1
Q3 2020
Sector
Update
Software
Important disclosures appear at the back of this report
GP Bullhound LLP is authorized and regulated by the Financial Conduct Authority
GP Bullhound Inc is a member of FINRA
2
GP Bullhound is a leading technology advisory and investment firm highly focused in the SaaS sector.
Our quarterly report provides quantitative insights into public and private
market valuations across the transaction spectrum and qualitative
insights into company business models, technology and trends. We
feature many of the leading SaaS companies and CEOs across
interesting sub-sectors.
Q3 has been a rollercoaster in a year unique in terms of the challenges
for people in their private and professional lives. The pandemic continues
to cause uncertainty across geographies but has reinforced the need for
digital transformation across the board. Political uncertainty in the US has
caused further chaos in the public markets, as it is unclear who will
emerge victorious. Amid the turmoil, clear winners and losers have
emerged in the 'new' economy that now exists, with cloud-based
software solutions being the most obvious winner.
Nowhere is this more evident than in the public markets. The GPB SaaS
Index has grown impressively, trading at all-time highs versus Q1 and Q2
2020. There has also been enormous appetite for software IPOs, with a
host of private companies tapping into this market sentiment and listing
for the first time in Q3. Snowflake, Palantir, Asana and many more have
gone public in a combination of traditional IPOs and direct listings,
gaining access to capital and providing liquidity to longstanding
shareholders. In the private markets, strategic M&A for the highest quality
assets remains robust, with premium valuations holding up; however,
assets that are not highly strategic are staying in market longer.
Going into Q4, appetite for M&A is increasing as strategic acquirers have
shored up their own balance sheets, and PE backers have fortified their
portcos and are ready to aggressively look for high-quality inorganic
growth opportunities. However, COVID-19 and the upcoming US election
mean that the deal environment will be fluid and ever changing over the
next few months.
With 16 transactions in the past 12 months, our Software practice recently
raised $1bn+ for our clients in new capital and exit proceeds. Some of our
recent advisory transactions and investments are showcased below:
Software perspectives
EXECUTIVE SUMMARY
INVESTMENT BY
Accel - KKR
Partnerize
INVESTMENT BY
CVC
EcoVadis
INVESTMENT BY
Wavecrest Growth &
Beringea
Edited
ACQUIRED BY
Dude Solutions
Assetic
Motif
ACQUIRED BY
Charles Schwab
AllyO
ACQUIRED BY
HireVue
$50M
$200M
$29M
UNDISCLOSED
UNDISCLOSED
UNDISCLOSED
3
Key sector takeaways
SaaS CEO commentary
1
Contents
2
Recent software transaction trends
Public market SaaS analysis
Key SaaS metrics
Appendix A: GP Bullhound SaaS index
3
4
5
6
Appendix B: Software public comparables by category
7
Appendix C: GP Bullhound credentials & team
8
4
Section 1
Key sector takeaways
5
GP Bullhound’s views on current trends in software
KEY TRENDS
Changed spending patterns lift demand for real-time customer intelligence
1
Increased demand for cloud-based supply-chain management software
QR codes increasingly adopted by payment processing software platforms
Blended-learning LMS software boosts global corporate and academic e-learning
Enterprises and SMBs shift to cloud-based data warehousing solutions
Software-focused SPACs take precedence over IPOs for public equity raises
2
3
4
5
6
6
GP Bullhound’s views on current trends in software
KEY TRENDS
1
Changed spending patterns lift demand for real-time customer intelligence
▪ COVID-19 has adversely affected income levels across the globe and the prolonged period of financial uncertainty has
dramatically shifted consumer spending patterns towards essentials such as grocery and household supplies, with major cut-
backs on discretionary categories such as apparel, footwear and travel.
−
In addition to the changes in products consumed, consumption channels and loyalty preferences have changed as
consumers convert to online and other contactless methods of shopping such as Buy Online Pick-up In Store (BOPIS) and
move towards products that are easily available and organic. These shifts necessitate real-time insights into changing
customer preferences and monitoring of customer experience to recognise and prevent churn.
▪ Customer intelligence software providers are progressively leveraging AI / ML technology for real-time analysis of increasingly
granular data that can be processed through unsupervised learning for new, unique consumer insights on purchase patterns and
preference trends, thus helping to improve customer acquisition, value creation and retention. Since the onset of the pandemic,
organisations have refocused AI / ML efforts, with a ~7% increase in focus on consumer insights and consumer experience.
