Web 2.0 Weekly
                                                                                                           ...
Key Developments (past week)
    Deals (M&A, Finance) – Major DST Financing
     Naspers, a South African media and print ...
Chart of the Week: DST Continues to Cash Up
       800.0
                                                   DST has raised...
Public Company Data




4                         www.mackieresearch.com
Aggregate Public Data

     Web 2.0 Public Companies   Total      Median    Max           Min
    # Companies             ...
6
                                                                      0
                                                ...
Valuation Dashboard – 1 Week
                     Market Cap                        EV/Revenue

                   Flat
  ...
8
                         Source: CapitalIQ
                                                                             ...
9
                         Source: CapitalIQ
                                                                             ...
10
                         Source: CapitalIQ
                                                                            ...
11
                                                                  -
                                                   ...
Average EV/EBITDA – by Sector

          45.0
                    41.3

          40.0


          35.0


          30.0

...
Average P/E – by Sector

          100.0


           90.0      87.6


           80.0


           70.0


           60.0...
14
                                                                                   0.0
                                ...
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"
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Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"

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Large deals drive July financing to near record levels: With another huge financing (DST - see below) July financing is near record monthly levels. Total raised month-to-date is $742.6 million over 29 deals - averaging $25.6 million each. Excluding the Zynga ($100 million) and DST ($388 million) deals, the average deal size is $9.4 million. In comparison, total capital raised in July 2009 was $209.0 million, averaging $5.2 million over 40 deals. The monthly median total is ~$280 million with a median deal size of $8.1 million.

Deals (M&A, Finance)
Naspers, a South African media and print conglomerate, invested $388 mm in Digital Sky Technologies, the Russian digital media holding company with significant stakes in Facebook, Groupon, Mail.ru, and Zynga.

The next biggest raise of the week was Australian enterprise software developer, Atlassian, receiving $60 mm in Series A funds from Accel Partners.

Social Commerce continues to garner attention – this week BlueSwarm ($0.8 mm angel round) and Shopkick ($15 mm Series B round) raised money.

Another $31 mm in venture funds found their way to Advertising-related start-ups, including Israel-based Adsmarket ($17 mm), as well as a pair of India-based companies – Komli Media ($6 mm) and InMobi ($8 mm).

Price performance split
The Web 2.0 public company universe was split this week, with 48% of companies seeing their market cap fall vs. 43% rising and 9% flat.

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Web 2.0 Weekly - July 20, 2010: "DST Cashing Up"

