Unlocking

Cloud Index as at 31 March 2024

#

268

4 Nov

Pushpay takeover offer

#

236

18 Feb

Xero to Hero

#

232

3 Dec

New Zealand's Technology Boom

#

199

19 Mar

Vend and Seequent

#

87

6 Jul

2018

SaaS Metrics Cheat Sheet

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#

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#

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#

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325

15 Apr

Cloud Index as at 31 March 2024

#

268

4 Nov

Pushpay takeover offer

#

236

18 Feb

Xero to Hero

#

232

3 Dec

New Zealand's Technology Boom

#

199

19 Mar

Vend and Seequent

#

87

6 Jul

2018

SaaS Metrics Cheat Sheet

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2.5x

5.0x

7.5x

10.0x

12.5x

15.0x

17.5x

20.0x

22.5x

25.0x

Mar 19

Sep 19

Mar 20

Sep 20

Mar 21

Sep 21

Mar 22

Sep 22

Mar 23

Sep 23

Mar 24

Tech Insights #325

Cloud Index as at 31 March 2024

Page 1 of 2

Mergers & acquisitionsCorporate finance advisoryCapital raising

15 April 2024

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Overview

This report looks at valuation multiples for cloud companies publicly listed in the United States, Australia and New Zealand. As at 31 March 2024, the US Cloud Index is down 2% from the previous quarter to 6.7x EV / NTM revenue and still well below the five-year average of 11.6x. The ANZ Cloud Index has had a strong quarter and moving above the US Index, with an increase of 19% to 7.1x EV / NTM revenue. The ANZ increase was driven by top quartile companies, Xero, WiseTech, Megaport and Altium lifting their EV / NTM revenue multiple by 10-50%, which can be seen in the 75th percentile EV / NTM revenue increasing from 9.0x to 10.8x EV / NTM revenue, a 20% increase.

NTM revenue multiple for cloud companies listed in the US and ANZ (EV / NTM revenue)

7.9x

ANZ Cloud Index

Average

12MMA

Mar-24

7.1x

6.0x

Dec-23

6.0x

5.6x

Change

19%

Mar-23

5.6x

Change

27%

US Cloud Index

Average

12MMA

Mar-24

6.7x

6.3x

Dec-23

6.8x

6.0x

Change

(2%)

Mar-23

6.0x

6.6x

Change

10%

(5%)

Note: Indices are calculated using a simple average (equal weighting), with the ANZ index (20 companies) comprising of companies that have a minimum NZD $250m market capitalisation versus NZD $500m for the US Index (88 companies). Avg = Average, NTM = Next 12 months, 12MMA = 12 month moving average

11.6x

7.1x

6.7x

Key:

ANZ

Average

12MMA

5yr avg

10.0x

20.0x

30.0x

40.0x

Mar 19

Mar 20

Mar 21

Mar 22

Mar 23

Mar 24

75th percentile

Median

25th percentile

5.0x

10.0x

15.0x

20.0x

Mar 19

Mar 20

Mar 21

Mar 22

Mar 23

Mar 24

Tech Insights #325

Cloud Index as at 31 March 2024

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Mergers & acquisitionsCorporate finance advisoryCapital raising

15 April 2024

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US cloud companies NTM revenue multiple

ANZ cloud companies NTM revenue multiple

9.2x

6.1x

3.4x

10.8x

4.6x

3.1x

US cloud companies

25th

75th

31 Mar 2024

Average

percentile

Median

percentile

EV (NZD $m)

35,515

4,018

9,610

22,018

EV / NTM rev

6.7x

3.4x

6.1x

9.2x

Revenue growth (NTM)

14%

20%

EV / LTM rev

7.8x

3.7x

6.7x

10.3x

Revenue growth (LTM)

19%

11%

17%

25%

Gross margin

72%

68%

75%

81%

Operating margin

(8%)

(18%)

(5%)

FCF margin

19%

11%

19%

29%

ANZ cloud companies

25th

75th

31 Mar 2024

Average

percentile

Median

percentile

EV (NZD $m)

4,392

504

985

2,771

EV / NTM rev

7.1x

3.1x

4.6x

10.8x

Revenue growth (NTM)

16%

11%

25%

EV / LTM rev

8.1x

3.1x

4.8x

11.9x

Revenue growth (LTM)

25%

20%

32%

Gross margin

55%

26%

60%

81%

Operating margin

(5%)

10%

22%

FCF margin

10%

11%

18%

Note: The percentiles for each metric are calculated individually. Companies added or removed from each index take effect from the first day of the reported quarter.

EV = Enterprise Value, LTM = Last 12 months, NTM = Next 12 months, FCF = Unlevered free cash flow.

Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. ClareCapital holds no responsibility over the actual numbers. ClareCapital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

‍

15 Apr

Cloud Index as at 31 March 2024

325

Tech Insights #324

Being AI

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Mergers & acquisitionsCorporate finance advisoryCapital raising

8 April 2024

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Overview

Being AI recently joined the NZX via a reverse-listing through the shell of Ascension Capital. The company has positioned itself as New Zealand’s first listed AI company.As it stands today, the business is a legacy mail/courier business (Send Global), with a small school (AGE) and a 6-month old consultancy (Being Consultants) attached.

The market cap of Being AI (NZX:BAI) is $115m (using VWAP from Friday 5 April).

Entity

Send Global(formerly G3)

AGE

Being Consultants(incl Being Labs and Ventures)

Total

Description

Mail and courier services, outsourced business services (filing / mailroom etc).

A school for years 1–13 in Takapuna, Auckland forup to 100 students.

Positioning itself as an AI/EAT (Exponentially Accelerating Technologies) business.

Currently a mail/courier business, that has branded itself as an AI/EATbusiness.

Revenue

$38.0m

$2.3m

$40.3m

EBITDA

$2.6m

($0.1m)

$2.5m

Value (as per reverse listing)

$25m

$15m

$5m initiallyUp to another $35m over 3 years

$45m nowUp to $80m including earn-in

Clare Capitalequity valuation estimate

$12m - $24m

$0m - $2m

$0m

Less than the sum of the parts

Commentary

•Revenue has fallen from $52m in FY17 to $38m currently, in a decliningmail environment.

•EBITDA in recent years has been consistently around $3m.

•EBITDA multiple of 4x-8x appropriate, likely at the lower end of the range.

•Small school with no current profitability.

•Has physical assets of $2.7m, but also debt at a similar level.

•ClareCapital see little economic value in this company.

•Has only been established~6 months ago.

•As far as we can tell, has no revenue or customers.

•Is essentially just an idea at this stage.

•Current value is primarily derived from the EBITDA of Send Global, however this will be diminished as it is used to fund the Being AI division.

NZX:BAI

Note: Send Global financials for the 12 months to 30 Sept 2023, AGE financials for the 12 months to 31 Dec 2023. Financials are estimates where actuals are not available.

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Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence, and NZX reports and filings. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

8 April 2024

Tech Insights #324

Being AI

Timeline

30 Oct 2023

Being Consultants Limited incorporated.