▪ Recognition of the demand for customer intelligence software is validated by the consolidation and fundraising activity in the
space.
− Sprinklr, a key customer experience management software provider with a huge focus on customer insights, raised $200m
on a $2.7bn valuation in Q2 2020.
− Socialbakers, an AI-powered provider of customer intelligence and insights, was acquired by Astute, a customer
engagement platform, to provide an end-to-end customer engagement software solution amidst the height of
pandemic-driven demand volatility.
Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020
7
▪ The pandemic-driven increase in e-commerce sales, alongside contactless payments being embraced globally, has led to the
growth of payment processing software solutions. The payment processing software market is now expected to grow by ~$46bn+
in 2020-2025, representing a CAGR of ~10%.
▪ Since the onset of the pandemic, new payment technology, specifically QR codes and digital wallets, has seen a 10% boost in
users, forcing key payment processing platforms, such as Alipay and PayPal, to provide QR code purchase processing
functionality. In addition to convenience and customer engagement, the use of QR codes helps merchants access user
information that can be leveraged for personalised offers and messaging, as well as tailored rewards programmes.
▪ Smartphone saturation over the past few years has helped push the adoption of QR code payments forward in the US. COVID-19
has forced widespread usage of QR code payments, with restaurants leading the charge.
GP Bullhound’s views on current trends in software
KEY TRENDS
2
▪ The change in demand across products and channels has accelerated the need for supply chain management (SCM) software.
It facilitates smooth functioning of complex production and delivery processes an0d provides data-driven insights for optimisation.
SCM software is also used to provide visibility into supply-chain links. As a result, the SCM software market is poised to grow by
~$9bn+ in 2020-2024, representing a CAGR of ~11%.
▪ Businesses that traditionally used on-premise SCM software are now moving to cloud-based SaaS solutions for both supply chain
planning and execution applications. Demand for SCM SaaS solutions has sky-rocketed, where planners can use real-time data to
reduce latency, manage disruptions and use manual hours to manage exceptions.
▪ Data-powered autonomous supply chains enable the creation of predefined scenarios that can be automatically implemented
when a particular event is triggered, making organisations more resilient and adaptable.
Increased demand for cloud-based supply-chain management software
3
QR codes increasingly adopted by payment processing software platforms
Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020
8
GP Bullhound’s views on current trends in software
KEY TRENDS
4
Blended-learning LMS software boosts global corporate and academic e-learning
▪ Lockdowns and social distancing have caused a paradigm shift in learning for students and workers alike, with learning
management system (LMS) software being heavily used amidst the pandemic. With industrial and emerging economies rapidly
adopting e-learning, the global LMS software market is poised to grow by ~$12bn in 2020-2025 at a ~14% CAGR.
▪ Synchronous learning capabilities are in demand by organisations that need live instructor-led classes for increased engagement,
whereas asynchronous learning is convenient for generic training programmes that students and employees can complete at
their own pace through channels of their choice. Customers now demand tools offering a blend of both, with companies such as
Docebo, LearnUpon and Instructure leading the market.
▪ Smaller customers, specifically SMBs, demand one-stop-shop platforms that enable blended learning as well as some level of built-
in course authoring capabilities that are more affordable than best-in-breed point solutions.
5
Enterprises and SMBs shift to cloud-based data warehousing solutions
▪ Per IDC, 125m petabytes of data is forecast to be created, captured and consumed worldwide through 2024 in structured, semi-
structured and unstructured format. This data needs to be aggregated from various sources, cleaned, indexed, and backed up to
support queries for analytics and reporting. The data warehousing market is forecast to reach ~$24bn by 2030, with companies
such as Snowflake, Teradata, Cloudera, Pivotal Software, SAP, Solver and Yellowbrick.
▪ Traditionally, on-site infrastructure was used for data storage and management; however, rapidly increasing amounts of data
increased the costs of on-site data warehousing, leading to cloud solutions offered as data warehousing as a service (DWaaS)
that are scalable, agile and affordable with pay-per-use models.
▪ As businesses unlock the insights hidden in vast amounts of data, warehousing software built on architecture that enables running
analytical queries for AI-powered analytics and insights is being adopted by large and small enterprises for improved topline
growth, customer experience and operational efficiency.
Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020
9
GP Bullhound’s views on current trends in software
KEY TRENDS
6
Software-focused SPACs take precedence over IPOs for public equity raises
▪ COVID-19 has created volatility in the public markets for tech stocks. To mitigate market risk, long-standing private tech unicorns
are now looking to exit into public markets via special purpose acquisition companies (SPACs) instead of traditional IPOs. By
enabling valuations to be set by SPAC management instead of the market, these companies seek to avoid pricing volatility in
public markets.
▪ The market remains receptive to SPACs, as shown by the $150m IPO of Software Acquisition Group Inc. II, a SPAC led by Jonathan
Huberman aiming to invest in vertical enterprise software companies owned by private equity or venture capital.
▪ Although SPACs have been around for past few decades, they returned to the limelight last year when Chamath Palihapitiya of
Social Capital took Richard Branson's space tourism company Virgin Galactic public via his first SPAC. Another notable Social
Capital acquisition is Opendoor, an instant sale home platform that was valued at $4.8bn and went public in mid-September.
Source: CapitalIQ, Pitchbook, company websites and publicly available news as of 30 September 2020
10
Section 2
SaaS CEO commentary
11
Fairmarkit
INTELLIGENT SOURCING PLATFORM FOR ORGANISATIONS TO MORE EFFICIENTLY PURCHASE THE GOODS AND SERVICES THEY NEED
|Q&A WITH THE CO-FOUNDERS
1. Why is the Fairmarkit solution need today?
Companies do not have the bandwidth to address their non-
contractual or ‘tail’ spend. Fairmarkit bridges that gap for our
customers, streamlining the purchasing process with existing
vendors, as well as finding new vendors.
2. What are the key benefits that your customers are
seeing?
Our customers see 7%+ in savings, and a 60% reduction in
cycle time employee touch / time.
3. What are the next steps in the product evolution?
We want to help customers offload contract spend and
payments to us. We see a future where customers pay
Fairmarkit and then we pay their suppliers – like a modern
treasury. Supply chain management is really heating up and
being recognised by companies as an extremely important
business process to streamline.
| MISSION
Enable organisations to more efficiently
purchase the goods and services they
need with automation, increased
transparency and actionable insights.
| LONG-TERM VISION
Accelerate the digital transformation of companies’
procurement, and automate the procurement process using
data and intelligent sourcing.
| SCALE
Fairmarkit works with some of the world’s largest
companies across a range of sectors including
financial services, transportation, internet
technology and healthcare.
Victor Kushch
Co-Founder
Kevin Frechette
Co-Founder
Tarek Alaruri
Co-Founder
12
NetMotion
SECURE REMOTE ACCESS PLATFORM EMPOWERING COMPANIES TO SUPPORT WORKFORCES AND DELIVER A SUPERIOR USER EXPERIENCE
|Q&A WITH MANAGEMENT
1. Why is the NetMotion solution needed today?
Now more than ever, companies need to ensure to provide
employees with a seamless and powerful remote access
technology solution. NetMotion's platform allows companies
to manage all remote access needs through one unified
platform with best-in-class SDP, VPN and digital experience
monitoring (DEM) product offerings.
2. What are the key benefits that your customers are
seeing?
NetMotion’s secure remote access platform was built
specifically with mobile workers in mind and thus improves the
end-user experience while providing unmatched visibility,
analytics and management capabilities to IT & security
leaders. NetMotion has an industry-leading net promoter
score (NPS) of 91 and gives businesses a software-defined
perimeter solution that can grow with them as they evolve
toward zero trust situations.
3. What are the next steps in the product evolution?
We recently unified our VPN and DEM products with our SDP
solution to provide an unparalleled Secure Access Service
Edge (SASE) platform. On top of that, we will also launch
NetMotion as a hosted platform soon, supporting our
customers in providing a superior remote access experience.
| MISSION
To keep remote workers safe and
secure without compromising the user
experience.
| LONG-TERM VISION
Be the partner of choice for global enterprises looking to
implement and run a premier SASE solution with highly productive
and happy end users.
| SCALE
More than 1.5m workers at more than 3,000
enterprise and government organisations rely on
NetMotion’s mission-critical software solutions every
single day.
