We follow 59 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 still hot, but multiples came in. The median revenue multiple is now 8.9x with Snapchat and Facebook leading the way at 13.2x revenue and 9.5x revenue respectively. Line Corp’s multiple is the only one that improved over the prior period, but the overall we still view revenue multiples for social media as quite strong.
Marketplaces are at 3.7x. The revenue multiple for marketplaces fell to 3.7x. The eighteen companies in this data set are diverse, but on median generate $1.1bln in revenue with 18% YOY growth and positive EBITDA ($112mm) and cash flow ($137mm). Note the multiple is on revenue, not GMV.
Content stayed strong. Content distributors were showing weakness for the past year, but rebounded materially to 4.6x in June and 4.7x in August. Netflix’s revenue multiple continues to be the outperformer at 11.1x and Google’s revenue multiple is strong at 6.0x. 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 6.1x. Google is obviously the behemoth in the space with $102bln of revenue over the past 12 months whereas the median of the group is $1.2bln.
Gaming isnt’ growing. With all the hype around esports, the big public Gaming companies are not growing, with median YOY growth of only 1%. Their median revenue multiple of 7.3x is strong 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 $3.0bln and EBITDA is very strong at $681mm.
Ecommerce broke 2x. The sector is the least attractive to investors, with a median revenue multiple of 2.2x, although note the sector hasn’t broken 2x at any time since we’ve been tracking the data. There is a big difference between what we would call premium ecommerce like Alibaba and Amazon (11.7x and 4.6x), versus soft ecommerce like Blue Apron (0.6x 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 standout of the group (10.2x) followed by Apple (4.2x). Growth is slow in the space (6% median) but revenue is a solid $1.3bln on median with $91mm of EBITDA. Sonos, the newest addition to the space is actually trading at a lower revenue multiple than the group at only 1.9x.
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