HOSTING AND MANAGED SERVICES | Q1 2019 · HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019...
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HOSTING AND MANAGED SERVICES | Q1 2019
Transcript of HOSTING AND MANAGED SERVICES | Q1 2019 · HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019...
HOSTING AND MANAGED SERVICES | Q1 2019
T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 1
HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
Office: +1 (415) 217-3418
Office: +44 20 7518 8909
K E Y C O N T A C T S
Managing [email protected]
Office: +1 (617) 654-2117
M A R K E T C O M M E N T A R Y
• The strong wave of consolidation in the second half of 2018 has continued into Q1 2019;
• The rising adoption of cloud-based services is one of the key factors underpinning market growth in the near-term, with various companies adopting cloud computing solutions in order to reduce costs, and achieve flexibility and scalability;
• The hyperscale data center market is set to grow from $20 billion in 2018 to over $65 billion by 2025, driven by rising demand for big data and cloud computing solutions1;
• Global IT Services and Webhosting peers outperformed global equity markets on average, whilst performance of other sub-sectors was more mixed;
• Significant M&A activity in the Managed Services sub-sector with a number of companies due to come to market.
H A R R I S W I L L I A M S ( “ H W ” ) A S A F I R M T E C H N O L O G Y , M E D I A & T E L E C O M ( “ T M T ” ) G R O U P
• 330+ professionals across eight offices globally
• 170+ closed transactions in the last 24 months
• 21st record year in 2018
• 96% of revenue is from sell-side M&A advisory
• 10 industry groups
• 40+ professionals across Boston, San Francisco, and London
• 23 closed transactions in the last 12 months
• Education Technology• Fintech• Healthcare IT• Hosting and Managed Services• Human Capital Management• Internet & Digital Media
• Manufacturing Technology• Membership Management• Public Sector Software• Supply Chain, Transportation & Logistics• Infrastructure and Security Software
Managing [email protected]
Office: +44 20 7518 8901
Managing [email protected]
Office: +1 (617) 654-2102
Managing [email protected]
Office: +1 (617) 654-2133
Managing [email protected]
Office: +1 (415) 217-3411
Office: +1 (617) 654-2122
Office: +1 (415) 217-3420
Office: +1 (617) 654-2115
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
S E L E C T E D R E C E N T H W H O S T I N G A N D M A N A G E D S E R V I C E S T R A N S A C T I O N S
Selected Market Participants Selected Market Participants Selected Global Market Participants
Refers to a service in which a vendor offers the housing of business-to-business or business-to-
consumer e-commerce websites via vendor-owned shared or dedicated servers and applications for
enterprises at the provider-controlled facilities
Refers to the use of external service providers to effectively deliver IT-enabled business
process, application service and infrastructure solutions for business outcomes
Refers to the delivery of network, application, system and e-management services across a
network to multiple enterprises, using a “pay as you go” pricing model
Provider of managed hosting and cloud solutions
specialised in managed cloud hosting, desktop-as-a-
service, security andconnectivity
has been acquired by
Provider of SME focused hosting and cloud solutions, including domains website hosting, email for smaller customers and managed
servers and applications for larger customers
has been acquired by
Provider of managed technology services with
national scale in the US and the capability to design,
deploy and support technology solutions from
cable to cloud
has been acquired by
Provider of web domains, shared web hosting and
value-added services with leading positions in Sweden and the Czech Republic, and presence in Norway, Serbia, Slovakia, Spain, Netherlands,
Germany and the UK
&
have been acquired by
Provider of services allowing SMEs to move their IT
infrastructure and operations into the cloud, as well as
providing end user support and consulting as part of a
full-service IT offering
has acquired
Provider of mass hosting services for SMEs, including web hosting, domains, e-commerce and application solutions with
leading positions in Belgium and Denmark and a growing
presence in the Netherlands, Sweden and Switzerland
has invested in
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019M
AN
AG
ED
S
ER
VIC
ES February 1 , 2019
Enterprise Value: NA
Emerging technologies such as IoT and Blockchain have the potential to create significant opportunities for Managed
Services Providers as organisations need deep skill sets and understanding to use these technologies.
