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Global Technology IPO Review Q2 2017

PwC | Global Technology IPO Review Q2 2017 1

Global tech IPO market has best quarter in two years based on volume: 28 IPOs – Including four Unicorns – In Q2 2017

Raman Chitkara Partner and Global Technology

Industry Leader

PricewaterhouseCoopers LLP

[email protected]

Welcome to the Q2 2017 issue of PwC’s Global Technology IPO Review. It was the best quarter for technology initial public offerings

(IPOs) in two years as the upbeat mood in the capital markets increased the appetite of investors for new public offerings. In the second

quarter, 28 technology companies completed IPOs for total proceeds of US$5.1 billion. This is the most technology IPOs since Q2 2015

when there were 36.

The improvement of economic fundamentals in the major developed economies, continued rallies in many equity markets and the backlog

of tech companies waiting to go public led to the increased volume.

While four Unicorns completed their IPOs, the big names continued to stay on the sidelines. The pace of Unicorn IPOs in the remainder of

calendar 2017 is likely to be influenced by the post-IPO performance of Unicorns that completed their IPOs in the first half.

Geographically, China continued to show robust growth in the technology IPO market with 16 companies raising a total of US$1.2 billion.

Chinese IPOs were favorably impacted by the efforts of the China Securities Regulatory Commission (CSRC) to speed up the approval

process. South Korea had a strong quarter with two IPOs, raising US$2.405 billion, including the largest IPO of Q2—Netmarble Games

Corp. with proceeds of US$2.356 billion.

The US had six IPOs with total proceeds of less than a billion, a 50% improvement over the preceding quarter, though significantly below

comparable historical levels achieved during strong IPO cycles. After a drought of five quarters, the UK had one technology IPO in Q2

2017, raising US$324 million. Rounding out Q2, Belgium, Canada and Israel had one IPO each.

In a rare turn of events, Internet Software & Services shared first place for volume with another subsector—Semiconductors. Each had

eight IPOs in Q2 2107. As for total proceeds, Internet Software & Services raised US$3.5 billion, and Semiconductors a more modest

US$832 million. Internet Software & Services benefitted from Netmarble’s proceeds. Semiconductors benefitted from IPOs by five

Chinese companies. It was the first time Semiconductors had eight or more IPOs since Q4 2010, when it had 12.

Looking ahead, we expect the second half of 2017 to continue the positive momentum of the first half. However, any significant decline or

increase in volatility in the capital markets has the potential to change investor sentiment in a hurry. Factors to watch include Chinese

regulatory developments; the tone, tenor and timing of US budget, debt ceiling and tax reform deliberations, and the continuity of overall

global economic progress without inflationary pressures. Lastly, gaps between private company valuations in the recent past and the

valuations investors are willing to give public companies will influence how many and which Unicorns test the capital markets in the

second half of 2017.

Sincerely,

*Issue size greater than US$40

million (includes overallotment)

and based on trade date;

See Methodology

mailto:[email protected]


Table of contents

1. Q2 2017 Global tech IPO summary 3

Tech IPOs continue to ride high on positive investor sentiment 3

First-half 2017 average proceeds are higher than first-half 2015 and 2016 – Led by six Unicorn listings 4

The Asian tech IPO market takes center stage this quarter 5

Tech IPOs in Q2 2017 have wider geographic spread than the previous quarter 6

Global macroeconomic conditions improve as Asia gains strength; political challenges continue in the US and Europe 7

Semiconductor surprise: Subsector shares top spot for number of IPOs with Internet Software & Services 8

2. Country and stock exchange detail 9

China 9

South Korea 10

US 11

UK 12

Stock exchange distribution 13

Q2 2017 tech IPOs – Offering details 14

3. Key financials – Q2 2017 16 4. Q2 2017 Technology IPO listings: Valuation metrics 20 5. Top three subsectors in Q2 2017 22

Internet Software & Services 22

Semiconductors 29

Software 36

6. Methodology 43 7. For more information 44


Q2 2017 Global tech IPO summary

Tech IPOs continue to ride high on positive investor sentiment

After a positive start to the year, Q2 2017 saw an increase in

technology IPOs. Deal volume increased significantly as 28

IPOs raised a total of US$5.1 billion in the second quarter;

the number of listings rose 56% quarter over quarter and

100% year over year. Proceeds declined 12% from the

previous quarter, but increased 246% year over year.

