gpbullhound-2022年第二季度软件洞察（英）

Q22022

Software

sectorupdate

QualitativeinsightsintobroaderSoftwaretrendsandpublicandprivatevaluationsacrossthetransactionspectrum,and

interviewswithtoday’sleaderstransformingthesector.

Importantdisclosuresappearattheendofthisreport

GPBullhoundCorporateFinanceLtdandGPBullhoundAssetManagementLimitedareauthorisedandregulatedbytheFinancialConduct

Authority

GPBullhoundIncisamemberofFINRA

GPBullhoundHongKongLimitedisauthorisedandregulatedbytheSecurities&FuturesCommission

GPBullhoundLuxembourgSàrlisauthorisedasanAIFMinLuxembourgbytheCommissiondeSurveillanceduSecteurFinancier

Takeaways

THEV工EW

Q2SoftwarePerspectivesfromGPBullhound

CONTINUOUSDEPLOYMENT-AS-A-SERVICE

USAGE-BASED

PRICINGIS

TAKINGOVER

RUSTBUILDSUP

THENEWCOSTOFCOMPLIANCE

PROFITABILITYRE-DISCOVERED

▪Deploymenthasbecomeacostlybottleneckforsoftwareproviders

▪Theneedforcheapandend-to-enddeploymentoutsourcinghaspresenteditself

▪ContinuousDeployment-as-a-Servicesolutionsarefillingthegapinthemarket

▪Enterprisesoftwarebudgetsareshrinkingduetothecurrentmarketturbulence

▪Usage-basedpricingisreplacingseat-basedandsubscription-basedmodels

▪Adoptionofusage-basedmodelsisgrowingrapidlyamongtechgiants

▪Rustestablisheditselfasamulti-paradigm,all-purposeprogramminglanguage

▪Rusthasrecentlyexperiencedasharpuptickinpopularityduetoitssimplicity

▪BigtechcompaniesarerapidlydeployingRustduetoitsbroaduse-cases

▪Continuoustechnologyadoptionhascreatedanewwebofcomplianceissues

▪Inresponse,regulatorsarelegislatingcontinuoussoftwaremonitoringlaws

▪Continuouscyber-monitoringplatformshaveattractedprivatemarketinvestors

▪Thecurrentmarkethasharshlyre-evaluatedunprofitablesoftwarecompanies

▪Profitabilitybecameamuchmorerealisticvaluationmetricforpublicmarkets

▪IndustryleaderVCsareadvisingsoftwarecompaniestofocusonprofitability

2

ACQUIREDBY

Theusage-basedpricingmovementistakingoverSaaS

▪Usage-basedpricingmodelshaveonceagainbecomethepreferredoptionforcompaniesgivenrevisedsoftwarespendingbudgetsduetothecurrenteconomicclimate.Shrinkingsoftwarespendingbudgetshavemaderesourceplanningmorecautiousthanusual.CompaniesprefertopayaccordinglywiththeextractedvaluefromaSaaStoolratherthanpayingafixedsubscriptionfee

▪Usage-basedpricingisamodelwhereclientspayforaSaaStoolaccordingtotheirmeasuredconsumption.Consumptionmetricsareusuallyalignedwiththevalueextractedbytheclientutilisingthetool.Usage-basedpricinghasprovenitselfintheSaaSecosystemandhasreplacedmoretraditionalfixed-subscriptionandseat-basedmodels

▪MajorSaaScompanieslikeAWSandSnowflakeareofferingusage-basedpricingandareshiftingtherelationshipbetweensoftwareprovidersandtheircustomersfromunfairsubscriptionmodelstowardequitablevalueexchanges

▪Usage-basedmodelscanallowclientstostartproductutilisationatlowercosts,limitingthestigmaaroundexpensivelaunchcosts.Additionally,usage-basedmodelscanexpandTAMforSaaSprovidersbybreakingceilingcaps,astheproductcanbeutilisedatanyscale

Takeaways

GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Selecttransactions

ContinuousDeployment-as-a-Service

▪Large-scaledeploymentshavealwaysbeenasignificantlytaskingmissionontopofsoftwaredevelopment.Multipleplatformintegrations,hiddencosts,professionalplanningrequirements,andITinfrastructurechallengesaresomeoftheobstaclesthatcompaniesfacewhenundertakingdeploymentprojects

