IPO Review Q3 2016 - PwCGlobal Technology IPO Review – Q3 2016 5 Compared to every third quarter...

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Global Technology IPO Review Q3 2016

Global Technology IPO Review – Q3 2016 2

Global tech IPO market gathers steam in the third quarter*

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

Welcome to the third quarter 2016 issue of PwC’s Global Technology IPO Review. The global technology IPO market gained momentum in the third quarter after a slow first half. In the third quarter, 20 technology IPOs were listed, a 43% increase over 14 listings in the second quarter. The third quarter has been the best period in 2016, with total proceeds of US$5.38 billion. Over the last five quarters, Q3 2016 had the second highest total proceeds.

Asia-Pacific led with 11 technology IPOs (nine in China and one each in Japan and India), its most in the last five quarters. The US held its momentum from the previous quarter with six IPOs in Q3, one more than Q2. The Brexit uncertainties led investors to remain on the sidelines in the UK, where no technology IPOs were launched for the third straight quarter. The rest of Europe maintained a steady pace with three technology IPOs.

Continuing a trend, two subsectors—Software, with nine, and Internet Software & Services, with four—led in IPOs, compiling 13, more than half the total. The disruptive technologies these two subsectors often represent, plus their lower capex, quick scalability and positive market perception, continue to draw investors’ attention.

The technology IPO market’s rebound in the third quarter may suggest a good run for the next few months. However, the average IPO proceeds were comparatively low, driven by a larger number of low-value listings. And, the absence of large IPOs from major markets like the US may indicate that the technology IPO market, while ‘open’, may not be at its best.

As we look ahead at 2017, there remains a strong pipeline of technology companies that could potentially go public, but post US election performance of the capital markets will certainly impact the timing of these IPOs.

Sincerely,

*Issue size greater than US$40 million (includes overallotment) and based on trade date; See Methodology


Table of contents

Global tech IPO market gathers steam in the third quarter* 2 1. Q3 2016 global summary 4

Broad global participation continued ............................................................................................................................................ 6 Big-ticket IPOs return, but not in the US or China ......................................................................................................................... 7 Average proceeds of technology IPOs remained suppressed ........................................................................................................ 8 Services companies continue to lead in number and proceeds ..................................................................................................... 9

2. A close look at Q3 technology IPOs 10 Geographic IPO trends – Q3 2016 ................................................................................................................................................. 10

United States……………………………………………………………………………………………………………………………………………………… 11 China………………………………………………………………………………………………………………………………………………………………….12 Asia (excluding China) .......................................................................................................................................................... 13 Europe .................................................................................................................................................................................... 14

Stock exchange distribution – Q3 2016…………………………………………………………………………………………………………………….…..15 Subsector distribution – Q3 2016…………………………………………………………………………………………………………………………….…..16 Q3 2016 top 10 technology listings ................................................................................................................................................ 19 Cross-border listings – Q3 2016 ................................................................................................................................................... 20

3. Key financials – Q3 2016 21 Q3 2016 technology IPO listings – Valuation metrics ..................................................................................................................25 Top three subsectors in Q3 2016 .................................................................................................................................................... 27

Software…………………………………………………………………………………………………………………………………………………………….27 Internet Software & Services………………………………………………………………………………………………………………………………..31 IT Consulting & Services ...................................................................................................................................................... 35

4. Methodology 39 5. For more information 40


Q3 2016 global summary

Tech IPOs gain strength in numbers, but proceeds have yet to pick up

Global tech IPOs have been on a slow but steady rise since the first quarter of the year. The third quarter posted stronger results, with 20 tech IPOs and proceeds of US$5.38 billion. Supported by a 43% increase in number of IPOs, proceeds rose 264% over the previous quarter.

Year over year, the number of IPOs increased 82%, and proceeds increased 31%.

Encouraged by the successes of recent IPOs, such as cloud technology company Twilio in June and messaging app LINE in July, companies that had shelved market launch plans as far back as December expedited the process of readying paperwork for regulators to debut in the market.

