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Global Technology IPO Review Q3 2017

PwC | Global Technology IPO Review Q3 2017 2

Global tech IPO activity slows in spite of record high capital markets

Raman Chitkara Partner and Global Technology Industry Leader PricewaterhouseCoopers LLP [email protected]

*Issue size greater than US$40 million

(includes overallotment) and based on

trade date; See Methodology

Welcome to the third quarter 2017 issue of PwC’s Global Technology IPO Review. With 20 tech IPOs and proceeds of US$5.2 billion, the third quarter saw a 31% drop in volume and a 15% decrease in proceeds from the prior quarter but an equal number of offerings and only marginally lower proceeds year over year (-3%). Even allowing for typical third quarter seasonality, however, the overall strength of the capital markets would have suggested a stronger showing. It is clear that poor aftermarket performance of several Unicorns that completed their IPOs earlier in the year did not foster an environment of higher risk taking and higher valuations, and this was especially true in the US. As a result, not only was there only one Unicorn IPO this quarter, it hailed from Argentina, not the US or China. However, activity did pick up in the last month of the third quarter with 13 of the 20 technology IPOs listing in September, setting a positive stage for an improved fourth quarter.

Year to date there have been 67 tech IPOs raising US$17.1 billion − the best nine months since 2014 when 84 tech IPOs raised US$43.7 billion, a spike in proceeds due to the mega Alibaba IPO.

Geographically, Asia accounted for 80% of the tech IPOs (16) in the third quarter, lending additional credence to the widely held notion that “the center of gravity of the tech world is slowly moving towards the East.” Greater China (China and Taiwan) continued its domination of tech IPOs with 11. It was followed by South Korea with three and Japan and India with one each. Europe posted the two largest tech IPOs of the quarter, but the UK was again absent as it continues to be challenged by transitional issues associated with the Brexit decision. Perhaps the biggest surprise of the quarter was just one tech IPO in the US. Consistent with past quarters, there was just one cross-border offering, Argentina’s Despegar.com, the sole Unicorn of the quarter that listed on the NYSE.

In sharp contrast to preceding quarters, Internet Software & Services was number three this quarter raising US$616 million from three IPOs. Electronics led the way with nine IPOs, including the largest of the quarter, raising a combined US$3.6 billion. Software was second with four IPOs raising US$718 million.

The macro environment remains positive for the IPO market owing to a robust pipeline and upbeat capital markets. With US and European elections behind us, and barring any unforeseen geopolitical turmoil, the tech IPO market is poised for a strong finish to the year.

Sincerely,

mailto:[email protected]

PwC | Global Technology IPO Review Q2 2017

Table of contents

Q3 2017 Global tech IPO summary .......................................................................................................................................... 4

Country and stock exchange detail .......................................................................................................................................... 9

Key financials – Q3 2017 ......................................................................................................................................................... 16

Q3 2017 Technology IPO listings – Valuation metrics ......................................................................................................... 20

Top three subsectors in Q3 2017............................................................................................................................................. 22

Methodology ............................................................................................................................................................................ 43

For more information ............................................................................................................................................................. 44


Q3 2017 Global tech IPO summary

Lack of Unicorns and US tech IPOs dampen Q3 results, but improving activity at the close of the quarter sets the stage for a robust Q4

Following a positive first half of the year, Q3

2017 saw 20 IPOs with proceeds of US$5.2

billion. Those were declines of 31% and 15%

respectively from the prior quarter but only a

3% decline in proceeds from Q3 2016. The two

largest tech IPOs of Landis+Gyr Group, AG

and Rovio Entertainment helped to raise

average proceeds to US$261 million, higher

than Q2 2017 at US$211 million, but slightly

below Q3 2016 at $269 million.

Tech IPOs picked up steam in the latter part of

the quarter which suggests a stronger year-

end. There were 13 tech IPOs in September, of

which 8 were listed in the second half of the

month.

Asia had the largest number of tech IPOs with

16 IPOs, while Europe led the way in proceeds

with US$2.9 billion from just two tech IPOs.

