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1Q13 Mobile Software M&A Overview with Mobile Landscape

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1Q13 Mobile Software M&A Overview with Mobile Landscape

  1. 1. 1Q13 Mobile Software M&AMarket UpdateBrad WeekesVi P id tVice PresidentSoftware Equity Group, LLC© Software Equity Group, LLC 2013858 509-2800www.softwareequity.com
  2. 2. DisclaimerThe information contained in this Report is obtained fromsources we believe to be reliable, but no representation or, pguarantee is made about the accuracy or completeness of suchinformation, or the opinions expressed herein. Nothing in thisR t i i t d d t b d ti f ifi itReport is intended to be a recommendation of a specific securityor company or intended to constitute an offer to buy or sell, orthe solicitation of an offer to buy or sell, any security. Softwarey , y yEquity Group LLC may have an interest in one or more of thesecurities or companies discussed herein. Financial dataid d b C it l IQprovided by Capital IQ.This Report may not be reproduced in whole or in part withoutp y p pthe expressed prior written authorization of Software EquityGroup, L.L.C.© Software Equity Group, LLC 2013
  3. 3. Mobile LandscapeMarketing & AdvertisingMarketing & Advertising Commerce & PaymentsCommerce & Payments Content & EntertainmentContent & Entertainment CarriersSocial & MessagingSocial & Messaging EnterpriseEnterprise HealthHealth DevicesInfrastructureInfrastructureDevelopmentPlatformsSecurity Optimization LBS Analytics© Software Equity Group, LLC 2013* Some of the companies in the landscape above have been acquired but the seller logos were retained since the brand is better recognized as mobile first
  4. 4. Software M&A OverviewTraditional on premise and Internet M&A represent the ast majorit ( 70%) of o erall soft are• Traditional on-premise and Internet M&A represent the vast majority (~70%) of overall softwareM&A transactions• However, on-premise and Internet M&A transactions have been in decline over the past year whileMobile and SaaS M&A is growing rapidly• As a % of total software M&A transactions, SaaS and Mobile M&A account for approximately 15%each• In 1Q13, mobile software M&A had its biggest quarter on record (87 transactions), while SaaS M&Avolume ticked down slightly. 2013’s projected mobile software M&A transactions will likely exceedg y p j ythe number of SaaS transactions for the yearOn‐premise SaaS Internet MobileSoftware Industry M&A by SectorSoftware Industry M&A by Sector Mobile & SaaS as a % of Total Software M&AMobile & SaaS as a % of Total Software M&A300350400450sactions12 0%14.0%16.0%18.0%e DealsMobile SaaS50100150200250# of M&A Trans4.0%6.0%8.0%10.0%12.0%% of Total Software© Software Equity Group, LLC 20130500.0%2.0%%
  5. 5. Mobile Software M&A Volume“Mobile first” dri ing man b ers to shift foc s from SaaS to mobile• “Mobile first” driving many buyers to shift focus from SaaS to mobile• Many buyers are still seeking basic mobile competency to help navigate the challenging mobiledevelopment and distribution ecosystem• The diversity of mobile buyers is astounding, coming from a number of different focus areas withintraditional technology providers as well as those without a technology portfolio entering into themobile arena• FY 2013 M&A volume is on pace to reach 348 transactions, a marked increase over 2012’s 235transactionsM&A Volume by YearM&A Volume by Year M&A Volume by QuarterM&A Volume by Quarter• Mobile software M&A now accounts for 15.9% of all software M&A transactions, up from only 3.7%in 1Q10M&A Volume by YearM&A Volume by Year M&A Volume by QuarterM&A Volume by Quarter300350400s901002010 2011 2012 2013150200250300M&A Transactions4050607080&A Transactions0501002010 2011 2012 2013 (F)# of 010203040Q1 Q2 Q3 Q4# of M&© Software Equity Group, LLC 20132010 2011 2012 2013 (F) Q1 Q2 Q3 Q4
