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Mobile Market Overview


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Mobile Market Overview

  1. 1. Software Equity Group, LLC 858 509-2800© Software Equity Group, LLC 2012
  2. 2. Disclaimer The information contained in this Report is obtained from sources we believe to be reliable, but no representation or guarantee is made about the accuracy or completeness of such information, or the opinions expressed herein. Nothing in this Report i intended to be a recommendation of a specific security R t is i t d d t b d ti f ifi it or company or intended to constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any security. Software Equity Group LLC may have an interest in one or more of the securities or companies discussed herein. Financial data provided by Capital IQ. id d b C it l IQ This Report may not be reproduced in whole or in part without the expressed prior written authorization of Software Equity Group, L.L.C. © Software Equity Group, LLC 2012
  3. 3. About Our Firm• Industry leading boutique investment bank, founded in We Do Deals. 1992, representing public and private software and internet companies seeking: • Strategic exit g • Growth capital • Buyout • Inorganic growth via acquisition • Buy and sell-side mentoring • Fairness opinions and valuations• Clients span virtually every technology, product category, delivery model and vertical market t d li d l d ti l k t• Global presence providing advice and guidance to more than 2,000 private and public companies throughout US, Canada, Europe, Asia-Pacific, Africa and Israel• Strong cross functional team leveraging transaction, cross-functional operating, legal and engineering experience• Highly referenceable base of past clients © Software Equity Group, LLC 2012
  4. 4. Mobile Software Product Categories Mobile Categories Description Example Companies Technology focused on advertising display (creative, rich media,Advertising g etc) and infrastructure to connect ads with publishers (Ad networks, exchanges, DSPs, SSPs, etc). Collect, analyze, deliver and manage mobile traffic data includingAnalytics usage trends, device, OS, ad types, etc. from native and the Mobile web. App stores, unique applications that dont fit into a specificApps category, custom application job shops.Commerce Focused on facilitating mobile retail, excluding payment platforms.Communications Messaging, Group Messaging, VoIP, video over IP, etc. Platforms that enable write once, run anywhere where th output Pl tf th t bl it h h the t tDevelopment is native and/or mobile web. Includes specialty platformsPlatforms focused on special vertical, like gaming, retail, etc. Focus on needs of enterprise, via private application stores,Enterprise p application development platforms, device management (MDM), l (MDM) telecom expense management (TEM) productivity, etc. (TEM), d i i Apps and services focused on music, video, images, etc. OtherEntertainment services include cloud sync and access anywhere solutions. Does not include games as its a big enough category onto its own.Games Social, MMPG, gaming platforms, etc. © Software Equity Group, LLC 2012
  5. 5. Mobile Software Product Categories (con’t) Mobile Categories Description Example Companies Health Apps focused on health care, fitness, etc. Back office billing, messaging, policy control, video and web Infrastructure optimization, video codecs, transcoding, content management systems, etc. Location B L ti Based d Extensive use of location in application or service or strictly a E t i fl ti i li ti i t i tl location based service used by others to create location based Services applications. Focused on selling to the customer, post advertisement (destination g Marketing landing site, communication tools/messaging, sweepstakes, polls, etc). Also includes market segmentation/targeting, CRM, etc. Enable payments (digital or physical) via smartphones serving Payments merchants. Also, serving the banking sector supporting deposits, bill pay, etc. Security Antivirus, filtering, device location, etc. Focused on social networks or highly social services, including Social social games which will also be counted in the gaming category games, category. Firms focused squarely on enabling the mobile web. Primarily Web browser companies as the web platform developers are in the Development Platform category. © Software Equity Group, LLC 2012