Chinese technology companies led with 16 IPOs raising

US$1.2 billion. South Korea had two IPOs that raised more

than US$2.4 billion. The US had six tech IPOs with total

proceeds of US$764 million.

Technology IPOs included four Unicorns, twice the number

in Q1. All were in the Internet Software & Services

subsector: Netmarble Games Corp of South Korea

(proceeds of US$2.4 billion), China Rapid Finance Ltd of

China (US$69 million), Okta Inc (US$187 million) and

Cloudera Inc (US$259 million) of the US. While Netmarble

and Okta were priced above pre-IPO valuations, the other

two were priced lower than pre-IPO valuations.

Figure 1: Global tech IPOs Q2 2016-Q2 2017

Source: S&P Capital IQ with analysis by PwC

$1,480

$5,382

$1,742

$5,813

$5,124

14

20

10

18

28

0

5

10

15

20

25

30

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

US

$ m

illi

on

s

Total proceeds (US$mn) Number of IPOs

No

. o

f IP

Os

"Looking ahead, we expect the second half of 2017 to continue the positive momentum

of the first half. However, investor sentiment could change in a hurry as a result of a

significant negative political development or increased volatility in the capital

markets.”

Raman Chitkara

Global Technology Industry Leader


First-half 2017 average proceeds are higher than first-half 2015 and 2016 – Led by six Unicorn listings

Two Unicorns in particular, Netmarble (Q2) and Snap (Q1),

raised total proceeds disproportionately and acted as

positive outliers in the Q2 and Q1 2017 IPO environments.

As for average proceeds, H1 2017 was higher than the

previous two first-half periods at US$238 million. H1 2015

had average proceeds of US$207 million and H1 2016 had

US$94 million.

However, although the volume of tech IPOs rose

substantially in Q2, average proceeds declined from

US$323 in Q1 to US$183 in Q2 owing to smaller offerings

including three of the four Unicorns garnering less than

US$600 million in aggregate.

Figure 2: H1 2010-H1 2017 total proceeds, average proceeds and no. of IPOs


$8,699 $8,710

$20,817

$4,588

$18,955

$12,225

$2,249

$10,937

$158 $164 $416 $170 $287 $207 $94 $238

55 53 50

27

66

59

24

46

0

15

30

45

60

75

H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017

$0

$5,000

$10,000

$15,000

$20,000

$25,000

US

$ m

illi

on

s

Total proceeds (US$mn) Avg proceeds (US$mn) No. of IPOs

No

. o

f IP

Os


The Asian tech IPO market takes center stage this quarter

Asia reported 19 technology IPOs, the highest for any

region in Q2, with total proceeds of US$3.7 billion. China

led with 16 IPOs, followed by South Korea with two and

Israel with one. South Korea’s Netmarble was the biggest

IPO in the Asian market and the largest tech IPO of the

quarter, raising just under US$2.4 billion. China raised

US$1.2 billion, and Israel had proceeds of US$46 million.

Figure 3: Q2 2016-Q2 2017 – Asia – total proceeds and no. of IPOs


$536

$1,921

$932

$1,322

$3,655

7

11

3

14

19

0

3

6

9

12

15

18

21

24

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Proceeds (US$mn) No. of IPOs

US

$ m

illi

on

s

No

.o

f IP

Os


Tech IPOs in Q2 2017 have wider geographic spread than the previous quarter

Q2 2017 had a wider geographic distribution than the prior

two quarters with seven countries reporting technology

IPOs. China led with 16, followed by the US with six and

South Korea with two. The UK, Canada, Belgium and Israel

had one IPO each. China accounted for 57% of IPOs in Q2

while South Korea had 47% of IPO proceeds.

The UK reported one technology IPO after five quarters of

none. That’s progress, but lingering uncertainty about the

impact of Brexit continues to hinder UK and European

IPO activity.

Figure 4: Q2 2017 geographic distribution


1,204

764

2,405

324 267 11446

16

6

2

1 1 1 10

3

6

9

12

15

18

China United States South Korea UnitedKingdom

Belgium Canada Israel

0

500

1,000

1,500

2,000

2,500

3,000


US

$m

illi

on

s

No

. o

f IP

s


Global macroeconomic conditions improve as Asia gains strength; political challenges continue in the US and Europe

Europe had two IPOs, one each from Belgium and the UK,

together raising US$591 million in Q2 2017. Nonetheless, it

continued to lag behind Asia and North America with the

fallout from Brexit still putting a damper on enthusiasm.

