cision has not been included in the above analysis as it listed on the NYSE through a reverse merger with Capitol Acquisition Corp III, a publicly traded investment vehicle, not via an initial public offering: (1) Current increase from IPO price; market data as of 30th June 2018 (2) Analyst reports were unavailable at the time of IPONote: Calendarised to December year end; net revenues have been used where possible (gross revenues minus TAC); $ millions, except share price data; multiples capped at20x EV / Revenue and 50x EV / EBITDASources: Capital IQ and Results analysis
8
MARTECH: PUBLIC COMPANY VALUATION BENCHMARKS
1.7 x
6.7 x
3.4 x
5.0 x
2.7 x
-
1.0 x
2.0 x
3.0 x
4.0 x
5.0 x
6.0 x
7.0 x
8.0 x
AdTech MarTech Data Diversified
Internet
Global
AdTech/
MarTech
20.9%
25.4%
6.8%
21.4% 20.9%
-
5%
10%
15%
20%
25%
30%
AdTech MarTech Data Diversified
Internet
Global
AdTech/
MarTech
NET REVENUE GROWTH (2018-19E) EV / NET REVENUE 2018E
Notes: EV = Enterprise Value; financials calendarised to December year end; median values reported; net revenues have been used where possible (gross revenues minus TAC)See Selected Publicly Traded Companies (slide 13) for details of companies included in each categorySources: Capital IQ, analyst reports and Results analysis
9
MARTECH: PUBLIC COMPANY VALUATION PERFORMANCE
OVER TIME
6.7 x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
MarTech: EV / CY Net Revenue
Median
1.7 x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
AdTech: EV / CY Net Revenue
Median
LTM Q2 2018
% CHANGE
Median 72.3% (12.1%)
LTM Q2 2018
% CHANGE
Median 39.0% 20.1%
11(1)
Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
10(1)
(1) Number of companies with applicable multiples in Q2 2018 indexNotes: EV = Enterprise Value; financials calendarised to December year end, which can impact the multiples at the start of each year as the base is shifted forward; weekly tracking of valuation multiples commenced in July 2015, October 2014 – June 2015 tracked on a quarterly basis, therefore a linear progression has been assumed between quarters up to July 2015Sources: Capital IQ and Results analysis
10
MARTECH: GLOBAL M&A ACTIVITY Q1 2013 – Q2 2018
3732
55
38
8072 74
67
54 54
87
61
74
85
72
60
91
82
6268
86
76
17
11
19
14
28
29
39
39
44 47
25
39
33
27
40
21
24
20
26
25
18
14
-
$1bn
$2bn
$3bn
$4bn
$5bn
$6bn
$7bn
$8bn
0
20
40
60
80
100
120
140
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
MarTech - Deal Number AdTech - Deal Number MarTech - Deal Value AdTech - Deal Value
NU
MB
ER
OF D
EA
LS
TOTA
L DIS
CLS
OED
DEA
L VA
LUE
(1) (2) (3) (4) (5)
2016:412 Deals
2015:411 Deals
2014:428 Deals
2013:223 Deals
2017:398 Deals
2018:194 Deals
(6)
Notable deal announcements include: (1) Alliance Data’s acquisition of Conversant ($2.2bn); (2) Verizon’s acquisition of AOL ($4.3bn); (3) Salesforce’s acquisition of Demandware ($2.8bn), Vista Equity Partners’ acquisition of Marketo ($1.6bn) and Cvent ($1.4bn) and EQT’s acquisition of Sitecore ($1.1bn); (4) Verizon’s acquisition of Yahoo! ($4.8bn) and Orient Hontai Capital’s acquisition of Applovin ($1.4bn); (5) Golden Gate Capital’s acquisition of Neustar ($2.7bn); (6) SAP’s acquisition of Callidus ($2.4bn) and GTCR’s & Sycamore Partner’s acquisition of CommerceHub ($1.1bn)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis
11
MARTECH: SELECTED DEALS IN Q2 2018
DATE BUYER TARGET EV ($M) EV/REVENUE(1) COMPANY DESCRIPTIONTARGET
LOCATION
Jun-18 1,600 - Programmatic ad exchange
Jun-18 - - Mobile-first programmatic DSP
Jun-18 17 - Marketing automation & lead generation
Jun-18 800 5.3x Programmatic ad verification & optimisation
Jun-18 20 - Influencer marketing
May-18 1,680 11.2x eCommerce platform
May-18 - - Marketing & promotions management
May-18 19 - Marketing automation and CRM
May-18Certain assets
80 0.6x Converged addressable video & TV
May-18Managed media unit
- - US managed media unit of Drawbridge
May-18 130 3.1x SEO & social media marketing
May-18 12 30.0x AI-driven real-time eCommerce personalisation
Apr-18 265 7.2x eCommerce websites & integrated marketing
Apr-18 454 13.0x Audience measurement & targeting
Apr-18 150 - Travel loyalty marketing
Apr-18 - - AI-driven mediation for mobile publishers
Apr-18 16 12.8x Mobile app intelligence
Apr-18 8 - Personalised video & mobile messaging
(2)
(2)
(2)
(2)
(2)
(1) In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority
interest); net revenues have been used where possible (gross revenues minus TAC)
