Summer financing doldrums: After a very strong June (with total transaction value (excluding M&A) of $542.8 million from 66 transactions, averaging $8.4 million each), July has started very slowly with only one small financing announced. However, we have seen some large M&A transactions (see below). In comparison, total capital raised in July 2009 was $206.2 million, averaging $5.4 million over 38 deals. Excluding Dec 09 and Apr 10, the average monthly total is ~$270 million.
Deals (M&A, Finance)
Google, acquired ITA Software, search provider for the travel industry for $700 mm.
infoGROUP, provider of business and consumer databases for sales leads, mailing lists, direct marketing, database marketing, e-mail marketing, and marketing research solutions, was taken private for $645 mm by CCMP Capital Advisers.
GroupSpaces, a provider of web-based tools for sports clubs, university societies, organizations, and groups of friends or coworkers, raised $1.3 mm.
Domain based online advertising services provider, OCTANE360, was acquired by Local.com for $10.9 mm.
Negative price performance
The Web 2.0 public company universe fell again this week, with 61% of companies seeing their market cap fall vs. 27% rising and 12% flat.
2. Key Developments (past week)
Deals (M&A, Finance) – Big Acquisitions, Little Financing
Google, acquired ITA Software, search provider for the travel industry for $700 mm.
infoGROUP, provider of business and consumer databases for sales leads, mailing
lists, direct marketing, database marketing, e-mail marketing, and marketing research
solutions, was taken private for $645 mm by CCMP Capital Advisers.
GroupSpaces, a provider of web-based tools for sports clubs, university societies,
organizations, and groups of friends or coworkers, raised $1.3 mm.
Domain based online advertising services provider, OCTANE360, was acquired by
Local.com for $10.9 mm.
Financial Results/Guidance/Partnerships/Product
Points International Ltd. (TSX:PTS) announced that it has formed a partnership with
The Mileage Company. The new partnership means that Airmiles UK members can now
purchase miles for themselves or gift Airmiles to other members.
RealNetworks Inc. (NasdaqGS:RNWK) is once again scaling back its operations and
announced a restructuring of its operations which includes layoffs of 85 employees. The
layoffs include a 25% reduction in its executive ranks and the reorganization seeks to
streamline its technology and media services divisions. The company is now down to
1,365 employees from 1,700, with roughly 65 layoffs coming out of the Seattle office.
2 www.mackieresearch.com
4. Aggregate Public Data
Web 2.0 Public Companies Total Median Max Min
# Companies 103 - - -
Market Cap (US$ mm) 74,460.8 67.2 30,629.6 1.2
Revenue (US$ mm) 23,139.7 56.0 3,057.7 0.0
1 Year revenue growth 2.5% 8961.6% -100.0%
EBITDA as % of revenue - 11.3% 63.1% -99.5%
Net cash (US$ mm) 9,273.3 3.3 1,841.1 -670.8
TEV/Revenue - 1.9x 47.4x 0.1x
TEV/EBITDA - 8.5x 45.6x 0.5x
P/E - 15.3x 90.4x 0.0x
Relative to 52 week high -42.9% -4.1% -95.6%
Source: CapitalIQ
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5. 5
0
5
10
15
20
25
30
Gaming
28
Social Networking
18
Media
10
9
Diversified
5
Mobile
5
Marketing
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
Search
1
Podcasting
1
Learning
1
Video
1
Collaboration
1
Payment
1
Financial Services
Public Company Distribution
0
5
10
15
20
25
30
35
40
45
50
United States
Canada
China
South Korea
Japan
Taiwan
Hong Kong
Germany
Poland
Australia
United Kingdom