In the NewsMagic Quadrant for Public Cloud Infrastructure
Professional and Managed Services, Worldwide
GLO
BA
L IT
S
ER
VIC
ES March 11, 2019
Enterprise Value: $468m
Increasing prevalence of technologies, platforms and devices that can cost-effectively extend AI and ML capabilities to the edge of the network. Working in
concert with cloud services, these devices are capable of processing significantly larger volumes of data locally.
In the NewsCapgemini launches ‘Perform AI’
LOC
AL
IT
SE
RV
ICE
S January 25 , 2019
Enterprise Value: NA
In the context of the many recent, publicised security breaches, companies are increasingly outsourcing IT
security as maintaining a state-of-the-art IT and security team is unrealistic for many organisations.
In the NewsBechtle and IBM expand their cooperation in Managed
Services
WE
B H
OS
TIN
G
January 11, 2019
Enterprise Value: NA
In the NewsWix Unveils Wix Turbo Features for Site Speed
Improvements
DA
TA
CE
NT
ER
S
/ C
OLO
CA
TIO
N
January 24, 2019
Enterprise Value: NA
The number of hyperscale data centers, mostly used by major cloud companies and social networks, has increased by 11% in 2018. The US continues to lead the world in the
number of hyperscale facilities, accounting for c. 40% of the total, but its dominance is shrinking.
In the NewsHow hyperscale data centers are reshaping all of IT
Enterprise Value /
LTM Rev. LTM EBITDA 2019P EBITDA
1.9x 8.1x 7.5x
Enterprise Value /
LTM Rev. LTM EBITDA 2019P EBITDA
2.3x 11.5x 9.4x
Enterprise Value /
LTM Rev. LTM EBITDA 2019P EBITDA
1.2x 11.9x 8.9x
Enterprise Value /
LTM Rev. LTM EBITDA 2019P EBITDA
5.7x 20.3x 14.1x
Enterprise Value /
LTM Rev. LTM EBITDA 2019P EBITDA
9.2x 17.6x 13.3x
*Group weighted average stock price performance over the past year based on market capitalisations
Market growth primarily driven by the increasing adoption of applications, which have become more
popular due to the increasing complexity of business needs, as well as the shift to premium hosting.
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Service business
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
• Netherlands-based provider of web hosting, domain names and servers services
• iXL Hosting has more than 8,000 customers
• The acquisition will enable Combell to strengthen its position in the Dutch market and leverage iXL’s services and expertise across the combined customer baseEnterprise Value:
HW Proprietary dataRevenue:HW Proprietary data
• France-based specialist in consulting, training and integration of OpenStack, Ansible and Kubernetes technologies
• Objectif Libre has experienced constant growth since 2009
• The acquisition further strengthens LINKBYNET’s organic growth and is part of the development strategy of its consulting division, addressing the Cloud and DevOps transformation markets
Enterprise Value: NA Revenue: c. €2m
• Denmark-based provider of information technology solutions to companies in production, construction, retail, trade and transport, government, professional services and utility sectors
• The business employs c. 570 people across the Nordics
• The acquisition strengthens DXC’s position in the Microsoft Dynamics 365 systems integration segment
Enterprise Value: NA Revenue: NA
• Denmark-based provider of domain registration and management solutions
