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Cybersecurity Snapshot February 2016
Advisors & Dealmakers In Cybersecurity
Momentum Partners, LLC • Advise. Network. Invest.
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Momentum’s Watch List Announced at RSA Conference Each Quarter We Add 10 Companies With Significant Input From Our Vast Security Network.
Highlights
1 2016 Sandbox Innovation Winner
4 2015 Sandbox Innovation Finalists
3 2015 Sandbox Innovation Finalists
5 Companies Have Raised Next Round
1 Company Has Been Acquired Q3 2015 Q2 2015
Q1 2016 Q4 2015
Source: Capital IQ, Crunchbase, 451 Group.
Date Target Acquirer Sub-Sector EV ($M) EV / Rev
2/29/16 Incident Response 100.0 NA
2/26/16 Automated Risk
Assessment NA NA
2/25/16 Web Security NA NA
2/24/16 Penetration
Testing NA NA
2/23/16 Endpoint Security / Application Control NA NA
2/18/16 Transaction Verification 12.5 NA
2/17/16 Multi-Factor
Authentication NA NA
2/8/16 Enterprise
Management Services
0.4 NA
2/8/16 Threat Intelligence 45.0 NA
2/1/16 Incident Response 30.0 NA
Cybersecurity M&A
EMS Assets
Strategic Deal Flow Commentary
M&A Activity
§ 10 transactions with total a disclosed deal value of $188 million
§ Incident Response / Orchestration bookended the month beginning with FireEye’s acquisition of Invotas and ending with IBM’s acquisition of Resilient Systems
§ Cyber strategic activity overall has held last year’s record pace, while we’ve experience a ~12% decline in the broader TMT M&A market
§ Valuation expectations in the private markets are starting to rationalize lagging the severe valuation declines in the public markets
Financing Activity
§ 35 transactions with total disclosed amount raised of $956 million; excluding Symantec, total amount raised was $456 million with a median amount raised of $7.4 million
§ Later stage investors are becoming more discerning resulting with Series A Boards now considering dual track processes (i.e., M&A + Series B Financing)
February Deal Flow M&A Activity For The Month of February.
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Date Company Select Investors Funding
Stage Amount
($M)
2/29/16 .406 Ventures Series A 6.4
2/27/16 NA Convertible Note 0.1
2/25/16 NA Series B N/A
2/25/16 Rembrandt Venture Partners, Carmel Ventures, Lightspeed Venture Partners Series A 9.0
2/25/16 Menlo Ventures, QED, IA Ventures, Allegis Capital Series B 20.0
2/23/16 PICO Venture Partners, Founders Group Series A 5.0
2/23/16 Accenture, AT&T, Mitsui, Nokia, Soros, Temasek, Cisco, Innovation Endeavors, Alcatel-Lucent, Bessemer, Marker Series B 23.0
2/2316 Environnemental Technologies Series B 4.2
2/22/16 Kleiner Perkins Series A 8.0
2/18/16 83 North Seed 4.0
2/18/16 Christopher Davis, Wesley Clover Seed 1.1
2/18/16 Trivest Partners Private Equity NA
2/17/16 Qihoo 360 Technology, Shanghai Ziyou Investment Management Series A 100.0
2/16/16 NA Venture 1.0
2/11/16 DuKlaw Ventures Seed 4.3
2/10/16 Qumra Capital, Entrée Capital, Genesis Partners, NTT DOCOMO Ventures, Phoenix Insurance Series B 25.0
2/10/16 Sutter Hill Ventures, Clear Venture Partners, Battery Ventures, Amplify Partners Series B 17.0
Note: Bold denotes lead investors. Source: Capital IQ, Crunchbase.
