1q13 mobile software m&a market...

1Q13 Mobile Software M&A Market Update

Brad Weekes Vi P id tVice President

Software Equity Group, LLC

© Software Equity Group, LLC 2013

858 509-2800www.softwareequity.com

Disclaimer

The information contained in this Report is obtained from sources we believe to be reliable, but no representation or , pguarantee is made about the accuracy or completeness of such information, or the opinions expressed herein. Nothing in this R t i i t d d t b d ti f ifi itReport is intended to be a recommendation of a specific security 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 y , y yEquity Group LLC may have an interest in one or more of the securities or companies discussed herein. Financial data

id d b C it l IQprovided by Capital IQ.

This Report may not be reproduced in whole or in part without p y p pthe expressed prior written authorization of Software Equity Group, L.L.C.


Mobile LandscapeMarketing & AdvertisingMarketing & Advertising Commerce & PaymentsCommerce & Payments Content & EntertainmentContent & Entertainment Carriers

Social & MessagingSocial & Messaging EnterpriseEnterprise HealthHealth Devices

InfrastructureInfrastructureDevelopment

PlatformsSecurity Optimization LBS Analytics


* 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

Software M&A Overview

Traditional 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 software M&A transactions

• However, on-premise and Internet M&A transactions have been in decline over the past year while Mobile 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&A volume ticked down slightly. 2013’s projected mobile software M&A transactions will likely exceed g y p j ythe number of SaaS transactions for the year

On‐premise SaaS Internet Mobile

Software 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&A

300

350

400

450

sactions

12 0%

14.0%

16.0%

18.0%

e De

als

Mobile SaaS

50

100

150

200

250

# of M

&A Trans

4.0%

6.0%

8.0%

10.0%

12.0%

% of Total Softw

are


0

50

0.0%

2.0%

%

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 mobile

development and distribution ecosystem• The diversity of mobile buyers is astounding, coming from a number of different focus areas within

traditional technology providers as well as those without a technology portfolio entering into the mobile arena

• FY 2013 M&A volume is on pace to reach 348 transactions, a marked increase over 2012’s 235 transactions

M&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 1Q10

M&A Volume by YearM&A Volume by Year M&A Volume by QuarterM&A Volume by Quarter

300

350

400

s

90

100

2010 2011 2012 2013

150

200

250

300

M&A Transactions

40

50

60

70

80

&A Transactions

0

50

100

2010 2011 2012 2013 (F)

# of

0

10

20

30

40

Q1 Q2 Q3 Q4

# of M

&


2010 2011 2012 2013 (F) Q1 Q2 Q3 Q4

Mobile Software M&A Exit Multiples

E 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 software companies are wide ranging, as evidenced by the difference between the average and median EV/Revenue exit multiples (4.0x vs. 2.7x in 2012)

• The lower median can be attributed to the large number of small, private mobile software companies lured to the opportunity in the mobile space but struggling to gain adoption and ultimately 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, less established mobile software providers can garner attractive multiples as well, as demonstrated by the 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 Multiples

5 0x

Median AverageMedian Average

3.0x

3.5x

4.0x

4.5x

5.0x

e Multip

le

4.0X

5.0X

6.0X

7.0X

ue Multip

le

0.5x

1.0x

1.5x

2.0x

2.5x

EV/Reven

ue

0.0X

1.0X

2.0X

3.0X

EV <= $10 EV > $10 EV > $20 EV > $50 EV > $100

EV/Reven


0.0x2011 2012

&EV <= $20

&EV <= $50

&EV <= $100

Enterprise Value Range ($ millions)

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 is

distinct from other channels. The market segment is heavily fragmented with a large number of companies offering new 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 the exponential 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, gaming offers 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 as enterprises 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 ramp considerably in 2013 as OTT messaging is positioned for huge growth

