DIGITAL MEDIA | INTERNET SECTOR REPORT€¦ · 3 Q1 2020 Internet & Digital Media Wrap-Up EXECUTIVE...
Transcript of DIGITAL MEDIA | INTERNET SECTOR REPORT€¦ · 3 Q1 2020 Internet & Digital Media Wrap-Up EXECUTIVE...
INTERNET & DIGITAL MEDIA SECTOR REPORT
Q1 2020
With A Double Click on the Streaming Market
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COVID-19 STATEMENT
We at GCA are closely monitoring the effects of the COVID-19 pandemic. First and
foremost, we are committed to ensuring our employees and families remain safe
and healthy and we hope you, your employees and loved ones remain safe and
healthy as well. We are incredibly grateful for everyone in the medical community,
as well as the numerous essential service providers keeping us safe and keeping our
communities running in these difficult times.
While this is an unprecedented time, deals are continuing to take place. Each
business—whether public or private, established or new, domestic or
international—has a unique set of needs. With this in mind, we want to offer our
expertise, insights and perspective to help you navigate this environment.
Please contact a member of our team to discuss what we are seeing in the market
and how you could best position your business at this time and in the future.
NOTE ABOUT THE CURRENT CLIMATE
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Q1 2020 Internet & Digital Media Wrap-Up
EXECUTIVE SUMMARY
» Internet & Digital Media was a highly active category with ~$15.3Bn in M&A volume and ~$11.7Bn in financing volume during Q1 ‘20
— 17 M&A transactions closed in Q1 ‘20 including Penn National / Barstool (Internet Content), Najafi Companies / Tegna (Diversified Marketing) and Fox / Tubi (OTT Streaming); of these transactions, ~18% were completed by private equity firms via leveraged buyout
— 656 financings across all stages – from seed to LBO – in Q1 ’20 which was down ~8% from Q1 ’19
» High-profile, internet content M&A deals highlighted Q1 ‘20 activity, with strategic buyers looking to build out their offerings, remain
competitive and differentiate themselves from emerging competition while also looking to add significant brands and engaged audiences
― NuCom Group’s acquisition of The Meet Group (NASDAQ: MEET) and The San Vicente Group’s acquisition of Grindr represent
approximately $1.1Bn of deal value in Q1 ’20, illustrating further consolidation and activity in the mobile dating app business
» Transactions involving stand-out digital brands including The Ringer, Barstool Sports and The Athletic highlighted robust activity among content
creators and new digital platforms; this is thematically consistent with a trend we have been observing for years
— These three deals alone represent roughly $1.2Bn in overall digital media deal value in Q1 ‘20
» From a financing perspective, Q1 ’20 saw a number of well-established private equity firms invest in popular, growing consumer companies,
aiming to strengthen their foothold in the sector
» From a trading perspective, Marketplace companies lead the public company pack, trading at 4.8x EV / ’20E Revenue and 17.1x EV / ’20E EBITDA
on average
― Trading multiples for companies across digital media subsectors are deflated due to the public market impact of COVID-19
Notes:Sources: Capital IQ, PitchBook, PriceWaterhouseCoopers / NVCA MoneyTree Report, Wall Street Research.
Select Q1 Active Buyers Select Q1 Active Investors
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GCA OVERVIEWStrong Sector Expertise Across Internet & Digital Media Team
MEDIA / ENTERTAINMENT
SEARCH & ONLINE ADVERTISING
INTERNET CONTENT
INTERNET COMMERCE
MARKETPLACE / NEW TECHNOLOGY
PUBLISHING
GAMING
SOCIAL MEDIA
HR TECHNOLOGY
DIVERSIFIED MARKETING TECHNOLOGY
SELECTED RECENT TRANSACTIONS
REPRESENTATIVE FOCUS AREAS GCA SECTOR TEAM
JOHN LAMBROSManaging DirectorNew [email protected]+1 (212) 999-7083
JOSHUA WEPMANManaging DirectorNew [email protected]+1 (212) 999-7092
KEVIN WALSHManaging DirectorSan [email protected]+1 (415) 318-3629
THOMAS EGLIManaging [email protected]+41 43 499 4341
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.
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Strategic Financing
NORTH AMERICA
– Expertise and relationships with high-growth private and public technology companies and private equity investors focused on this sector of the economy
– M&A, private capital and private funds advisory services
ASIA
– Strong relationships with leading global Japanese conglomerates and trade buyers
– Full-scope M&A advisory services, Mezzanine financing fund
EUROPE
– Extensive experience and relationships advising leading PE firms, innovative technology companies and corporates throughout Europe and the Nordics
– M&A and debt advisory business
GCA IS PLEASED TO ANNOUNCE ITSROLE AS EXCLUSIVE FINANCIAL ADVISOR TO:
GCA TRANSACTION ANNOUNCEMENT
Q1 2020 TRANSACTIONS
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GCA OVERVIEWSelected Recent Internet & Digital Media 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.
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TA Associates’ Acquisition of Auction Technology Group (ATG)
GCA OVERVIEW
» On February 14, TA Associates announced it had acquired ATG
» GCA was appointed as ATG’s advisor in mid-2019 due to its experience in running multi-track processes and recent IPO credentials
» Two pre-emptive offers were received prior to launching a formal process, including one from TA Associates
» GCA continued the multi-track process up until three days before transacting in order to maximize process competitiveness and optionality
» As part of its offer, TA was seeking to simultaneously acquire ATG and a key competitor in the US – Proxibid
Headquarters: London, England
Founded: 1998
Description: Provider of online auction information and services to the fineart and antiques, industrial and commercial and surplus andreturns industries. The Company's services facilitate onlinetransactions, auction information and related services throughan online platform and trade magazines.
Combining ATG and Proxibid will give us the resources to invest in better tools for auctioneers and accelerate investment in marketing, which we believe will bring a steady stream of new online bidders. The companies are a natural cultural fit, both valuing the provision of a professional experience for our auctioneer and bidder clients.
John-Paul Savant,
CEO, ATG
TA Associates is excited to bring together these two profitable and growing online businesses. With their similar business models, technology and culture, as well as complementary geography and sector focus, we believe that Proxibid and ATG are an excellent match.
Morgan Seigler,
MD, TA Associates
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“
“
“Transaction Overview ATG Overview
TA Associates Investment Rationale
Selected Transaction Commentary
ATG Product Overview
Five Marketplaces in Three Industry Verticals» Thesaleroom: Arts and antiques marketplace in the UK
» Lot-tissimo: Arts and antiques marketplace in the DACH region
» Bidspotter.com: Industrial and commercial marketplace in North
America
» Bidspotter.co.uk: Industrial and commercial marketplace in the
UK
» i-bidder: Consumer surplus and returns marketplace in the UK
Trade Magazine» ATG also owns and operates Antiques Trade Gazette, the leading
trade magazine for arts and antiques
» Provides insight and key information around the United
Kingdom’s specialist auctions and auctioneers
Notes:Sources: Company Website, PitchBook, Press Releases.
Online Auction Marketplace» ATG is an online marketplace connecting the world’s auctioneers
to a global bidder base
✓ Market-leading positions across multiple geographies with leading bidder and auctioneer numbers
✓ Strong financial growth profile benefiting from first-mover advantage and the virtuous circle of a marketplace model
✓ Numerous actionable growth opportunities
✓ Significant synergy potential with the combination of Proxibid
✓ Led by an exceptionally strong management team
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SECTION IGCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
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Music & Podcasting Streaming Growth and Acceleration
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:Sources: Goldman Sachs, Activate Consulting.
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
3240
4657
6575
88
103
120
140
164
'13A '14A '15A '16A '17A '18A '19E '20E '21E '22E '23E
Global Recorded Music Revenues ($Bn) U.S. Monthly Podcast Listeners (MM, Age 12+)
Physical Digital (excl. streaming) Streaming
Performance Rights Synchronization
29.9%
CAGR (2013A – 2023E)
STREAMING
17.8%
CAGR (2013A – 2023E)
LISTENERS
$1 $2 $3 $5 $7 $9 $11 $13 $16 $18 $20$15 $14 $15
$16$17
$19$20
$22$24
$26$28
'13A '14A '15A '16A '17A '18E '19E '20E '21E '22E '23E
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Music Streaming Highlights
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:Sources: Goldman Sachs, Activate Consulting, Statista, Wall Street Research.1) As of September 2019.