▪Intoday’sSaaSecosystem,deploymenthasalsobecomeapainfultaskatsmallerscalesduetotimeandresourceconstraintsthatarefacedmorecommonlyinthelowertiersofthesector

▪Asaresponse,companieslikeArmoryarebringingContinuousDeployment-as-a-Servicesolutionstothemarketbyundertakingalllevelsofdeploymentonbehalfoftheirclientsatreasonablecosts.Armorycanactasastandaloneproductforcloud-firstcompanies,enablingend-to-enddeploymentefficiency

INVESTMENTBY

ACQUIREDBY

3

Sources:Infoworld,SDTimes,TechCrunch,WallStreetJournal,VentureBeat(asof30June2022)

Takeaways

工NVESTMENTBY

FundV

Thenewcostofcompliance

▪Continuousadoptionofnewenterprisetechnologyhasbeenfollowedbyhundredsofnewcybercomplianceregulationscreatingawebofsecuritystandardstocombatnewsecuritythreatsonlocalscalesandglobally

▪Asaresponse,regulatorsaretighteninglawsbycreatingcontinuousmonitoringrequirementsasopposedtotraditionalcompliancecycles.Thecomplexityandaccelerationofnewregulationshasmadetheeffectivenessoftacticalauditmute.Followingtheregulatorytrends,theneedfor24/7security-andcompliance-monitoringSaaShasbecomeareality

▪CompaniessuchasA-LIGN,SecurityCompass,Coalfire,andothershavecreatedsoftwareplatformsthatallowcontinuousmonitoringofacompany’ssecurityandcomplianceprofile,allowingcompaniestorelievetheirITbudgetsandfocusonotherprojects

▪Theneedforcybersecurityservicesandmonitoringplatformshasalsoattractedprivatemarketinvestors.BothA-LIGN(WarburgPincus)andCoalfire(ApaxPartners)arebackedbylargeprivateequityplatforms.Otherprivateequity-backedplatformsincludeAlertLogic(WCAS),eSentire(WarburgPincus),Optiv(KKR),Presidio(BCPartners),Rackspace(Apollo),SecurityCompass(FTVCapital)

工NVESTMENTBY

FundIV

工NVESTMENTBY

FundIV

Takeaways

GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Selecttransactions

Rustbuildsup

▪Rustisarelativelyyoungprogramminglanguagethatfirstappearedin2010buthasrecentlyexperiencedasharpuptickinpopularityduetoitssimplicity,withoutsacrificingcapabilityorflexibility

▪Code-sharingwebsiteGitHubsaysRustwasthesecondfastest-growinglanguageontheplatformsince2019,showinganimpressive235%YoY

▪Rusthasbroaduse-casesacrossapplicationdevelopmentanddatasciencesimilartoPython,withpremierecompanieslikeAmazon,Discord,Dropbox,Figma,MicrosoftandMozilladeployingthelanguageintotheirplatforms

4

Sources:A-LIGN,CapitalIQ,CareerKarma,Gartner,ISC2,Nature,Tiobe,Pitchbook,PRNewswire(asof30June2022)

Takeaways

Takeaways

GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Selecttransactions

Profitabilityre-discovered

▪Thecurrentmarketclimatehasbroughtdownhigh-flyinggrowth-focusedsoftwarecompaniesasthedownturn

becameareality.Incontrasttotheoldinvestortestament,profitabilityhasbecomeamuchmorerealisticmetricfor

publicandprivatemarketvaluations

MERGERANDINVESTMENTBY

▪InQ12022,Bannouncedthatithadgained11,600netnewcustomers,whichwasitslargestadditionsinceits