Rounding out the globe were the Americas

with one tech IPO each in the US and

Argentina.

Figure 1: Global tech IPOs Q3 2016-Q3 2017

Source: S&P Capital IQ with analysis by PwC

$ 5,382

$ 1,742

$ 5,813 $ 6,114

$ 5,223

20

10

18

29

20

-

5

10

15

20

25

30

35

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 $-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

US

$ m

illi

on

s

Total proceeds (US$mn) Total number of IPOs

No

. o

f IP

Os

"Continued strength in global capital markets and a robust pipeline of quality companies

suggests a strong finish to the year.”

Raman Chitkara

Global Technology Industry Leader


Global tech IPOs post best nine-month results in three years

The nine-month total and average proceeds in

Q3 2017 were US$17.1 billion and US$256

million, respectively. These numbers were

higher than the comparable nine-month

periods in the past few years, except those that

included the IPOs by Facebook (2012) and

Alibaba (2014).

Compared to 2016, the proceeds grew by 125%

and the number of tech IPOs rose 52%. The

nine-month growth was led by three billion-

dollar-plus IPOs (Snap Inc, Landis+Gyr

Group, and Netmarble)

Figure 2: 9M 2010-9M 2017 total proceeds, average proceeds and no. of IPOs


$13,532$10,282

$21,811

$5,858

$43,740

$16,318

$7,632

$17,149

$167 $153 $358 $150 $521 $233 $173 $256

81

67

61

39

84

70

44

67

0

15

30

45

60

75

90

9M 2010 9M 2011 9M 2012 9M 2013 9M 2014 9M 2015 9M 2016 9M 2017 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Total Proceeds Avg Proceeds No. of IPOs

US

$m

illi

on

s

No

. o

f IP

Os


The Asian tech IPO market has been the bellwether three quarters in a row, accounting for 80% of the tech IPOs in Q3 2017

Ongoing demand for tech IPOs in China,

continuing innovation in South Korea, and

contributions from Japan and India led to

stronger Asia numbers. A total of 16 IPOs

garnered US$1.7 billion.

Europe had the two largest tech IPOs of the

quarter raising proceeds of US$2.9 billion.

Landis+Gyr Group, listed in Switzerland,

raised US$2.4 billion while Rovio, listed in

Finland, raised US$501 million. Once again,

notably absent was the UK that continues to

grapple with transitional issues associated with

Brexit.

Challenged by the underperformance of

several high-profile tech IPOs earlier in the

year, the US recorded just one tech IPO raising

US$252 million.

We continue to see tech’s center of gravity shift

from West to East. Asia’s nine-month numbers

far exceeded North America. North America

had 12 IPOs for a total of US$5.6 billion, and

Asia had 49 IPOs for a total US$6.6 billion.

Asia captured 73% of the tech IPOs during the

first nine months.

Figure 3: Regional analysis of number of tech IPOs


Figure 4: Regional analysis of tech IPO proceeds


6

3

11

0

5

2 3

4

0

14

7

3

19

1 2

16

1

0

2

4

6

8

10

12

14

16

18

20

North America Europe Asia RoW

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

$627

$2,835

$1,921

$0$480 $331 $932

$4,490

$-

$1,322 $879

$1,580

$3,655

$252

$2,922

$1,666

$382

$-

$1,000

$2,000

$3,000

$4,000

$5,000

North America Europe Asia RoW

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

US

$ m

illi

on

s


Tech IPOs in Q3 2017 were geographically diverse; nine countries, including Argentina, participated

Q3 2017 had broad geographic participation,

with nine countries listing at least one tech

IPO. Switzerland produced the biggest IPO,

Landis+Gyr Group, with proceeds of US$2.4

billion, followed by Finland with Rovio raising

US$501 million.

Greater China (China and Taiwan) recorded 11,

the highest this quarter, raising US$1.3 billion.

