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Global Technology IPO Review Q2 2017
PwC | Global Technology IPO Review Q2 2017 1
Global tech IPO market has best quarter in two years based on volume: 28 IPOs – Including four Unicorns – In Q2 2017
Raman Chitkara Partner and Global Technology
Industry Leader
PricewaterhouseCoopers LLP
raman.chitkara@us.pwc.com
Welcome to the Q2 2017 issue of PwC’s Global Technology IPO Review. It was the best quarter for technology initial public offerings
(IPOs) in two years as the upbeat mood in the capital markets increased the appetite of investors for new public offerings. In the second
quarter, 28 technology companies completed IPOs for total proceeds of US$5.1 billion. This is the most technology IPOs since Q2 2015
when there were 36.
The improvement of economic fundamentals in the major developed economies, continued rallies in many equity markets and the backlog
of tech companies waiting to go public led to the increased volume.
While four Unicorns completed their IPOs, the big names continued to stay on the sidelines. The pace of Unicorn IPOs in the remainder of
calendar 2017 is likely to be influenced by the post-IPO performance of Unicorns that completed their IPOs in the first half.
Geographically, China continued to show robust growth in the technology IPO market with 16 companies raising a total of US$1.2 billion.
Chinese IPOs were favorably impacted by the efforts of the China Securities Regulatory Commission (CSRC) to speed up the approval
process. South Korea had a strong quarter with two IPOs, raising US$2.405 billion, including the largest IPO of Q2—Netmarble Games
Corp. with proceeds of US$2.356 billion.
The US had six IPOs with total proceeds of less than a billion, a 50% improvement over the preceding quarter, though significantly below
comparable historical levels achieved during strong IPO cycles. After a drought of five quarters, the UK had one technology IPO in Q2
2017, raising US$324 million. Rounding out Q2, Belgium, Canada and Israel had one IPO each.
In a rare turn of events, Internet Software & Services shared first place for volume with another subsector—Semiconductors. Each had
eight IPOs in Q2 2107. As for total proceeds, Internet Software & Services raised US$3.5 billion, and Semiconductors a more modest
US$832 million. Internet Software & Services benefitted from Netmarble’s proceeds. Semiconductors benefitted from IPOs by five
Chinese companies. It was the first time Semiconductors had eight or more IPOs since Q4 2010, when it had 12.
Looking ahead, we expect the second half of 2017 to continue the positive momentum of the first half. However, any significant decline or
increase in volatility in the capital markets has the potential to change investor sentiment in a hurry. Factors to watch include Chinese
regulatory developments; the tone, tenor and timing of US budget, debt ceiling and tax reform deliberations, and the continuity of overall
global economic progress without inflationary pressures. Lastly, gaps between private company valuations in the recent past and the
valuations investors are willing to give public companies will influence how many and which Unicorns test the capital markets in the
second half of 2017.
Sincerely,
*Issue size greater than US$40
million (includes overallotment)
and based on trade date;
See Methodology
PwC | Global Technology IPO Review Q2 2017 2
Table of contents
1. Q2 2017 Global tech IPO summary 3
Tech IPOs continue to ride high on positive investor sentiment 3
First-half 2017 average proceeds are higher than first-half 2015 and 2016 – Led by six Unicorn listings 4
The Asian tech IPO market takes center stage this quarter 5
Tech IPOs in Q2 2017 have wider geographic spread than the previous quarter 6
Global macroeconomic conditions improve as Asia gains strength; political challenges continue in the US and Europe 7
Semiconductor surprise: Subsector shares top spot for number of IPOs with Internet Software & Services 8
2. Country and stock exchange detail 9
China 9
South Korea 10
US 11
UK 12
Stock exchange distribution 13
Q2 2017 tech IPOs – Offering details 14
3. Key financials – Q2 2017 16 4. Q2 2017 Technology IPO listings: Valuation metrics 20 5. Top three subsectors in Q2 2017 22
Internet Software & Services 22
Semiconductors 29
Software 36
6. Methodology 43 7. For more information 44
PwC | Global Technology IPO Review Q2 2017 3
Q2 2017 Global tech IPO summary
Tech IPOs continue to ride high on positive investor sentiment
After a positive start to the year, Q2 2017 saw an increase in
technology IPOs. Deal volume increased significantly as 28
IPOs raised a total of US$5.1 billion in the second quarter;
the number of listings rose 56% quarter over quarter and
100% year over year. Proceeds declined 12% from the
previous quarter, but increased 246% year over year.
Chinese technology companies led with 16 IPOs raising
US$1.2 billion. South Korea had two IPOs that raised more
than US$2.4 billion. The US had six tech IPOs with total
proceeds of US$764 million.