  6. 6. Mobile Software M&A Exit MultiplesE it m ltiples and deal str ct res (more on the latter in s bseq ent slides) for mobile soft are• Exit multiples and deal structures (more on the latter in subsequent slides) for mobile softwarecompanies are wide ranging, as evidenced by the difference between the average and medianEV/Revenue exit multiples (4.0x vs. 2.7x in 2012)• The lower median can be attributed to the large number of small, private mobile softwarecompanies lured to the opportunity in the mobile space but struggling to gain adoption andultimately forced to exit the business at sub optimal exit multiples• Mobile software leaders are getting significant premiums in the market as demonstrated by the 5.0xmedian EV/Revenue exit multiple achieved in transactions over $100Mp $• Given the allure and need for mobile competency, even if unproven in the market, a select few, lessestablished mobile software providers can garner attractive multiples as well, as demonstrated bythe average EV/Revenue exit multiple of 5.7x for deals under $10M in size (median is 1.4x)EV/Revenue Exit Multiples by SizeEV/Revenue Exit Multiples by SizeEV/Revenue Exit MultiplesEV/Revenue Exit Multiples5 0xMedian AverageMedian Average3.0x3.5x4.0x4.5x5.0xe Multiple4.0X5.0X6.0X7.0Xue Multiple0.5x1.0x1.5x2.0x2.5xEV/Revenue0.0X1.0X2.0X3.0XEV <= $10 EV > $10 EV > $20 EV > $50 EV > $100EV/Reven© Software Equity Group, LLC 20130.0x2011 2012&EV <= $20&EV <= $50&EV <= $100Enterprise Value Range ($ millions)
  7. 7. Mobile Software M&A by Product Category• Over the past two years, the three most active mobile software M&A categories have been Marketing & Advertising,Over the past two years, the three most active mobile software M&A categories have been Marketing & Advertising,Infrastructure, and Content & Entertainment• Marketing & Advertising M&A is currently driven by the unique targeting approaches afforded by mobile which isdistinct from other channels. The market segment is heavily fragmented with a large number of companies offeringnew and innovative approaches and formats effectively reach and convert consumers• Infrastructure M&A is currently driven by buyers seeking innovative solutions to help mobile operators deal with theexponential increase in data through compression, offload and QoS solutions• Content & Entertainment M&A is largely driven by Gaming content. Gaming is hit or miss, but if it’s a hit, gamingoffers the best monetization opportunities for mobile consumer applicationsM bil t i M&A h l d d i 2012 F TEM MDM/MAM MDAP b iti i th l• Mobile enterprise M&A has exploded in 2012. From TEM, MDM/MAM, MDAP, buyers are positioning themselves asenterprises struggle with the BYOD phenomenon and potential for mobile apps/web to accelerate their business.• Although it accounted for only 9% of total mobile M&A deals in 2012, we expect Social & Messaging deals to rampconsiderably in 2013 as OTT messaging is positioned for huge growth2012 Mobile Software M&A By Product Category2012 Mobile Software M&A By Product Category2011 Mobile Software M&A By Product Category2011 Mobile Software M&A By Product Category31%7%5%10%Marketing & AdvertisingContent & EntertainmentInfrastructure22%8%2%9% Marketing & AdvertisingInfrastructureContent & Entertainment15%8%InfrastructureCommerce & PaymentsEnterpriseSocial & MessagingOth22%14%9% EnterpriseSocial & MessagingCommerce & PaymentsHealth© Software Equity Group, LLC 201324%Other16% Other
