Brad Weekes Software Equity Group, LL C 858 509-2800 www ... · SingTel , a wireless carrier based...

Brad WeekesVice President

Software Equity Group, LLC858 509-2800

www.softwareequity.com

© Software Equity Group, LLC 2012

Disclaimer

The information contained in this Report is obtained from sources we believe to be reliable, but no representation orsources 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 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. Softwarethe 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

id d b C it l IQprovided by Capital IQ.

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


About Our Firm

• Industry leading boutique investment bank, founded in 1992, representing public and private software and internet companies seeking:

• Strategic exit

We Do Deals.

g• Growth capital• Buyout • Inorganic growth via acquisition• Buy and sell-side mentoring• Buy and sell-side mentoring• Fairness opinions and valuations

• Clients span virtually every technology, product t d li d l d ti l k tcategory, delivery model and vertical market

• 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,Strong cross functional team leveraging transaction, operating, legal and engineering experience

• Highly referenceable base of past clients


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


Mobile Software Product Categories

Mobile CategoriesMobile Categories DescriptionDescription Example CompaniesExample Companies

AdvertisingTechnology focused on advertising display (creative, rich media, etc) and infrastructure to connect ads with publishers (Ad g

Analytics

networks, exchanges, DSPs, SSPs, etc).

Collect, analyze, deliver and manage mobile traffic data including usage trends, device, OS, ad types, etc. from native and the Mobile web.

Apps

Commerce

App stores, unique applications that don't fit into a specific category, custom application job shops.

Focused on facilitating mobile retail, excluding payment platforms.

Communications Messaging, Group Messaging, VoIP, video over IP, etc.

Pl tf th t bl it h h th t tDevelopment Platforms

Enterprise

Platforms that enable write once, run anywhere where the output is native and/or mobile web. Includes specialty platforms focused on special vertical, like gaming, retail, etc.

Focus on needs of enterprise, via private application stores, application development platforms, device management (MDM) l (TEM) d i i

p(MDM), telecom expense management (TEM), productivity, etc.

Apps and services focused on music, video, images, etc. Other services include cloud sync and access anywhere solutions. Does not include games as it's a big enough category onto its own.

Entertainment


Games Social, MMPG, gaming platforms, etc.

Mobile Software Product Categories (con’t)

Mobile CategoriesMobile Categories DescriptionDescription Example CompaniesExample Companies

Health Apps focused on health care, fitness, etc.

Infrastructure

L ti B d

Back office billing, messaging, policy control, video and web optimization, video codecs, transcoding, content management systems, etc.

E t i f l ti i li ti i t i tlLocation Based Services

Marketing

Extensive use of location in application or service or strictly a location based service used by others to create location based applications.

Focused on selling to the customer, post advertisement (destination landing site, communication tools/messaging, sweepstakes, polls, g

Payments

etc). Also includes market segmentation/targeting, CRM, etc.

Enable payments (digital or physical) via smartphones serving merchants. Also, serving the banking sector supporting deposits, bill pay, etc.

Security

Social

Antivirus, filtering, device location, etc.

Focused on social networks or highly social services, including social games which will also be counted in the gaming categorysocial games, which will also be counted in the gaming category.

WebFirms focused squarely on enabling the mobile web. Primarily browser companies as the web platform developers are in the Development Platform category.


High Level Mobile Software M&AHistorical Mobile Software M&A by YearHistorical Mobile Software M&A by Year Historical Mobile Software M&A by QuarterHistorical Mobile Software M&A by QuarterHistorical Mobile Software M&A by YearHistorical Mobile Software M&A by Year Historical Mobile Software M&A by QuarterHistorical Mobile Software M&A by Quarter

205

200

250

e M&A 70

5954

67

60

70

80

sactions

2010 2011 2012

81100

150

obile

Softw

are

Transactions

20 2127

4036

54

30

40

50

60

ware M&A Tran

0

50

2010 2011

# of M 13

20 21

0

10

20

Q1 Q2 Q3 Q4 of M

obile

Softw

*

2011 Mobile Software M&A By Product Category2011 Mobile Software M&A By Product Category10 Categories within Other, all less than 5% of total

bil ft M&A

2010 2011

1H 2012 Mobile Software M&A By Product Category1H 2012 Mobile Software M&A By Product Category

Q1 Q2 Q3 Q4#

mobile software M&A

13%

13%

29%

Mobile Marketing

Mobile Apps

Mobile Gaming

Mobile Advertising

17%

12%

24%

Mobile Marketing

Mobile Enterprise

Mobile Infrastructure

Mobile Apps

10%

8%7%7%

6%

6%

Mobile Infrastructure

Mobile Development Platforms

Mobile Entertainment

Mobile Payments

Mobile Other

12%

10%

9%7%

7%

7%Mobile Advertising

Mobile Development Platforms

Mobile Entertainment

Mobile Payments


7 Categories within Other, all less than 5% of total mobile software M&A

7% Mobile Other 9%7%

7%Mobile Other

Select Active Mobile Software Buyers

Buyer Acquisitions



Buyer Acquisitions



Buyer Acquisitions


Select Mobile Software M&A Transactions and Deal Structures

B T t D EV EV/R C h S k E NBuyer Target Date EV EV/Rev Cash Stock Earnout Notes

5/14/2012 $322 0M 1 0x $262 5M $111 9M

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

t ith di t t th h5/14/2012 $322.0M 1.0x $262.5M $111.9M payments either direct to consumers or through 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

5/1/2012 $210.0M $210.0M

headquarters in Japan, continues to expand outside of its home market and into Western markets with its acquisition of Funzio , a mobile game developer based in San Francisco . The Funzio acquisition comes on the heels of Gree’sacquisiion of OpenFeint, a mobile social gaming platform.