Technology IPOs included four Unicorns, twice the number
in Q1. All were in the Internet Software & Services
subsector: Netmarble Games Corp of South Korea
(proceeds of US$2.4 billion), China Rapid Finance Ltd of
China (US$69 million), Okta Inc (US$187 million) and
Cloudera Inc (US$259 million) of the US. While Netmarble
and Okta were priced above pre-IPO valuations, the other
two were priced lower than pre-IPO valuations.
Figure 1: Global tech IPOs Q2 2016-Q2 2017
Source: S&P Capital IQ with analysis by PwC
$1,480
$5,382
$1,742
$5,813
$5,124
14
20
10
18
28
0
5
10
15
20
25
30
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
US
$ m
illi
on
s
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
"Looking ahead, we expect the second half of 2017 to continue the positive momentum
of the first half. However, investor sentiment could change in a hurry as a result of a
significant negative political development or increased volatility in the capital
markets.”
Raman Chitkara
Global Technology Industry Leader
PwC | Global Technology IPO Review Q2 2017 4
First-half 2017 average proceeds are higher than first-half 2015 and 2016 – Led by six Unicorn listings
Two Unicorns in particular, Netmarble (Q2) and Snap (Q1),
raised total proceeds disproportionately and acted as
positive outliers in the Q2 and Q1 2017 IPO environments.
As for average proceeds, H1 2017 was higher than the
previous two first-half periods at US$238 million. H1 2015
had average proceeds of US$207 million and H1 2016 had
US$94 million.
However, although the volume of tech IPOs rose
substantially in Q2, average proceeds declined from
US$323 in Q1 to US$183 in Q2 owing to smaller offerings
including three of the four Unicorns garnering less than
US$600 million in aggregate.
Figure 2: H1 2010-H1 2017 total proceeds, average proceeds and no. of IPOs
Source: S&P Capital IQ with analysis by PwC
$8,699 $8,710
$20,817
$4,588
$18,955
$12,225
$2,249
$10,937
$158 $164 $416 $170 $287 $207 $94 $238
55 53 50
27
66
59
24
46
0
15
30
45
60
75
H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017
$0
$5,000
$10,000
$15,000
$20,000
$25,000
US
$ m
illi
on
s
Total proceeds (US$mn) Avg proceeds (US$mn) No. of IPOs
No
. o
f IP
Os
PwC | Global Technology IPO Review Q2 2017 5
The Asian tech IPO market takes center stage this quarter
Asia reported 19 technology IPOs, the highest for any
region in Q2, with total proceeds of US$3.7 billion. China
led with 16 IPOs, followed by South Korea with two and
Israel with one. South Korea’s Netmarble was the biggest
IPO in the Asian market and the largest tech IPO of the
quarter, raising just under US$2.4 billion. China raised
US$1.2 billion, and Israel had proceeds of US$46 million.
Figure 3: Q2 2016-Q2 2017 – Asia – total proceeds and no. of IPOs
Source: S&P Capital IQ with analysis by PwC
$536
$1,921
$932
$1,322
$3,655
7
11
3
14
19
0
3
6
9
12
15
18
21
24
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Proceeds (US$mn) No. of IPOs
US
$ m
illi
on
s
No
.o
f IP
Os
PwC | Global Technology IPO Review Q2 2017 6
Tech IPOs in Q2 2017 have wider geographic spread than the previous quarter
Q2 2017 had a wider geographic distribution than the prior
two quarters with seven countries reporting technology
IPOs. China led with 16, followed by the US with six and
South Korea with two. The UK, Canada, Belgium and Israel
had one IPO each. China accounted for 57% of IPOs in Q2
while South Korea had 47% of IPO proceeds.
The UK reported one technology IPO after five quarters of
none. That’s progress, but lingering uncertainty about the
impact of Brexit continues to hinder UK and European
IPO activity.
Figure 4: Q2 2017 geographic distribution
Source: S&P Capital IQ with analysis by PwC
1,204
764
2,405
324 267 11446
16
6
2
1 1 1 10
3
6
9
12
15
18
China United States South Korea UnitedKingdom
Belgium Canada Israel
0
500
1,000
1,500
2,000
2,500
3,000
Total proceeds (US$mn) Number of IPOs
US
$m
illi
on
s
No
. o
f IP
s
PwC | Global Technology IPO Review Q2 2017 7
Global macroeconomic conditions improve as Asia gains strength; political challenges continue in the US and Europe
Europe had two IPOs, one each from Belgium and the UK,
together raising US$591 million in Q2 2017. Nonetheless, it
continued to lag behind Asia and North America with the
fallout from Brexit still putting a damper on enthusiasm.
Asia was at full throttle with 19 IPOs raising US$3.7 billion.
In North America, the US had six IPOs and Canada had
one. The valuation gap is still a concern for technology
companies in the US, with private placements valuing
them at much higher multiples compared to their likely
IPO valuations.
