INSURTECH SECTOR REPORT Q3 2017
INSURTECH SECTOR REPORT
Q3 2017
2
A leading independent, global investment bank
GCA OVERVIEW
San Francisco I New York I Manchester I London I Milan I Zurich I Frankfurt I Munich I Tel Aviv I Mumbai I New Delhi I Singapore I Shanghai I Osaka I Tokyo
GLOBAL
Global reach with 15 offices in 10 key markets – but deep local roots ensure close, hands-on support for our clients
FINTECH & RELATED
Leading advisor in FinTech and related sectors with strong networks in key tech hubs, including Silicon Valley
CROSS-BORDER
Expert advisor for cross-border transactions: ~33% of our deals involve cross-border participation
GROWTHCOMPANIES
Strong expertise in advising growth companies and leading corporations in capital raising and M&A
400+
Over 400 experienced professionals in the U.S., Europe and Asia
350+
Over 350 deals closed in last 3 years
3
Selected recent FinTech experience
GCA OVERVIEW
We Advised the Buyer
Acquired bySale of 54% stake in
We Advised GP Net
to
Financial Advisor
Series B Financing
We Advised the Seller
Acquired by
Investor Group led by Casin Group
We Advised the Buyer
Acquisition of
We Advised the Seller
Acquired by Series A Financing
Financial Advisor
We Advised the Seller
Acquired by
We Advised the Buyer
Acquisition of
We Advised the Seller
Acquired by
We Advised the Seller
Acquired byStrategic Investment
We Advised ControlExpertFinancial Advisor
Series C Financing
Sale of
Financial Advisor
to
Acquired by
We Advised the SellerWe Advised the Seller
Acquired by Acquired by
We Advised the Seller We Advised the Seller
Acquired by
We Advised the Seller
Growth Investmentfrom
Financial Advisor
Convertible NoteOffering
We Advised the Seller
Majority sale to
We Advised the Seller
Acquired by
We Advised the Buyer
Acquisition of
Lead Generation Business
Acquired by
We Advised the Seller
sold its investment in
to the shareholders of
We Advised the Seller
Acquired by
We Advised the Seller
4
Case study: Sale of ControlExpert to General Atlantic
GCA OVERVIEW
GCA acted as exclusive financial advisor to the shareholders of ControlExpert
Transaction
• GCA was retained as sell-side advisor to provide support in the preparation and execution of the transaction to the Company and its shareholders:
› Channeled strong inbound interest from numerous strategic buyers and financial sponsors
› Managed a tight transaction timeline while maintaining confidentiality throughout the process
› Coordinated due diligence work streams
› Supported during deal structuring and negotiations
• General Atlantic emerged as the preferred potential partner and was able to move swiftly during the due diligence phase
• The transaction was signed in May 2017 and closed June 2017
Background
• ControlExpert is a disruptive technology service providerto the auto insurance industry and Europe’s largestInsurTech company
• The Company serves a broad blue-chip customer base ofmore than 100 enterprise accounts, including ~90% ofall German auto insurances, as well as majorleasing/fleet management companies and automotiveOEMs
• ControlExpert’s cutting-edge technology allows moreefficient organization of a traditionally very lengthy,costly and prone-to-fraud claims handling process
Objectives of the Transaction
• ControlExpert sought a strategic partner with an international footprint and relevant industry experience to accelerate its future growth in existing and new markets
• The shareholders were aiming to realize a valuation which reflects ControlExpert‘s strong growth, significant market potential and competitive positioning
Entered into a Strategic
Partnership with
GCA Advised ControlExpert
“We thank GCA for their valuable
support during this intense
transaction. GCA’s global footprint,
unique sector expertise and skilled
execution helped to achieve an
outstanding result for all parties.”
- Gerhard Witte, MD and founder
5
EXECUTIVE SUMMARY
INSURTECH OVERVIEW
By now it’s probably not new to hear an unprecedented level of capital is pouring into insurance technology (“InsurTech”) startups looking to make their mark in a space that has traditionally been resistant to technological change. The fundamental function of insurance – the pooling and sharing of risk – dates back to the ancient world. But modern insurance as we know it began in 19th century Britain and the U.S., where large corporations emerged to insure against various forms of catastrophe, while governments proffered regulations both to encourage consumers to purchase insurance and to prevent insurers from operating unscrupulously.
So, given how long the insurance industry has been around, what’s taken it so long to become tech-enabled? And why now?
The insurance industry is large, cumbersome and resistant to change due to several factors, including:
• a state-based regulatory system of insurance, effectively requiring insurers to run separate businesses to conform;
• typically wide and varied product sets and customer segments; and
• a highly fragmented insurance distribution model.
Similar to what unfolded over the past 10-15 years with banks and other traditional financial services providers, insurers are now facing a need to update their legacy systems as well as fundamental shifts in their competitive environments and core strategies. Another familiar pattern is a sizeable “first wave” of InsurTech startups that are focused on the expense side of the business – think data and analytics, software, outsourcing, claims handling and other solutions focused primarily on cost reduction and increased efficiency. At the same time, a handful of companies are focused on the revenue side, offering innovative, tech-enabled ways to price, underwrite or otherwise take on balance sheet risk. The latter businesses are in the minority for the time being, but it will be interesting to see how these startups partner with or compete against the longstanding incumbents.
• Banks started the FinTech journey earlier, and have more mature innovation strategies
• Insurers have been slower to progress despite being in a mature industry
• InsurTech activity to date is largely driven by “expense side” businesses, although a handful of “revenue side” businesses are emerging
There is growing recognition that insurance will ultimately benefit
most from the FinTech boom
TraditionallyCONSERVATIVE
HugeBALANCESHEETS
Unsure how toHARNESS NEWTECHNOLOGY
INSURERS
Some more than 300 YEARS OLD
EntrenchedLEGACY
Lack newTECHSKILLS
Brashly DISRUPTIVE
HugeINVESTMENTFLOWS
Unsure how toUNLOCK THEINSURANCE MKT.
STARTUPS
Some less than 300DAYS OLD
Inherent AGILITY
Driven by TECHNOLOGYINNOVATION
Despite fundamental differences, insurers and startups are realizing they need each other(1)
Introduction
1) Accenture Technology Vision for Insurance 2017.
6
Policy Admin, Claims
& Back Office
1) Sources: Capital IQ and William Blair Equity Research 2017.
• Focus on customer engagement, e.g., data and analytics solutions that enable better lead generation or sales and marketing, mobile solutions and other direct-to-consumer insurance channels, or other solutions that improve distribution or facilitate contact with the end consumer. Established examples include:
• Insurance is behind the curve in enterprise-level core technology, and InsurTech companies can help modernize these operating systems, in particular policy, claims, and billing systems. Established examples include:
• This includes companies that provide analytic capabilities to insurance companies to help them operate more efficiently (i.e., the expense side, although some companies are developing data and analytics to help on the underwriting/revenue side as well). Established examples include:
• This tends to mean, actual insurance companies that are tech-enabled in some way. These insurers bring technology to traditionally low-tech areas by using newer or superior core systems. Established examples include:
Insurance Value Chain Detail(1)
INSURTECH “CHEAT SHEET”
InsurTech startups often provide a single solution in a sea of insurance categories and markets, and sometimes it’s hard to know exactly what a particular company does or how to think about it relative to others. The graphic to the left provides a simple – and admittedly broad – framework for thinking about the insurance industry across its various segments and value chain. Throughout this report, we loosely categorize companies and transactions into these categories to help the reader understand exactly where in the insurance ecosystem the company is playing. (Keep in mind that many companies operate in multiple insurance segments and/or parts of the value chain, and we’ve attempted to account for this where applicable.)