44.5
44.2
31.5
25.9
21.8
16.5
15.3
» Tremendous rebound in the global music industry in recent years, largely driven by digital transformation and streaming ubiquity
― Growth in digital sales has outstripped the decline in physical sales
― Global recorded music revenues are projected to reach $22Bn in 2020E, with streaming representing roughly 60%
» Apple Music, Spotify and Pandora remain the most popular streaming services in the US; however, nearly 40% of listeners utilize more than one streaming service
» With both stability in streaming and better technology to monetize and track listening, songs are a real “asset class,” with valuations for premium libraries reaching 15-20x NPS
― Hipgnosis (LON: SONG), the only pure-play, publicly traded music royalty fund, has acquired 22 song catalogues with more than 6,000 songs since 2018
― Round Hill Capital, Kobalt Capital, Concord Bicycle, Tempo Music and many other funds are all aggressively competing for song libraries and IP ownership
» The increased direct exposure artists have to their fans through digital decreases dependence on traditional publisher relationships, which has fueled the growth of tech-enabled independent artists and record labels
U.S. Active Monthly Users (MM) (1)
Global Recorded Music Revenue Split ($Bn)
$13
$4
$3
$2
$36
$4
$3
$1 $12030E
2020E
Physical
Digital (excl. streaming)
Streaming Performance Rights
Synchronization
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Steady and Growing Presence of the Artists Direct and Independent Segments
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
30.6% 30.3% 29.7% 30.3%
22.9% 22.6% 22.1% 20.6%
16.9% 17.5% 17.7% 18.3%
27.9% 27.2% 27.7% 27.4%
1.7% 2.3% 2.7% 3.4%
2015 2016 2017 2018
Independents
Artists Direct
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:Sources: Midia.
Independent labels have maintained their market share while Artists Direct have expanded their share versus the incumbents, a key driver to change throughout the industry
Global Recorded Music Industry Market Share
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Live Concert Streaming is Here to Stay
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:Sources: Ludwig van Toronto, Akamai.
Live Concert Streams
Selected Market Commentary
» COVID-19 has accelerated the growth of live concert streaming, a promising area we have been tracking within the music sector
» Live streaming, which is reportedly a $5Bn market globally, is an inexpensive way for artists to expand their audience and deepen relationships with fans
― Bandsintown LIVE launched with Twitch on March 20th with a DJ Black Coffee concert and has become a hub for live concert superfans attracting more than 2.3MM views on this channel alone
― Andrea Bocelli’s “Music For Hope” classical music event on Easter Sunday streamed on YouTube and drew 2.8MM peak concurrent viewers making it the largest simultaneous audience for classical music
» Technology to support live virtual performances is in a very early stage
» Latency, privacy and security represent the largest hurdles to successful live concert performances, but companies large and small are working to minimize these disruptions, as they see tremendous opportunity in the live streaming market
» The broader live music industry will benefit from growth in streaming concerts through increased ticket sales and fan engagement
― People who stream concerts are 67% more likely to buy a ticket to a similar event in the future
Live is on the rise and rightfully so, but it is still in its infancy and is still the baby brother of broadcast video. The scale of the cloud and reach of the Internet have allowed different audiences to more easily reach their niche content and allows for advertisers to more accurately put relevant content in front of intenders.
Joe Green, VP,
Turner Broadcasting
Accessing live streams has become second nature to our audiences, whether that is within our own sites and apps, or on social sites. We now live stream multiple times a day across multiple platforms, along with 24/7 channel simulcast streams and major live events.
Alec Hendry,
Sr. Director, Viacom
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“Date Artist Platform
3/18 John Legend
3/27 Kungs
4/12 Andrea Bocelli
4/24Thomas Rhett &Train
4/25 Jack Johnson
4/27 Brett Young
5/1Joe Jonas &Dillon Francis
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Innovation Across the Music Value Chain
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:This is a representative list and may not include all relevant companies. If your company is not on the list and would like to be added for future publications, kindly shoot us a note at [email protected] and we would be happy to consider.
MUSIC VALUE CHAIN:
Artist Services & Rights Management
DistributionPublishingEngagement Tools
` ` `
` ` `
` `
`DSPs `DIY & Distribution
Rights Management Artist & Label Services Artist Platforms
AI Tools & Analytics Fan Engagement Video & Creative Live Event Management
`Distributors
`Major Labels ` Indie Labels`
Creator & Promotional Services
Large Scale Publishers Live Concert Streaming
Live ConcertStreaming
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Downtown Music Holdings’ Acquisition of FUGA
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
» On January 22, Downtown Music Holdings announced that its subsidiary, AVL Digital Group, had acquired FUGA for an undisclosed amount
» FUGA will continue to function as a standalone business within Downtown's suite of distribution and monetization capabilities across AVL, while providing Downtown greater reach into the growing independent artist sector of the music industry
» As part of a broader enterprise, FUGA, its clients and partners will benefit from expanded resources, infrastructure and global scale to more quickly bring to market added services and innovation for music industry rights holders
Headquarters: Amsterdam, Netherlands
Founded: 2006
Description: FUGA connects music content providers and digital serviceplatforms using a B2B technology platform. The platformenables distributors, record labels, artist services companies andother rights holders to directly reach the world's musicstreaming market. In addition, FUGA provides full servicemarketing, promotion, monetization and label services to therapidly growing independent music sector.
The exceptional team at FUGA and their unique focus on providing best-in-class capabilities has put the company at the forefront of empowering the fastest growing sector of the music industry. Integrating FUGA is a natural next step for Downtown in developing businesses that support a more equitable and innovative music ecosystem.
Justin Kalifowitz,
CEO, Downtown
This acquisition will give FUGA the backing to achieve our global ambitions in this space so we can continue serving the independent music community, developing our service offering and improving our technology. We share a common business approach and philosophy with Downtown, one rooted in providing control and flexibility for creators and rights holders.
Pieter van Rijn,
CEO, FUGA
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“
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“Transaction Overview FUGA Overview
260+ Platform Connections
Selected Transaction Commentary
FUGA Product Overview
Music Distribution» Complete content management system
» Upload / create releases, re-compile catalog, create audio / video
bundles, set tracks to pre-order, timed release dates and more
Royalty Accounting Software» Collate income streams and issue customized royalty reports for
different deal structures
» Issue advances, set reserve payments, send statements and more
Neighboring Rights Collection» Direct member of 30+ societies worldwide
» Ability to register catalogues directly in each territory to
maximize income on behalf of an artist
Analytics» Filter by artist, label, territory, service and time period and sort
by gender, device type and age
» Financial dashboard provides picture of repertoire's revenues
Notes:Sources: Company Website, Pitchbook, Capital IQ, Press Releases.
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22% 23% 25%29% 27%
30%33%
36%40%
44%
51%
11% 12% 12% 14% 12%15% 17%
21%24% 26%
32%
7% 8% 10%13% 15% 17%
22%
'09A '10A '11A '12A '13A '14A '15A '16A '17A '18A '19E
16%
25%
25%
16%
17%
1%
Podcasting Market Highlights
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:Sources: Andreessen Horowitz, Edison Research and Triton Digital.
% of Americans (Age 12+) Who Have Listened to a Podcast
144MM Ever
90MM Past month
62MM Past week
Average Weekly Time Spent Listening to Podcasts
< 1 Hour
1 – 3 Hours
3 – 5 Hours
5 – 10 Hours
> 10 Hours
» Podcasting is an early but explosive part of the broader streaming market, feeding off of digital distribution platforms and device ubiquity
― 65% of active listeners began listening in the last three years
― 22% of Americans listen on a weekly basis
― Overall, roughly 144MM Americans have listened to a podcast at some point
» Of those listening to podcasts, consumption is believed to be 6+ hours per week – it’s an obsession!