29 Nov 2023

Being Labs and Being Ventures incorporated.

11 Dec 2023

Ascension announces proposed reverse-listing to the market.

11 Mar 2024

Acquisition docs including independent advisors report released.

17 Oct 2023

Last time Ascension (NZX:ACE) shares are traded(30,000 shares @ 1.5c, ~$450).

28 Mar 2024

Shareholders approve the transaction (99% in favour) @ 2.5c share price.

2 Apr 2024

Shares begin to trade under BAI ticker – $1.7k traded @ VWAP 2.2c.

3 Apr 2024

$72.5k traded @ VWAP 4.4c, ends day at 5c.

4 Apr 2024

NZ RegCo issues a ‘please explain’ to BAI given its share price increase.

NZ RegCo encourages investors to read the listing docs and the valuation guidance in them. $59.5k traded @ VWAP of 7c.

5 Apr 2024

NZ RegCo issues its first ever ‘trade with caution’ notice.

NZ RegCo strongly urges investors to read the listing docs and that the reverse listing was undertaken at 2.5c. $261.2k traded @ VWAP of 6.2c.

Reverse listing details

The reverse listing was settled in shares valued at 2.5c each, the cap table for Being AI post the reverse listing is tightly held by several individuals.

Shareholder

Shares (m)

Katherine Allsop-Smith and Evan Christian (owned 100% of Send and 87% of AGE) 1

1,520

81.4%

David McDonald (owned 100% of Being Consultants)

200

10.7%

Sean Joyce / Excalibur Capital Partners 2

116

6.2%

Other Ascension shareholders

1.0%

Other Ascension directors

0.7%

Total

1,868

100.0%

1 250m of the Allsop-Smith/Christian shares have been given to their charitable foundation (which until February was called the 'AGE Foundation Charitable Trust’, since renamed ‘Te Turanga Ukaipo Charitable Trust’).

2 Sean Joyce was a director and shareholder of Ascension, and is the Chair of Being AI. His Being AI shares derive from his initial Ascension shares, his 13% shareholding in AGE, and capitalisation of Ascension debt / directors fees.

There are no lock-ups for the shareholders, except for a 12-month lock-up for any earn-in shares, and a 6-month lock-up for director fee shares.

Being AI “earn-in” mechanism

In addition to the $5m upfront share issue for Being Consultants, more shares will be issued if the share price reaches 4c after 9months, 8c after 18months, 12c after 24months and 30c up to 36months.

If current share price levels hold, this would trigger an additional ~$12m of shares issued to David McDonald, lifting his stake to 29%. If the full earn-in is achieved, David McDonald would own just under 50% of Being AI.

‍

200

400

600

800

1,000

FY21

FY22

FY23

S&M

G&A

R&D

Cost of revenue

Revenue

150

225

300

375

450

2,000

4,000

6,000

8,000

10,000

12,000

Series A

Series B

Series C

Series D

Series E

Series F

IPO

Dec 12

Sep 14

Jul 17

Feb 19

Feb 21

Aug 21

Mar 24

Tech Insights #323

Reddit Inc.

Mergers & acquisitionsCorporate finance advisoryCapital raising

25 March 2024

r/Overview

This week’s Tech Insights report looks at Reddit, which recently listed its class A shares on the New York Stock Exchange. Reddit is a social media platform which provides a network of communities with the ability to discuss interests, ask questions, share images and videos. The first page looks at key financial metrics, Reddit’s funding rounds to date and key information about the IPO. The second page looks at industry metrics and how this compares to some of Reddit’s competitors.

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r/Reddit funding rounds & valuation (USD $m)

r/Share structure & key IPO information

r/Reddit financials (USD $m)

Key items

A shares

B shares

Total

Shares outstanding (# m)

36.9

122.1

159.0

Economic rights (%)

23.2%

76.8%

100.0%

Voting rights (%)

2.9%

97.1%

100.0%

Voting weight

1 / share

10 / share

Trading status

Public

Private

Valuation (LHS)

Capital raised (RHS)

Over 95% of Reddit’s revenue is advertising.

IPO gross proceeds

USD $748m

Market cap at IPO open

USD $5.4bn

CEO voting rights

46.3%

Reddit shares opened at $34 / share and closed its 1st day of trading at $50.4 / share, a 48% increase in market value.

For this IPO

Shares (#m)

USD $m

Primary sale

15.3

519.4

Secondary sale

6.7

228.6

Total sale

22.0

748.0

r/Daily active users for FY23 (# millions)

r/Advertising revenue for FY23 (USD $b)

r/ARPU for Q4 FY23 (USD $)

Tech Insights #323

Reddit Inc.

Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence, Crunchbase and SEC filings. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

25 March 2024

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r/Peer comparables data (USD $b)

Company

Market cap

LTM revenue

LTM EBITDA

Gross margin

LTM rev growth

EV/LTM rev

Alphabet (Google)

1,841.6

307.4

100.2

56.9%

8.7%

Meta (Facebook)

1,294.5

134.9

61.4

80.7%

15.7%

Roblox

23.8

2.8

(1.0)

19.0%

25.8%

23.3

3.1

0.0

77.5%

9.0%

Snap

18.4

4.6

(1.2)

54.1%

0.1%

Median

23.8

4.6

0.0

56.9%

9.0%

8.0

0.8

(0.1)

86.2%

35.7%

11x

Reddit information is taken as at the end of the first day of trading on 21 March.

2,074

400

500

1,000

1,500

2,000

2,500

Facebook

Snapchat

131.9

4.6

0.8

31.5

100

120

140

Facebook

Snapchat

YouTube

Advertising revenue / avg. daily active users for quarter.

18.3

3.3

3.4

Facebook

Snapchat

‍

(22)

(40)

(20)

FY13

FY15

FY17

FY19

FY21

FY23

Revenue ($m)

Op. margin

Business model

Total

3,399

1.8%

Low margin at scale

1,892

3.8%

Low margin at scale

1,061

2.6%

249

9.3%

Good margin

162

(13.7%)

Neither

(65.4%)

New product

Tech Insights #322

A Tale of Two Acquisitions

Mergers & acquisitionsCorporate finance advisoryCapital raising

18 March 2024

Overview

On the back of the recently announced $1 sale of Torpedo7, this Tech Insights report examines two companies that The Warehouse Group acquired at a similar time and price, Torpedo7 and Noel Leeming. Torpedo7 specialises in outdoor sports gear while Noel Leeming in consumer electronics. We compare how they have performed since the acquisition by looking into their financials and key metrics to demonstrate the stark differences between the fate of the two companies.

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Note that we have used operating profit as an approximation for cash flow. The operating profit figures are all presented on a pre-IFRS 16 basis. The price of Noel Leeming includes $8m of debt acquired.

