April 2010 a record month for Web 2.0 Financing: Total transaction value (excluding M&A) in the Web 2.0 universe for April was $808.2 million - the highest monthly total we have recorded. The number of financings was also a record, at 48, averaging $16.8 million each. Note that this includes the $300 million investment in DST by Tencent. Excluding this transaction, the average is $9.6 million. In comparison, total capital raised in March was $168.1 million, averaging $5.4 million over 31 deals.
Deal round-up for April: The large deal highlights for the month include:
Tencent invested $300mm in DST (investor in Facebook, Zynga, Groupon).
Apple acquired Siri, a mobile local search developer for a rumoured $225 mm.
DST acquired ICQ, the instant messaging company, for $187.5 mm.
Warner Bros. acquired gaming company, Turbine, for $160 mm.
DST invested $135mm in social-shopping service Groupon.
Salesforce.com acquired crowd-sourced personal contact service, Jigsaw, for $142 mm.
Ankeena Networks, media infrastructure solution provider was acquired by Juniper for $100mm.
Bearish week: Price performance was largely negative in our Web 2.0 universe, with prices dropping for over 60% of the companies.
2. Key Developments (past week)
Deals (M&A, Finance) – Apple Delves into Content, DST at It Again
Siri (mobile personal assistant app developer) was acquired by Apple for a rumoured
$225 mm – initiating a flurry of prognosticating over what this means for Apple –
potentially building a mobile search business around its market leading mobile devices?
DST, the Russian diversified Web and telecom concern, acquired instant messaging
company, ICQ, for $187.5 mm.
Tremor Media (online Hollywood media source) raised $40 mm in late-stage financing.
Crowdsourced retail competitor to Groupon, LivingSocial, raised $14 mm – this
following on the heels of Groupon’s $135 mm injection from DST.
Financial Results/Guidance
Open Text Corp. (NasdaqGS:OTEX) reported Q3/F10 revenue of $212.8 mm (vs.
$192.0 mm in Q3/F09) and Adjusted EPS of $0.70 (vs. consensus: $0.74 and Q3/F09 of
$0.59). Management noted its comfort with current Q4/F10 consensus estimates, which
pegs Q4/F10 revenue expectations at $246-$278 mm.
Sohu.com (NasdaqGS:SOHU) reported Q1/F10 revenue of $129.5 mm vs. $115.7 mm
a year ago (+12% Y/Y), with $0.86/share non-GAAP EPS compared with $1.13/share in
the same period last year.
2 www.mackieresearch.com
4. Aggregate Public Data
Web 2.0 Public Companies Total Median Max Min
# Companies 99 - - -
Market Cap (US$ mm) 83,388.0 78.4 38,745.0 1.4
Revenue (US$ mm) 22,599.1 60.2 3,057.7 0.0
1 Year revenue growth 4.2% 857.0% -91.4%
EBITDA as % of revenue - 13.4% 67.7% -75.0%
Net cash (US$ mm) 8,523.1 1.8 1,754.4 -732.7
TEV/Revenue - 2.0x 46.4x 0.0x
TEV/EBITDA - 9.0x 49.6x 0.1x
P/E - 17.4x 96.9x 0.0x
Relative to 52 week high -32.7% 1.9% -98.5%
Source: CapitalIQ
4 www.mackieresearch.com
5. 5
0
5
10
15
20
25
30
Gaming
27
Social Networking
16
Media
10
7
Diversified
6
Marketing
5
Mobile
Source: CapitalIQ
3
Infrastructure
3
SMS/Voice
3
Enterprise
3
Advertising
2
Internet Retail
2
Virtual World
By Sector
2
Dating
2
Music
1
Vertical Communities
1
Collaboration
1
Podcasting
1
Learning
1
Video
1
Search
1
Payment
1
Financial Services
Public Company Distribution
0
5
10
15
20
25
30
35
40
45
United States
Canada
China
South Korea
Japan
Taiwan
Germany
Australia
United Kingdom
Hong Kong
Poland
Russia
By Country
Finland
Sweden
Malaysia
India
Italy
Switzerland
Israel
www.mackieresearch.com
10. 10
-
5.0
10.0
15.0
20.0
25.0
# Companies 2
Infrastructure
3
SMS/Voice
7
Social Networking
1
Vertical Communities
2
Music
5
Diversified
1
Learning
4
Mobile
6
Marketing
Gaming
21
1
Search
1
Podcasting
EV/Revenue
9
Media
3
Advertising
1
Collaboration
1
Video
2
Internet Retail
3
Enterprise
2
Dating
1
Financial Services
1
Virtual World
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Average Valuation – By Sector
# Companies
2
Mobile
2
Enterprise
5
Diversified
6
Media
2
Internet Retail
Gaming
14
5
Social Networking
1
Collaboration
EV/EBITDA
1
Financial Services
3
Marketing
1
Dating
1
Advertising
Vertical
0
Communities
www.mackieresearch.com
11. 11
0. 0
5. 0
10. 0
15. 0
20. 0
25. 0
30. 0
35. 0
40. 0
45. 0
50. 0
C yberplex Inc .