IPO,andaround3,500morethanthecompany’spriorbestquarter.However,thestockwasnotshieldedbythe

marketdownturngivenitsweakprofitabilitymetrics,andwasdownmorethan40%inQ22022

▪Thesharepriceperformancebetweenprofitableandunprofitablesoftwarebusinesseshasbecomedrastically

differentwithunprofitableonesbeingdownaround50%sinceQ12021,whileprofitableonesbeingdownaround2%in

thesametimeperiod

▪Onagrowth-adjustedbasis,lookingathowmanypointsofEV/Revenuemultiplesareawardedbyinvestorsper

percentagepointofgrowth,bothprofitableandunprofitablesoftwarecompanieswerevaluedsimilarlyatthepeaks

of2021.However,withthecurrentmarketclimate,thesamegrowth-adjustedanalysisshowsthatinvestorsvalue

INVESTMENTBY

growthalmost40%lesswhencomparedto2021.Althoughinvestorselectivityhassignificantlyincreased,itisagreat

timeforunprofitablesoftwarecompaniestoprovetheirbusinessmodelsbybecomingprofitable

▪Focusonprofitabilityisalsoabigemphasisintheprivatemarkets.SeasonedSaaSinvestor,BatteryVentures,has

releasedtheirquarterlyreport,"TheCloudQuarterly:AFounder'sAlmanac",mainlyadvisingfounderstofocusonthe

profitabilitycomponentofthe“Ruleof40”matrixduringtheseunprecedentedtimes,whenlayoffshavebecomemore

commonthanever

INVESTMENTBY

5

Sources:BatteryVentures,BusinessInsider,CNBC,FinancialTimes,HGCapital,TechCrunch,WallStreetJournal(asof30June2022)

ACQUIREDBY

INVESTMENTBY

ACQUIREDBY

INVESTMENTBY

INVESTMENTBY

Investment

Banking

ACQUIREDBY

ACQUIREDBY

ACQUISITIONANDGROWTHINVESTMENTBY

INVESTMENTBY

ACQUIREDBY

INVESTMENTBY

FundIV

INVESTMENTBY

FundV

INVESTMENTBY

FundIV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

InvestmentManagement

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundIV

EURONEXTIPO

FundIII

Takeaways

ALEADINGTECHNOLOGYADVISORYANDINVESTMENTFIRM,PROVIDINGTRANSACTIONADVICEANDCAPITAL

GPBullhound’srecentSoftwareactivity

MERGERANDINVESTMENTBY

ACQUIREDBY

INVESTMENTBY

FundIV

INVESTMENTBY

FundIII

6

CEOcommentary

Selecte

Date

dprivatefina

Leadinvestor(s)

ncings

Issuer

Issuerdescription

Amount($m)

Jun-22

ProviderofHRsoftwareforSMBs

470

May-22

Providerofunifiedaccessorchestrationandapplicationsecuritysoftware

200

May-22

Providerofsourcing,payroll,andtalentmanagementsoftware

400

May-22

Providerofapoint-of-saleandcustomerengagementsoftware

300

May-22

Providerofacloud-basedpayroll,benefits,andhumanresourcemanagementsoftwaresuite

230

May-22

ProviderofaHRmanagementandIToperationssoftware

250

Apr-22

Providerofcontinuousdelivery-as-a-servicesoftwareforengineeringandDevOpsteams

230

Apr-22

Providerofopen-sourcemonitoring,interactivevisualisation,andmetricanalyticssoftware

240

Apr-22

Developerandoperatorofanindependentpaymentplatformfordigitalcontentmonetisation

690

Transactiontrends

NOTABLESOFTWAREM&ADEALS&PRIVATEFINANCINGS

NotabletransactionsfromQ22022

Selecte

Date

dM&Atrans

Buyer

actions

Target

Targetdescription

EV($m)