  8. 8. Select Active Mobile Software BuyersBuyer Targets© Software Equity Group, LLC 2013
  9. 9. Select Active Mobile Software BuyersBuyer TargetsTEM Business© Software Equity Group, LLC 2013
  10. 10. Select Active Mobile Software BuyersBuyer Targets© Software Equity Group, LLC 2013
  11. 11. D tTop 10 Mobile Software M&A Transactions by Enterprise Value (EV)StockBuyer TargetDate EV EV/Rev Cash Earnout5/17/2007 $5,746 11.6x $5,746 - -5/12/2010 $5,423 4.5x $5,423 - -10/13/2009 $2,420 7.9x $2,420 - -2/04/2013 $1,645 6.0x $1,645 - -7/12/2011 $1,301 7.5x $651 $100 $5506/14/2011 $1,150 1.5x $1,150 - -$ , $ ,11/14/2011 $1,050 5.5x $1,050 - -4/09/2012 $1,000 - $300 $700 -6/24/2008 $790 - $790 - -© Software Equity Group, LLC 201312/08/2005 $705 10.7x $705 - --
  12. 12. D tTop 10 Mobile Software M&A Transactions by EV/Revenue MultipleStockBuyer TargetDate EV EV/Rev Cash Earnout9/20/2010$42 66.9x $0.5 $16.5 $252/15/2013 $147 35.0x $76 $71 -10/13/2010 $70 25.0x $70 - -1/31/2012 $70 20.0x $70 - -11/09/2009 $674 15.0x - $674 -5/17/2007 $5,746 11.7x $5,746 - -1/31/2011 $150 11.2x $100 - $5012/08/2005 $705 10.7x $705 - -6/07/2012 $435 10.0x $435 - -© Software Equity Group, LLC 20133/26/2012 $144 10.0x - $144 -
  13. 13. Select Mobile Software M&A Transactions and Deal StructuresD t StockBuyer TargetDate EV EV/Rev Cash Earnout8/8/2012 $44.0 $29.2 $14.83/26/2012 $174.4 10.0x $174.42/16/2012 $50.0 $18.0 $32.02/16/2012 $50.0 $18.0 $32.02/16/2012 $14.5 $8.0 $6.51/3/2012 $45.1 2.7x $45.111/15/2011 $59.0 3.0x $20.0 $5.0 $34.010/10/2011 $90.0 4.5x $60.0 $30.08/4/2011 $60.0 6.7x $4.0 $38.5 $27.53/18/2011 $150.0 11.4x $100.0 $50.0© Software Equity Group, LLC 2013
  14. 14. Mobile Software M&A Deals – 1Q13Date Target Buyer EV EV/Revenue EV/EBITDAg y03/28/2013 CheckMate Room 77, Inc. - - -03/25/2013 Summly Limited Yahoo! Inc. (NasdaqGS:YHOO) $30 - -03/25/2013 Maporama Solutions SAS TIBCO International Holdings, B.V. - - -03/24/2013 Wifislam, Inc. Apple Inc. (NasdaqGS:AAPL) - - -03/21/2013 PlaySay, Inc. Lesson Nine GmbH - - -03/20/2013 Micro Librarian Systems Ltd. Capita plc (LSE:CPI) - - -03/20/2013 Socialize, Inc. ShareThis, Inc. - - -03/20/2013 Livestar Pinterest - - -03/19/2013 Open Mile, Inc. Echo Global Logistics, Inc. (NasdaqGS:ECHO) - - -03/19/2013 Datria Systems, Inc. Knighted, Inc. - - -03/18/2013 MetroFax, Inc. j2 Global, Inc. (NasdaqGS:JCOM) - - -03/18/2013 mBlox, Inc., Premium SMS Business OpenMarket Inc. - - -03/18/2013 Mobile Marketing NL Adformatie Groep03/18/2013 Mobile Marketing NL Adformatie Groep - - -03/18/2013 Zynk Gestão de Conteúdo Ltda. A Zenvia - - -03/15/2013 Orchestra, Inc. Dropbox, Inc. $100 - -03/15/2013 Adexcite, LLC Q1Media - - -03/14/2013 Clk2c.com ValueFirst Messaging Pvt. Ltd. - - -03/14/2013 Hot Studio Inc. Facebook, Inc. (NasdaqGS:FB) - - -03/13/2013 Duff Research, LLC PayPal, Inc. - - -, y ,03/12/2013 LIQUID Barcodes AS Telenor ASA (OB:TEL) - - -03/12/2013 Telenav, Inc., Enterprise Business Unit Fleetcor Technologies Operating Company, Llc $10 - -03/12/2013 Cellbroker Solutiontech - Consultoria e Projetos em Informática Ltda. $1 1.4x -03/11/2013 conTgo limited Concur Technologies, Inc. (NasdaqGS:CNQR) - - -03/11/2013 Nellymoser, Inc. Brow n Printing Company - - -03/08/2013 Arieso Ltd. JDS Uniphase Corporation (NasdaqGS:JDSU) $85 - -03/08/2013 Chaotic Moon, L.P. Silver Lake; William Morris Endeavor Entertainment, LLC - - -03/07/2013 