In this report we categorize companies into the following
insurance buckets
P&C Life Health
Distribution & CustomerEngagement
Products, Pricing & Underwriting
Data & AnalyticsPolicy Admin, Claims & Back Office
Insurance Segment
Insurance Value Chain
Distribution &
Customer
Engagement
Products, Pricing &
Underwriting
Data &
Analytics
EXECUTIVE SUMMARYIntroduction (cont’d)
7
Question Industry Observations
INSURTECH KEY THEMES
Below we’ve outlined some key themes to think about as we head into Q4 2017.
We hope you enjoy this report. To learn more about these and other trends that are shaping the dealmaking landscape in InsurTech, please contact us.
• InsurTech overview and key themes
• Market update and analysis
• Sector and transaction data
We take a deep dive into the numbers to understand what is
driving deal dynamics in the InsurTech sector
In this report we cover:
EXECUTIVE SUMMARYIntroduction (cont’d)
Where do we see the
key trends?
• Allure of B-to-C
• Feeling late to the game post insurance agency buyouts (USI, Hub, Ascension, Acrisure, Integro, Confie Seguros, etc.)
• Many industry “dinosaurs” in desperate need of basic technology advancements
• Remain very constructive around business models that disrupt the value chain and / or drastically improve efficiency across the industry
• Remain constructive around Insurance Tech / Incumbent partnerships or co-investments
• Small-business commercial / BOP and excess & surplus lines are segments that naturally lend themselves to large opportunities…but also have lots of decision-makers with deeply entrenched behaviors
• The life / annuity models appear under-invested by venture capital, perhaps because “silver bullet” solutions not yet apparent and industry investments are large and consolidated
• Insanely high growth expectations – creates severe operational pressure (unicorn aspirations, Zenefits, etc.)
• Lack of proven business model – great concept, but uncertainty around how players will behave
• Dependency on B-to-C models – LTV / CAC ratios often upside down
• Dependency on old line players within the value chain changing their behavior within the ecosystem’s status quo
Why is venture
funding not
following the likely
value chain
disruption process?
Where are the risks
the greatest?
Sean MinnihanManaging Director, Head of FinTech
Phone: (212) [email protected]
Peter BangManaging Director, Head of FinServices
Phone: (212) [email protected]
Rob FreimanDirector
Phone: (212) [email protected]
Kegan GreeneVice President
Phone: (415) [email protected]
David KruegerVice President
Phone: (212) [email protected]
GCA InsurTech Team
John LambrosManaging Director
Phone: (212) [email protected]
Chris GoughManaging Director
Phone: (415) [email protected]
Tobias SchultheissManaging Director, Europe FinTech
Phone: +49 69 20434 [email protected]
8
Life $809Bn
Health$776Bn
P&C$614Bn
Sources:1) National Association of Insurance Commissioners.2) Accenture Technology Vision for Insurance 2017. 3) Insurance Information Institute “World Insurance Marketplace” 2016.4) TechNavio “Insurance IT Spending” 2016. 5) Novarica Research Council CIO Survey Q3 2017.
Insurance Technology Projected Spending by Type(4)
Key Insurance Market Data Points
Top IT Priorities for 2018(5)
2016 Total U.S. Direct Written Premiums(1)
Insurance technology spending will surpass $50Bn by 2019
P/C (n=70) L/A (n=23)
17%
52%
39%
65%
13%
65%
9%
1%
42%
29%
73%
37%
47%
Costs
Talent
IT Ops
Security
Core
Data
Digital
Life & annuity insurers are focused on digital, optimized workflow, and operating efficiency, while P&C insurers are focused on analytics and speed
to market
94%OF INSURERS SAY ADOPTING A PLATFORM-BASED MODEL AND ENGAGING WITH DIGITAL PARTNERS ARE CRITICAL TO THEIR SUCCESS(2)
$22Bn2018P INSURANCE IT SERVICES SPEND(4)
$11Bn2018P INSURANCE SOFTWARE SPEND(4)
90%OF INSURERS RUNNING ON OBSOLETE SOFTWARE(3)
The insurance industry is ripe for technology innovation
$2.2Tn
Insurance is an enormous U.S. market
$20 $21 $21 $22 $22 $23
$14 $15 $15 $16 $17 $18
$10 $10 $11 $11 $12 $12 $44 $45
$47 $49
$51 $53
$0
$10
$20
$30
$40
$50
$60
2015A 2016A 2017E 2018P 2019P 2020P
An
nu
al S
pe
nd
(in
$B
n)
Software Hardware IT Services
EXECUTIVE SUMMARYInsurTech “state of the union”
9
IoT / Telematics
Online DistributionPolicy Management Tools / Software
Innovative / Specialty Insurance
Claims Management Tools / Software
Employee Benefits Admin / InsuranceExchange Technology
Data / Analytics Peer-to-Peer (“P2P”)
Sales, Marketing & Engagement
Customer Origination
Mobile
Distribution / Comparison Health Insurance Carrier Affiliated / New Carriers
Auto Health
Home
EXECUTIVE SUMMARYInsurTech landscape/ ecosystem – selected companies
Lege
nd
Distribution & CustomerEngagement
Products, Pricing & Underwriting
Data & AnalyticsPolicy Admin, Claims & Back Office
Insurance Value Chain
10
Most Active Insurance Technology Investors
Accelerators / Seed
Venture Capital / Private Equity
Corporate Investors
Alternative Investors
Ventures
EXECUTIVE SUMMARYSelected active investors in InsurTech
Notes:Source: CB Insights, Pitchbook.
11
EXECUTIVE SUMMARYSelected recent strategic investments by insurers
Notes:Source: CB Insights, Pitchbook.
InvestmentsCompany(s)
12
INSURTECH DEAL DASHBOARD
Notes:Source: CB Insights, Pitchbook. CapIq. GCA Deal Database.Market data as of 10/27/17.(1) Includes private company equity financings.(2) Represents unweighted average, except for S&P 500.
Publicly traded InsurTech companies are up 30% over the LTM period, as compared to 19% for the S&P 500. Q3 2017 financing
volume is down 25% and amounts raised are down 68% vs. Q2 2017; however, financing volume is up 26% and amounts raised are
up 36% vs. Q3 2016
(1)
Lege
nd
P&C Life Health Distribution & CustomerEngagement
Products, Pricing & Underwriting
Data & AnalyticsPolicy Admin, Claims & Back Office
Insurance Segment Insurance Value Chain
Percent Change(2) Select Q3 Financing Transactions ($MM)
Subsector LTM 3 Years Date Company Selected Investors Amt. Sub-Sector
Quarterly InsurTech Financing Activity ($MM)(1) 27% 96%
22% 109%
48% 45%
19% 45%
32% 19%
48% 100%
20% 51%
18% 40%
38% 96%
InsurTech Deal Volume by Stage Aggregate InsurTech Market 30% 67%
S&P 500 19% 11%
Insurance Technology Deal Dashboard Industry Stock Market Performance$1.55 Bn | 178 Deals
LTM InsurTech Financing Volume(1)
Trends in InsurTech
9/19/17 $40
8/23/17 $19
8/22/17 $24
8/8/17 $12
7/11/17 $50
Benefits Administration/Payroll
Property & Casualty
Health
Insurance Technology
Life
Brokerage & Distribution
Information Services
Financial SaaS
IT & BPO Services
1
2
8
9
7
6
5
4
3
$783
$398
$230 $271 $283
$985
$312
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17
5964
$6.5$15.4$7.4$6.3$6.1$11.7$13.3
34 3843
38
48
38% 41% 42% 48% 50%
20% 19% 23% 19%28%18% 16% 15% 10%
13%
2013 2014 2015 2016 2017 (YTD)
Seed/Angel Series A Series B Series C Series D Series E+ Other
Average Deal Amount ($MM)
13
INSURTECH SELECTED PUBLIC COMPANY LANDSCAPESelected InsurTech subsectors and key operating stats ($Bn)
Notes:Source: CapIq.Revenue growth and EBITDA margins shown are median values for comp group.Market data as of 10/27/17.
