SEG-2018年第二季度SaaS公共市场报告（英文）-2018.10-32页-3mb

SEG 2Q18 SaaS Public Market Update Summary

Core Content

This report provides an overview of the SaaS public market performance in the second quarter of 2018, highlighting key financial metrics, trends, and SEG's role as a leading M&A advisory firm for software companies.

Main Points

SEG Overview

• Software Equity Group (SEG) is a leading M&A advisory firm specializing in emerging and established software companies.
• SEG offers services in strategic M&A, majority recapitalizations, divestitures, and board advisory.
• The firm has over 20 years of experience, has handled billions in transaction value, and maintains thousands of buyer relationships.
• SEG has a broad network of software industry buyers, which it leverages to create competitive markets for its clients.

SEG SaaS Index

• The SEG SaaS Index tracks public companies primarily offering cloud-based solutions through subscription or transaction pricing models.
• As of 2Q18, the index includes 74 publicly traded companies.

Financial Performance

• Median TTM Revenue in 2Q18 was approximately $273M, showing consistent growth.
• Median TTM Revenue Growth was 28.9%, consistent with the past four quarters.
• Median EBITDA Margin was -4.5%, indicating that most companies in the index were still unprofitable on a GAAP basis.
• Median Free Cash Flow Margin increased from 8.1% in 2Q17 to 12.7% in 2Q18, showing improvement in cash flow performance.

Public Market Multiples

• Median EV/TTM Revenue increased to 7.6x in 2Q18, up 17.1% YoY.
• Median EV/EBITDA was 39.9x in 2Q18, showing a modest decline from 43.0x in 2Q17.
• Companies with higher revenue growth typically commanded higher EV/Revenue multiples.

Rule of 40%

• The Rule of 40% is used to assess the health of SaaS companies by combining revenue growth and EBITDA margin.
• In 2Q18, the top quartile of companies in the SEG SaaS Index had a median Rule of 40% score of 39.7%, significantly outperforming the bottom quartile with a median score of 9.5%.
• Okta (17.0x) and ZScaler (18.8x) were among the top companies with high EV/Revenue multiples.

Product Category Performance

• The IT SaaS category showed the highest median TTM revenue growth at 39.8%, led by companies like Okta (60.7%), Atlassian (41.0%), and Talend (40.0%).
• Other SaaS and Communications categories also showed strong growth, with Shopify (67.7%), Smartsheet (65.9%), and Zuora (56.3%) leading the way.
• The bottom quartile of companies had significantly lower revenue growth and EV/Revenue multiples, with many struggling to meet the Rule of 40% benchmark.

Key Information

• SEG's Role: SEG acts as an exclusive advisor for numerous SaaS and software companies in their M&A and investment processes, including acquisitions by major firms and investments from private equity.
• Market Trends: The SaaS public market continued to show growth, with companies achieving higher valuation multiples for higher revenue growth.
• Performance Variability: There was a notable difference in performance between the top and bottom quartiles, with the top group outperforming in both revenue growth and valuation multiples.
• Rule of 40%: This metric is a strong indicator of company health, with companies in the top quartile achieving higher scores and better financial outcomes.
• Segmentation by Product Category: IT, Other SaaS, and Communications categories showed the strongest performance in terms of revenue growth and valuation.

Summary Table

Appendix Highlights

• The 2Q18 SEG SaaS Index provides detailed data on companies across multiple financial metrics including EV/Revenue, EV/EBITDA, and TTM Revenue Growth.
• The data reflects consistent growth in revenue and valuation multiples, though profitability remains a challenge for many SaaS firms.