Asia was at full throttle with 19 IPOs raising US$3.7 billion.

In North America, the US had six IPOs and Canada had

one. The valuation gap is still a concern for technology

companies in the US, with private placements valuing

them at much higher multiples compared to their likely

IPO valuations.

Figure 5: Regional analysis of IPO proceeds


Figure 6: Regional analysis of number of IPOs


$694

$250$536

$0

$627

$2,835

$1,921

$480

$331

$932

$4,490

$0

$1,322

$879 $591

$3,655

$0

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

North America Europe Asia RoW

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

US

$ m

illi

on

s

5

2

7

0

6

3

11

5

2 3

4

0

14

7

2

19

0

0

2

4

6

8

10

12

14

16

18

20

North America Europe Asia RoW

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


Semiconductor surprise: Subsector shares top spot for number of IPOs with Internet Software & Services

The Semiconductor subsector matched Internet Software &

Services – the perennial tech IPO leader – with eight IPOs

in Q2 2107. Between them they had 16, more than half

the total.

The two subsectors also had the top proceeds. Internet

Software & Services raised US$3.5 billion and

Semiconductors had US$832 million. All four Unicorns in

the quarter were in the Internet Software & Services

subsector, impacting those total proceeds.

Internet Software & Services proceeds actually declined by

20% from the previous quarter although the number of

IPOs was up by 60%. Semiconductors witnessed a sharp

increase of 167% sequentially in the number of IPOs with

proceeds increasing by 142% from the previous quarter.

Of the eight Semiconductor IPOs, five were from China and

one each from South Korea, Belgium and the US.

Clearances issued by China regulatory authorities led

to the upsurge in Semiconductor IPOs this quarter.

The Software subsector was a distant third in Q2 with four

IPOs raising a total of US$250 million.

Figure 7: Subsector distribution showing total proceeds


Figure 8: Subsector distribution showing number of IPOs


$341 $660

$145 $149 $0

$0 $185

$4,395

$126 $345

$169

$59 $426 $293

$3,502

$250

$832

$202 $125 $214

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Internet Software& Services

Software Semiconductors Electronics Computers &Peripherals

CommunicationsEquipment

IT Consulting &Services

U.S

$ in m

illio

ns

Q2 2016 Q1 2017 Q2 2017

3

6

2 2

0 0

1

5

1

3

2

1

4

2

8

4

8

3

2

3

0

0

1

2

3

4

5

6

7

8

9

Internet Software& Services

Software Semiconductors Electronics Computers &Peripherals


IT Consulting &Services

No.

of

IPO

S

Q2 2016 Q1 2017 Q2 2017


Country and stock exchange detail

China

The Chinese tech IPO market continues its momentum with 16 IPOs in Q2 2017, or 57% of the total

With 16 IPOs, China had the largest piece of the tech IPO

market in Q2, with proceeds of US$1.2 billion. With this,

China topped its numbers of the last five quarters.

Significantly, only one of the 16 Chinese IPOs was listed on

the NYSE; the others were on the Chinese exchanges. The

biggest IPO in China this quarter was Olympic Circuit

Technology, which raised US$195 million. The increasing

participation of companies from mainland China was due

to the attraction of the relatively higher PE ratio for

companies on Chinese exchanges compared to the US and

European exchanges, and the acceleration of the IPO

approval process by the regulatory authorities (CSRC).

Figure 9: China tech IPOs


$368

$611

$822

$1,196 $1,204

5

9

2

12

16

0

3

6

9

12

15

18

21

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

US

$ m

illi

on

s


No

. o

f IP

Os

“Though Chinese tech IPOs continued their escalating trend in Q2 2017, there have

been signs that China regulatory authorities (CSRC) may slowdown the IPO approval

process in the second half of 2017. In spite of this, number of Chinese tech IPOs is still

expected to reach a historical high in 2017, due to the increase of small to medium

sized deals.”

Jianbin Gao

Technology Industry Leader, PwC China


South Korea

South Korea shines in the Q2 2017 tech IPO market with the high-profile listing of Netmarble

After three quarters of no IPOs, South Korea’s Netmarble

raised the highest tech IPO proceeds globally in Q2 2017.

Investors are now more comfortable with recent political

developments in South Korea. Investor confidence in the

economy has improved with exports becoming more robust

and stronger-than-expected GDP figures reported for Q1

2017. The Korean currency has grown stronger along with

stock prices reaching an all-time high as investors

continued to buy technology stocks on the back of their

promising outlooks, led by the South Korean tech giant

Samsung Electronics with its record breaking Q2 earnings.