As k net AG
Ngi G roup Inc.
J umbuck E ntertainment L imited
Source: CapitalIQ
T ree.C om, Inc .
R ealNetwork s Inc .
G ameO n C o L td.
O penwav e S ys tems Inc.
U nis erv e C ommunic ations C orp.
Ac toz S oft C o. , L td.
G igaMedia L td.
G lu Mobile, Inc.
Northgate T ec hnologies L imited
DADA S pA
AO L, Inc.
P oints International L td.
IAC /InterAc tiveC orp.
0.10.10.3 0.40.40.40.4 0.50.50.50.50.6 0.70.70.70.70.80.8
Internet G roup S A
C DC C orp.
T he New Y ork T imes C ompany
U nited O nline, Inc.
T heS treet. com, Inc.
C ornerWorld C orporation
AQ Interac tive, Inc .
O AO R B C Information S y s tems
infoG R O UP , Inc.
EV/Revenue Ranking
H anbitS oft, Inc.
G amania Digital E ntertainment C o. , L td.
Hutchis on T elec ommunications H ong K ong
Y D O nline C orp.
S park Network s , Inc .
NetDragon WebS oft, Inc .
Y nk K orea Inc.
0.80.90.90.91.0 1.2 1.2 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.7 1.7
V alueC lick , Inc .
1.8
S hutterfly, Inc .
UO MO Media, Inc
S core Media Inc .
S NAP Interactiv e, Inc.
XING AG
P NI Digital Media Inc.
V elti P lc
Modern T imes G roup Mtg AB
NeuL ion Incorporated
O riented Media G roup B erhad
S ohu. c om Inc .
Webz en Inc.
G ungH o O nline E ntertainment, Inc.
Myriad G roup AG
O pen T ex t C orp.
2.02.0 2.12.22.2 2.32.32.42.4 2.52.6 2.72.72.7
F rogs ter Interactiv e P ictures AG
is eemedia Inc .
Wiz z ard S oftware C orporation
NE O WIZ G ames C orporation
S K C ommunications C o. , L td.
3.0 3.23.2 3.43.4
4.0
T aleo C orp.
Lingo Media C orporation
revenue multiple at 46.4x
SpectrumDNA has highest
DigitalP os t Interac tive, Inc .
C hangy ou.c om L imited
4.9 5.0 5.1 5.4
K ings oft C orporation L imited
Acc eleriz e New Media, Inc .
WebMediaB rands Inc
5.6 5.7 5.7
Unilava C orporation
6.3
Mix i, Inc .
7.5
G ree, Inc .
F luid Mus ic C anada, Inc .
9.1
H U G HE S T elematic s , Inc.
T rans G aming, Inc .
11.211.5
C hines e G amer International
13.6
B eyond C ommerce, Inc .
14.3
G eoS entric O yj
15.4
MO K O .mobi L imited
18.2
P aid Inc .
19.2
T encent H oldings L td.
23.3
B right T hings plc
27.8
S pectrumDNA, Inc.
46.4
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12. 12
0.0
10.0
20.0
30.0
40.0
50.0
60.0
G ameO n C o L td.
AO L , Inc .
Source: CapitalIQ
Ac toz S oft C o., L td.
1. 9 2.2 2. 4
United O nline, Inc .
T he New Y ork T imes C ompany
H utc his on T elec ommunications H ong K ong H oldings
4.5 5. 3 5.6
L td.
V alueC lic k , Inc.
S ohu.c om Inc.
DADA S pA
Y D O nline C orp.
S park Network s , Inc.
C DC C orp.
5. 9 6. 0 6. 6 6. 8 7.0 7. 2
infoG R O U P , Inc .
EV/EBITDA Ranking
G amania Digital E ntertainment C o., L td.
C hangy ou.c om L imited
XING AG
NetDragon WebS oft, Inc.
U nis erve C ommunic ations C orp.
7.5 7. 9 8.1 8. 1 8. 1 8. 9
P NI Digital Media Inc.
T ree. C om, Inc.
O pen T ex t C orp.
IAC /InterAc tiveC orp.
9. 0 9.1 9. 7 9.8
V elti P lc
G ungH o O nline E ntertainment, Inc .
11.1 12. 0
NE O WIZ G ames C orporation
S c ore Media Inc.
K ings oft C orporation L imited
G ree, Inc.
group at 49.6x
S hutterfly , Inc.
12.6 12.9 12. 9 13.0 13. 7
Myriad Group leads the
H anbitS oft, Inc .
14.5
Y nk K orea Inc .
Modern T imes G roup Mtg AB
15. 9 16.6
O penwave S y s tems Inc .
F rogs ter Interactive P ic tures AG
17. 5 18. 5
Mix i, Inc.
20. 9
C hines e G amer International
25. 2
T aleo C orp.
29.6
T heS treet.c om, Inc .
32. 4
T enc ent H oldings L td.
45.5
My riad G roup AG
49. 6
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Excluding EV/EBITDA > 100x