  6. 6. High Level Mobile Software M&A Historical Mobile Software M&A by Year Historical Mobile Software M&A by Quarter 250 2010 2011 2012 205 80 70 ware M&A Transactions e M&A  70 67 200 59 60 54# of Mobile Software Transactions 150 50 40 40 36 100 81 27 30 21 #  of Mobile Softw 20 50 20 13 10 0 0 2010 2011* Q1 Q2 Q3 Q4 2011 Mobile Software M&A By Product Category 1H 2012 Mobile Software M&A By Product Category 10 Categories within Other, all less than 5% of total mobile software M&A bil ft Mobile Marketing Mobile Marketing 13% 17% Mobile Apps 24% Mobile Enterprise 29% Mobile Gaming Mobile Infrastructure 13% Mobile Advertising Mobile Apps Mobile Infrastructure 12% Mobile Advertising Mobile Development Platforms 7% 10% Mobile Development Platforms 6% Mobile Entertainment 10% Mobile Entertainment 6% Mobile Payments 7% 8% Mobile Payments 7% 7% Mobile Other Mobile Other 7% 9% 7% Mobile Other 7 Categories within Other, all less than 5% of total mobile software M&A © Software Equity Group, LLC 2012
  7. 7. Select Active Mobile Software Buyers Buyer Acquisitions © Software Equity Group, LLC 2012
  8. 8. Select Active Mobile Software Buyers Buyer Acquisitions © Software Equity Group, LLC 2012
  9. 9. Select Active Mobile Software Buyers Buyer Acquisitions © Software Equity Group, LLC 2012
  10. 10. Select Mobile Software M&A Transactions and Deal Structures Buyer B Target T t Date D EV EV/Rev EV/R Cash C h Stock S k Earnout E Notes N Buongiorno is an Italian mobile content provider with a sizeable customer base of 2 billion across 57 countries. Buongiorno offers services such as gaming, music, casual content and mobile 5/14/2012 $322.0M $322 0M 1.0x 1 0x $262.5M $262 5M $111.9M $111 9M payments either di t t consumers or through t ith direct to th h carrier partnerships. NTT DOCOMO , like many other carriers around the world, continues to expand outside its core business into content and services through acquisitions. Gree , a 1.7 billion dollar gaming company with headquarters in Japan, continues to expand Japan outside of its home market and into Western markets with its acquisition of Funzio , a mobile 5/1/2012 $210.0M $210.0M game developer based in San Francisco . The Funzio acquisition comes on the heels of Gree’s acquisiion of OpenFeint, a mobile social gaming platform. SingTel , a wireless carrier based in Singapore, purchased Amobee to expand beyond their traditional services. Amobee, a provider of mobile ad networks, enables SingTel to monetize content 4/13/2012 $320.0M 10.7x $320.0M using targeted advertising to its 430 million users across Asia. SingTel stated its goal is to become the leading mobile advertising company in Asia Pacific and among the top three companies worldwide. Monitise’s presence in the mobile banking and payment sector makes their acquisition of Clairmail, a leading US provider of mobile banking and payments, a natural fit as they seek global 3/26/2012 $174.4M $174 4M 10.0x 10 0x $174.4M $174 4M expansion. Together, expansion Together they have 13 million registered users over four continents and will provide mobile banking services for one-third of the top 50 U.S. financial institutions. The mobile banking sector is undergoing tremendous innovation from Company’s like Monitise, who provide the banking infrastructure, and others who interface more directly with the consumer such as Square, PayPal, Google and others. © Software Equity Group, LLC 2012