Benefits Administration/Payroll
Combined Market Cap.: $101.017E/16A Rev. Growth: 19.8%
17E EBITDA Margin: 25.7%
2Insurance Technology
Combined Market Cap.: $29.017E/16A Rev. Growth: 13.4%
17E EBITDA Margin: 11.3%
1 Brokerage & Distribution
Combined Market Cap.: $126.717E/16A Rev. Growth: 5.4%17E EBITDA Margin: 23.6%
3
Property & Casualty
Combined Market Cap.: $424.617E/16A Rev. Growth: (3.8%)
17E EBITDA Margin: 13.2%
4 Life
Combined Market Cap.: $440.617E/16A Rev. Growth: (1.6%)
17E EBITDA Margin: 12.6%
5 Health
Combined Market Cap.: $442.217E/16A Rev. Growth: 3.8%
17E EBITDA Margin: 6.6%
6
Information Services
Combined Market Cap.: $320.217E/16A Rev. Growth: 7.2% 17E EBITDA Margin: 30.8%
7 IT & BPO Services
Combined Market Cap.: $572.217E/16A Rev. Growth: 8.2% 17E EBITDA Margin: 17.5%
8 Financial SaaS
Combined Market Cap.: $101.717E/16A Rev. Growth: 16.6%
17E EBITDA Margin: 19.4%
9
14
INSURTECH STOCK PRICE PERFORMANCE
3 Year Share Price Performance
LTM Share Price Performance
Notes:Source: CapIq. Market data as of 10/27/17.
InsurTech is in the middle of the pack on an LTM basis, but in the upper third over the past three years
6) Health1) Insurance Technology 2) Benefits Administration/Payroll
3) Brokerage & Distribution 5) Life4) Property & Casualty 7) Information Services 8) IT & BPO Services 9) Financial SaaS
15
INSURTECH PUBLIC COMPANY VALUATIONInsurTech is second only to Financial SaaS on both an EV/ LTM revenue and EV/ NTM revenue basis
Notes:Source: CapIq.Market data as of 9/30/17.Lines display median multiples across comp groups for given year.
Enterprise Value / LTM RevenueEnterprise Value / LTM Revenue
Median Revenue Growth to EV / NTM Revenue MultipleEnterprise Value / NTM Revenue
1
2
3
45
6
78
9
2.6x 2.5x2.8x
3.2x
2.4x 2.4x 2.6x3.2x
6) Health1) Insurance Technology 2) Benefits Administration/Payroll
3) Brokerage & Distribution 5) Life4) Property & Casualty 7) Information Services 8) IT & BPO Services 9) Financial SaaS
16
INSURTECH PUBLIC COMPANY VALUATION (CONT’D)InsurTech has performed similarly well on both an EV/ LTM EBITDA and EV/ NTM EBITDA basis
Notes:Source: CapIq.Market data as of 9/30/17.Lines display median multiples across comp groups for given year.
Enterprise Value / LTM EBITDAEnterprise Value / LTM EBITDA
Median EBITDA Growth to EV / NTM EBITDA MultipleEnterprise Value / NTM EBITDA
1
2
3
4
5
6
87
9
12.6x 12.2x13.3x
15.1x
11.3x 10.9x11.6x
13.2x
6) Health1) Insurance Technology 2) Benefits Administration/Payroll
3) Brokerage & Distribution 5) Life4) Property & Casualty 7) Information Services 8) IT & BPO Services 9) Financial SaaS
17
Long-term growth is not necessarily correlated with public company P/E multiples or PEG ratios(1) : InsurTech has the highest 2017E
PEG ratio but is middle of the pack in terms of long-term growth
INSURTECH PUBLIC COMPANY VALUATION (CONT’D)
Notes: (1) PEG ratio defined as 2017E price/earnings ratio divided by estimated long-term EPS growth rate.Figures represent medians of sub-sectors.Market data as of 10/27/17.Long-term EPS growth covers last 5 years.
21.7%
17.8%
12.5%
11.5%
9.4%
13.2%
9.1%
11.9%
7.3%
2.5
2.3
2.8
2.2
2.0
1.6
2.2
1.4
1.5
2017E P/E Multiple 2017E PEG Ratio
Long-Term EPS Growth
Life5
Benefits Admin/Payroll2
Financial SaaS9
Information Services7
Insurance Technology1
Health6
IT & BPO Services8
Property & Casualty4
Brokerage & Distribution3
18
9/21/17Foundation Capital, Index Ventures, Starr Companies, Two Sigma Ventures,
Union Square VenturesSeries B $18.5
9/19/17 Accel Partners Series B $40.0
9/14/17 Undisclosed Investors Series A $11.7
9/13/17 The Hartford Series A $3.5
9/7/17 MK Capital, Seyen Capital Series A $2.5
9/4/17 Matteo Carbone, Pietro Menghi Angel - II $0.8
8/30/17Banyan Capital, BlueRun Ventures, IDG Capital, Meituan-Dianping, Sinovation
Ventures, Tencent Holdings, Tongcheng CapitalSeries A $24.0
8/30/17 Aquiline Capital Partners Series A - II $1.3
8/30/17 Lireas Holdings Series A $0.4
8/23/17 Draper Fisher Jurvetson, Social Capital, True Ventures Series B $19.0
8/23/17Denise Peng, Marathon Venture Partners, Matrix Partners China, NNFE,
Zhongguancun Development GroupSeries B $14.0
SELECTED RECENT GROWTH EQUITY & VC ACTIVITY
Notes: Source: CapIq. Pitchbook.Selected deals from LTM as of 9/30/17.
Date
Announced Target Investors Type Amount ($MM)
19
8/22/17 F-Prime Capital, New Enterprise Associates, Portag3 Ventures, Venrock Series B $23.5
8/14/17Fosun RZ Capital, Infinity Venture Partners, Linear Venture, Xincheng
InvestmentSeries A NA
8/8/17 BoxGroup, Red Swan Ventures, Ribbit Capital, SV Angel, Valar Ventures Series A $11.5
7/21/17AXA Strategic Ventures, Launchpad Digital Health, MassMutual Ventures, Plug
and Play Ventures, Portag3 Ventures, Wanxiang Healthcare InvestmentsSeries B $7.0
7/19/17 Aberdare Ventures, FirstMark Capital, GE Ventures, Split Rock Partners Series C $14.1
7/17/17 Foundry Group, Techstars Ventures Series A $13.0
7/13/17Great Oaks Venture Capital, Liquid 2 Ventures, Maveron, Shasta Ventures,
Sherpa Capital, Social Capital, SV Angel, Tencent Holdings, VY CapitalSeries A $8.0
7/11/17ACE & Company, Alibaba Group, Goldman Sachs, H&Q Asia Pacific, International
Finance Corporation, Nova Founders Capital, Route 66 Ventures, SBI GroupSeries B $50.0
6/13/17 Tola Capital Series D $12.0
6/3/17Accel Partners India, Catamaran Ventures, SAIF Partners, Transamerica
VenturesSeries C $15.0
6/1/17
Bessemer Venture Partners, Cross Creek Advisors, Flare Capital Partners,
Greenspring Associates, Greycroft Partners, New Enterprise Associates,
Redpoint Ventures
Series B $160.0
SELECTED RECENT GROWTH EQUITY & VC ACTIVITY (CONT’D)
Date
Announced Target Investors Type Amount ($MM)
Notes: Source: CapIq. Pitchbook.Selected deals from LTM as of 9/30/17.