― Average of 6 hours and 37 minutes per week
― Average of 7 podcast episodes per week
» While Adam Currey of MTV-VJ fame is often cited as one of the first to “podcast” in 2004, Apple formally launched its Podcasts app in 2012, although the competition for podcast platform market share has been intense
― New entrants into the podcasting platform market have drained Apple of ~20% of its market share in the past few years
― With 4 acquisitions in the last 15 months in podcasting alone, Spotify has legitimized this market
Don’t know
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52%
19%
29%
Leading Podcasting Platforms
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
4%
5%
6%
6%
7%
9%
12%
19%
21%
Podcast Listeners (Age 18+) by Service (1)
Anchor-Distributed Podcast Consumption (Hours) by Platform (2)
Platforms are Competing for Listeners
» Apple maintains an edge in the amount of podcast hours played, but listeners consume podcasts from a variety of other providers
» Although Apple’s users tend to spend more time on the app, Apple and Spotify have a similar number of users
» There exists a long tail of apps attracting a minority of listeners
― 20+ apps comprise the “Other” 29% of podcast hours played
Other
Notes:Source: Activate Consulting.1) As of October 2019.2) As of September 2018.
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79%
21%
7%
9%
9%
13%
14%
Comedy
Society & Culture
Sports
News & Politics
Business
11%
10%
11%
20%
18%
18%
Advertising Drives Podcasting Profitability
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Standalone Podcast Service Payment (Age 18+) (1)
79%
of monthly listeners have not paid for a podcast in the last twelve months
Reasons Consumers (Age 18+) Do Not Pay for Podcasts
Internet Users’ Reactions to Podcast vs. Radio Ads (2)
Podcast Ads Read by Host Radio Ads
Lift in Purchase Intent for Brands After Hearing Podcast Ad (2)
35% Satisfied with free content
28%Not interested in paid content
22% Do not mind ads
7%Prices are too high
5%Access podcasts through another paid service
2% Other
Enjoyment
Brand & Message Recall
Trust
Notes:Source: Activate Consulting.1) As of October 2019.2) As of 2017.
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DATE INVESTOR TARGET AMOUNT RAISED
10/24/19 $30MM
08/30/19 ~$30MM
07/16/19 $60MM
02/06/19 $100MM
04/25/18 14MM
09/11/17 ~20MM
Selected Financing Activity
Podcasting Market Opportunity vs. M&A Activity
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Notes:Sources: Capital IQ, PitchBook, Activate Consulting, PriceWaterhouseCoopers and Interactive Advertising Bureau (IAB), Andreessen Horowitz.
DATE ACQUIRER TARGET DEAL VALUE
03/23/20 Undisclosed
02/05/20 ~$250MM
01/29/20 $450MM
03/26/19 $56MM
02/06/19 ~$200MM
02/06/19 ~$140MM
09/13/18 $55MM
Selected M&A Activity
Ximalaya
» Podcast TAM has been elusive and complicated to identify with any accuracy given the early stages of the market
» PwC and IAB estimated podcast ad revenue would hit roughly $680MM in 2019E and roughly $1.0Bn in 2021E
» Within a year, Activate Consulting had revised its estimate for podcast ad revenue substantially, suggesting the value will roughly triple by 2023E
$0.3 $0.4
$0.5 $0.7
$0.8 $0.9
N/A
$0.3 $0.4
$0.6
$0.8
$1.0
$1.2
$1.6
2017A 2018E/A 2019E 2020E 2021E 2022E 2023E
November 2018 October 2019
» These estimates suggest podcasts are under monetized
― Ad spend is still very small compared to media channels such as Internet, TV and radio
» Alone, Spotify has spent roughly $650MM in the last 15 months to enhance its market presence
» Valuations suggest major players believe the market has greater potential and new monetization tactics are key
19Notes:Sources: Company Filings, Press Releases, Andreessen Horowitz.
Identifiable BrandsDrive Intrinsic Value
» Consumers engage with brands they can trust – The Ringer crushed it!
» Strong identity is a critical component of investing in brands
Industry Case Study: Spotify’s Acquisition of The Ringer
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
Ability for Spotify to
expand its sports and
entertainment
offerings, leveraging a
best-in-class editorial
team
Enables Spotify to
further refine its
listener targeting
within its walled garden
Immediately grow The
Ringer’s audience by
introducing Spotify’s
expansive listener
network
New opportunity for
monetization paired
with continued focus
on deepening audience
engagement
Maintain its position as
the world’s largest
audio streaming
platform by getting a
lead in the growing
podcast industry
New and bourgeoning
asset Spotify can use to
drive ad sales with its
dynamic in-stream ad
placement algorithm
1 Engaged Audience in a Desirable Demographic
» The Ringer attracts listeners who are generally educated millennials, but appeals to a broader age and gender demographic
2
Content is King, Again» The Ringer has a long pedigree of
developing top-tier content, which is a hallmark of the brand
» Bill Simmons, a true pioneer in sports media, has attracted a sizable creative team
4Podcast Consumption is Rapidly Growing
» 90MM Americans listen to podcasts monthly; 65% started in the last 3 years
» The Ringer’s podcasts receive more than 100MM episode downloads per month
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Transaction Overview The Ringer Overview
Spotify Investment Rationale
» On February 5, Spotify announced that it
had acquired The Ringer for nearly $250M in
cash considerations paid over the next few
years
» The transaction is expected to close in Q2
‘20
» Spotify will maintain 100% of voting rights
and shares held in The Ringer Why We Like This Deal
Spotify has the unique ability to truly supercharge both content and creator talent across genres. We spent the last few years building [this] company and believe Spotify can take us to another level.
Bill Simmons, Founder, The Ringer
We look forward to putting the full power of Spotify behind The Ringer as they drive our sports strategy. As we set out to expand our sports and entertainment offerings, we wanted a best-in-class editorial team.
Dawn Ostroff, CCO, Spotify
Selected Transaction Commentary
“
“ “
“
Acquisition of
~$250MM
Headquarters: Los Angeles, CA
Founded: 2016
Employees: ~175
Description: Website, podcast network and scripted and non-scripted videoproduction house creating blend of sports, pop culture, politicsand tech content. The Ringer Podcast Network includes over 30popular podcasts, including “The Bill Simmons Podcast,” “TheRewatchables,” and “The Ryen Russilio Podcast,” among others.
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Industry Case Study: Penn National’s Acquisition of Barstool Sports
GCA INTERNET & DIGITAL MEDIA: KEEP ON STREAMIN’
LBO Capital Raise Strategic Sale
Date 1/7/16 1/23/18 1/29/20
Investor Chernin Group Chernin Group Penn National
Equity Sold / Raised $12.5MM $15MM $163MM
Valuation $24.5MM $100M $450MM
Utilize Barstool’s
nationally recognized
brand for retail and
online sports betting
and iCasino products
» On January 29, Barstool Sports announced that it had sold a 36% stake to Penn National Gaming (NasdaqGS: Penn) for ~$163MM in cash and convertible stock
» After three years, Penn will have the option to increase its ownership to ~$50% by purchasing an incremental stake of ~$62MM at the same $450MM valuation
» Upon completion of the transaction, both Penn and prior investor, The Chernin Group, will own 36% of the Company (TCG previously owned 60%), with Barstool employees owning the remaining 28%
» Penn to initially receive 2 of 7 board seats
Headquarters: New York, NY
Founded: 2003
Employees: ~400
Description: Leading digital sports, entertainment and media platform thatdelivers original content across blogs, podcasts, radio, video andsocial, supported by nearly 70 dedicated personalities. TheCompany has approximately 66 million monthly unique visitors,including an estimated 48% of males and 44% of females in theMillennial and Generation X generations across America.
We’re excited to partner with Penn National on Barstool Sports’ next chapter. With Erika’s leadership and Dave’s vision, the Company has realized remarkable growth over the last four years. We believe the marriage of the Barstool brand and passionate audience with Penn National’s gaming leadership will change the industry.
Mike Kerns, Partner,
The Chernin Group
This exciting new partnership with Barstool Sports reflects our strategy to continue evolving [into] a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment. With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National.
Jay Snowden,
President / CEO, Penn
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Leverage Barstool’s
complementary
audience of 66MM
monthly uniques with a
strong affinity for
sports and gaming
Reduce customer
acquisition costs by
incentivizing key
Barstool talent to
promote Penn’s
business
(2)
Sold Stake to
$450MM
Promote Penn’s land-
based casinos through
Barstool talent, live
events and tailored
content
Opportunity to launch
ancillary gaming
products and casinos
under the Barstool
brand
Use Barstool to help
create a bespoke
omni-channel sports
betting and casino
ecosystem for retail
and digital customers
Transaction Overview Barstool Overview
Barstool Fundraising Timeline
Selected Transaction Commentary
Penn National Investment Rationale
Notes:Sources: Company Filings, PitchBook, Capital IQ, Press Releases, LinkedIn.
