AUDIO SECTOR REPORT Music Streaming Liftoff! - GCA Advisors
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Contact:
AUDIO SECTOR REPORT
JOHN LAMBROS
Music Streaming Liftoff! Managing Director
Tel: +1 (212) 999-7083
Q2 2020 jlambros@gcaglobal.com
EXECUTIVE SUMMARY
Q2 2020 Music Sector Wrap-Up
» While COVID-19 positively impacted the growth of music streaming – as it has with online video, ecommerce and digital health and
wellness apps and technologies – there were three other significant events in the quarter that impacted the sector:
» First, Warner Music Group (WMG) priced its initial public offering at $25 per share for 77 million shares, raising a total of $1.925 billion at a
~$13 billion valuation
― This was the largest IPO of the year thus far in terms of dollars, most of which went to selling shareholder / owner Access Industries
» Second, Goldman Sachs’ highly anticipated annual "Music in the Air" report was published in May
― While some of the near-term forecasts for live music and adjacent sectors were hurt due to the pandemic, digital music growth
remained strong and the long-term outlook on the general music industry remains bullish
― Recent public market activity of music companies underpins the success of the category in Q2 despite adverse macroeconomic trends
» Third, Spotify’s (SPOT) market cap appreciated over 70% since January, and we expect to see the company use its equity to continue its
aggressive M&A strategy
― In May, the company announced an exclusive multi-year deal with “The Joe Rogan Experience” worth over $100 million
― In June, the company announced podcast partnerships with Warner Bros / DC Comics and Kim Kardashian West – highlighting
Spotify’s continued interest in the podcasting space
» Within our core music group, Music Publishers lead the public company pack, trading at 5.2x EV / 2020E Revenue and 17.9x EV / 2020E
EBITDA
― DSPs also had a strong quarter, trading at 4.5x EV / 2020E Revenue and 17.7x EV / 2020E EBITDA
» Strategics and financial sponsors are seeking increased exposure to this rapidly growing segment through high-profile audio financings
— KKR’s investment in Artlist highlighted Q2 2020 activity
— SoundCloud also announced a $75 million investment earlier in the year from Sirius XM to accelerate product development
» We expect this trend to continue as the digital audio market continues to evolve with top artists splintering across emerging platforms that
leverage technology to create differentiated offerings
2
TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
3
GCA OVERVIEW
Leading Global Investment Bank Providing Strategic M&A and Capital Markets Advisory Services
STOCKHOLM
MANCHESTER LEEDS
PARIS FRANKFURT
BIRMINGHAM MUNICH
KYOTO NAGOYA
ZURICH TOKYO
LONDON SHANGHAI
NEW YORK LAUSANNE
MILAN
NEW DELHI OSAKA
TEL AVIV FUKUOKA
SAN FRANCISCO
TAIPEI
MUMBAI
SINGAPORE HO CHI MINH CITY
Global platform:
Sector expertise: Exceptional cross-
25 offices in key Experienced team:
Expansive coverage border capabilities:
markets across Over 500 employees
and deep Half of all
America, Asia and across the globe
specialization transactions
Europe
Broad spectrum
Diversified
Strong reputation of clients:
business model:
and track record: Leading
Geographically
High number of conglomerates, top
balanced, synergistic
repeat clients and private equity firms
and complementary
referrals and emerging high-
focus areas
growth companies
San Francisco | New York | Birmingham | Frankfurt | Fukuoka | Ho Chi Minh City | Kyoto | Lausanne | Leeds | London | Manchester | Milan | Mumbai |
Munich | Nagoya | New Delhi | Osaka | Paris | Shanghai | Singapore | Stockhom | Taipei | Tel Aviv | Tokyo | Zurich 4
GCA OVERVIEW
GCA’s Dedicated Sector Knowledge and Execution Excellence
GCA Music Focus Selected Relevant Transactions
STREAMING PUBLISHING
RIGHTS
DISTRIBUTION MANAGEMENT
Advisor to Fulwell 73
ARTIST SERVICES ENGAGEMENT TOOLS
acquired
AI TOOLS & VIDEO & CREATIVE
ANALYTICS
from
PROMOTIONAL LIVE EVENT
SERVICES MANAGEMENT Advisor to MBO Group Advisor to Chrysalis Advisor to WMG
GCA Overview
25 >500 >180 157 50%
OFFICES AROUND M&A TRANSACTIONS PER PE DEALS IN THE CROSS-BORDER
THE WORLD PROFESSIONALS YEAR LAST TWO YEARS TRANSACTIONS
Notes:
The above transactions represent a compilation of past and current deals that GCA entities, including GCA Advisors, LLC, GCA Advisors Corporation and GCA Altium have advised on. 5
GCA OVERVIEW
Selected Recent Internet & Digital Media Transactions
6
GCA OVERVIEW
Case Study: SISTER’s Investment in The SpringHill Company
Transaction Overview The SpringHill Company Overview
» On April 3, SISTER announced its $100 million Headquarters: Los Angeles, CA
investment in The SpringHill Company
Founded: 2015
» SISTER invested alongside the financial services
companies Guggenheim Investments and UC Description: Provider of media content intended to create compelling stories
Investments, as well as Jason Stein’s SC for television, features and digital. The company offers different
Holdings feature films, webseries, television series and short films,
enabling users to get an altogether different experience while
» The company’s new board will include SISTER’s
enjoying their favorite shows. The SpringHill Company was co-
founder Elisabeth Murdoch, Serena Williams,
founded by NBA star LeBron James and his business consortium
Apollo Global Management’s co-founder Marc
in 2015.
Rowan, investment banker Paul Wachter, Live
Nation CEO Michael Rapino and Boston Red Sox
chairman Tom Werner Production Partners
Content Offering Overview
Television
What’s My Million Dollar The Wall Warriors of Student Athlete Shut Up &
Name Mile Teams compete in Liberty City Explores the Dribble
The story of Everyday athletes trivia for cash Series covering a business of college History of the NBA Selected Transaction Commentary
Muhammad Ali compete in the prizes Miami youth sports and its impact on
mile for $1 million football program pop culture
“platform
I’ve always wanted to use the
of basketball to empower “andTogether with our new partners
incredible team, we are
Feature Films those around me. Now I’m building a consumer and
incredibly excited about the entertainment business that’s
opportunity to build a company committed to diversity, that’s
that empowers creators, unafraid to stand up for what we
“
consumers and everything it
“
believe in and that’s resonating
touches. with our community.