Figure 5: Regional analysis of IPO proceeds
Source: S&P Capital IQ with analysis by PwC
Figure 6: Regional analysis of number of IPOs
Source: S&P Capital IQ with analysis by PwC
$694
$250$536
$0
$627
$2,835
$1,921
$480
$331
$932
$4,490
$0
$1,322
$879 $591
$3,655
$0
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
North America Europe Asia RoW
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
US
$ m
illi
on
s
5
2
7
0
6
3
11
5
2 3
4
0
14
7
2
19
0
0
2
4
6
8
10
12
14
16
18
20
North America Europe Asia RoW
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
PwC | Global Technology IPO Review Q2 2017 8
Semiconductor surprise: Subsector shares top spot for number of IPOs with Internet Software & Services
The Semiconductor subsector matched Internet Software &
Services – the perennial tech IPO leader – with eight IPOs
in Q2 2107. Between them they had 16, more than half
the total.
The two subsectors also had the top proceeds. Internet
Software & Services raised US$3.5 billion and
Semiconductors had US$832 million. All four Unicorns in
the quarter were in the Internet Software & Services
subsector, impacting those total proceeds.
Internet Software & Services proceeds actually declined by
20% from the previous quarter although the number of
IPOs was up by 60%. Semiconductors witnessed a sharp
increase of 167% sequentially in the number of IPOs with
proceeds increasing by 142% from the previous quarter.
Of the eight Semiconductor IPOs, five were from China and
one each from South Korea, Belgium and the US.
Clearances issued by China regulatory authorities led
to the upsurge in Semiconductor IPOs this quarter.
The Software subsector was a distant third in Q2 with four
IPOs raising a total of US$250 million.
Figure 7: Subsector distribution showing total proceeds
Source: S&P Capital IQ with analysis by PwC
Figure 8: Subsector distribution showing number of IPOs
Source: S&P Capital IQ with analysis by PwC
$341 $660
$145 $149 $0
$0 $185
$4,395
$126 $345
$169
$59 $426 $293
$3,502
$250
$832
$202 $125 $214
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Internet Software& Services
Software Semiconductors Electronics Computers &Peripherals
CommunicationsEquipment
IT Consulting &Services
U.S
$ in m
illio
ns
Q2 2016 Q1 2017 Q2 2017
3
6
2 2
0 0
1
5
1
3
2
1
4
2
8
4
8
3
2
3
0
0
1
2
3
4
5
6
7
8
9
Internet Software& Services
Software Semiconductors Electronics Computers &Peripherals
CommunicationsEquipment
IT Consulting &Services
No.
of
IPO
S
Q2 2016 Q1 2017 Q2 2017
PwC | Global Technology IPO Review Q2 2017 9
Country and stock exchange detail
China
The Chinese tech IPO market continues its momentum with 16 IPOs in Q2 2017, or 57% of the total
With 16 IPOs, China had the largest piece of the tech IPO
market in Q2, with proceeds of US$1.2 billion. With this,
China topped its numbers of the last five quarters.
Significantly, only one of the 16 Chinese IPOs was listed on
the NYSE; the others were on the Chinese exchanges. The
biggest IPO in China this quarter was Olympic Circuit
Technology, which raised US$195 million. The increasing
participation of companies from mainland China was due
to the attraction of the relatively higher PE ratio for
companies on Chinese exchanges compared to the US and
European exchanges, and the acceleration of the IPO
approval process by the regulatory authorities (CSRC).
Figure 9: China tech IPOs
Source: S&P Capital IQ with analysis by PwC
$368
$611
$822
$1,196 $1,204
5
9
2
12
16
0
3
6
9
12
15
18
21
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
US
$ m
illi
on
s
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
“Though Chinese tech IPOs continued their escalating trend in Q2 2017, there have
been signs that China regulatory authorities (CSRC) may slowdown the IPO approval
process in the second half of 2017. In spite of this, number of Chinese tech IPOs is still
expected to reach a historical high in 2017, due to the increase of small to medium
sized deals.”
Jianbin Gao
Technology Industry Leader, PwC China
PwC | Global Technology IPO Review Q2 2017 10
South Korea
South Korea shines in the Q2 2017 tech IPO market with the high-profile listing of Netmarble
After three quarters of no IPOs, South Korea’s Netmarble
raised the highest tech IPO proceeds globally in Q2 2017.
Investors are now more comfortable with recent political
developments in South Korea. Investor confidence in the
economy has improved with exports becoming more robust
and stronger-than-expected GDP figures reported for Q1
2017. The Korean currency has grown stronger along with
stock prices reaching an all-time high as investors
continued to buy technology stocks on the back of their
promising outlooks, led by the South Korean tech giant
Samsung Electronics with its record breaking Q2 earnings.
The IPO market is also expected to receive a boost from the
new rules introduced at the beginning of the year. These
rules allow start-ups without net income to list; earlier laws
allowed only listings by companies with reported net
income. However, the IPO market in H2 2017 may slow
down somewhat as a result of certain companies
postponing their IPO plans and any further escalating
tension with North Korea could also curtail enthusiasm.