• Ascio manages a total of more than two million domain names and is responsible for the provision of Domain Portfolio Management services indirectly through more than 600 domain partners
• The acquisition will enable Tucows to add more than two million domains under management and approximately 500 active resellers, while enabling Ascio to focus on its resellers
Enterprise Value: $29m EV / EBITDA: 7.4x
• Sweden-based provider of IT operations to SMEs in the private and public sectors, as well as offering advanced consulting services within system development, system management and IT infrastructure
• Solid Park AB has workforce of 200 employees
• The transaction will strengthen Candidator DGC’s position in Sweden and further increase Solid Park’s service offering
Enterprise Value: NA Revenue: c. €30m
Webhosting
Local IT Services
Local IT Services
Webhosting
Local IT Services
Service business
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
–
VALUATION2
As of March 31, 2019 ($ in millions)
M A N A G E D S E R V I C E S
G L O B A L I T S E R V I C E S
L O C A L I T S E R V I C E S
Vmware $76,137 $74,138 95.8% 48.8% 245.1% 12.0% 9.7% 38.2% 7.7x 7.0x 20.1x 18.3x
Internap $775 $126 32.4% (54.9%) (54.6%) 1.1% 4.8% 37.9% 2.4x 2.3x 6.4x 6.0x
iomart $540 $493 72.8% (11.2%) 17.2% NA 8.3% 40.5% 3.7x 3.5x 9.3x 8.5x
Arq Group $214 $167 48.5% (45.6%) (8.8%) (3.1%) 6.9% 16.4% 1.4x 1.3x 8.5x 7.7x
Proact IT $196 $216 90.3% 33.4% 48.8% (2.5%) 2.0% 7.3% 0.5x 0.5x 7.2x 7.0x
Redcentric $178 $148 69.3% (9.2%) (64.0%) 12.9% (14.4%) 22.0% 1.2x 1.4x 5.4x 7.2x
Managed Services Median $377 $192 7 1.0% (10 .2%) 4.2% 1.1% 5.9% 29.9% 1.9x 1.8x 7 .9x 7 .5x
Accenture $110,215 $112,271 99.2% 14.7% 52.5% 4.3% 7.1% 16.7% 2.5x 2.3x 15.0x 13.8x
Tata Consultancy Services $103,232 $108,355 92.6% 32.2% 52.0% 11.3% 10.9% 27.2% 4.5x 4.1x 16.6x 14.9x
Infosys $42,826 $46,814 99.0% 23.2% 16.5% 11.1% 10.5% 25.7% 3.3x 3.0x 13.0x 11.7x
Capgemini $22,175 $20,306 86.8% (2.5%) 29.0% 1.9% 5.4% 14.4% 1.4x 1.3x 9.7x 9.0x
HCL Technologies $21,129 $21,301 94.3% 5.7% 27.7% 13.3% 10.7% 23.4% 2.2x 2.0x 9.5x 8.5x
CGI $20,654 $18,866 99.6% 19.3% 43.3% 0.7% 3.4% 18.5% 2.3x 2.2x 12.3x 11.8x
Wipro $18,502 $22,189 87.9% 13.6% 15.3% 6.5% 7.1% 20.5% 2.1x 1.9x 10.1x 9.4x
Atos $15,825 $10,321 64.7% (29.3%) 18.4% 2.0% 3.5% 13.9% 1.1x 1.0x 7.7x 7.2x
Indra Sistemas $2,818 $1,963 77.9% (19.6%) (4.6%) (2.8%) 3.1% 10.4% 0.8x 0.8x 7.6x 7.1x
Global IT Services Median $21,129 $21,301 92.6% 13.6% 27 .7% 4.3% 7 .1% 18.5% 2.2x 2.0x 10 .1x 9.4x
Bechtle $4,056 $3,893 87.6% 14.5% 79.2% 10.0% 7.9% 5.7% 0.7x 0.7x 12.6x 11.7x
Capita $3,179 $2,696 70.1% 31.1% (82.3%) (5.6%) 0.7% 11.4% 0.6x 0.6x 5.7x 4.9x
Tieto $2,420 $2,263 82.8% (8.3%) 16.9% (1.8%) 2.9% 13.8% 1.3x 1.3x 9.5x 8.9x
Netcompany $1,948 $1,792 86.5% NA NA 17.3% 22.3% 28.2% 5.1x 4.2x 18.1x 14.5x
EVRY $1,838 $1,369 91.2% (4.3%) 71.6% (2.9%) 2.7% 13.7% 1.2x 1.2x 8.7x 8.3x
Atea $1,601 $1,586 87.2% (10.3%) 52.2% 1.0% 5.0% 3.7% 0.4x 0.4x 9.9x 8.9x
NNIT $718 $645 78.0% (9.6%) (0.7%) 0.0% 4.7% 18.4% 1.5x 1.4x 8.2x 7.9x
Loca l IT Services Median $1,948 $1,792 86.5% (6.3%) 34.6% 0.0% 4.7% 13.7% 1.2x 1.2x 9.5x 8.9x
IT & Tech-Enabled Services Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth 2019E EBITDA Enterprise Value /
Sub-Vertical Company Value Capitalization Week High Performance Performance 2019E 2020P Margin '19E Rev. '20P Rev. '19E EBITDA '20P EBITDA
T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 6
HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