More Than A Game I Am Giant
Covers LeBron James’ high school basketball team in Akron Chronicles Victor Cruz’s improbable rise to football stardom,
Ohio, detailing the story of five friends chasing victory and the life-shattering injury that derailed his career and his
LeBron James, Maverick Carter,
James’ path to superstardom dramatic attempt at a comeback Co-Founder, SpringHill Co-Founder, SpringHill
Notes:
Sources: Pitchbook, LinkedIn, Press Releases, Company Website. 7
TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
8
MUSIC IN THE NEWS
Warner Music Group’s IPO
Transaction Overview Warner Music Group Overview
» On June 3, Warner Music Group priced its long- Headquarters: New York, NY
anticipated initial public offering at $25 a share
Founded: 1958
for 77 million shares, raising a total of $1.925
billion, representing the largest IPO of the year to Description: Warner Music Group is a leading major label in the music
date industry. The company comprises an array of businesses aimed
» The IPO priced at the higher end of its $23 to at helping artists achieve creative and financial success while
$26 price range and the size of the deal was also providing consumers with the highest-quality music content
increased from an original 70 million shares, available. WMG provides recorded music / artists services and
Initial Public publishing solutions and operates through numerous
ultimately valuing the company at ~$13 billion
Offering » Shares were up ~22% on afternoon trading the
international affiliates and licensees in more than 50 countries.
day of the IPO
» The company will not receive any funding from
Selected Companies & Subsidiaries
~$1,925MM the IPO, as the selling stockholders, primarily
Access Industries, received all proceeds
Services & Solutions Overview
Recorded Music
» Primarily through major labels Atlantic and Warner Records in
the U.S.
» Offer discovery and development of artists and any marketing,
promotion, distribution, sale and licensing of their music
Artist & Label Services Selected Transaction Commentary
» Primarily through WEA (Warner-Elektra-Atlantic) and Alternative
Distribution Alliance (ADA)
» Provide services to artists outside the traditional recorded music “wayIt’speople
a vote of confidence in the
see music’s growth “growing
The valuation reflects the
awareness of the value of
business such as touring, merchandising and sponsorships trajectory and how they see content. Often times the spotlight
distribution shaping up in mature “
is on tech, but tech in many forms
Publishing and developing markets. I think utilizes music.
» Primarily through Warner Chappell Music subsidiary they see that there is still a long
runway for traditional streamers to
» Own or control rights to more than 1.4 million songs across “
grow and expand but also new
80,000 songwriters and composers
business models.
» Revenue derived from performance, digital, mechanical and Stephen Cooper,
synchronization sources
CEO, Warner Music Group
Notes:
Sources: Capital IQ, Pitchbook, SEC Filings, Press Releases, Company Website. 9
MUSIC IN THE NEWS
Warner Music Group’s IPO (cont.)
Financing History Financial Summary ($Bn)
DATE DEAL TYPE INVESTOR AMOUNT VALUATION Total Revenue Adj. EBITDA Revenue Growth
5 25%
$4.5
6/3/20 IPO Public $1,925MM $12,750MM 5
$4.0
4
$3.6 20%
4
7/28/16 Debt Undisclosed $300MM N/A 3 15%
11.7% 12.0%
3
3/31/14 2 10.2% 10%
Debt $9MM N/A
6/30/13 2
$1.0
1 $0.6 $0.7 5%
7/20/11 M&A N/A $3,300MM 1
0 0%
FY '17A FY '18A FY '19A
Trading Statistics
$MM (except per share data) 6/30/20 $35.00 40.0
Daily Trading Volume (MM)
35.0
Share Price $29.50 $33.00
30.0
Fully Diluted Shares Out. 510.0
Stock Price
$31.00 25.0
Equity Value $15,045.0
20.0
Less: Cash and Eq. $484.0 $29.00 $29.50 15.0
Plus: Debt $3,370
10.0
Plus: Minority Interest $21.0 $27.00
5.0
Net Debt $2,907.0
$25.00 -
Enterprise Value $17,952.0 6/3/20 6/8/20 6/13/20 6/18/20 6/23/20 6/28/20
Notes:
Sources: Capital IQ, Pitchbook, SEC Filings, Press Releases, Company Website. 10MUSIC IN THE NEWS
Spotify’s Massive Market Growth in 1H 2020
» Many digital music companies, especially major DSPs, have experienced tremendous stock appreciation in the wake of the COVID-19 pandemic
» Spotify’s strong subscriber growth in Q1 coupled with the continued upside and growth prospects internationally, however, have put the company in a
league of its own
» Investors have been especially bullish on listener engagement with music platforms, and Spotify’s efforts to own both playlists and podcasts globally
has proven to be a powerful combination
Announces exclusive podcasting
$300.00 deals with Warner Bros / DC $258.19 Share Price 14.0
Comics and Kim Kardashian West $48.0Bn Market Cap
71.1% 12.0
$250.00 MARKET CAP APPRECIATION Announces exclusive Rosenblatt Securities
(1/1/20 – 6/30/20) multi-year deal with upgrades Spotify target
Trump declares “The Joe Rogan share price to $275
Experience” podcast (was previously $190) 10.0
Daily Trading Volume (MM)
national emergency
$200.00 due to COVID-19
$151.62 Share Price
$27.2Bn Market Cap Announces Q1 earnings; paid
8.0
Stock Price
subscribers have grown 31%
year-over-year to 130MM
$150.00
WMG IPO
Definitive agreement 6.0
to acquire The Ringer
$100.00 Goldman Sachs
releases music report
4.0
$50.00
2.0
- -
1/2/20 2/1/20 3/2/20 4/1/20 5/1/20 5/31/20 6/30/20
Notes:
Sources: Capital IQ, Pitchbook, SEC Filings, Press Releases, Company Website. 11MUSIC IN THE NEWS
Main Takeaways from Goldman Sachs’ “Music in the Air” Report
1 EXPECTED STREAMING SUBSCRIPTION GROWTH IS VERY
STRONG
2 EMERGING MARKET GROWTH AND PENETRATION WILL
DRIVE SIGNIFICANT VALUE CREATION
» The number of paid streaming subscribers is expected to » By 2030, emerging markets are projected to account for 67%
nearly quadruple within the next decade of total paid subscribers, compared to just 38% in 2019
2030E
12.3% 1,220
2019A
CAGR (2019A – 2030E)
PAID SUBSCRIBERS 403
129
212
341 817
Developed Market Paid Subscribers
2019A 2030E
Emerging Market Paid Subscribers
3 SPOTIFY IS ONLY JUST GETTING GOING
4 MUSIC PUBLISHING REMAINS ONE OF THE MOST ATTRACTIVE
WAYS TO “PLAY” THE SECULAR GROWTH IN THE MUSIC INDUSTRY
» Spotify’s growth has proven to be exceptional in recent years » With paid streaming fueling growth in digital royalties and
» Nevertheless, there is still widespread opportunity for the increased usage of musical content driving higher
company to expand – using Netflix as a comparison, Spotify performance royalties, the continued growth in music
still has dozens and dozens of untapped markets to fuel publishing is here to stay
further growth » Given a projected growth rate of a steady ~6% CAGR from
2019 – 2030 for music publishing, we expect continued M&A
79 MARKETS 194 MARKETS and financing activity in the sector, as players continue to
shore up their publishing footholds
VS.