Torpedo7 vs Noel Leeming’s operating profit (NZD $m)

Key information for first full year

Torpedo7

Noel Leeming

NZD $m

Torpedo7

Noel Leeming

Acquisition

(53)

(73)

Bolt-on acquisitions

(27)

Total investment

(79)

(73)

Accum. operating profit

(41)

310

Exit/implied value

273

Total return

(41)

583

NZD $m

Torpedo7

Noel Leeming

Financial year

FY14

Revenue

108

621

Operating profit

Identifiable NTA

Store count # – (leased)

Accumulated as at FY23

Annual operating profit

Returns comparison

Note Noel Leeming’s implied value is assumed by taking the median EBIT multiple of its industry peers.

Analysis excludes change in net working capital.

The Warehouse Group

(41)

(100)

100

200

300

310

What $1 buys

Estimated Salary cost

$11.2m

Store count (leased)

Operating profit

($22m)

Net op. assets

$54m

Net operating assets is from FY22 and excludes lease assets/liabilities

Acquired: 2012

Price: $73m

Acquired: 2013

Price: $79m

200

400

600

800

1,000

1,200

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

Tech Insights #322

A Tale of Two Acquisitions

Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence and annual reports. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

18 March 2024

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Revenue (NZD $m)

Operating profit margin

% of total retail revenue

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

Store count (#)

Torpedo7

Noel Leeming

(15%)

(10%)

(5%)

10%

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

10%

15%

20%

25%

30%

35%

40%

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

‍

18 Mar

A Tale of Two Acquisitions

322

Mar 20

Dec 20

Sep 21

Jun 22

Mar 23

Dec 23

Tesla revenue

BYD revenue

Tech Insights #321

Charging ahead: Exploring the EV landscape

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Mergers & acquisitionsCorporate finance advisoryCapital raising

11 March 2024

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Overview

This Tech Insights report explores the electric vehicle (EV) industry. In the financial quarter ending on 31 December 2023, Chinese carmaker BYD surpassed Tesla to become the global leader in fully electric vehicle sales. However, Tesla maintains its position as the most popular new car EV manufacturer in New Zealand by number of registrations. For the purposes of this report, the term ‘EV’ refers to all-battery electric vehicles. All financial figures are presented in USD.

Tesla and BYD quarterly revenue (US $bn)

Indexed share prices – Tesla and BYD

Market capitalisation (USD $bn) – Tesla and BYD

Tesla and BYD number of quarterly sales (000s)

Note: Revenue for BYD quarter ending Dec 23 is an analyst estimate.

400%

800%

1,200%

1,600%

Jan 20

Jan 21

Jan 22

Jan 23

Jan 24

Tesla

BYD

300

600

900

1,200

Jan 20

Jan 21

Jan 22

Jan 23

Jan 24

Tesla

BYD

200

400

600

800

1,000

Mar 20

Dec 20

Sep 21

Jun 22

Mar 23

Dec 23

BYD hybrids sold

BYD EVs sold

Tesla EVs sold

% change from 2022

(29.3%)

25.4%

121.6%

211.9%

74.5%

3.9%

18.3%

3393.8%

43.0%

(33.7%)

Tech Insights #321

Charging ahead: Exploring the EV landscape

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Disclaimer The information in this report has been sourced from S&P Global Market Intelligence, annual reports, NZ Transport Agency and the Ministry of Transport. Clare Capital holds no responsibility over the actual numbers and is not an Authorised Financial Adviser. If you are making investment decisions, you should seek appropriate advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

11 March 2024

EVs by number and share of new vehicles registered in NZ

Dominant EV car makes in NZ by new vehicles registered

Global car manufacturers by enterprise value (USD $bn)

2,000

4,000

6,000

8,000

Polestar

BMW

Volkswagen

Peugeot

Hyundai

Kia

BYD

Nissan

Tesla

2022

2023

1.5%

3.0%

4.5%

6.0%

7.5%

9.0%

'19

'20

'21

'22

'23

Share of total vehicles registered

Number of EVs registered (‘000)

Others

Tesla

BYD

Share of total vehicles registered

Note: Chart refers to all-battery electric vehicles.

Company

Country

Total cars sold FY23 (millions)

Enterprise value

LTM revenue

LTM revenue growth

EBITDA

margin

Gross

margin

Enterprise value / LTM revenue

Enterprise value

/ EBITDA

Tesla

USA

1.8

550

18.8%

14.0%

18.2%

5.7x

40.6x

Toyota

Japan

10.3

487

312

14.5%

15.0%

19.9%

1.6x

10.4x

Volkswagen

Germany

9.2

281

333

15.1%

7.6%

17.6%

0.8x

11.1x

Mercedes

Germany

2.5

182

164

5.1%

14.6%

21.9%

1.1x

7.6x

Ford

USA

4.4

172

176

11.5%

6.7%

9.2%

1.0x

14.5x

BMW

Germany

2.3

161

162

13.9%

15.5%

17.7%

1.0x

6.4x

General Motors

USA

6.2

151

172

9.6%

9.2%

11.2%

0.9x

9.6x

Hyundai

South Korea

4.2

119

121

12.0%

11.5%

20.6%

1.0x

8.5x

Honda

Japan

3.7

138

10.1%

13.1%

21.2%

0.7x

5.1x

Stellantis

Netherlands

6.2

205

8.3%

14.6%

20.2%

0.4x

2.9x

BYD

China

3.0

58.7%

9.4%

19.4%

0.9x

9.1x

Median

4.2

161

164

12.0%

13.1%

19.4%

1.0x

9.1x

‍

11 Mar

Charging ahead: Exploring the EV landscape

321

300

600

900

1,200

Feb 20

Feb 21

Feb 22

Feb 23

Feb 24

1,000

2,000

3,000

4,000

Feb 20

Feb 21

Feb 22

Feb 23

Feb 24

Solana

BNB

Tether

Ethereum

Bitcoin

Tech Insights #320

Crypto

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Mergers & acquisitionsCorporate finance advisoryCapital raising

4 March 2024

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Overview

In this Tech Insights report we explore the crypto space. The first page highlights the top 5 coins by total market cap and the value traded from February 2020, along with notable events. The second page outlines the 11 bitcoin ETFs approved for trading by the Securities Exchange Commission (SEC) on 10 January 2024. On 12 February, the price of Bitcoin surpassed USD $50,000 for the first time since November 2021. This mainstream adoption by traditional institutions marks a step in the development of crypto as an asset class. Note all dollar values are in USD.

Top 5 cryptocurrencies by market cap (USD $bn)

Monthly value traded (USD $bn)

Solana

BNB

Tether

Other

Ethereum

Bitcoin

Bitcoin domain registered

2008

2009

Bitcoin white paper released

2011

Altcoins (alternative coins) launch

2014

First stablecoin Tether launches

2021

•Bitcoin market cap hits

•$1 trillion USD

•Dogecoin spikes ~1,850% from Jan to May peak

2023

•BlackRock and others file for Bitcoin and Ethereum ETFs

•Sam Bankman-Fried found guilty

Two pizzas purchased for 10,000 Bitcoin, marking an early commercial crypto transaction

2010

Bitcoin market cap hits

$1 billion USD

2013

Ethereum launches with proof of stake consensus protocol a as an alternative to Bitcoin’s proof of work

2015

FTX filed for bankruptcy and founder (Sam Bankman-Fried) arrested

2022

SEC approves spot-exchange trading for Bitcoin ETFs

2024

17,500

35,000

52,500

70,000

Feb 14

Feb 16

Feb 18

Feb 20

Feb 22

Feb 24

Tech Insights #320

Crypto

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Disclaimer The information in this report has been sourced from S&P Global Market Intelligence and CoinMarketCap. Clare Capital holds no responsibility over the actual numbers and is not an Authorised Financial Adviser. If you are making investment decisions, seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

4 March 2024

Indexed returns of top 5 coins by market cap

Daily value traded for spot Bitcoin ETFs (USD $bn)

Bitcoin price over time (USD) – what are two pizzas worth now?