Figure 10: Q2 2017 South Korean tech IPOs
Source: S&P Capital IQ with analysis by PwC
$41 $0 $0 $0
$2,405
12
0
1
2
3
4
5
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
US
$ m
illi
on
s
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
“While favorable market factors led to an excellent second quarter for tech IPOs in
South Korea, the second half of 2017 may not prove as robust due to several major
companies postponing their listings.”
Steven Kang
Technology Industry Leader, PwC South Korea
PwC | Global Technology IPO Review Q2 2017 11
US
Two Unicorns supported the US tech IPO market, although with much lower average proceeds
The US reported six tech IPOs with proceeds of US$764
million, much lower than last quarter’s US$4.5 billion,
most of which was from the Snap IPO. The average
proceeds in Q2 were US$127 million.
The two US Unicorns—Cloudera and Okta—listed this
quarter. It is worth noting that Cloudera’s post-IPO
valuation was lower than its pre-IPO valuation: US$2.3
billion versus US$4.1 billion. Okta’s post-IPO valuation was
slightly higher than its pre-IPO valuation: US$1.5 billion
against US$1.2 billion.
*PwC Deals Insights: https://www.pwc.com/us/en/deals/publications/technology-deals-insights.html
Figure 11: US tech IPOs
Source: S&P Capital IQ with analysis by PwC
$694 $627$479
$4,490
$764
5
6
5
4
6
0
2
4
6
8
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$0
$1,000
$2,000
$3,000
$4,000
$5,000
US
$ m
illi
on
s
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
“Six tech IPOs raised $764 million representing a 50% increase in volume from Q1
despite several “down round” IPO valuations. The buy side took advantage of a
buoyant US Tech IPO market as it outperformed the broader US IPO market with
returns averaging 20%, almost double the 11% return* of the broader IPO market.”
Alan Jones
Technology Deals Partner, PwC US
PwC | Global Technology IPO Review Q2 2017 12
UK
The UK technology IPO market finally opens up after a persistent drought of five straight quarters
With one IPO in Q2, the UK broke its long drought. But
does one IPO suggest the UK market is regaining the
momentum it lost due to last year’s Brexit vote?
It remains to be seen. Much will depend on how well the
“divorce” negotiations with the EU proceed in the coming
months. The appetite for IPOs could return as the Brexit
election shock subsides and investors start to get a clearer
picture of the new landscape. Pent up demand could also
give the market a push.
Figure 12: UK tech IPOs
Source: S&P Capital IQ with analysis by PwC
$0 $0 $0 $0
$324
-
1
0
1
2
3
4
5
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$0
$50
$100
$150
$200
$250
$300
$350
US
$ m
illi
on
s
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
PwC | Global Technology IPO Review Q2 2017 13
Stock exchange distribution
Q2 2017 saw an increase in stock exchange participation.
China’s exchanges led with 15 listings total whereas the
Korean exchange dominated in proceeds with just one IPO.
The US exchanges had seven listings in Q2 2017, one more
than Q2 2016. However, numbers for China’s exchanges
increased by 11 IPO listings and proceeds by
US$832 million.
Shanghai Stock Exchange had 32% of the total listings,
whereas Korea Stock Exchange had 46% of the total
proceeds—the result of the biggest IPO of the
quarter, Netmarble.
Figure 13: Q2 2017 stock exchange distribution
Source: S&P Capital IQ with analysis by PwC
$440
$695
$461 $373$114 $267 $46
$2,356
$50 $324
6
9
3
4
1 1 1 1 1 1
0
2
4
6
8
10
ShenzhenStock
Exchange(SZSE)
ShanghaiStock
Exchange(SHSE)
NYSE NASDAQ Toronto SE EuronextParis
(ENXTPA)
Tel AvivStock
Exchange
KoreaStock
Exchange(KOSE)
KOSDAQ London SE
$0
$500
$1,000
$1,500
$2,000
$2,500
US
$ m
illio
ns
Total proceeds (US$mn) Number of IPOs
No
. o
f IP
Os
PwC | Global Technology IPO Review Q2 2017 14
Q2 2017 tech IPOs – Offering details
Table 1: Q2 2017 tech IPOs – By highest proceeds
Issue date Company Subsector
Proceeds
(US$ millions) Primary exchange
Domicile nation
Q2
05/02/2017 Netmarble Games Corporation Internet Software & Services
2355.75 Korea Stock Exchange (KOSE) South Korea
05/26/2017 Alfa Financial Software Holdings PLC Internet Software & Services
324.11 London Stock Exchange (LSE) United Kingdom
