Loading ...
Techceler...
Other
SaaS and Business Software
36
0
Try Now
Log In
Pricing
MarketTracker™ B2B SAAS TECHNOLOGY SECTOR Covering the six month period ending 31 January 2021 WWW.BOXINGTON.COM – 1 – This document contains significant assumptions and has been prepared by Boxington Corporate Finance (Boxington) based on publicly available information, or additional information supplied by the owners and/or managers of the companies described in this document, which has not been independently verified. Accuracy and completeness of the information provided has been presumed and, therefore, its content may or may not be accurate and complete. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information or statements made in this document and Boxington, its affiliates, directors, officers, employees and representatives expressly disclaim any and all liability with regards thereto. This document has been prepared for informational purposes only, is not a research report (as such term is defined by applicable law and regulations) and is not to be relied on by any person for any purpose. In addition, it is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. No part of this material may be copied or duplicated in any form, or redistributed, without the prior written consent of Boxington. • VALUATION TRACKER IMPORTANT NOTICE WWW.BOXINGTON.COM – 2 – • VALUATION TRACKER “Investors are more optimistic than ever about the B2B SaaS sector’s long-term growth prospects because of the permanent impact of the pandemic” ALEX COOPER Assistant Director Boxington Corporate Finance WWW.BOXINGTON.COM LONDON 52 Brook Street London W1K 5DS United Kingdom T +44 (0)207 355 6270 TOKYO 8th Floor, TOC Dai-ichi Building 1-8-3 Shibuya, Shibuya-ku Tokyo 150-0002 Japan T +81 (0)50 5534 9624 CHICAGO 150 S Wacker Drive Chicago, IL 60606 United States T +1 (312) 788 2620 B2B SAAS TECHNOLOGY SECTOR MarketTracker™ BOXINGTON is a modern, full service corporate finance advisory house, operating nationally and internationally out of London (UK), and focused exclusively on advising mid-market companies across the Business to Business (B2B) Services and Technologies space including the SaaS Technology sector. TIM EVANS Managing Director T +44 (0)207 355 6272 T +44 (0)7584 902 744 E twe@boxington.com SATNAAM KAUR VIRDEE Research Manager T +44 (0)207 268 2265 T +44 (0)7547 531 226 E skv@boxington.com REPORT AUTHORS ALEX COOPER Assistant Director T +44 (0)207 268 2025 T +44 (0)7469 927 413 E ac@boxington.com ABOUT US REPORT SUMMARY ● The pandemic has accelerated by many years the on-going shift towards digitisation and given an unprecedented growth opportunity to B2B SaaS businesses, with average share valuations increasing by c.33% in the period – see page 4 ● With the light at the end of the Covid tunnel starting to appear, investors are more optimistic than ever about the B2B SaaS sector’s long-term growth prospects because of the permanent impact of the pandemic including, but not limited to, remote working, remote education/ training and renewed employee/ consumer engagement methods. ● Valuation revenue multiples performed strongly, with the average quoted multiple moving meaningfully upwards by c.22% to 9.8x over the six months to 31st Jan 2021 – see page 5 ● It can be seen from the wide distribution of multiples that businesses undergoing cloudification/ transition to SaaS models attract lower multiples than those which are already SaaS-based. ● M&A deal activity in B2B SaaS was buoyant during the period. The nature of deals highlighted the on-going shift in the B2B M&A market of buyers acquiring niche SaaS businesses to broaden, digitise, differentiate or modernise existing services – see pages 7-8 ● We are often asked about SaaS valuation dynamics and have therefore finished our report with a look at the key factors that influence revenue multiples of B2B SaaS businesses – see pages 10-11 Boxington is authorised and