Date Company Select Investors Funding
Stage Amount
($M)
2/10/16 Hewlett Packard Ventures, Ten Eleven Ventures, YL Ventures, Moshe Lichtman Series A 8.0
2/10/16 Lazarus Hedge Fund Series A 7.0
2/9/16 DH Capital, Vectis Life Sciences, Brooke Private Equity Associates
Convertible Note 1.6
2/9/16 NA Series C 3.0
2/9/16 NA Venture 7.8
2/9/16 Trinity Ventures, Passion Capital, Storm Ventures, Ten Eleven Ventures Series B 14.0
2/5/16 NA Common Stock 2.5
2/4/16 Goldman Sachs, Accel, Bay Partners, Hummer Windblad, Canvas Ventures, NEA Private Equity 30.0
2/4/16 Innovation Endeavors, Oryzn Capital Series A 3.5
2/4/16 Silver Lake Partners Private Equity 500.0
2/3/16 Providence Equity Partners ($80M Secondary / $16M Primary) Private Equity 96.0
2/3/16 NA Series F 14.0
2/3/16 Georgian Partners, Edison Partners, Cisco, Northleaf Capital Partner, Venturelink Series C 19.5
2/2/16 Cypress Growth Capital Seed 2.8
2/1/16 Elephant Series A 8.0
2/1/16 NA Private Equity 0.3
2/1/16 Foundation Capital, Eddy Shalev, Gilat Opponent Venture 10.0
2/1/16 NA Seed 0.2
Cybersecurity Investing (VC & PE)
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February Deal Flow Venture Capital & Private Equity Activity For The Month of February.
75
80
85
90
95
100
105
Stock Price Performance Public Markets Have Rebounded Recently From A Rough January & Early February, Cybersecurity Included.
Note: Market data as of February 29, 2016. Source: Capital IQ.
Company Price Change (%) Company Price Change (%)
$19.14 1% $3.37 9%
$12.86 22% $144.79 3%
$83.07 5% $46.84 7%
$37.47 14% $24.97 4%
$16.94 20% $13.29 2%
$28.40 1% $2.94 14%
$2.76 1% $43.60 6%
$43.87 15% $19.31 3%
$11.54 1% $36.41 12%
$9.36 23% $13.75 11%
February Stock Price Performance
LTM Indexed Stock Performance
February Indexed Stock Performance
0%
-2%
-1%
-3%
-2%
High Growth Security
Low Growth Security
S&P 500
NASDAQ
HACK
Index
60
70
80
90
100
110
120
130
Feb-15 Mar-15 April-15 May-15 June-15 July-15 Aug-15 Sept-15 Oct-15 Nov-15 Dec-15 Jan-16
2/1 2/5 2/9 2/13 2/17 2/21 2/25 2/29
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-25% -20% -18%
-9% -9%
Earnings Scorecard Earnings Release Calendar And Results.
80.27 | 80.09
Cons. | Act.
0.08 | 0.07 EPS:
1,629 | 1,630
Cons. | Act.
4.13 | 4.17 EPS:
1,009 | 1,009
Cons. | Act.
0.51 | 0.51 EPS:
264 | 265
Cons. | Act.
(0.35) | (0.35) EPS:
Rev:
FY15 3Q16
Rev:
FY15
Rev:
FY15 FY15 FY15
Rev:
FY15
FY15 FY15 FY15 3Q16 2Q16 FY15 FY15
FY15 3Q16 FY16 3Q16 FY15 FY15 IPO Pipeline
153 | 161
Cons. | Act.
0.81 | 0.94 EPS:
Rev: 624 | 623
Cons. | Act.
(1.62) | (1.61) EPS:
Rev:
230 | 234
Cons. | Act.
0.05 | 0.11 EPS:
Rev: 146.6 | 147.5
Cons. | Act.
(0.77) | (0.71) EPS:
Rev: 164.4 | 164.3
Cons. | Act.
0.66 | 0.70 EPS:
Rev:
108 | 111
Cons. | Act.
(1.54) | (1.51) EPS:
Rev: 906 | 909
Cons. | Act.
0.24 | 0.26 EPS:
Rev:
Cons. | Act.
427 | 428
1.79 | 1.81 EPS:
Rev: 162 | 163
Cons. | Act.
0.14 | 0.15 EPS:
Rev:
118 | 119
Cons. | Act.
