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Enterprise Stack – Q2 2019 Market Review

By William Garbutt 16 Jul 2019

Welcome to the Q2 2019 edition of our Enterprise Stack Report – Results International’s quarterly market update for the enterprise software sector.

 

Highlights in the quarter:

  • Enterprise Software had a very positive quarter, with both public and private markets performing strongly:
    • In the private market – M&A activity had its second most active quarter, with 487 software deals being announced, driven in part by US Private Equity (again representing 9 of the top 10 acquirers).
    • In the public markets – RI’s SaaS index now trades at an all-time high (9.2x revenue vs. 6.0x historic median); with multiples reaching as high as 10.0x during Q2.
  • Q2’s numerous B2B software IPOs demonstrated the increasing demand investors have for scalable, innovative enterprise software with recurring revenue as Zoom (147%), PagerDuty (96%), Crowdstrike (101%) and Slack (44%) all saw share prices increase significantly following IPO. This activity was in contrast to some of Q1’s high profile B2C technology IPOs (Lyft, Uber, Pinterest) which have seen limited uplift in share price following IPO.
  • Two standout Business Intelligence (BI) transactions proved how BI and data management are increasingly seen as the key to delivering an all-round software offering. Salesforce’s $16.3bn acquisition of Tableau and Alphabet’s $2.6bn acquisition of Looker demonstrate the value that software vendors are placing on enabling customers to derive ever deeper, actionable insights from growing data-warehouses. Alphabet specifically made clear it would not be acquiring any additional data, as wariness around antitrust regulation continues to manifest in light of significant rumoured fines.
  • Software driving the automation of manual and process-oriented tasks has seen rapidly growing market demand in recent quarters; with an emerging set of select leaders in the space, including UK-based Blue Prism which acquired domestic rival Thoughtonomy (AI-based virtual workforce automation) for $101m (7.9x revenue), adding scale and capability to better compete with rival vendors including UiPath, the recipient of a $568m Series D this quarter (valuing it at $7bn post-money).

The remainder of 2019 will see a continuation of investor appetite across the board for enterprise software businesses. 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.

 

William Garbutt

Associate

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