regulated by the Financial Conduct Authority. WWW.BOXINGTON.COM – 4 – FROM 1 AUGUST 2020 TO 31 JANUARY 2021 Percentage change in share price (%)• VALUATION TRACKER VALUATION MOVEMENTS © 2021 Boxington Corporate Finance UK USA EUROPE APAC 49.7% 88.9% 48.0% -3.1% 13.3% 10.4% 4.9% 10.5% 97.1% 65.6% 48.8% -6.9% 52.1% 3.3% -8.8% 59.4% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Dotdigital’s strong share price performance has been driven by the pandemic’s acceleration of digital marketing, which is bulking up the new business pipeline and driving increased uptake of Dotdigital's SMS and chat offerings. In addition, the company continues to execute well on its geographic expansion into the Americas and APAC regions, with FY20 revenue growing by 12% in FY20. Despite Sage’s relatively decent FY20 (Sep end) results its share price has been one of the weaker performers over the past 6 months. This is largely due to its slowing growth, increasing OpEx and the challenge of the on- going cloudification process of its portfolio. ReadyTech, a provider of people management software, has enjoyed a rally in its share price thanks to its acquisition of Open Office, a local Government software solutions provider with operations in ANZ and the UK. Investors expect the deal will add revenue diversification and offer a beachhead to a future UK expansion. Average movement +33.3% Serviceware’s valuation increased strongly on account of its recent revenue growth of +16% year-on-year, driven by SaaS revenues doubling (comprising 41% of group revenues) as the Business continues its shift away from a licence- based model. This transition to SaaS is reflected in Serviceware’s subdued revenue multiple (see overleaf). WWW.BOXINGTON.COM – 5 – Change in REVENUExover 6 monthsFROM 1 AUGUST 2020 TO 31 JANUARY 2021 REVENUE MULTIPLE MOVEMENTS * Discounts to public company multiples are typically needed when applied to private companies to reflect risk and liquidity differentials. © 2021 Boxington Corporate Finance Current EV/Revenue multiple (decreased) Prior 6 months EV/Revenue multiple Key Current EV/Revenue multiple (increased) UK USA EUROPE APAC 7.7x 6.7x 7.0x 3.8x 3.7x 14.6x 3.7x 5.9x 11.3x 12.5x 1.3x 26.6x 11.6x 10.5x 4.7x 3.7x 9.2x 11.1x 8.6x 3.5x 4.0x 18.7x 5.7x 7.5x 18.8x 15.2x 2.0x 20.6x 12.1x 10.4x 3.4x 5.4x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Ceridian’s multiple increased significantly by c.28% on the expectation that its sales activity will continue to ramp up, with it achieving pre-COVID sales targets and announcing a number of enterprise customer wins. Growth is expected to be driven by a combination of the acquisition and successful integration of Excelity, driving strong growth in Asia Pacific, and the launch of its new Digital Wallet product which has been gaining strong traction. The c.23% drop in TeamViewer’s multiple reflects investors question on whether it can sustain its supernormal growth (42% yoy revenue growth). However, its multiple remains high given the long-term change in working patterns from which it will continue to benefit. PayGroup has felt the impact of Covid with reduced demand from the workforce management firms that use its SaaS payroll billing software. The decrease of c.28% in its multiple, reflects the challenge single/ limited product SaaS firms face when demand for their core product dips. Average multiple 9.8x Average movement +22.4% WWW.BOXINGTON.COM M&A ANALYSIS UNDERSTANDING WHY B2B BUYERS HAVE MADE SAAS ACQUISITIONS Covering the six month period ending 31 January 2021 WWW.BOXINGTON.COM – 7 – UNDERSTANDING WHY B2B BUYERS HAVE MADE SAAS ACQUISITIONS • VALUATION TRACKER M&A ANALYSIS • Our M&A matrix (opposite) assesses the reasons why selected B2B SaaS acquisitions have been made by their buyers over the past six months. • We see the majority of deals weighted towards the right-hand side of the matrix, highlighting the on-going shift in the B2B M&A market of