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The Covid-19 pandemic has driven significant demand for cybersecurity products and services as businesses have grappled with a newly dispersed workforce, massive increases in ecommerce, and other digital communications replacing face-to-face engagement. As we progress through the pandemic, we expect these and other newly adopted behaviours to drive long-term strength in the sector.
Results International has remained active in the space during Q3, advising QinetiQ on the disposal of Boldon James to HelpSystems; a transaction completed within seven weeks during lockdown.
Valuations in public markets remain strong
Our basket of public companies are trading at their highest revenue multiple since the end of 2015 (6.4x at the median).
This is partially driven by the cohort of 2019 IPOs (Cloudflare, Ping Identity and Crowdstrike) all of which are trading at more than double their initial listing price
Private company valuations are also high, for example, Snyk, which raised $200m in the quarter, is now valued at $2.6B+.
IPO activity around the space has recommenced
Despite a low number of transactions in Q3, overall private market appetite remains very healthy
Notes: Based on share prices as at 30th September 2020; indices weighted by market capitalisation. Sources: Capital IQ and Results International analysis.
(1) This company IPO’d within the last 12 months, the share price movement represents the change between the stock’s IPO date (see here) and 30th September 2020. Note: Based on share prices as at 30th September 2020. Sources: Capital IQ and Results International analysis.
(1) Current increase from IPO price; market data as of 30th September 2020. Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDA. Sources: Company filings, Capital IQ, FactSet and Results International analysis.
Notes: EV = Enterprise Value; financials calendarised to December year end; median values reported. See Selected Publicly Traded Companies (here) for details of companies included in each category. Global Security represents the median of all stocks in Diversified, Endpoint, Identity & Access Management, Network, Messaging, Vulnerability Analytics and Services, with no weighting applied. Sources: Capital IQ, analyst reports and Results International analysis.
1) Number of companies with applicable multiples in Q3 2020 index. Notes: EV = Enterprise Value; financials calendarised to December year end, which can impact the multiples at the start of each year as the base is shifted forward; weekly tracking of valuation multiples commenced in July 2015, October 2014 – June 2015 tracked on a quarterly basis, therefore a linear progression has been assumed between quarters up to July 2015. The 75th percentile refers to the middle value between the median and the highest value of the relevant data set. Sources: Capital IQ and Results International analysis
Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results International analysis.
In certain cases EV/Revenue and EV/EBITDA are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest). Based on 451 Research estimates. Sources: Company filings, press releases, 451 Research, news articles, investor presentations and Results International analysis.
Sources: Pitchbook, Crunchbase, press releases and Results International analysis.
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 25x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. *Sumo Logic financials based on LTM revenue; forecasted broker reports unavailable at time of publishing. Source: Capital IQ