The IPO market is also expected to receive a boost from the

new rules introduced at the beginning of the year. These

rules allow start-ups without net income to list; earlier laws

allowed only listings by companies with reported net

income. However, the IPO market in H2 2017 may slow

down somewhat as a result of certain companies

postponing their IPO plans and any further escalating

tension with North Korea could also curtail enthusiasm.

Figure 10: Q2 2017 South Korean tech IPOs


$41 $0 $0 $0

$2,405

12

0

1

2

3

4

5

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

US

$ m

illi

on

s


No

. o

f IP

Os

“While favorable market factors led to an excellent second quarter for tech IPOs in

South Korea, the second half of 2017 may not prove as robust due to several major

companies postponing their listings.”

Steven Kang

Technology Industry Leader, PwC South Korea


US

Two Unicorns supported the US tech IPO market, although with much lower average proceeds

The US reported six tech IPOs with proceeds of US$764

million, much lower than last quarter’s US$4.5 billion,

most of which was from the Snap IPO. The average

proceeds in Q2 were US$127 million.

The two US Unicorns—Cloudera and Okta—listed this

quarter. It is worth noting that Cloudera’s post-IPO

valuation was lower than its pre-IPO valuation: US$2.3

billion versus US$4.1 billion. Okta’s post-IPO valuation was

slightly higher than its pre-IPO valuation: US$1.5 billion

against US$1.2 billion.

*PwC Deals Insights: https://www.pwc.com/us/en/deals/publications/technology-deals-insights.html

Figure 11: US tech IPOs


$694 $627$479

$4,490

$764

5

6

5

4

6

0

2

4

6

8

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

$0

$1,000

$2,000

$3,000

$4,000

$5,000

US

$ m

illi

on

s


No

. o

f IP

Os

“Six tech IPOs raised $764 million representing a 50% increase in volume from Q1

despite several “down round” IPO valuations. The buy side took advantage of a

buoyant US Tech IPO market as it outperformed the broader US IPO market with

returns averaging 20%, almost double the 11% return* of the broader IPO market.”

Alan Jones

Technology Deals Partner, PwC US

https://www.pwc.com/us/en/deals/publications/technology-deals-insights.html


UK

The UK technology IPO market finally opens up after a persistent drought of five straight quarters

With one IPO in Q2, the UK broke its long drought. But

does one IPO suggest the UK market is regaining the

momentum it lost due to last year’s Brexit vote?

It remains to be seen. Much will depend on how well the

“divorce” negotiations with the EU proceed in the coming

months. The appetite for IPOs could return as the Brexit

election shock subsides and investors start to get a clearer

picture of the new landscape. Pent up demand could also

give the market a push.

Figure 12: UK tech IPOs


$0 $0 $0 $0

$324

-

1

0

1

2

3

4

5

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

$0

$50

$100

$150

$200

$250

$300

$350

US

$ m

illi

on

s


No

. o

f IP

Os


Stock exchange distribution

Q2 2017 saw an increase in stock exchange participation.

China’s exchanges led with 15 listings total whereas the

Korean exchange dominated in proceeds with just one IPO.

The US exchanges had seven listings in Q2 2017, one more

than Q2 2016. However, numbers for China’s exchanges

increased by 11 IPO listings and proceeds by

US$832 million.

Shanghai Stock Exchange had 32% of the total listings,

whereas Korea Stock Exchange had 46% of the total

proceeds—the result of the biggest IPO of the

quarter, Netmarble.

Figure 13: Q2 2017 stock exchange distribution


$440

$695

$461 $373$114 $267 $46

$2,356

$50 $324

6

9

3

4

1 1 1 1 1 1

0

2

4

6

8

10

ShenzhenStock

Exchange(SZSE)

ShanghaiStock

Exchange(SHSE)

NYSE NASDAQ Toronto SE EuronextParis

(ENXTPA)

Tel AvivStock

Exchange

KoreaStock

Exchange(KOSE)

KOSDAQ London SE

$0

$500

$1,000

$1,500

$2,000

$2,500

US

$ m

illio

ns


No

. o

f IP

Os


Q2 2017 tech IPOs – Offering details

Table 1: Q2 2017 tech IPOs – By highest proceeds

Issue date Company Subsector

Proceeds

(US$ millions) Primary exchange

Domicile nation

Q2

05/02/2017 Netmarble Games Corporation Internet Software & Services

2355.75 Korea Stock Exchange (KOSE) South Korea

05/26/2017 Alfa Financial Software Holdings PLC Internet Software & Services

324.11 London Stock Exchange (LSE) United Kingdom

04/05/2017 X-FAB Silicon Foundries SE Semiconductors 266.58 Euronext Paris (ENXTPA) Belgium

