Web 2.0 Weekly
“Market Declines Impact Web 2.0 Universe Valuations”
                                                      ...
Key Developments (past week)
    Deals (M&A, Finance)
     Cyberplex (TSX:CX) announced plans to acquire Tsavo Media for U...
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...
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"
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Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"

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May tracking to average monthly levels: After a slow start to the month, financing in the Web 2.0 universe has rebounded and is now on track with prior months. Total transaction value (excluding M&A) in the Web 2.0 universe for May (month-to-date) is $189.9 million from 30 transactions, averaging $6.3 million each. In comparison, total capital raised in May 2009 was $375.0 million, averaging $12.5 million over 30 deals. Excluding May 09, Dec 09 and Apr 10, the average monthly total is $212 million.

Deals (M&A, Finance)
Cyberplex (TSX:CX) announced plans to acquire Tsavo Media for US$75.6 mm, partially funded through a C$30 mm bought deal financing at $0.55.
Online gaming company Gaikai, raised $10.0 mm in Series B financing.
Blip.TV, online TV provider, raised $10.1 mm in Series C financing.

Financial Results/Guidance
Netease.com (NasdaqGS:NTES, online gaming) reported Q1/F10 revenue of RMB 1.2 bn (vs. RMB 781.7 mm in the same period last year).
Snap Interactive (OTCBB:STVI, online dating) reported Q1/F10 revenue growth of 20% to $0.927 mm from $0.768 mm.

Bearish week again: Price performance was largely negative in our Web 2.0 universe. This impacted valuation multiples, which fell for ~80% of the companies in our universe.

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Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"