EV/LTMRev

Jun-22

Providerofenvironmentalhealth,andlearningmanagementsoftware

390

6.9x

Jun-22

Providerofconnectedhealthcaresoftware,systemsandsolutions

1,632

7.1x

Jun-22

Providerofsoftwaresolutionsforfacilities,energy,safety,andITassetmanagement

1,875

-

Jun-22

Providerofcustomersupport,sales,andothercommunicationssoftware

10,200

6.4x

Jun-22

Providerofintegratedbusinessapplicationsoftwaretomiddle-marketcompanies

11,476

-

Jun-22

Providerofsoftwareforambulatorycareservices,carehomes,andtherapists

1,062

-

May-22

Providerofregulatoryandcompliancesoftware

1,345

14.1x

May-22

Providerofsoftwaresolutionsintheareasofsecurity,cloudinfrastructure,andmore

61,000

5.0x

Apr-22

Providerofidentitysecuritysoftwaresolutions

6,900

14.0x

Sources:CapitalIQandMergerMarket(asof30June2022),GPBullhoundintelligence

7

Transactiontrends

GLOBALSOFTWARETRANSACTIONTRENDS

Globaldealmakingexperiencespullback

M&A/buyoutactivitycoolsafterhotstreak

$300B

$250B

$200B

$150B

$100B

$50B

$0M

M&AVolumeBuyoutVolumeM&AdealsBuyoutdeals

900

800

700

600

500

400

300

200

100

0

Similarstoryforprivateplacements

$80B

$70B

$60B

$50B

$40B

$30B

$20B

$10B

$0M

Capitalinvested($bn)Volume

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

MajorityofM&A/buyoutstookplaceintheU.S.andEurope

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Privateplacementsrelativelystableacrossregions

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

US&Canada

Europe

Asia

Other

US&CanadaEurope

Source:Pitchbook(asof30June2022)

Note:DataincludesallSaaSM&AandprivateplacementdealsasdefinedbyPitchbookregardlessofgeography;”Other”includesAfrica,Oceania,South/CentralAmerica,andtheMiddleEast

AsiaOther

8

0

0

Transactiontrends

SOFTWAREIPOLANDSCAPE

Recessionconcerns,broadsell-offsuppressIPOactivity

▪SoftwarecompaniesoptedtorefrainfromgoingpublicinQ22022,acontinuationofQ12022’ssuppressedactivity

▪Ongoinggeopoliticalconflictandrecessionfearsfueledbyheightenedinflationandhawkishcentralbankactivityfrightenedinvestorsandledtoabroadmarketsell-off,withtheNASDAQendingH12022down30%andofficiallyinbearmarketterritory

▪High-calibercompanieshavestillbeenabletoraiseprivatefundingdespiteinvestorstighteningpursestrings,promptingthemtowaitouttheturbulenceandgopublicwhenmarketsareconducivetomoreattractivevaluations

SoftwareIPOsbyquarter

99

8

55

4

3

2Q203Q204Q201Q212Q213Q214Q211Q222Q22

ListingstolookforinH22022+

Company

Overview

Providerofanall-in-onecollaborationplatformdesignedtodemocratisesoftwarecreation

Developerofaweb-scaleplatformdesignedtosimplifythewaycompaniesprotect,manageandextractvaluefromtheirdata

Developerofanenterprisesoftwareapplicationfordatawarehousinganddatalakes

Developerofaninstantmessaging/VoIPplatformforfriends,colleagues,andcommunities

Developerofanapplicationforon-demanddelivery

Providerofanapplicationforinteractivedataanalysis,enterprise-classanalytics,datadiscoveryandsalesperformanceanalysis

Operatorofasocialnetworkplatformdesignedforpeopletodiveintoanythingthroughexperiencesbuiltaroundtheirinterests

Providerofanemployeemanagementplatformintendedtohelpeliminatetheadministrativeworkinacompany

Developerofcloud-basedsoftwaredesignedtoacceleratethehomeandcommercialserviceindustries

Sources:CapitalIQ,Pitchbook(asof30June2022)

Note:SoftwareIPOdatagraphbasedoffpreviousGPBullhoundreports

9

February/March2021:ThoughSaaSvaluationsarestillsignificantlyabovehistoricallevels,anewUSpresidentialadministration,inflationconcerns,andrisinginterestratescontributedtoamodestpull-backoftheSaaSIndex

March2020:Afterabriefinitialsell-off,SaaSstocksenjoyedsignificantappreciationthankstotheforceddigitisationoftheworldcausedbythepandemic

December2018:

TradewarwithChinaleadstosell-offofSaaSstocks

Publiccompanyanalyses

REVENUEMULTIPLETRENDS–LASTFIVEYEARS

GPBullhoundSaaSindexvaluations

ContinuedSaaSsell-off–valuationsdroppedbelowthefive-yearmean,butwithagreaterdisparitybetweenhigh-andlow-growthSaaSvaluations

