• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
 
SOFTWARE & SERVICES 28 APRIL 2009
WEB 2.O WEEKLY
DAVID SHORE, CFA, MBA 416.860.6784
david.shore@researchcapital.com
Arun Thomas (Associate) 416.860.7666 
WEEK FOUR IN APRIL MOSTLY QUIET; MEDIA COMPANY BATANGA RAISES $7.5 MILLION
PICK-UP IN ACTIVITY ONLY MARGINAL IN WEEK FOUR
The fourth week of April had only a marginal number of capital raises (four) and not enough to push the month aboveMarch and February levels. Total financings (month-to-date) were $102.3 million, with February and March closing offat $185.5 mm and $159.5 mm, respectively. As of last week, a total of 16 deals closed, with the $20 million raise byCollective Media and $16 million by GOOM Radio being major contributors.With four days left in April, it is evident that the month may likely finish at or slightly below March levels, unless a fewhigh dollar financings materialize. We speculate that capital market activity in April (for Web 2.0 companies) world-wide has dropped from prior months, potentially as a follow-on (time lagged) effect of the equity markets. With aseeming capital market revival on the horizon (as exhibited by stock market index levels) and if sustainable, weshould expect institutional investors to participate in venture capital funds or direct investments in private companies – albeit slowly.
Financing Activity Last Three Months
0.020.040.060.080.0100.0120.0140.0160.0180.0200.0Feb-09Mar-09Apr-09
   (   U   S   $  m   )
0.01.02.03.04.05.06.07.08.0
   (   U   S   $  m   )
TotalAverage
 
Capital Market Activity:
Four weeks into April and we saw 16 companies raising money, with GOOM Radio andCollective Media still leading the list with $16 million and $20 million, respectively. The largest raise last week was byBatanga – raising $7.5 million. The month-to-date total capital raised stands at $102.3 million. The Rubicon Project(ad network sector) and Cellufun (gaming sector) followed GOOM Radio, raising $13 million and $10 million,respectively.
Price Performance:
Most of the companies in our universe had positive stock price performances over the past week(for stocks with prices greater than $1), with 22 companies showing positive returns on the week. Modern TimesGroup Mtg AB (MTG B-OM) led the group with a 27.7% return, while DigitalTown Inc. (DGTW-OTCBB) had the worstreturn, dropping 21.7% in the week. Two companies had better than 20% price increases last week.
This report has been created by Analysts that are employed by Research Capital Corporation, a Canadian Investment Dealer.
 
For further disclosures, please see last page of this report.
www.researchcapital.comToronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
 