  1. 1. Web 2.0 Weekly “Market Declines Impact Web 2.0 Universe Valuations” May 26, 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) Cyberplex (TSX:CX) announced plans to acquire Tsavo Media for US$75.6 mm, partially funded through a C$30 mm bought deal financing at $0.55. Online gaming company Gaikai, raised $10.0 mm in Series B financing. Blip.TV, online TV provider, raised $10.1 mm in Series C financing. Financial Results/Guidance Netease.com (NasdaqGS:NTES, online gaming) reported Q1/F10 revenue of RMB 1.2 bn (vs. RMB 781.7 mm in the same period last year). Snap Interactive (OTCBB:STVI, online dating) reported Q1/F10 revenue growth of 20% to $0.927 mm from $0.768 mm. 2 www.mackieresearch.com
  3. 3. Public Company Data 3 www.mackieresearch.com
  4. 4. Aggregate Public Data Web 2.0 Public Companies Total Median Max Min # Companies 102 - - - Market Cap (US$ mm) 76,398.3 58.8 33,384.2 1.7 Revenue (US$ mm) 23,069.7 58.3 3,057.7 0.0 1 Year revenue growth 5.5% 857.0% -91.4% EBITDA as % of revenue - 13.3% 63.1% -75.0% Net cash (US$ mm) 9,067.7 2.0 1,826.7 -670.8 TEV/Revenue - 1.9x 37.3x 0.0x TEV/EBITDA - 9.2x 45.0x 0.0x P/E - 15.0x 82.6x 0.0x Relative to 52 week high -41.9% -4.7% -96.3% Source: CapitalIQ 4 www.mackieresearch.com
  5. 5. 5 0 5 10 15 20 25 30 Gaming 27 Social Networking 16 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 1 Financial Services 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 5% 3% Rising 20% Falling 62% Rising 33% Falling 77% EV/EBITDA P/E Flat Flat 2% 0% Rising Rising 17% 20% Falling Falling 80% 81% 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 4/7/2009 4/14/2009 4/21/2009 4/28/2009 5/5/2009 5/12/2009 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 7/14/2009 7/21/2009 Median EV/Revenue 7/28/2009 8/4/2009 8/11/2009 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 Median 10/13/2009 10/20/2009 10/27/2009 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 Long-term average 12/22/2009 12/29/2009 1/5/2010 1/12/2010 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 down fourth 3/9/2010 3/16/2010 consecutive week Revenue multiples 3/23/2010 3/30/2010 4/6/2010 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 393940404041414043434546474746474850515150525354565859596164646463646468696870716965707170707375787780787879788081848281 www.mackieresearch.com
  8. 8. 8 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 4/7/2009 4/14/2009 4/21/2009 4/28/2009 5/5/2009 5/12/2009 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 Median EV/EBITDA 7/14/2009 7/21/2009 7/28/2009 8/4/2009 8/11/2009 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 Median 10/13/2009 10/20/2009 10/27/2009 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 12/22/2009 Long-term average 12/29/2009 1/5/2010 1/12/2010 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 below LT average 3/9/2010 remain depressed 3/16/2010 EV/EBITDA multiples 3/23/2010 3/30/2010 4/6/2010 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 20 20 22 22 23 23 22 22 24 24 23 23 24 24 26 26 26 26 25 25 26 27 29 30 32 33 35 36 38 41 39 40 39 40 41 39 39 39 42 43 41 41 43 43 42 43 44 47 46 45 51 51 50 53 53 52 53 53 50 50 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 35. 0x 4/7/2009 4/14/2009 4/21/2009 Median P/E 4/28/2009 5/5/2009 5/12/2009 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 7/14/2009 7/21/2009 7/28/2009 8/4/2009 8/11/2009 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 Median 10/13/2009 10/20/2009 10/27/2009 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 12/22/2009 Long-term average 12/29/2009 1/5/2010 1/12/2010 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 3/9/2010 3/16/2010 below LT average P/E multiples also 3/23/2010 3/30/2010 4/6/2010 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 19 19 19 18 18 19 19 19 20 20 19 18 19 19 20 20 21 25 24 25 25 26 27 26 28 30 31 32 31 32 32 34 35 37 38 38 38 38 39 40 41 39 39 39 37 36 37 33 32 31 34 34 34 34 34 34 34 33 31 35 www.mackieresearch.com
  10. 10. 10 - 5.0 10.0 15.0 20.0 25.0 # Companies 2 Infrastructure 2 Music 7 Social Networking 1 Learning 5 Diversified 1 Vertical Communities 4 Mobile 3 SMS/Voice 6 Marketing Gaming 21 1 Search 1 Collaboration EV/Revenue 9 Media 3 Advertising 1 Podcasting 1 Video 2 Internet Retail 3 Enterprise 2 Dating 1 Financial Services 1 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 1 Mobile 2 Enterprise 5 Diversified 2 Internet Retail 6 Media 1 Collaboration 5 Social Networking EV/EBITDA Gaming 14 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 L ook S mart, L td. As k net AG C y berplex Inc. Actoz S oft C o. , Ltd. Source: CapitalIQ J umbuc k E ntertainment L imited 0.10.10.20.20.20.3 R ealNetwork s Inc. T ree. C om, Inc. O penwav e S y s tems Inc . S NAP Interac tive, Inc . G lu Mobile, Inc . Northgate T echnologies Limited P oints International L td. G igaMedia L td. AO L, Inc . DADA S pA C DC C orp. Unis erv e C ommunications C orp. AQ Interactive, Inc. Internet G roup S A IAC /InterActiv eC orp. United O nline, Inc . T heS treet.c om, Inc . T he New Y ork T imes C ompany NetDragon WebS oft, Inc. O AO R B C Information S ys tems C ornerWorld C orporation EV/Revenue Ranking 0.40.4 0.5 0.50.60.6 0.6 0.70.70.70.70.7 0.70.80.80.80.80.9 0.9 1.0 1.0 H anbitS oft, Inc . H utc his on T elecommunic ations H ong infoG R O U P , Inc . S park Network s , Inc. G amania Digital E ntertainment C o., Ltd. O riented Media G roup B erhad NeuLion Inc orporated 1.2 1.3 1.4 1.4 1.4 1.4 1.5 G ungHo O nline E ntertainment, Inc. V alueC lick , Inc. S hutterfly , Inc . S c ore Media Inc. P latforma Mediowa P oint G roup S . A. Webz en Inc . Modern T imes G roup Mtg AB XING AG S ohu.c om Inc. P NI Digital Media Inc. 1.7 1.7 1.8 1.9 2.02.02.0 2.12.2 2.3 U O MO Media, Inc Wiz z ard S oftware C orporation O pen T ex t C orp. S K C ommunic ations C o. , Ltd. is eemedia Inc. F rogs ter Interac tiv e P ic tures AG eP ro Ltd. My riad G roup AG 2.6 2.72.92.93.0 3.13.1 NE O WIZ G ames C orporation T aleo C orp. Mix i, Inc. 3.4 3.53.63.9 K ings oft C orporation Limited C hangyou. com Limited revenue multiple at 37.3x SpectrumDNA has highest U nilav a C orporation WebMediaB rands Inc 4.14.24.3 4.4 F luid Mus ic C anada, Inc. L ingo Media C orporation HU G H E S T elematic s , Inc . 5.4 5.5 5.8 Ac celeriz e New Media, Inc . V elti P lc 6.26.3 DigitalP os t Interactiv e, Inc. G ree, Inc. 7.9 8.4 Dena C o. L td. 8.8 T rans G aming, Inc. C hines e G amer International G eoS entric O y j 11.211.8 MO K O . mobi Limited 12.8 B ey ond C ommerc e, Inc. 14.5 P aid Inc. T enc ent H oldings L td. 17.417.5 B right T hings plc 25.7 S pectrumDNA, Inc . 37.3 www.mackieresearch.com
  12. 12. 12 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 C y berplex Inc. AO L , Inc . 1. 5 2.1 Source: CapitalIQ United O nline, Inc . NetDragon WebS oft, Inc. H utc his on T elec ommunications H ong K ong H oldings 3. 9 4.6 5. 0 L td. S ohu.c om Inc. T he New Y ork T imes C ompany V alueC lic k , Inc. G ungH o O nline E ntertainment, Inc . C DC C orp. 5.0 5. 1 6. 1 6. 2 6. 2 C hangy ou.c om L imited S park Network s , Inc. infoG R O U P , Inc . 6.5 6. 5 6.7 EV/EBITDA Ranking U nis erve C ommunic ations C orp. XING AG G amania Digital E ntertainment C o., L td. 7. 5 8.1 8. 1 P NI Digital Media Inc. DADA S pA K ings oft C orporation L imited IAC /InterAc tiveC orp. O pen T ex t C orp. 8. 9 8. 9 9. 2 9.6 9. 7 P latforma Mediowa P oint G roup S . A. H anbitS oft, Inc . S c ore Media Inc. 10. 9 11.2 11. 5 NE O WIZ G ames C orporation S hutterfly , Inc. 45.0x G ree, Inc. 12.6 13.1 13. 8 T heS treet.c om, Inc . 13.9 Modern T imes G roup Mtg AB O penwave S y s tems Inc . Points leads the group at G igaMedia L td. Mix i, Inc. 14. 2 14.4 14. 9 15.2 F rogs ter Interactive P ic tures AG Dena C o. L td. 18. 5 19. 3 C hines e G amer International 22. 0 T aleo C orp. 26. 1 V elti P lc 30.4 T enc ent H oldings L td. 33. 7 S K C ommunic ations C o. , L td. P oints International L td. 44.2 45. 0 www.mackieresearch.com Excluding EV/EBITDA > 100x
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