A strong equity market and positive post-IPO

performance boosted investor sentiment while

actions taken by the Chinese government to

reduce the backlog of companies waiting to list

helped to accelerate activity. Hong Kong also

confirmed that steps are being taken to open

another trading platform.

Continuing innovation in South Korea helped

to further tech IPO activity with three listings

raising US$260 million.

The US, India, Japan, and Argentina also

recorded one tech IPO each in the quarter.

Figure 5: Q3 2017 geographic distribution

* Includes China and Taiwan


$1281

$260

$2422

$501

$382$252

$70 $55

11

3

1 1 1 1 11

0

3

6

9

12

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

GreaterChina*

SouthKorea

Switzerland Finland Argentina UnitedStates

India Japan

Totak proceeds (US$mn) Number of IPOs

US

$ m

illi

on

s

No

. o

f IP

s


Electronics subsector dominates with nine IPOs and US$3.6 billion in proceeds

Contrary to the recent norm in global tech

IPOs, Electronics led the way with nine IPOs

raising US$3.6 billion, sequentially up 200%

and 1700%, respectively. Software came in

second, with four IPOs raising US$718 million.

Internet Software & Services ranked third with

three IPOs and proceeds of US$616 million.

Proceeds declined 86% and the number of

IPOs fell 67% compared to the previous

quarter.

Semiconductors reported three IPOs with

proceeds of US$145 million. Proceeds were

down 83% and the number of IPOs declined

63%.

Computers & Peripherals posted one IPO with

proceeds of US$115 million.

Figure 6: Subsector distribution showing total proceeds


Figure 7: Subsector distribution showing number of IPOs


$4,395

$126 $345

$169 $59 $426 $293

$4,491

$250

$832

$202 $125

$214

$616 $718

$145

$3,629

$115$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

$ i

n m

illi

on

s

Q1 2017 Q2 2017 Q3 2017

5

1

3

2

1

4

2

9

4

8

3

2

3

0

3

4

3

9

1

0

1

2

3

4

5

6

7

8

9

10

Internet Software& Services

Software Semiconductors Electronics Computers &Peripherals

CommunicationsEquipment

IT Consulting &Services

No

. o

f IP

OS

Q1 2017 Q2 2017 Q3 2017


Country and stock exchange detail

Greater China

The Greater China tech IPO market continues its rally with 11 IPOs in Q3 2017, capturing 55% of the total number of tech IPOs With eleven IPOs and proceeds of US$1.3

billion, Greater China (China and Taiwan) led

the way. Proceeds increased 98% and the

number of IPOs were up 22% year on year.

Sequentially, proceeds increased a more

modest 6% and the number of IPOs decreased

31%.

The steady flow of IPOs from Greater China

was supported by the backlog of companies

wishing to list, the government’s support to

ease clearances, an improving economy, and

overall positive investor sentiment.

Figure 8: Greater China tech IPOs


$611

$822

$1,196 $1,204 $1,281

9

2

12 16

11

0

3

6

9

12

15

18

21

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

US

$ m

illi

on

s

Total proceeds (US$mn) Number of IPOs

No

. o

f IP

Os

“Consistent with our expectation, China tech IPOs slowed slightly in Q3 2017 after several quarters'

escalation. We anticipate that the number of Chinese domestic TMT IPOs will remain stable at a

relatively high level over the fourth quarter of this year. Further, Hong Kong IPOs are becoming

attractive again for Chinese tech companies in view of recent strong market performance.”

Jianbin Gao

Technology Industry Leader, PwC China


South Korea

South Korea’s tech IPO activity continued in Q3 with three IPOs though proceeds declined in the absence of billion plus listings

South Korea participated in the tech IPO

market with three IPOs raising US$260

million. Compared to the previous quarter, the

number of IPOs grew 50% but proceeds

declined by 89%.

Looking ahead, the number of IPO

applications in the pipeline indicates that we

will see more IPOs in the last quarter resulting

in better year-on-year numbers and proceeds.

