Q3 2015 STRICTLY PRIVATE AND CONFIDENTIAL
CyberScopeQ3 2015 Market Review
2
About Results International
DEEP DOMAIN EXPERTISE IN THREE INTER-RELATED SECTORS… …AND BROAD INDUSTRY NETWORKS
A MARKET-LEADING CORPORATE FINANCE ADVISORY FIRM… …WITH GLOBAL REACH
• 40 person team; 250+ completed transactions
• Broad global network
• Creative solutions
• Senior level focus on every transaction
• Founded in 1991
• Entrepreneurial and owner-managed
Marketing
Healthcare
Technology
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
3
80
100
120
140
160
180
200
Broadline Endpoint Network DataMonitoring & Analysis Global Security NASDAQ Comp
Results International Global Cybersecurity Indices
Sep-15Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15
Notes: Based on share prices as at 30th September 2015; indices weighted by market capitalisationSources: Capital IQ and Results analysis
27.1%
14.3%
2.8%
12.6%
(12.5%)
12.8%
30.3%
Q3 2015 PERFORMANCEBroadline (11.7%)Endpoint (18.1%)Network (4.4%)Data (23.5%)Monitoring & Analysis (23.2%)Global Security (9.8%)
LAST
12
MON
TH S
HARE
PRI
CE P
ERFO
RMAN
CEQUARTERLY TECH REPORT – Q3: CYBERSECURITY
4
Cybersecurity: Share Price Performance
(1) These companies have IPO’d within the last 12 months, the share price movement represents the change between each stock’s respective IPO dates (see slide 4) and the 30th September 2015Note: Based on share prices as at 30th September 2015Sources: Capital IQ and Results analysis
LAST
12
MON
THS
Q3 2
015
BROADLINE ENDPOINT NETWORK DATAMONITORING & ANALYSIS
(70.0%)
(60.0%)
(50.0%)
(40.0%)
(30.0%)
(20.0%)
(10.0%)
0.0%
10.0%
(16.3%)
0.6%
(20.1%) (20.2%) (21.3%)
(47.5%)
(0.2%)
(60.7%)
(0.3%)
2.8%
(3.8%) (1.5%)
(26.8%)
(4.0%)
(34.9%)
(3.3%) (5.3%)
(28.9%) (29.5%)
(9.5%)
(100.0%)
(50.0%)
0.0%
50.0%
100.0%
150.0%
(17.2%)
13.6%31.2%
56.6%
(0.8%)
(72.2%)
(0.1%)
(39.3%)
14.6%
68.1%
(2.5%)
75.3%
(7.9%)
4.9% 4.1%
127.9%
62.4%
(10.5%)
7.0%
(9.5%)
(1)
(1)
(1)
(1)
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
5
Cybersecurity: Selected Stocks – Performance Since IPO
COMPANY IPO DATE DESCRIPTION RAISE
D ($M)INDICATIVE PRICE
RANGE ($)IPO LISTING
PRICE ($)INCREASE VS.
RANGEDAY 1
INCREASECURRENT
INCREASE(1)
CURRENT EV ($M)
EV / REVENUE
2015EEV / EBITDA
2015E
Jul-15Detection, analytics and penetration testing
162 13.00-15.00 25.14 79.6% 0.5% (9.5%) 1,093 10.5 x n.m.
Jun-15 Antivirus and network security 552 n.a. 3.54 n.a. 7.4% (0.1%) 1,913 3.7 x 24.9 x
Sep-14 Privileged account security 86 13.00-15.00 16.00 14.3% 87.1% 213.4% 1,521 10.2 x 48.2 x
Jun-14 Mobile security and management 100 8.00-10.00 9.00 0.0% 22.4% (65.6%) 137 0.9 x n.m.
Nov-13 Network security and data storage 64 18.00-21.00 18.00 (7.7%) 19.7% (13.4%) 618 2.0 x 10.3 x
Sep-13 Forensics and malware protection 304 12.00-14.00 20.00 53.8% 80.0% 59.1% 4,994 7.8 x n.m.
Jul-15 Cloud security and compliance 91 11.00-13.00 12.00 0.0% 18.0% 137.2% 930 5.6 x 19.5 x
Jul-12 Firewalls and network security 260 34.00-37.00 42.00 18.3% 26.5% 309.5% 14,837 13.7 x n.m.