04/27/2017 Cloudera Inc Internet Software & Services

258.75 New York Stock Exchange (NYSE) United States

04/17/2017 Olympic Circuit Technology Co Ltd Semiconductors 194.69 Shanghai Stock Exchange (SHSE) China

04/06/2017 Okta Inc Internet Software & Services

187.00 NASDAQ Global Select (NQGS) United States

04/12/2017 Yext Inc Internet Software & Services

132.83 New York Stock Exchange (NYSE) United States

05/05/2017 Real Matters Inc Internet Software & Services

114.38 Toronto Stock Exchange (TSX) Canada

04/11/2017 Raisecom Technology Co Ltd Communications Equipment

113.10 Shanghai Stock Exchange (SHSE) China

04/06/2017 Zhejiang Jiemei Electronic and Technology Co Ltd

Semiconductors 110.57 Shenzhen Stock Exchange (SZSE) China

05/12/2017 Shenzhen Genvict Technologies Co Ltd Electronics 93.28 Shenzhen Stock Exchange (SZSE) China

06/28/2017 Fujian Raynen Technology Co Ltd Software 76.26 Shanghai Stock Exchange (SHSE) China

05/24/2017 Appian Corporation Software 75.00 NASDAQ Global Market (NQGS) United States

04/25/2017 Jiangsu Transimage Technology Co Ltd Computers & Peripherals 69.89 Shenzhen Stock Exchange (SZSE) China

04/27/2017 China Rapid Finance Limited Internet Software & Services

69.00 New York Stock Exchange (NYSE) China


Table 1: Q2 2017 tech IPOs – By highest proceeds

Issue date Company Subsector

Proceeds

(US$ millions) Primary exchange

Domicile nation

06/05/2017 SG Micro Corp Semiconductors 65.74 Shenzhen Stock Exchange (SZSE) China

06/14/2017 Suzhou Etron Technologies Co Ltd Electronics 62.91 Shanghai Stock Exchange (SHSE) China

06/29/2017 Tintri Inc Internet Software & Services

60.00 NASDAQ Global Market (NQGS) United States

05/12/2017 Fujian Apex Software Co Ltd Software 58.12 Shanghai Stock Exchange (SHSE) China

05/23/2017 Nanjing Huamai Technology Co Ltd Communications Equipment

55.58 Shanghai Stock Exchange (SHSE) China

05/24/2017 Shenzhen Sunnypol Optoelectronics Co Ltd Computers & Peripherals 55.51 Shenzhen Stock Exchange (SZSE) China

05/26/2017 EmbedWay Technologies (Shanghai) Corporation

Semiconductors 51.57 Shanghai Stock Exchange (SHSE) China

05/23/2017 SMART Global Holdings Inc Semiconductors 50.55 NASDAQ Global Select (NQGS) United States

05/29/2017 Philoptics Co Ltd Semiconductors 49.65 KOSDAQ (KOSDAQ) South Korea

05/29/2017 Telrad Networks Ltd Communications Equipment

45.66 Tel Aviv Stock Exchange Israel

06/26/2017 Shenzhen JingQuanHua Electronics Co Ltd Electronics 45.42 Shenzhen Stock Exchange (SZSE) China

04/23/2017 Will Semiconductor Co Ltd Shanghai Semiconductors 42.42 Shanghai Stock Exchange (SHSE) China

04/17/2017 Shanghai Koal Software Co Ltd Software 40.13 Shanghai Stock Exchange (SHSE) China



Key financials – Q2 2017 Three-fourths (21) of the technology companies that listed

IPOs in Q2 2017 reported net income for their last twelve

months (LTM); their LTM net income average was US$23

million. The other seven companies reported net losses that

lowered the overall LTM net income average to US$7

million. The average for the previous quarter was a net loss.

The tech IPO companies’ average LTM revenue for Q2 2017

was US$219 million, a 38% decline from the previous

quarter. The average LTM EBIDTA for Q2 2017 was US$8

million, a 38% change over the US$13 million LTM

EBIDTA in Q1 2017.