Figure 9: Q3 2017 South Korean tech IPOs


$0 $0 $0

$2,405

$260

- - -

2

3

0

1

2

3

4

5

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

US

$ m

illi

on

sTotal proceeds (US$mn) Number of IPOs

No

. o

f IP

Os

"Although we saw a poor start to tech IPO activity in Korea in Q1, it picked up in Q2 with companies

in the Internet Software & Services and Semiconductor sectors. While we expect to see this continued

momentum for the remainder of the year, a healthy pipeline, especially with artificial intelligence,

robotics and electric vehicles, is expected to fuel tech IPOs through next year."

Steven Kang

Technology Industry Leader, PwC South Korea


Europe

Europe had its strongest quarter since Q4 2015 for proceeds, led by the two largest offerings of the quarter The European tech IPO market has gathered

momentum in 2017. The region was a no-show

in Q1 but picked up steam in Q2. The third

quarter saw the quarter’s biggest IPO with

Landis+Gyr Group AG raising US$2.4 billion.

This was also the largest IPO in Switzerland in

11 years.

Q3 2017 tech IPO figures for the region were

almost on par with the year-ago period, with

the number of IPOs declining by a single

listing and proceeds increasing by just 3%.

Increasing stability in the European markets,

low levels of market volatility, stable indices,

strength in equity markets, and an improving

economic outlook led to the improvement in

tech IPO activity.

Figure 10: Europe tech IPOs


$2,835

$331

$0

$1,580

$2,922

3

2

-

3

2

0

1

2

3

4

5

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

US

$ m

illi

on

s


No

. o

f IP

Os

"The tech IPO market in Europe is slowly brightening compared to its initial weakness earlier in the

year. In Q2, we already saw the IPO of Delivery Hero in Germany with almost $1 billion raised in

addition to X-FAB Silicon Foundries in Belgium and Alfa Financial Software in the UK which both

reached around $300 million. In Q3, Switzerland claimed the largest single IPO, globally, to the

tune of $2.4 billion with Landis+Gyr, while Rovio Entertainment in Finland raised $500 million.

Looking ahead, with European elections behind us and a healthy pipeline of new entrants, I expect

the renewed momentum to continue through this year and into 2018.”

Werner Ballhaus

European Technology, Media and Telecommunications Industry Leader, PwC Germany


US

Despite strong capital markets, tech companies were largely absent from the US IPO market

The third quarter marked the second-largest

setback for the US tech IPO market since Q1

2016, when US tech companies avoided the

IPO market altogether. In Q3 2017 there was

just one tech IPO, a decline in the number of

listings by 83% and a decline in proceeds by

67% quarter on quarter. However, the nine-

month year-on-year comparison shows IPO

volumes on par with the previous year,

whereas IPO proceeds increased by 317% in Q3

2017.

Multiple factors impacted the IPO market in

the US in Q3 but likely the greatest issue facing

tech IPOs was the aftermarket

underperformance of two recent Unicorn

IPOs. However, with a promising performance

by Roku, many tech Unicorns with stalled IPO

plans may opt for listings in Q4 2017.

Figure 11: US tech IPOs


$627 $479

$4,490

$764

$252

6

5

4

6

1

0

2

4

6

8

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017$0

$1,000

$2,000

$3,000

$4,000

$5,000

US

$ m

illi

on

s


No

. o

f IP

Os

“Although activity in the Q3 2017 US Technology IPO market was relatively modest with only a

single company raising $252 million, the pipeline for the remainder of the year remains robust

with several offerings close to pricing and a strong pipeline of potential IPOs.”

Alan Jones

Technology Deals Partner, PwC US


Stock exchange distribution

The Asian stock exchanges led the global IPO

market in Q3 2017 in number of offerings with

Chinese stock exchanges contributing 55% or 11

of 20 deals for the quarter. Of the 11 deals,

Shenzhen Stock Exchange (SZSE) listed seven

IPOs with an increase of one listing compared

to the last quarter. Sequentially tech offerings

on the Chinese stock exchanges declined by

27%.