Notes:
Source: Goldman Sachs. 12TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
13DIGITAL MUSIC TRENDS AND INSIGHTS
Music & Podcasting Streaming Growth and Acceleration
Global Recorded Music Revenues ($Bn) U.S. Monthly Podcast Listeners (MM, Age 12+)
29.9% $28
164
CAGR (2013A – 2023E) $26 17.8%
STREAMING $24 CAGR (2013A – 2023E) 140
$22 LISTENERS
$20 120
$19 103
$17
$16 88
$15 $14 $15
$20 75
$13 $16 $18 65
$1 $2 $3 $5 $7 $9 $11 57
46
40
32
'13A '14A '15A '16A '17A '18E '19E '20E '21E '22E '23E '13A '14A '15A '16A '17A '18A '19E '20E '21E '22E '23E
Physical Digital (excl. streaming) Streaming
Performance Rights Synchronization
Streaming is mainstream – and whether a song, playlist or podcast, streaming audio represents one
of the most exciting, dynamic and high-growth entertainment markets today
Notes:
Sources: Goldman Sachs, Activate Consulting. 14DIGITAL MUSIC TRENDS AND INSIGHTS
Industry Highlights
Global Recorded Music Revenue Split ($Bn)
» Tremendous rebound in the global music industry in recent
years, driven by streaming and digital transformation 2030E
2020E $1 $1
― Digital sales growth has outpaced physical sales’
decline $3
― Global recorded music revenues are projected to $2 $4
reach $22Bn in 2020E, with streaming representing
$3
roughly 60% $13
» 1.2Bn user opportunity by 2030 is supported by multiple $4 $36
macro, secular trends including continued global
proliferation of DSP platforms
» Apple Music, Amazon, Spotify and Tencent Music remain
Streaming Physical Performance Rights
the most popular global streaming services; however,
Digital (excl. streaming) Synchronization
nearly 40% of listeners utilize more than one streaming
service
» With stability in streaming and better technology to Top Streaming Platforms’ Global Market Share (1)
monetize and track listening, songs have become a real
“asset class,” with valuations for premium libraries
reaching 15-20x NPS
― Hipgnosis (LON: SONG), the only pure-play, publicly 8%
traded music royalty fund, has acquired 22 song
catalogues with more than 6,000 songs since 2018 19%
― Round Hill Capital, Kobalt Capital, Concord Bicycle, 21%
Tempo Music and many other funds are all
aggressively competing for song libraries and IP
ownership 36%
» The increased direct exposure artists have to their fans Other
through digital decreases dependence on traditional 4%
publisher relationships, which has fueled the growth of
tech-enabled independent artists and record labels 12%
Notes:
Sources: Goldman Sachs, Activate Consulting, Wall Street Research.
1) Size of shaded areas are proportionate to % total market share. 15DIGITAL MUSIC TRENDS AND INSIGHTS
Key Constituents Driving the Music Industry
1 THE MAJORS
2 THE DSPs
» The Majors’ incumbent status carries significant weight » Stabilized the music industry by reinventing music services and
across the market – few are willing to challenge them monetization in the age of streaming
directly » Of the market leaders, only Spotify and Tencent Music are
» Pending IPOs for Warner Music and Universal Music will be singularly committed to audio streaming; Amazon, Apple and
significant events and mark a “new chapter” for the Google / YouTube view streaming as an accessory to their core
industry services
» Several other incumbents control their respective » There is a long tail of streaming providers who will likely be
territories in the industry including rights (ASCAP, BMI, consolidated over the next 3-7 years
SESAC) and live entertainment (Live Nation)
48%
COMBINED MARKET SHARE OF
SPOTIFY AND TENCENT
3 THE INDEPENDENTS
4 INNOVATIVE TECH UPSTARTS
» Consists of newer publishers, rights holders and » Innovative, disruptive and diverse, this category includes
distribution companies building scale across the industry labels, rights administrators and artist distributors leveraging
technology to drive new business models
» These companies are creating and consolidating services
across the streaming landscape to help independent labels » Generally fit the size profile for growth equity investors
and emerging artists expand their market potential — Revenues range from $1MM to $50MM, with varying
degrees of profitability
Notes:
Source: Goldman Sachs. 16DIGITAL MUSIC TRENDS AND INSIGHTS
Emergence of Technology Leading to the Growing Presence of the Artists Direct and Independent Segments
Global Recorded Music Industry Market Share
Artists Direct 1.7% 2.3% 2.7% 3.4% Independent labels
have maintained their
market share while
Independents 27.9% 27.2% 27.7% 27.4% Artists Direct have
expanded their share
versus the
incumbents, a key
16.9% 17.5% 17.7% 18.3% driver to change
throughout the
industry
22.9% 22.6% 22.1% 20.6%
30.6% 30.3% 29.7% 30.3%
2015 2016 2017 2018
Technology enables both lower cost and greater scale for artists direct and independent labels,
who continue to take incremental market share from the major labels
Notes:
Source: Midia. 17DIGITAL MUSIC TRENDS AND INSIGHTS
Surge of Fund Activity Centered on Music Rights Management, Production and Services
Founded in 2017 Founded in 2019
Ithaca Holdings Gasoline Alley
Jun-17: Concord Music
Jun-19: Primary Wave
acquires Imagem Music Jan-18: Round Hill Jun-18: Hipgnosis raises
Founded in 2011 Founded in 2013 acquires Gasoline Alley
Group acquires Carlin Music $268.4M in IPO
Jul-14: Round Hill Jun-16: Primary Wave Jun-19: Ithaca Holdings
Founded in 2010 establishes $209M+ establishes $300M+ IP Apr-19: Hipgnosis raises Aug-19: Hipgnosis raises acquires Big Machine
Royalty Fund I Fund I $185.6M in stock offering $62.8M in stock offering Label Group
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gaspin Media
Feb-19: Ithaca Holdings Jan-20: Concord Music
Jan-12: Kobalt acquires Oct-16: Primary Wave Dec-17: Kobalt acquires
acquires Atlas Music Sep-19: Hipgnosis raises acquires Pulse Music
AWAL acquires Gaspin Media Songs Music Publishing
Publishing $297.2M in stock offering Group
May-16: Shamrock Nov-17: Kobalt raises Jan-18: Round Hill Feb-19: Primary Wave
2011: Kobalt raises establishes $500M+ IP
Capital closes $250M $600M fund sponsored Nov-17: Round Hill establishes $263M
$350M fund Fund II
Entertainment IP Fund by RPMI Railpen acquires ZYNC Music Royalty Fund II
KEY: Stargate
Concord Music Kobalt Music Royalty Exng. Jun-17: Royalty Exchange Oct-18: Shamrock Capital
raises $6.4M in Later acquires Stargate Music
Hipgnosis Primary Wave Shamrock
Stave VC Publishing Catalog
Ithaca Holdings Round Hill Tempo Music
Notes:
Sources: Pitchbook, Press Releases, Company websites. 18DIGITAL MUSIC TRENDS AND INSIGHTS
Live Concert Streaming is Here to Stay
Live Concert Streams
» COVID-19 has accelerated the growth of live concert
streaming, a promising area we have been tracking within Date Artist Platform
the music sector
» Live streaming, which is reportedly a $5Bn market 6/9 Phish
globally, is an inexpensive way for artists to expand their
audience and deepen relationships with fans 6/14 BTS
― Bandsintown LIVE launched with Twitch on March
6/24 All in WA
20th with a DJ Black Coffee concert and has become
a hub for live concert superfans attracting more than Electric
2.3MM views on this channel alone 6/25
Blockaloo
― With ~475MM combined users, Fortnite and The Roots
6/27
Minecraft enable artists to host live concerts with Roddy Ricch
unprecedented scale
7/3 Zac Brown Band
― The largest in-person concert ever drew ~3.5MM;
Travis Scott’s Fortnite concert drew 12.3MM 7/7 Paul McCartney
concurrent viewers
» Technology to support live virtual performances is in a Selected Market Commentary
very early stage
» Latency, privacy and security represent the largest “so,Livebutisitonis the rise and rightfully
still in its infancy and is “become
Accessing live streams has
second nature to our
hurdles to successful live concert performances, but still the baby brother of broadcast audiences, whether that is within
companies large and small are working to minimize these video. The scale of the cloud and our own sites and apps, or on
disruptions, as they see tremendous opportunity in the live reach of the Internet have allowed social sites. We now live stream
different audiences to more easily multiple times a day across
streaming market reach their niche content and multiple platforms, along with 24/7
» The broader live music industry will benefit from growth allows for advertisers to more
“
channel simulcast streams and
“
accurately put relevant content in major live events.
