Web 2.0 Weekly
         “What Recession? Online Luxury Heats Up”
                                                         ...
Key Developments (past week)
    Deals (M&A, Finance) – Online Luxury – Hot Sector in a Poorer World
     Booyah (virtual...
Public Company Data




3                         www.mackieresearch.com
Aggregate Public Data
     Web 2.0 Public Companies   Total      Median    Max           Min
    # Companies              ...
5
                                                                      0
                                                ...
Valuation Dashboard – 1 Week
                       Market Cap                              EV/Revenue
                   ...
7
                         Source: CapitalIQ
                                                                             ...
8
                         Source: CapitalIQ
                                                                             ...
9
                         Source: CapitalIQ
                                                                             ...
10
                                                                     -
                                                ...
11
                                                                                              0.0
                     ...
12
                                                                                                                   0. 0...
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
10 05-18 web 2.0 weekly
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10 05-18 web 2.0 weekly

  1. 1. Web 2.0 Weekly “What Recession? Online Luxury Heats Up” May 18, 2010 David Shore, CFA, MBA 416.860.6784 dshore@mackieresearch.com Damian Wojcichowsky, CFA 416.860.7652 This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report. www.mackieresearch.com Copyright © 2000-2010, Mackie Research Capital Corporation, All rights reserved www.mackieresearch.com
  2. 2. Key Developments (past week) Deals (M&A, Finance) – Online Luxury – Hot Sector in a Poorer World  Booyah (virtual world operator) raised $20 mm in Series C financing.  Social media brand and charity promoter, SocialVibe, raised an $11.7 mm financing round.  Activity in the online luxury retail space headed up this week with Brandsclub (Brazilian luxury flash retailer) in a $17 mm funding and Gilt Groupe raising $35 mm. Financial Results/Guidance  Fluid Music (TSX:FMN, digital music distributor) reported Q1/F10 revenue of $15.9 mm (vs. $1.3 mm in the same period last year) and EPS of ($0.06) vs. ($0.03) in Q1/F09.  Points International (TSX:PTS, rewards program manager) reported strong revenue growth – up 11% Y/Y to $23.5 mm, and break-even EPS. Excluding contribution last year from a discontinued relationship with a major customer (Delta Airlines), revenue growth was 205% Y/Y. 2 www.mackieresearch.com
  3. 3. Public Company Data 3 www.mackieresearch.com
  4. 4. Aggregate Public Data Web 2.0 Public Companies Total Median Max Min # Companies 100 - - - Market Cap (US$ mm) 82,162.9 67.9 36,142.4 1.2 Revenue (US$ mm) 23,048.3 59.8 3,057.7 0.0 1 Year revenue growth 5.3% 857.0% -91.4% EBITDA as % of revenue - 13.4% 67.7% -75.0% Net cash (US$ mm) 9,044.1 2.1 1,827.7 -670.8 TEV/Revenue - 1.9x 41.8x 0.1x TEV/EBITDA - 8.4x 36.6x 0.8x P/E - 16.0x 83.4x 0.0x Relative to 52 week high -37.8% 0.0% -97.6% Source: CapitalIQ 4 www.mackieresearch.com