Christopher Kenessey
CEO & President
13
Social Standards
CONTEXTUALISE CONSUMER DATA TO EMPOWER EXECUTIVES TO MAKE BETTER DECISIONS
|Q&A WITH THE CEO
1. Why is the Social Standards solution needed today?
Our unique platform structures social media conversations
similarly to how Nielsen or IRI structures sales data and
benchmarks every data point to the current market norms.
This enables deep and thorough analyses that can be
delivered, recognised and actioned quicker than any
consumer insights platform or service to date.
2. What are the key benefits that your customers are
seeing?
Our customers can instantly find and analyse macro level
trends or choose to drill down into very targeted topics and
cohorts. They can examine the benefits and concerns the
consumer associates with specific products, the activities they
enjoy while consuming, and the ingredients they care about.
They can even discover how loyal their consumers are and
directly see where they are winning and to whom they may
be losing market share.
3. What are the next steps in the product evolution?
We are currently developing new innovative efficiencies in
how companies extract and interact with analytical insights,
from social data and beyond.
| MISSION
To unlock the full potential of
collective social intelligence.
| LONG-TERM VISION
To revolutionise market analytics by transforming social data into
strategic insights enabling agile decision-making.
| SCALE
Social Standards is utilised directly by the world’s
leading CPG based CXOs and PE firms.
Additionally, financial institutions, such as Bank of
America, rely on Social Standards to ultimately
inform their 'buy’ or 'sell’ decisions.
Devon Bergman
CEO, Co-Founder
Photo
14
Section 3
Recent software transaction trends
15
Announce
Date
Buyer
Target
Target Description
Value
($m)
Implied
EV/LTM Rev
Sep-20
Provider of a purpose-built
mobile IT platform
872
4.0x
Sep-20
Provider of enterprise
automation software for the
employee benefits & property
and insurance industry
900
-
Sep-20
Provider of continuous
automation software
220
3.1
1
Aug-20
Developer of enterprise
software products
4,700
-
Aug-20
Developer of a web protection
platform
775
-
Aug-20
Provider of an online lending
platform
850
-
Aug-20
Developer of cloud-based
insurance software and
services
5,350
-
Aug-20
Provider of healthcare
technology and analytics
services
1,300
-
Jul-20
Developer of software-defined
wide-area network products
925
7.0
Source: Capital IQ (as of 30 September 2020) Pitchbook
(1) ARR multiple
Notable software M&A deals & private financings
M&A TRANSACTIONS ARE SLIGHTLY DOWN QUARTER OVER QUARTER
Q3 2020 Mean
4.8x
Announce
Date
Lead Investor
Issuer
Issuer Description
Capital
Raised ($m)
Sep-20
Provider of a digital investment
platform
52
Sep-20
Provider of SaaS logistics technology
68
Sep-20
Developer of a marketplace
platform
300
Sep-20
Developer of an end-to-end cloud
commerce platform
185
Sep-20
Developer of a customer experience
management software platform
350
Sep-20
Developer of security analysis tools
200
Sep-20
Operator of an online learning
platform
500
Aug-20
Developer of an AI-driven revenue
intelligence platform
200
Aug-20
Developer of an electronic trading
platform
200
Aug-20
Developer of an employee
management platform
145
Jul-20
Developer of a cloud
communications platform
200
Jul-20
Undisclosed
Developer of cloud-based call
centre software
143
Jul-20
Developer of an online education
and learning platform
130
Selected M&A Transactions
Selected Private Financings
Q2 2020 Mean
5.5x
16
Source: Pitchbook as of 30 September 2020
Note: Data includes all ‘SaaS’ M&A and private placement deals as defined by Pitchbook regardless of geography or
transaction size
Global software transaction trends
M&A HAS SEEN AN UPTICK THROUGH Q3
Q3 SaaS deal volumes pick up pace after slower Q2
Total number of private placement transactions have increased QoQ
US & Canada M&A bounces back after slower Q2