in streaming concerts through increased ticket sales and front of intenders.
fan engagement
― People who stream concerts are 67% more likely to Joe Green, VP, Alec Hendry,
buy a ticket to a similar event in the future Turner Broadcasting Sr. Director, Viacom
Notes:
Sources: Ludwig van Toronto, Akamai, Statista, Wall Street Research. 19DIGITAL MUSIC TRENDS AND INSIGHTS MUSIC VALUE CHAIN:
The Music Value Chain Live Concert
Live Concert
Artist
ArtistServices
Services
Engagement
Engagement
Publishing Distribution &&Rights
Rights
Streaming
Streaming Tools
Tools
Management
Management
`Major Labels `Large Scale Publishers `Indie Labels Live Concert Streaming
DSPs DIY & Distribution Distributors
`Rights Management Artist & Label Services Artist Platforms
AI Tools & Analytics Fan Engagement Video & Creative Creator Platforms & Services Live Event Management
Notes:
This is a representative list and may not include all relevant companies. 20DIGITAL MUSIC TRENDS AND INSIGHTS
Top 10 Leaders in Private Funding Raised-to-Date
Company Headquarters Founded Amt. Raised ($MM)(1) Company Description
Developer of an online music platform offering free
Hangzhou, China 2013 $1,410
and paid online streaming and downloads
Shanghai, China 2012 ~$652 Provider of an online audio streaming platform
Ximalaya
Operates a publishing, recording, content
London, England 2000 ~$561
management and rights services platform
Developer of a music streaming platform designed to
Berlin, Germany 2007 $507
offer audio distribution and music sharing
The merger of TouchTunes and PlayNetwork created
New York, NY 2017 ~$305 Octave, the largest in-venue, interactive music and
entertainment platform
Provider of music and video distribution services
Paris, France 2005 ~$217
intended for artists and labels to improve sales
Provider of music streaming services designed to
Paris, France 2006 $187
offer personalized music tracks
Developer of a platform designed for musicians to
New York, NY 2013 ~$112
create music, connect and collaborate easily
Provider of music distribution and marketing services
Brooklyn, NY 2017 $70
to create partnerships between artists and brands
Developer of a global music distribution and rights
Los Angeles, CA 2012 $60
management platform
Notes:
Sources: Pitchbook, LinkedIn, Company Websites.
1) Includes debt and equity financing. 21DIGITAL MUSIC TRENDS AND INSIGHTS
Selected Active Investors
Investor Type Investor Logos
Accelerators / Seed
Venture Capital /
Private Equity
Corporate Investors
Alternative
Investors
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 22DIGITAL MUSIC TRENDS AND INSIGHTS
Most Active Deal Makers
Company Headquarters Number of Deals Investments & M&A
New York, NY 23
Santa Monica, CA 18
New York, NY 15
Shenzhen, China 10 Ximalaya
Stockholm,
Sweden 7
New York, NY 5
Seattle, WA 4
Cupertino, CA 4
New York, NY 4
Beverly Hills, CA 4
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 23TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
24PUBLIC MARKETS
Stock Performance
Q2 2020 Share Price Performance
90%
83%
75% 80%
60%
54%
45% 45%
36%
30% 31%
15% 17%
- (0%)
(15%)
Apr-20 May-20 Jun-20
High-Growth Digital Services Advertising DSPs Diversified Data & Music Live
SaaS & Marketplace Technology Analytics Publishers Entertainment
Core Music Technology Platforms Relevant Other Categories
Music Diversified Digital Services
DSPs Live Entertainment Advertising Data & Analytics High-Growth SaaS
Publishers Technology & Marketplace
17% 45% (0%) 36% 83% 54% 31% 80%
Q2 2020 Share Price Performance
Notes:
Source: Capital IQ. 25PUBLIC MARKETS
Trading Metrics
Enterprise Value / 2020E Revenue(1) Enterprise Value / 2020E EBITDA(1)
22.0x 25.5x
19.0x 22.1x
20.9x
18.2x 17.9x 17.7x
12.9x 15.6x
11.5x
7.4x
5.2x 5.1x 4.5x
2.6x
High- Data & Advertising Diversified Music Digital DSPs Live Diversified Digital Advertising Data & Music DSPs High- Live
Growth Analytics Technology Publishers Services & Entertainment Technology Services & Analytics Publishers Growth Entertainment
SaaS Marketplace Marketplace SaaS
Core Music Technology Platforms Relevant Other Categories
Music Diversified Digital Services
DSPs Live Entertainment Advertising Data & Analytics High-Growth SaaS
Publishers Technology & Marketplace
5.2x / 17.9x 4.5x / 17.7x 2.6x / 11.5x 7.4x / 25.5x 5.1x / 22.1x 12.9x / 20.9x 19.0x / 18.2x 22.0 / 15.6x
2020E Revenue / 2020E EBITDA Multiple(1)
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM.