  5. 5. 5 0 5 10 15 20 25 30 Gaming 27 Social Networking 17 Media 10 7 Diversified 6 Marketing 5 Mobile Source: CapitalIQ 3 Infrastructure 3 SMS/Voice 3 Enterprise 3 Advertising 2 Internet Retail 2 Virtual World By Sector 2 Dating 2 Music 1 Vertical Communities 1 Collaboration 1 Podcasting 1 Learning 1 Video 1 Search 1 Payment Financial Services 1 Public Company Distribution 0 5 10 15 20 25 30 35 40 45 United States Canada China South Korea Japan Taiwan Germany Australia United Kingdom Hong Kong Poland Russia By Country Finland Sweden Malaysia India Italy Switzerland Israel www.mackieresearch.com
  6. 6. Valuation Dashboard – 1 Week Market Cap EV/Revenue Flat Flat 3% 5% Rising 29% Falling 59% Rising 36% Falling 68% EV/EBITDA P/E Flat Flat 2% Rising 0% 21% Rising 34% Falling 66% Falling 77% 6 www.mackieresearch.com
  7. 7. 7 Source: CapitalIQ Multiple (x) 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 5.0x # companies 3/30/2009 4/6/2009 4/13/2009 4/20/2009 4/27/2009 5/4/2009 5/11/2009 5/18/2009 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 7/6/2009 7/13/2009 Median EV/Revenue 7/20/2009 7/27/2009 8/3/2009 8/10/2009 8/17/2009 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 Median 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 Long-term average 12/14/2009 12/21/2009 12/28/2009 1/4/2010 1/11/2010 1/18/2010 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 down second 3/1/2010 3/8/2010 consecutive week Revenue multiples 3/15/2010 3/22/2010 3/29/2010 4/5/2010 4/12/2010 4/19/2010 4/26/2010 5/3/2010 5/10/2010 5/17/2010 373638383939393841414344444545454648494949485154545859596264646562626467687069726968677072707574757879787977788080848181 www.mackieresearch.com
  8. 8. 8 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 3/30/2009 4/6/2009 4/13/2009 4/20/2009 4/27/2009 5/4/2009 5/11/2009 5/18/2009 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 Median EV/EBITDA 7/6/2009 7/13/2009 7/20/2009 7/27/2009 8/3/2009 8/10/2009 8/17/2009 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 Median 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 12/14/2009 Long-term average 12/21/2009 12/28/2009 1/4/2010 1/11/2010 1/18/2010 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 below LT average 3/1/2010 remain depressed 3/8/2010 EV/EBITDA multiples 3/15/2010 3/22/2010 3/29/2010 4/5/2010 4/12/2010 4/19/2010 4/26/2010 5/3/2010 5/10/2010 5/17/2010 20 20 21 22 23 23 22 22 23 24 23 23 23 24 26 26 26 26 26 25 26 26 28 32 29 32 34 36 37 41 39 39 37 39 40 40 38 38 41 42 41 42 42 42 42 44 43 45 43 44 49 50 49 51 52 52 50 51 49 48 www.mackieresearch.com
  9. 9. 9 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 30. 0x 3/30/2009 4/6/2009 4/13/2009 Median P/E 4/20/2009 4/27/2009 5/4/2009 5/11/2009 5/18/2009 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 7/6/2009 7/13/2009 7/20/2009 7/27/2009 8/3/2009 8/10/2009 8/17/2009 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 Median 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 12/14/2009 Long-term average 12/21/2009 12/28/2009 1/4/2010 1/11/2010 1/18/2010 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 3/1/2010 3/8/2010 below LT average P/E multiples also 3/15/2010 3/22/2010 3/29/2010 4/5/2010 4/12/2010 4/19/2010 4/26/2010 5/3/2010 5/10/2010 5/17/2010 19 20 19 18 18 19 19 19 19 20 20 18 18 19 19 20 21 24 24 25 25 25 26 28 26 30 31 32 30 32 32 33 34 36 37 37 37 37 38 39 40 38 38 38 38 36 37 33 32 31 34 34 34 34 34 34 34 34 32 36 www.mackieresearch.com
  10. 10. 10 - 5.0 10.0 15.0 20.0 25.0 # Companies 2 Infrastructure 2 Music 1 Learning 8 Social Networking 4 Mobile 1 Vertical Communities 5 Diversified 6 Marketing 3 SMS/Voice Gaming 20 1 Search 1 Podcasting EV/Revenue 1 Collaboration 9 Media 3 Advertising 2 Internet Retail 3 Enterprise 1 Video 2 Dating 1 Financial Services 0 Virtual World - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Average Valuation – by Sector # Companies 2 Enterprise 1 Mobile 5 Diversified 6 Social Networking 2 Internet Retail 1 Collaboration Gaming 13 EV/EBITDA 6 Media 3 Marketing 1 Dating 1 Advertising www.mackieresearch.com