04/05/2017 X-FAB Silicon Foundries SE Semiconductors 266.58 Euronext Paris (ENXTPA) Belgium
04/27/2017 Cloudera Inc Internet Software & Services
258.75 New York Stock Exchange (NYSE) United States
04/17/2017 Olympic Circuit Technology Co Ltd Semiconductors 194.69 Shanghai Stock Exchange (SHSE) China
04/06/2017 Okta Inc Internet Software & Services
187.00 NASDAQ Global Select (NQGS) United States
04/12/2017 Yext Inc Internet Software & Services
132.83 New York Stock Exchange (NYSE) United States
05/05/2017 Real Matters Inc Internet Software & Services
114.38 Toronto Stock Exchange (TSX) Canada
04/11/2017 Raisecom Technology Co Ltd Communications Equipment
113.10 Shanghai Stock Exchange (SHSE) China
04/06/2017 Zhejiang Jiemei Electronic and Technology Co Ltd
Semiconductors 110.57 Shenzhen Stock Exchange (SZSE) China
05/12/2017 Shenzhen Genvict Technologies Co Ltd Electronics 93.28 Shenzhen Stock Exchange (SZSE) China
06/28/2017 Fujian Raynen Technology Co Ltd Software 76.26 Shanghai Stock Exchange (SHSE) China
05/24/2017 Appian Corporation Software 75.00 NASDAQ Global Market (NQGS) United States
04/25/2017 Jiangsu Transimage Technology Co Ltd Computers & Peripherals 69.89 Shenzhen Stock Exchange (SZSE) China
04/27/2017 China Rapid Finance Limited Internet Software & Services
69.00 New York Stock Exchange (NYSE) China
PwC | Global Technology IPO Review Q2 2017 15
Table 1: Q2 2017 tech IPOs – By highest proceeds
Issue date Company Subsector
Proceeds
(US$ millions) Primary exchange
Domicile nation
06/05/2017 SG Micro Corp Semiconductors 65.74 Shenzhen Stock Exchange (SZSE) China
06/14/2017 Suzhou Etron Technologies Co Ltd Electronics 62.91 Shanghai Stock Exchange (SHSE) China
06/29/2017 Tintri Inc Internet Software & Services
60.00 NASDAQ Global Market (NQGS) United States
05/12/2017 Fujian Apex Software Co Ltd Software 58.12 Shanghai Stock Exchange (SHSE) China
05/23/2017 Nanjing Huamai Technology Co Ltd Communications Equipment
55.58 Shanghai Stock Exchange (SHSE) China
05/24/2017 Shenzhen Sunnypol Optoelectronics Co Ltd Computers & Peripherals 55.51 Shenzhen Stock Exchange (SZSE) China
05/26/2017 EmbedWay Technologies (Shanghai) Corporation
Semiconductors 51.57 Shanghai Stock Exchange (SHSE) China
05/23/2017 SMART Global Holdings Inc Semiconductors 50.55 NASDAQ Global Select (NQGS) United States
05/29/2017 Philoptics Co Ltd Semiconductors 49.65 KOSDAQ (KOSDAQ) South Korea
05/29/2017 Telrad Networks Ltd Communications Equipment
45.66 Tel Aviv Stock Exchange Israel
06/26/2017 Shenzhen JingQuanHua Electronics Co Ltd Electronics 45.42 Shenzhen Stock Exchange (SZSE) China
04/23/2017 Will Semiconductor Co Ltd Shanghai Semiconductors 42.42 Shanghai Stock Exchange (SHSE) China
04/17/2017 Shanghai Koal Software Co Ltd Software 40.13 Shanghai Stock Exchange (SHSE) China
Source: S&P Capital IQ with analysis by PwC
PwC | Global Technology IPO Review Q2 2017 16
Key financials – Q2 2017 Three-fourths (21) of the technology companies that listed
IPOs in Q2 2017 reported net income for their last twelve
months (LTM); their LTM net income average was US$23
million. The other seven companies reported net losses that
lowered the overall LTM net income average to US$7
million. The average for the previous quarter was a net loss.
The tech IPO companies’ average LTM revenue for Q2 2017
was US$219 million, a 38% decline from the previous
quarter. The average LTM EBIDTA for Q2 2017 was US$8
million, a 38% change over the US$13 million LTM
EBIDTA in Q1 2017.
Six of the Q2 companies that reported LTM net losses were
from the Internet Software & Services subsector, of which
five listed on a US stock exchange. One of Q2’s four
Unicorns, Cloudera, from the Internet Software & Services
subsector, reported the highest LTM net loss at US$366
million.
As noted, the overall average LTM revenue for Q2 2017 was
US$219 million. The average LTM revenue for Asia,
including China, was US$191 million. Netmarble from the
Internet Software & Services subsector raised the Asian
average. It had the highest LTM revenue of any Q2 IPO
company at US$1,246 million.
The Internet Software & Services subsector, with eight
IPOs, reported the highest average LTM revenue at US$303
million and the highest EV/LTM revenue at 8.2x. However,
the subsector also reported the highest average LTM net
loss—US$63 million.