On May 22, 2010, two Papa John’s pizzas were purchased using 10,000 Bitcoin. At the time, the value of this amount of Bitcoin was ~$41. See call-outs below for the value of 10,000 Bitcoin at different points in time.

28 Feb 14:$5.49m

29 Feb 24:$611.98m

Indexed returns of S&P BDMI* vs. S&P 500 and NZX 50

Stablecoin

BNB

Solana

Ethereum

Bitcoin

Tether

*Cryptocurrency Broad Digital Market Index

11 Jan

18 Jan

25 Jan

1 Feb

8 Feb

15 Feb

22 Feb

29 Feb

6 others

Bitwise

Ark Invest/21Shares

Fidelity

Grayscale

BlackRock

300%

600%

900%

1,200%

Feb 20

Feb 21

Feb 22

Feb 23

Feb 24

S&P BDMI

S&P 500

NZX 50

1,000%

2,000%

3,000%

4,000%

May 20

Feb 21

Nov 21

Aug 22

May 23

Feb 24

‍

2021

2022

2023

2024

2021

2022

2023

2024

Tech Insights #319

Semiconductor industry

Page 1 of 2

Mergers & acquisitionsCorporate finance advisoryCapital raising

26 February 2024

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Overview

Since the start of 2021, NVIDIA’s market capitalisation has increased from USD $330b to $1,900b. This is the largest dollar increase of any company in the world over this period. This comes during a period where the aggregate value of the wider semiconductor industry has broadly stayed flat. NVIDIA’s outperformance of the industry relates to a material increase in its revenue and earnings margins, driven by an increase in data center revenue. “Nvidia’s chips underpin all of the most advanced AI systems, giving the company a market share estimated at more than 80%” (WSJ, Feb-2024). For the purpose of this report, we include companies that create materials used in the production of semiconductors.

100

200

300

400

500

600

2021

2022

2023

2024

US semiconductor industry by Enterprise Value USD $t

Share price index – largest semiconductor companies

Broadcom

Taiwan Semiconductor

ASML

Applied Materials

AMD

Non-US semiconductor industry by Enterprise Value USD $t

Taiwan Semiconductor

Rest of Taiwan

ASML (Netherlands)

China

Rest of world

Broadcom

Rest of USA

Intel

QUALCONN

Texas I.

Micron T.

As at 23 Feb

Tech Insights #319

Semiconductor industry

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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

26 February 2024

Semiconductor industry comparators USD $b (companies from page one)

Company

Country

LTM revenue

LTM revenue growth

EBITDA

margin

EV/LTM

revenue

EV/NTM

revenue

EV/EBITDA

NVIDIA

USA

1,925

126%

57%

32x

18x

56x

Broadcom

USA

632

56%

18x

13x

31x

Taiwan Semiconductor

Taiwan

548

(9%)

67%

12x

ASML

Netherlands

366

34%

35%

12x

35x

AMD

USA

283

(4%)

17%

12x

11x

73x

Intel

USA

210

(14%)

18%

22x

QUALCOMM

USA

176

(16%)

30%

16x

Applied Materials

USA

162

31%

20x

Texas Instruments

USA

152

(13%)

48%

10x

18x

Micron Technology

USA

(40%)

78x

Median

246

(6%)

33%

27x

10%

20%

30%

40%

50%

60%

70%

80%

'14

'15

'16

'17

'18

'19

'20

'21

'22

'23

'24

Gross margin

EBITDA margin

'20

'21

'22

'23

'24

'20

'21

'22

'23

'24

Data center

Gaming

Other

NVIDIA has a January year end

NVIDIA: Revenue USD $b

NVIDIA: EBITDA USD $b

NVIDIA: Margins

‍

26 Feb

319

Semiconductor industry

Microsoft (78%)

NVIDIA (48%)

Apple (93%)

Alphabet (58%)

Salesforce (16%)

Visa (41%)

1,000

2,000

3,000

4,000

Systems software

Semiconductors

Technologyhardware, storageand peripherals

Interactive mediaand services

Applicationsoftware

Transaction andpayment processingservices

Pre-Covid

Start 2023

Now

360 Security Technology (16%)

HygonIT (7%)

Xiaomi (31%)

Tencent (80%)

Beijing Kingsoft (10%)

Lakala(37%)

10%

20%

30%

40%

Pre-Covid

Start 2023

Now

USA

China

Tech Insights #318

Listed tech industries – USA vs China

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Mergers & acquisitionsCorporate finance advisoryCapital raising

19 February 2024

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Overview

This Tech Insights report compares the share price return and market capitalisation of major US and Chinese tech industries. It shows the difference in scale between industries in the two countries and how US tech industries have outperformed their Chinese counterparts since Covid. This data is based on current listed companies in each of the two countries. All analysis is in USD, which has appreciated ~1% against the Chinese Yuan since November 2019.

China: Aggregate market capitalisation of selected tech industries (USD $b)

Tech industries % of total market cap

1,000

2,000

3,000

4,000

Systems software

Semiconductors

Technologyhardware, storageand peripherals

Interactive mediaand services

Applicationsoftware

Transaction andpayment processingservices

Pre-Covid

Start 2023

Now

USA: Aggregate market capitalisation of selected tech industries (USD $b)

These are the four largest industries in the US by market capitalisation.

Industry

Largest company

(% of total)

Industry

Largest company

(% of total)

This analysis is based on S&P’s definition of Primary Industry. Listed companies in the USA and China fall into one of 163 industries.

The six tech industries to the left now make up a third of the market capitalisation of all US publicly listed companies. They make up less than 9% in China.

Although none of the six tech industries shown here are the largest single industry in China, both Semiconductors and Interactive media and services are in the top six largest industries in China.

It is worth noting that this data is for market capitalisation, which does not include net debt.

Tencent

Baidu

Xiaomi

360 Security

BTC Digital

Will Semiconductor

LONGi

Shenzhen

Weibo

iFLYTEK

Yonyou

Autohome

Montage

Sanan

Hundsun

Lenovo

Giga Device Semiconducto

Hello Group

Sangfor

Tongwei

Apple

Microsoft

Alphabet

Meta

4 Feb 2004

28 Jun 2021

Tesla

1 Jul 2003

25 Oct 2021

Alphabet

4 Sep 1998

16 Jan 2020

Amazon

5 Jul 1994

4 Sep 2018

Nvidia

5 Apr 1993

30 May 2023

Apple

1 Apr 1976

2 Aug 2018

Microsoft

4 Apr 1975

26 Apr 2019

Saudi Aramco

29 May 1933

11 Dec 2019

Note: Meta and Tesla are currently no longer valued above $1 trillion.

