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Enterprise Stack – Q1 2019 Market Review

By William Garbutt 16 Apr 2019

Overall Q1 2019 has been a prosperous quarter for the enterprise software sector with deal activity continuing at pace, and a record number of deals this quarter.

Welcome to the Q1 2019 edition of our Enterprise Stack Report – Results International’s quarterly market update for the enterprise software sector.

Highlights in the quarter:

  • Public stocks experienced a significant recovery, reversing much of the loss felt during December, with the RI SaaS index showing companies trading at a median valuation of 7.8x revenue at the end of the quarter, well above historical medians of 5.9x, as share prices rose 24.2% in Q1.
  • An interesting dynamic is emerging between private raises and public markets in the B2C space. Lyft’s shares have fallen below its 29 March 2019 IPO opening price and Pinterest has set a price range for its upcoming IPO valuing the company below its last private-market valuation. As B2B vendors including PagerDuty and Tufin begin trading and others such as Slack and Zoom prepare to list, attention will be on the performance of B2C peers and whether there are any implications for B2B listings.
  • Deal activity continues at pace, with a record number of deals this quarter. Healthtech represented a particularly buoyant market, with Results International acting as exclusive financial advisor to Linguamatics on its acquisition by a Tier-1 CRO and Arxspan on its acquisition by Bruker.

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  • Blockbuster transactions were limited to both the $11bn take-private of Ultimate Software by a Hellman & Friedman-led investor group and the c.$3.7bn acquisition of mortgage loan-origination platform Ellie Mae Inc. by Thoma Bravo, as large strategic software vendors seek to embed capabilities acquired during an active 2018. US Private Equity continues to represent the most prolific acquirer group, constituting nine of the top ten aggregators for the quarter, making 55 acquisitions
  • McDonald’s made its largest acquisition for 20 years by acquiring personalisation business Dynamic Yield ($300m), demonstrating how retailers are increasingly looking to an in-housed, tech-enable strategy to help support a revival of the bricks-and-mortar channel
    • Personalisation tools and Customer Data Platforms (CDPs) represent a significant growth area within martech, as businesses seek greater insights from a unified view of customer data sets. California-based CDP, Segment recently raised $175m, valuing the business at $1.5bn and Centerbridge Partners acquired IBM’s marketing automation and customer experience analytics tools
    • Leveraging customer data is not only becoming business critical for brands, but also a regulatory industry focus; in March, EU Authorities levied a $1.7bn fine against Google for antitrust violations in online advertising, whilst Facebook admitted to exposing up to 600 million user passwords

We hope that you enjoy this document and look forward to discussing the data and underlying themes with you. If you are contemplating fundraising, exit or growth through acquisitions, please do get in touch.

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William Garbutt

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