  1. 1. Web 2.0 Weekly “DST Cashing Up” July 20, 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) – Major DST Financing Naspers, a South African media and print conglomerate, invested $388 mm in Digital Sky Technologies, the Russian digital media holding company with significant stakes in Facebook, Groupon, Mail.ru, and Zynga. The next biggest raise of the week was Australian enterprise software developer, Atlassian, receiving $60 mm in Series A funds from Accel Partners. Social Commerce continues to garner attention – this week BlueSwarm ($0.8 mm angel round) and Shopkick ($15 mm Series B round) raised money. Another $31 mm in venture funds found their way to Advertising-related start-ups, including Israel-based Adsmarket ($17 mm), as well as a pair of India-based companies – Komli Media ($6 mm) and InMobi ($8 mm). Financial Results/Guidance/Partnerships/Product Score Media (TSX:SCR, BUY, FTM price target: $1.25), Canadian sports entertainment media concern and developer of the popular Score Mobile application for iPhone, BlackBerry, and Android, reported strong Q3/F10 results, including total revenue of $12.0 million (+10.8% Y/Y, +20.4% Q/Q, MRCC estimate: $11.5 million), EBITDA of $2.0 million (+16.6% Y/Y, +79.1% Q/Q, MRCC: $1.8 million), EBITDA margin of 17.0% (MRCC: 16.0%), and EPS of $0.01 – inline with our $0.01 estimate. 2 www.mackieresearch.com
  3. 3. Chart of the Week: DST Continues to Cash Up 800.0 DST has raised almost $700 700.0 688.0 mm this year as it continues to make large investments in Web 2.0 companies 600.0 500.0 400.0 300.0 247.0 200.0 135.0 100.0 60.0 50.0 50.0 44.0 40.0 38.5 35.0 0.0 Technologies Zynga LivingSocial Groupon Atlassian Gilt Groupe Glam Media Tremor Media Squarespace Qiyi Digital Sky 3 www.mackieresearch.com
  4. 4. Public Company Data 4 www.mackieresearch.com
  5. 5. Aggregate Public Data Web 2.0 Public Companies Total Median Max Min # Companies 102 - - - Market Cap (US$ mm) 81,684.2 56.0 32,832.1 0.0 Revenue (US$ mm) 28,443.7 47.9 6,736.1 0.0 1 Year revenue growth 1.9% 8961.6% -100.0% EBITDA as % of revenue - 8.3% 63.1% -99.5% Net cash (US$ mm) 17,042.9 2.8 6,535.8 -670.8 TEV/Revenue - 1.9x 43.5x 0.1x TEV/EBITDA - 8.3x 48.9x 0.3x P/E - 15.0x 94.5x 0.0x Relative to 52 week high -42.2% -1.6% -93.3% Source: CapitalIQ 5 www.mackieresearch.com
  6. 6. 6 0 5 10 15 20 25 30 Gaming 28 Social Networking 17 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 United States Canada China South Korea Japan Taiwan Hong Kong Germany Poland Australia United Kingdom By Country Italy Finland Sweden India Russia Malaysia Switzerland www.mackieresearch.com
  7. 7. Valuation Dashboard – 1 Week Market Cap EV/Revenue Flat 9% Flat 2% Falling 51% Rising 43% Falling 48% Rising 47% EV/EBITDA P/E Flat Flat 2% 3% Falling 42% Falling 38% Rising 59% Rising 56% 7 www.mackieresearch.com
  8. 8. 8 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 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 Median EV/Revenue 9/21/2009 9/28/2009 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 Median 12/7/2009 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 Long-term average 2/15/2010 2/22/2010 3/1/2010 3/8/2010 3/15/2010 3/22/2010 3/29/2010 4/5/2010 4/12/2010 average 4/19/2010 4/26/2010 well below LT 5/3/2010 5/10/2010 down slightly, still Revenue multiples 5/17/2010 5/24/2010 5/31/2010 6/7/2010 6/14/2010 6/21/2010 6/28/2010 7/5/2010 7/12/2010 7/19/2010 373939394040394242444546464646474951515150535656606161646666676464656971717274716770727370767578788179807878808084818484 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 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 Median EV/EBITDA 9/7/2009 9/14/2009 9/21/2009 9/28/2009 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 Median 12/7/2009 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 Long-term average 2/22/2010 3/1/2010 3/8/2010 3/15/2010 3/22/2010 3/29/2010 4/5/2010 4/12/2010 4/19/2010 4/26/2010 below LT average 5/3/2010 5/10/2010 5/17/2010 slightly, but still depressed 5/24/2010 EV/EBITDA multiples up-tick 5/31/2010 6/7/2010 6/14/2010 6/21/2010 6/28/2010 7/5/2010 7/12/2010 7/19/2010 19 21 21 22 22 21 21 22 23 22 21 23 23 25 25 25 25 25 24 25 26 28 31 29 32 34 35 37 40 38 39 37 39 40 39 38 38 41 42 41 41 41 41 41 43 43 45 44 44 50 49 48 49 50 50 48 49 47 49 49 www.mackieresearch.com
