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Enterprise Stack – Q3 2019 Market Review

By William Garbutt 22 Oct 2019

Welcome to the Q3 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 private markets in particular performing strongly.
    • M&A activity continues at pace, with 468 software deals being announced this quarter, driven in part by US Private Equity (again representing nine of the top ten acquirers).
    • VMware delivered two of Q3’s standout transactions; acquiring Carbon Black ($2.1bn), taking the cloud-based endpoint security business private, and software development platform Pivotal Software ($3.1bn), originally incubated at VMware. These acquisitions will expand VMware’s digital transformation offering and modernise the way in which its customers both build and protect their software.
    • Cybersecurity represented a particularly buoyant market. Results International acted as the exclusive financial advisor to cybersecurity services consultancy Intragen on receiving investment from FPE Capital this quarter, and shortly after to Monterro-backed Outpost24 on its acquisition of threat detection business Pwnie Express.
  • The pace of B2B software IPOs showed no sign of slowing during Q3. Medallia (30.6% share price increase since IPO), Datadog (25.6%), Cloudflare (23.8%), Dynatrace (16.7%) and Ping Identity (15.0%) all listed this quarter with share prices continuing to perform strongly post-IPO.
  • This quarter has seen significant activity amongst cloud-focused infrastructure monitoring vendors. In addition to the IPOs of Dynatrace and Datadog this quarter (noted above), Splunk acquired real-time cloud performance monitoring business SignalFx for just over $1bn (an estimated 21x TTM revenue), and Elastic, which IPO’d in October of last year, also continues to perform very strongly with its shares up 129% on the listing price.
    • As enterprises continue to demand more innovative monitoring solutions, it is clear that both the investor appetite and capital is available to support this, with emerging vendors competing to deliver an increasingly comprehensive and unified product-set
  • As enterprises continue to embrace digital transformation, challenges can arise when it comes to the adoption of this new technology. This quarter Results International advised AppLearn, a digital adoption platform, on securing investment from K1 Investment Management. AppLearn looks to maximise its customers’ returns on digital investment, providing measurable benefits in productivity, accuracy and speed. This transaction further demonstrates our significant track record in advising high-growth, disruptive and innovative enterprise software companies like AppLearn on transformational fundraising and M&A transactions.

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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