1) Multiples represent mean figures. 26TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
27M&A AND FINANCINGS
Precedent M&A Transactions
($MM)
Announced Enterprise EV / Revenue EV / EBITDA
Date Acquirer Target Value (EV) LTM NTM LTM NTM Target Description
5/19/20 NA NA NA NA NA Operates as a music publishing company in South Africa
Provides digital solutions for identifying musical content, recommending music and
4/23/20 NA NA NA NA NA
anticipating music-related trends
Developer of a news narration platform designed to eliminate the gap between writing for
3/23/20 $9 NA NA NA NA
print and the digital audio market
Operator of a media-tech company intended to deliver innovative rights management and
3/20/20 $38 NA NA NA NA
distribution solutions to the music and video industries
South Korean entertainment company, offering a record label, talent agency, music
2/21/20 $75 3.0x NM 23.5x NM
production, event management and concert production services
2/20/20 Formax $5 NA NA NA NA Provider of sound recording and music publishing services
2/5/20 $250 NA NA NA NA Owns and operates a website and podcasting network
1/29/20 $450 NA NA NA NA Owns and operates a sports and culture blogging website and podcast network
1/22/20 NA NA NA NA NA Provider of technology and services for content owners, record labels and distributors
1/2/20 $868 NA NA NA NA Hospitality company providing fans access and tickets to premier live events
10/18/19 $19 NA NA NA NA Operates regional commercial radio broadcast networks in Western Australia
Developer of an online music production marketplace designed to connect and hire top
9/12/19 NA NA NA NA NA
musicians
Specializes in the development, acquisition, production, financing and distribution of
8/22/19 $3,800 3.8x 3.2x 36.2x 15.2x
entertainment content
8/6/19 $10 NA NA NA NA Organizes and operates the largest country music festival in the United States
Cloud-based application software for music creators, artists, producers and music rights
7/30/19 NA NA NA NA NA
holders
Operates an online portal for musicians and dealers to buy, sell and trade new, used and
7/22/19 $275 7.6x NA NA NA
vintage gear and guitars
5/23/19 NA NA NA NA NA Operates a multi-channel network that enables users to monetize their music
4/25/19 Salerton $107 NA NA NA NA Owns and operates a music library
Global music company that publishes music for television, film, advertising and corporate
4/11/19 $217 5.7x NA 15.1x NA
video productions
3/27/19 $200 NA NA NA NA Provider of music distribution and monetization services for independent musicians
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 28M&A AND FINANCINGS
Precedent M&A Transactions (cont.)
($MM)
Announced Enterprise EV / Revenue EV / EBITDA
Date Acquirer Target Value (EV) LTM NTM LTM NTM Target Description
3/26/19 $56 NA NA NA NA Produces podcasts, focusing on creating scripted, story-driven programming
2/19/19 NA NA NA NA NA Provider of music composition, licensing and rights management solutions
Provider of music distribution, marketing and technology services intended to help
2/12/19 NA NA NA NA NA
independent labels and content owners manage their music
Privately-owned radio company, which operates radio stations in Maryland, Delaware and
2/6/19 $19 NA NA NA NA
New Jersey
2/6/19 ~$200 NA NA NA NA Digital media company focused on producing narrative podcasts
2/6/19 ~$140 NA NA NA NA Operates a mobile application and a website that broadcasts short audio clips
Operates an online advertising technology company that connects brands and audiences
1/30/19 $162 0.5x 0.4x 10.7x 3.3x
through digital advertising and content distribution
1/24/19 NA NA NA NA NA Offers on-demand music, audio streaming and AI technology
Provides music and audio streaming technologies and services for businesses and
1/22/19 $40 NA NA NA NA
individuals
12/7/18 NA NA NA NA NA Owns and operates recording studios
9/24/18 $3,454 2.3x 2.1x NM NM Provides music discovery platform services in the United States and internationally
9/13/18 $55 NA NA NA NA Offers podcasts publishing services
Provides music for major domestic and overseas music platforms such as iTunes, YouTube
7/25/18 $51 0.7x NA NA NA
and Spotify
7/23/18 Tron $140 NA NA NA NA Develops Internet content delivery technologies for customers worldwide
6/26/18 $218 2.7x NA NM NA Provides music distribution services in South Korea
6/11/18 $10 NA NA 10.0x NA Provides sound design, casting, music and writing services
(1
5/21/18 $2,269 7.8x NA 20.6x NA Operates as a music publishing company
Owns and operates Newcap Radio, which is one of Canada's leading radio broadcasters with
5/2/18 $397 3.0x NA 9.7x NA
101 broadcast licenses
5/2/18 $69 NA NA NA NA Organizes live music events in Brazil
Music licensing platform that enables content creators, aggregators and digital music
4/12/18 NA NA NA NA NA
services to identify and pay royalties to music publishers
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research.
1) Sony acquired the remaining 60% of EMI Music Publishing in this transaction. 29M&A AND FINANCINGS
Precedent M&A Transactions (cont.)
($MM)
Announced Enterprise EV / Revenue EV / EBITDA
Date Acquirer Target Value (EV) LTM NTM LTM NTM Target Description
Manages licensing and commercial releases of video game music, including bespoke PR and
4/9/18 $6 0.7x NA 6.7x NA
marketing for the artists and composers
4/4/18 $50 NA NA NA NA Global music publisher headquartered in London
3/23/18 NA NA NA NA NA Operator of music streaming application in India
Provides monthly subscription packages to license music tracks and sound effects for
1/10/18 NA NA NA NA NA
creative projects
12/11/17 $400 7.1x NA NA NA Developer of an application that connects artists and fans through music discovery
Provides audio and lighting products include musical instruments, live sound equipment,
12/1/17 $28 1.0x NA NA NA
recording products and accessories for music retailers
10/15/17 $295 4.1x NA NM NA Investment holding company active in the entertainment and music sectors
9/22/17 $245 NA NA NA NA Operates as an independent music publisher
8/31/17 $50 1.7x NA NM NA Provides radio music services in the United States and internationally
6/19/17 $18 NA NA NA NA Provides rights management, production, publication and live event services
Music Catalogue
Provides ticketing, marketing and analytics tools that help event promoters and venues
6/9/17 $200 NA NA NA NA
book talent and streamline operations
5/9/17 $11 NA NA NA NA Provides an online service that turns iPhones into wireless karaoke microphones
5/3/17 $26 NA NA NA NA Distributor of a high-quality, focused roster of independent record labels
4/13/17 $626 1.3x 1.3x 8.0x 6.7x Provides in-store media solutions in the United States and internationally
2/13/17 $922 1.4x 1.3x 6.3x 5.9x Engages in music distribution, commercial systems, ICT and other businesses in Japan
2/2/17 $2,813 2.3x NA 8.6x NA Provides radio broadcasting services in the United States
Offers broadcasting services and operates thematic channels for the digital pay-television
1/30/17 $289 1.7x NA 7.5x NA
market in France
1/4/17 $1,200 4.4x NA NA NA Provider of music licensing and administration services
Broadcasts live events and world premieres from stages, festivals and music events in
1/3/17 $8 NA NA NA NA
Mexico, Europe, Africa, Asia and Australia
Provider of entertainment data and technology for music, consumer electronics,
12/20/16 $560 NA NA NA NA
automakers, media and cable and satellite operators
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 30M&A AND FINANCINGS
Precedent M&A Transactions (cont.)