Among other Asian exchanges, KOSDAQ listed

three IPOs with total proceeds of US$260

million; Mumbai and Tokyo Stock Exchanges

each had a single listing during the quarter.

The SIX Swiss Exchange raised the highest

proceeds of US$2.4 billion with just a single

listing, Landis+Gyr Group AG.

The US stock exchanges had only two listings

in Q3 2017 compared to seven listings in Q2

2017, a decline of 71% quarter on quarter. One

of these listings was the cross border offering

of Despegar.com, from Argentina. It was the

sole Unicorn of the quarter and listed on the

NYSE.

Figure 12: Q3 2017 stock exchange distribution


$ 661

$ 260 $ 382

$ 252 $ 55

$ 501 $ 359

$ 70

$ 260

$ 2,422 7

3

1

1 1 1 1 1

3

1

-

1

2

3

4

5

6

7

8

ShenzhenStock

Exchange

ShanghaiStock

Exchange

NYSE NASDAQ Tokyo SE OMX NordicExchangeHelsinki

Hong KongSE

BSE KOSDAQ Swiss SE $-

$500

$1,000

$1,500

$2,000

$2,500

$3,000


US

$m

illi

on

s

No

. o

f IP

Os


Q3 2017 tech IPOs – Offering details

Table 1: Q3 2017 tech IPOs – By highest proceeds

Issue date Company Subsector Proceeds (US$ million) Primary exchange Domicile nation

Q3

07/20/2017 Landis+Gyr Group AG Electronics 2,421.82 SIX Swiss Exchange Switzerland

09/28/2017 Rovio Entertainment Oyj Software 500.67 OMX Nordic Exchange Helsinki Finland

09/20/2017 Despegar.com Corp Internet Software & Services

381.82 New York Stock Exchange Argentina

07/12/2017 Foxconn Interconnect Technology Limited Electronics 359.31 The Stock Exchange of Hong Kong Taiwan

07/28/2017 Electric Connector Technology Co Ltd Electronics 301.58 Shenzhen Stock Exchange China

09/27/2017 Roku Inc Electronics 252.25 NasdaqGS United Sates

09/13/2017 Pearl Abyss Corp Internet Software & Services

163.91 KOSDAQ South Korea

09/12/2017 Cashway Technology Co Ltd Computers & Peripherals

115.15 Shanghai Stock Exchange China

08/09/2017 Changzhou Youon Public Bicycle System Co Ltd

Software 96.56 Shanghai Stock Exchange China

09/06/2017 Wenzhou Yihua Connector Co Ltd Electronics 84.54 Shenzhen Stock Exchange China

09/28/2017 Dongguan Mentech Optical & Magnetic Co Ltd

Electronics 74.26 Shenzhen Stock Exchange China

09/19/2017 Matrimony.com Limited Internet Software&Services

70.23 Mumbai Stock Exchange India

08/02/2017 Guangzhou Sie Consulting Co Ltd Software 65.88 Shenzhen Stock Exchange China

09/21/2017 Pksha Technology Inc Software 54.91 The Tokyo Stock Exchange Japan

08/10/2017 Union Optech Co Ltd Electronics 51.39 Shenzhen Stock Exchange China

09/15/2017 Sunic System Ltd Semiconductor 49.03 KOSDAQ South Korea

09/04/2017 Guangdong Champion Asia Electronics Co Ltd Semiconductors

48.20 Shanghai Stock Exchange China

09/26/2017 YAS Co Ltd Semiconductors 47.49 KOSDAQ South Korea


Issue date Company Subsector Proceeds (US$ million) Primary exchange Domicile nation

08/03/2017 Shenzhen CDL Precision Technology Co Ltd Electronics 43.75 Shenzhen Stock Exchange China

09/14/2017 Nanyang Senba Optical and Electronic Co Ltd Electronics

40.09 Shenzhen Stock Exchange China

Source: S&P Capital IQ


Key financials – Q3 2017

The total number of IPOs for Q3 2017 was 20

compared to 29 in Q2 2017, down 31%. The

average proceeds for Q3 2017 increased by

24% quarter on quarter to US$261 million.