Motopia Limited (ASX:MOT) Priority Processing Systems Pty Ltd - - -03/07/2013 MeNetw ork, Inc. Spindle, Inc. (OTCPK:SPDL) $11 - -03/06/2013 Bemoko Ltd. SDL plc (LSE:SDL) $3 - -03/06/2013 Ubiquity Corporation Ubiquity Broadcasting Corporation (OTCBB:UBIQ) - - -03/05/2013 Dephasium Corp. (OTCPK:DPHS) Dephasium Ltd. - - -03/05/2013 Tw istage Inc Perceptive Softw are Inc03/05/2013 Tw istage, Inc. Perceptive Softw are, Inc. - - -03/03/2013 Kids Games Club Ltd. TabTale Ltd. $4 - -02/28/2013 Sw ipe & Tap Limited Apposing Limited - - -© Software Equity Group, LLC 2013
  15. 15. Mobile Software M&A Deals – 1Q13 (con’t)Date Target Buyer EV EV/Revenue EV/EBITDAg y02/27/2013 Strike Media Proprietary Limited Ogilvy South Africa (Proprietary) Limited - - -02/26/2013 lonelybrand, LLC HY Connect Inc. - - -02/22/2013 Sazneo Limited Access UK Limited - - -02/21/2013 N4 Systems Incorporated Master Lock Canada Inc. - - -02/20/2013 Tigga Studios LLC Hanover Portfolio Acquisitions, Inc. (OTCBB:HVPA) - - -02/20/2013 FlyCast Inc., HTML5 Development Tools Division Intel Corporation (NasdaqGS:INTC) - - -02/19/2013 SNRLabs, Inc. SEVEN Netw orks, Inc. - - -02/14/2013 Skyfire Labs, Inc. Opera Softw are ASA (OB:OPERA) $147 35.9x -02/12/2013 Propeld, Inc. Yahoo! Inc. (NasdaqGS:YHOO) - - -02/11/2013 M.dot, Inc. The Go Daddy Group, Inc. - - -02/05/2013 Show Uhow , Inc. SellPoint, Inc. - - -02/04/2013 Acme Packet, Inc. Oracle Corporation (NasdaqGS:ORCL) $1,646 6.0x 181.4x02/03/2013 Riptide Games Inc Mercury Active Inc02/03/2013 Riptide Games, Inc. Mercury Active Inc. - - -02/01/2013 GoMiso, Inc. Dijit Media Inc. - - -01/31/2013 mFoundry, Inc. Fidelity National Information Services, Inc. (NYSE:FIS) $154 - -01/31/2013 Shift Global Inc. Engauge Communication, Inc. - - -01/29/2013 Foodspotting Inc. OpenTable, Inc. (NasdaqGS:OPEN) $10 - -01/28/2013 Crashlytics Inc. Tw itter, Inc. - - -01/25/2013 Mobvalue Prisma Média - - -01/25/2013 Mobspire Inc. Aarki, Inc. - - -01/24/2013 IVONA Softw are Sp. z o.o. Amazon.com Inc. (NasdaqGS:AMZN) - - -01/24/2013 NextBus Inc. Cubic Transportation Systems, Inc. $21 - -01/23/2013 Intucell Ltd. Cisco Systems, Inc. (NasdaqGS:CSCO) $475 - -01/23/2013 IBEE Softw are Solutions Pvt. Ltd. XBT Holding LTD. - - -01/23/2013 Eat it Now Group Limited hungryhouse.com limited - - -/ / C01/22/2013 Lascaux Co., Inc. Etsy, Inc. - - -01/19/2013 Pushpins, Inc. Performance Marketing Brands, Inc. - - -01/17/2013 Energy Today Inc. (OTCPK:NRGT) QED Connect, Inc. (OTCPK:QEDN) $0 0.4x 11.1x01/17/2013 Mynet Japan Inc., CRM Business for Mobile Devices Yahoo Japan Corporation (TSE:4689) $4 - -01/16/2013 Mozes, Inc. ePrize, Inc. - - -01/15/2013 Exploding Barrel Games Inc. Kabam, Inc. - - -01/15/2013 RedMas LLC AdsMovil LLC - - -01/15/2013 RedMas LLC AdsMovil LLC01/11/2013 Ansible Technologies, Inc. Groupon, Inc. (NasdaqGS:GRPN) - - -01/10/2013 Retail Anyw here Inc. NetSuite Inc. (NYSE:N) - - -01/10/2013 Anpulo Food Development, Inc. - $0 - -© Software Equity Group, LLC 2013
  16. 16. Mobile Software M&A Deals – 1Q13 (con’t)Date Target Buyer EV EV/Revenue EV/EBITDAate a get uye / e e ue /01/10/2013 12snap AG plan.net Gruppe für digitale Kommunikation GmbH & Co.KG- - -01/09/2013 Tresys Technology LLC Behrman Capital - - -01/09/2013 Active Life App, LLC DAXKO, Inc. - - -01/08/2013 Overlay Media Limited InMobi - - -01/08/2013 Fanminder, Inc. Total Merchant Services, Inc. - - -01/07/2013 Epocrates, Inc. athenahealth, Inc. (NasdaqGS:ATHN) $216 2.0x 38.2x01/07/2013 Name.com LLC Demand Media, Inc. (NYSE:DMD) - - -01/07/2013 4ORCEDigital Manifest Digital, Inc. - - -01/07/2013 