($MM)
Announced Enterprise EV / Revenue EV / EBITDA
Date Acquirer Target Value (EV) LTM NTM LTM NTM Target Description
11/23/16 NA NA NA NA NA Owns and operates an online music streaming, sharing and distribution platform
Identifies and collects money earned by songwriters and music publishers for use of their
7/21/16 NA NA NA NA NA
works in YouTube videos
Developer of an application programming interface designed to deliver powerful music and
5/12/16 NA NA NA NA NA
licensing capabilities
Summary Statistics
Mean 3.1x 1.7x 13.6x 7.8x
Median 2.5x 1.3x 9.9x 6.3x
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 31M&A AND FINANCINGS
Precedent Financings
($MM)
Announced Amount Enterprise
Date Investor Target Invested Value (EV) Target Description
A royalty-free music and sound effects company that licenses content to creators on YouTube and other
6/29/20 $48 NA
platforms
3/3/20 $56 NA Developer of a music-mixing application designed to enable editing and mixing of songs
An audio platform that enables customers to create, record, promote and share their original content across
2/11/20 $75 NA
the Internet
1/31/20 $16 NA Developer of a multi-channel virtual entertainment platform for live concerts
(1) Operator of an online music distribution platform, offering unlimited releases to all major digital music
1/20/20 $1 $19
stores
1/3/20 $37 NA Provides an OTT streaming service that combines frame-accurate synchronization and ultra-low latency
12/19/19 $9 NA Offers artist management and music production services
Operates as an entertainment media company, enabling aggregation, licensing and delivery of music, video
11/6/19 $30 NA
and media content
10/24/19 $30 $200 Developer of an online subscription podcast platform
9/11/19 $20 NA Operator of music streaming application in India
9/6/19 $700 NA Developer of an online music platform offering free and paid streaming and downloads in China
8/27/19 ~$30 NA Developer of a curated mobile platform designed to facilitate on-demand audio and podcasts
Developer of a global music distribution and rights management platform intended to reach music fans via
8/13/19 $40 NA
hundreds of digital, physical and mobile retailers
LiveXLive Media Inc is the premium internet networks devoted to live music and music-related video
7/25/19 $10 NA
content
7/16/19 $60 $660 Operates a platform enabling content creators and artists to fund their work
7/1/19 $30 NA Developer of an online audio mastering software designed to refine and polish finished stereo mixes
Developer of a royalty-free music library that provides cutting edge production music for films, TV and
7/1/19 $20 $370
YouTube content
5/21/19 $25 NA Provider of event organization services intended to offer public music entertainment
Developer of music and video streaming application with more than 5 million tracks that can be streamed
3/27/19 $20 NA
free of charge
2/6/19 $100 NA Developer of a platform designed to discover, organize and listen to podcasts
Ximalaya
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research.
1) Strategic investment to help the company launch Bluebox 32M&A AND FINANCINGS
Precedent Financings (cont.)
($MM)
Announced Amount Enterprise
Date Investor Target Invested Value (EV) Target Description
Provider of music and video distribution services intended for artists and labels to turn audience
1/2/19 $148 $400
engagement into sales
11/2/18 $150 NA Provider of an education platform intended to offer one-on-one tutoring services of music related aspects
10/17/18 NA NA Operator of a SaaS-based musical platform intended to distribute music at a fraction of the price
10/12/18 $600 NA Developer of an online music platform offering free and paid online streaming and downloads in China
Developer of a music streaming platform assist artists publish and monetize their work and distribute it
8/8/18 $6 NA
directly to fans
8/2/18 $186 $1,161 Provider of music streaming services designed to offer personalized music tracks
7/1/18 $618 $3,710 Developer of an online audio streaming platform
Ximalaya
Operates an app allowing users to upload their music directly to music streaming platforms and track how
5/22/18 $16 NA
many people are listening to their music and how much money it generates
Provider of curated direct-to-consumer and B2B services, including audio television channels, radio
5/2/18 $31 NA
stations, music apps and SVOD content
4/25/18 $14 NA Developer of an audio platform designed to deliver contextual recommendations for listeners of podcasts
Developer of an audio streaming platform designed for radio presenters and DJs to upload their shows and
4/16/18 $12 NA
reach a new audience
3/1/18 $10 NA Operates online music platforms that enable streaming, online karaoke and live streaming services in China
11/15/17 $4 NA Operator of a digital music distribution platform
Operator of an entertainment and sports agency, specializing in talent management, literary and strategic
10/6/17 $26 NA
marketing and consulting services
Developer of a digital media network platform intended to help listeners better understand the world and
9/11/17 ~$20 $75
each other
Provider of a video analytics and rights management platform designed to quickly find and claim all copies
8/17/17 $7 $9
of your content
Provider of an online radio application designed to provide access to sports, music, talk and news streams
8/11/17 $50 NA
from around the world
8/2/17 $400 $5,000 Operator of a global entertainment, sports and content company
Developer of a global music distribution and rights management platform intended to reach music fans via
7/19/17 $20 NA
hundreds of digital, physical and mobile retailers
Developer of a voice interactive storytelling application designed to synchronize theme music and sound
7/17/17 NA NA
effects using voice recognition
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 33M&A AND FINANCINGS
Precedent Financings (cont.)
