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Q2 ‘19 saw a number of high profile software IPOs including Zoom Video Communications which soared over 150% from its offer price; M&A volume in the quarter was healthy, bolstered by Salesforce’s $15B acquisition of Tableau

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Sector Report: Software Q2 2019

 

EXECUTIVE SUMMARY

  • The global software sector remains one of the most active sectors, with approximately $15 billion in financing volume and approximately $39 billion in M&A volume during Q2 ’19
    • 198 financings in Q2 ‘19 is 19% higher than the number of financings in the same period in ’18
    • 359 M&A transactions in Q2 ‘19 is 5% higher than the 343 deals consummated during the same period in ’18
    • Q2 ‘19 M&A volume was bolstered by Salesforce’s $15 billion acquisition of Tableau Software resulting in a 22% M&A volume growth over Q2 last year
  • Business and Productivity Software had one of the highest financing volume and deal counts in Q2 ‘19 led by the $500 million financing of Kaseya and $300 million financing of Carta; the Financial Software sector also saw a high volume of financings
  • Financial Software companies trade at the highest average revenue multiple at 11.5x EV/ ’19E Revenue compared to other software; the Technical Applications sector trades at the highest average EBITDA multiple at 31.7x EV/ ’19E EBITDA compared to other software
    • Security software had the highest average 2019E/2018A revenue growth at 30% compared to other software
    • Development and Operations Management software stock performance outperformed other software sectors with LTM growth over 33%
  • Select Q2 ’19 Global Software Sector Active Investors:
    • Accel
    • Andreessen Horowitz
    • Bain Capital Ventures
    • Battery Ventures
    • Index Ventures
    • Insight Partners
    • Intel Capital
    • Kleiner Perkins
    • NEA
    • Norwest Venture Partners
    • Tiger Global Management
    • Vista Equity Partners
  • Select Q2 ’19 Global Software Sector Active Strategic Buyers:
    • Constellation Software Inc.
    • Descartes
    • E2open
    • J2 Global
    • Mastercard
    • Medallia
    • Microsoft
    • Palo Alto Networks
    • Salesforce
    • SolarWinds
    • Twitter
    • Upland

 

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