Ninety percent of the 20 IPO listings in the

quarter reported net income; last quarter’s

share was 72%. The average LTM net income

of US$22 million for the quarter skyrocketed

by 263%, quarter on quarter. All subsectors

except Electronics had companies that

reported net income. Only 2 of 20 companies

reported LTM net loss for the quarter, both in

the Electronics subsector.

The average LTM revenue for Q3 2017 was

US$385 million, an increase of 72% quarter on

quarter, led by the Electronics subsector,

followed by Internet Software & Services

(US$198 million) and Computers &

Peripherals (US$168 million).

The Electronics subsector led in average LTM

EBIDTA at US$74 million, in average EV at

US$1,655 mllion, and in average total debt at

US$78 million. Internet Software & Services

topped average net income with US$30

million. All the three listings for the subsector

reported net income in Q3 2017, compared to

just two of nine companies that had reported net income in Q2 2017.

Electronics led in average LTM revenue, average LTM EBIDTA, average EV, and average total debt. This was due primarily

to the contribution of Foxconn Interconnect Technology Ltd.

The Software subsector captured second place among the top three subsectors with four listings, equivalent to Q2 2017.

The Semiconductors subsector reported the lowest average LTM revenue of US$102 million and average EV of US$439

million in Q3 2017, dropping from its second rank on both fronts in Q2 2017.

Figure 13: Q3 2017 and Q2 2017 tech IPOs – Net income


90%

10%

Q3 2017

Net income Net loss

72%

28%

Q2 2017

Net income Net loss


Figure 14: Q3 2017—Average LTM revenue by subsector

Figure 15: Q3 2017 —Average LTM EBITDA by subsector


$168

$678

$198

$102$135

$385

1

9

3

3 4

20

0

5

10

15

20

25

30

$0

$100

$200

$300

$400

$500

$600

$700

$800

Computers &Peripherals

Electronics Internet Softwareand Services

Semiconductors Software All Sectors

No

. o

f IP

Os

LTM revenue No. of IPOs

In U

S$

mil

lio

ns

$19

$74

$43

$19

$28

$50

1

9

3 3 4

20

0

5

10

15

20

25

30

$0

$10

$20

$30

$40

$50

$60

$70

$80




No

. o

f IP

Os

LTM EBITDA No. of IPOs

In U

S$

mil

lio

ns


Figure 16: Q3 2017—Average LTM net income by subsector


Figure 17: Q3 2017—Average total debt by subsector


$21 $25

$30

$13 $14

$22

1

9

3 3 4

20

0

5

10

15

20

25

30

$0

$5

$10

$15

$20

$25

$30

$35


Electronics Internet Software andServices


No

. o

f IP

Os

LTM Net income No. of IPOs

In U

S$

mil

lio

ns

$39

$78

$5

$14 $12

$42

1

9

3

3 4

20

0

5

10

15

20

25

30

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90




No

. o

f IP

Os

LTM debt No. of IPOs

In U

S$

mil

lio

ns


Figure 18: Q3 2017 —Average enterprise value by subsector


$1,590 $1,655

$1,173

$439

$1,027

$1,315

1

9

3 3 4

20

0

5

10

15

20

25

30

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800




No

. o

f IP

Os

Enterprise value No. of IPOs

In U

S$

mil

lio

ns


Q3 2017 Technology IPO listings – Valuation metrics

Both the EV/LTM revenue (3.4x) and the

EV/LTM EBIDTA (26.2x) multiple declined

compared to the previous quarter.

Computers & Peripherals reported the highest

EV/LTM revenue 9.4x and EV/LTM EBIDTA

83.7x for the quarter.

Computers & Peripherals was followed by the

Software subsector with an EV/LTM revenue

of 7.6x and EV/LTM EBIDTA of 36.5x.

Electronics reported the lowest valuation

metrics of 2.4x for EV/LTM revenue and 22.4x

for EV/LTM EBIDTA.

