Welcome to the Q1 2020 edition of the MarTech Barometer – Results International’s market update for the global marketing technology sector.
Highlights of the quarter:
- Covid-19 had a short, sharp impact on the public markets, and while enterprise technology has been affected in part, we believe that these short term repercussions for the sector could propel it forward at a faster rate than otherwise achieved.
- Enforced remote working has accelerated digital transformation and moved the conversation to mission critical. Enterprise software is a major winner:
- Zoom has seen its share price double in Q1 and quadruple in the last 12 months as video conferencing becomes core to everyday life. Verizon has capitalised on the trend by acquiring Zoom’s video conferencing rival, BlueJeans (announced in Q2).
- Increased remote working creates vulnerabilities that hackers could exploit; cybersecurity tech vendors Crowdstrike (endpoint), Okta (IAM) and Cloudflare and ZScaler (network) prove the popular solutions to the challenge with share prices rising in the quarter.
- Infrastructure providers will see a significant uptick as more companies rapidly migrate to the cloud, with the lion’s share going to three market leaders: Amazon Web Services (AWS), Microsoft Azure and Google Cloud.
- The recovery following 2008 was strong for enterprise software and it is already showing promising signs; Nasdaq is back to levels seen six months ago and SaaS has also recovered to a similar level – SaaS was the big winner in the last recession as investors looked to quality revenue streams; the same is likely to be the case here.
- With the near-term pain offset by future structural upside, there is a significant opportunity to all:
- Most of the PE and trade acquirors that we have spoken to are very much open for business, although for the larger deals ($200m+) the sentiment is to wait for the market to settle down
- The general view is that Covid-19 represents a substantial opportunity as enterprises focus on resilience at the Board level and further accelerate their digital journeys – moving to cloud faster, embracing ecommerce, cybersecurity enhancements and remote working
- Therefore, if businesses can demonstrate resilience with great growth prospects in today’s market environment there will be plenty of appetite
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.