In the US, where late-stage funding has cooled, more companies are expected to take the IPO route to raise funds.

China’s results—nine tech IPOs in Q3 versus five in Q2 and three in Q1—reflects pent up demand.

As a result of both pre- and post-Brexit uncertainties, investors remained on the sidelines in the UK where there were no tech IPOs for the third quarter in a row. The rest of Europe maintained a steady pace with three tech IPOs.

Figure 1: Q3 2015-Q3 2016 global tech IPO trends

Source: S&P Capital IQ with analysis by PwC

$4,093

$10,785

$769$1,480

$5,38211

22

10 14

20

0

5

10

15

20

25

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

2,000

4,000

6,000

8,000

10,000

12,000

US$ millions

Total proceeds (US$mn) Number of IPOs

No. of IPOs

“The rebound we experienced in the third-quarter technology IPO market may hint at a good run for the next few months. That said, IPO proceeds were comparatively low, driven by a larger number of low-value listings. In addition, the absence of large IPOs from major markets like the US could signal that the technology IPO market, while ‘open for business,’ may not be at its best.”

~Raman Chitkara Global Technology Industry Leader


Compared to every third quarter since 2010, Q3 2016 generated the second highest total proceeds, US$5.38 billion, behind Q3 2014, which raised US$24.78 billion, a figure skewed by the Alibaba Group IPO. There were two big-ticket IPOs in Q3 2016. Average proceeds of US$269 million were the third highest third quarter since 2010. The increase in the average was influenced by two Unicorn (billion-dollar valuation) IPOs, including Nets A/S, which issued the largest IPO in Q3 with proceeds of US$2.4 billion.

Figure 2: Q3 global technology IPO trends, 2010-2016


$4,833

$1,572 $994 $1,270

$24,785

$4,093$5,382

$186$112 $90 $106

$1,377 $372 $269

26

14

11 12

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Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 20160

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28,000No. of IPOsUS$ millions

Total proceeds (US$mn) Average proceeds Number of IPOs


Broad global participation continued

China led with nine IPOs in the third quarter, followed by six from the US. Europe posted three IPOs, including the largest technology IPO of the quarter. Japan and India each had one, with Japan’s being the second largest IPO of the quarter, a dual listing on NYSE and TSE.*

The US IPO market remained steady in the third quarter with six tech IPOs raising a total of US$627 million. Largely stable economic conditions, modest volatility and strong returns from recent IPOs boosted confidence. Japanese messaging app, LINE, raised US$1.1 billion in the year’s largest NYSE tech IPO.*

Whether this momentum continues in the fourth quarter will be influenced by Fed policy and by how investors react to the outcome of the US election. *LINE Corp offered 63% of shares on NYSE and 37% on TSE.

Figure 3: Geographic distribution – Technology IPOs Q3 2016


$611 $627

$2,371

$95

$185

$1,125

$369

9

6

11

1 11 0

2

4

6

8

10

China United States Denmark France India Japan Netherlands0

500

1,000

1,500

2,000


Total proceeds (US$mn) Total number of IPOs

“Nine domestic IPOs in Q3 do not yet suggest a strong revival of the Chinese capital market. Regulators still set the IPO rhythms in China, and the introduction of the new major assets restructuring regulation is expected to cool the back-door listings fever in the domestic market. Cross-border IPOs, especially in Hong Kong and the US, are becoming appealing again for Chinese tech companies. ”

– Jianbin Gao Technology Industry Leader, PwC China


Big-ticket IPOs return, but not in the US or China

Unicorns made a comeback this quarter with Nets A/S of Denmark and LINE Corp of Japan.

Apart from these two, Unicorns have stayed away this year, indicating market uncertainties.

2017 is expected to be a better year for Unicorn technology IPOs because political uncertainty surrounding the US elections will be over and investors’ patience will dictate the need to monetize through IPOs.