Apr-12 Communication security 82 10.00-12.00 13.00 18.2% 8.3% 364.0% 2,600 10.1 x n.m.
Feb-12 Antivirus and anti-spyware 128 16.00-18.00 16.00 (5.9%) (18.8%) 35.9% 1,294 3.0 x 8.1 x
(1) Current increase from IPO price; market data as of 30 th September 2015Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDASources: Capital IQ and Results analysis
Nasdaq
Nasdaq
Nasdaq
Nasdaq
NYSE
NYSE
NYSE
Nasdaq
LSE
Nasdaq
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
6
Cybersecurity: Valuation Benchmarks
(1) Global Security represents the median of all stocks in Broadline, Endpoint, Network, Data and Monitoring & Analysis, with no weighting appliedNotes: EV = Enterprise Value; financials calendarised to December year end; median values reportedSee Selected Publicly Traded Companies (slide 9) for details of companies included in each categorySources: Capital IQ and analyst reports
REVENUE GROWTH (2015-16E) EV / REVENUE 2015E
EBITDA MARGIN 2015E EV / EBITDA 2015E
Broadline Endpoint Network Data Monitoring & Analysis
Global Security
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1.4%
15.6%
10.3%
26.5%24.0%
15.5%
Broadline Endpoint Network Data Monitoring & Analysis
Global Security
(10.0%)(5.0%)
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%
33.3%
18.7% 19.1%
(3.3%)
1.2%
17.6%
Broadline Endpoint Network Data Monitoring & Analysis
Global Security
0.0 x1.0 x2.0 x3.0 x4.0 x5.0 x6.0 x7.0 x8.0 x9.0 x
10.0 x
2.7 x 3.0 x3.8 x
8.6 x
5.6 x
3.7 x
Broadline Endpoint Network Data Monitoring & Analysis
Global Security
0.0 x
5.0 x
10.0 x
15.0 x
20.0 x
25.0 x
8.1 x
18.2 x
13.4 x
n.m.
19.5 x
12.1 x
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
7
Cybersecurity: Global M&A Activity Q1 2011 – Q3 2015
Sources: Press Releases, Capital IQ, Mergermarket, 451 Research and Results analysis
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
0
5
10
15
20
25
30
35
40
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
26 26 26 27
23 23
32
24
15
31
2522
32
28 27
22
34 33
22
No. of Deals Total Disclosed Deal Value
NUM
BER
OF D
EALS
TOTA
L DI
SCLO
SED
DEAL
VAL
UE ($
M)
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
8
Cybersecurity: Selected Deals in Q3 2015
DATE BUYER TARGET EV ($M) EV / REVENUE
EV / EBITDA COMPANY DESCRIPTION TARGET
LOCATION
Sep-15 - - - Smartphone and tablet security suite
Sep-15 - - - Software vulnerability, patch management and software authentication
Sep-15 425.0 2.0x - Secure enterprise mobility solutions
Aug-15 - - - Range of security software from antivirus to firewall and mobile security
Aug-15 - - - Authentication security management and granular access control systems
Aug-15 - - - Online cybersecurity analytics and big data platform
Aug-15 - - - Anti-keylogging and encryption
Aug-15 - - - Endpoint security integrity and threat detection
Aug-15 8.5 - - Mobile app threat identification and prevention
Aug-15 - - - Privileged user access, password management and network authentication
Jul-15 - - - Data encryption and tokenisation of personally identifiable information
Jul-15 - - - Botnet monitoring, threat detection and cybersecurity threat intelligence
Jul-15 - - - Cloud identity and access management and data protection management