Figure 19: Q3 2017 EV/LTM revenue by subsector


9.4x

2.4x

5.9x

4.3x

7.6x

3.4x

19 3 3

4

20

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

10.0x


Electronics InternetSoftware and

Services


No

. o

f IP

Os

EV/LTM revenue No. of IPOs

In m

ult

iple

s


Figure 20: Q3 2017 EV/LTM EBITDA by subsector


83.7x

22.4x

27.4x

22.7x

36.5x

26.2x

1

9

3 34

20

0

5

10

15

20

25

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x

80.0x

90.0x




No

. o

f IP

Os

EV/ LTM EBITDA No. of IPOs

In m

ult

iple

s


Top three subsectors in Q3 2017

Electronics

With nine IPOs in the quarter, Electronics

figured among the top three subsectors for the

first time since 2010 when we began tracking

global tech IPOs. The average LTM revenue in

the third quarter was US$678 million. This

was up 511% quarter on quarter and a massive

1580% year on year. This increase was

primarily driven by Foxconn Interconnect

Technology Ltd. (US$3,218 million) and

Landis+Gyr Group AG (US$1,659 million).

This subsector reported the highest average EV

of US$1,655 million in Q3 2017, a 165%

increase quarter on quarter. Average LTM

EBIDTA rose 697% year on year to US$74

million, whereas average LTM net income was

US$25 million, up 201% year on year.

Despite having the highest average LTM

revenue for the quarter, the subsector reported

the lowest EV/LTM revenue of 22.4x. The

subsector recorded 6 out of 11 Greater China

tech IPO offerings for Q3 2017, with all of

them being listed on the SZSE.

Figure 21: Electronics – LTM revenue


$40 $0

$765

$111

$678

2

0

23

9

0

2

4

6

8

10

12

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In U

S$

mil

lio

ns


Figure 22: Electronics – LTM EBITDA


$9

$0

$66

$14

$74

2 2

3

9

0

2

4

6

8

10

12

$0

$10

$20

$30

$40

$50

$60

$70

$80

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In U

S$

mil

lio

ns


Figure 23: Electronics – LTM net income


$8

$0

$58

$13

$25

2 2

3

9

0

2

4

6

8

10

12

$0

$10

$20

$30

$40

$50

$60

$70

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

LTM Net income No. of IPOs

In U

S$

mil

lio

ns


Figure 24: Electronics – EV


$773

$0

$2,848

$624

$1,655

2

23

9

0

2

4

6

8

10

12

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In U

S$

mil

lio

ns


Figure 25: Electronics – Total debt


$7

$0 $0

$4

$78

2

0

2

3

9

0

2

4

6

8

10

12

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

Total debt No. of IPOs

In U

S$

mil

lio

ns


Figure 26: Electronics – EV/LTM revenue


19.2x

0.0x

3.7x

5.6x

2.4x2 2

3

9

0

2

4

6

8

10

12

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 27: Electronics – EV/LTM EBITDA


83.6x

0.0x

43.1x46.1x

22.4x

2

23

9

0

2

4

6

8

10

12

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x

80.0x

90.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

EV/LTM EBITDA No. of IPOs

In m

ult

iple

s


Software

Software reported average revenue of US$135

million with four IPOs in Q3 2017, an increase

of 20% quarter on quarter. On the number of

deals, the subsector was on par with the last

quarter; however, the year-on-year decline was

60%. The sector’s average LTM EBIDTA

improved remarkably, up 571% year on year

and 307% quarter on quarter. This increase

was mainly due to positive LTM EBIDTA

reported by the companies in the subsector.

The subsector’s average LTM net income also

improved with 175% increase year on year and

171% increase quarter on quarter. The average

EV for the quarter is US$1,027 million, an

increase of 51% quarter on quarter.

EV/LTM EBIDTA is 36.5x compared to that of

97.9x for Q2 2017.

