GP Bullhound：2023年Q1全球软件报告

Q12023

Software

sectorupdate

Qualitativeinsightsintobroadersoftwaretrendsandpublicand

privatevaluationsacrossthetransactionspectrum,andinterviews

withtoday’sleaderstransformingthesector.

Importantdisclosuresappearattheendofthisreport

GPBullhoundCorporateFinanceLtdandGPBullhoundAssetManagement

LimitedareauthorisedandregulatedbytheFinancialConductAuthority

GPBullhoundIncisamemberofFINRA

GPBullhoundLuxembourgS.ÀR.L.isregulatedbytheCSSFinLuxembourg

Takeaways

Transactiontrends

CEOcommentary

Publiccomparables

Aboutus

Publiccompanyanalyses

GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Strengtheningthesupplychain:Supplychain“digitaltwins”gainprominence

▪Legacymethodsfordesigningandplanningsupplychainsarestaticandrelativelymanual,makingthemlessthanidealformodernsupplychainsthatarecomplexanddynamic.Inresponse,organisationshavebeenincreasinglyturningtosupplychain“digitaltwins”–avirtualabstraction/simulationofacompany’send-to-endsupplychainconfiguration

▪Digitaltwinsprovideseveralkeyadvantagesinacentralisedhub,includingstreamlinedsupplychaindesign,predictiveanalyticsforproductiondelays/leadtimes,andhighvisibilityofeverystageofanorder’sjourney(fromproductiontoshipping),allowingdecisionmakerstoreactandadapttoreal-timesupplychaininformation.Thispresentsauniqueopportunityforverticalagnosticdigitaltwintoolstoenterthespaceorteamupwithexistingplayers

▪InnovativecompaniesinthesupplychaintechspacewithdigitaltwinofferingsincludeCoupa,whichwasrecentlyacquiredbyThomaBravofor$8bn.BlueYonder,whichwasrecentlyacquiredbyPanasonicfor$7billion,isanotherleaderinthesupplychaintechnologyspace.Themarketforglobaldigitaltwinswasestimatedtobe$11bnin2022andgrowingataCAGRof37.5%

DataSwissarmyknife:CDPsareexpandingtheirusecasesandexperiencingunprecedentedgrowth

▪CDPshaveevolvedoverthelastfewyearstobecomeoneofthemostimportantcomponentsofanorganisation'stechstack,withmoreandmoredepartmentswantingaccesstounifiedcustomerdataprofiles,asusecasesexpandbeyondmarketing

▪WiththeintegrationofCDPsintofull-stackmarketingandthedramaticimprovementinmachinelearning,thereisanopportunityforreal-time,predictiveanalyticswherebyorganisationsusethefirst-partydatatheyhaveoncustomerstoimprovemarketingROI.Andascompaniescollectmorezero-partydata(highlypersonalisedinformationgivendirectlyby

users),weexpecttheseenrichedcustomerprofilesandAItechnologytoprovidefutureprooftargetingandattributionmethods

▪Withunifiedcustomerdatabeingsuchanintegralpartofanymoderncompany'ssuccessfuldigitalstrategy,therearemanygrowthopportunitiesforcompaniesthathavebuiltpureplayCDPs(asopposedtorepurposedDMPs),likeverticalspecificity,APIsforintegrationandexpandedusecases,appecosystems,privacyanddatacompliance,andbroaderdatamanagementsolutions.Alongsideanexpansionofpotentialusecases,theTAMforCDPsislikelytogrowfrom$4.8bnin2022toover$19.7bnbytheendof2027,ataCAGRof32.4%.Thisisinpartdrivenby“pre-packaged”CDPsthatgiveSMBsaccesstoafullsuiteofdataandmarketingtools

Selecttransactions

INVESTMENTBY

INVESTMENTBY

ACQUIREDBY

Source:TechTarget,CDPInstitute,GlobeNewsWire,Coupa,MIT,Forbes,Venturebeat,GrandViewResearch