($MM)
Announced Amount Enterprise
Date Investor Target Invested Value (EV) Target Description
Developer of an enterprise platform intended to provide distribution and payments solutions to artists and
5/26/17 $8 $18
their teams
6/9/17 $452 NA Radio broadcasting company that offers music streaming and automated music recommendation services
5/8/17 $87 $647 Provider of publishing, recording and rights management platform
4/11/17 $109 $1,161 Developer of an online music platform, offering free and paid online streaming and downloads in China
3/20/17 $4 NA Operator of an online platform intended to seamlessly collect royalties globally
3/15/17 $24 NA Provides Internet music, content planning and music distribution services in South Korea
A music-streaming application created to provide lossless audio and high definition music and videos with
1/23/17 $45 NA
curated editorial
Provider of music distribution and marketing services, facilitating partnerships between artists and the
12/31/16 $70 NA
brands
Developer of an online music marketing platform designed to provide data management, reporting and
8/29/16 $3 NA
analytics services
Notes:
Sources: Capital IQ, Pitchbook, Wall Street Research. 34TABLE OF CONTENTS
I. GCA Overview
II. Music In the News
III. Digital Music Trends and Insights
IV. Public Markets
V. M&A and Financings
VI. Public Comps Backup
35PUBLIC COMPS BACKUP
Public Market Comparable Companies
($MM, except per share data)
Trading Metrics Operating Metrics
Stock Price Market Cash & Total Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 6/30/2020 Cap ST. Invest. Debt Value (EV) CY19A CY20E CY19A CY20E 19A/18A 20E/19A CY19A CY20E
Music Publishers
Sony Corporation $68.94 $84,119 $8,944 $17,438 $98,858 1.3x 1.4x 8.6x 13.1x 2% (8%) 15% 10%
Vivendi SA $25.67 $29,718 $2,667 $9,422 $36,721 2.1x 2.0x 15.6x 15.0x 11% 2% 13% 14%
Warner Music Group Corp. $29.50 $15,045 $484 $3,370 $17,952 NA 4.0x NA 24.2x NA NA NA 17%
Hipgnosis Songs Fund Limited $1.45 $892 $81 $17 $828 NA 20.6x NA 24.8x NA NA NA 83%
YG Entertainment Inc. $29.68 $536 $75 $22 $542 2.3x 2.6x NM 23.0x (7%) (13%) 3% 11%
SM Entertainment Co. $20.01 $469 $261 $72 $434 0.7x 0.9x 5.2x 7.4x 7% (19%) 14% 12%
Summary Statistics
Mean 1.6x 5.3x 9.8x 17.9x 3% (9%) 11% 25%
Median 1.7x 2.3x 8.6x 19.0x 4% (10%) 14% 13%
DSPs
NetEase $429.38 $59,342 $10,664 $2,845 $53,161 6.2x 5.4x 20.8x 19.7x (12%) 15% 30% 27%
Spotify Technology S.A. $258.19 $48,012 $1,649 $700 $47,062 6.2x 5.3x NM NM 27% 17% 1% (1%)
Sirius XM Holdings Inc. $5.87 $25,705 $40 $8,340 $34,005 4.4x 4.4x 14.1x 14.2x 35% (1%) 31% 31%
Tencent Music Entertainment Group $13.46 $22,580 $2,957 $19 $19,654 5.4x 4.7x 29.1x 30.2x 31% 16% 19% 15%
LINE Corporation $50.28 $12,065 $1,739 $2,157 $12,616 5.9x 5.3x NM NM 13% 12% (6%) 3%
Stingray Group Inc. $3.87 $285 $2 $278 $562 2.3x 2.7x 6.5x 6.9x 89% (12%) 36% 39%
LiveXLive Media $3.62 $215 $6 $16 $226 5.9x 4.1x NM NM 21% 45% NM (11%)
Summary Statistics
Mean 5.2x 4.5x 17.6x 17.7x 29% 13% 18% 15%
Median 5.9x 4.7x 17.4x 16.9x 27% 15% 24% 15%
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM. 36PUBLIC COMPS BACKUP
Public Market Comparable Companies (cont.)
($MM, except per share data)
Trading Metrics Operating Metrics
Stock Price Market Cash & Total Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 6/30/2020 Cap ST. Invest. Debt Value (EV) CY19A CY20E CY19A CY20E 19A/18A 20E/19A CY19A CY20E
Live Entertainment
Live Nation Entertainment $44.33 $9,374 $3,270 $5,220 $12,140 1.1x 3.0x 12.9x NM 7% (64%) 8% (9%)
iHeartMedia $8.35 $1,218 $647 $6,879 $7,459 2.0x 2.4x 7.6x 11.5x (42%) (16%) 27% 21%
Madison Square Garden Sports Corp. $146.89 $3,524 $1,337 $632 $2,863 1.8x 4.5x 43.4x NM 0% (61%) 4% (14%)
Madison Square Garden Entertainment Corp. $75.00 $1,801 $1,335 $281 $788 NA 1.5x NA NM NA NA NA (15%)
Avid Technology $7.27 $318 $81 $286 $523 1.3x 1.5x 9.3x 11.6x (1%) (12%) 14% 13%
Eventbrite $8.57 $777 $373 $23 $427 1.3x 2.8x NM NM 10% (53%) (1%) NM
Summary Statistics
Mean 1.5x 2.6x 18.3x 11.5x (5%) (41%) 10% (1%)
Median 1.3x 2.6x 11.1x 11.5x 0% (53%) 8% (9%)
Diversified Technology
Apple Inc. $364.80 $1,581,165 $94,051 $118,761 $1,605,875 6.1x 6.0x 20.8x 22.0x 1% 1% 29% 27%
Microsoft Corporation $203.51 $1,543,306 $137,642 $84,025 $1,489,689 11.2x 10.1x 25.1x 22.1x 12% 11% 45% 45%
Amazon.com $2,758.82 $1,376,033 $49,292 $78,151 $1,404,892 5.0x 4.1x 33.7x 31.1x 20% 24% 15% 13%
Alphabet Inc. $1,418.05 $967,990 $117,229 $16,804 $867,565 5.3x 5.1x 14.7x 15.2x 19% 4% 36% 34%
Facebook $227.07 $647,453 $60,289 $10,814 $597,978 8.5x 7.8x 15.1x 16.0x 26% 9% 56% 48%
Alibaba Group Holding Limited $215.70 $578,885 $51,287 $17,711 $561,569 8.0x 6.4x 25.2x 21.6x 39% 25% 32% 30%
The Walt Disney Company $111.51 $201,417 $14,339 $59,555 $260,199 3.5x 4.0x 14.1x 31.1x 26% (13%) 25% 13%
Netflix $455.04 $200,128 $5,152 $16,266 $211,242 10.5x 8.5x NM 46.0x 28% 23% 16% 19%
Snap Inc. $23.49 $33,953 $2,082 $1,233 $33,105 19.3x 15.7x NM NM 45% 23% (13%) (9%)
Twitter $29.79 $23,329 $7,671 $4,137 $19,796 5.7x 6.0x 16.1x 24.6x 13% (5%) 36% 25%
Summary Statistics
Mean 8.3x 7.4x 20.6x 25.5x 23% 10% 28% 24%
Median 7.1x 6.2x 18.5x 22.1x 23% 10% 31% 26%
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM. 37PUBLIC COMPS BACKUP
Public Market Comparable Companies (cont.)
