We follow 58 publicly traded internet companies in different industries including social media, marketplaces, content distribution, gaming, ecommerce, payments, and new hardware. The one thing these companies all have in common is that consumers are a customer/critical constituent in the business model. Given the diversity of industries, the multiples vary. Below is the data along with a few observations.
Social media is whit hot. The median revenue multiple is now 11.1x with Snapchat and Facebook leading the way at 17.3x revenue and 11.5x revenue respectively. Twitter’s multiple also improved to 10.6x from 9.0x in March.
Marketplaces broke 4.0x. The revenue multiple for marketplaces increased to 4.2x, breaking the 4.0x ceiling for the first time in the data. The eighteen companies in this data set are diverse, but on median generate $1.1bln in revenue with 7% YOY growth and positive EBITDA ($101mm) and cash flow ($139mm).
Content rebounded. Content distributors were showing weakness for the past year, but rebounded materially to 4.6x revenue. Netflix’s revenue multiple continues to be the outperformer at 12.8x and Google’s revenue multiple is strong at 5.9x. It’s the rest of the group which includes underperformers like Pandora that is suppressing the industry’s multiple overall, although Spotify is trading at a healthy 5.8x.
Gaming isnt’ growing. Gaming is strong with revenue multiples of 6.8x and continuing to trend up. It’s a bit perplexing to us as the sector’s YOY growth is only 1%, although median revenue is material at $3.5bln and cash flow is very strong at $764mm.
Ecommerce is steady. The sector is the least attractive to investors, with a median revenue multiple of 1.6x. That said, there is a big difference between what we would call premium ecommerce like Alibaba and Amazon (14.4x and 4.4x), versus soft ecommerce like Blue Apron (0.8x revenue). Recall not too long ago the Wall Street Journal put out a scathing article on the meal box delivery sector, with a VC from Greycroft quoted as saying he knows no one that is actively looking at the space anymore — and Greycroft made money on Plated.
Payments. We only have two companies to look at in payments so we try not to draw generalizations about the space. We are glad to hear Stripe is considering an IPO so we’ll have another data point shortly.
Hardware is consistent. Hardware is steady at 3.2x. Roku is the stand out of the group (7.6x) followed by Apple (4.0x). Growth is slow in the space (4% median) and while revenue is a solid $1.3bln on median with $45mm of cash flow, the smaller medians in the sector perhaps helps explain why gaming trades at a more of a premium to hardware.