  10. 10. 10 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 30. 0x 35. 0x 40. 0x 6/1/2009 6/8/2009 6/15/2009 Median P/E 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 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 Median 12/7/2009 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 Long-term average 2/22/2010 3/1/2010 3/8/2010 3/15/2010 3/22/2010 3/29/2010 average 4/5/2010 4/12/2010 4/19/2010 and still below LT 4/26/2010 5/3/2010 5/10/2010 P/E multiples also tick up 5/17/2010 5/24/2010 5/31/2010 6/7/2010 6/14/2010 6/21/2010 6/28/2010 7/5/2010 7/12/2010 7/19/2010 20 19 18 18 18 19 19 19 20 19 18 19 19 18 19 20 23 24 24 24 25 26 26 26 30 31 32 30 33 33 34 34 37 38 38 38 38 39 40 41 39 39 39 37 36 37 34 33 32 35 35 35 35 35 35 36 36 32 33 33 www.mackieresearch.com
  11. 11. 11 - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 # Companies 1 Virtual World 33.0 2 Infrastructure 13.4 9 Social Networking 9.2 7 Diversified 9.0 1 Learning 7.6 4 Mobile 4.9 2 Music 4.3 1 Search 4.0 Gaming 21 3.7 5 Marketing 3.4 3 SMS/Voice 3.3 1 Vertical Communities 3.3 Average EV/Revenue – by Sector 1 Podcasting 2.8 1 Collaboration 2.5 9 Media 2.3 3 Advertising 2.3 2 Internet Retail 1.9 3 Enterprise 1.8 1 Video 1.5 2 Dating 1.3 1 Financial Services 0.4 www.mackieresearch.com
  12. 12. Average EV/EBITDA – by Sector 45.0 41.3 40.0 35.0 30.0 25.0 20.0 18.3 16.4 15.0 12.7 12.2 10.8 10.1 9.2 9.0 10.0 6.9 6.6 5.0 4.0 - Diversified Advertising Internet Retail Search Mobile Enterprise Gaming Social Networking Collaboration Media Marketing Dating # Companies 1 3 2 13 5 2 6 1 6 2 1 1 12 www.mackieresearch.com
  13. 13. Average P/E – by Sector 100.0 90.0 87.6 80.0 70.0 60.0 56.5 50.0 40.3 40.0 35.9 30.0 23.3 19.2 20.0 14.3 13.1 13.0 10.0 7.3 - Internet Enterprise Collaboration Diversified Social Marketing Advertising Gaming Media Virtual World Retail Networking 2 3 1 9 17 5 3 28 10 2 # Companies 13 www.mackieresearch.com
  14. 14. 14 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 43 Ac credited Members H olding C orporation Source: CapitalIQ 36 Worlds .c om Inc . 26 S pec trumDNA, Inc . S ocialG O P LC 25 17 T encent H oldings L td. MO K O . mobi L imited 15 15 G eoS entric O y j 12 P aid Inc . 11 B ey ond C ommerce, Inc . L ingo Media C orporation C hines e G amer International 9 9 9 G ree, Inc . 7 DigitalP os t Interactive, Inc . 7 Mood Media C orporation Dena C o. L td. T rans G aming, Inc . 6 6 5 Ac celeriz e New Media, Inc. 5 HU G H E S T elematic s , Inc . F rogs ter Interac tiv e P ic tures AG C hangyou. com Limited Mix i, Inc. 4 4 4 4 S K C ommunications C o., L td. T aleo C orp. K ings oft C orporation Limited WebMediaB rands Inc 4 3 3 3 Motric ity , Inc . is eemedia Inc . Wiz z ard S oftware C orporation EV/Revenue Ranking 3 3 3 O pen T ex t C orp. eP ro L td. Modern T imes G roup Mtg AB H anbitS oft, Inc. XING AG NE O WIZ G ames C orporation S ohu.c om Inc . S core Media Inc. U O MO Media, Inc V elti P lc S hutterfly, Inc. P NI Digital Media Inc . V alueC lick , Inc . G ungH o O nline E ntertainment, Inc . P latforma Mediowa P oint G roup S . A. 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Myriad G roup AG NeuL ion Inc orporated Webz en Inc. G amania Digital E ntertainment C o., L td. Accredited Members Hutc his on T elec ommunic ations Hong revenue multiple at 43x Y D O nline C orp. Holding Co. has highest S park Network s , Inc . U nilav a C orporation 2 1 1 1 1 1 1 1 S NAP Interactive, Inc . Y nk K orea Inc. NetDragon WebS oft, Inc. AQ Interactive, Inc . P oints International L td. Internet G roup S A O AO R B C Information S ys tems O riented Media G roup B erhad T he New Y ork T imes C ompany IAC /InterAc tiv eC orp. DADA S pA Northgate T echnologies Limited T heS treet. com, Inc . U nited O nline, Inc . Unis erve C ommunic ations C orp. AO L, Inc. C DC C orp. G lu Mobile, Inc . 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 G igaMedia L td. T ree. C om, Inc . Actoz S oft C o., Ltd. C y berplex Inc. O penwav e S y s tems Inc. R ealNetwork s Inc . J umbuc k E ntertainment L imited G ameO n C o L td. As k net AG Look S mart, L td. 0 0 0 0 0 0 0 0 0 0 DigitalT own, Inc. www.mackieresearch.com
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