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SECTION IIQ1 ‘20 MARKET UPDATE
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Select Q1 '20 Financing Transactions Quarterly Financing Volume ($Bn) (1)(2) Quarterly M&A Volume ($Bn) (4) Select Q1 '20 M&A Transactions
Company Amount ($MM) Acquirer Target EV ($MM)
$500 $8,700
$400 $1,395
$285 $879
$275 $615
$120 $588
$100 $569
$100 $513
$100 $450
Last 12 Months Digital Media & Internet Price Performance (5)
656
Q1 2020 Financing Transactions (1)(2)(3)
$11.7 Billion
Q1 2020 Financing Volume (1)(2)(3)
$15.3 Billion
Q1 2020 M&A Volume (3)(4)
17
Q1 2020 M&A Transactions (3)(4)
796 783671 690 710
787688 706 656
0
200
400
600
800
1000
$13 $12$15
$13 $13$15
$13 $13 $12
$0
$5
$10
$15
$20
$13 $14
$28 $30
$17$20
$35
$24
$15
$0
$10
$20
$30
$40
17 16
2532
1611
1520
17
0
10
20
30
40
San Vicente SPV
60.0%
75.0%
90.0%
105.0%
120.0%
135.0%
150.0%
4/1/2019 6/1/2019 8/1/2019 10/1/2019 12/1/2019 2/1/2020 4/1/2020
DEAL DASHBOARD
Notes:Sources: Capital IQ, PitchBook, PriceWaterhouseCoopers / NVCA MoneyTree Report.1) Criteria based on U.S. internet/mobile/telecommunications Series A and subsequent rounds of financings. 2) Financings include Venture and Private Equity Growth/Expansion activity for U.S. internet/mobile/telecommunications sectors. 3) Figures reflect total transactions and volume through end of most recent quarter. 4) Criteria based on U.S. target internet/digital media M&A deals with transaction enterprise values greater than $50MM. 5) Details on companies included can be found on the following page.
Quarterly Financing Deal Count (1)(2) Quarterly M&A Deal Count
Internet Content Gaming PublishersDiversified Marketing
Marketplace / New Technology
Social Media Internet CommerceSearch / Online
AdvertisingMedia /
Entertainment
26.0%
2.4%7.9%
0.6%
19.2%16.3%
(9.0)%(14.6)%(21.9)%
23
17.1x14.7x 14.4x
12.9x11.3x 11.3x 10.6x 10.3x
9.0x
Marketplace / NewEconomy
Internet Content Internet Commerce Search / Online Adv. Social Media Gaming Publishers DiversifiedMarketing
Media /Entertainment
4.8x4.3x
3.5x 3.4x3.1x
2.8x
2.0x 1.9x 1.9x
Marketplace / NewEconomy
Social Media Search / Online Adv. Internet Content Gaming DiversifiedMarketing
Publishers Internet Commerce Media /EntertainmentGaming Publishers Internet
CommerceInternet Content
Diversified Marketing
Search / Online Adv.
Marketplace / New
Economy
ENTERPRISE VALUE / 2020E REVENUE ENTERPRISE VALUE / 2020E EBITDA
INTERNET & DIGITAL MEDIA ECOSYSTEM
Social Media
Media / Entertainment
Social Media
Media / Entertainment
Diversified Marketing
Internet Content
GamingSearch / Online Adv.
Internet Commerce
Marketplace / New
Economy
Publishers
2020E Revenue / 2020E EBITDA Multiple
3.1x / 11.3x4.8x / 17.1x 2.8x / 10.3x
SocialMedia
1.9x / 14.4x 2.0x / 10.6x
Gaming
4.3x / 11.3x 3.4x / 14.7x
Internet Commerce
1.9 / 9.0x3.5x / 12.9x
Marketplace / New Technology
PublishersMedia /
EntertainmentDiversified Marketing
Internet Content
Search / Online Advertisement
PUBLIC COMPANY VALUATION
Notes:Source: Capital IQ. Multiples <0x and >50x considered NM. Multiples represent mean value of sector group.
24
$12.6
$15.6
$27.5
$29.8
$20.4 $20.3
$34.5
$24.3
$15.3
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Q1 2020 M&A DEAL DASHBOARD
($BN) Number of Deals M&A Volume
QUARTERLY M&A ACTIVITY (1)(2) SELECT Q1 2020 M&A TRANSACTIONS
Ann. Date Acquirer Target Enterprise Value
3/31 $235
3/25 $879
3/17 $440
3/17 $8,714
3/6 $615
3/5 $513
2/24 $1,395
2/19 $569
2/11 $588
2/5 $250
1/29 $450
Notes:Sources: Capital IQ, PitchBook, Wall Street Estimates. 1) Criteria based on U.S. target internet/digital media M&A deals with transaction enterprise values greater than $50MM. 2) Details on companies included can be found in the appendix.
17
16
25
31
11
15
20
San Vicente SPV
($MM)
17 17
25
$12.7 $12.3
$14.8
$12.6 $13.4
$15.1
$12.9 $12.7
$11.7
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Q1 2020 FINANCING DEAL DASHBOARD
($BN) Number of Deals Financing Volume
QUARTERLY FINANCING ACTIVITY (1)(2)(3) SELECT Q1 2020 FINANCING TRANSACTIONS
($MM)
Ann. Date Company Selected Investors Amount Invested
3/30 $500
3/25 $120
3/19 $400
3/19 $100
2/12 $93
2/11 $275
1/27 $75
1/21 $100
1/14 $50
1/13 $100
1/8 $285
Notes:Sources: Capital IQ, PitchBook, PriceWaterhouseCoopers / NVCA MoneyTree Report. 1) Criteria based on U.S. internet/mobile/telecommunications Series A and subsequent rounds of financings. 2) Financings include Venture and Private Equity Growth/Expansion activity for U.S. internet/mobile/telecommunications sectors. 3) Figures reflect total transactions and volume through end of most recent quarter.
690
796783
671
710
787
688706
656
26
APPENDIX
27
APPENDIX – PUBLIC COMPANY VALUATIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM.