EV/EBITDA multiple

3-year EBITDA CAGR

18.3

21.4

24.2

30.2

42.3

44.1

86.5

17.4

(100%)

(50%)

50%

100%

150%

200%

250%

300%

2018

2019

2020

2021

2022

2023

Costco

Target

Home Depot

Amazon

Walmart

eBay

Carrefour

Rakuten

(10%)

(5%)

10%

15%

20%

25%

30%

10x

15x

20x

25x

30x

Tech Insights #313

Accenture M&A

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Mergers & acquisitionsCorporate finance advisoryCapital raising

27 November 2023

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Overview

Global IT services company Accenture recently announced the acquisition of Wellington based Solnet. This follows Accenture’s 2020 acquisition of New Zealand based Zag. As part of announcing the Solnet deal, Accenture reported that its annual revenue from New Zealand operations exceed $200m. M&A is an integral part of Accenture’s growth strategy as shown by their acquisition history. M&A can be an effective method of growth compared with organic customer acquisition and Accenture clearly have a streamlined process of finding and executing deals.

Enterprise value USD $b

Aus/NZ acquisitions since 2020

# of acquisitions by quarter

100

200

300

2015

2016

2017

2018

2019

2020

2021

2022

2023

2015

2016

2017

2018

2019

2020

2021

2022

2023

Date

Name

Employee estimate

Overview

Nov 23

Solnet*

134

IT services and IT consulting.

Aug 23

ATI Solutions

Digital consultancy for asset-intensive industries.

May 23

BourneDigital

Cloud services and digital consultancy.

Dec 22

Fiftyfive5

223

Market research.

May 21

Industrie&Co

173

Cloud services and consultancy.

May 21

Elector 80

100

Mining, electrical and IT consulting. (AU$30m deal).

Mar 21

GRA Supply

Supply chain consultants. (AU$25m deal).

Nov 20

Olikka

Provide remote work solutions to corporatesand government in Australia.

Oct 20

Zag*

200

SAP provider and certified AWS Advanced Consulting Partner.

Feb 20

AlphaBeta

Strategic economics consultancy.

Feb 20

Icon Integration

SAP consultancy in Australia and NZ.

*NZ company

Acquisitions by country since 2020

Tech Insights #313

Accenture M&A

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DisclaimerThe information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisionsyou should seek appropriate personalised financial advice.

Revenue USD $b and EBITDA margin

Mergers & acquisitionsCorporate finance advisoryCapital raising

27 November 2023

Global IT services companies USD $b

Revenue by geography USD $b

Revenue by industry USD $b

North America

Europe

Rest of World

Consumer goods,industrial & lifesciences

Resources

Financial services

Health & publicservice

Communications,media &technology

10%

15%

20%

25%

'18

'19

'20

'21

'22

'23

'24

'25

Name

Headquarters

Ticker

LTM revenue

LTM EBITDA

EV / LTM revenue

EV / LTM EBITDA

4yr revenue CAGR

EBITDA margin

Acquistions in ANZ since '20

Accenture

Ireland

NYSE:CAN

204

3.2x

18.2x

10%

17%

IBM

USA

NYSE:IBM

189

3.1x

13.9x

-6%

22%

Tata Consultancy

India

NSE:TCS

149

5.2x

20.4x

26%

Infosys

India

NSE:INFY

3.8x

16.4x

11%

23%

Capgemini

France

EPA:CAP

1.7x

12.2x

11%

14%

Cognizant

USA

NASDAQ:CTSH

1.8x

10.1x

18%

Tech Mahindra

India

NSE:TECHM

1.9x

17.0x

11%

Median

3.1x

16.4x

18%

Mean

100

2.9x

15.5x

19%

Forecast

‍

(35%)

(25%)

(15%)

(5%)

15%

25%

3 years ago

2 years ago

LTM

NTM

(35%)

(25%)

(15%)

(5%)

15%

25%

3 years ago

2 years ago

LTM

NTM

Tech Insights #312

Tech industry pivots to profitability

Page 1 of 2

Mergers & acquisitionsCorporate finance advisoryCapital raising

20 November 2023

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Overview

In the years leading up to the coronavirus pandemic, and in the first two years of the pandemic, there was a strong narrativethat tech companies should focus on revenue growth over profitability. Investors could accept a company’s losses so long as it was growing at a sufficient pace. We have seen over the last two years that investors are less willing to accept this narrative and there has been a trend back to profitability. In this report we look at listed tech companies in North America and Australia/NZ. We examine how EBITDA margins are forecast to grow this year at an aggregate level (page 1) and focus on specific companies that have pivoted to profitability (page 2).

EBITDA margins for listed North American tech companies

EBITDA margins for listed Australia/NZ tech companies

Forecast

3 years ago

2 years ago

LTM

NTM

Average

1,202

1,334

1,288

1,669

Upper quartile

281

320

283

557

Median

118

Lower quartile

(10)

(14)

(12)

# of companies

389

3 years ago

2 years ago

LTM

NTM

Average

Upper quartile

Median

Lower quartile

(5)

# of companies

EBITDA for listed North American tech companies (USD $m)

EBITDA for listed Australia/NZ tech companies (USD $m)

Note: Tech companies are as defined by S&P Global Market Intelligence under Information Technology. The North American average is high due to outliers at the top end (Apple, Microsoft, etc.). All current listed tech companies with data across the four periods are included. LTM = Last 12 Months, NTM = Next 12 months.

Upper quartile

Median

Lower quartile

Upper quartile

Median

Lower quartile

Actual

Forecast

Actual

(1,500)

(1,000)

(500)

500

1,000

1,500

3 years ago

2 years ago

LTM

NTM

(40%)

(30%)

(20%)

(10%)

10%

20%

30%

3 years ago

2 years ago

LTM

NTM

Tech Insights #312

Tech industry pivots to profitability

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DisclaimerThe information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisionsyou should seek appropriate personalised financial advice.