Figure 4: Unicorns – Technology IPOs since Q1 2015


$2,358

$0

$2,919

$6,402

$0

$0

$3,497

1

22

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Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

1,000

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5,000

6,000

7,000

No. of IPOsUS$ millions



Average proceeds of technology IPOs remained suppressed

The number of IPOs increased primarily due to the significant growth of low-value listings. The absence of large IPOs from major markets indicates that the technology IPO market, while ‘open’, is not very strong. Leaving out Q3’s two billion-dollar-plus IPOs, the average proceeds for the other 18 was just US$105 million. Also, NASDAQ remained the preferred exchange for smaller, cost-conscious technology companies.

In the last few quarters, the top technology IPOs have been launched in Europe and Asia instead of the US, which has historically been a favored option for big-ticket IPOs. In the last five quarters, two of the top three came from Europe. The distribution of the top three IPOs for each of the last five quarters (15 total) has been Europe with six, followed by Asia with four.

The larger tech IPOs from Europe tend to be from well-established service companies with a long history of stable earnings. As a result, their IPOs are not negatively impacted by a difficult market.

Figure 5: Q3 2015-Q3 2016 Global technology IPOs average proceeds


$372$490

$77$106

$269

11

22

10

14

20

-

100

200

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400

500

600

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 0

5

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US$ millions

Average proceeds Number of IPOs

No. of IPOs


Services companies continue to lead in number and proceeds

Software and Internet Software & Services have accounted for more than half the number of IPOs and close to half the proceeds in the last five quarters. This quarter there were four Internet Software & Services companies that came out with IPOs. LINE Corp led the way with a billion-dollar IPO, followed by Takeaway.com, Apptio Inc and Trade Desk Inc.

The Software sector had nine IPOs this quarter, with Nutanix Inc the biggest. The other companies were Shenzhen Bingchuan Network Co. Ltd, Talend SA, Everbridge, Inc, Gridsum Holding Inc, Beijing Global Safety Technology Co. Ltd, Shanghai Wondertek Software Co. Ltd, Tabula Rasa HealthCare Inc, and Beijing Advanced Digital Technology Co. Ltd.

These two sectors have the most number and the highest proceeds over the last five quarters. The trend is due to their comparatively lower cost models, strong top-line or user growth and a clear picture of how these companies will achieve profitability.

Figure 6: Q3 2015-2016 tech IPOs – % Proceeds & number of IPOs by Services companies


46%

90%

50%

68%

47%

64%

77%

50%

64% 65%

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160%

20%

40%

60%

80%

100%

% Proceeds raised by Software and Internet Software & Services IPO% of IPOs by Software and Internet Software & Services IPO


A close look at Q3 technology IPOs Geographic IPO trends – Q3 2016

Asia led this quarter, with 11 IPOs followed by North America with six and Europe with three.

With Denmark and Japan each having a big-ticket IPO, Europe and Asia led in total proceeds; US$2.8 billion and US$1.9 billion, respectively.

Influenced by the ebb in its economic slowdown and a sharp depreciation of its currency, China had more IPOs in Q3.

Figure 7: Regional analysis of IPO proceeds



$103

$1,626$2,298

$4,042$5,075

$1,206$462$258 $511

$694 $250 $536$627

$2,835$1,921

0

2,000

4,000

6,000

North America Europe Asia Rest of world


Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Figure 8: Regional analysis of number of IPOs

13

66 7 8

13

75

2

763

11

North America Europe Asia Rest of world0

5

10

15

No. of IPOs

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016


United States The US had six IPOs with proceeds of US$627 million.

The IPO market improved due to a more active September, following two quarters that were its worst start since the financial crisis.

The US IPO market benefited from a combination of low volatility, broader market returns, strong interest in growth and several quality offerings. IPOs provided exits for private equity and venture capital backers, though aggregate proceeds were still below past cycles with many large offerings on hold. The average deal size also was lower than the last quarter.