Asof30June,theMediumGrowthSaaSIndexistradingat6.1xnext12-monthrevenues,whichis29.2%lessthantheHighGrowth

45.0x

40.0x

35.0x

30.0x

25.0x

20.0x

15.0x

10.0x

5.0x

0.0x

November2021-Present:TheCovid-19Omicronvariant,geopoliticaltension(includingRussia’sinvasionofUkraine),ongoingglobalsupplychainissues,andhawkishmonetarypolicy,havetriggeredasteepsell-offacrossmarketsandregionsthatbroughttechvaluationsbelowthefive-yearaverage

Median:7.2x

Median:5.7x

Median:3.1x

Jun'12

Jun'13

Jun'14Jun'15Jun'16Jun'17Jun'18Jun'19

Jun'20

Jun'21

Jun'22

GPBSaaSIndex-EV/NTMRevenues

HighGrowthMediumGrowthLowGrowth

10

Sources:CapitalIQandWallStreetJournal(asof30June2022)

Note:HighGrowth:>40%,MediumGrowth:15-40%,LowGrowth<15%

110%

100%

90%

Publiccompanyanalyses

GPBULLHOUNDSAASINDEXPERFORMANCE

Sell-offcontinuestoimpactsectorperformance

L1M

80%

70%31/05/202210/06/202220/06/202230/06/2022

S&P500NASDAQCompositeGPBMasterSaaSIndex-IndexValue

L6M

110%

100%

90%

80%

70%

60%

50%

31/12/202131/01/202228/02/202231/03/202230/04/202231/05/202230/06/2022 S&P500NASDAQCompositeGPBMasterSaaSIndex-IndexValue

Sources:CapitalIQ(asof30June2022)

L3M

110%

100%

90%

80%

70%

60%

50%

31/03/202230/04/202231/05/202230/06/2022 S&P500NASDAQCompositeGPBMasterSaaSIndex-IndexValue

L12M

120%

100%

80%

60%

40%30/06/202130/09/202131/12/202131/03/202230/06/2022

S&P500NASDAQCompositeGPBMasterSaaSIndex-IndexValue

11

Publiccompanyanalyses

PUBLICSAASMETRICBENCHMARKING

KeymetricsforSaaSinvestors

RevenueYoYgrowth(1)

66%

57%

46%

42%

40%

37%36%35%

33%

29%27%26%26%26%

20%

17%17%

12%12%

Paybackperiod(2)

Inmonths,lowerisbetter

62.8

37.6

28.9

23.423.8

20.5

14.714.7

10.4

29.6

21.8

22.4

22.1

15.8

17.8

16.2

15.9

11.2

8.8

Freecashflowmargin(3)

44%

40%

37%

32%32%

25%

23%

19%

18%

15%

5%

7%7%

3%0.9%1%

-3%

-28%-34%

Netdollarretention(4)

177%

143%

126%

119%

98%

130%

127%

124%

120%

120%

Sources:CapitalIQ,companySECfilings,andGPBullhoundestimates(asof30Jun2022);Note:1CY22E/CY21A;2(S&MLTM

Jun.2021/((LTMJun.2022rev.–LTMJun2021rev.)*GM%))/12;3LTMJun.2022operatingcashflow/LTMJun.2022revenue;

4Asstatedincompanyfilings&earningsreleases

12

Best

in

class

Verygood

Exceptional

Good

Publiccompanyanalyses

PUBLICSAASMETRICBENCHMARKING

GPBullhoundSaaSindex–netdollarretention

--

177%

143%

130%

127%

126%

124%

120%

120%

Median:125%

119%

98%

SnowflakeUnity

DatadogCloudflareTwilioOktaAsanaDocuSign

Sources:CompanySECfilingsandGPBullhoundresearch(asof30June2022)

GPBullhoundNetDollarRetentionRanges:Goodas100%-110%,Verygoodas110%-120%,Best-in-classas120-130%,andExceptionalas>130%