EBITDA margin for selected Australia/NZ tech companies

Mergers & acquisitionsCorporate finance advisoryCapital raising

20 November 2023

EBITDA (USD $m)

EBITDA margin for selected North American tech companies

(40%)+

(80%)

(60%)

(40%)

(20%)

20%

Megaport

Audinate

Ansarada

Task

Catapult

Bigtincan

3 years ago

2 years ago

LTM

NTM

‍

20 Nov

Tech industry pivots to profitability

312

1.3

(2.9)

(2.5)

(1.3)

2.7

(60.0)

(45.0)

(30.0)

(15.0)

15.0

30.0

45.0

60.0

(4.0)

(3.0)

(2.0)

(1.0)

1.0

2.0

3.0

4.0

FY19

FY20

FY21

FY22

FY23

Passengers carried (line)

Profit (loss) before tax (bar)

2.7

3.0

1.9

5.0

4.7

4.4

21.6

3.2

18.5

1.3

2.8

2.1

4.1

4.6

4.3

19.2

2.4

16.7

Before tax profit (loss)

Other

D&A

Fuel

Labour

Aircraft operations

Total revenue

Other

Passenger revenue

0.4

(0.6)

(0.4)

(0.8)

0.6

(20.0)

(15.0)

(10.0)

(5.0)

5.0

10.0

15.0

20.0

(1.0)

(0.5)

0.5

1.0

FY19

FY20

FY21

FY22

FY23

Passengers carried (line)

Profit (loss) before tax (bar)

0.6

1.0

0.7

1.5

1.4

1.1

6.3

1.0

5.3

0.4

1.2

0.6

1.3

1.4

1.1

5.8

0.8

5.0

Before tax profit (loss)

Other

D&A

Fuel

Labour

Aircraft operations

Total revenue

Other

Passenger revenue

COVID impacted period

Tech Insights #311

Post-COVID airline recovery

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Mergers & acquisitionsCorporate finance advisoryCapital raising

13 November 2023

Overview

Following the easing of travel restrictions, airlines have shown signs of recovery with revenue surpassing pre-COVID levels. The first page of this report provides a comparison of two prominent listed companies within the New Zealand passenger airline landscape: Air New Zealand and Qantas Group (the parent company of Jetstar), focusing on their performance before, during and after COVID. The second page widens the scope to encompass global players, exploring financial and operational metrics over time.

Profit/(loss) before tax (NZD $bn) versus passengers carried (million)

Profit/(loss) before tax breakdown (NZD $bn)

FY23 (post-COVID)

FY19 (pre-COVID)

Profit/loss before tax

FY23 (post-COVID)

FY19 (pre-COVID)

Tech Insights #311

Post-COVID airline recovery

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Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence and company annual reports. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

13 November 2023

Company

(NZD $bn)

Revenue LTM

(NZD $bn)

EBITDA LTM

(NZD $bn)

EV / EBITDA LTM

Passengers carried (million)

Revenue passenger kilometres (bn)**

Revenue per passenger (NZD)

Oct 19

Oct 23

Oct 19

Oct 23

Oct 19

Oct 23

Oct 19

Oct 23

FY19

FY22/23*

FY19

FY22/23*

FY19

FY22/23*

InterGlobe Aviation

12.6

25.9

6.6

11.6

0.8

1.8

16.4

14.5

64.7

85.3

69.8

114.1

92.5

127.6

Delta Airlines

78.7

73.8

69.6

93.3

13.0

12.1

6.1

162.3

141.6

382.5

316.2

439.9

563.6

United Airlines

59.3

53.5

64.4

85.5

9.9

13.2

6.0

4.1

162.4

144.3

385.2

332.8

404.3

491.6

Qantas Airways

14.0

13.0

19.2

21.6

2.9

4.6

4.8

2.8

55.8

45.7

127.5

97.7

343.3

473.5

Singapore Airlines

20.7

38.5

17.7

20.8

3.0

5.2

6.8

7.4

20.7

18.2

102.6

91.0

851.3

1,143.7

Air France

20.7

19.1

45.5

51.7

4.8

5.8

4.3

3.3

104.2

83.3

263.5

205.7

443.4

525.3

Air Canada

18.9

15.0

21.4

25.8

3.1

3.9

6.2

3.9

51.5

36.1

151.5

107.0

424.7

554.9

Air China

54.1

72.2

29.9

26.9

6.4

(0.3)

8.5

115.0

38.6

233.2

60.4

260.2

321.1

Air New Zealand

4.7

3.4

5.8

6.3

0.8

0.9

5.6

3.6

17.7

15.8

38.6

29.0

326.1

401.2

Median

20.7

25.9

21.4

25.8

3.1

4.6

6.1

3.9

64.7

45.7

151.5

107.0

404.3

491.6

Indexed share price of selected airlines since 2020

Key financial and operational metric comparison (pre- and post- COVID)

(80%)

(60%)

(40%)

(20%)

20%

Jan 20

Apr 20

Jul 20

Oct 20

Jan 21

Apr 21

Jul 21

Oct 21

Jan 22

Apr 22

Jul 22

Oct 22

Jan 23

Apr 23

Jul 23

Oct 23

InterGlobe Aviation

Delta Airlines

United Airlines

Qantas Airways

Singapore Airlines

Air France

Air Canada

Air China

Air New Zealand

*Note operational metrics taken from the recent annual report (FY22 or FY23, depending on the company’s fiscal year-end).

**Revenue passenger kilometres is the total number of passengers carried multiplied by total number of kilometres flown.

InterGlobe Aviation (IndiGo) holds over 60% of India’s domestic market share

13 Nov

Post-COVID airline recovery

311

100

120

140

Nov 21

Feb 22

May 22

Aug 22

Nov 22

Feb 23

May 23

Aug 23

Nov 23

65%

70%

75%

80%

85%

500

1,000

1,500

2,000

LTM 3 yearsago

LTM 2 yearsago

LTM 1 year ago

LTM

Tech Insights #310

New Relic takeover

Mergers & acquisitionsCorporate finance advisoryCapital raising

6 November 2023

Overview

This Tech Insights report looks at the agreed full takeover for New Relic (anagram of founder Lew Cirne’s name) by TPG Capital (TPG) and Francisco Partners (FP) for USD $6.6bn. The takeover offer has been accepted on the back of previously rejected offers. New Relic is a US-based web tracking and analytics company. It specialises in providing software analytics and performance monitoring solutions for businesses with tools to track and analyse the performance of web and mobile applications. In this report, we take a look at New Relic’s financial metrics to date, the key events leading up to the acquisition, how the offer matches against comparable companies and transactions, and an overview of the wider software M&A space over time.

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New Relic vs Datadog revenue (USD $m) and gross margin

New Relic key financial statistics (USD $m)

New Relic share price (USD $)

Jul 23

FP & TPG revised offer to $87. Offer accepted.

May 23

FP & TPG drops out due to financing & NR forecast shortfall issues.

Acquirers

Target

Gross margin (RHS)

Revenue (LHS)

Apr 23

Receive 3 offers $90-$100. FP & TPG offer $96.05.

LTM stands for Last Twelve Months

Jul – Aug 22

FP & TPG joint bid $70-$75. Offer rejected.

Nov 22

FP & TPG offer

$75-$80. Offer rejected.

Feb 23

FP & TPG offer $95.

Mar 23

Sales process.

16 parties approached.

Jun 23

FP & TPG revised offer to $90.

Sep 23

New Relic approached 53 additional parties with no better offer.