Figure 9: US technology IPO trends


$168

$4,041

$694 $6272

65

6

0

1

2

3

4

5

6

7

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

5001,0001,5002,0002,5003,0003,5004,0004,500



“US tech IPO activity picked up in Q3 2016 with six tech IPOs raising US$627 million. Companies with large addressable markets, high barriers to entry, scale, and strong top-line or user growth, coupled with smaller deal sizes and strong after-market performance, led the resurgence in US tech IPOs. We expect the momentum to continue and remain bullish on tech IPOs for the remainder of this year and the first half of next year, despite the presidential election.”

–Alan Jones Technology Deals Partner, PwC US


China China had nine IPOs, but the proceeds were relatively

low (US$611 million), with an average of US$68 million. The trend in number of IPOs has been due to the region’s impressive performance led by improving economic conditions, increased confidence and lessened fears of a sharp slowdown in the economic growth rate.

The momentum is expected to continue because the China Securities Regulatory Commission said it will allow companies registered in one of 592 impoverished regions nationwide to skip the list of 836 groups currently waiting to float in Shanghai or Shenzhen.

With the Commission still controlling the IPO market, cross-border listing has again become more appealing for Chinese tech companies.

Figure 10: Chinese technology IPO trends


$1,467

$551

$267 $368

$611 2

6

3

5

9

012345678910

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

200

400

600

800

1,000

1,200

1,400

1,600




Asia (excluding China) The rest of Asia had two IPOs, one each from India

and Japan, contributing a significant 24% of the total proceeds.

Proceeds from Asia were the highest they have been in recent quarters because LINE Corp’s IPO in Japan raised more than a billion dollars.*

Year-on-year proceeds grew 53%, and quarter-to-quarter they grew 683%.

*LINE listed on both the NYSE (63%) and the TSE (37%).

Figure 11: Asia (excluding China) echnology IPO trends


$859

$656

$244 $167

$1,310 4

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Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

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Europe Europe posted the largest IPO of Q3 with the US$2.4

billion debut of Nets A/S, provider of digital payment services and related solutions.

Europe’s other IPOs were Takeaway.com, a food delivery app from the Netherlands, with proceeds of US$369 million, and Talend SA, a software-based platform provider from France, with proceeds of US$95 million.

Technology companies have been absent from UK listings for three consecutive quarters. The initial reaction to the UK vote to leave the EU has not been as bad as feared, but the full impact is not yet understood. Most technology IPOs are waiting for a better understanding of the impact of Brexit and new trade norms.

Figure 12: Europe (excluding UK) technology IPO trends


$1,497

$307 $258 $250

$2,835

1

23

2

3

0

1

2

3

4

5

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160

500

1,000

1,500

2,000

2,500




Stock exchange distribution – Q3 2016

US exchanges led in number of IPOs with nine, followed by the Chinese with eight.

It is worth note that LINE Corporation of Japan was a dual listing on NYSE (63% of shares offered) and TSE (37% of shares offered) but is reflected here as a NYSE listing.

European exchanges had two IPOs, with the Nordic Exchange listing the biggest IPO—Nets A/S at US$2.4 billion. It was followed by the NYSE listing of LINE Corp with proceeds of US$1.1 billion.

Figure 13: Q3 2016 stock exchange distribution


$336 $188 $369 $185

$1,125

$2,371

$808

5

3

1 1 1 1

8

0

1

2

3

4

5

6

7

8

9

SZSE SHSE EuronextAmsterdam

NSEI (India) NYSE OMX Nordic NASDAQ0

500

1,000

1,500

2,000




Subsector distribution – Q3 2016

Software led with nine IPOs, followed by Internet Software & Services with four.

The IT Consulting & Services, Semiconductors, and Electronics subsectors had two IPOs each.

IT Consulting & Services led in total proceeds with US$2.5 billion, followed by Internet Software & Services with US$1.7 billion. Electronics had the lowest proceeds.