EPS:
Rev:
(0.75) | (0.69)
35 | 37
Cons. | Act.
EPS:
Rev:
(0.08) | 0.06
318 | 335
Cons. | Act.
EPS:
Rev:
0.39 | 0.40
NA | 121
Cons. | Act.
EPS:
Rev:
NA | NA
652 | 668
Cons. | Act.
EPS:
Rev:
0.15 | 0.18
1,086 | 1,092
Cons. | Act.
EPS:
Rev:
1.45 | 1.38
240 | 241
Cons. | Act.
EPS:
Rev:
1.30 | 1.27
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Public Company Trading Analysis High Growth & Low Growth Public Security Comps.
Note: NM – Not Meaningful, NA – Not Available; as of February 29, 2016; * performance since IPO. Source: Capital IQ.
Company Name Stock Price LTM Price
Performance Market Cap
($M) Enterprise Value
($M) 2014-15E
Revenue Growth 2015E-16E
Revenue Growth
EV / Revenue EV / EBITDA P / E
CY2015 CY2016 CY2017 CY2015 CY2016 CY2017 CY2016
High Growth Security (>20% CAGR) Palo Alto Networks 144.79 12.0% 12,795 12,328 55.6% 35.9% 10.7x 7.9x 6.1x 59.3x 33.8x 23.4x 70.2x
Splunk 43.60 (18.8%) 5,655 4,646 48.3% 32.1% 7.0x 5.3x 4.1x NM NM 49.5x NM
Fortinet 28.40 (2.8%) 4,874 3,982 31.0% 24.1% 3.9x 3.2x 2.7x 23.7x 18.0x 14.2x 41.9x
FireEye 16.94 (48.3%) 2,811 2,348 46.4% 33.3% 3.8x 2.8x 2.3x NM NM NM NM
Proofpoint 46.84 (6.5%) 1,928 1,868 35.7% 31.2% 7.0x 5.4x 4.2x NM NM 51.2x NM
Imperva 43.87 2.4% 1,417 1,153 42.9% 30.3% 4.9x 3.8x 3.0x NM NM 41.0x NM
CyberArk 37.47 10.9% 1,186 948 56.1% 28.8% 5.9x 4.6x 3.7x 21.2x 21.3x 15.8x 43.2x
Qualys 24.97 (36.1%) 860 681 23.0% 19.9% 4.1x 3.5x 2.9x 12.0x 10.8x 8.7x 32.6x
Rapid7* 13.29 (16.9%) 553 466 43.8% 35.3% 4.2x 3.1x 2.5x NM NM NM NM
Imprivata 11.54 (18.0%) 289 238 22.8% 16.2% 2.0x 1.7x 1.5x NM NM NM NM
Mean 40.5% 28.7% 5.4x 4.1x 3.3x 29.0x 21.0x 29.1x 47.0x Median 43.3% 30.8% 4.6x 3.6x 2.9x 22.4x 19.7x 23.4x 42.6x
Low Growth Security (<20% CAGR) Check Point Software 83.07 5.8% 15,024 13,739 9.0% 8.0% 8.4x 7.8x 7.3x 14.7x 13.9x 12.9x 18.3x
Symantec 19.31 (24.6%) 12,594 12,065 (7.0%) (41.4%) 2.2x 3.3x 3.3x 7.1x 9.8x 8.8x 18.0x
Trend Micro 36.41 29.8% 4,970 3,679 8.7% 19.0% 3.4x 3.0x 2.8x 10.8x 10.1x 8.6x 27.8x
Sophos* 2.94 (16.9%) 1,327 1,539 NM NM NA 3.1x 2.7x NA 19.7x 17.5x 39.2x
AVG Technologies 19.14 (3.5%) 1,002 1,118 14.5% 4.1% 2.6x 2.5x 2.4x 7.8x 6.7x 6.5x 9.9x
Barracuda Networks 12.86 (63.2%) 683 533 16.2% 9.6% 1.7x 1.6x 1.4x 8.3x 9.6x 5.0x 33.0x
VDSI 13.75 (39.3%) 546 422 19.8% (10.0%) 1.7x 1.9x 1.7x 7.3x 13.6x 9.0x 18.1x
Mimecast* 9.36 (6.4%) 506 409 NM 15.8% 3.0x 2.6x 2.1x NA 45.4x 28.4x NM
F-Secure 2.76 6.5% 430 327 (13.9%) (2.5%) 2.0x 1.9x 1.8x 10.6x 11.0x 8.6x 24.7x
MobileIron 3.37 (62.0%) 278 181 12.9% 14.3% 1.2x 1.1x 0.9x NM NM NM NM
Mean 6.9% 3.1% 2.9x 2.9x 2.6x 9.5x 15.5x 11.7x 23.6x Median 13.0% 8.0% 2.2x 2.6x 2.2x 8.3x 11.0x 8.8x 21.5x
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Overview of Momentum Partners
Momentum Partners Advisors & Dealmakers In Cybersecurity.