20
5/24/17AXA Strategic Ventures, Fika Ventures, Karlin Ventures, MassMutual Ventures,
Norwest Venture Partners, Revolution, Susa Ventures, Transamerica VenturesSeries C $30.0
5/10/17GV, Palm Drive Capital, Sequoia Capital, First Round Capital, Greenoaks Capital
Management, Western Technology InvestmentSeries D $130.0
5/2/17American Family Ventures, AXA Strategic Ventures, Centana Growth Partners,
MassMutual VenturesSeries B $15.5
4/10/17Markel Ventures, Munich Re/HSB Ventures, Nationwide Ventures, Ribbit
Capital, TLV Partners, Zeev VenturesSeries A $29.0
4/6/17Anthemis Group, Guidewire Group, Munich Re/HSB Ventures, Oak HC/FT
Partners, Sompo Japan Insurance and Suncorp GroupSeries D $45.0
2/22/17Savano Capital Partners, Stratim Capital, Oceanic Partners, T Capital Partners,
Second Alpha Partners, Green D Ventures, Link VenturesSeries B II $13.0
2/10/17 ff Venture Capital Series A $6.3
12/10/16General Catalyst Partners, GV, Thrive Capital, Tusk Ventures, Aleph, Sequoia
Capital, XL Innovate Series B $34.0
11/17/16Union Square Ventures, Index Ventures, Highland Capital Partners, Two Sigma
Ventures, Founder CollectiveSeries A $7.8
10/21/16Oceania Capital Partners, Savano Capital Partners, Stratim Capital, T Capital
PartnersSeries B $23.0
Median $14.1
SELECTED RECENT GROWTH EQUITY & VC ACTIVITY (CONT’D)
Date
Announced Target Investors Type Amount ($MM)
Notes: Source: CapIq. Pitchbook.Selected deals from LTM as of 9/30/17.
21
CASE STUDY: COVERWALLET RAISES NEW ROUND
CoverWallet raises $18.5 million of Series B funding, led by Foundation Capital
Use of Funds
• The startup said it plans to use the funding to continue building core technology, expand partnerships, and scale operations “to meet growing demand and to solidify its position as a market leader” in the small business insurance space
› Charles Moldow, Foundation Capital: “Today, there exists a unique opportunity to reinvent [the insurance industry] by focusing on the CoverWallet principles of simplification and transparency, leveraging analytics and ultimately reducing friction.”
Background
• CoverWallet provides an online enterprise insurancemanagement platform intended to speed up theinsurance-buying process with data analytics
› The company's online enterprise insurance management platform helps clients to manage commercial insurance policies including, among others, general liability, commercial property, workers compensation, directors and officers, professional liability, errors and omissions and cyber liability coverages
• The company raised $18.5 million of Series B venture funding in a deal led by Foundation Capital on October 5, 2017, putting the pre-money valuation at $62 million
Raises Series B Round
Led By:
$18.5 MM
Estimated Pre-Money Valuation
$62 MM
Estimated Post-Money Valuation
$81 MMMedian: $12.4
Notes:Source: CB Insights, InsurTech insights.
Selected Q3 InsurTech Financings ($MM)
P&C
Data & Analytics
Policy Admin, Claims & Back Office
Insurance Segment
Insurance Value Chain
22
10/6/2017 $275 NA NA
9/28/2017 $1,741 1.5x NA
9/21/2017 $3,031 NA NA
8/21/2017 Sequel $324 9.7x 21.1x
8/4/2017 $490 8.2x 50.7x
6/8/2017 NA NA NA
5/15/2017 NA NA NA
4/4/2017 $225 4.7x NA
3/31/2017 $102 1.3x NA
2/16/2017 $160 3.9x NA
5/27/2016 $187 2.4x 18.3x
3/29/2016 EagleEye Analytics $42 NA NA
2/29/2016 $460 2.1x NA
8/28/2015 $677 2.0x 16.6x
6/30/2015 $7,854 2.2x 11.0x
10/9/2014 NA NA NA
9/17/2014 NA NA NA
7/16/2014 $1,325 NA 12.0x
Median 2.3x 17.5x
SELECTED M&A ACTIVITY
Notes: Source: CapIq. Pitchbook.
Date Enterprise EV / Revenue EV / EBITDA
Announced Acquirer Target Value ($MM) LTM LTM
23
CASE STUDY: ACQUISITION OF CYENCE BY GUIDEWIRE
Guidewire acquires Cyence for $275MM
Value Proposition
• For Guidewire, value is primarily driven by how Cyence differs in its approach to selling into insurers—both from a personnel and budget standpoint
› Today, Guidewire has over 300 P&C insurance customers, but bringing on new customers typically entails a long sales cycle, which involves the entire organization + IT support. Meanwhile, Cyence, according to CEO Arvind Parthasarathi, uses the chief risk or chief underwriting officers as its primary sponsors within insurers for its solutions
Background(1)
• Cyence is a provider of an analytics platform designed toquantify the financial impact of cyber risk
› The company's analytics platform combines data collection at scale, machine learning and economic/ risk modeling to create an insurance risk modeling platform, enabling insurers to prospect, select, manage and assess portfolio risk accumulations and bring new insurance products to market
• The company reached a definitive agreement to beacquired by Guidewire Software (NYSE: GWRE) forapproximately $275 million in cash and stock on October6, 2017
Price & Market
• Guidewire paid an estimated 25x - 30x Cyence’s 2018 forward-looking subscription revenue
• Large cyber policy writers are moving from packaged to standalone policies. In 2016, total direct written premium for cyber was $1.3Bn according to A.M. Best.
• While cyber coverage is projected to increase to $20Bn by 2020, perspectives are mixed on whether the growth will materialize
Acquired by
$275 MM
Rank Company2016 DPW
($MM)DPW Growth
Market Share
1 228.3 5.9% 17.0%
2 160.8 41.7% 12.0%
3 133.6 10.3% 10.0%
4 92.2 41.8% 6.9%
5 83.9 21.7% 6.3%
US P&C Industry – Cybersecurity Direct Premiums Written, Top 5 by 2016 DPW(2)
Notes:Sources:(1) CB Insights, InsurTech insights.(2) A.M. Best Data and Research.
Transaction Value
$275MMEstimated EV/ Forward
Revenue
25x – 30x
P&C
Data & Analytics
Policy Admin, Claims & Back Office
Insurance Segment
Insurance Value Chain
24
SELECTED PUBLIC COMPANY DETAIL
Notes: Source: CapIq. Pitchbook.Multiples based on CapIq Consensus Estimates. Multiples <0 and >100 considered NM.