The eight IPOs from the Semiconductors subsector, which raised total proceeds of US$832 million, reported the
second highest average LTM revenue at US$270 million. At US$304 million, Will Semiconductor Co Ltd from the
Semiconductors subsector reported the second highest LTM revenue of the Q2 IPO companies.
Figure 14: Q2 2017 and Q1 2017 tech IPOs – Net income
Source: S&P Capital IQ with analysis by PwC
75%
25%
Q2 2017
Net income Net loss
78%
22%
Q1 2017
Net income Net loss
PwC | Global Technology IPO Review Q2 2017 17
Figure 15: Q2 2017—Average LTM revenue
Source: S&P Capital IQ with analysis by PwC Figure 16: Q2 2017 —Average LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
$100
$187
$111
$303
$270
$112
$219
23 3
8 8
4
28
0
5
10
15
20
25
30
$0
$50
$100
$150
$200
$250
$300
$350
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
LTM revenue No. of IPOs
US
$ m
illi
on
s
$17$24
$14
($36)
$41
$7 $8
2 3 3
8 8
4
28
0
5
10
15
20
25
30
($40)
($30)
($20)
($10)
$0
$10
$20
$30
$40
$50
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
LTM EBITDA No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 18
Figure 17: Q2 2017—Average LTM net income
Source: S&P Capital IQ with analysis by PwC
Figure 18: Q2 2017—Average total debt
Source: S&P Capital IQ with analysis by PwC
$13 $19
$13
($63)
$21
$5 $7
23 3
8 8
4
28
0
5
10
15
20
25
30
($70)
($60)
($50)
($40)
($30)
($20)
($10)
$0
$10
$20
$30
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
LTM Net income No. of IPOs
US
$ m
illi
on
s
$47
$32
$4
$20
$73
$11
$35
2 33
8 8
4
28
0
5
10
15
20
25
30
$0
$10
$20
$30
$40
$50
$60
$70
$80
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
LTM debt No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 19
Figure 19: Q2 2017 —Average enterprise value
Source: S&P Capital IQ with analysis by PwC
$695$682 $624
$2,487
$791$678
$1,239
2
3 3
8 8
4
28
0
5
10
15
20
25
30
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
Enterprise value No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 20
Q2 2017 Technology IPO listings: Valuation metrics Despite having 28 IPO listings in the quarter, the EV/LTM
metrics in Q2 2017 failed to match previous quarters.
In Q2, the technology sector’s average EV/LTM revenue
multiple was 5.7x, down from 8.0x in Q1 2017 and 8.5x in
Q2 2016.
The EV/LTM EBIDTA metric was 162.0x, lower than the
222.1x in Q1 2017. The lower valuation was driven
predominantly by companies in the Internet Software &
Services subsector. The rush for private funding at
extremely high valuations is over and the market has
discounted the valuation of loss, making start-ups perform
at a more reasonable level.
Figure 20: Q2 2017 EV/LTM revenue
Source: S&P Capital IQ with analysis by PwC
6.9x
3.6x
5.6x
8.2x
2.9x
6.0x5.7x
23 3
8
8 4
28
0
5
10
15
20
25
30
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
EV/LTM revenue No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 21
Figure 21: Q2 2017 EV/LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
39.8x
28.5x
46.1x
0.0x
19.3x
97.9x
162.0x
2
3
3
8 8
4
28
0
5
10
15
20
25
30
0.0x
20.0x
40.0x
60.0x
80.0x
100.0x
120.0x
140.0x
160.0x
180.0x
Computers &Peripherals
CommunicationsEquipment
Electronics Internet Software &Services
Semiconductors Software All sectors
No
. o
f IP
Os
EV/ LTM EBITDA No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 22
Top three subsectors in Q2 2017
Internet Software & Services
The eight listings in the Internet Software & Services subsector reported the highest average LTM revenue at US$303 million. The average LTM revenue increased by 49% quarter on quarter and by 214% year on year. The subsector had eight deals in Q2 2017, up from five deals in Q1 2017 and three deals in Q2 2016. The subsector’s average LTM EBIDTA (US$36 million) and average LTM net loss (US$63 million) were pulled down by significant LTM net losses reported by Cloudera and Tintri. The subsector’s EV/LTM revenue decreased significantly to 8.2x in Q2 from 27.9x in Q1 2017.