Why Momentum Partners? Momentum Partners is a bespoke cybersecurity focused advisory firm based in Silicon Valley with operations globally. We employ a high-touch advisory model specifically designed to serve Founders/CEOs and their Boards – Series A to exit – where we are relentless in our pursuit for better outcomes for clients. As advisors and dealmakers in cybersecurity for two decades, we have closed over 200 deals totaling $200 Billion in value.
Cybersecurity � Enterprise IT � Cloud & SaaS � Mobile��� ���
Mergers & Acquisitions* � Capital Raising*������
Corporate Development � Ecosystem Development
Momentum’s Cybersecurity Team Michael Tedesco Executive Chairman Founder Strategic and Capital Markets Advisor to CEOs, Founders & Boards
Eric McAlpine Managing Partner Founder Senior Advisor Cybersecurity Lead
Dino Boukouris Director Strategic Advisor Start-up Advisor VC & Private Equity
Keith Skirbe Director Strategic Advisor Mergers & Acquisitions Deep Cybersecurity Expertise
Dealmakers in Security & Enterprise IT
CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY
200+ Deals $200+ Billion
Petros Kitsos Senior Advisor Strategic Advisor Direct Investor and Board Member Deep Defense & Aerospace Expertise
Timothy Lipton Partner Founder Start-Up Advisor iCFO
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West East
Europe
LatAm
Israel
APAC
1 5 1 1 6 3 0 7
Momentum’s Global Reach
0 1 7 0 3 5 9
Com
pani
es
Exec
utiv
es
CIS
Os
Inve
stor
s
, , , , *** AS OF FEBRUARY 29, 2016 ***
Relentless Coverage + Providing Meaningful Insights.
Global Sector Coverage & Reach
4
10
Infrastructure Security Endpoint Security Application Security
Endpoint Protection & Anti-Virus WAF & Application Security
Vulnerability Assessment Intrusion Prevention Systems
Unified Threat Management
Network Firewall Network Monitoring
Source: Momentum Partners.
Identity & Access Management
Threat Intelligence Mobile Security
Endpoint Detection & Response
IoT Security
Transaction Security
Web Security Messaging Security
Specialized Threat Analysis & Protection
Cloud Security
SIEM
Security Incident Response
Security Operations & Incident Response
Risk & Compliance
Data Security
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Our Clients and Coverage CYBERscape: The Cybersecurity Landscape Is Vast. Advisors, Dealmakers & Thought Leaders For Two Decades.
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Advise. Network. Invest. Momentum Partners, LLC���
Momentum Capital Markets, LLC
340 Brannan Street | Suite 501 San Francisco, California 94107
Michael Tedesco Executive Chairman
Eric McAlpine Managing Partner
Keith Skirbe Director
Dino Boukouris Director
*Securities offered through Momentum Capital Markets, LLC, a division of Financial Telesis Inc. Member FINRA/SIPC.
Petros Kitsos Senior Advisor
Timothy Lipton Partner