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Insurance TechnologyVerisk Analytics, Inc. $84.94 $13,977 $16,236 9.3% 2.9 5.0% 6.9% 8.7% 7.8% 48.7% 7.8x 7.3x 15.9x 14.8x 27.1x 24.8x Guidewire Software, Inc. $77.70 $5,828 $5,255 15.8% 5.8 22.2% 21.4% NA 36.1% 19.8% 9.6x 7.9x 48.2x 35.4x 91.7x 71.6x HealthEquity, Inc. $49.78 $3,011 $2,801 28.3% 2.6 27.3% 24.2% 52.2% 27.5% 36.5% 12.3x 10.0x 33.8x 26.5x 73.5x 58.1x Ebix, Inc. $67.55 $2,125 $2,410 15.0% 1.5 16.9% 18.9% 10.0% 16.5% 34.6% 6.9x 6.1x 20.0x 17.1x 22.1x 19.7x CorVel Corporation $60.10 $1,127 $1,092 NM NA NA NA 5.6% NA NA NA NA NA NA NA NABenefitfocus, Inc. $27.55 $859 $912 21.7% NM 9.9% 8.7% NA 69.3% 6.3% 3.6x 3.1x 56.6x 33.4x NM NMCrawford & Company $11.91 $665 $864 10.0% 1.6 1.8% 3.4% 20.4% 14.4% 11.3% 0.8x 0.7x 6.8x 5.9x 15.5x 13.7x Sapiens International Corporation N.V. $13.88 $683 $676 10.0% 3.9 25.3% 20.8% NA 61.2% 10.6% 2.5x 2.2x 23.4x 14.5x 39.1x 22.0x eHealth, Inc. $23.57 $437 $386 5.0% NM (8.9%) 1.4% NA NA NA 2.3x 2.0x NM 98.0x NM NMMajesco $5.87 $214 $222 NM NM (7.7%) 5.9% 38.8% NA 4.4% 1.9x 1.6x 43.7x 22.2x NM 41.9x Symbility Solutions Inc. $0.36 $86 $80 NM NM 23.8% 18.4% NA 23.4% 4.9% 2.5x 2.3x 52.0x 42.2x NM NA
Median 12.5% 2.8 13.4% 13.5% 15.2% 25.4% 11.3% 3.0x 2.7x 33.8x 24.4x 33.1x 24.8x
Benefits Administration/PayrollAutomatic Data Processing, Inc. $118.25 $52,553 $51,772 10.7% 3.0 5.2% 5.5% (5.0%) 10.3% 20.5% 4.1x 3.9x 19.9x 18.1x 31.9x 29.5x Paychex, Inc. $65.40 $23,500 $23,189 8.1% 3.5 5.6% 6.9% 7.6% 6.7% 43.6% 7.2x 6.7x 16.4x 15.4x 28.4x 26.5x The Ultimate Software Group, Inc. $197.75 $5,898 $5,797 24.0% 2.3 19.8% 18.6% NA 25.3% 22.6% 6.2x 5.2x 27.4x 21.8x 55.9x 45.6x Paycom Software, Inc. $82.01 $4,886 $4,852 28.2% 2.5 31.0% 27.2% 82.4% 26.4% 28.8% 11.2x 9.0x 39.1x 30.9x 71.4x 57.4x HealthEquity, Inc. $49.78 $3,011 $2,801 28.3% 2.6 27.3% 24.2% 52.2% 27.5% 36.5% 12.3x 10.0x 33.8x 26.5x 73.5x 58.1x Paylocity Holding Corporation $52.35 $2,739 $2,636 26.5% 2.7 25.8% 23.3% NA 24.9% 19.4% 7.9x 6.5x 40.9x 32.7x 71.9x 58.9x TriNet Group, Inc. $34.89 $2,421 $2,628 20.0% 1.2 7.8% 9.9% NA 5.5% 29.2% 3.5x 3.4x 12.0x 11.4x 23.5x 21.7x WageWorks, Inc. $64.40 $2,557 $2,027 15.0% 2.5 32.2% 15.8% NA 14.8% 30.0% 4.2x 3.8x 14.0x 12.2x 36.9x 33.2x Insperity, Inc. $96.30 $2,008 $1,868 16.0% 1.3 12.0% 11.5% 41.4% 14.3% 5.1% 0.6x 0.5x 11.0x 9.6x 21.2x 18.6x Benefitfocus, Inc. $27.55 $859 $912 21.7% NM 9.9% 8.7% NA 69.3% 6.3% 3.6x 3.1x 56.6x 33.4x NM NMCastlight Health, Inc. $3.95 $520 $439 37.3% NM 28.6% 25.1% NA NA NA 3.4x 2.6x NM NM NM NM
Median 21.7% 2.5 19.8% 15.8% 41.4% 19.8% 25.7% 4.2x 3.9x 23.7x 20.0x 36.9x 33.2x
Brokerage & DistributionMarsh & McLennan Companies, Inc. $81.00 $41,515 $45,925 11.2% 1.9 5.4% 5.1% 9.4% 7.7% 24.4% 3.3x 3.2x 13.5x 12.6x 21.3x 19.5x Aon plc $146.18 $37,197 $40,847 11.7% 1.9 (14.4%) (14.1%) 3.1% 12.5% 24.8% 4.1x 3.9x 16.6x 14.7x 22.4x 18.2x Willis Towers Watson Public Limited Company $161.62 $21,704 $25,215 8.7% 2.2 4.1% 4.5% 28.4% 11.0% 23.6% 3.1x 3.0x 13.2x 11.9x 19.2x 16.5x Arthur J. Gallagher & Co. $62.54 $11,267 $13,788 9.3% 2.3 9.4% 8.8% 15.6% 13.6% 16.6% 2.3x 2.1x 13.7x 12.1x 21.0x 18.8x Brown & Brown, Inc. $49.68 $6,931 $7,336 6.9% 3.9 5.0% 4.8% 1.3% 3.7% 31.4% 4.0x 3.8x 12.6x 12.2x 26.6x 24.7x Jardine Lloyd Thompson Group plc $16.98 $3,587 $4,184 25.1% 0.9 14.2% 6.6% NA NA 0.0% 2.4x 2.2x NA NA 22.0x 17.4x Moneysupermarket.com Group PLC $4.19 $2,244 $2,221 9.4% 2.0 13.0% 8.5% 24.9% 7.8% 38.3% 5.0x 4.7x 13.1x 12.2x 19.2x 17.5x Bankrate, Inc. $13.95 $1,240 $1,349 10.0% 2.0 16.1% 12.2% 35.7% 10.4% 25.3% 2.7x 2.4x 10.6x 9.6x 19.8x 16.9x eHealth, Inc. $23.57 $437 $386 5.0% NM (8.9%) 1.4% NA NA (9.2%) 2.3x 2.0x NM 98.0x NM NMQuinStreet, Inc. $7.18 $328 $279 NM NM 4.3% 10.0% NA 25.0% 6.5% 0.9x 0.8x 13.6x 10.9x NM NMiSelect Limited $1.19 $260 $198 NM NM 13.6% 12.6% 24.0% 16.2% 15.9% 1.3x 1.2x 8.2x 7.1x 19.7x 16.2x
Median 9.4% 2.0 5.4% 6.6% 19.8% 11.0% 23.6% 2.7x 2.4x 13.2x 12.1x 21.0x 17.5x
$MM, Except Per Share Data
Stock EPSPrice Equity Enterprise Long Term Revenue Growth EBITDA Growth EBITDA Margin EV / Revenue EV / EBITDA Price / EPS
10/27/17 Value Value Growth PEG 17E/16A NTM 17E/16A NTM 17E 17E 18P 17E 18P 17E 18P
25
SELECTED PUBLIC COMPANY DETAIL (CONT’D)
Notes: Source: CapIq. Pitchbook.Multiples based on CapIq Consensus Estimates. Multiples <0 and >100 considered NM.