–
VALUATION2
As of March 31, 2019 ($ in millions)
W E B H O S T I N G
D A T A C E N T E R S / C O L O C A T I O N
VeriSign $22,786 $21,735 97.7% 53.1% 105.1% 0.9% 4.5% 72.5% 18.6x 17.8x 25.6x 24.4x
Shopify $19,864 $22,809 98.6% 65.8% 632.4% 38.8% 31.9% 3.6% 13.3x 10.1x NM NM
GoDaddy $15,147 $13,513 88.5% 22.4% 132.6% 12.2% 11.3% 26.8% 5.1x 4.6x 18.9x 16.0x
United Internet $9,823 $7,488 53.5% (41.9%) (27.3%) 1.1% 4.4% 24.1% 1.6x 1.5x 6.7x 6.2x
Wix.com $5,436 $6,025 96.0% 51.9% 496.1% 26.0% 22.8% 19.7% 7.1x 5.8x 36.3x 27.3x
Endurance $2,776 $1,044 66.2% (2.0%) (31.1%) (0.6%) 1.7% 28.8% 2.4x 2.4x 8.5x 8.3x
Tucows $928 $864 98.1% 45.0% 261.6% 6.9% 9.2% 15.1% 2.5x 2.3x 16.6x 12.2x
Web Hosting Median $9,823 $7 ,488 96.0% 45.0% 132.6% 6.9% 9.2% 24.1% 5.1x 4.6x 17 .8x 14.1x
KDDI $65,037 $54,559 75.3% (15.3%) (19.4%) 1.3% 1.1% 30.8% 1.4x 1.4x 4.6x 4.5x
CenturyLink $48,349 $12,947 49.5% (27.0%) (62.5%) (3.2%) (2.3%) 39.7% 2.1x 2.2x 5.4x 5.4x
Equinix $47,053 $37,998 98.3% 8.4% 37.0% 9.2% 9.1% 47.5% 8.5x 7.8x 17.8x 16.1x
Digital Realty Trust $38,039 $25,990 95.1% 12.9% 34.5% 9.0% 6.9% 58.5% 11.6x 10.8x 19.8x 18.3x
Zayo $12,700 $6,675 71.7% (16.8%) 17.2% (0.2%) 2.4% 50.5% 4.9x 4.8x 9.7x 9.3x
CyrusOne $7,982 $5,681 76.0% 2.4% 14.9% 18.9% 15.0% 52.7% 8.2x 7.1x 15.5x 13.3x
Interxion Holding $6,070 $4,778 96.8% 7.4% 93.0% 8.7% 14.8% 50.8% 8.4x 7.3x 16.6x 14.4x
CoreSite Realty $4,981 $3,926 90.8% 6.7% 52.9% 7.7% 10.9% 54.3% 8.5x 7.7x 15.7x 14.0x
QTS Realty Trust $4,141 $2,492 96.4% 24.2% (5.0%) 3.9% 11.7% 53.0% 8.8x 7.9x 16.7x 14.7x
Switch $1,561 $2,547 63.5% (35.2%) NA 8.5% 11.5% 49.9% 3.5x 3.2x 7.1x 6.3x
Internap $775 $126 32.4% (54.9%) (54.6%) 1.1% 4.8% 37.9% 2.4x 2.3x 6.4x 6.0x
Data Centers / Colocation Median $7 ,982 $5,681 76.0% 2.4% 16.1% 7 .7% 9.1% 50.5% 8.2x 7 .1x 15.5x 13.3x
IT & Tech-Enabled Services Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth 2019E EBITDA Enterprise Value /
Sub-Vertical Company Value Capitalization Week High Performance Performance 2019E 2020P Margin '19E Rev. '20P Rev. '19E EBITDA '20P EBITDA
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
–SELECT RECENT M&A TRANSACTIONS*3,4
*Conversion to USD based on FX rate as of announcement date
01/04/2019 TIG BGF UK-based managed service provider which supports mid-market companies transitioning to the cloud NA
01/04/2019 netConsult TIG UK-based specialist provider of transformational IT services and cyber security for the alternative investment sector NA
01/07/2019 IT-mästaren Telecomputing Sweden-based provider of IT services for small and large companies in the Nordics NA
01/08/2019 Vintor Oy Advania AB Finland-based company specialised in digital customer engagement solutions NA
01/09/2019 Orbium AG Accenture Switzerland-based company offering technology consulting services NA
01/10/2019 Nucleus Combell Group Belgium-based company offering domain names, shared hosting, dedicated servers and cloud servers services $11.3
01/11/2019 Zenika Isatis Capital & FounderFrance-based provider of specialised software architecture and Agile methods with expertise in consulting, realisation
and trainingNA
01/11/2019 iXL Hosting Combell Group Netherlands-based provider of web hosting, domain names and servers services $7.5
01/14/2019 Ismotec Candidator DGCSweden-based customer-oriented consulting company with extensive experience in M3, integration, IBMi and
Microsoft ServerNA