(2) Earnout consideration has not been included in the calculation of Enterprise Value unless stated; Ahalogy - $30m maximum earnout excluded from $20m deal value; WordStream - $20m earnout
excluded from $130m deal value; Weebly - $100m earnout (restricted stock) excluded from $265m deal value; Priori Data - $0.3m earnout excluded from $16m deal value; Vehicle - $4m earnout
excluded from $8m deal value
(3) Enterprise Value includes approximate adjustments of $20.9m
Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis
(3)
12
MARTECH: SELECTED FUNDRAISINGS IN Q2 2018DATE COMPANY
TYPE OF ROUND
FUNDSRAISED ($M)
INVESTOR PARTICIPATION COMPANY DESCRIPTIONCOMPANYLOCATION
Jun-18 Series B 16GMG Ventures (lead investor), Hearst Ventures, Reed Elsevier Ventures, MMC Ventures, Frontline Ventures, Kreos Capital and LocalGlobe
Media monitoring & real-time customer insight
Jun-18 Series B 33 Sageview Capital (lead investor), Yaletown Partners and BDC Venture Capital API-based eCommerce
Jun-18 Series B 26Redpoint Ventures (lead investor), Canaan Partners, Boldstart Ventures, Social Leverage, Plug and Play, Cisco Investments, BoxGroup and private investors
Omni-channel customer experience
May-18Growth Equity
20Jolt Capital, Sunstone Capital, Conor Venture Partners, Vækstfonden (lead investors) and Cipio Partners
AI-powered media planning
May-18 Series A 16 Draper Esprit (lead investor), Harbert Management Corporation and Karma VenturesAI & computer-vision video ad emotion response
May-18 Series B 27Goldman Sachs Principal Strategic Investments, Nasdaq Ventures, DRW Venture Capital, Tribeca Venture Partners (lead investors), Tribeca Angels and TLcom Capital
Offline location intelligence & measurement
May-18 Series B 12 Sofiouest (lead investor), Bpifrance and Entrepreneur VenturePersonalised mobile ad measurement
May-18 Series B 37Battery Ventures (lead investor), Contour Venture Partners, Cross Creek Capital, Primary Venture Partners, Rho Ventures and private investors
Behavioural marketing automation & analytics
May-18 Series B 13 Smedvig Capital (lead investor), Beringea and Revolt Ventures App commerce
Apr-18 Series C 37 Octopus VenturesRetail engagement & content optimisation
Apr-18 Venture 64 Goldman Sachs (lead investor), General Catalyst, GGV Capital and Tenaya CapitaCloud-based eCommerce platform
Apr-18 Series A 32 Updata PartnersCloud-based content personalisation
Apr-18 Venture 40 e.ventures, Siguler Guff & Company and GreycroftCompetitive intelligence & analytics
Apr-18 Venture 25Femto Partners, Eight Roads Ventures, Mitsui & Co, Mitsui Sumitomo Insurance Venture Capital, SMBC Venture Capital, Mizuho Capital and Mitsubishi UFJ
Real-time eCommerce web analytics
Apr-18 Series C 60 Sequoia Capital (lead investor), General Catalyst and CRVConversational sales &
marketing automation
Apr-18 Series B 30Insight Venture Partners (lead investor), Matrix Partners, Underscore VC and Leaders Fund
Marketing automation, analytics & CRM
Apr-18 Venture 8 West Coast Capital (lead investor) and Scottish Investment BankTV campaign measurement & optimisation
Apr-18 Series B 14Two Sigma Ventures (lead investor), Epic Ventures, Comcast Ventures, Rembrandt Venture Partners and Voyager Capital
Personalised marketing & CDP
Sources: Press releases, Capital IQ and Results analysis
13
MARTECH: SELECTED PUBLICLY TRADED COMPANIES
PRICE ($) % OF 52 MARKET TOTAL NET ENTERPRISE REVENUE REV. GROWTH GROSS MARGIN EBITDA MARGIN
COMPANY (30-JUN-18) WEEK HIGH CAP CASH DEBT VALUE ($M) CY2018 CY18-19 HISTORICAL CY2018 CY2019 CY2018 CY2019 CY2018 CY2019
ADTECH
MARTECH
DATA
DIVERSIFIED INTERNET
OPERATING METRICS VALUATION METRICS
REVENUE EBITDA
Note: Calendarised to December year end; $ millions, except share price data; multiple capped at 20x EV/Revenue and 80x EV/EBITDA; net debt is inclusive of minority interest and preferred equity; net revenues have been used where possible (gross revenues minus TAC); analyst reports have been used for selected company financialsSources: Capital IQ, analyst reports and Results analysis
14
THE TECH REPORT: SUBSECTORS
In addition to this summary, we produce separate quarterly reports that focus specifically on; Digital Services (Digital Horizon),
Enterprise Software (Enterprise Stack), Cybersecurity (CyberScope) and HealthTech (HealthTech Heartbeat). You can find these
reports on our website or by clicking on the icons below. Alternatively, you can contact one of our team members on the details
overleaf.
HEALTHTECH
HEARTBEATCYBERSCOPE MARTECH
BAROMETER
DIGITAL
HORIZONENTERPRISE
STACK
15
GET IN TOUCH
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