Embed Size (px)
Citation preview
CYBERSCOPE
Q2 2018 MARKET REVIEW
2
SECTOR-LED SPECIALISTS IN M&A AND FUNDRAISING
Years ofRI DEALS 3 Sectors
Deals inPast 2 Years
25+ 30+
50 People
15 Nationalities 3 Offices 1,000+ Buyers& Investors
100%Referenceable
3
has acquiredhas been
acquired by
a JMI Equity-backed company
a Francisco Partners-backed company
has been acquired by
THE BEST COMPANIES IN CYBERSECURITY WORK WITH US TO
ACHIEVE GREAT RESULTS
has received a $49m growth equity
investment from
“From start to finish the Results team were fantastic. They drove the process forwards relentlessly, were always on top of the detail but never lost sight of the big picture. We would recommend them to anyone.”
“It was a pleasure to work with the Results team, they quickly understood our needs, the specifics of our industry and what would be a good outcome for our company. I wouldn’t hesitate to recommend Results.”
“The Results team has done a tremendous job. They have been incredibly helpful as advisors to the company, providing excellent advice to both shareholders and management.”
“In our first deal we thought they were absolutely fantastic, two years later we are even more positive… Would we hire Results again? Absolutely – they will get you the very best deal.”
PAUL KENYON AND MARK AUSTIN, CO-FOUNDERS AND CO-CEOS, AVECTO
ROB GENIESER, PARTNER AT ETF PARTNERS
JYRKI TULOKAS, EVP, STRATEGY & CORPORATE DEVELOPMENT, F-SECURE
PAUL KENYON AND MARK AUSTIN, CO-FOUNDERS AND CO-CEOS, AVECTO
4
CYBERSECURITY HIGHLIGHTS: Q2 2018
Welcome to the Q2 2018 edition of the CyberScope – Results International’s regular market update for the global cybersecurity
space.
Highlights in the quarter include:
• Sophisticated, innovative cyber threats have continually evolved security requirements across the enterprise with detection,
identification and protection key components, representing key drivers of cybersecurity activity:
o UK-based MWR InfoSecurity was acquired by F-Secure for $139m (3.8x revenue), creating the largest European
cybersecurity services and detection and response solutions vendor. Results International acted as exclusive financial
advisor to MWR
o Francisco Partners acquired Bomgar (network privilege and identity management) for $800m. Bomgar subsequently
acquired Avecto (endpoint privilege management) in July. Results International acted as Avecto’s exclusive financial
advisor
o Endpoint protection solution provider, Carbon Black, successfully listed on Nasdaq raising $152m, with the stock surging 26%
first day of trading
• Further scrutiny regarding data protection, with GDPR now in full effect, drove strong global cybersecurity stock performance.
With data protection at the top of boardroom agendas, it now forms the regulatory environment which businesses must track
and cybersecurity firms must govern
• Crowdstrike ($200m Series E), Tanium ($175m secondary) and Cylance ($120m Series E) all raised significant funding, building
towards highly anticipated IPOs. However, it is unlikely they will rule out strategic or Private Equity acquirers as viable alternatives;
LogRhythm (security information and event management) looked at an IPO less than two years ago, but instead raised $50m
and eventually exited this quarter to Thoma Bravo for $525m
Cybersecurity, from growth equity raises to strategic exits, continues to demand premium interest, making now an excellent time to
be contemplating a fundraising, exit or growth through acquisition in the cybersecurity space – if you are, please do get in touch.
5
RI GLOBAL CYBERSECURITY INDICES
80
100
120
140
160
180
200
220
Broadline Endpoint Network Data Monitoring & Analysis Global Security NASDAQ Comp
Notes: Based on share prices as at 30th June 2018; indices weighted by market capitalisationSources: Capital IQ and Results analysis
27.6%
20.5%
22.3%
78.9%
(16.0%)
59.2%
22.0%
Q2 2018 PERFORMANCE
Broadline (13.1%)
Endpoint 26.3%
Network 13.1%
Data 3.7%
Monitoring & Analysis; Managed
Services21.8%
Global Security 8.2%
LAST
12
MO
NTH
SH
AR
E P
RIC
E P
ER
FO
RM
AN
CE (
%)
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-17 Mar-17 Apr-18 May-18 Jun-18
6
CYBERSECURITY: SHARE PRICE PERFORMANCE
(26.9%)
9.2%
36.8%26.0%
(9.7%)
(26.4%)
120.9%
104.5%
44.1%
(10.5%)
55.7%66.7%
35.7%
53.6%44.1%
33.5%
123.4%
1.2% 0.8%
53.9%
32.8%
106.6%
67.7%
34.0%
(40.0%)
(20.0%)
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
(20.1%)
(0.5%)
36.8%
23.4%
3.0%
(10.1%)
26.4%
18.6%
47.6%
(1.7%)
5.6%
16.5%19.3%
13.2%18.4%
30.3%27.4%
(9.1%)
11.4%16.3%
1.5%
15.9%10.4%
54.1%
(30.0%)
(20.0%)
(10.0%)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
(1) This company IPO’d within the last 12 months, the share price movement represents the change between the stock’s IPO date (see slide 7) and 30th June 2018Note: Based on share prices as at 30th June 2018Sources: Capital IQ and Results analysis
LAST
12
MO
NTH
SQ
2 2
01
8
BROADLINE ENDPOINT NETWORK DATA
MONITORING & ANALYSIS;
MANAGED SERVICES
(1)
(1)
(1)
(1)
(1)
7
CYBERSECURITY: SELECTED STOCKS – PERFORMANCE SINCE IPO
(1) Current increase from IPO price; market data as of 30th June 2018(2) Due to their relative lack of scale, ECSC and Osirium have not been included in the Global Security index (slide 5) and selected Publicly Traded Companies (slide 13) Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDASources: Capital IQ and Results analysis
COMPANYIPO
DATEDESCRIPTION
RAISED
($M)INDICATIVE PRICE
RANGE ($)
IPO LISTING
PRICE ($)
INCREASE VS.