Six of the Q2 companies that reported LTM net losses were

from the Internet Software & Services subsector, of which

five listed on a US stock exchange. One of Q2’s four

Unicorns, Cloudera, from the Internet Software & Services

subsector, reported the highest LTM net loss at US$366

million.

As noted, the overall average LTM revenue for Q2 2017 was

US$219 million. The average LTM revenue for Asia,

including China, was US$191 million. Netmarble from the

Internet Software & Services subsector raised the Asian

average. It had the highest LTM revenue of any Q2 IPO

company at US$1,246 million.

The Internet Software & Services subsector, with eight

IPOs, reported the highest average LTM revenue at US$303

million and the highest EV/LTM revenue at 8.2x. However,

the subsector also reported the highest average LTM net

loss—US$63 million.

The eight IPOs from the Semiconductors subsector, which raised total proceeds of US$832 million, reported the

second highest average LTM revenue at US$270 million. At US$304 million, Will Semiconductor Co Ltd from the

Semiconductors subsector reported the second highest LTM revenue of the Q2 IPO companies.

Figure 14: Q2 2017 and Q1 2017 tech IPOs – Net income


75%

25%

Q2 2017

Net income Net loss

78%

22%

Q1 2017

Net income Net loss


Figure 15: Q2 2017—Average LTM revenue

Source: S&P Capital IQ with analysis by PwC Figure 16: Q2 2017 —Average LTM EBITDA


$100

$187

$111

$303

$270

$112

$219

23 3

8 8

4

28

0

5

10

15

20

25

30

$0

$50

$100

$150

$200

$250

$300

$350

Computers &Peripherals


Electronics Internet Software &Services

Semiconductors Software All sectors

No

. o

f IP

Os

LTM revenue No. of IPOs

US

$ m

illi

on

s

$17$24

$14

($36)

$41

$7 $8

2 3 3

8 8

4

28

0

5

10

15

20

25

30

($40)

($30)

($20)

($10)

$0

$10

$20

$30

$40

$50





No

. o

f IP

Os

LTM EBITDA No. of IPOs

US

$ m

illi

on

s


Figure 17: Q2 2017—Average LTM net income


Figure 18: Q2 2017—Average total debt


$13 $19

$13

($63)

$21

$5 $7

23 3

8 8

4

28

0

5

10

15

20

25

30

($70)

($60)

($50)

($40)

($30)

($20)

($10)

$0

$10

$20

$30





No

. o

f IP

Os

LTM Net income No. of IPOs

US

$ m

illi

on

s

$47

$32

$4

$20

$73

$11

$35

2 33

8 8

4

28

0

5

10

15

20

25

30

$0

$10

$20

$30

$40

$50

$60

$70

$80





No

. o

f IP

Os

LTM debt No. of IPOs

US

$ m

illi

on

s


Figure 19: Q2 2017 —Average enterprise value


$695$682 $624

$2,487

$791$678

$1,239

2

3 3

8 8

4

28

0

5

10

15

20

25

30

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000





No

. o

f IP

Os

Enterprise value No. of IPOs

US

$ m

illi

on

s


Q2 2017 Technology IPO listings: Valuation metrics Despite having 28 IPO listings in the quarter, the EV/LTM

metrics in Q2 2017 failed to match previous quarters.

In Q2, the technology sector’s average EV/LTM revenue

multiple was 5.7x, down from 8.0x in Q1 2017 and 8.5x in

Q2 2016.

The EV/LTM EBIDTA metric was 162.0x, lower than the

222.1x in Q1 2017. The lower valuation was driven

predominantly by companies in the Internet Software &

Services subsector. The rush for private funding at

extremely high valuations is over and the market has

discounted the valuation of loss, making start-ups perform

at a more reasonable level.

Figure 20: Q2 2017 EV/LTM revenue


6.9x

3.6x

5.6x

8.2x

2.9x

6.0x5.7x

23 3

8

8 4

28

0

5

10

15

20

25

30

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x





No

. o

f IP

Os

EV/LTM revenue No. of IPOs

In m

ult

iple

s


Figure 21: Q2 2017 EV/LTM EBITDA


39.8x

28.5x

46.1x

0.0x

19.3x

97.9x

162.0x

2

3

3

8 8

4

28

0

5

10

15

20

25

30

0.0x

20.0x

40.0x

60.0x

80.0x

100.0x

120.0x

140.0x

160.0x

180.0x





No

. o

f IP

Os

EV/ LTM EBITDA No. of IPOs

In m

ult

iple

s


Top three subsectors in Q2 2017

Internet Software & Services

The eight listings in the Internet Software & Services subsector reported the highest average LTM revenue at US$303 million. The average LTM revenue increased by 49% quarter on quarter and by 214% year on year. The subsector had eight deals in Q2 2017, up from five deals in Q1 2017 and three deals in Q2 2016. The subsector’s average LTM EBIDTA (US$36 million) and average LTM net loss (US$63 million) were pulled down by significant LTM net losses reported by Cloudera and Tintri. The subsector’s EV/LTM revenue decreased significantly to 8.2x in Q2 from 27.9x in Q1 2017.