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Property & CasualtyAllianz SE $231.10 $102,775 $118,596 4.7% 2.7 22.6% 12.7% 14.8% 4.8% 10.0% 0.9x 0.8x NA NA 12.4x 11.7x Chubb Limited $152.75 $71,092 $81,657 6.6% 3.2 (13.4%) (13.5%) (10.0%) NA 18.0% 3.0x 2.9x NA NA 20.7x 14.2x American International Group, Inc. $64.55 $58,315 $76,108 11.0% 1.8 (3.7%) (3.0%) 15.1% NA 23.3% 1.5x 1.5x NA NA 19.3x 12.2x The Allstate Corporation $93.73 $33,870 $37,560 11.4% 1.4 (12.0%) (13.0%) NA NA 12.7% 1.2x 1.1x NA NA 15.9x 13.3x The Travelers Companies, Inc. $131.06 $35,871 $36,554 6.0% 2.9 (7.1%) (7.9%) (17.4%) NA 14.4% 1.4x 1.4x NA NA 17.5x 13.8x The Progressive Corporation $48.90 $28,440 $27,939 17.0% 1.2 14.3% 12.6% 7.5% NA 9.4% 1.0x 0.9x NA NA 21.0x 17.4x The Hartford Financial Services Group, Inc. $55.20 $19,691 $21,256 11.1% 1.4 2.3% 9.5% NA 27.4% 0.0% 1.1x 1.1x NM NM 15.0x 11.8x CNA Financial Corporation $50.79 $13,764 $14,894 4.6% 4.2 NA NA NA NA 16.0% NA NA NA NA 19.4x 15.7x Markel Corporation $1,094.08 $15,199 $13,750 NM NM 6.0% 8.6% NA NA 8.1% 2.3x 2.2x NA NA NM 37.8x Cincinnati Financial Corporation $71.03 $11,654 $11,823 NM NM 5.3% 2.8% NA NA 15.2% 2.1x 2.0x NA NA 26.2x 23.1x W. R. Berkley Corporation $69.56 $8,470 $9,574 9.0% 3.2 (17.8%) (17.9%) (4.0%) NA 13.7% 1.5x 1.5x NA NA 28.6x 21.7x American Financial Group, Inc. $105.07 $9,249 $9,003 6.3% 2.8 (36.0%) (33.6%) 16.0% NA 16.7% 2.2x 2.1x NA NA 17.6x 15.6x RSA Insurance Group plc $8.26 $8,322 $8,346 9.3% 1.5 6.0% (0.9%) 9.8% NA 10.0% 0.9x 0.9x NA NA 13.9x 12.2x Assurant, Inc. $100.05 $5,384 $5,473 NM NM (15.1%) (4.7%) NA NA 8.3% 0.9x 0.8x NA NA 28.8x 14.1x AmTrust Financial Services, Inc. $12.74 $2,495 $3,212 10.2% 1.0 (4.0%) (8.7%) 8.3% NA NA 0.6x 0.6x NA NA 10.4x 7.2x
Median 9.1% 2.2 (3.8%) (3.9%) 8.3% 16.1% 13.2% 1.3x 1.3x NM NM 18.5x 14.1x
LifeAXA SA $29.83 $72,180 $107,474 4.7% 2.2 (9.3%) (17.5%) (7.6%) (3.8%) 7.9% 0.9x 0.9x 11.2x 11.7x 10.4x 9.7x MetLife, Inc. $54.29 $57,605 $88,184 9.0% 1.4 (1.6%) (2.4%) NA NA NA 1.4x 1.4x NA NA 12.4x 11.5x Zurich Insurance Group AG $303.28 $45,546 $45,000 3.2% 4.5 (26.3%) (25.3%) 0.6% (1.8%) 12.6% 0.9x 0.9x 7.2x 7.3x 14.5x 12.4x Legal & General Group Plc $3.52 $20,902 $42,556 7.3% 1.5 (54.4%) (35.8%) NA NA NA 3.9x 4.1x NA NA 11.2x 11.1x Aflac Incorporated $83.94 $33,062 $38,310 5.0% 2.5 (5.6%) (2.8%) NA 10.9% 19.1% 1.8x 1.8x 9.3x 8.4x 12.5x 12.3x Prudential Financial, Inc. $112.02 $47,833 $33,396 NM NM (15.9%) (13.7%) NA NA NA 0.7x 0.6x NA NA 11.0x 10.0x Manulife Financial Corporation $20.17 $39,892 $32,336 11.0% 1.1 16.1% 48.0% NA NA NA 0.7x 0.7x NA NA 11.7x 10.7x Ameriprise Financial, Inc. $160.62 $23,820 $26,686 NM NM 0.7% 1.6% 25.5% 5.7% 29.4% 2.3x 2.2x 7.7x 7.3x 13.5x 12.6x Lincoln National Corporation $77.33 $16,977 $19,097 NM NM 8.7% 5.6% NA NA NA 1.3x 1.3x NA NA 10.3x 10.0x Principal Financial Group, Inc. $68.10 $19,678 $18,414 10.0% 1.3 11.3% 3.8% NA NA NA 1.3x 1.3x NA NA 13.1x 12.2x AEGON N.V. $5.89 $12,148 ($550) 15.7% 0.5 (49.7%) (56.0%) NA NA NA NM NM NA NA 7.7x 7.6x Aviva plc $6.72 $26,936 ($13,064) 5.3% 1.8 19.8% 31.0% 23.4% 4.7% 5.9% NM NM NM NM 9.5x 9.1x Sun Life Financial Inc. $39.21 $24,061 ($30,580) NM NM 17.3% 29.6% NA NA NA NM NM NA NA 12.5x 11.7x
Median 7.3% 1.5 (1.6%) (2.4%) 12.0% 4.7% 12.6% 1.3x 1.3x 8.5x 7.9x 11.7x 11.1x
HealthUnitedHealth Group Incorporated $212.60 $205,554 $217,192 13.4% 1.6 8.3% 8.9% 17.8% 20.3% 8.5% 1.1x 1.0x 12.7x 10.6x 21.3x 19.6x Aetna Inc. $173.12 $57,424 $60,436 10.6% 1.7 (3.3%) (0.3%) (1.6%) 5.5% 10.0% 1.0x 0.9x 9.9x 9.4x 18.2x 17.1x Cigna Corporation $201.94 $50,844 $51,917 13.1% 1.5 3.3% 3.6% 17.6% 11.5% 11.0% 1.3x 1.2x 11.5x 10.3x 20.2x 17.8x Anthem, Inc. $211.34 $54,264 $45,137 10.9% 1.6 4.3% 2.3% (6.2%) 21.7% 6.1% 0.5x 0.5x 8.3x 6.8x 17.7x 16.4x Humana Inc. $258.97 $37,426 $26,269 13.3% 1.7 (0.9%) 2.6% 86.2% 5.3% 7.1% 0.5x 0.5x 6.9x 6.5x 22.6x 21.1x Centene Corporation $94.41 $16,292 $16,223 13.2% 1.4 26.7% 15.5% (10.4%) 32.6% 3.7% 0.3x 0.3x 9.2x 6.9x 19.0x 17.1x WellCare Health Plans, Inc. $186.00 $8,279 $4,916 14.7% 1.8 18.9% 19.1% 1.4% 40.5% 3.9% 0.3x 0.3x 7.5x 5.4x 26.5x 23.2x AEGON N.V. $5.89 $12,148 ($550) 15.7% 0.5 (49.7%) (56.0%) NA NA 0.0% NM NM NA NA 7.7x 7.6x
Median 13.2% 1.6 3.8% 3.1% 1.4% 20.3% 6.6% 0.5x 0.5x 9.2x 6.9x 19.6x 17.4x
$MM, Except Per Share Data
Stock EPSPrice Equity Enterprise Long Term Revenue Growth EBITDA Growth EBITDA Margin EV / Revenue EV / EBITDA Price / EPS
10/27/17 Value Value Growth PEG 17E/16A NTM 17E/16A NTM 17E 17E 18P 17E 18P 17E 18P
26
SELECTED PUBLIC COMPANY DETAIL (CONT’D)
Notes: Source: CapIq. Pitchbook.Multiples based on CapIq Consensus Estimates. Multiples <0 and >100 considered NM.