RANGE
DAY 1
INCREASE
CURRENT
INCREASE(1)
EV ($M)EV /
REVENUEEV / EBITDA
IPO CURRENT IPO CURRENT IPO CURRENT
May-18Endpoint security big
data and analytics152 15.00-17.00 19.00 18.8% 26.0% 36.8% 1,452 2,398 7.2x 11.8 x n.m. n.m.
Mar-18Cloud-based network
security192 10.00-12.00 16.00 45.5% 106.3% 123.4% 1,833 4,459
10.2
xn.m. n.m. n.m.
Nov-17Identity governance
and management240 9.00-11.00 12.00 20.0% 8.3% 104.5% 1,175 2,144 5.5 x 9.4 x n.m. n.m.
Oct-17Network security and
management116 20.00-22.00 22.00 4.8% 15.9% 55.7% 942 1,395 3.7 x 5.0 x n.m. n.m.
Apr-17Cloud identity and
access management 187 13.00-15.00 17.00 21.4% 38.3% 196.3% 1,560 6,338 6.9 x 18.2 x n.m. n.m.
Dec-16
Penetration testing, IR
and managed
services7 n.a. 2.12 n.a. 22.3% (28.4%) 13 12 n.a. 1.6 x n.a. n.m.
Apr-16 Managed Services 112 15.50-17.50 14.00 (15.2%) 0.0% (11.1%) 1,020 972 2.4 x 1.9 x n.m. n.m.
Apr-16
Hybrid-cloud
privileged account
management13 n.a. 2.22 n.a. 12.9% (13.4%) 9 28 n.a. n.m. n.a. n.m.
Nov-15
Email security,
continuity and
archiving78 10.00-12.00 10.00 (9.1%) 1.0% 312.1% 503 2,537 3.6 x 8.0 x n.m. n.m.
Jul-15
Detection, analytics
and penetration
testing103 13.00-15.00 16.00 14.3% 58.0% 76.4% 745 1,262 7.5 x 5.4 x n.m. n.m.
Nasdaq
Nasdaq
Nasdaq
AIM
Nasdaq
(2)
AIM
(2)
Nasdaq
Nasdaq
NYSE
Nasdaq
8
CYBERSECURITY: PUBLIC COMPANY VALUATION BENCHMARKS
Notes: EV = Enterprise Value; financials calendarised to December year end; median values reportedSee Selected Publicly Traded Companies (slide 13) for details of companies included in each categoryGlobal Security represents the median of all stocks in Broadline, Endpoint, Network, Data and Monitoring & Analysis; Managed Services, with no weighting appliedSources: Capital IQ, analyst reports and Results analysis
REVENUE GROWTH (2018-19E) EV / REVENUE 2018E
EBITDA MARGIN 2018E EV / EBITDA 2018E
5.4%
18.3%
15.3%
18.0% 18.0%16.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Broadline Endpoint Network Data Monitoring
& Analysis;
Managed
Services
Global
Security
35.2%
8.1%
20.1%
13.1%
(2.2%)
12.8%
(5.0%)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Broadline Endpoint Network Data Monitoring
& Analysis;
Managed
Services
Global
Security
3.9 x
6.4 x
5.0 x
5.8 x5.4 x 5.4 x
0.0 x
1.0 x
2.0 x
3.0 x
4.0 x
5.0 x
6.0 x
7.0 x
Broadline Endpoint Network Data Monitoring
& Analysis;
Managed
Services
Global
Security
11.3 x
28.4 x25.4 x
22.8 x
32.3 x
26.8 x
0.0 x
5.0 x
10.0 x
15.0 x
20.0 x
25.0 x
30.0 x
35.0 x
Broadline Endpoint Network Data Monitoring
& Analysis;
Managed
Services
Global
Security
9
CYBERSECURITY: PUBLIC COMPANY VALUATION PERFORMANCE
OVER TIME
26.8 x
29.1 x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
EV / CY EBITDA
Median 75th Percentile
5.4 x
7.8 x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
EV / CY Revenue
Median 75th Percentile
Number of companies with applicable multiples in Q2 2018 indexNotes: EV = Enterprise Value; financials calendarised to December year end, which can impact the multiples at the start of each year as the base is shifted forward; weekly tracking of valuation multiples commenced in July 2015, October 2014 – June 2015 tracked on a quarterly basis, therefore a linear progression has been assumed between quarters up to July 2015. The 75th percentile refers to the middle value between the median and the highest value of the relevant data set. Sources: Capital IQ and Results analysis
LTM Q2 2018
% CHANGE
Median 31.6% 19.6%
75th Percentile 30.1% 10.7%
LTM Q2 2018
% CHANGE
Median 41.1% 17.8%
75th Percentile 10.8% 6.3%
Q1-16Q2-15 Q3-15 Q4-15Q1-15Q4-14 Q2-16 Q3-16 Q4-16
24(1)
(1)
13