($MM), Except Per Share DataStock Trading Statistics Operating Metrics
Price LTM Price Range Equity Cash & Net Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 3/31/20 Low High Value Equiv. Debt Value CY 19A CY 20E CY 21E CY 19A CY 20E CY 21E 19A/18A 20E/19A 21E/20E CY 19A CY 20E CY 21E
Marketplace / New Economy
Shopify Inc. $416.93 $190.38 $593.89 $48,808 $2,468 ($2,316) $46,492 29.5x 21.5x 15.8x NM NM NM 47.0% 37.0% 35.8% 4.2% 2.1% 3.8%
Uber Technologies, Inc. $27.92 $13.71 $47.08 $48,226 $11,313 ($3,474) $44,752 3.2x 2.8x 2.2x NM NM NM 25.5% 11.4% 29.1% (20.0%) (12.3%) 0.6%
MercadoLibre, Inc. $488.58 $422.22 $756.48 $24,287 $2,459 ($1,442) $22,846 9.9x 7.6x 5.6x NM NM NM 59.5% 31.4% 34.7% (3.1%) (2.8%) 4.1%
Copart, Inc. $68.52 $55.69 $104.88 $16,013 $94 $426 $16,439 7.4x 7.0x 6.4x 18.1x 16.2x 15.6x 18.8% 5.9% 9.7% 40.8% 43.1% 40.8%
Peloton Interactive, Inc. $26.55 $17.70 $37.02 $7,452 $1,487 ($959) $6,493 5.3x 3.5x 2.4x NM NM NM 179.2% 53.3% 43.2% (15.5%) (6.6%) (1.8%)
Lyft, Inc. $26.85 $14.56 $76.10 $8,233 $2,850 ($2,374) $5,859 1.6x 1.5x 1.1x NM NM NM 67.7% 6.8% 36.6% (19.8%) (16.1%) (2.7%)
Etsy, Inc. $38.44 $29.95 $71.80 $4,534 $817 $56 $4,590 5.6x 4.4x 3.7x 24.9x 20.0x 15.7x 35.6% 28.6% 18.9% 22.5% 21.8% 23.4%
LendingTree, Inc. $183.39 $156.57 $434.94 $2,393 $60 $307 $2,700 2.4x 2.2x 1.9x 13.3x 11.9x 9.7x 44.7% 13.5% 15.1% 18.3% 18.0% 19.3%
Farfetch Limited $7.90 $5.99 $27.56 $2,683 $322 ($203) $2,480 2.4x 1.6x 1.3x NM NM NM 69.5% 49.4% 27.9% (12.5%) (6.0%) 0.4%
TripAdvisor, Inc. $17.39 $13.73 $56.60 $2,367 $319 ($152) $2,215 1.4x 1.6x 1.4x 5.1x 6.4x 5.2x (3.4%) (12.5%) 16.5% 27.9% 25.4% 27.0%
CarGurus, Inc. $18.94 $14.25 $42.82 $2,127 $172 ($102) $2,025 3.4x 3.6x 2.7x 27.8x 36.6x 17.0x 29.7% (4.0%) 32.5% 12.4% 9.8% 15.9%
Moneysupermarket.com Group PLC $3.78 $2.61 $5.23 $2,030 $32 $14 $2,044 4.0x 4.1x 3.9x 11.0x 11.6x 10.7x 13.5% (2.0%) 5.2% 36.0% 34.9% 35.9%
The RealReal, Inc. $7.01 $5.00 $30.05 $607 $363 ($363) $243 0.8x 0.6x 0.5x NM NM NM 48.8% 23.3% 31.1% (23.1%) (17.7%) (8.3%)
Mean 5.9x 4.8x 3.8x 16.7x 17.1x 12.3x 48.9% 18.6% 25.9% 5.2% 7.2% 12.2%Median 3.4x 3.5x 2.4x 15.7x 14.1x 13.2x 44.7% 13.5% 29.1% 4.2% 2.1% 4.1%
Social Media & New Platform
Facebook, Inc. $166.80 $137.10 $224.20 $475,455 $54,855 ($43,781) $431,674 6.1x 5.3x 4.4x 10.9x 10.5x 8.6x 26.6% 14.9% 20.4% 56.0% 50.5% 51.4%
Spotify Technology S.A. $121.44 $109.18 $161.38 $22,560 $1,797 ($1,091) $21,470 2.8x 2.4x 2.0x NM NM NM 26.1% 20.2% 20.7% 0.8% (0.7%) 1.1%
Twitter, Inc. $24.56 $20.00 $45.86 $19,178 $6,639 ($3,350) $15,828 4.6x 4.9x 3.7x 12.9x 17.7x 11.6x 13.7% (6.3%) 30.6% 35.5% 27.6% 32.3%
Snap Inc. $11.89 $7.89 $19.76 $16,886 $2,113 ($876) $16,010 9.3x 7.3x 5.4x NM NM 43.7x 45.3% 27.4% 34.6% (12.9%) (1.1%) 12.4%
LINE Corporation $48.42 $27.05 $50.28 $11,609 $2,097 ($48) $11,561 5.5x 4.5x 4.0x NM NM 34.1x 10.8% 22.0% 12.2% (6.5%) 8.3% 11.8%
Yelp Inc. $18.03 $12.89 $40.99 $1,295 $412 ($180) $1,115 1.1x 1.1x 1.0x 5.1x 5.8x 4.7x 7.6% (3.7%) 12.9% 21.5% 19.6% 21.6%
Mean 4.9x 4.3x 3.4x 9.6x 11.3x 20.5x 21.7% 12.4% 21.9% 15.7% 17.4% 21.8%Median 5.0x 4.7x 3.9x 10.9x 10.5x 11.6x 19.9% 17.6% 20.5% 11.2% 14.0% 17.0%
Search / Online Advertising
Microsoft Corporation $157.71 $118.38 $190.70 $1,199,550 $134,231 ($47,084) $1,152,466 8.6x 7.7x 6.8x 19.4x 17.0x 14.6x 13.3% 11.0% 13.2% 44.3% 45.5% 46.8%
Alphabet Inc. $1,161.95 $1,008.87 $1,530.74 $798,592 $119,675 ($103,708) $694,884 4.3x 3.9x 3.3x 11.8x 11.3x 9.4x 18.3% 11.0% 17.7% 36.5% 34.3% 35.0%
Yandex N.V. $34.05 $27.93 $48.95 $11,232 $1,422 ($1,052) $10,180 3.6x 3.5x 2.8x 11.9x 12.6x 9.5x 53.7% 2.0% 26.7% 30.2% 28.0% 29.4%
The Trade Desk, Inc. $193.00 $136.00 $323.78 $8,796 $255 ($66) $8,730 13.2x 10.5x 8.2x 41.7x 35.2x 26.6x 38.5% 26.2% 27.6% 31.7% 29.7% 30.8%
QuinStreet, Inc. $8.05 $5.76 $17.13 $416 $76 ($61) $355 0.7x 0.7x 0.6x 10.5x 6.4x 4.4x 8.2% 10.8% 11.8% 7.0% 10.4% 13.3%
The Rubicon Project, Inc. $5.55 $4.51 $13.11 $305 $89 ($66) $239 1.5x 1.3x 1.1x 9.6x 6.7x 4.9x 25.4% 15.7% 15.4% 16.0% 19.6% 23.4%
Criteo S.A. $7.95 $5.89 $22.96 $492 $419 ($251) $242 0.1x 0.3x 0.3x 0.8x 1.0x 1.0x (1.7%) (64.9%) 1.4% 12.8% 29.3% 28.7%
Marchex, Inc. $1.45 $1.10 $5.57 $61 $43 ($35) $26 0.2x 0.3x 0.3x 6.1x NM 14.4x 24.5% (13.0%) 4.0% 4.0% (3.3%) 1.9%
Mean 4.0x 3.5x 2.9x 14.0x 12.9x 10.6x 26.0% 12.8% 14.7% 22.8% 28.1% 26.2%Median 2.6x 2.4x 2.0x 11.1x 11.3x 9.4x 21.4% 10.9% 14.3% 23.1% 28.6% 29.1%
28
APPENDIX – PUBLIC COMPANY VALUATIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM.