Figure 28: Software – LTM revenue


$253

$100$86

$112

$135

10

4

1

4

4

0

2

4

6

8

10

12

$0

$50

$100

$150

$200

$250

$300

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 29: Software – LTM EBITDA


$4

($7)

($21)

$7

$2810

4

1

4 4

0

2

4

6

8

10

12

($30)

($20)

($10)

$0

$10

$20

$30

$40

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 30: Software – LTM net income


($19)($18)

($24)

$5

$1410

4

1

4

4

-4

-2

0

2

4

6

8

10

12

($30)

($25)

($20)

($15)

($10)

($5)

$0

$5

$10

$15

$20

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

LTM net income No. of IPOs

US

$ m

illi

on

s


Figure 31: Software – EV


$2,468

$756

$1,004

$678

$1,027

10

4

1

4 4

0

2

4

6

8

10

12

14

16

18

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 32: Software – Total debt


$65

$30

$0

$11 $12

10

4

1

4 4

0

2

4

6

8

10

12

14

16

$0

$10

$20

$30

$40

$50

$60

$70

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 33: Software – EV/LTM revenue


9.8x

7.5x

11.7x

6.0x

7.6x10

4

1

4 4

0

2

4

6

8

10

12

14

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 34: Software – EV/LTM EBITDA


587.6x

NM NM

97.9x

36.5x

10

4

1

4 4

0

2

4

6

8

10

12

0.0x

100.0x

200.0x

300.0x

400.0x

500.0x

600.0x

700.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In m

ult

iple

s


Internet Software & Services

With three IPO listings in Q3 2017, Internet

Software & Services failed to maintain the top

position it held for many quarters.

The subsector reported a 67% decline in

number of deals and a 59% decline in average

proceeds, quarter on quarter.

Average LTM revenue for the quarter declined

by 36% quarter on quarter whereas average

LTM EBIDTA and average LTM net income

increased by 201% and 138%, respectively.

EV/LTM EBIDTA multiple for the quarter was

27.4x compared to a nonmaterial figure for the

last quarter. The EV/LTM revenue multiple

was 5.9x for Q3 2017.

Figure 35: Internet Software & Services – LTM revenue


$131

$472

$204

$312

$198

3

25

9

3

0

3

6

9

12

15

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 36: Internet Software & Services – LTM EBITDA


$1

($54)

($92)

($42)

$43

32

5

9

3

0

3

6

9

12

15

($100)

($80)

($60)

($40)

($20)

$0

$20

$40

$60

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 37: Internet Software & Services – LTM net income


($14)

($479)

($92)

($77)

$30

3

2

5

9

3

0

3

6

9

12

15

($600)

($500)

($400)

($300)

($200)

($100)

$0

$100

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os

LTM net income No. of IPOs

US

$ m

illi

on

s


Figure 38: Internet Software & Services – Enterprise value


$686

$4,587

$5,674

$3,015

$1,1733

2

5

9

3

0

3

6

9

12

15

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 39: Internet Software & Services – Total debt


$18

$28

$11

$31

$5

3

25

9

3

0

3

6

9

12

15

$0

$5

$10

$15

$20

$25

$30

$35

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


US

$ m

illi

on

s


Figure 40: Internet Software & Services – EV/LTM revenue


5.2x

9.7x

27.9x

9.7x

5.9x

3

2

5

9

3

0

3

6

9

12

15

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

No

. o

f IP

Os


In m

ult

iple

s


Figure 41: Internet Software & Services – EV/LTM EBITDA


1,083.7 x

NM NM NM27.4 x

32

5

9

3

0

3

6

9

12

15

0.0x

200.0x

400.0x

600.0x

800.0x

1000.0x

1200.0x

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 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















About PwC’s technology institute The Technology Institute is PwC’s global research network that studies the business of technology and the technology of business with the purpose of creating thought leadership that offers both fact-based analysis and experience-based perspectives. Technology Institute insights and viewpoints originate from active collaboration between our professionals across the globe and their first-hand experiences working in and with the technology industry. About PwC At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at http://www.pwc.com/ This content is for general information purposes only and should not be used as a substitute for consultation with professional advisors. © 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

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