Financial item

FY19

FY20

FY21

FY22

FY23

Total revenue

479

600

668

786

926

Gross profit

402

496

486

529

681

EBITDA

(17)

(95)

(176)

(135)

Net debt

(339)

(312)

(299)

(270)

(330)

Active customers #

14,100

14,800

16,000

NRR*

112%

119%

118%

*Net revenue retention rate

1,941

1,682

1,306

1,611

1,808

1,803

1,815

2,175

2,417

2,425

2,580

2,755

2,818

2,837

4,181

3,385

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

100

150

200

250

300

350

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deal count

Transaction value

6.9

7.7

4.7

5.4

4.0

50.7

18.9

10x

15x

20x

25x

30x

35x

TPG & FP/New Relic (Jul 23)

Cisco Systems/Splunk (Sep 23)

FP/Sumo Logic (Feb 23)

Broadcom/VMware (May 22)

Ivanti Software/MobileIron (Sep 20)

Splunk/SignalFx (Aug 19)

Cisco Systems/AppDynamics (Mar 17)

Tech Insights #310

New Relic takeover

Disclaimer The information provided in this report has been sourced and calculated from S&P Global Market Intelligence and SEC filings. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

Mergers & acquisitionsCorporate finance advisoryCapital raising

6 November 2023

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Comparable transactions EV/revenue multiples

Software M&A transactions since 2007 (USD $bn)

Comparable listed company metrics (USD $m)

Company

LTM revenue

Gross margin

LTM rev growth

3-year rev CAGR

EV/Rev

Fortinet

37,531

4,988

76%

31%

28%

7.3x

Datadog

25,363

1,897

79%

39%

58%

13.4x

Splunk

26,310

3,843

79%

26%

18%

6.8x

Dynatrace

13,405

1,224

83%

24%

28%

10.3x

Elastic N.V.

6,769

1,113

73%

39%

42%

6.1x

SolarWinds

2,777

737

90%

(1%)

3.7x

Median

19,384

1,597

79%

26%

28%

7.1x

New Relic

5,815

968

77%

13%

15%

6.0x

45x

50x

55x

Total transaction value (for available data)

Median

6.9x

Deal count

‍

CAC ratio formula

The CAC ratio can be adapted with varying interpretation depending on the industry and market. It is recommended that companies calculating their own CAC ratio to use new revenue from new customers, however, this is not often publicly available data. For this reason, this analysis uses the following formula:

Tech Insights #309

CAC ratio – listed SaaS companies

Page 1 of 2

Mergers & acquisitionsCorporate finance advisoryCapital raising

30 October 2023

Overview

This week’s Tech Insight explores the well-known SaaS metric that is the Customer Acquisition Cost (CAC) ratio. A CAC ratio indicates how much money the company spends on acquiring new customers in order to generate one additional dollar of revenue. Generally, we would expect a higher CAC ratio for start ups compared to established companies, as they are spending more to attract new customers, as well as assert market presence. However, for larger mature companies in a saturated market, the marginal cost of acquiring new customers can increase and therefore the CAC ratio can rise again as a result. Data is as at 31 August 2023.

1.0

2.0

3.0

4.0

5.0

BASE

DOMO

BTH

BIGC

DOCU

ADSK

CRM

ADBE

EVS

DBX

CFLT

HUBS

SMAR

GTLB

WDAY

XRO

FCT

PCTY

PYPL

360

SHOP

IKE

CAC ratio – Selection of US and Australian listed companies

CAC ratio and other metrics

A CAC ratio can be interpreted as a return on investment for a company's sales and marketing expenditure. It indicates the overall effectiveness and scalability of sales and marketing strategies. It is also useful to identify trends over time and make strategic adjustments.

The CAC ratio can be used in in conjunction with other customer value metrics, such as the CAC payback period, to further analyse value creation.

The CAC payback period assesses the time it takes for a company to recover the cost of acquiring a new customer and can be calculated as: CAC / Annual Gross Margin per customer.

Note: For this analysis we have used S&P Global Market Intelligence definitions, which may miss some company specific classifications.

Annual Sales and Marketing SpendAnnual Revenue Increase

Simplified CAC ratio =

Sales and Marketing SpendRevenue from new customers

CAC ratio =

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Tech Insights #309

CAC ratio – listed SaaS companies

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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

CAC ratio and annual sales and marketing spend as a percentage of total expenses

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30 October 2023

Couchbase

Domo

BigCommerce

DocuSign

Autodesk

Salesforce

Adobe Inc.

Dropbox

Confluent

HubSpot

Smartsheet Inc.

GitLab

Workday

Paylocity

Paypal

Shopify

Bigtincan

Envirosuite

Xero

FirstWave Cloud Technology

Life360

ikeGPS Group

10%

15%

20%

25%

30%

35%

40%

45%

50%

1.0

2.0

3.0

4.0

5.0

Sales and Marketing as a % of total expenses

CAC Ratio

Enterprise Value key (NZD $billions)

100 – 500

1 – 10

< 1

US Listed AU Listed

10 – 100

Bubble colour key

‍

30 Oct

CAC ratio - listed SaaS companies

309

Tech Insights #308

NZX 50 index comparison

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16 October 2023

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Overview

This Tech Insights report investigates the composition of New Zealand’s primary index (NZX 50) against well-known international indices. The NZX 50 has a comparatively large weighting in Industrials (driven by Auckland International Airport, Infratil and Mainfreight), Healthcare (driven by F&P Healthcare and EBOS) and Utilities (driven by Meridian, Contact and Mercury). The NZX 50 has the smallest exposure to sectors defined as cyclical. The second page of the report presents the performance of the indices over the last 2 years. The analysis on page 1 is at 30 September 2023.

Index constituents share of market cap by GICS sector

Index overview

Index composition

Index

Gross market cap (NZD $b)

HHI* index concentration (# constituents)

Top 10

(% of index)

Largest constituent (weight)

MSCI World

106,014

136

20%

Apple (5%)

S&P 500

63,531

31%

Apple (7%)

FTSE 100

4,135

50%

Shell (9%)

ASX 200

2,662

47%

BHP (11%)

NZX 50

301

64%

F&PH (11%)

10%

20%

30%

40%

Industrials

Financials

Health Care

ConsumerDiscretionary

Real Estate

ConsumerStaples

Materials

Utilities

InformationTechnology

CommunicationServices

Energy

MSCI World

S&P 500

FTSE 100

ASX 200

NZX 50

14%

66%

36%

29%

30%

43%

19%

30%

48%

40%

44%

15%

35%

23%

21%

50%

100%

NZX 50

ASX 200

FTSE 100

S&P 500

MSCI World

Type (Morningstar)

Definition

GICS sectors

Cyclical

Highly sensitive to business cycle peaks and troughs

Materials, Consumer Discretionary, Financial Services and Real Estate

Sensitive

Moderate correlations with business cycles

Communication Services, Energy, Industrials and Information Technology

Defensive

Typically counter-cyclical through business cycles

Consumer Staples, Health Care and Utilities

*HHI (Herfindahl-Hirschman index) measures the degree of concentration. The effective number of constituents is calculated as 1 / the sum of squared constituent weights.

Tech Insights #308

NZX 50 index comparison

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Disclaimer The information provided in this report has been sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.