Deal volume in the US, Canada, & Europe outpaced other regions
0
100
200
300
400
500
600
$0M
$20B
$40B
$60B
$80B
$100B
$120B
2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3M&A
Buyout
M&A deals
Buyout deals
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3U.S. & Canada
Europe
Asia
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3U.S. & Canada
Europe
Asia
Other
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
$0M
$5B
$10B
$15B
$20B
$25B
$30B
$35B
$40B
2015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3Capital invested ($Bn)
Volume
17
Software direct listing & IPO landscape
Source: Company SEC filings, Capital IQ as of 30 September 2020
(1) For each of the past nine quarters
Listed – Q3 2020
Description (NYSE: ASAN): Web and mobile
application that helps teams organise, track, and
manage their work
Founded: 2008
Listing Date: 30 September 2020
Reference Price/Share: $21.00
LTM 7/31/20 Gross Revenue: $181.3m
Selected Metrics:
• 1.2m+ paid users
• 75k paying customers
• 190 countries
• 3.2m+ free activated accounts
Description (NYSE: PLTR): Builds software platforms
that help human experts perform collaborative
analysis of data at scale
Founded: 2003
Listing Date: 30 September 2020
Reference Price/Share: $7.25
LTM 6/30/20 Gross Revenue: $901.1m
Selected Metrics:
▪ 41k downloads per week in Q2 2020
▪ 125 customers in H1’20
▪ Avg. revenue / customer – $24.8m
Description (NYSE: U): Provides a software
platform for creating and operating interactive,
real-time 3D content
Founded: 2004
Listing Date: 17 September 2020
Offering Price/Share: $52.00
LTM 6/30/20 Gross Revenue: $640.3m
Selected Metrics:
▪ 1.5m monthly active creators
▪ 3bn+ app downloads per month
▪ Teams in 190+ countries
Description (NASDAQ: SUMO): Creator of a
Continuous Intelligence Platform that enables
organisations to address the challenges and
opportunities presented by digital transformation
Founded: 2010
Listing Date: 17 September 2020
Offering Price/Share: $22.00
LTM 7/31/20 Gross Revenue: $181.4.m
Selected Metrics:
▪ 120-135%1 net revenue retention range
▪ 873 petabytes of data scanned / day
▪ 49.9 quadrillion total events scanned
Description (NASDAQ: FROG): Provides an end-to-
end, hybrid, DevOps platform to achieve
Continuous Software Release Management
Founded: 2008
Listing Date: 16 September 2020
Offering Price/Share: $44.00
LTM 6/30/20 Gross Revenue: $127.9m
Selected Metrics:
• 5.8k+ customer
• 85% of revenue from multi-product
subscriptions
• 139% net revenue retention
Description (NYSE: SNOW): Cloud-based data
warehousing company that offers storage and
analytics, solving for issues that come with silo’d
data and data governance
Founded: 2012
Listing Date: 16 September 2020
Offering Price/Share: $120.00
LTM 7/31/20 Gross Revenue: $402.7m
Selected Metrics:
• 158% net revenue retention
• 3,117 customers
• 56 customers with $1m+ of LTM revenue
Description (NASDAQ: RXT): End-to-end multi-
cloud technology services company. They
design, build and operate cloud environments
across all major tech platforms
Founded: 1998
Listing Date: 5 August 2020
Offering Price/Share: $21.00
LTM 6/30/20 Gross Revenue: $2.5bn
Selected Metrics:
• 95% recurring revenue
• 98% net revenue retention 2019
• 2019/18 Bookings Growth: 17%
• 120,000 customers
Description (NASDAQ: BIGC): Bigcommerce’s
platform simplifies the process of creating
engaging online stores
Founded: 2009
Listing Date: 5 August 2020
Offering Price/Share: $24.00
LTM 6/30/20 Gross Revenue: $128.8m
Selected Metrics:
• 106% 2019 net revenue retention for
customers with ACV’s >$2k
• 4.4:1 2019 LTV:CAC
Indicates Direct Listing
18
Section 4
Public market SaaS analysis
19
1x
6x
11x
16x
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
GPB SaaS Index - EV / LTM Revenues
GPB SaaS Index - EV/ NTM Revenues
Source: Capital IQ as of 30 September 2020
Note: GP Bullhound SaaS Index constituents can be found in Appendix A
(1) YTD GPB SaaS Index EV / LTM Revenues growth rate