  11. 11. 11 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Look S mart, Ltd. C y berplex Inc. Actoz S oft C o. , Ltd. G ameO n C o Ltd. Source: CapitalIQ J umbuck E ntertainment Limited R ealNetwork s Inc. G igaMedia Ltd. T ree. C om, Inc. O penwave S y s tems Inc. DADA S pA G lu Mobile, Inc. Northgate T echnologies Limited P oints International Ltd. Unis erve C ommunications C orp. C DC C orp. AQ Interactive, Inc. Internet G roup S A AO L, Inc. 0.2 0.20.30.30.40.40.4 0.4 0.50.60.60.6 0.70.70.70.70.80.80.8 IAC /InterActiveC orp. U nited O nline, Inc . T he New Y ork T imes C ompany C ornerWorld C orporation T heS treet.com, Inc. O AO R B C Information S y s tems HanbitS oft, Inc. NetDragon WebS oft, Inc. EV/Revenue Ranking infoG R O U P , Inc. Hutchis on T elecommunications H ong S park Network s , Inc. O riented Media G roup B erhad G amania Digital E ntertainment C o. , Ltd. S NAP Interactive, Inc. Y D O nline C orp. 0.80.8 1.0 1.0 1.0 1.2 1.2 1.3 1.3 1.4 1.4 1.4 1.4 1.5 1.5 Y nk K orea Inc. NeuLion Incorporated S hutterfly , Inc. V alueC lick , Inc. S core Media Inc. P NI Digital Media Inc. Modern T imes G roup Mtg AB 1.6 1.8 1.8 1.9 2.12.1 G ungHo O nline E ntertainment, Inc. XING AG 2.22.22.2 S ohu.com Inc. U O MO Media, Inc is eemedia Inc. Webz en Inc. O pen T ex t C orp. Wiz z ard S oftware C orporation My riad G roup AG NE O WIZ G ames C orporation V elti P lc F rogs ter Interactive P ictures AG 2.72.82.8 2.93.03.0 3.1 3.13.13.4 S K C ommunications C o. , Ltd. T aleo C orp. 3.74.4 C hangy ou. com Limited DigitalP os t Interactive, Inc. revenue multiple at 41.8x SpectrumDNA has highest Mix i, Inc. K ings oft C orporation Limited WebMediaB rands Inc H U G H E S T elematic s , Inc . 4.54.6 4.74.74.9 U nilava C orporation Acceleriz e New Media, Inc. 5.5 5.6 5.8 Lingo Media C orporation 8.0 G ree, Inc. Dena C o. Ltd. 8.9 9.2 T rans G aming, Inc. F luid Mus ic C anada, Inc. 10.4 C hines e G amer International 12.2 B ey ond C ommerce, Inc. 13.8 G eoS entric O y j MO K O . mobi Limited 15.415.5 T encent Holdings Ltd. 19.0 P aid Inc. 19.7 B right T hings plc 31.4 S pectrumDNA, Inc. 41.8 www.mackieresearch.com
  12. 12. 12 0. 0 5. 0 10. 0 15. 0 20. 0 25. 0 30. 0 35. 0 40. 0 G ameO n C o L td. Ac toz S oft C o. , Ltd. 1. 3 1. 6 Source: CapitalIQ C y berplex Inc. AO L , Inc . 2.4 2. 4 United O nline, Inc. 4. 2 T he New Y ork T imes C ompany S ohu. c om Inc. Hutchis on T elec ommunications H ong K ong Holdings Ltd. DADA S pA 5. 2 5. 3 5. 4 5. 8 NetDragon WebS oft, Inc. C DC C orp. S park Network s , Inc. V alueC lick , Inc. EV/EBITDA Ranking Y D O nline C orp. infoG R O UP , Inc. C hangy ou. com L imited 6.4 6. 5 6. 6 6. 6 6. 7 6. 7 7. 0 Unis erve C ommunic ations C orp. XING AG G amania Digital E ntertainment C o. , L td. P NI Digital Media Inc. 7.4 8. 1 8. 2 8. 4 G ungHo O nline E ntertainment, Inc. 8. 8 IAC /InterAc tiveC orp. O pen T ex t C orp. 10. 1 10. 5 K ings oft C orporation L imited 11. 1 NE O WIZ G ames C orporation S c ore Media Inc. 11. 5 12.0 at 36.6x S hutterfly , Inc . HanbitS oft, Inc . G ree, Inc. 13. 2 13. 3 14. 0 Tencent leads the group Y nk K orea Inc . 14. 2 Mix i, Inc. V elti P lc Modern T imes G roup Mtg AB 15. 2 15. 2 15.4 O penwave S y s tems Inc . T heS treet. c om, Inc. 17. 0 17. 4 F rogs ter Interactive P ic tures AG 19. 5 Dena C o. L td. 20. 6 C hines e G amer International 23. 8 T aleo C orp. 27. 9 T encent H oldings L td. 36.6 www.mackieresearch.com Excluding EV/EBITDA > 100x
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