Q12023Softwaresectorupdate3

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GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Costoptimisation:Deeperunderstandingofacompany'sfinancialcostcenters

▪Costoptimisationsoftwarehasbeenatthetopofexecutivemindsascompanieslooktocontrolspendingintheeraoftechlayoffsandnewfoundfocusonprofitabilityandefficiency.Risinginflationputtingupwardspressureondirectandindirectcostsforbusinesseshasonlyservedtoexacerbatetheproblem

▪Marketvolatilityandincreasedinvestorscrutinyhaveencouragedcompaniestoadoptcostoptimisationplatforms,asbusinessessearchformorecomprehensiveviewsoftheircompany’scostcenterswithaddedanalyticalfunctionalityorothercontrols.Theglobalcostoptimisationsoftwaremarketislikelytosurpass$29bnin2028asaresult,representingaCAGRof10%

▪Coupa,alargeplayerinthecostoptimisationsoftwarespacewithafocusonsupplychain,wasrecentlyacquiredbyThomaBravofor$8bn,whichplanstocapitaliseontheseopportunisticmarketconditions.ItalsoacquiredLlamasoftinNovember2020tostrengthenitsgraspofthespendmanagementspace.LlamasoftprovidedCoupawithimprovedaccounting,actualtime-spendingtransparency,andadeeperbenchofsupplychainsolutionsforcustomers

AIincybersecurity:Anewchapterforbothsidesofthedigitalarmsrace

▪Asthecybersecurityarmsracecontinuestoevolve,theincreasinguseofAIbybothattackersanddefendersiscreatinganewchapterintheongoingbattlefordigitalsecurity,settounfoldoverthecomingyear

▪AIisincreasinglybeingusedbyattackerstocreatemaliciouspayloadsthatcanavoiddetectionandgeneratepersonalisedphishingemails.TherecentGoDaddymultiyearbreachappearstohavebeenacyberattackpoweredbyAI

▪Ontheotherhand,behaviouralanalyticspoweredbyAIoffersreal-timeinformationaboutsuspiciousactivity,bydetectingandrespondingtoanomalies.ThisapproachisprovingeffectiveforCISOsandtheirteamswhenestablishingnormsfortypicalbehaviour,byanalysingandcomprehendingpastbehaviouraltrends,andsubsequentlyidentifyinganomaliesinthedata

▪TheincreasingAIutilisation,frombothsecurityprofessionalsandhackers,hasledtomassivegrowthinthesector.TheAI-enabledcybersecuritymarketissettogrowataCAGRof24.4%,anditsvalueissettoexceed$94bnby2030

Selecttransactions

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundIV

Source:ArsTechnica,Venturebeat,GlobeNewsWire,LinkedIn,Gartner,McKinsey

Q12023Softwaresectorupdate4

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GPBULLHOUND’SSECTORTAKEAWAYS

CurrentsoftwareperspectivesfromGPBullhound

Trainingsoftware:Frictionlessonboardingandproducttrainingimproveadoptionandretention

▪UnderstandingaSaaSproduct'svalueandcapabilitiesiscrucialtouserengagementandretention,withtheamountoftimetosuccessfullyandcompletelyonboardanewcustomercrucialtothesuccessofthattoolwithinthebuyer'sorganisation

▪CompanieslikeUserpilot,Pendo,andAppcueshavebeenactiveincreatingcustomisableonboardingprogramsthatalloworganisationstotailortheirtrainingforamorefrictionlessexperience.Capabilitiesincludemanagingemployeelearninganddevelopmentthroughdetailedanalytics,ensuringusersobtainqualityproductknowledge,andguidancetowardsspecificcompanyinitiativesthatresultinanincreasedengagementandadoptionofB2Btrainingsoftwaretools

▪Companiesthatprovidequalitytrainingsoftwareandtoolsofferorganisationstheopportunitytodecreasetheneedforhumancapital,subsequentlyleadingtostrongergrossmarginsandamorefrictionlessuserexperiencethatearninghigherretention.Asaresult,thetrainingsoftwaremarketissettoreach$115.5bnby2028,representingaCAGRof10.3%