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Technology sector performance (total return - last 2 years)

(50%)

(40%)

(30%)

(20%)

(10%)

10%

20%

30%

(50%)

(40%)

(30%)

(20%)

(10%)

10%

20%

30%

Oct 21

Jan 22

Apr 22

Jul 22

Oct 22

Jan 23

Apr 23

Jul 23

Oct 23

FTSE 100

ASX 200

S&P 500

MSCI World

NZX 50

Index performance (total return - last 2 years)

(50%)

(40%)

(30%)

(20%)

(10%)

10%

20%

30%

(50%)

(40%)

(30%)

(20%)

(10%)

10%

20%

30%

Oct 21

Jan 22

Apr 22

Jul 22

Oct 22

Jan 23

Apr 23

Jul 23

Oct 23

FTSE Tech

ASX Tech

S&P 500 IT

Global IT

NZX IT

‍

16 Oct

308

NZX 50 index comparison

2.5x

5.0x

7.5x

10.0x

12.5x

15.0x

17.5x

20.0x

22.5x

25.0x

Sep 18

Mar 19

Sep 19

Mar 20

Sep 20

Mar 21

Sep 21

Mar 22

Sep 22

Mar 23

Sep 23

Tech Insights #307

Cloud Index as at30 September 2023

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9 October 2023

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Overview

This report looks at valuation multiples for cloud companies publicly listed in the United States, Australia and New Zealand.How the indices have been calculated in this report has been refined since the last report (#294) by applying a minimum NZD $250m market capitalisation to the ANZ index and using asimple average for each index rather than the median value. This reduces the constituent size of the ANZ index from 69 to 20 but allows us to compare the top companiesinANZ against the top companies in the US.

As at30 September 2023, the US Cloud Index is down 8% from the previous quarter to 5.9x EV / NTM revenue and still well below the five-year average of 11.5x. The ANZ Cloud Index is also marginally down, 2% to 5.8x EV / NTM revenue and well below the five-year average of 8.1x.

NTM revenue multiple for cloud companies listed in the US and ANZ (EV / NTM revenue)

8.1x

ANZ Cloud Index

Average

12MMA

Sep 23

5.8x

5.6x

Jun 23

6.0x

5.5x

Change

(2%)

Sep 22

5.2x

7.4x

Change

13%

(25%)

US Cloud Index

Average

12MMA

Sep 23

5.9x

Jun 23

6.4x

6.1x

Change

(8%)

(3%)

Sep 22

6.1x

11.2x

Change

(3%)

(47%)

Note: Avg = Average, NTM = Next 12 months, 12MMA = 12 month moving average

11.5x

5.8x

5.9x

Index size

US: 88 companies

ANZ: 20 companies

Key:

ANZ

Avg

12MMA

5yr avg

5.0x

10.0x

15.0x

20.0x

Jun 18

Jun 19

Jun 20

Jun 21

Jun 22

Jun 23

10.0x

20.0x

30.0x

40.0x

Jun 18

Jun 19

Jun 20

Jun 21

Jun 22

Jun 23

75th percentile

Median

25th percentile

Tech Insights #307

Cloud Index as at30 September 2023

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US cloud companies NTM revenue multiple

ANZ cloud companies NTM revenue multiple

8.4x

5.6x

3.2x

9.1x

3.6x

2.8x

US cloud companies

25th

75th

30 Sep 2023

Average

percentile

Median

percentile

EV (NZD $m )

27,626

3,649

8,500

22,261

EV / NTM rev

5.9x

3.2x

5.6x

8.4x

Revenue growth (NTM)

15%

16%

22%

EV / LTM rev

7.0x

3.4x

6.2x

10.3x

Revenue growth (LTM)

23%

12%

21%

31%

Gross margin

72%

68%

75%

80%

Operating margin

(14%)

(28%)

(11%)

FCF margin

16%

17%

25%

ANZ cloud companies

25th

75th

30 Sep 2023

Average

percentile

Median

percentile

EV (NZD $m )

3,287

441

860

1,915

EV / NTM Rev

5.8x

2.8x

3.6x

9.1x

Revenue growth (NTM)

18%

16%

27%

EV / LTM rev

7.1x

3.0x

4.1x

11.4x

Revenue growth (LTM)

30%

21%

36%

Gross margin

53%

28%

60%

81%

Operating margin

(15%)

12%

22%

FCF margin

(5%)

15%

Note: The percentiles for each metric are calculated individually. Companies added or removed from each index take effect from the 1st day of the reported quarter.

EV = Enterprise Value, LTM = Last 12 months, NTM = Next 12 months, FCF = Unlevered free cash flow

‍

9 Oct

Cloud Index as at 30 September 2023

307

2020

2022

2023

2020

2021

2022

2021

2022

2014

2020

2022

2021

2018

2023

2019

2021

Tech Insights #306

IT and digital services landscape

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2 October 2023

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Overview

The New Zealand IT and digital services market has seen a range of M&A activity over recent years. On the first page of this Tech Insights report, we provide an overview of the IT and digital services landscape, highlighting key transactions (in colour) and competitors within the industry (shaded grey). Noteworthy acquisitions by non-IT and digital services companies are outlined to the right of the market map. On the second page, we provide valuation ranges observed across M&A and publicly listed companies.

Medium

Small

Large

Size

IT services

Digital design

Pure services

services & licenses

2018

2021

Private

equity involvement

Clare Capital advised deal

Buyer

Target

Non-IT and digital services acquirers

M&A transaction key:

Year

2020

2021

2022

2023

2019

2022

2020

2021

2023

2019

2023

2020

2019

2022

2017

2021

2016

2018

Tech Insights #306

IT and digital services landscape

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Valuation datapoints

Below are the ranges of observed valuation multiples for IT and digital services companies across various acquirers. Higher multiples can be achieved for businesses that offer best in class metrics in terms of scale, EBITDA margins and growth trajectory. The outlined multiple ranges are informed using companies operating at or above industry averages.

10x

EV / LTM EBITDA

Acquisitions by digital advertising agencies (WPP, Dentsuetc)

Listed IT services companies

Australian firms looking to make NZ acquisitions

NZ IT and digital services M&A

M&A multiples

Clare Capital typically observes EBITDA multiples of 3.5x to 6x resulting from a competitive M&A process, where the shareholders of an NZ services firm are looking to sell their business and the transaction completes. Note, not all deals complete.

Clare Capital is aware that Australian firms have historically considered IT and digital services acquisitions within a price range of 3x to 5x EBITDA. An active cash buyer of IT services firms in the NZ market is highly unusual and should be engaged with.

The multiples for listed IT companies is linked to gross margin, EBITDA margin and revenue growth. The IT services businesses that trade at materially higher multiples, like Accenture, tend to have significantly higher growth prospects and/or a higher EBITDA margin.

Digital advertising agencies such as WPP, Publicis and Dentsu are highly acquisitive, regularly buying firms for 5x to 8x EBITDA. Clare Capital advised Heyday on their sale to WPP. Dentsu acquired Davanti in 2019. Achieving an exit to one of these companies is driven almost entirely by the deal appetite of the acquirer.

Publicly listed

multiples

‍

2 Oct