2021-12-31-GP_Bullhound-2022年第1季度对数字服务的洞察（英）_24页_1mb

Q1 2022 Digital Services Sector Summary

Core Content Overview

The Q1 2022 Digital Services sector update highlights key trends in the digital transformation landscape, including the rise of automation in creative production, the continued demand for cloud computing services, and the transformative impact of headless technologies. The report also includes insights from GP Bullhound's recent transaction activity and market analysis.

Main Trends and Insights

Automation Tech Giving an Edge to Creative Production

• Digital Channel Proliferation: The increasing number of digital channels has accelerated the need for rapid and efficient creative production.
• Content Creation Challenges: 80% of marketers see content generation as a challenge, with 75% reporting it has become more demanding over the past year.
• Automation as a Solution: Automation technology is a key driver of recent M&A and investment activity in the marketing sector.
• Example: Team ITG, a Birmingham-based marketing activation business, was invested in by Bridgepoint, and its platform, CanopyCloud, is used by major brands such as GSK and Jaguar Land Rover.

Hyperscalers Continue to Drive Cloud Demand

• Market Growth: The global cloud computing market was valued at $369bn in 2021 and is expected to grow at a CAGR of 15.7% to 2030.
• Hyperscaling: Hyperscalers like AWS, GCP, IBM, and Azure are in high demand due to their scalable cloud computing capabilities.
• Market Share: AWS holds a 32% market share, with the top four hyperscalers collectively accounting for two-thirds of cloud spend.
• Strategic M&A: Enterprises continue to pursue strategic acquisitions to enhance their cloud capabilities, such as OSF acquiring netnomics and Upstack acquiring RDS Solutions.

Headless is Transforming Marketing and Commerce

• Next-Gen Integration: Headless technology is driving the next generation of software integration, enabling seamless and flexible platform solutions.
• Headless CMS Market Growth: The headless CMS market is expected to reach $1.6bn by 2027, with a CAGR of 22.6%.
• Opportunities for Services Players: There is a significant growth opportunity for services players to leverage headless platforms, which currently account for a small share of the CMS and e-commerce software markets.
• Notable Transactions: Examples include Omnicom's acquisition of TA Digital, Uniform's acquisition of Headless Creator, and Kin + Carta's acquisition of Loop.

Recent Transaction Activity

M&A Deals in Q1 2022

Investment Deals in Q1 2022

• Team ITG: Invested in by Bridgepoint.
• LoopMe: Acquired by Mightyhive/S4Capital.
• Bliss Point Media: Acquired by Tinuiti.
• Adyoulike: Acquired by OpenWeb (Insight Partners).
• The Variable: Invested in by Svoboda Capital.
• Venatus: Invested in by Livingbridge.
• Byte: Acquired by Dept.
• FutureDeluxe: Invested in by Queen's Park Equity.
• MedThink: Acquired by Fingerprint.
• FortyFour: Invested in by Momentum.
• Search Discovery: Invested in by Momentum.
• Phiture: Not mentioned in transaction details.
• NP Digital: Not mentioned in transaction details.

Market Activity and Performance

• Deal Activity: Q1 2022 saw strong deal activity, with the US leading the way in transaction volume.
• Regional Trends: Asian digital services deals continue to trade below pre-pandemic levels.
• Consultancy Activity: Consultancies were less active compared to IT services and marketing agencies.
• Tech Mahindra: The most active acquirer in Q1 22, with several acquisitions.

Valuation Trends

• GP Bullhound Digital Services Index: Average valuations across all companies increased by 31% compared to Q1 2021.
• Market Cap and Multiples: Companies like Accenture, Tata Consultancy Services, and IBM showed strong performance with varying revenue and EBITDA multiples.
• EBITDA Margins: EBITDA margins across the Digital Services index companies remained around 18-19% in Q1 2022.

Key Players and Their Insights

Neil Patel & Mike Kamo, Co-founders of NP Digital

• NP Digital: A performance marketing agency based in San Diego, founded in 2017.
• Growth: Achieved 120% YoY growth and now employs over 600 people globally.
• Focus: Emphasises the use of AI/ML and automation for efficiency and scale.
• Clients: Includes major brands across various verticals such as cryptocurrency and finance.

Vincent Klingbeil, Co-founder & CEO of European Digital Group

• European Digital Group (EDG): A group focused on all aspects of corporate digital transformation.
• Approach: Holistic and end-to-end offering, combining best-in-class experts and agile capabilities.
• Clients: Includes major brands like Samsung, Decathlon, and L'ORÉAL.

Andy Carvell, Co-founder & CEO of Phiture

• Phiture: A multi-award-winning mobile growth consultancy.
• Growth: Experienced over 100% annual growth since 2016.
• Focus: Specialised in mobile app growth, including App Store Optimisation, Performance Marketing, and Subscriber Retention Optimisation.
• Clients: Includes major clients in the app industry.