Figure 22: Internet Software & Services– LTM revenue


$96 $131

$472

$204

$303

33

2

5

8

0

2

4

6

8

10

12

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 23: Internet Software & Services – LTM EBITDA


($24)

$1

($54)

($92)

($36)

3 3

2

5

8

0

2

4

6

8

10

12

($100)

($80)

($60)

($40)

($20)

$0

$20

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 24: Internet Software & Services – LTM net income


($28)($14)

($479)

($92)

($63)

3 3

2

5

8

0

2

4

6

8

10

12

($600)

($500)

($400)

($300)

($200)

($100)

$0

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os

LTM net income No. of IPOs

US

$ m

illi

on

s


Figure 25: Internet Software & Services – EV


$1,526

$686

$4,587

$5,674

$2,487

3

3

2

5

8

0

2

4

6

8

10

12

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 26: Internet Software & Services – Total debt


$8

$18

$28

$11

$20

3

3

2

5

8

0

2

4

6

8

10

12

$0

$5

$10

$15

$20

$25

$30

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os

Total debt No. of IPOs

US

$ m

illi

on

s


Figure 27: Internet Software & Services – EV/LTM revenue


15.8x

5.2x

9.7x

27.9x

8.2x

3

3

2

5

8

0

2

4

6

8

10

12

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 28: Internet Software & Services – EV/LTM EBITDA


1083.7x

3

3

2

5

8

0

2

4

6

8

10

12

0.0x

200.0x

400.0x

600.0x

800.0x

1000.0x

1200.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. of IP

Os

EV/LTM EBITDA No. of IPOs

In m

ult

iple

s


Semiconductors

The Semiconductors subsector has maintained its position

among the top three subsectors continuously for three

quarters as measured by number of deals. The average

proceeds increased by 49% quarter on quarter.

The subsector reported the second highest average LTM

revenue for Q2 2017, US$270 million, a 49% increase

quarter on quarter. Still, the subsector had the lowest

EV/LTM revenue of 2.9x for Q2 2017. The EV/LTM

EBITDA for Q2 2017 was 19.3x.

The number of IPOs increased year over year by 300%

whereas the quarter-over-quarter increase was 167%.

The total debt for the quarter increased by 284% over

Q1 2017.

Figure 29: Semiconductors – LTM revenue


$276

$147

$183 $181

$270

2 2 2

3

8

0

2

4

6

8

10

12

$0

$50

$100

$150

$200

$250

$300

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 30: Semiconductors – LTM EBITDA


$57

$15

$4

$49

$41

22

2

3

8

0

2

4

6

8

10

12

$0

$10

$20

$30

$40

$50

$60

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 31: Semiconductors – LTM net income


$51

$13

-$8

$36

$21

2

2

2

3

8

-4

-2

0

2

4

6

8

10

12

($20)

($10)

$0

$10

$20

$30

$40

$50

$60

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 32: Semiconductors – EVh


$1,279

$1,689

$342

$1,614

$791

2 2 2

3

8

0

2

4

6

8

10

12

14

16

18

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 33: Semiconductors – Total debt


$3 $10

$35

$19

$73

2 2 2

3

8

0

2

4

6

8

10

12

14

16

$0

$10

$20

$30

$40

$50

$60

$70

$80

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 34: Semiconductors – EV/LTM revenue


4.6x

11.5x

1.9x

8.9x

2.9x2

2 2

3

8

0

2

4

6

8

10

12

14

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 35: Semiconductors – EV/LTM EBITDA


22.6x

113.4x

77.7x

33.1x

19.3x

2 2 2

3

8

0

2

4

6

8

10

12

0.0x

20.0x

40.0x

60.0x

80.0x

100.0x

120.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


In m

ult

iple

s


Software

After just one IPO in Q1, the Software subsector made a

comeback in Q2 2017 with four IPOs, enough to place it

back among the top three subsectors.