2012 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 Category

31%7%

5%10%Marketing & Advertising

Content & Entertainment

Infrastructure

22%8%

2%9% Marketing & Advertising

Infrastructure

Content & Entertainment

15%

8%

Infrastructure

Commerce & Payments

Enterprise

Social & Messaging

Oth

22%14%

9% Enterprise

Social & Messaging

Commerce & Payments

Health


24%Other16% Other

Select Active Mobile Software Buyers

Buyer Targets



Buyer Targets

TEM Business



Buyer Targets


D t

Top 10 Mobile Software M&A Transactions by Enterprise Value (EV)

StockBuyer TargetDate EV EV/Rev Cash Earnout

5/17/2007 $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 $550

6/14/2011 $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 - -


12/08/2005 $705 10.7x $705 - --

D t

Top 10 Mobile Software M&A Transactions by EV/Revenue Multiple

StockBuyer TargetDate EV EV/Rev Cash Earnout

9/20/2010$42 66.9x $0.5 $16.5 $25

2/15/2013 $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 - $50

12/08/2005 $705 10.7x $705 - -

6/07/2012 $435 10.0x $435 - -


3/26/2012 $144 10.0x - $144 -

Select Mobile Software M&A Transactions and Deal Structures

D t StockBuyer TargetDate EV EV/Rev Cash Earnout

8/8/2012 $44.0 $29.2 $14.8

3/26/2012 $174.4 10.0x $174.4

2/16/2012 $50.0 $18.0 $32.02/16/2012 $50.0 $18.0 $32.0

2/16/2012 $14.5 $8.0 $6.5

1/3/2012 $45.1 2.7x $45.1

11/15/2011 $59.0 3.0x $20.0 $5.0 $34.0

10/10/2011 $90.0 4.5x $60.0 $30.0

8/4/2011 $60.0 6.7x $4.0 $38.5 $27.5

3/18/2011 $150.0 11.4x $100.0 $50.0


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 - - -


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 - -


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 4ORCE Digital 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. WPP plc (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 , , ( ) $


B i f S f E iBrief Software Equity Group Overviewp


• Industry leading boutique investment bank, founded in

Leaders in Software M&A

1992, representing public and private software and internet companies seeking:

• Strategic exit• Growth capital

We 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, product category, delivery model and vertical market

• Global presence providing advice and guidance to more p p g gthan 2,000 private and public companies throughout US, 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 track record


record.

• Highly referenceable base of past clients

Extensive Global Reach

Current Sell-side Representation

• SEG currently represents software companies in the United States, Canada, France, Germany, Australia & Saudi Arabia

Recent Sell-side Representation

Saudi Arabia

• In addition to the countries listed above, SEG has recently represented software companies in the United Kingdom, France, Netherlands, Israel, and South Africa

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• SEG’s Quarterly and Annual Software Industry Equity Reports and Monthly Flash Reports are distributed to

i li f 50 000 bli f CEOan opt-in list of 50,000 public software company CEOs, software entrepreneurs, private equity managing directors, VCs, high tech corporate lawyers, public accountants, etc. in 76 countries.


A little about me…

Over 15 years of operational and investment bankingOver 15 years of operational and investment banking experience in mobile, wireless and software sectors

Nearly 10 years of operational experience in mobile y y p pspecifically, working closely with a number of vendors in the space

Product lead for award winning mobile music serviceProduct lead for award winning mobile music service

Strategic consultant for mobile browser and widget runtime providerp

MBA, UCLA Anderson School of ManagementM. Eng, Electrical Engineering, UCSDB S Computer Engineering UCSDB.S., Computer Engineering, UCSD


To discuss the mobile ecosystem, M&A transactions and/or your mobile business, please contact me at:and/or your mobile business, please contact me at:

P: 858.509.2800

C: 858.945.3032C: 858.945.3032

Email: [email protected]

http://www.linkedin.com/in/bradweekeshttp://www.linkedin.com/in/bradweekes

Twitter: @bradweekes


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