  11. 11. Select Mobile Software M&A Transactions and Deal Structures Buyer B Target T t Date D EV EV/Rev EV/R Cash C h Stock S k Earnout E Notes N Opera’s acquisition of Mobile Theory indicates they are consolidating within the mobile sector to help them better compete against companies like Google and other full-service solutions. Companies 2/16/2012 $18 0 - $50 0M $18.0 $50.0M $18.0M $18 0M $32.0M like Google and Apple are lowering their prices, forcing other companies to change their strategies within the Mobile Ad space. Both Mobile Theory and 4th Screen Advertising focus on rich-media advertising solutions and will benefit Opera by expanding their current advertising business. 4th Screen Advertising is one of the world’s leading premium mobile advertising agencies. In order to strengthen their offering for advertisers across 2/16/2012 $8.0M - $14.5M $8.0M $6.5M both the U.S. and Europe, Opera wants to add more demand-side advertising services. The addition of Mobile Theory and 4th Screen Advertising allows Opera to command a larger international presence. WorkLight s WorkLight’s native mobile application platform is one of a handful of mobile platforms targeting the enterprise market as opposed to the developer ecosystem. The strategy and product is a perfect 1/31/2012 $70.0M 20.0x fit with IBM’s enterprise orientation. Enterprise adoption of mobile applications has lagged consumer adoption dramatically, but IBM’s acquisition of WorkLight is a strong indicator that enterprises are getting serious about mobile and t i tti i b t bil d looking for solutions from their technology providers.. The CardStar acquisition is consistent with Constant Contact’s strategic goal of expanding wallet share within their large (~500,000) SMB customer base. Constant Contact has evolved from purely e-mail marketing to surveys, event marketing, social media monitoring/campaigns and now mobile loyalty/coupons. CardStar enables Constant Contact to offer their SMB customers the 1/19/2012 $5.8M $5.8M ability to reach mobile consumers with timely, location based couponing/loyalty- another arrow in the proverbial quiver to offer Constant Contact’s customer base In order for this acquisition to be base. successful, the solution must be drop dead simple, given the lack of technical sophistication and resources within Constant Contact’s base SMB customers whereby ~70% have 10 © Software Equity Group, LLC 2012
  12. 12. Select Mobile Software M&A Transactions and Deal Structures Buyer B Target T t Date D EV EV/Rev EV/R Cash C h Stock S k Earnout E Notes N Synchronoss will leverage Miyowa’s social networking capabilities to expand its product offering, adding social capabilities to its 1/5/2012 $45.5M-$59.0M 3.6x-4.6x $45.5M $13.5M ConvergenceNow Plus+ platform and its Network Address Book. This transaction is similar to the Myriad Group/Synchronica acquisition two days prior and reflects the growing interest in adding social capabilities to existing mobileservices Synchronica’s business is primarily mobile messaging solutions based on open industry standards. Its flagship product, Mobile Gateway, provides p sh email s nchroni ation pro ides push email, synchronization, instant 1/3/2012 $45.1M 2.7x $45.1M messaging, backup and restore to popular social networking services. Myriad acquired Synchronica to bolster its thrust in the mobile social networking domain as it attempts to capitalize on the success of a major partnership with Vodaphone. Nuance acquired Vlingo to expand its focus on voice enabling mobile devices. Nuance is rumored to be the supplier of the underlying voice recognition engine for the popular Siri application on the iPhone. The acquisition of Vlingo provides 12/20/2011 Nuance with an application it can marry with its powerful speech recognition capabilities to create its own Siri competitor for Android. It will be interesting to see how Google responds, given Eric responds Schmidt’s recent admission that Siri, and others its like, is a threat to Google’s search market. Velti has been highly acquisitive recently, making seven acquisitions over the past three years. Velti’s goal is to become a global leader in mobile marketing and advertising, acquiring companies for 11/15/2011 $25 0M $59 0M 1 3x – 3 0x $25.0M-$59.0M 1.3x 3.0x $20.0M $20 0M $5.0M $5 0M $34.0M $34 0M geographical reach product capabilities and reach, vertical competency. The impetus behind this deal was MIG’s retail/payment competency, customer base (little overlap with Velti’s existing base) and the management team.IBM/Worklight financial details are estimated © Software Equity Group, LLC 2012