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Information ServicesRELX PLC $22.70 $45,451 $52,036 8.1% 2.7 14.9% 4.3% 33.2% 10.0% 34.8% 5.3x 5.1x 15.3x 13.9x 21.4x 20.0x S&P Global Inc. $162.16 $41,675 $44,146 13.2% 1.9 5.3% 5.8% 16.2% 6.9% 48.2% 7.4x 7.0x 15.4x 14.4x 24.4x 22.5x Thomson Reuters Corporation $46.86 $33,474 $40,494 9.9% 1.9 2.0% 4.0% 44.2% 4.3% 30.2% 3.6x 3.4x 11.8x 11.3x 19.2x 17.9x Moody's Corporation $146.40 $27,962 $29,695 9.6% 2.7 12.1% 8.7% 17.0% 10.3% 47.5% 7.3x 6.8x 15.5x 14.0x 25.8x 23.4x Experian plc $20.96 $19,127 $22,349 9.3% 2.4 NA 6.2% NA 5.3% 34.9% 5.1x 4.7x 14.6x 13.9x 22.4x 20.0x Nielsen Holdings plc $38.57 $13,737 $21,723 7.2% 2.0 4.1% 4.6% 24.7% 4.1% 30.8% 3.3x 3.2x 10.8x 10.3x 14.7x 13.8x IHS Markit Ltd. $43.32 $17,148 $21,064 12.7% 1.7 30.2% 5.5% NA 9.0% 38.8% 5.9x 5.6x 15.2x 14.0x 21.1x 19.2x Wolters Kluwer N.V. $48.33 $13,656 $16,251 8.5% 2.2 13.5% 2.9% 17.0% 4.2% 26.9% 3.2x 3.1x 11.7x 11.2x 18.5x 17.3x Verisk Analytics, Inc. $84.94 $13,977 $16,236 9.3% 2.9 5.0% 6.9% 8.7% 7.8% 48.7% 7.8x 7.3x 15.9x 14.8x 27.1x 24.8x Equifax Inc. $109.39 $13,168 $15,656 11.3% 1.6 7.2% 4.8% 11.0% 1.5% 37.0% 4.6x 4.5x 12.6x 12.4x 18.4x 17.8x Gartner, Inc. $125.15 $11,338 $14,177 16.8% 2.2 36.1% 36.8% 75.0% 21.5% 21.1% 4.3x 3.5x 20.2x 16.6x 36.7x 30.4x MSCI Inc. $120.00 $10,807 $12,133 14.0% 2.3 10.2% 10.5% 15.7% 11.5% 52.0% 9.6x 8.8x 18.4x 16.5x 31.5x 27.0x TransUnion $53.75 $9,777 $12,009 12.0% 2.4 11.2% 7.7% 31.5% 11.2% 39.2% 6.3x 5.9x 16.1x 14.5x 28.9x 25.7x Informa plc $9.00 $7,410 $9,446 6.0% 2.4 37.2% 10.3% 47.2% 5.8% 33.7% 4.1x 4.0x 12.3x 11.6x 14.7x 13.8x FactSet Research Systems Inc. $189.10 $7,418 $7,766 11.3% 2.2 10.6% 10.7% 8.1% 8.6% 34.4% 6.1x 5.7x 17.9x 16.4x 25.1x 22.5x News Corporation $13.69 $7,978 $6,625 20.9% 1.5 (0.5%) 0.5% 36.0% 4.1% 11.2% 0.8x 0.8x 7.3x 7.0x 31.5x 27.7x The Dun & Bradstreet Corporation $118.25 $4,370 $5,688 7.3% 2.3 3.7% 4.1% 10.4% 5.5% 28.1% 3.2x 3.1x 11.5x 10.9x 16.8x 16.0x CoreLogic, Inc. $47.06 $3,877 $5,525 11.8% 1.7 (5.3%) 0.8% 12.9% 4.7% 25.6% 3.0x 2.9x 11.7x 11.1x 20.2x 18.9x Fair Isaac Corporation $147.03 $4,504 $4,985 16.0% 1.8 4.8% 6.7% 17.2% 22.1% 25.7% 5.3x 4.9x 20.6x 16.8x 29.0x 24.3x Morningstar, Inc. $87.04 $3,702 $3,583 NM NA NA NA NA NA NA NA NA NA NA NA NAThe Advisory Board Company $53.90 $2,197 $2,655 17.0% 1.7 0.4% 2.7% 58.4% 8.3% 24.4% 3.3x 3.1x 13.5x 12.5x 28.3x 26.1x Acxiom Corporation $25.08 $1,983 $2,050 17.7% 2.0 2.2% 7.8% 84.5% 22.3% 18.7% 2.3x 2.1x 12.2x 10.0x 35.5x 25.4x Euromoney Institutional Investor PLC $15.28 $1,639 $1,754 NM NM 13.1% 11.7% 5.9% 7.7% 26.7% 3.1x 2.9x 11.6x 10.7x 15.3x 14.2x comScore, Inc. $29.68 $1,700 $1,586 NM NM NA 40.9% NA 19.5% 26.6% 2.6x 2.3x 9.7x 8.1x 15.3x 12.0x National Research Corporation $53.40 $1,306 $1,276 NM NA 8.3% 8.0% 12.6% 10.8% 33.7% 10.8x 10.0x 32.0x 28.9x NA NAForrester Research, Inc. $45.20 $802 $676 13.5% 2.8 1.8% 4.5% (5.5%) 20.8% 11.5% 2.0x 1.9x 17.7x 14.6x 37.5x 30.0x
Median 11.5% 2.2 7.2% 6.2% 17.0% 8.3% 30.8% 4.3x 4.0x 14.6x 13.9x 23.4x 21.3x
$MM, Except Per Share Data
Stock EPSPrice Equity Enterprise Long Term Revenue Growth EBITDA Growth EBITDA Margin EV / Revenue EV / EBITDA Price / EPS
10/27/17 Value Value Growth PEG 17E/16A NTM 17E/16A NTM 17E 17E 18P 17E 18P 17E 18P
27
SELECTED PUBLIC COMPANY DETAIL (CONT’D)
Notes: Source: CapIq. Pitchbook.Multiples based on CapIq Consensus Estimates. Multiples <0 and >100 considered NM.