01/24/2019 Teraco Data Environments Berkshire PartnersSouth Africa-based company that develops vendor neutral colocation data centers and provides related services in
secure and resilient data centersNA
01/25/2019 EG A/S (Service business) DXC TechnologyDenmark-based provider of information technology solutions to companies in production, construction, retail, trade and
transport, government, professional services and utility sectorsNA
01/29/2019 NTT Data (2 data centers) GI Partners Two US-based data centers NA
01/30/2019Domain registry business
(.SE Direkt)Loopia Sweden-based domain registry business NA
01/31/2019 Solid Park Candidator DGC Sweden-based provider of IT operations to small and medium-sized companies in the private and public sectors NA
01/31/2019 Nine Zero DC PlatformConsortium led by Brookfield
Infrastructure PartnersSingapore-based colocation and wholesale data center provider $272.0
02/01/2019 SecureData Europe Orange UK-based company that provides cloud-based and managed cyber-security services NA
02/07/2019 Certus IT SysGroup UK-based managed IT services and cloud hosting provider $11.7
02/13/2019 Hardis Group CM-CIC Investissement France-based consulting firm, digital services provider and software publisher NA
02/14/2019 valantic DPE Deutsche Private Equity Germany-based consultancy and provider of software solutions for digital transformation NA
02/14/2019 clckwrk Limited RDX (Madison Dearborn)UK-based company specialised in designing, migrating and managing Oracle technologies and enterprise application
environments in the AWS public cloudNA
02/21/2019 Objectif Libre Linkbynet SAS France-based specialist in consulting, training and integration of OpenStack, Ansible and Kubernetes technologies NA
02/21/2019 HR Team B & CapitalFrance-based provider of IT services specialised in web, mobile and application development, infrastructure and
consultingNA
03/11/2019 Acando AB CGI Group Sweden-based IT consulting company $467.9
03/15/2019 Axarnet Comunicaciones SL Total Webhosting Solutions Spain-based provider of web and cloud hosting services NA
03/19/2019 Ascio Technologies Tucows Denmark-based provider of domain registration and management solutions $29.4
03/29/2019 Groupe Infodis LBO France France-based company operating on the high-tech market through two subsidiaries Infodis IT and Visualdis NA
03/29/2019 Chilit Dustin Finland-based IT services company offering IT outsourcing and software license management services NA
Announced Date Target / Issuer Buyer Descript ion Enterprise Value (m)
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
R E P R E S E N T A T I V E I T & T E C H - E N A B L E D S E R V I C E S P R O V I D E R S
Shared HostingColocation / DedicatedData Centers
Managed Services
Managed Hosting Managed Applications
Diversified Comms.
Cloud Consultancies and VARs
IT Outsourcing / Diversified System Integration
Domain Registrars
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HOSTING AND MANAGED SERVICES SECTOR REVIEW | Q1 2019
The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.
Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: [email protected]). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. awaited). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.
1. Global Market Insights.
2. Factset; market data as of 31 March 2019.
3. Merger Market.
4. HW proprietary transaction information.