($MM), Except Per Share DataStock Trading Statistics Operating Metrics
Price LTM Price Range Equity Cash & Net Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 3/31/20 Low High Value Equiv. Debt Value CY 19A CY 20E CY 21E CY 19A CY 20E CY 21E 19A/18A 20E/19A 21E/20E CY 19A CY 20E CY 21E
Internet Content
IAC/InterActiveCorp $179.23 $124.60 $278.85 $15,191 $3,159 $200 $15,391 3.2x 2.9x 2.5x 15.6x 14.4x 10.8x 11.6% 11.6% 14.6% 20.8% 20.2% 23.5%
GoDaddy Inc. $57.11 $40.25 $82.30 $9,911 $1,086 $1,632 $11,543 3.9x 3.5x 3.2x 17.6x 13.1x 11.5x 12.3% 9.8% 10.1% 22.0% 26.8% 27.8%
Zillow Group, Inc. $33.97 $18.65 $66.96 $7,109 $2,422 $91 $7,200 2.6x 1.9x 1.3x NM NM NM 105.7% 34.8% 54.3% 0.3% (1.3%) 0.4%
TEGNA Inc. $10.86 $9.61 $18.31 $2,371 $29 $4,267 $6,638 2.9x 2.3x 2.3x 9.4x 6.7x 7.8x 4.2% 27.1% (2.5%) 30.7% 33.7% 29.8%
eHealth, Inc. $140.82 $49.19 $152.19 $3,557 $23 $16 $3,572 7.7x 5.9x 4.7x 40.6x 27.5x 20.6x 105.4% 30.1% 24.6% 18.9% 21.4% 22.9%
TechTarget, Inc. $20.61 $15.32 $30.00 $578 $57 ($3) $575 4.3x 3.9x 3.6x 13.8x 11.9x 10.5x 10.4% 9.7% 9.1% 31.0% 32.9% 34.2%
Mean 4.1x 3.4x 2.9x 19.4x 14.7x 12.2x 41.6% 20.5% 18.4% 20.6% 22.3% 23.1%Median 3.5x 3.2x 2.9x 15.6x 13.1x 10.8x 12.0% 19.3% 12.3% 21.4% 24.1% 25.6%
Internet Commerce
Amazon.com, Inc. $1,949.72 $1,626.03 $2,185.95 $970,680 $55,021 $22,514 $993,194 3.5x 3.0x 2.5x 23.8x 19.7x 15.7x 20.5% 19.2% 17.1% 14.9% 15.1% 16.1%
Alibaba Group Holding Limited $194.48 $147.95 $231.14 $521,736 $51,302 ($33,725) $488,011 7.0x 5.7x 4.3x 21.9x 19.1x 13.2x 39.9% 21.3% 32.4% 31.7% 30.0% 32.8%
Netflix, Inc. $375.50 $252.28 $393.52 $164,772 $5,018 $11,354 $176,126 8.7x 7.2x 6.1x NM 39.5x 29.5x 27.6% 20.6% 18.5% 15.7% 18.3% 20.7%
Booking Holdings Inc. $1,345.32 $1,107.29 $2,094.00 $55,241 $7,310 $1,941 $57,182 3.8x 4.8x 3.8x 9.8x 14.4x 10.1x 3.7% (21.5%) 28.2% 38.8% 33.5% 37.3%
eBay Inc. $30.06 $26.02 $42.00 $23,930 $2,825 $5,597 $29,527 2.7x 3.1x 2.9x 8.0x 8.3x 7.8x 0.5% (11.0%) 6.4% 34.2% 36.8% 37.0%
Chewy, Inc. $37.49 $20.62 $41.34 $14,944 $212 $4 $14,947 4.2x 2.4x 2.0x NM NM NM (0.0%) 78.3% 19.0% (2.7%) 0.1% 1.2%
Qurate Retail, Inc. $6.11 $3.01 $17.55 $2,540 $673 $7,333 $9,873 0.7x 0.8x 0.8x 5.0x 5.3x 5.2x (4.3%) (4.7%) 1.1% 14.8% 14.6% 14.8%
Expedia Group, Inc. $56.27 $40.76 $144.00 $7,877 $3,841 $1,748 $9,625 0.8x 1.2x 0.8x 4.5x 9.1x 4.4x 7.5% (31.0%) 45.2% 17.6% 12.7% 18.3%
Zalando SE $38.45 $30.03 $53.95 $9,563 $1,166 ($544) $9,020 1.2x 1.1x 1.0x 19.9x 23.2x 14.6x 17.9% 10.7% 17.9% 6.2% 4.8% 6.5%
Wayfair Inc. $53.44 $21.70 $166.40 $5,043 $987 $1,383 $6,426 0.7x 0.6x 0.5x NM NM NM 34.6% 16.8% 19.4% (5.4%) (4.7%) (2.5%)
Grubhub Inc. $40.73 $29.35 $80.25 $3,741 $425 $188 $3,929 3.0x 2.7x 2.4x 21.8x 35.9x 24.0x 30.3% 9.4% 16.0% 13.7% 7.6% 9.8%
Cimpress plc $53.20 $43.99 $145.09 $1,394 $37 $1,543 $2,938 1.1x 1.4x 1.2x 6.7x 9.3x 7.1x 4.1% (22.6%) 16.9% 15.8% 14.7% 16.3%
Stamps.com Inc. $130.08 $32.54 $185.20 $2,219 $156 ($86) $2,132 3.7x 3.6x 3.4x 14.7x 14.8x 13.1x (2.6%) 2.2% 6.7% 25.4% 24.6% 26.2%
ASOS Plc $14.88 $12.14 $50.92 $1,245 $11 $621 $1,866 0.5x 0.5x 0.4x 12.6x 12.7x 6.6x 13.1% 5.0% 17.9% 4.3% 4.1% 6.7%
Stitch Fix, Inc. $12.70 $10.90 $32.34 $1,301 $301 ($151) $1,150 0.7x 0.6x 0.5x 47.0x NM 26.7x 26.7% 12.3% 18.3% 1.4% 0.1% 1.9%
Shutterstock, Inc. $32.16 $28.76 $48.34 $1,142 $303 ($246) $895 1.4x 1.3x 1.3x 8.9x 9.2x 8.3x 4.4% 3.2% 3.9% 15.5% 14.6% 15.4%
1-800-FLOWERS.COM, Inc. $13.23 $11.15 $21.77 $851 $296 ($126) $725 0.6x 0.5x 0.5x 8.2x 7.2x 7.1x 7.6% 7.6% 1.3% 6.8% 7.1% 7.2%
Quotient Technology Inc. $6.50 $4.55 $11.99 $583 $225 ($49) $534 1.2x 1.1x 1.0x 12.2x 9.2x 6.8x 12.7% 9.6% 13.4% 10.0% 12.2% 14.6%
Revolve Group, Inc. $8.64 $7.17 $48.36 $599 $65 ($65) $534 0.9x 0.8x 0.7x 9.8x 9.6x 7.1x 20.5% 13.1% 18.0% 9.0% 8.2% 9.4%
trivago N.V. $1.46 $1.33 $5.38 $515 $256 ($144) $371 0.4x 0.5x 0.5x 4.9x 9.3x 4.7x (10.2%) (28.3%) 19.4% 8.0% 5.9% 9.8%
Blue Apron Holdings, Inc. $12.05 $2.01 $28.84 $160 $44 $82 $242 0.5x 0.7x 0.6x NM NM 27.5x (31.9%) (19.2%) 14.9% (1.7%) 0.1% 2.1%
Overstock.com, Inc. $4.99 $2.53 $29.75 $201 $123 ($94) $107 0.1x 0.1x 0.1x NM NM NM (20.3%) (2.5%) 3.6% (5.6%) (3.1%) (2.7%)
Travelzoo $3.93 $3.04 $22.85 $45 $20 ($6) $39 0.3x 0.3x 0.3x 2.9x 2.7x 1.9x 0.1% 3.7% 4.7% 12.2% 12.5% 16.8%
Mean 2.1x 1.9x 1.6x 13.5x 14.4x 12.1x 8.8% 4.0% 15.7% 12.2% 11.7% 13.7%Median 1.1x 1.1x 1.0x 9.8x 9.5x 8.1x 7.5% 5.0% 17.1% 12.2% 12.2% 14.6%
29
APPENDIX – PUBLIC COMPANY VALUATIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM.
