SaaS Median Operating Ratios

Publicly traded SaaS companies have maintained relatively flat sales & marketing and research & development expenditures, as a percent of revenue over the past year, while cutting back on G&A expense. On a median basis in 4Q16, 36.9% of revenue was spent on S&M, 18.8% on R&D and 16.3% on G&A.

Subscribe to SEG Research Reports

slide-11

LTG Offers to Acquire NetDimensions for $67 Million

Learning Technologies Group (LTG), a provider of specialist learning management solutions, offers to acquire NetDimensions, a provider of learning and performance management solutions predominantly to highly regulated industries. The proposed transaction follows LTG’s long-term strategy of acquiring specialist LMS providers and further expands its reach into the healthcare, life sciences, manufacturing, financial services, energy, transportation and government markets.

Brief Transaction Details:

Enterprise Value (mm) $55.8
TTM Seller Revenue (mm) $25.3
TTM Seller EBITDA (mm) $0.3
Revenue Multiple 2.2x
TTM EBITDA Multiple 166.5x
Seller Business Description

NetDimensions (Holdings) Limited, an investment holding company, provides performance, knowledge, and learning management solutions worldwide.

Buyer Business Description

Learning Technologies Group plc provides various e-learning services and technologies to corporate and government clients worldwide.

For more information, see the Press Release.

Hexagon Acquires MSC Software for $834 Million

Hexagon AB, a leading provider of geospatial and industrial applications, has acquired MSC Software, a leading provider in computer-aided engineering (CAE). The $834 million dollar transaction strengthens Hexagon’s ability to connect the traditionally separate stages of design and production by integrating production floor data with simulation data to further improve a customer’s ability to reveal and correct design limitations and production problems prior to manufacturing. The 3.6x TTM revenue multiple was driven, in part, by MSC’s strong recurring revenue base and profit.

Transaction Details:

Enterprise Value (m) $834.0
TTM Seller Revenue (m) $230.0
TTM Revenue Multiple 3.6x
Seller Business Description

Hexagon AB is a leading global provider of information technologies that drive productivity and quality across geospatial and industrial enterprise applications.

Buyer Business Description

MSC Software is a leading provider of computer-aided engineering (CAE), including simulation software technology that enables engineers to validate and optimize their designs using virtual prototypes.

For more information, see  Hexagon Press Release

Public SaaS Companies Nearing GAAP Profitability

Median EBITDA margin for the SEG Public SaaS Index was -4.1% during the final quarter of 2016 and has been trending toward positive territory for the past couple of years. This compares to -9.4% and -13.7% in 4Q15 and 4Q14, respectively. While 60% of the index posted GAAP losses during 4Q16, approximately 70% of the index posted positive cash flow from operations (CFO) in Q4. For additional insight, please see SEG’s 4Q16 Software Industry Financial Report.

slide-10-ebitda-slide

Subscribe to SEG Research

Zoopla Acquires Hometrack for $182m

Zoopla, a leading provider of internet listings and data services for the U.K. real estate property market, has acquired Hometrack, a provider of real estate property data and analytics services. With the acquisition, Zoopla aims to complement its ILS offering with enhanced pricing and valuation information services for property sellers and buyers in the U.K. market. The $182 million purchase price includes approximately $135 million cash at close, deferred payments of $7.5 million during each of the next two years, and an earnout of $31 million payable over ten years (based on achieving certain performance targets).

Transaction Details:

Enterprise Value (m) $182.2
TTM Seller Revenue (m) $21.5
TTM Seller EBITDA (m) $10.3
TTM Revenue Multiple  8.5x
TTM EBITDA Multiple 17.7x
Seller Business Description

Hometrack is a leading provider of residential property market insights and analytics in the U.K.

Buyer Business Description

Zoopla is a property website in the U.K. that combines property listings with market data, local information, and community tools.