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Saa
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IT & BPO ServicesInternational Business Machines Corporation $153.68 $143,221 $177,462 4.9% 2.3 (1.6%) 0.7% 2.5% 4.4% 24.2% 2.3x 2.3x 9.3x 8.9x 11.1x 11.0x Accenture plc $143.28 $88,077 $84,733 9.9% 2.4 6.6% 9.0% 7.6% 9.3% 17.1% 2.4x 2.2x 13.9x 12.7x 23.9x 21.4x Tata Consultancy Services Limited $39.74 $76,068 $71,079 12.8% 1.5 8.2% 8.1% 4.5% 6.6% 26.5% 3.8x 3.5x 14.4x 13.5x 19.6x 18.0x Cognizant Technology Solutions Corporation $75.39 $44,527 $41,140 14.6% 1.4 9.8% 9.5% 10.7% 16.3% 20.0% 2.8x 2.5x 13.9x 12.0x 20.4x 17.3x DXC Technology Company $91.91 $26,166 $31,442 10.5% 1.4 60.3% NA NA 34.1% 17.5% 1.6x 1.3x 9.0x 6.7x 15.1x 11.6x Infosys Limited $14.55 $33,266 $27,834 9.4% 1.6 6.2% 7.2% 2.7% 4.8% 26.7% 2.6x 2.4x 9.7x 9.3x 14.9x 14.3x Capgemini SE $119.41 $19,447 $21,919 7.9% 2.2 11.7% 3.7% 18.9% 6.8% 13.4% 1.5x 1.4x 11.0x 10.3x 17.4x 16.2x NTT Data Corporation $11.55 $16,201 $19,633 8.8% 3.3 27.9% 9.0% 14.4% 7.2% 14.1% 1.1x 1.1x 7.7x 7.2x 29.1x 28.0x Wipro Limited $4.56 $22,081 $18,460 9.9% 1.7 4.6% 3.3% 12.6% (0.7%) 21.5% 2.2x 2.1x 10.2x 10.3x 16.3x 15.9x HCL Technologies Limited $13.15 $18,760 $17,453 13.5% 1.0 14.7% 11.0% 14.9% 6.9% 22.2% 2.2x 2.1x 10.1x 9.5x 13.5x 13.2x Atos SE $154.74 $16,203 $16,425 12.2% 1.3 19.4% 6.3% 15.8% 7.5% 12.6% 1.1x 1.1x 8.8x 8.2x 16.0x 14.7x CGI Group Inc. $53.44 $15,113 $16,255 13.7% 1.3 7.9% 4.4% 14.2% 5.9% 18.0% 1.9x 1.8x 10.5x 9.9x 18.4x 16.8x Nomura Research Institute, Ltd. $42.52 $10,153 $9,630 NM NM 10.8% 5.2% 10.4% 6.3% 20.5% 2.4x 2.3x 11.9x 11.2x 25.7x 24.3x Capita plc $6.89 $4,583 $7,546 17.4% 0.6 (6.8%) (10.1%) (0.7%) 2.4% 13.3% 1.3x 1.3x 10.1x 9.8x 10.9x 10.2x Genpact Limited $30.42 $5,868 $6,703 11.9% 1.6 4.8% 6.0% 6.5% 8.8% 16.6% 2.5x 2.3x 15.0x 13.8x 19.5x 17.4x Tech Mahindra Limited $7.33 $7,152 $6,057 12.4% 1.2 10.3% 4.7% (5.2%) 14.4% 13.1% 1.3x 1.2x 10.0x 8.7x 15.2x 14.0x Conduent Incorporated $15.41 $3,238 $5,059 NM NM (5.2%) (2.5%) 50.5% 10.7% 11.0% 0.8x 0.8x 7.6x 6.8x 20.5x 15.8x EPAM Systems, Inc. $90.95 $4,777 $4,358 20.2% 1.4 23.2% 21.9% 51.3% 23.7% 18.0% 3.0x 2.5x 17.0x 13.7x 27.4x 22.2x Presidio, Inc. $14.69 $1,341 $2,309 9.0% 1.3 2.1% 4.9% 18.6% 8.6% 8.1% 0.8x 0.8x 10.0x 9.2x 12.0x 11.1x Syntel, Inc. $22.82 $1,909 $2,188 10.0% 1.2 (7.2%) (4.9%) (15.7%) 2.0% 25.3% 2.4x 2.5x 9.7x 9.5x 12.2x 12.6x ExlService Holdings, Inc. $62.44 $2,119 $1,916 14.0% 1.7 10.6% 9.5% 31.6% 13.7% 17.2% 2.5x 2.3x 14.7x 12.9x 23.7x 21.7x WNS (Holdings) Limited $37.99 $1,913 $1,833 14.6% 2.8 17.4% 11.8% 34.8% 10.2% 17.8% 2.7x 2.4x 15.0x 13.6x 40.8x 25.9x MphasiS Limited $10.82 $2,090 $1,761 10.7% 1.7 7.7% 9.6% 4.0% 12.7% 15.4% 1.8x 1.7x 11.8x 10.5x 18.2x 15.4x Luxoft Holding, Inc. $45.05 $1,508 $1,411 18.5% 0.9 17.9% 18.1% 41.1% 32.6% 15.3% 1.6x 1.3x 10.4x 7.9x 16.4x 12.9x Globant S.A. $37.80 $1,320 $1,293 NM NM 24.2% 23.7% 3.8% 28.5% 15.8% 3.2x 2.7x 20.4x 15.9x 30.2x 24.5x Hexaware Technologies Limited $4.36 $1,294 $1,231 12.8% 1.4 16.1% 8.6% 19.7% 11.8% 16.6% 2.0x 1.8x 12.3x 11.0x 18.0x 16.4x Virtusa Corporation $38.35 $1,122 $1,100 17.5% 1.5 15.7% 10.0% 24.0% 46.0% 6.8% 1.2x 1.1x 17.3x 11.8x 26.0x 20.1x Mindtree Limited $7.31 $1,198 $1,064 11.6% 1.6 6.1% 9.3% (7.7%) 20.2% 12.3% 1.3x 1.2x 10.5x 8.8x 18.7x 15.6x Perficient, Inc. $19.46 $683 $746 17.0% 0.9 5.5% 14.9% 42.7% 16.2% 14.4% 1.5x 1.4x 10.4x 9.0x 15.7x 13.5x Persistent Systems Limited $10.07 $806 $693 13.9% 1.1 12.1% 13.1% 23.7% 18.8% 15.8% 1.5x 1.3x 9.4x 7.9x 15.9x 13.6x
Median 11.9% 1.4 8.2% 5.6% 11.7% 7.2% 17.5% 2.2x 2.1x 10.1x 9.8x 17.4x 15.9x
Financial SaaSIntuit Inc. $153.46 $39,128 $38,839 14.7% 2.3 10.5% 9.9% 41.4% 10.9% 37.2% 7.2x 6.6x 19.5x 17.6x 34.4x 30.3x Workday, Inc. $108.51 $22,570 $21,021 34.0% NM 34.0% 26.6% NA 40.6% 15.2% 10.0x 8.0x 65.8x 46.8x NM 98.4x The Sage Group plc $9.68 $10,455 $10,878 10.9% 2.3 9.9% 9.2% 11.9% 12.6% 29.1% 4.9x 4.4x 16.7x 14.9x 24.6x 21.8x SS&C Technologies Holdings, Inc. $40.61 $8,343 $10,456 15.0% 1.4 13.1% 6.6% 34.4% 10.8% 41.2% 6.2x 5.9x 15.1x 13.7x 21.1x 18.6x Paycom Software, Inc. $82.01 $4,886 $4,852 28.2% 2.5 31.0% 27.2% 82.4% 26.4% 28.8% 11.2x 9.0x 39.1x 30.9x 71.4x 57.4x Xero Limited $23.16 $3,180 $3,100 NM NM 39.7% 38.9% NA NA 1.6% 11.7x 8.6x NM 69.5x NM NMPaylocity Holding Corporation $52.35 $2,739 $2,636 26.5% 2.7 25.8% 23.3% NA 24.9% 19.4% 7.9x 6.5x 40.9x 32.7x 71.9x 58.9x Envestnet, Inc. $53.40 $2,351 $2,583 16.2% 2.6 16.6% 15.4% NA 25.6% 18.9% 3.8x 3.3x 20.3x 16.1x 41.6x 33.1x Financial Engines, Inc. $36.55 $2,308 $2,138 17.0% 1.6 14.4% 13.4% NA 16.4% 32.8% 4.4x 3.9x 13.5x 11.6x 26.6x 23.4x Alfa Financial Software Holdings PLC $6.36 $1,908 $1,882 NM NM 23.2% 2.4% NA NA 0.0% 16.9x 14.8x NA NA 45.3x 38.8x Coupa Software Incorporated $34.46 $1,847 $1,639 NM NM 33.4% 24.8% NA NA (9.9%) 9.2x 7.4x NM NM NM NMBlucora, Inc. $23.83 $1,099 $1,383 18.5% 0.9 10.5% 6.4% 27.7% 18.5% 19.8% 2.7x 2.6x 13.8x 11.7x 17.2x 13.4x Benefitfocus, Inc. $27.55 $859 $912 21.7% NM 9.9% 8.7% NA 69.3% 6.3% 3.6x 3.1x 56.6x 33.4x NM NM
Median 17.8% 2.3 16.6% 13.4% 34.4% 21.7% 19.4% 7.2x 6.5x 19.9x 17.6x 34.4x 31.7x
$MM, Except Per Share Data
Stock EPSPrice Equity Enterprise Long Term Revenue Growth EBITDA Growth EBITDA Margin EV / Revenue EV / EBITDA Price / EPS
10/27/17 Value Value Growth PEG 17E/16A NTM 17E/16A NTM 17E 17E 18P 17E 18P 17E 18P