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
Q1-16Q2-15 Q3-15 Q4-15Q1-15Q4-14 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
10
CYBERSECURITY: GLOBAL M&A ACTIVITY Q1 2011 – Q2 2018
26 26 26 27
23 23
32
24
15 31
2522
32
28 27
22
34 33
22
35
23
31
37
44
4038 38
47
53
37
0
2,000
4,000
6,000
8,000
10,000
12,000
0
10
20
30
40
50
60
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
TOTA
L D
ISC
LOSED
DEA
L V
ALU
E (
$M
)
NU
MB
ER
OF D
EA
LS
No. of Deals Total Disclosed Deal Value
Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis
11
CYBERSECURITY: SELECTED DEALS IN Q2 2018
(1) In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)
(2) Includes earnout payment of £25m(3) Based on 451 Research estimatesSources: Press releases, Capital IQ, Mergermarket, 451 Research, investor presentations and Results analysis
DATE BUYER TARGET EV ($M)EV / (1)
REVENUEEV /
EBITDACOMPANY DESCRIPTION
TARGETLOCATION
Jun-18 14.0 4.2x 23.9xPenetration testing, vulnerability assessment and managed
services
Jun-18 - - - Machine learning-based API security detection and response
Jun-18 - - -Incident response, penetration testing, red teaming, phishing,
security assessment, monitoring, awareness and training
Jun-18 139.3(2)
3.8x n.m.Managed detection and response (MDR) platform, security
assurance, cyber defense, incident response (IR) and managed
phishing assessment
Jun-18 - - -Data encryption, interface and application control and data loss
prevention
Jun-18
Cyber Division
- - -Managed security event monitoring, managed detection and
response (MDR), SIEM, vulnerability management and incident
response (IR)
Jun-18 - - - Managed detection and response (MDR) platform
Jun-18 17.0 1.7x(3)
n.a. Policy-based secure access automation and orchestration
May-18 525.0(3)
4.2x(3)
n.a.SIEM platform combining user and entity behaviour analytics,
network traffic, security automation and orchestration
May-18 - - - User-behaviour security analytics and risk management platform
May-18 - - - Endpoint threat monitoring, intelligence and mitigation
May-18 40.8 - -Penetration testing, application security, vulnerability research,
managed SIEM and managed EDR
May-18(Sentinel asset)
- - -Goldman Sachs in-house asset; security information and event
management (SIEM)
May-18 11.5 - -Managed threat detection, incident response and regulatory
compliance
Apr-18 - - -Managed security operations, security consulting, product resell
and deployment
Apr-18 82.7 - - Endpoint, detection and response (EDR)
Apr-18 - - -Security information and event management (SIEM) and user
behaviour analytics
Apr-18 800.0(3)
6.7x(3)
17.8x(3) Network adaptive privilege, identity management and incident
response
12
CYBERSECURITY: SELECTED FUNDRAISINGS IN Q2 2018
Sources: Press releases, Capital IQ and Results analysis
DATE COMPANYTYPE OF ROUND
FUNDSRAISED ($M)
INVESTOR PARTICIPATION COMPANY DESCRIPTIONCOMPANYLOCATION
Jun-18 Series C 17.0Blackstone, Blumberg Capital, ClearSky, Gilot Capital Partners,
Tola Capital, Wipro Ventures
Enterprise threat intelligence and
mitigation platform
Jun-18 Series E 120.0 Blackstone Tactical OpportunitiesAI-based endpoint advanced threat
prevention
Jun-18 Series E 200.0Accel, CapitalG, General Atlantic, Institutional Venture Partners,
March Capital Partners
Cloud-based endpoint protection
platform
Jun-18 Series A 10.0Albion Capital Group, Cisco Investments, Evolution Equity
Partners, Notion Capital, Paladin Capital Group, Winton Ventures
Enterprise cyber hygiene and risk
platform
Jun-18 Series A 13.0Accel, Amadeus Capital Partners, Balderton Capital, Crane