Customerexperience:CXgoesconversationalwiththeriseofLLMsandNLP

▪CXisbecomingincreasinglymoreconversationalthankstorecentadvancementsinAILargeLanguageModelslikeGPT-4.VoicetechnologyincludingvoiceAPIs/speechrecognitioncannowbridgethegapbetweenvocalisedthoughtsandadvanceduserfunctionalityorinteraction

▪Thisrenaissanceinlanguageprocessingandrelatedvoicetechnologymeanscustomerscannoweffectivelytalktobrands,whichinturnenablesbrandstocapturebettervoicedataandproducericheranalytics.CompanieslikeAssemblyAI,Dialogflow,Replicant,UniphoreandVoicifyarebutafewoftheemergingnamesinthespace

▪Automaticspeechrecognitionfeaturesarenowcentraltopersonalisation,retention,andfrictionlessvoicedrivenself-serviceoptions.Voicetechnologiessuchasinteractivevoiceresponse(voicecommandsandtouch-tonekeyselections),conversationalAI,andvoice-botsarebutsomeofthevoicetechnologiesenhancingCXcapabilities

▪AsCXcapabilitiescontinuetoevolve,gonearethedayswhenvoicewasconsideredtooinaccurate,orunavailableintoomanylanguagesandaccentstobedeemedreliable.Fortheforeseeablefuture,providingtimelyandintuitivevoicedrivencustomerservice,forcustomersfromallbackgrounds,willbeaCXpriorityandkeygrowtharea

Source:Userpilot,VerifiedMarketResearch,Forbes,Voicify

Selecttransactions

MERGERAND

INVESTMENTBY

ACQUIREDBY

ACQUIREDBY

Q12023Softwaresectorupdate5

Takeaways

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Publiccomparables

Aboutus

ACQUIREDBY

ACQUIREDBY

ACQUIREDBY

MAJORITYGROWTH

BUYOUTFROM

INVESTMENTIN

INVESTMENTBY

MERGERAND

INVESTMENTBY

ACQUIREDBY

INVESTMENTBY

INVESTMENTBY

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundV

INVESTMENTBY

FundIV

INVESTMENTBY

FundIV

INVESTMENTBY

FundIV

INVESTMENTBY

FundIV

Publiccompanyanalyses

ALEADINGTECHNOLOGYADVISORYANDINVESTMENTFIRM,PROVIDINGTRANSACTIONADVICEANDCAPITAL

GPBullhound’srecentSoftwareactivity

InvestmentBanking

ACQUIREDBY

ACQUIREDBY

InvestmentManagement

INVESTMENTBY

FundV

INVESTMENTBY

FundIV

Q12023Softwaresectorupdate6

SelectedM&Atransactions

Average

Median

8.1x

7.7x

Selectedprivatefinancings

Takeaways

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NOTABLESOFTWAREM&ADEALS&PRIVATEFINANCINGS

NotabletransactionsfromQ12023

Date

Target

Buyer

Targetdescription

EV($m)

EV/LTMRev

Mar-23

ProviderofcoreSaaSsystemsfortheP&Cinsuranceindustry

2,600

8.4x

Mar-23

Developerofacloud-basedplatformforenterpriseeventmarketingandmanagement

4,600

7.3x

Mar-23

DeveloperofsoftwareofferingsfororganisationsthroughitsXMPlatform

12,500

7.7x

Mar-23

Providerofsurveysoftwareproductsandpurpose-builtsolutionsfororganisations

1,500

2.7x

Feb-23

Developerofacloud-basedbusinessspendingmanagementsolution

8,000

9.8x

Feb-23

ProviderofaSaaSanalyticsplatformforreliableandsecurecloud-nativeapplications

1,700

5.7x

Feb-23

Creatorofasecurityawarenessframeworkthatallowsbusinessestoguardagainstsocialengineeringattacks