($MM, except per share data)
Trading Metrics Operating Metrics
Stock Price Market Cash & Total Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 6/30/2020 Cap ST. Invest. Debt Value (EV) CY19A CY20E CY19A CY20E 19A/18A 20E/19A CY19A CY20E
Digital Services & Marketplace
Shopify Inc. $949.20 $113,303 $2,361 $141 $111,083 NM NM NM NM 7% 39% 8% 5%
Uber Technologies $31.08 $53,892 $8,996 $9,499 $55,371 3.9x 4.2x NM NM 7% (6%) NM (18%)
MercadoLibre $985.77 $49,003 $2,276 $1,125 $47,851 21.0x 15.8x NM NM 7% 33% (3%) (1%)
eBay Inc. $52.45 $36,855 $4,430 $9,195 $41,620 3.9x 4.0x 11.3x 10.7x 7% (4%) 34% 38%
Expedia Group $82.20 $11,589 $4,099 $7,377 $16,338 1.4x 2.7x 7.7x NM 8% (50%) 18% 0%
Rakuten $8.84 $12,000 $16,949 $17,698 $12,763 1.1x 0.9x 6.7x 13.4x 7% 18% 17% 7%
Etsy $106.23 $12,607 $804 $854 $12,657 23.1x 16.2x NM 46.9x 35% 42% 34% 35%
Zillow Group $57.48 $12,699 $2,561 $2,279 $12,416 4.8x 3.7x NM NM 96% 30% 0% (3%)
Lyft $33.01 $10,128 $2,670 $533 $7,991 2.2x 2.8x NM NM 7% (21%) (20%) NM
Grubhub Inc. $70.30 $6,484 $597 $793 $6,680 5.2x 4.3x 37.1x NM 7% 20% 14% 4%
LendingTree $289.53 $3,782 $51 $429 $4,160 3.7x 4.7x 20.6x 32.6x 46% (21%) 18% 14%
TripAdvisor $19.01 $2,551 $798 $725 $2,478 1.6x 3.8x 5.7x NM (3%) (58%) 28% (10%)
Yelp Inc. $23.13 $1,663 $487 $237 $1,413 1.4x 1.7x 6.5x 18.1x 8% (20%) 21% 10%
Shutterstock $34.97 $1,246 $296 $46 $996 1.5x 1.6x 9.8x 11.1x 5% (4%) 15% 14%
Summary Statistics
Mean 5.7x 5.1x 13.2x 22.1x 17% (0%) 14% 7%
Median 3.7x 3.8x 8.8x 15.8x 7% (4%) 17% 5%
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM. 38PUBLIC COMPS BACKUP
Public Market Comparable Companies (cont.)
($MM, except per share data)
Trading Metrics Operating Metrics
Stock Price Market Cash & Total Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 6/30/2020 Cap ST. Invest. Debt Value (EV) CY19A CY20E CY19A CY20E 19A/18A 20E/19A CY19A CY20E
Advertising
Adobe Inc. $435.31 $208,803 $4,351 $4,697 $209,149 18.8x 16.4x 41.5x 34.7x 24% 14% 45% 47%
The Trade Desk $406.50 $18,723 $446 $370 $18,647 28.3x 27.1x NM NM 38% 4% 32% 26%
Wix.com Ltd. $256.22 $13,202 $726 $448 $12,924 17.0x 13.5x NM NM 26% 26% 15% 16%
HubSpot $224.35 $9,788 $969 $610 $9,430 14.1x 11.7x NM NM 31% 20% 13% 9%
LivePerson $41.43 $2,743 $171 $200 $2,772 9.5x 8.0x NM NM 17% 19% (5%) 2%
Magnite NA NA $71 $21 ($51) NM NM NM 25.2x 25% 19% 16% (1%)
Criteo S.A. $11.39 $703 $437 $164 $462 0.5x 0.6x 1.6x 2.9x (3%) (22%) 31% 22%
Summary Statistics
Mean 14.7x 12.9x 21.6x 20.9x 23% 12% 21% 17%
Median 15.5x 12.6x 21.6x 25.2x 25% 19% 16% 16%
Data & Analytics
Experian plc $35.57 $32,280 $277 $4,522 $36,531 7.3x 7.3x 21.6x 21.2x 3% 0% 34% 34%
IHS Markit Ltd. $75.50 $29,959 $208 $5,777 $35,542 8.0x 8.3x 20.1x 19.4x 10% (3%) 40% 43%
Verisk Analytics $170.20 $27,617 $207 $3,334 $30,743 11.8x 11.1x 25.2x 23.6x 9% 7% 47% 47%
Equifax Inc. $171.88 $20,864 $370 $3,508 $24,045 6.9x 6.6x 20.4x 20.2x 3% 4% 34% 33%
TransUnion $87.04 $16,520 $319 $3,817 $20,115 7.6x 7.8x 19.1x 21.4x 13% (3%) 40% 37%
Nielsen Holdings plc $14.86 $5,297 $359 $8,949 $14,074 2.2x 2.3x 7.6x 7.9x (0%) (4%) 29% 29%
comScore $3.10 $220 $37 $266 $449 1.2x 1.2x NM 13.6x (7%) (5%) 1% 9%
Summary Statistics
Mean 6.4x 6.4x 19.0x 18.2x 4% (1%) 32% 33%
Median 7.3x 7.3x 20.2x 20.2x 3% (3%) 34% 34%
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM. 39PUBLIC COMPS BACKUP
Public Market Comparable Companies (cont.)
($MM, except per share data)
Trading Metrics Operating Metrics
Stock Price Market Cash & Total Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 6/30/2020 Cap ST. Invest. Debt Value (EV) CY19A CY20E CY19A CY20E 19A/18A 20E/19A CY19A CY20E
High-Growth SaaS
Zoom Video Communications $253.54 $71,524 $1,105 $72 $70,491 NM 39.1x NM NM 85% 195% 19% 26%
Twilio Inc. $219.42 $30,730 $1,843 $648 $29,535 26.5x 19.4x NM NM 72% 36% 9% 6%
Okta $200.23 $24,951 $1,447 $1,161 $24,665 42.9x 31.7x NM NM 44% 35% (7%) (3%)
Slack Technologies $31.09 $17,525 $1,525 $840 $16,857 27.1x 19.3x NM NM 56% 40% (19%) (9%)
Coupa Software Incorporated $277.04 $18,582 $706 $718 $18,594 48.8x 37.8x NM NM 46% 29% 13% 15%
Zscaler $109.50 $14,292 $391 $41 $13,941 39.0x 28.6x NM NM 47% 36% 10% 9%
Smartsheet Inc. $50.92 $6,098 $544 $75 $5,628 20.8x 15.4x NM NM 52% 35% (18%) (13%)
Cloudera $12.72 $3,757 $412 $212 $3,558 4.5x 4.2x NM 20.3x 63% 7% 6% 21%
Zix Corporation $6.90 $377 $16 $198 $559 3.2x 2.6x 14.0x 11.0x 145% 24% 23% 24%
Summary Statistics
Mean 26.6x 22.0x 14.0x 15.6x 68% 49% 4% 8%
Median 26.8x 19.4x 14.0x 15.6x 56% 35% 9% 9%
Notes:
Sources: Capital IQ, Wall Street Research. Multiples 50x considered NM. 40GCA Advisors, LLC is the US entity of GCA, a global investment bank that
provides strategic M&A and capital markets advisory services to growth
companies and market leaders. The firm offers worldwide coverage with over
500 professionals in 25 locations across America, Asia and Europe. Built by the
people that run the business, GCA is a firm of experts who focus on deals that
require commitment, original perspective, skill and exceptional networks.
www.gcaglobal.com
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