Jul-15 - - - Endpoint-based signature-less malware detection and analytics
Jul-15 - - - Antimalware and antispyware application for Apple computers
Jul-15 - - - Real-time secure data governance and monitoring
Jul-15 - - - Password protection security management
Jul-15 190.0 - - Real-time behavioural analytics and breach detection software
(1) In certain cases EV/Revenue are publicly reported estimates; TTM net revenues have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press Releases, Capital IQ, Mergermarket, PitchBook, 451 Research and Results analysis
(tech assets)
(1)
(China)
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
9
Cybersecurity: Selected Fundraisings in Q3 2015
DATE COMPANY TYPE OF ROUND
FUNDS RAISED
($M)INVESTOR PARTICIPATON COMPANY DESCRIPTION COMPANY
LOCATION
Sep-15 Series B 25.0 Icon Ventures, Aspect Ventures, Norwest Venture Partners Big data security analytics
Sep-15 Series G 150.0TPG, Institutional Venture Partners, T. Row Price Associates, Andreessen Horowitz, Franklin Templeton, Geodesic Partners
Enterprise security and systems management
Sep-15 Series B 110.0 TPG Growth, EMC, Lightspeed Ventures, Google Capital Security-as-a-Service platform
Sep-15 Series D 110.0FMR, Google Capital, Microsoft Ventures, Baidu, Qualcomm Ventures, New Enterprise Associates, Union Square Ventures
Internet security protection
Sep-15 Series A 10.0 Orchard Holdings Group Threat intelligence platform
Sep-15 Series D 75.0 Iconiq Capital, Accel Partners, Lightspeed Venture Partners, Social+Capital Cloud access security broker
Sep-15 Series C 12.0First Floor Capital, Bessemer Venture Partners, KPCB, North Bridge Equity Partners, Intel Capital, CommonAngels Ventures
Mobile app security
Aug-15 Seed 2.2 Azure Capital, Epic Ventures, Bialla Venture Partners Cloud data exchange security
Aug-15 Series B 17.0 Evolution Equity Partners, 406 Ventures, Arsenal Venture Partners
SAP and Oracle enterprise application security
Aug-15 Seed 2.3 Accomplice Mobile application security vulnerability detection platform
Aug-15 Series E 52.0 Institutional Venture Partners, Trident Capital, KPCB, GGV Capital
Security management and threat intelligence
Jul-15 Series C 42.0 DFJ Growth, KKR, Dell Ventures, CapitalOne Ventures, TenEleven Ventures Cybersecurity solutions
Jul-15 Series B 22.5 Summit Partners Intelligence-based behavioural cyberdefence technology
Jul-15 Series A 3.5 BRM Group, Curious Minds, FirstTime Ventures , Maxfield Capital, TheTime VC Mobile security app
Jul-15 Series B 17.0 Allegis Capital, The Blackstone Group Monitoring, reporting and post-incident forensics
Jul-15 Series C 100.0 Google Capital, Rackspace, Accel Partners, Warburg Pincus Endpoint protection and threat intelligence
Jul-15 Series D 30.0 Pinnacle Ventures, Qihoo 360 Technology, Redpoint Ventures
Secure cloud protection for Windows and Android
Jul-15 Venture 4.0 Sequoia Capital Penetration testing and risk quantification
Source: Press Releases, Capital IQ, Mergermarket and Results analysis
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
10