GP Bullhound SaaS index valuations
REVENUE MULTIPLE TRENDS – PAST 5 YEARS
Mean: 9.6x
Mean: 7.9x
Current SaaS valuations remain strong against the 5-year mean
Sep 2020: Multiples are up
58%+(1) YTD as COVID-19
continues to provide a bump
for public software multiples
As of 30 September, the SaaS Index was trading at 18.0x trailing 12-month revenues, 89% greater than the 5-year average
As of 30 September, the SaaS Index was trading at 14.8x next 12-month revenues, 86% greater than the 5-year average
Feb 2016: Overall market correction, global
economic weakness made its way into the US
causing SaaS companies to adjust their guidance
Dec 2018: Trade war with
China leads to the sell-off
of SaaS company stocks
20
Investors are increasingly focused on KPIs outside of revenue
as they evaluate business models
Source: CapitalIQ, SEC Filings
(1) CY20E / CY19A; (2) (S&M LTM Sep. 2019 / ((LTM Sep. 2020 Rev. – LTM Sep. 2019 Rev.) * GM%)) / 12; (3) LTM Sep. 2020
Operating Cash Flow / LTM Sep. 2020 Revenue; (4) As stated in company filings & earnings releases
PUBLIC SAAS METRIC BENCHMARKING
Revenue YoY growth (1)
Payback period (2)
Free cash flow margin (3)
Net dollar retention (4)
In months
42% 41% 41% 40% 39%
26% 25%
23% 22% 22% 21%
18% 18%
15% 14%
12%
11% 10%
7%
83.3
69.4 67.0 65.7
46.5
36.8
33.6 32.6 31.7
25.0 24.7 24.2 23.7 23.4 23.3 21.0 20.4 19.0 18.1
43%
30%
26% 24% 22% 19% 18% 17% 16%
12%
7% 5% 4% 3% 3%
0%
-7%
-10%
-28%
125%
121%
120%
120%
118%
116%
113%
106%
100%
99%
Slack
Okta
Docusign
Zscaler
Pluralsight Pagerduty Appian
Box
Hubspot
Zuora
21
Source: Capital IQ as of 30 September 2020
Note: GP Bullhound SaaS Index constituents can be found in Appendix A
GP Bullhound SaaS index performance
INDEX VALUE
80%
90%
100%
110%
120%
130%
Jul-20
Aug-20
Sep-20
GPB SaaS Index - Index Value
S&P 500
NASDAQ Composite
20%
100%
180%
260%
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
GPB SaaS Index - Index Value
S&P 500
NASDAQ Composite
60%
100%
140%
180%
220%
Oct-19
Feb-20
Jun-20
GPB SaaS Index - Index Value
S&P 500
NASDAQ Composite
L1M
L3M
L6M
L12M
80%
90%
100%
110%
120%
Sep-20
Sep-20
Sep-20
GPB SaaS Index - Index Value
S&P 500
NASDAQ Composite
Sep-20
22
0%
100%
200%
300%
400%
500%
600%
700%
800%
0%
100%
200%
300%
400%
500%
600%
700%
800%
Source: Capital IQ
Note: Existing cash balances allow companies to spend over 100% of operating cash flow
(1) As of Q3 2020 (2) Dollar amounts represent total cash use during the LTM period
Tech giants – show me the money
▪ R&D
▪ Debt paydown
▪ Capex
▪ Dividends
▪ Share buybacks
▪ Acquisitions
$34,399
$1,153
$891
$9,726
$2,595
$137,646
$79,326
$80,854
$1,732
$5,701
$83,590
$700
LTM (1) % of operating cash flow $m (2)
LTM – Q3 2019 % of operating cash flow $m (2)
$46,548
$1,132
$1,097
$5,760
$3,083
$125,951
$60,994
$75,089
$65,310
$1,490
$189
$4,235
▪ Q2 was a period of cash conservation as companies sought to build liquidity cushions to soften the economic blow from arguably the most
uncertain period of the pandemic to date. Going into Q3, we predicted that companies able to minimise spending and safely navigate through
H1 2020 would look to deploy cash to explore growth opportunities through M&A and organic investments. The data has shown that companies
are opting to go the M&A route, as deal volume has significantly picked up pace in most major regions – specifically the US and Canada.
▪ As the curtain of economic uncertainty continues to slowly lift and the market outlook becomes clearer, companies will likely continue to explore
M&A through the rest of 2020; however, there will be greater levels of scrutiny placed on transactions.
23
Section 5
Key SaaS metrics
24
Key SaaS metrics
DEFINITIONS & CALCULATIONS
Metric
Definition
Calculation
Normalised measurement of recurring revenue, most frequently
measured with a constant value in each month of the subscription
period
MRR
All S&M expenses for new customers. Sometimes excludes
personnel management S&M costs
CAC =