Figure 22: Internet Software & Services– LTM revenue
Source: S&P Capital IQ with analysis by PwC
$96 $131
$472
$204
$303
33
2
5
8
0
2
4
6
8
10
12
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM revenue No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 23
Figure 23: Internet Software & Services – LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
($24)
$1
($54)
($92)
($36)
3 3
2
5
8
0
2
4
6
8
10
12
($100)
($80)
($60)
($40)
($20)
$0
$20
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM EBITDA No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 24
Figure 24: Internet Software & Services – LTM net income
Source: S&P Capital IQ with analysis by PwC
($28)($14)
($479)
($92)
($63)
3 3
2
5
8
0
2
4
6
8
10
12
($600)
($500)
($400)
($300)
($200)
($100)
$0
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM net income No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 25
Figure 25: Internet Software & Services – EV
Source: S&P Capital IQ with analysis by PwC
$1,526
$686
$4,587
$5,674
$2,487
3
3
2
5
8
0
2
4
6
8
10
12
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Enterprise value No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 26
Figure 26: Internet Software & Services – Total debt
Source: S&P Capital IQ with analysis by PwC
$8
$18
$28
$11
$20
3
3
2
5
8
0
2
4
6
8
10
12
$0
$5
$10
$15
$20
$25
$30
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Total debt No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 27
Figure 27: Internet Software & Services – EV/LTM revenue
Source: S&P Capital IQ with analysis by PwC
15.8x
5.2x
9.7x
27.9x
8.2x
3
3
2
5
8
0
2
4
6
8
10
12
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
EV/LTM revenue No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 28
Figure 28: Internet Software & Services – EV/LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
1083.7x
3
3
2
5
8
0
2
4
6
8
10
12
0.0x
200.0x
400.0x
600.0x
800.0x
1000.0x
1200.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. of IP
Os
EV/LTM EBITDA No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 29
Semiconductors
The Semiconductors subsector has maintained its position
among the top three subsectors continuously for three
quarters as measured by number of deals. The average
proceeds increased by 49% quarter on quarter.
The subsector reported the second highest average LTM
revenue for Q2 2017, US$270 million, a 49% increase
quarter on quarter. Still, the subsector had the lowest
EV/LTM revenue of 2.9x for Q2 2017. The EV/LTM
EBITDA for Q2 2017 was 19.3x.
The number of IPOs increased year over year by 300%
whereas the quarter-over-quarter increase was 167%.
The total debt for the quarter increased by 284% over
Q1 2017.
Figure 29: Semiconductors – LTM revenue
Source: S&P Capital IQ with analysis by PwC
$276
$147
$183 $181
$270
2 2 2
3
8
0
2
4
6
8
10
12
$0
$50
$100
$150
$200
$250
$300
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM revenue No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 30
Figure 30: Semiconductors – LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
$57
$15
$4
$49
$41
22
2
3
8
0
2
4
6
8
10
12
$0
$10
$20
$30
$40
$50
$60
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM EBITDA No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 31
Figure 31: Semiconductors – LTM net income
Source: S&P Capital IQ with analysis by PwC
$51
$13
-$8
$36
$21
2
2
2
3
8
-4
-2
0
2
4
6
8
10
12
($20)
($10)
$0
$10
$20
$30
$40
$50
$60
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM net income No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 32
Figure 32: Semiconductors – EVh
Source: S&P Capital IQ with analysis by PwC
$1,279
$1,689
$342
$1,614
$791
2 2 2
3
8
0
2
4
6
8
10
12
14
16
18
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Enterprise value No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 33
Figure 33: Semiconductors – Total debt
Source: S&P Capital IQ with analysis by PwC
$3 $10
$35
$19
$73
2 2 2
3
8
0
2
4
6
8
10
12
14
16
$0
$10
$20
$30
$40
$50
$60
$70
$80
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Total debt No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 34
Figure 34: Semiconductors – EV/LTM revenue
Source: S&P Capital IQ with analysis by PwC
4.6x
11.5x
1.9x
8.9x
2.9x2
2 2
3
8
0
2
4
6
8
10
12
14
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
EV/LTM revenue No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 35
Figure 35: Semiconductors – EV/LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
22.6x
113.4x
77.7x
33.1x
19.3x
2 2 2
3
8
0
2
4
6
8
10
12
0.0x
20.0x
40.0x
60.0x
80.0x
100.0x
120.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
EV/LTM EBITDA No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 36
Software
After just one IPO in Q1, the Software subsector made a
comeback in Q2 2017 with four IPOs, enough to place it
back among the top three subsectors.
The quarter-over-quarter numbers increased 300%,
although the year-over-year number was a 33% decline.
The average LTM revenue, which was US$112 million in
Q2, increased by 31% quarter over quarter. The average
LTM EBIDTA of US$7 million and the average LTM net
income of US$5 million were declines of 133% and
121%, respectively.
The highest deal value for the subsector was US$76 million
by China-based Fujian Raynen Technology. The subsector
had three of the four technology IPO listings on the
Shanghai Stock Exchange (SHSE) in Q2.
The subsector had the highest EV/LTM EBITDA of 97.9x
for the quarter. However, EV/LTM revenue decreased to
6.0x from 11.7x in Q1 2017.