PRICE % OF 52 MARKET TOTAL NET ENTERPRISE REVENUE REV. GROWTH GROSS MARGIN EBITDA MARGINCOMPANY (30-SEP-15) WEEK HIGH CAP CASH DEBT VALUE CY2015 CY15-16 HISTORICAL CY2015 CY2016 CY2015 CY2016 CY2015 CY2016BROADLINESymantec 19.47 71.3% 13,224 3,884 (1,795) 11,429 6,331 0.1% 82.3% 32.4% 35.0% 1.8 x 1.8 x 5.6 x 5.2 xTrend Micro 35.20 86.3% 4,797 1,039 (1,039) 3,758 1,041 2.8% 82.3% 34.1% 34.8% 3.6 x 3.5 x 10.6 x 10.1 x
ENDPOINTAVG Technologies 21.75 74.6% 1,146 117 148 1,294 432 15.6% 86.1% 36.9% 36.9% 3.0 x 2.6 x 8.1 x 7.0 xCyberArk 50.14 65.7% 1,804 284 (284) 1,521 148 32.9% 85.7% 21.3% 21.2% 10.2 x 7.7 x 48.2 x 36.4 xF-Secure 2.76 64.3% 434 85 (85) 349 163 7.2% 94.9% 18.7% 20.6% 2.1 x 2.0 x 11.5 x 9.7 xMobileIron 3.10 23.9% 244 108 (108) 137 146 18.8% 81.8% (39.3%) (19.1%) 0.9 x 0.8 x n.m. n.m.Sophos 3.53 81.9% 1,765 629 149 1,913 789 (2.2%) 86.0% 14.7% 14.5% 3.7 x 3.8 x 24.9 x 26.0 x
NETWORKBarracuda Networks 15.58 33.3% 832 218 (213) 618 314 15.4% 78.9% 19.1% 25.1% 2.0 x 1.7 x 10.3 x 6.8 xCheck Point Software 79.33 89.6% 14,756 1,227 (1,227) 13,529 1,627 8.1% 88.2% 56.7% 56.9% 8.3 x 7.7 x 14.7 x 13.5 xFortinet 42.48 84.4% 7,565 873 (873) 6,692 1,007 22.6% 70.0% 16.5% 17.5% 6.6 x 5.4 x 40.2 x 30.9 xF5 Networks 115.80 85.1% 8,230 798 (798) 7,432 1,978 10.2% 82.1% 39.3% 39.4% 3.8 x 3.4 x 9.6 x 8.7 xPalo Alto Networks 172.00 85.8% 15,139 789 (302) 14,837 1,082 35.9% 72.9% 5.6% 24.6% 13.7 x 10.1 x n.m. 41.0 xRadware 16.26 65.3% 740 81 (81) 659 215 7.3% 81.1% 19.1% 17.8% 3.1 x 2.9 x 16.1 x 16.1 xSecunet 21.32 86.3% 138 26 (26) 112 92 10.3% 64.3% 10.1% 10.0% 1.2 x 1.1 x 12.1 x 11.0 x
DATAFireEye 31.82 57.5% 5,494 1,190 (501) 4,994 640 37.3% 58.9% (26.4%) (13.7%) 7.8 x 5.7 x n.m. n.m.Imperva 65.48 88.5% 2,118 245 (245) 1,873 217 23.7% 77.7% (3.3%) (0.6%) 8.6 x 7.0 x n.m. n.m.Proofpoint 60.32 83.0% 2,674 411 (75) 2,600 258 26.5% 66.4% 0.9% 6.3% 10.1 x 8.0 x n.m. n.m.
MONITORING & ANALYSISGuidance Software 6.02 58.9% 182 21 (21) 161 110 5.5% 66.9% 1.2% 3.9% 1.5 x 1.4 x n.m. 35.9 xQualys 28.46 51.3% 1,088 158 (158) 930 166 24.0% 78.3% 28.8% 29.3% 5.6 x 4.5 x 19.5 x 15.5 xRapid7 22.75 86.9% 960 130 134 1,093 104 24.9% 75.9% (29.3%) (24.4%) 10.5 x 8.4 x n.m. n.m.
25th percentile 63.0% 159 7.2% 72.2% 1.1% 5.7% 2.1 x 1.9 x 10.3 x 9.2 xMedian 78.3% 286 15.5% 80.0% 17.6% 19.2% 3.7 x 3.6 x 12.1 x 13.5 x75th percentile 85.9% 1,016 24.2% 83.1% 29.7% 30.7% 8.4 x 7.2 x 19.5 x 28.4 x
OPERATING METRICS VALUATION METRICSREVENUE EBITDA
Cybersecurity: Selected Publicly Traded Companies
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDA; net debt includes minority interestSource: Capital IQ
QUARTERLY TECH REPORT – Q3: CYBERSECURITY
11
Contact Us
Disclaimer: This document has been produced by Results International Group LLP (“Results”) and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Results’ officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.Authorised and regulated by the Financial Conduct Authority.
27 Soho Square, London, W1D 3AYt +44 20 7629 7575 www.resultsig.com
588 Broadway, Suite 1010, New York, 10012t +1 646 747 6500 www.resultsig.com
Chris LewisMANAGING DIRECTORt +44 (0)20 7514 8236e [email protected]
Mark WilliamsDIRECTORt +44 (0)20 7514 8242e [email protected]
Maurice WatkinsPARTNERt +1 (0)646 747 6500e [email protected]
Pierre-Georges RoyPARTNERt +1 (0)646 747 6505e [email protected]
QUARTERLY TECH REPORT – Q3: CYBERSECURITY