4,600

14.8x

Jan-23

Developerofsecurityenterprisesoftwaresolutionsfororganisations

7,298

-

Jan-23

Developerofacloud-basedfieldservicemanagementplatformformultipleindustries

1,460

-

Sources:Pitchbook,CapitalIQandMergerMarket(asof31March2023),GP

Date

Target

LeadInvestor(s)

Targetdescription

Amount($m)

Mar-23

Developerofamobilepaymentapplicationfordigitalpayments

642

Mar-23

Developerofanonlinefinancial

infrastructureplatform

6,500

Mar-23

Developerofamachinelearningmodelforhuman-computerinteraction

350

Mar-23

Providerofanemployeemanagementplatformtohelpeliminateadministrativework

500

Mar-23

Developerofapeer-to-peerpropertylistingplatform

199

Feb-23

Operatorofanonlinecarmarketplacethatallowstransactionswithoutamiddleman

463

Feb-23

Developerofacloudsecurityplatformthatsecurescloudinfrastructureatscale

300

Feb-23

Developerofamanagedsecurityplatformtoincreasesecuritymaturity

180

Jan-23

Developerofasecurityplatformdesignedforwebsitesandprivateapplications

401

Q12023Softwaresectorupdate7

Bullhoundintelligence

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

Takeaways

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CEOcommentary

Publiccomparables

Aboutus

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GLOBALSOFTWARETRANSACTIONTRENDS

Globaldealmakingcontinuestopull-back

GlobalM&A/buyoutvaluecontinuestodecline

$300B

$250B

$200B

$150B

$100B

$50B

$0M

1Q18

2Q18

3Q18

4Q18

1Q19

M&Avalue

2Q19

3Q19

4Q19

1Q20

2Q20

Buyoutvalue

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

M&AvolumeBuyoutvolume

1,200

1,000

800

600

400

200

0

Globalprivateplacementscontinueweakshowing

$80B

$70B

$60B

$50B

$40B

$30B

$20B

$10B

$0M

CapitalinvestedVolume

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

EuropeanM&A/buyoutactivitysurgesback

100%90%80%70%60%50%40%30%20%10%0%

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

Asia

Other

US&CanadaEurope

Strongrelativefundraisingactivityinemergingmarkets

100%90%80%70%60%50%40%30%20%10%0%

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

Asia

Other

US&CanadaEurope

Source:Pitchbook(asof31March2023);Note:DataincludesallSaaSM&AandprivateplacementdealsasdefinedbyPitchbookregardlessofgeography;”Other”includesAfrica,Oceania,South/CentralAmerica,andtheMiddleEast

Q12023Softwaresectorupdate8

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GPBULLHOUNDSAASINDEXPERFORMANCE

TechofficiallyinbullmarketsinceDecember2022lows

L1M

120%

110%

100%

90%

80%27/02/202307/03/202315/03/202323/03/202331/03/2023

S&P500NASDAQCompositeGPBMasterSaaSIndex

L6M

130%

120%

110%

100%

90%

L3M

130%

120%

110%

100%

90%

80%31/12/202231/01/202328/02/202331/03/2023

S&P500NASDAQCompositeGPBMasterSaaSIndex

L12M

120%

100%

80%

60%

80%

30/09/2022

30/11/202231/01/202331/03/2023

S&P500

NASDAQCompositeGPBMasterSaaSIndex

Source:CapitalIQ(asof31March2023)

40%31/03/202230/06/202230/09/202231/12/202231/03/2023

S&P500NASDAQComposite

GPBMasterSaaSIndex

9

Q12023Softwaresectorupdate

February-March2021:ThoughSaaSvaluationsarestillsignificantlyabovehistoricallevels,anewUSpresidentialadministration,inflationconcerns,andrisinginterestrateshavecontributedtoamodestpull-backoftheSaaSIndex

November2021-June2022:

TheCovid-19Omicronvariant,geopoliticaltension(includingRussia’sinvasionofUkraine),ongoingglobalsupplychainissues,andahawkishmonetarypolicyhavetriggeredasteepsell-offacrossmarketsandregionsthatbroughttechvaluationsbelowthefive-yearaverage

March2020:Afterabriefinitialsell-off,SaaSstocksenjoyedsignificantappreciationthankstotheforceddigitisationoftheworldcausedbythepandemic

December2018:USTradewarwithChinaleadstosell-offofSaaSstocks

June2022-Present:

Narrowingdisparitybetweenhigh-growthandlow-growthSaaSvaluations,andslightimprovementinoverallvaluationsin1Q23

Takeaways

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GPBULLHOUNDSAASINDEXPERFORMANCE

GPBullhoundSaaSindexvaluations-10-yeartrends

Valuationsstabiliseandrecoverafterintensesell-off,disparitybetweengrowthprofilesclosestsincepre-pandemiclevels

45x

40x

35x

30x

25x

20x

15x

10x

5x

0x

Factorsthatmayinfluencevaluationsin2Q-4Q23:

RecentCPIprintsindicatethatinflationmight

finallyberecedingandleadtoapivotfortheFedintheUS

Therecentbankingcrisishasstabilised,with

consumer/corporateconfidencerecoveringmodestlythankstoFDICinterventionintheUS

vHeightenedrecessionlikelihoodduetoimpactofmonetarypolicychangestofightinflation

vResidualeffectsandconcernsfromtherecentbankingcrisismaycontinuetodampeneconomicactivity,particularlyintech

7.5x

6.0x

3.4x

Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19Mar'20Mar'21Mar'22Mar'23

GPBSaaSIndex-EV/NTMRevenues

HighGrowthMediumGrowthLowGrowth

Sources:CapitalIQ,WallStreetJournal,GPBullhoundIntelligence(asof31March2023)

Note:High-Growth:>40%,MediumGrowth:15-40%,Low-Growth<15%

Q12023Softwaresectorupdate10

0

0

0

0

0

Takeaways

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SOFTWAREIPOLANDSCAPE

IPOdroughtcontinuesinto2023asinvestorsnavigateanuncertainmacroeconomicclimate

▪Softwarecompaniesoptedtorefrainfromgoingpublicin1Q23,whichcontinuedatrendfrom2022

▪Stressontheglobalbankingsystem,pairedwithrecessionaryconcerns,willlikelyleadtofurtherIPOhesitationforthenextfewmonths

▪Recordvolumesofprivateequitydrypowder,andthescarcityvalueofpremiumassetsinthemarkettoday,meanthathighqualitylate-stagesoftware

companiescanraiseprivatecapitalandcontinuetodelaypublicofferings

99

55

4

4Q201Q212Q213Q214Q211Q222Q223Q224Q221Q23

ListingstolookforinQ22023+

Company

Overview

Providerofanall-in-onecollaborationplatformdesignedtodemocratisesoftwarecreation

Developerofacheckoutexperienceplatformdesignedtodrivee-commercebusinesseswithnewfoundrevenue

Developerofanenterprisesoftwareapplicationfordata

warehousinganddatalakes

Developerofaninstantmessaging/VoIPplatformforfriends,colleagues,andcommunities

Developerofgamingsoftwareandapplicationsdesignedforgamersandgamedeveloperstopublishandplayimmersivegames

HRplatformthathelpsgrowingbusinessesonboard,pay,insure,andsupporttheirteamswithpayroll,benefits,andmore

Developerofanapplicationforon-demanddelivery

Providesamarketingautomationplatform,usedprimarilyforemailmarketingandSMSmarketing

Operatorofasocialnetworkplatformdesignedforpeopletodiveintoanythingthroughexperiencesbuiltaroundtheirinterests

Developerofanonlinepaymentsprocessingplatformdesignedtohelpsmallandlargecompaniesacceptwebandmobilepayments