The quarter-over-quarter numbers increased 300%,

although the year-over-year number was a 33% decline.

The average LTM revenue, which was US$112 million in

Q2, increased by 31% quarter over quarter. The average

LTM EBIDTA of US$7 million and the average LTM net

income of US$5 million were declines of 133% and

121%, respectively.

The highest deal value for the subsector was US$76 million

by China-based Fujian Raynen Technology. The subsector

had three of the four technology IPO listings on the

Shanghai Stock Exchange (SHSE) in Q2.

The subsector had the highest EV/LTM EBITDA of 97.9x

for the quarter. However, EV/LTM revenue decreased to

6.0x from 11.7x in Q1 2017.

Figure 36: Software – LTM revenue


$199

$253

$100$86

$112

6

10

4

1

4

0

3

6

9

12

15

$0

$50

$100

$150

$200

$250

$300

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os

LTM revenue No. of IPOsU

S$ m

illi

on

s


Figure 37: Software – LTM EBITDA


$21

$4

($7)

($21)

$7

6

10

4

1

4

0

3

6

9

12

15

($25)

($20)

($15)

($10)

($5)

$0

$5

$10

$15

$20

$25

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 38: Software – LTM net income


($11)

($19)

($18)

($24)

$5

6

10

4

1

4

0

3

6

9

12

15

($30)

($25)

($20)

($15)

($10)

($5)

$0

$5

$10

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 39: Software – Enterprise value


$1,627

$2,468

$756$1,004

$6786

10

4

1

4

0

3

6

9

12

15

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 40: Software – Total debt


$178

$65

$30

$0

$11

6

10

4

1

4

0

3

6

9

12

15

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 41: Software – EV/LTM revenue


8.2x

9.8x

7.5x

11.7x

6.0x6

10

4

1

4

0

3

6

9

12

15

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 42: Software – EV/LTM EBITDA

ssSource: S&P Capital IQ with analysis by PwC

77.6x

587.6x

97.9x

6

10

4

1

4

0

3

6

9

12

15

0.0x

100.0x

200.0x

300.0x

400.0x

500.0x

600.0x

700.0x

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No

. o

f IP

Os


In m

ult

iple

s


Methodology The Global Technology IPO Review for Q2 2017 is based on PwC’s analysis of transaction data extracted from S&P Capital IQ. The analysis considers IPOs across all countries

worldwide during the period 1 April 2017 to 30 June 2017 (Q2), financial data was also obtained from S&P Capital IQ.

The definition of the Technology sector is based on the S&P Capital IQ database industry classifications and includes the following subsectors:

Internet Software & Services

IT Consulting & Services

Professional Services (e.g., Application Software, Software Solutions)

Semiconductors Software

Computers & Peripherals

– Computers, Computers Peripheral Equipment – Computers, Storage Device Manufacturing

Electronic Computer Manufacturing (“Electronics”)

Communications Equipment

Only IPOs with issue size greater than US$40 million were included in the analysis.

All monetary amounts are in US dollars unless otherwise indicated.

LTM – Last 12 months

Most figures are rounded to one decimal, except were comparisons require more.


For more information

If you would like to discuss how these findings might impact your business or your future strategy, please reach out to any of our technology industry leaders listed below.

Raman Chitkara

Global Technology Leader

Phone: 1 408 817 3746

Email: [email protected]

Rod Dring – Australia

Phone: 61 2 8266 7865


Estela Vieira – Brazil

Phone: 55 1 3674 3802


Christopher Dulny – Canada

Phone: 1 416 869 2355


Jianbin Gao – China

Phone: 86 21 2323 3362


Pierre Marty – France

Phone: 33 1 5657 58 15


Werner Ballhaus – Germany

Phone: 49 211 981 5848


Sandeep Ladda – India

Phone: 91 22 6689 1444


Masahiro Ozaki – Japan

Phone: 81 3 5326 9090


Steven Kang – Korea

Phone: 82 2 709 0201


Ilja Linnemeijer – The Netherlands

Phone: 31 88 792 4956


Yury Pukha – Russia

Phone: 7 495 223 5177


Mark Jansen – Singapore

Phone: 65 6236 7388


Jass Sarai – UK

Phone: 44 0 1895 52 2206


Mark McCaffrey – US

Phone: 1 408 817 4199


Alan Jones – US (Deals partner)

Phone: 1 415 498 7398















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