Software did not report any big-ticket IPOs. Internet-based businesses are always a top pick for an IPO due to their quick scalability, although concerns about the ability of these companies to post net income weigh on investors’ minds.

Of the nine Software companies, five were from China.

Figure 14: Subsector distribution – Q3 2016


$1,674

$876 $155

$2,556

$80 $41

4

9

2 2 2

1

0

1

2

3

4

5

6

7

8

9

10

InternetSoftware &Services

Software Semiconductors IT Consulting &Services

Electronics Computers &Peripherals

0

500

1,000

1,500

2,000

2,500

3,000




Table 1: Q3 2016: Tech IPOs by region – Asia, including Australia (Shanghai, Shenzhen, Tokyo Stock Exchange, Hong Kong Stock Exchange and National Stock Exchange)*

Issue date Company Subsector Proceeds (US$mn)

Primary exchange Domicile nation

07/14/2016 Larsen & Toubro Infotech Limited IT Consulting & Services

184.8 National Stock Exchange of India (NSEI)

India

07/25/2016 Beijing Global Safety Technology Co., Ltd Software 65.6 Shenzhen Stock Exchange (SZSE) China

08/08/2016 Shenzhen Urovo Technology Co., Ltd Electronics 40.1 Shenzhen Stock Exchange (SZSE) China

08/09/2016 GigaDevice Semiconductor (Beijing) Inc Semiconductors 87.3 Shanghai Stock Exchange (SHSE) China

08/17/2016 Shenzhen Bingchuan Network Co., Ltd Software 139.5 Shenzhen Stock Exchange (SZSE) China

09/13/2016 Beijing Advanced Digital Technology Co., Ltd Software 49.8 Shenzhen Stock Exchange (SZSE) China

09/13/2016 Shenzhen Emperor Technology Co., Ltd Computers & Peripherals

40.8 Shenzhen Stock Exchange (SZSE) China

09/14/2016 Shanghai Wondertek Software Co., Ltd Software 60.0 Shanghai Stock Exchange (SHSE) China

09/28/2016 Hubei TKD Crystal Electronic Science & Technology Co., Ltd

Electronics 40.3 Shanghai Stock Exchange (SHSE) China

*IPOs have been classified based on the exchange where capital was raised.



Table 2: Q3 2016 IPOs by region – Europe (Nordic Exchange; Euronext Amsterdam)*



09/23/2016 Nets A/S IT Consulting & Services

2,371 OMX Nordic Exchange Copenhagen (CPSE)

Denmark

09/29/2016 Takeaway.com Holding BV Internet Software & Services

369 Euronext Amsterdam (ENXTAM) Netherlands



Table 3: Q3 2016 IPOs by region – North America (NYSE, NASDAQ)*



07/11/2016 LINE Corporation Internet Software & Services

1,125.2 NYSE Japan

07/20/2016 Impinj, Inc Semiconductors 67.2 NASDAQ United States

07/28/2016 Talend SA Software 94.5 NASDAQ France

09/15/2016 Everbridge, Inc Software 90.0 NASDAQ United States

09/20/2016 The Trade Desk, Inc Internet Software & Services

84.0 NASDAQ United States

09/23/2016 Apptio, Inc Internet Software & Services

96.0 NASDAQ United States

09/23/2016 Gridsum Holding Inc. Software 87.1 NASDAQ China

09/29/2016 Tabula Rasa HealthCare Inc Software 51.6 NASDAQ United States

09/30/2016 Nutanix Inc Software 237.9 NASDAQ United States




Q3 2016 top 10 technology listings

The top 10 IPO listings for Q3 2016 raised US$4.8 billion, or 89% of total proceeds.

On average, the top 10 technology IPOs raised US$480 million. The average was pushed up by the top two IPOs.

In the top 10, the Software subsector recorded four IPOs, followed by Internet Software & Services with three.