buyers (both technology and services) acquiring niche SaaS businesses to broaden, digitise, differentiate or modernise existing services. • This shift towards SaaS has been accelerated by Covid, as technology and the tech-enablement of services becomes a mainstream commercial norm, not least to meet the long-term changes in working, education and engagement models. • We expect buyers to continue to acquire for scale and international reach as the addressable market and demand for SaaS technologies continues to grow and accelerate. • See overleaf for a closer look at the selected deals. “This shift towards SaaS has been accelerated by Covid, as technology and the tech- enablement of services becomes a mainstream commercial norm ” Alex Cooper Assistant Director ac@boxington.com WWW.BOXINGTON.COM – 8 – UNDERSTANDING WHY B2B SaaS BUYERS HAVE MADE ACQUISITIONS • VALUATION TRACKER M&A ANALYSIS © 2021 Boxington Corporate Finance INCREASING RANGE OF PRODUCTS INCREASING GEOGRAPHIC COVERAGE INCREASING MARKET SHARE & SYNERGIES DIFFERENTIATING EXISTING PRODUCTS SCALE SERVICES DEFENSIVE STRATEGIC Buyers Asia and Australia WWW.BOXINGTON.COM B2B SAAS VALUATION GUIDANCE UNDERSTANDING HOW REVENUE MULTIPLES ARE DETERMINED WWW.BOXINGTON.COM – 10 – • VALUATION TRACKER “Valuation of B2B SaaS businesses are mainly, but not entirely, determined by the aggregate of their Fundamental metrics and Growth metrics ” TIM EVANS Managing Director Boxington Corporate Finance WWW.BOXINGTON.COM – 11 – VALUATION GUIDANCE FOR SAAS BUSINESSES WITH <£10M ARR • VALUATION TRACKER SAAS VALUATION MATRIX FUNDAMENTAL METRICS GROWTH METRICS LOW MEDIUM HIGH HIGHMEDIUMLOWSaaS vs NON SaaS REVENUE MIXEXISTING SCALE (REVENUE) & SCALABILITYDIFFERENTIATED PRODUCT/ MODELSCARCITY VALUEADDRESSABLE MARKET SIZEANNUAL RECURRING REVENUE (ARR) CLIENT LIFETIME VALUE (CLV) RULE OF 40* CLIENT ACQUISITION COSTS (CAC) AVERAGE REVENUE PER CLIENT (ARPC) • Valuation of mid-market B2B SaaS businesses are mainly, but not entirely, determined by the aggregate of their Fundamental metrics and Growth metrics. See matrix opposite where we show some (top 5) of the key metrics. • As in the case for traditional non-SaaS valuation, SaaS valuation is additionally influenced by external factors such as the strategic ambitions of individual buyers for any given SaaS asset and the level of competitive tension that is created in an investment process. • To discuss further please contact Tim Evans, Managing Director, at twe@boxington.com * Rule of 40 = Revenue growth % + Profit margin % Top 5 Top 5 © 2021 Boxington Corporate Finance WWW.BOXINGTON.COM APPENDIX BASE DATA WWW.BOXINGTON.COM – 13 – B2B SaaS TECHNOLOGY SECTOR • VALUATION TRACKER BASE DATA UK USA EUROPE APAC USD$ Enterprise Value (EV) 1,844.20 700.63 1,577.02 9,084.04 3,734.05 14,066.66 3,792.18 2,737.13 1,777.00 576.62 170.30 10,976.47 289.88 360.87 37.40 163.09 Comparable EV (-6 months) 1,277.66 401.30 1,246.82 10,342.63 3,457.83 13,143.69 2,399.94 2,127.71 968.74 391.70 109.23 12,637.63 207.00 415.56 39.24 105.83 Market Capitalisation 2,029.36 729.32 1,666.85 8,865.96 3,210.06 13,611.96 2,642.26 2,530.02 1,800.51 567.84 205.84 10,369.02 346.09 450.21 42.65 147.88 Net Debt -185.16 -28.69 -89.82 218.08 523.99 454.70 1,149.92 169.97 -23.42 8.78 -35.42 607.45 -53.05 -92.76 -6.83 14.49 Last 12 Months (LTM)Revenue 193.94 65.02 180.44 2,610.14 908.45 841.50 683.59 375.69 98.12 39.26 86.86 536.02 23.74 38.32 10.33 30.06 EBITDA -75.99 19.63 54.30 795.52 148.50 98.40 100.36 -115.46 32.01 10.68 -4.45 257.60 -8.30 -12.90 0.39 6.60 EBIT -84.49 16.98 21.86 711.86 44.38 73.70 26.71 -143.34 28.41 8.70 -5.88 220.01 -9.86 -16.89 -0.09 4.27 EV/REVENUEx 9.5x 10.8x 8.7x 3.5x 4.1x 16.7x 5.5x 7.3x 18.1x 14.7x 2.0x 20.5x 12.3x 9.3x 3.5x 5.4x EV/REVENUEx (-6 months) 7.2x 6.4x 7.0x 3.9x 3.8x 15.6x 4.1x 6.3x 10.8x 10.7x 1.3x 25.6x 10.9x 11.8x 5.1x 3.8x As at 31 January 2021 Source © 2021 Boxington Corporate Finance London | Tokyo | Chicago