Sources:Pitchbook,CapitalIQ(asof31March2023);Note:SoftwareIPOdatagraphbasedoffpreviousGPBullhoundreports

Q12023Softwaresectorupdate11

LTMUnleveredFCFMargin%

APP

SEMRNOWZS

TMVVEEVCRMTEAM

BOXDT

GHTUDOCULEMONLVC

APPFCXMBMBLWDCRTOKTA

SHOPOLOWKSOPLMEHRTNYPDSPTFROGDDOG

FAASOWWEAVEINTAFRSHPCTYDUOL

QTWOEXFYPWSCFIVNHUBSSPLKESMTCRW

WIXNEWRWKL

MLNKUPLDINFATWLOAMPLNETAYX

TWOUYEXTENFNEYEPCORASANHCPCFLTMNDY

TEMNEMIS

FPIP

BCOV

SCWX

Transactiontrends

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PUBLICCOMPANYPERFORMANCE

Ruleof40%-publicSaaS

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

Breakdown:TheRuleof40%statesthatthesumofacompany’sgrowthandprofitabilityforagivenperiodshouldbegreaterthan40%.Thisisakeymetricusedbysoftwareinvestorstobenchmarktheefficiencyofacompany’sgrowthandtheassociatedtradeoffbetweengrowthandimpacttoprofitabilitytoachieveit.

SUSE

ZMQLYSXMSNOW

0%10%20%30%40%50%60%70%

LTMRevenueGrowth%

Source:CapitalIQ(asof31March2023)

Q12023Softwaresectorupdate12

EV/LTMRevenue

SGEIDOXAVDXOLOCXMSAPENFNSUSE

EVBG

QTWOEXFYBOXZM

YEXTGHTTWLODOCU

FPIP

FAABIGCZUORNG

UPLDDBXAPP

LAW

TWOU

TIETORXTEGHT

WKMEWEAV

SOW

Takeaways

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Outperformers

Underperformers

Performers

Publiccompanyanalyses

PUBLICCOMPANYPERFORMANCE

Ruleof40%performancesignificantlyimpactsvaluation

14x

12x

10x

8x

6x

4x

2x

0x

DUOL

VEEV

TEAM

DDOG

Ruleof40%line

PAYC

LVC

SPTNOW

HUBS

ZS

PCORMDB

MNDY

PCTY

CDAYDVDT

GTLB

PYCR

WK

U

APPFDSY

ESMT

CWANCFLT

INTAQLYS

SMCRT

HCP

BL

NEMWDAYPD

PATHTENBBRZE

XM

NEWRPLTRASANOKTA

APPNLIMEFIVNFRSH

TEMNBASEMLNKWKLSEMRAMPLTMVFROGLEMONAYX

PWSCCRM

EMIS

WIXDOTDINFASUMOSPLK

VTEXBMBLCRW

EYEESTCR²=0.517

Breakdown:LinearregressionanalysisindicatesstatisticallysignificantcorrelationbetweenRuleof40%performanceandpublicmarketvaluationforSaaScompanies.Acorrelationcoefficient(R-squaredvalue)of0.517meansthatapproximately52%ofasoftwarecompany’svaluationcanbeattributedtoRuleof40%performance.

ZENV

BCOVLPSN

0%10%20%30%40%50%60%70%80%90%100%

LTMRuleof40%

Source:CapitalIQ(asof31March2023)

Q12023Softwaresectorupdate13

EV/LTMRevenue

Unexplained

variance

ZS

MDB

MNDY

VEEV

DT

PDASAN

OKTA

FIVN

XM

AYX

SEMR

DOCU

AMPLZM

BIGC

SUMO

SNOW

Takeaways

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PUBLICCOMPANYPERFORMANCE

IncorporatingNetRevenueRetentionintoRuleof40%computationincreasesstatisticalcorrelationwithvaluation

25x

20x

15x

10x

5x

0x

SNOW

DDOG

R²=0.6444

0%20%40%60%80%100%120%

Ruleof40%

Breakdown:NetRevenueReten