Table 4: IPO summary – Top 10 listings

Issue date

Company Subsector Proceeds (US$mn)


7/11/16 LINE Corporation

Internet Software & Services

1,125 NYSE Japan

7/14/16 Larsen & Toubro Infotech Limited

IT Consulting & Services

185 National Stock Exchange of India (NSEI)

India

7/28/16 Talend SA Software 95 NASDAQ Global Market (NASDAQGM)

France

8/9/16 GigaDevice Semiconductor (Beijing) Inc

Semiconductors 87 Shanghai Stock Exchange (SHSE)

China

8/17/16 Shenzhen Bingchuan Network Co., Ltd

Software 140 Shenzhen Stock Exchange (SZSE)

China

9/15/16 Everbridge, Inc Software 90 NASDAQ Global Market (NASDAQGM)

United States

9/23/16 Nets A/S IT Consulting & Services

2,371 OMX Nordic Exchange Copenhagen (CPSE)

Denmark

9/23/16 Apptio, Inc Internet Software & Services

96 NASDAQ Global Market (NASDAQGM)

United States

9/29/16 Takeaway.com Holding BV


369 Euronext Amsterdam (ENXTAM)

Netherlands

9/30/16 Nutanix Inc Software 238 NASDAQ United States


Cross-border listings – Q3 2016

There were three cross-border listings in Q3, led by LINE Corp, a Japanese company with dual listing on the NYSE (63%) and TSE (37%). It was the biggest cross-border IPO with proceeds of US$1.12 billion.

Other cross-border listings included Talend SA and Gridsum Holding. In the third quarter, 15% of the IPOs were cross-border listings

Figure 15: Cross-border listings – Q3 2016


42 1

3

11

18

813

17

0

5

10

15

20

25

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No. of IPOs

Domestic deals Cross-border deals

18%

20%

7%

15%

0%


Key financials – Q3 2016

Financial results are based on 19 of the 20 companies. Financial information was not available for Shanghai Wondertek Software Co. Ltd. Eleven companies reported positive net income, with an average Last 12 Months (LTM) net income of US$2 million in Q3 2016.

Larsen & Toubro Infotech Ltd from the IT Consulting & Services subsector reported the highest net income, at US$147 million.

Nutanix Inc from the Software subsector reported the highest net loss, at US$169 million.

The Software subsector, with nine IPOs, reported the highest average LTM net loss of US$22 million in Q3 2016. Five of the nine companies posted LTM net losses. (Financial information on Shanghai Wondertek Software Co. Ltd was unavailable.) Companies with the biggest net losses: Nutanix Inc with US$169 million; Talend SA with US$25 million; and Everbridge, Inc with US$14 million.

The IT Consulting & Services subsector, with two IPOs (Larsen & Toubro Infotech Ltd and Nets A/S), reported the highest average LTM net income of US$98 million in Q3 2016. The subsector also reported the highest LTM revenue of US$982 million, and highest average LTM EBITDA of US$229 million.

Figure 16: Q3 2016 tech IPOs – Net income


Note: Financial data for Shanghai Wondertek Software Co. Ltd was not available so percentages have been calculated on the basis of the other 19 companies.

58%

42%

Q3 2016

Positive net income Negative net income


Figure 17: Q3 2016 – Average LTM revenue


Figure 18: Q3 2016 – Average LTM EBITDA


$37$40

$415

$982

$147 $126$266

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Computers &Peripherals

Electronics Internet Software &Services

IT Consulting &Services

Semiconductors Software All sectors

No.

of I

POs

LTM Revenue No. of IPOs

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ions

$7 $9$39

$229

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POs

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ions


Figure 19: Q3 2016 – Average LTM net income


Figure 20: Q3 2016 – Average total debt


$8 $8 -$10

$98

$13

-$22

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No.

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POs

LTM net income No. of deals

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ions

$0 $7 $116

$1,098

$10 $21$1511 2

42 2

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No.

of I

POs

Total debt No. of deals

US$

mill

ions


Figure 21: Q3 2016 – Average enterprise value


$262

$773

$3,120

$3,590

$1,689

$1,474

$1,928

1

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No.