Figure 36: Software – LTM revenue
Source: S&P Capital IQ with analysis by PwC
$199
$253
$100$86
$112
6
10
4
1
4
0
3
6
9
12
15
$0
$50
$100
$150
$200
$250
$300
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM revenue No. of IPOsU
S$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 37
Figure 37: Software – LTM EBITDA
Source: S&P Capital IQ with analysis by PwC
$21
$4
($7)
($21)
$7
6
10
4
1
4
0
3
6
9
12
15
($25)
($20)
($15)
($10)
($5)
$0
$5
$10
$15
$20
$25
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM EBITDA No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 38
Figure 38: Software – LTM net income
Source: S&P Capital IQ with analysis by PwC
($11)
($19)
($18)
($24)
$5
6
10
4
1
4
0
3
6
9
12
15
($30)
($25)
($20)
($15)
($10)
($5)
$0
$5
$10
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
LTM net income No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 39
Figure 39: Software – Enterprise value
Source: S&P Capital IQ with analysis by PwC
$1,627
$2,468
$756$1,004
$6786
10
4
1
4
0
3
6
9
12
15
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Enterprise value No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 40
Figure 40: Software – Total debt
Source: S&P Capital IQ with analysis by PwC
$178
$65
$30
$0
$11
6
10
4
1
4
0
3
6
9
12
15
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
Total debt No. of IPOs
US
$ m
illi
on
s
PwC | Global Technology IPO Review Q2 2017 41
Figure 41: Software – EV/LTM revenue
Source: S&P Capital IQ with analysis by PwC
8.2x
9.8x
7.5x
11.7x
6.0x6
10
4
1
4
0
3
6
9
12
15
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
EV/LTM revenue No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 42
Figure 42: Software – EV/LTM EBITDA
ssSource: S&P Capital IQ with analysis by PwC
77.6x
587.6x
97.9x
6
10
4
1
4
0
3
6
9
12
15
0.0x
100.0x
200.0x
300.0x
400.0x
500.0x
600.0x
700.0x
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No
. o
f IP
Os
EV/LTM EBITDA No. of IPOs
In m
ult
iple
s
PwC | Global Technology IPO Review Q2 2017 43
Methodology The Global Technology IPO Review for Q2 2017 is based on PwC’s analysis of transaction data extracted from S&P Capital IQ. The analysis considers IPOs across all countries
worldwide during the period 1 April 2017 to 30 June 2017 (Q2), financial data was also obtained from S&P Capital IQ.
The definition of the Technology sector is based on the S&P Capital IQ database industry classifications and includes the following subsectors:
Internet Software & Services
IT Consulting & Services
Professional Services (e.g., Application Software, Software Solutions)
Semiconductors Software
Computers & Peripherals
– Computers, Computers Peripheral Equipment – Computers, Storage Device Manufacturing
Electronic Computer Manufacturing (“Electronics”)
Communications Equipment
Only IPOs with issue size greater than US$40 million were included in the analysis.
All monetary amounts are in US dollars unless otherwise indicated.
LTM – Last 12 months
Most figures are rounded to one decimal, except were comparisons require more.
PwC | Global Technology IPO Review Q2 2017 44
For more information
If you would like to discuss how these findings might impact your business or your future strategy, please reach out to any of our technology industry leaders listed below.
Raman Chitkara
Global Technology Leader
Phone: 1 408 817 3746
Email: raman.chitkara@us.pwc.com
Rod Dring – Australia
Phone: 61 2 8266 7865
Email: rod.dring@au.pwc.com
Estela Vieira – Brazil
Phone: 55 1 3674 3802
Email: estela.vieira@br.pwc.com
Christopher Dulny – Canada
Phone: 1 416 869 2355
Email: christopher.dulny@ca.pwc.com
Jianbin Gao – China
Phone: 86 21 2323 3362
Email: gao.jianbin@cn.pwc.com
Pierre Marty – France
Phone: 33 1 5657 58 15
Email: pierre.marty@fr.pwc.com
Werner Ballhaus – Germany
Phone: 49 211 981 5848
Email: werner.ballhaus@de.pwc.com
Sandeep Ladda – India
Phone: 91 22 6689 1444
Email: sandeep.ladda@in.pwc.com
Masahiro Ozaki – Japan
Phone: 81 3 5326 9090
Email: masahiro.ozaki@jp.pwc.com
Steven Kang – Korea
Phone: 82 2 709 0201
Email: steven.c.kang@kr.pwc.com
Ilja Linnemeijer – The Netherlands
Phone: 31 88 792 4956
Email: ilja.linnemeijer@nl.pwc.com
Yury Pukha – Russia
Phone: 7 495 223 5177
Email: yury.pukha@ru.pwc.com
Mark Jansen – Singapore
Phone: 65 6236 7388
Email: mark.jansen@sg.pwc.com
Jass Sarai – UK
Phone: 44 0 1895 52 2206
Email: jass.sarai@uk.pwc.com
Mark McCaffrey – US
Phone: 1 408 817 4199
Email: mark.mccaffrey@pwc.com
Alan Jones – US (Deals partner)
Phone: 1 415 498 7398
Email: alan.jones@us.pwc.com
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