McMurry, Inc. McMurry/TMG, LLC - - -01/07/2013 mobcast ec inc. mobcast inc. (TSE:3664) $7 - -01/03/2013 ALK Technologies, Inc. Trimble Navigation Limited (NasdaqGS:TRMB) - - -01/03/2013 PLAY Communication Pty Ltd Group M Worldw ide Inc01/03/2013 PLAY Communication Pty Ltd Group M Worldw ide, Inc. - - -01/03/2013 Commodity Update, LLC Farm Journal, Inc. - - -01/02/2013 Crossbridge Solutions Inc. Telit Communications PLC (AIM:TCM) - - -01/02/2013 UAB Mokus Byggleverandorene AS - - -01/02/2013 Globant, Inc. WPPplc (LSE:WPP) $350 - -01/02/2013 TapIt! Media Group, Inc. Phunw are, Inc. $23 - -01/02/2013 Sports Asylum, Inc. SearchCore, Inc. (OTCPK:SRER) $1 - -p y , , ( ) $© Software Equity Group, LLC 2013
  17. 17. B i f S f E iBrief Software EquityGroup Overviewp© Software Equity Group, LLC 2013
  18. 18. • Industry leading boutique investment bank, founded inLeaders in Software M&A1992, representing public and private software andinternet companies seeking:• Strategic exit• Growth capitalWe Do Deals.G o t cap ta• Buyout• Inorganic growth via acquisition• Buy and sell-side mentoring• Fairness opinions and valuations• Fairness opinions and valuations• Sell-side client revenue range: $5 - 75 million• Clients span virtually every technology, productcategory, delivery model and vertical market• Global presence providing advice and guidance to morep p g gthan 2,000 private and public companies throughoutUS, Canada, Europe, Asia-Pacific, Africa and Israel• Strong cross-functional team leveraging transactionStrong cross functional team leveraging transaction,operating, legal and engineering experience• Unparalleled software industry reputation and trackrecord© Software Equity Group, LLC 2013record.• Highly referenceable base of past clients
  19. 19. Extensive Global ReachCurrent Sell-side Representation• SEG currently represents software companies in theUnited States, Canada, France, Germany, Australia &Saudi ArabiaRecent Sell-side RepresentationSaudi Arabia• In addition to the countries listed above, SEG hasrecently represented software companies in the UnitedKingdom, France, Netherlands, Israel, and South AfricaSEG Research Distribution• SEG’s Quarterly and Annual Software Industry EquityReports and Monthly Flash Reports are distributed toi li f 50 000 bli f CEOan opt-in list of 50,000 public software company CEOs,software entrepreneurs, private equity managingdirectors, VCs, high tech corporate lawyers, publicaccountants, etc. in 76 countries.© Software Equity Group, LLC 2013
  20. 20. A little about me…Over 15 years of operational and investment bankingOver 15 years of operational and investment bankingexperience in mobile, wireless and software sectorsNearly 10 years of operational experience in mobiley y p pspecifically, working closely with a number of vendors inthe spaceProduct lead for award winning mobile music serviceProduct lead for award winning mobile music serviceStrategic consultant for mobile browser and widgetruntime providerpMBA, UCLA Anderson School of ManagementM. Eng, Electrical Engineering, UCSDB S Computer Engineering UCSDB.S., Computer Engineering, UCSD© Software Equity Group, LLC 2013
  21. 21. To discuss the mobile ecosystem, M&A transactionsand/or your mobile business, please contact me at:and/or your mobile business, please contact me at:P: 858.509.2800C: 858.945.3032C: 858.945.3032Email: bweekes@softwareequity.comhttp://www.linkedin.com/in/bradweekeshttp://www.linkedin.com/in/bradweekesTwitter: @bradweekes© Software Equity Group, LLC 2013

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