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POs

Enterprise value No. of IPOs

US$

mill

ions


Q3 2016 technology IPO listings – Valuation metrics

The average EV/LTM revenue for listed IPOs in Q3 2016 was 7.3x, down from 8.5x in Q2 2016. The Electronics subsector reported the highest revenue multiple of 19.2x.


Figure 22: Q3 2016 EV/LTM revenue

7.0x

19.2x

7.5x

3.7x

11.5x 11.7x

7.3x

12

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20

0

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0.0x

5.0x

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No.

of I

POs

EV/LTM revenue No. of IPOs

Mul

tiple

s


Overall, the average EV/EBITDA multiple was 66.2x in Q3 2016 compared to 20.6x in Q3 2015. The Semiconductors subsector led with the highest average EV/EBITDA multiple of 113.4x.


Figure 23: Q3 2016 EV/LTM EBITDA

36.4x

83.6x 79.6x

15.7x

113.4x

-100.7x

66.2x

12

4

2 2

9

20

0

5

10

15

20

25

-150.0x

-100.0x

-50.0x

0.0x

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100.0x

150.0x





No.

of I

POs

EV/LTM EBITDA No. of deals

Mul

tiple

s


Top three subsectors in Q3 2016 Software

Figure 24: Software – LTM revenue


Figure 25: Software – LTM EBITDA


($17)

$31

($11)

$21

($15)

4 4

2

6

9

0246810

($20)($10)

$0$10$20$30$40

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions


$64

$223

$21

$199

$126 4 4

2

6

9

0

2

4

6

8

10

$0

$50

$100

$150

$200

$250

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions

LTM revenue No. of IPOs


Figure 26: Software – LTM net income


Figure 27: Software – Enterprise value


($13)

($4) ($4)

($11)

($22)

4

4

2

69

0

2

4

6

8

10

($25)

($20)

($15)

($10)

($5)

$0

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions

LTM net income No. of IPOs

$351

$2,675

$320

$1,627

$1,474 4 4

2

6

9

0

2

4

6

8

10

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 28: Software – Total debt


Figure 29: Software – EV/LTM revenue


$6 $0 $2

$178

$21

4 4

2

6

9

0

2

4

6

8

10

$0

$40

$80

$120

$160

$200

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions

Total debt No. of IPOs

5.5x

12.0x

15.2x

8.2x

11.7x

4 4

2

6

9

0

2

4

6

8

10

0.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s

EVM/LTM revenue No. of IPOs


Figure 30: Software – EV/LTM EBITDA


-21.3x

85.3x

-29.1x

77.6x

-100.7x

4

4

2

6

9

0

2

4

6

8

10

-150.0x

-100.0x

-50.0x

0.0x

50.0x

100.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s

EVM/LTM EBITDA No. of IPOs



Figure 31: Internet Software & Services – LTM revenue


$143

$1,082

$52 $96

$415

3

13

3 34

0

2

4

6

8

10

12

14

$-

$200

$400

$600

$800

$1,000

$1,200

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

IUS$

mill

ions



Figure 32: Internet Software & Services – LTM EBITDA


Figure 33: Internet Software & Services – LTM net income


$44

$309

$4

($24)

$39

3

13

3 34

0

2

4

6

8

10

12

14

$(50)

$-

$50

$100

$150

$200

$250

$300

$350

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions

LTM EBITDA No. of deals

($7)

($26)

$4

($28)

($10)

3

13

3 34

0

2

4

6

8

10

12

14

$(30)

$(25)

$(20)

$(15)

$(10)

$(5)

$-

$5

$10

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 34: Internet Software & Services – Enterprise value


Figure 35: Internet software & services – Total debt


$1,569 $5,286 $351 $1,526 $3,120

3

13

3 34

0

2

4

6

8

10

12

14

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions


$235

$2,390

$1 $8 $116

3

13

3 34

0

2

4

6

8

10

12

14

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 36: Internet Software & Services – EV/LTM revenue