By Country
Italy
Finland
Sweden
India
Russia
Malaysia
Switzerland
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10. 10
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
# Companies 2
Infrastructure
13.4
1
Virtual World
11.9
7
Diversified
9.9
1
Learning
9.4
8
Social Networking
5.3
4
Mobile
5.0
2
Music
4.4
4
Marketing 4.3
1
Vertical Communities
3.7
1
Search
3.6
Gaming
21
3.3
3
SMS/Voice
3.2
Average EV/Revenue – by Sector
1
Podcasting
2.8
1
Collaboration
2.4
3
Advertising
2.2
9
Media
2.2
2
Internet Retail
1.9
3
Enterprise
1.6
1
Video
1.5
2
Dating
1.3
1
Financial Services
0.3
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11. Average EV/EBITDA – by Sector
50.0
45.6
45.0
40.0 38.5
35.0
30.0
25.0
20.0 17.7
15.8
15.0
11.5 11.3 11.2 10.9
10.0 8.9 8.7
6.8
5.0
-
Diversified
Financial Services
Internet Retail
Search
Mobile
Enterprise
Gaming
Social Networking
Media
Collaboration
Marketing
# Companies 1 1 3 2 14 5 6 2 6 1 2
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12. Average P/E – by Sector
100.0
90.0 87.8
80.0
70.0
60.0
53.6
50.0
40.0 37.9
33.8
30.0 26.2
18.9
20.0
15.3
12.9 12.5
10.0
-
Internet Retail Enterprise Collaboration Diversified Social Marketing Advertising Gaming Media
Networking
2 3 1 9 18 5 3 28 10
# Companies
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13. 13
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
NeXplore C orporation
47
Source: CapitalIQ
26
S pectrumDNA, Inc.
25
S oc ialG O P L C
16
T enc ent Holdings Ltd.
15
G eoS entric O yj
13
P aid Inc.
12
Worlds . com Inc.
G ree, Inc.
B ey ond C ommerc e, Inc.
11 11 10
MO K O .mobi Limited
Lingo Media C orporation
9 9
C hines e G amer International
T rans G aming, Inc.
DigitalP os t Interac tiv e, Inc.
8 7 7
F luid Mus ic C anada, Inc.
7
Dena C o. Ltd.
H U G HE S T elematics , Inc .
5 5
Acc eleriz e New Media, Inc .
Mix i, Inc.
5 4
C hangy ou.c om L imited
WebMediaB rands Inc
S K C ommunic ations C o., Ltd.
F rogs ter Interactive P ictures AG
4 4 4 3
T aleo C orp.
Motricity, Inc.
Wiz z ard S oftware C orporation
K ings oft C orporation L imited
is eemedia Inc.
EV/Revenue Ranking
3 3 3 2 2
O pen T ex t C orp.
eP ro Ltd.
Modern T imes G roup Mtg AB
NE O WIZ G ames C orporation
XING AG
S ohu. com Inc.
S core Media Inc.
V elti P lc
S hutterfly , Inc .
UO MO Media, Inc
P NI Digital Media Inc.
G ungHo O nline E ntertainment, Inc.
My riad G roup AG
V alueC lic k , Inc.
P latforma Mediowa P oint G roup S .A.
HanbitS oft, Inc .
Unilava C orporation
Webz en Inc .
NeuLion Incorporated
Y D O nline C orp.
NeXplore has highest
revenue multiple at 47x
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1
G amania Digital E ntertainment C o. , L td.
S park Network s , Inc.
Hutc his on T elec ommunic ations Hong K ong H oldings L td.
S NAP Interac tiv e, Inc.
Y nk K orea Inc .
O riented Media G roup B erhad
NetDragon WebS oft, Inc.
AQ Interac tiv e, Inc.
Internet G roup S A
O AO R B C Information S y s tems
P oints International Ltd.
T he New Y ork T imes C ompany
T heS treet.c om, Inc.
Northgate T ec hnologies L imited
U nis erv e C ommunications C orp.
DADA S pA
IAC /InterActiveC orp.
U nited O nline, Inc.
C DC C orp.
AO L, Inc .
G igaMedia Ltd.
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
G lu Mobile, Inc.
C yberplex Inc.
T ree.C om, Inc.
Ac toz S oft C o., L td.
O penwav e S y s tems Inc .
G ameO n C o Ltd.
J umbuck E ntertainment Limited
R ealNetwork s Inc.
As k net AG
Y ippy , Inc .
0 0 0 0 0 0 0 0 0 0
Mobile Data C orp.
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