VeevaServiceNow

13

EV/NTMRevenue

Publiccompanyanalyses

PUBLICSAASMETRICBENCHMARKING

Retentionisthemostimportantdeterminantofvaluation

Weexaminedtheimpactofretentiononvaluationbycreatinga‘GPBSaaSScore’,definedasrevenuegrowth+FCFmargin+netdollarretention.Weobservethatcompanieswithhigherretentionaretradingatmoreattractivevaluationsinpublicmarkets

25.0x

20.0x

15.0x

10.0x

Datadog

Snowflake

Cloudflare

Veeva

Okta

Unity

DocuSign

5.0x

Twilio

0.0x

140%160%180%200%220%240%260%280%

GPBullhoundSaaSScore

Sources:CapitalIQandcompanySECfilings(asof30June2022)

14

2021unleveredFCFmargin%

COUP

LVC

DSYTEMN

TMV

ZMDOCU

RNG

CRM

WKME

PLTR

FRSH

MIME

SMCRTSPLK

PCOR

PWSC

WDAY

DDOG

APPF

HCP

SPT

DT

BLND

ZENV

XM

LEMON

TENB

BMBLPAYC

FROG

SUMOWK

PD

DVSEMR

ESMT

CWAN

NEWRWIXTWOU

AYX

ESTC

PCTY

LPSN

MSP

FIVN

ZUOEVBG

HUBS

MDB

NET

CDAY

LIME

EGHT

QTWO

SPSC

BRZE

ECOM

UDOUL

INTA

EYE

FAA

RXT

SHOP

GHT

YEXT

PING

NEM

SOW

INFA

AMPL

TWLO

FPIP

SNOW

WKL

DBX

DOTD

SAP

BCOVEMIS

TIETO

BNFT

Ruleof40%line

SCWX

Publiccompanyanalyses

REVENUEGROWTHVS.PROFITABILITYOFGPBULLHOUNDSAASINDEXCONSTITUENTS

Ruleof40%–PublicSaaS

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

(10.0%)

OKTA

ZS

SUSE

UPLD

QLYS

BOX

AVST

NOW

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%

2022/21revenuegrowth%

Sources:CapitalIQ(asof30June2022)

15

2022EV/revenue

Marketperformers

Marketoutperformers

Marketunderperformers

Publiccompanyanalyses

COMPANIESHIGHERONTHERULEOF40%SCALEAREGENERALLYVALUEDHIGHERBYINVESTORS

Ruleof40%–PublicSaaS(cont.)

20x

18x

16x

14x

12x

10x

8x

6x

4x

2x

0x

U

SPT

PAYC

NOW

ASAN

NEMSHOP

CWANPCTY

PLTR

HUBS

DT

LAW

WKESMTDSYXMPCOR

LEMONFIVNLVCCOUP

QLYS

SPSC

APPNTENBBRZE

DV

CDAYDOULWDAY

APPFMIMEBLNDSMCRT

SUSE

Ruleof40%line

DOCUFROG

FRSH

EXFYOLOLIMEAVST

PINGTEMNZENV

ESTC

USERCRM

MLNK

APP

MSPSEMRPD

QTWORNGAMPLTWLOSPLK

WKLBIGCPWSCZMAYX

VTEX

FPIPAIEMISZUO

NEWREVBGINTATMVBOX

SAP

SNOW

BASEWKMEBMBL

AVDX

LPSNDOTDFAASUMO

WIX

BNFTINFAUPLD

BLIND

EYEEGHT

DBX

SINCH

YEXTGHTRXT

BCOV

TWOU

ZENV

TIETO

WEAVECOM

SOW

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%

Ruleof40%

Sources:CapitalIQ(asof30June2022)

16

$156,264

$150,111

$3,479

$1,956

$125,949

$40,926

$21,802

$3,045

$504

$3,465

$102,506

$123,261

$143,296

$2,932

$1,937

$97,903

$35,997

$5,959

$4,634

$328

$2,941

Publiccompanyanalyses

CAPITALALLOCATION

Techgiants–showmethemoney

▪Totaltechgiantspendingwasapproximately26%higherduringtheLTMtoQ22022p