4/13/2012 $320.0M $320.0M

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 using targeted advertising to its 430 million users across Asia. SingTel stated its goal is to become the leading mobile advertising company in Asia

10.7x

3/26/2012

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 expansion Together they have 13 million$174 4M 10 0x $174 4M3/26/2012 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

$174.4M 10.0x $174.4M


Square, PayPal, Google and others.



2/16/2012 $18 0 - $50 0M $18 0M $32.0M

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 like Google and Apple are lowering their prices, 2/16/2012 $18.0 $50.0M $18.0M $32.0Mforcing 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

2/16/2012 $8.0M - $14.5M $8.0M $6.5Mstrengthen their offering for advertisers across 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 native mobile application platform is

1/31/2012 $70.0M

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 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

t i tti i b t bil d

20.0x

enterprises are getting serious about mobile and 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 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

1/19/2012 $5.8M $5.8M


customer base. In order for this acquisition to be 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



1/5/2012 $45.5M-$59.0M 3.6x-4.6x $45.5M $13.5M

Synchronoss will leverage Miyowa’s social networking capabilities to expand its product offering, adding social capabilities to its ConvergenceNow Plus+ platform and its Network Address Book. This transaction is similar to the

Synchronica’s business is primarily mobile messaging solutions based on open industry standards. Its flagship product, Mobile Gateway, pro ides p sh email s nchroni ation instant

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

Nuance acquired Vlingo to expand its focus on

$45.1M 2.7x $45.1Mprovides push email, synchronization, instant messaging, backup and restore to popular social networking services. Myriad acquired Synchronicato bolster its thrust in the mobile social networking domain as it attempts to capitalize on the success of a major partnership with Vodaphone.

1/3/2012

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 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

12/20/2011

11/15/2011 $25 0M $59 0M 1 3x 3 0x $20 0M $34 0M$5 0M

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 geographical reach product capabilities and

interesting to see how Google responds, given Eric Schmidt’s recent admission that Siri, and others its like, is a threat to Google’s search market.

11/15/2011 $25.0M-$59.0M 1.3x – 3.0x $20.0M $34.0M$5.0M geographical reach, product capabilities and 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.

© Software Equity Group, LLC 2012IBM/Worklight financial details are estimated



11/8/2011

Facebook has been outspoken regarding the difficulties of developing native applications for mobile devices. The Company is a major supporter for mobile devices. The Company is a major supporter and adopter of HTML5 as it attempts to

* Deal structure unknown on date of announcement, but similar size acquisition made by Lenco one year ago had the following terms:

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.

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)

10/10/2011 $60.0M - $90.0M 3.0x - 4.5x $60.0M $30.0M

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 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 paidtransaction details where the transaction was paid primarily in cash.

Nuance is committed to becoming a major player in the mobile ecosystem. The acquisition of Swypeshows that Nuance is also looking to expand beyond their core voice recognition technology and into alternative methods for interacting with mobile d i

10/7/2011 $109.0M

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 perceived to be out of date by many. The NewBayacquisition complements RIM’s content ecosystem strategy with a digital cloud service that competes

10/6/2011 $100.0M

devices.


with the iCloud on various levels.



10/3/2011

Adobe’s acknowledgement that HTML, and its Flash language, is the future of mobile. Adobe affirmed this point by announcing they would be halting investment on flash mobile tools during their Q3 earnings call The acquisition of Nitobitheir Q3 earnings call. The acquisition of Nitobi(PhoneGap) enables Adobe to expand into developer toolsets built on standard programming languages.

9/22/2011 $19.0M $19.0MExpands Velti’s U.S. and India footprint and provides access to carries and the financial services verticalservices vertical.

8/4/2011 $42.5M - $60.0M 4.8x – 6.7x $4.0M$27.5M incash or

stock$38.5M

Drivers behind the deal: Depth of management, significant revenue base, complementary technologies, Fortune 500 client relationships

6/6/2011 $3.2M - $13.2M 0.6x – 2.6x $3.2M $10.0M

The acquisition of SmartReply, an SMS marketing provider, expands SoundBite Communications’ mobile marketing capabilities in the retail vertical. After this acquisition, SoundBite announced a major initiative to expand into mobile marketing given the large market opportunitygiven the large market opportunity.

4/25/2011 $70.6M 2.8x $70.6M

In an attempt to gain U.S. advertising market share, ValueClick has acquired Greystripe to bolster its domestic mobile advertising. Greystripeoffers ValueClick both scalability and an impressive array of brand relationships, which ValueClick has predicted will be critical to d i ti th bil d ti i k t

3/18/2011 $150M 7.6x – 11.4x $100M $50.0M$10M of

$100M cash held in escrow

Motricity has stated they intend to benefit from the acquisition of Adenyo, a mobile marketing software firm, by integrating Adenyo’s mobile and analytics capabilities with Motricity’s mCore Platform, delivering a high value and highly relevant content solution set. This will make it possible for

t t hi k ti th h

dominating the mobile advertising market.


customers to achieve marketing through one 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.

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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