($MM), Except Per Share DataStock Trading Statistics Operating Metrics
Price LTM Price Range Equity Cash & Net Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 3/31/20 Low High Value Equiv. Debt Value CY 19A CY 20E CY 21E CY 19A CY 20E CY 21E 19A/18A 20E/19A 21E/20E CY 19A CY 20E CY 21E
Gaming
Tencent Holdings Limited $49.05 $40.28 $54.18 $465,826 $26,859 $6,535 $472,362 8.9x 7.3x 6.0x 23.4x 20.4x 17.0x 55.6% 22.3% 21.5% 38.1% 35.6% 35.2%
Activision Blizzard, Inc. $59.48 $41.84 $64.53 $45,753 $5,859 ($2,911) $42,842 6.6x 6.3x 5.8x 19.5x 16.7x 14.6x (13.5%) 5.2% 9.2% 33.9% 37.6% 39.4%
NetEase, Inc. $320.96 $209.01 $361.00 $41,070 $10,347 ($7,863) $33,208 3.9x 3.4x 3.1x 13.0x 12.8x 11.3x (12.9%) 13.4% 12.2% 30.1% 26.8% 27.1%
Electronic Arts Inc. $100.17 $85.69 $114.13 $29,017 $5,602 ($4,364) $24,653 4.6x 4.7x 4.3x 13.0x 13.9x 11.7x 1.8% (3.1%) 10.7% 35.1% 33.9% 36.5%
NAVER Corporation $139.83 $87.60 $159.98 $20,261 $3,548 ($1,741) $18,521 3.2x 3.0x 2.7x 20.5x 15.6x 12.3x 13.8% 6.8% 13.4% 15.8% 19.5% 21.8%
Ncsoft Corporation $536.29 $371.38 $596.34 $11,052 $1,535 ($1,225) $9,827 6.7x 4.4x 3.8x 20.2x 10.5x 8.6x (4.4%) 52.7% 15.2% 33.1% 41.5% 44.2%
Ubisoft Entertainment SA $73.82 $43.84 $94.00 $8,844 $1,776 $476 $9,320 5.0x 4.1x 3.1x 10.9x 7.5x 5.9x (16.9%) 24.6% 31.3% 46.3% 54.4% 51.9%
Zynga Inc. $6.85 $5.22 $7.42 $6,518 $1,361 ($645) $5,873 4.4x 3.6x 3.1x 19.2x 16.2x 13.6x 45.7% 23.1% 15.2% 23.1% 22.3% 23.0%
Glu Mobile Inc. $6.29 $3.98 $11.75 $944 $127 ($86) $858 2.1x 1.9x 1.7x 21.3x 20.7x 12.5x 12.2% 11.4% 12.3% 9.8% 9.0% 13.3%
DeNA Co., Ltd. $10.98 $9.69 $21.61 $1,575 $795 ($697) $878 0.8x 0.7x 0.8x NM 8.0x 4.5x (4.8%) 5.6% (2.4%) (3.4%) 9.4% 17.1%
Changyou.com Limited $10.70 $5.43 $20.55 $574 $306 ($306) $267 0.6x 0.5x 0.5x 1.9x 1.6x 1.7x (6.3%) 9.3% 3.7% 30.6% 32.6% 31.3%
GungHo Online Entertainment, Inc. $14.05 $12.63 $38.57 $954 $796 ($793) $160 0.2x 0.2x 0.2x 0.5x 0.7x 1.0x 11.1% (16.6%) (5.2%) 32.0% 28.6% 22.1%
GREE, Inc. $3.88 $3.17 $5.18 $894 $817 ($817) $77 0.1x 0.1x 0.1x 1.5x 1.6x 1.4x (6.6%) (1.4%) 1.0% 8.0% 7.8% 8.8%
Mean 3.6x 3.1x 2.7x 13.7x 11.3x 8.9x 5.8% 11.8% 10.6% 25.6% 27.6% 28.6%Median 3.9x 3.4x 3.1x 16.1x 12.8x 11.3x (4.4%) 9.3% 12.2% 30.6% 28.6% 27.1%
Media Conglomerates / Selected Entertainment
Comcast Corporation $34.38 $31.71 $47.74 $156,533 $5,500 $106,489 $263,022 2.4x 2.3x 2.3x 7.7x 7.8x 7.4x 15.3% 3.1% 3.1% 31.5% 30.2% 30.9%
The Walt Disney Company $96.60 $79.07 $153.41 $174,405 $6,833 $45,099 $219,504 2.9x 2.9x 2.5x 11.9x 14.9x 10.3x 26.5% 2.0% 16.3% 24.6% 19.2% 23.9%
Sony Corporation $59.67 $43.19 $75.40 $72,051 $7,927 $9,501 $81,551 1.3x 1.0x 0.9x 7.1x 7.4x 6.3x (3.2%) 24.4% 8.7% 17.8% 13.9% 14.9%
Vivendi SA $21.46 $18.24 $29.33 $25,565 $2,667 $6,755 $32,320 1.8x 1.8x 1.7x 13.7x 12.0x 10.9x 10.9% 3.4% 4.3% 13.2% 14.6% 15.4%
ViacomCBS Inc. $14.01 $10.10 $53.71 $8,598 $632 $20,288 $28,886 1.0x 1.0x 1.0x 4.9x 5.2x 4.8x 2.1% 2.7% 5.1% 21.2% 19.3% 19.9%
Discovery, Inc. $19.44 $17.12 $33.66 $13,383 $1,563 $14,809 $28,192 2.6x 2.5x 2.4x 6.0x 6.6x 6.2x 8.2% 4.5% 1.8% 43.2% 37.5% 39.0%
Mean 2.0x 1.9x 1.8x 8.5x 9.0x 7.7x 10.0% 6.7% 6.5% 25.3% 22.4% 24.0%Median 2.1x 2.0x 2.0x 7.4x 7.6x 6.8x 9.6% 3.2% 4.7% 22.9% 19.3% 21.9%
30
APPENDIX – PUBLIC COMPANY VALUATIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM.
($MM), Except Per Share DataStock Trading Statistics Operating Metrics
Price LTM Price Range Equity Cash & Net Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin
Company 3/31/20 Low High Value Equiv. Debt Value CY 19A CY 20E CY 21E CY 19A CY 20E CY 21E 19A/18A 20E/19A 21E/20E CY 19A CY 20E CY 21E
Publishers
Thomson Reuters Corporation $67.64 $53.55 $77.60 $33,485 $1,358 $2,280 $35,765 6.1x 5.8x 5.6x 23.8x 18.4x 17.3x 7.4% 4.2% 4.1% 25.4% 31.6% 32.3%
Informa plc $5.51 $4.07 $11.22 $6,897 $258 $3,516 $10,413 2.7x 3.3x 3.0x 7.8x 10.7x 8.4x 26.8% (16.9%) 10.6% 34.8% 30.7% 35.2%
Pearson plc $6.88 $5.44 $11.84 $5,154 $599 $1,657 $6,811 1.3x 1.4x 1.4x 7.0x 8.7x 8.3x (2.6%) (8.3%) 1.8% 19.1% 16.7% 17.1%
Lagardère SCA $12.64 $8.95 $27.76 $1,624 $1,025 $5,115 $6,739 0.8x 0.9x 0.8x 8.6x 11.0x 9.8x 2.9% (10.2%) 9.3% 9.6% 8.5% 8.7%
News Corporation $8.98 $7.97 $15.07 $5,283 $1,272 $1,488 $6,771 0.7x 0.7x 0.7x 6.4x 6.0x 5.6x (0.8%) 4.5% (0.7%) 11.6% 11.8% 12.8%
The New York Times Company $30.71 $26.13 $40.22 $5,110 $432 ($369) $4,741 2.9x 2.5x 2.4x 20.1x 21.5x 17.7x 0.9% 16.1% 5.7% 14.6% 11.8% 13.5%
Meredith Corporation $12.22 $11.76 $60.95 $554 $21 $2,858 $3,412 1.2x 1.1x 1.1x 5.5x 4.6x 5.0x (1.3%) 7.1% (0.8%) 21.2% 23.6% 21.8%
Gannett Co., Inc. $1.48 $1.06 $11.35 $167 $156 $1,825 $1,992 1.1x 0.5x 0.5x 10.9x 4.1x 4.1x 22.4% 112.2% (4.7%) 9.8% 12.2% 12.8%
Mean 2.1x 2.0x 1.9x 11.3x 10.6x 9.5x 6.9% 13.6% 3.1% 18.3% 18.3% 19.3%Median 1.2x 1.3x 1.3x 8.2x 9.7x 8.4x 1.9% 4.4% 2.9% 16.8% 14.4% 15.3%
Diversified Marketing
Experian plc $28.03 $22.70 $36.43 $25,231 $156 $4,212 $29,443 6.1x 5.5x 5.2x 17.4x 15.5x 14.3x 0.0x 0.1x 0.1x 0.3x 0.4x 0.4x
Alliance Data Systems Corporation $33.65 $20.51 $182.95 $1,603 $3,874 $18,726 $20,328 23.8x 3.8x 3.8x 15.6x 17.6x 16.5x -0.1x 5.2x 0.0x 1.5x 0.2x 0.2x
Equifax Inc. $119.45 $103.01 $164.77 $14,569 $401 $3,082 $17,651 5.0x 4.8x 4.5x 15.0x 14.1x 12.9x 0.0x 0.1x 0.1x 0.3x 0.3x 0.4x
WPP plc $6.86 $5.60 $13.51 $8,310 $3,932 $5,019 $13,329 0.8x 1.0x 1.0x 4.4x 6.2x 5.6x -0.1x -0.2x 0.0x 0.2x 0.2x 0.2x
Nielsen Holdings plc $12.54 $11.84 $27.28 $4,469 $454 $8,358 $12,827 2.0x 1.9x 1.9x 6.9x 6.9x 6.7x 0.0x 0.0x 0.0x 0.3x 0.3x 0.3x
The Interpublic Group of Companies, Inc.$16.19 $11.63 $25.20 $6,279 $1,192 $3,831 $10,110 1.2x 1.2x 1.1x 7.0x 7.0x 6.6x 0.1x 0.0x 0.0x 0.2x 0.2x 0.2x
HubSpot, Inc. $133.19 $90.84 $207.98 $5,766 $962 ($353) $5,412 8.0x 6.5x 5.4x NM NM 41.5x 0.3x 0.2x 0.2x 0.1x 0.1x 0.1x
MDC Partners Inc. $1.45 $1.02 $3.44 $104 $131 $824 $928 0.6x 0.6x 0.6x 5.3x 4.7x 4.3x 0.0x 0.0x 0.1x 0.1x 0.1x 0.1x
Yext, Inc. $10.19 $9.57 $22.65 $1,180 $256 ($132) $1,048 3.5x 2.9x 2.3x NM NM NM 0.3x 0.2x 0.2x -0.2x -0.1x -0.1x
Harte Hanks, Inc. $1.57 $1.45 $3.97 $10 $28 $11 $21 0.1x 0.1x 0.1x NM 10.6x 2.7x -0.2x -0.2x 0.0x 0.0x 0.0x 0.0x
Mean 5.1x 2.8x 2.6x 10.2x 10.3x 12.3x 2.5% 54.1% 6.9% 29.0% 16.5% 18.3%Median 2.7x 2.4x 2.1x 7.0x 8.8x 6.7x 0.5% 4.8% 4.4% 17.0% 16.6% 17.5%
31
APPENDIX – RECENT ACQUISITIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM. Disclosed transactions with Enterprise Value <$50MM not included.(1) Multiples based on Capital IQ consensus estimates.(2) Value based on Wall Street Estimates.