Venture partners, LocalGlobe, Walking Ventures, Winton Ventures Enterprise email security platform
Jun-18 Series B 60.0
Aster, Bessemer VP, Envision Ventures, ICV, Innovation Endeavors,
Rockwell Automation, Siemens AG, Team8, Tekfen Ventures,
Temasek
Industrial protection, control, detection
and response
Jun-18 Venture 30.0 Claridge IsraelThreat detection and security
orchestration platform
May-18 Series B 37.5Bessemer VP, Blue Delta Capital Partners, ICONIQ Capital, NEA,
Samsung NEXT, Soros Fund Management, Thyra GM
End-to-end data and email encryption
solutions
May-18 Series B 25.0Bloomberg Beta, Flybridge Capital Partners, Shasta Ventures,
Tenaya CapitalEmail security, authentication, phishing
May-18 Series A Undisc. Octopus InvestmentsCustomer IAM platform & cloud identity
services provider
May-18 Venture 50.0 Vector CapitalReal-time SaaS threat intelligence
console
May-18 Secondary 175.0Andreessen Horowitz, Institutional Venture Partners, T. Rowe Price,
TPG Growth
Endpoint, detection and response
platform
May-18 Series D 55.0Bessemer Venture Partners, K9 Ventures, Meritech Capital
Partners, Sapphire Ventures, Trinity Ventures, World Innovation Lab
Identity authentication and authorization
platform
May-18 Series B 78.0 C5 Capital, ForgePoint Capital, Kleiner Perkins Caufield & ByersNetwork scanning and targeting
behaviour security
Apr-18 Series A 40.0 Carrick Capital PartnersEnterprise cloud security and identity
governance
Apr-18 Series C 31.0 .406 Ventures, Arsenal, Evolution Equity Partners, LLR PartnersCompliance solutions for cloud and on-
premise business-critical applications
Apr-18 Series B 25.0 Amplify Partners, Redpoint, Sequoia Capital Container-native security platform
Apr-18 Series B 30.0Bain Capital Ventures, Red Dot Capital Partners, Sequoia Capital,
Tenaya CapitalAgentless IoT security platform
13
CYBERSECURITY: SELECTED PUBLICLY TRADED COMPANIES
PRICE % OF 52 MARKET TOTAL NET ENTERPRISE REVENUE REV. GROWTH GROSS MARGIN EBITDA MARGIN
COMPANY (30-JUN-18) WEEK HIGH CAP CASH DEBT VALUE CY2018 CY18-19 HISTORICAL CY2018 CY2019 CY2018 CY2019 CY2018 CY2019
BROADLINE
ENDPOINT
NETWORK
DATA
MONITORING & ANALYSIS; MANAGED SERVICES
OPERATING METRICS VALUATION METRICS
REVENUE EBITDA
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest Source: Capital IQ
14
THE TECH REPORT: SUBSECTORS
In addition to this summary, we produce separate quarterly reports that focus specifically on; Digital Services (Digital Horizon),
Enterprise Software (Enterprise Stack), HealthTech (HealthTech Heartbeat) and Marketing Technology (MarTech Barometer). You
can find these reports on our website or by clicking on the icons below. Alternatively, you can contact one of our team members
on the details overleaf.
HEALTHTECH HEARTBEAT
CYBERSCOPE MARTECH BAROMETER
DIGITAL
HORIZONENTERPRISE
STACK
15
GET IN TOUCH
Disclaimer: This document has been produced by Results International Group LLP (“Results”) and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Results’ officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. Authorised and regulated by the Financial Conduct Authority.
27 Soho Square, London,W1D 3AY+44 20 7629 7575
London
80 Broad Street, Suite 3203, New York, NY 10004 +1 646 747 6500
New York
3 Pickering Street, Nankin Row #03-03, Singapore, 048660 +65 6221 3575
Singapore
Julie LangleyPartner
t +44 (0)20 7514 8247
Chris LewisPartner
t +44 (0)20 7514 8236
Mark WilliamsManaging Director
t +44 (0)20 7514 8242
Pierre-Georges RoyPartner
t +1 (0)646 747 6505
Maurice WatkinsPartner
t +1 (0)646 747 6510
Andrew KeffordPartner
t +65 (0)6221 3575
Chris BeaumontPartner
t +81 (0)906 470 8216