Figure 37: Internet Software & Services – EV/LTM EBITDA


11.0x

4.9x6.8x

15.8x

7.5x

3

13

3 34

0

2

4

6

8

10

12

14

0.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0x18.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s


35.4x17.1x

85.5x

-64.7x

79.6x

3

13

3 34

0

2

4

6

8

10

12

14

-80.0x-60.0x-40.0x-20.0x

0.0x20.0x40.0x60.0x80.0x

100.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s



IT Consulting & Services

Figure 38: IT Consulting & Services – LTM revenue


$92

$858

$43

$583

$982

1 1 1 1

2

0.0

0.5

1.0

1.5

2.0

2.5

$0

$200

$400

$600

$800

$1,000

$1,200

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 39: IT Consulting & Services – LTM EBITDA


Figure 40: IT Consulting & Services – LTM net income


$19

$60

$14 $42

$229

1 1 1 1

2

0.0

0.5

1.0

1.5

2.0

2.5

$0

$50

$100

$150

$200

$250

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions


$15 $45

$8 $19

$98 1 1 1 1

2

0.0

0.5

1.0

1.5

2.0

2.5

$0

$20

$40

$60

$80

$100

$120

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 41: IT Consulting & Services – Enterprise value


Figure 42: IT Consulting & Services – Total debt


$346

$863

$221 $502

$3,590

1 1 1 1

2

0

1

1

2

2

3

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions


$0 $0 $0

$173

$1,098

1 1 1 1

2

0

1

1

2

2

3

$0

$200

$400

$600

$800

$1,000

$1,200

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

US$

mill

ions



Figure 43: IT Consulting & Services – EV/LTM revenue


Figure 44: IT Consulting & Services – EV/LTM EBITDA


3.8x

1.0x

5.1x

0.9x

3.7x

1 1 1 1

2

0

1

1

2

2

3

0

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s


18.5x

14.5x15.8x

11.9x

15.7x

1 1 1 1

2

0

1

1

2

2

3

0 2.0x 4.0x 6.0x 8.0x

10.0x 12.0x 14.0x 16.0x 18.0x 20.0x

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

No.

of I

POs

Mul

tiple

s



Methodology

The Global Technology IPO Review for Q3 2016 is based on PwC’s analysis of transaction data extracted from S&P Capital IQ. The analysis considers IPOs across all countries during the period 1 June 2016 to 30 September 2016. 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 Computers 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.


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 Email: [email protected]

Estela Vieira – Brazil Phone: 55 1 3674 3802 Email: [email protected]

Christopher Dulny – Canada Phone: 1 416 869 2355 Email: [email protected]

Jianbin Gao – China Phone: 86 21 2323 3362 Email: [email protected]

Pierre Marty – France Phone: 33 1 5657 58 15 Email: [email protected]

Werner Ballhaus – Germany Phone: 49 211 981 5848 Email: [email protected]

Sandeep Ladda – India Phone: 91 22 6689 1444 Email: [email protected]

Masahiro Ozaki – Japan Phone: 81 3 5326 9090 Email: [email protected]

Hoonsoo Yoon – Korea Phone: 82 2 709 0201 Email: [email protected]

Ilja Linnemeijer – The Netherlands Phone: 31 88 792 4956 Email: [email protected]

Yury Pukha – Russia Phone: 7 495 223 5177 Email: [email protected]

Mark Jansen – Singapore Phone: 65 6236 7388 Email: [email protected]

Philip Shepherd – UAE Phone: 97 1 43043501 Email: [email protected]

Jass Sarai – UK Phone: 44 0 1895 52 2206 Email: [email protected]

Pierre-Alain Sur – US Phone: 1 646 471 6973 Email: [email protected]

Alan Jones – US (Deals partner) Phone: 1 415 498 7398 Email: [email protected]

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 208,000 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.

© 2016 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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