($MM)
Announced Date Acquirer Target Enterprise Value EV / LTM Rev. EV / LTM EBITDA EV / NTM Rev. EV / NTM EBITDA
3/31/2020 $235 NA NA NA NA
3/25/2020 $879 NA NA NA NA
3/17/2020 $440 2.4x NA NA NA
3/17/2020 $8,714 3.8x 11.9x NA NA
3/6/2020 $615 NA NA NA NA
3/5/2020 $513 2.5x 25.7x NA NA
2/24/2020 $1,395 5.4x 14.0x NA NA
2/21/2020 $52 NA NA NA NA
2/19/2020 $569 5.4x 9.2x NA NA
2/11/2020 $588 2.6x 12.5x NA NA
2/10/2020 $66 1.1x 5.2x NA NA
2/5/2020 $200 NA NA NA NA
2/4/2020 $140 NA NA NA NA
San Vicente SPV
(1)
(1)
(1)
(2)
(2)
(2)
32
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM. Disclosed transactions with Enterprise Value <$50MM not included. (1) Multiples based on Capital IQ consensus estimates.
APPENDIX – RECENT ACQUISITIONS
($MM)
Announced Date Acquirer Target Enterprise Value EV / LTM Rev. EV / LTM EBITDA EV / NTM Rev. EV / NTM EBITDA
1/29/2020 $450 NA NA NA NA
1/22/2020 $65 NA NA NA NA
1/21/2020 $300 2.7x NA NA NA
1/14/2020 $73 1.9x 12.2x 1.5x 11.2x
12/20/2019 $150 NA NA NA NA
12/20/2019 $691 2.7x NM 2.6x 27.6x
12/19/2019 $441 5.5x NM 4.8x NM
12/18/2019 $675 0.7x NM NA NA
12/18/2019 $145 5.5x NA NA NA
12/18/2019 $75 NA NA NA NA
12/17/2019 $4,677 3.7x 14.3x 3.5x 11.3x
12/16/2019 $3,197 2.5x 15.5x 2.4x 9.4x
12/5/2019 $51 NA NA NA NA
(1)
(1)
(1)
(1)
(1)
(1)
(1)
33
APPENDIX – RECENT ACQUISITIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM. Disclosed transactions with Enterprise Value <$50MM not included.(1) Multiples based on Capital IQ consensus estimates.(2) Value based on Wall Street Estimates.
($MM)
Announced Date Acquirer Target Enterprise Value EV / LTM Rev. EV / LTM EBITDA EV / NTM Rev. EV / NTM EBITDA
12/4/2019 $2,010 7.7x NM NM NM
11/25/2019 $4,050 3.6x NA NA NA
11/20/2019 $4,000 20.0x NA 11.4x NA
11/19/2019 $140 NA NA NA NA
11/19/2019 $118 0.6x 6.4x 0.6x 5.7x
11/18/2019 $380 NA NA NA NA
10/22/2019 $2,878 3.7x 12.5x 3.5x 10.0x
10/22/2019 $215 5.4x NA NA NA
10/21/2019 $150 3.3x NA NA NA
10/16/2019 $110 NA NA NA NA
10/8/2019 $150 2.6x 14.6x NA NA
9/26/2019 $118 NA NA NA NA
9/24/2019 $100 NA NA NA NA
(1)
(1)
(1)
(1)
(2)
34
APPENDIX – RECENT ACQUISITIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM. Disclosed transactions with Enterprise Value <$50MM not included. (1) Multiples based on Capital IQ consensus estimates.
($MM)
Announced Date Acquirer Target Enterprise Value EV / LTM Rev. EV / LTM EBITDA EV / NTM Rev. EV / NTM EBITDA
9/24/2019 $1,000 NA NA NA NA
9/5/2019 $3,500 NA NA NA NA
9/2/2019 $152 1.9x NA NA NA
8/23/2019 $615 NA NA NA NA
8/22/2019 $4,535 3.8x 37.0x 3.2x 15.2x
8/13/2019 $20,947 1.6x 6.7x 1.5x 6.9x
8/8/2019 $92 NA NA NA NA
8/5/2019 $68 NA NA NA NA
8/5/2019 $2,296 0.8x 7.9x 0.8x 7.9x
7/29/2019 $66 1.9x NA NA NA
7/26/2019 $906 3.5x 15.7x 3.4x 11.1x
7/24/2019 $53 1.6x 17.7x NA NA
7/1/2019 $79 NA NA NA NA
(1)
(1)
(1)
(1)
(1)
(1)
MJR Theatres(1)
35
APPENDIX – RECENT ACQUISITIONS
Notes:Sources: Capital IQ, Wall Street Estimates. Multiples <0x and >50x considered NM. Disclosed transactions with Enterprise Value <$50MM not included. (1) Multiples based on Capital IQ consensus estimates.(2) Value based on Wall Street Estimates.
($MM)
Announced Date Acquirer Target Enterprise Value EV / LTM Rev. EV / LTM EBITDA EV / NTM Rev. EV / NTM EBITDA
6/24/2019 $200 NA NA NA NA
6/24/2019 $150 NA NA NA NA
6/11/2019 $405 9.5x NA NA NA
6/6/2019 $2,600 28.9x NA 17.3x NA
6/4/2019 $1,193 3.7x 32.9x 3.5x 17.3x
6/3/2019 $120 NA NA NA NA
5/3/2019 $10,600 2.8x NA NA NA
4/30/2019 $200 NA NA NA NA
4/17/2019 $262 NA NA NA NA
4/14/2019 $4,400 2.3x 8.2x NA NA
4/3/2019 $207 NA NA NA NA
3/26/2019 $56 NA NA NA NA
3/26/2019 $3,100 NA NA NA NA
(1)
(1)
(2)
(2)
36
APPENDIX – IPOS IN PUBLIC REGISTRATION
Notes:Sources: Capital IQ, Public Filings.
($MM)
Offering Amounts $10MM or Greater
Primary Initial Initial Offering LTM
Issuer Industry Filing Date Amount Description Revenue EBIT % Adj. EBITDA
Advertising 06/27/19 $26
Offers holographic AR advertising software
enables users to insert into video footages real
or animated three-dimensional objects;
products consist primarily of payment
software, game distribution , and holographic
software.
$39 45% $20
Entertainment 10/28/19 $45
Operates an interactive audio entertainment
and online audio platform, as well as an app
that allows users to record and share their
voices on mobile devices.
$168 NM NM
37
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This report was prepared by GCA Advisors, LLC, a registered broker-dealer and member of FINRA and SIPC. Sources of data include Capital IQ and other news organizations. Information obtained from third-party sources is considered reliable, but we do not guarantee that the information herein is accurate and complete. The report shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities mentioned herein; past performance does not guarantee future results. Recipients of this report should not interpret the information herein as sufficient grounds for an investment decision or any other decision.
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