  13. 13. Select Mobile Software M&A Transactions and Deal Structures Buyer B Target T t Date D EV EV/Rev EV/R Cash C h Stock S k Earnout E Notes N Facebook has been outspoken regarding the difficulties of developing native applications for mobile devices. The Company is a major supporter 11/8/2011 for mobile devices. The Company is a major supporter and adopter of HTML5 as it attempts to simplify mobile development and push the entire ecosystem forward. Strobe, an HTML5 apps developer, fits nicely within this strategy. * Deal structure unknown on date of announcement, but similar size acquisition made by Lenco one year ago had the following terms: 11/7/2011 $36.8M* 6.5x $0.5M cash with 4.05 million shares of common stock (worth roughly $16M on date of deal, worth $1M roughly one year later). Earnout of $4.25M in cash and another 5M shares of common stock (worth roughly $20M on date of deal, worth $6M one year later) The acquisition of Mobile Complete expands Keynote’s product portfolio by adding mobile device testing capabilities to Keynote’s existing website and application monitoring product 10/10/2011 $60.0M - $90.0M 3.0x - 4.5x $60.0M $30.0M portfolio. Mobile Complete had a roughly $20M in revenue split 50/50 in SaaS and services. This deal is one of only a handful of deals with reported transaction details where the transaction was paid primarily in cash. Nuance is committed to becoming a major player in the mobile ecosystem. The acquisition of Swype 10/7/2011 $109.0M shows that Nuance is also looking to expand beyond their core voice recognition technology and into alternative methods for interacting with mobile devices. d i RIM has been an active acquirer in the mobile space with 21 acquisitions in the past three years as it attempts to revitalize its platform which is 10/6/2011 $100.0M perceived to be out of date by many. The NewBay acquisition complements RIM’s content ecosystem strategy with a digital cloud service that competes with the iCloud on various levels. © Software Equity Group, LLC 2012
  14. 14. Select Mobile Software M&A Transactions and Deal Structures Buyer B Target T t Date D EV EV/Rev EV/R Cash C h Stock S k Earnout E Notes N Adobe’s acknowledgement that HTML, and its Flash language, is the future of mobile. Adobe affirmed this point by announcing they would be 10/3/2011 halting investment on flash mobile tools during their Q3 earnings call. The acquisition of Nitobi call (PhoneGap) enables Adobe to expand into developer toolsets built on standard programming languages. Expands Velti’s U.S. and India footprint and provides access to carries and the financial 9/22/2011 $19.0M $19.0M services vertical vertical. Drivers behind the deal: Depth of management, $27.5M in significant revenue base, complementary 8/4/2011 $42.5M - $60.0M 4.8x – 6.7x $4.0M $38.5M cash or technologies, Fortune 500 client relationships stock The acquisition of SmartReply, an SMS marketing provider, expands SoundBite Communications’ 6/6/2011 $3.2M - $13.2M 0.6x – 2.6x $3.2M $10.0M mobile marketing capabilities in the retail vertical. After this acquisition, SoundBite announced a major initiative to expand into mobile marketing given the large market opportunity opportunity. In an attempt to gain U.S. advertising market share, ValueClick has acquired Greystripe to bolster its domestic mobile advertising. Greystripe 4/25/2011 $70.6M 2.8x $70.6M offers ValueClick both scalability and an impressive array of brand relationships, which ValueClick has predicted will be critical to dominating th d i ti the mobile advertising market. bil d ti i k t Motricity has stated they intend to benefit from the $10M of acquisition of Adenyo, a mobile marketing software 3/18/2011 $150M 7.6x – 11.4x $100M $50.0M $100M cash firm, by integrating Adenyo’s mobile and analytics held in escrow capabilities with Motricity’s mCore Platform, delivering a high value and highly relevant content solution set. This will make it possible for customers to achieve marketing th t t hi k ti through one h highly scalable service platform. Motricity is hoping this acquisition will help position them to capitalize on the growing global data market- particularly the smartphone segment. © Software Equity Group, LLC 2012
  15. 15. To discuss the mobile ecosystem, M&A transactionsand/or your mobile business, please contact SEG at: P: 858.509.2800 Email: © Software Equity Group, LLC 2012