 
 Page 2
THE WEB 2.0 UNIVERSE
Ninety-two public Web 2.0 companies identified:
Our Web 2.0 universe contains 92 companies, with a combined marketcap of ~ $41 billion (Figure 1). The average market cap for the group is ~$452 million (but a median of only $45.8 million),with average trailing revenue of $145.7 million (median $51.8 million). The companies are also generally profitable, with amedian EBITDA margin of 17.6%. On a valuation basis, the overall average is 4.7x trailing revenue (median 1.3x) and 9.1xtrailing EBITDA (median 7.6x). Thirteen of the companies have more than 500 employees.
Comparable Company Analysis > Web 2.0
Company NameLTM as ofTickerExchangeTradingCurrencyHQCurrentPriceUSD MarketCap ($m)USD LTM TotalRev ($m)USD LTM TotalEBITDA ($m)EBITDA%TEV/LTMRevenueTEV/LTMEBITDAEmployees
Accelerize New Media, Inc.12/31/2008ACLZOTCBBUSDUnited States0.4913.4 3.8 (4.8)NM4.7x- 11Actoz Soft Co., Ltd.12/31/2008A052790KOSEKRWSouth Korea14,70093.2 69.5 13.9 20.0%0.9x4.7x NAAQ Interactive, Inc.12/31/20083838TSEJPYJapan47,100.0026.2 61.6 4.9 8.0%-- NAAssociated Media Holdings Inc.6/30/2007ASMHOTCPKUSDUnited States00.1 0.1 (2.3)NM8.1x- 3Bigstring Corp.12/31/2008BSGCOTCBBUSDUnited States0.010.7 0.1 (2.1)NM23.6x- 4Betawave Corporation12/31/2008BWAVOTCBBUSDUnited States03.2 7.7 (11.8)NM-- 45Beyond Commerce, Inc.12/31/2008BYOCOTCBBUSDUnited States1.4961.6 1.8 (8.6)NM35.5x- 43Bright Things plc9/30/2008AIM:BGTAIMGBPUnited Kingdom05.0 0.2 (1.6)NM20.6x- 3,125BroadWebAsia Inc.9/30/2008BWBAOTCPKUSDUnited States0.4538.2 0.0 (4.6)NM-- 37CDC Corp.9/30/2008CHIN.ANasdaqGSUSDHong Kong1126.3 428.1 18.8 4.4%0.4x9.7x NAChina Gateway Corporation9/30/2008CGWYOTCBBUSDUnited States0.000.0 6.7 (6.6)-98.9%6.0x- NAChinese Gamer International12/31/2008GTSM:3083GTSMTWDTaiwan215540.7 46.2 23.3 50.5%1.1x13.3x NACornerWorld Corporation1/31/2009CWRLOTCBBUSDUnited States0.106.4 1.3 NM NM0.8x4.7x 574Cyberplex Inc.12/31/2008TSX:CXTSXCADCanada153.8 46.7 3.9 8.4%0.5x3.9x NADADA SpA9/30/2008CM:DACMEURItaly5.85123.7 221.2 35.3 16.0%-- NADXN Holdings Bhd11/30/2008DXNKLSEMYRMalaysia020.2 76.7 10.2 13.3%5.6x- 11Dibz International, Inc.NADIBZOTCPKUSDUnited States0.000.0 NA NM NM-- 3DigitalPost Interactive, Inc.9/30/2008DGLPOTCBBUSDUnited States01.3 0.4 (3.3)NM-- 6DigitalTown, Inc.11/30/2008DGTWOTCBBUSDUnited States2.3563.6 NM (2.5)NM2.2x- NADolphin Digital Media, Inc.NADPDMOTCBBUSDUnited States126.1 NA NM NM-- NAEolith Co. Ltd.12/31/2007A041060KOSEKRWSouth Korea760.0040.7 18.6 (0.1)-0.3%-- 22Extensions, Inc.12/31/2008EXTIOTCPKUSDUnited States014.2 NM NM NM0.0x- 29FinancialMedia Group, Inc.11/30/2008FNGPOTCBBUSDUnited States0.000.3 6.8 1.2 18.3%5.2x- NAFluid Music Canada, Inc.9/30/2008TSX:FMNTSXCADUnited States015.0 4.2 (8.6)NM1.1x7.8x NAFrogster Interactive Pictures AG6/30/2008FRGXTRAEURGermany9.0627.8 5.3 (3.2)-60.6%0.4x1.7x NAGamania Digital Entertainment Co., Ltd.12/31/20086180GTSMTWDTaiwan32144.4 111.5 16.1 14.5%6.9x- 94GameOn Co Ltd.12/31/20083812TSEJPYJapan92,000.0090.9 76.2 19.7 25.9%-- NAGeoSentric Oyj12/31/2008GEO1VHLSEEURFinland046.7 5.7 (12.8)NM1.5x6.3x NAGiant Interactive Group, Inc.12/31/2008GANYSEUSDChina8.501,921.0 233.6 144.6 61.9%-- 636GigaMedia Ltd.12/31/2008GIGMNasdaqGSUSDTaiwan7364.7 190.4 46.0 24.2%40.8x- NAGravity Co., Ltd9/30/2008GRVYNasdaqGMUSDSouth Korea0.9025.0 36.5 7.0 19.2%1.2x6.9x NAGree, Inc.6/30/2008TSE:3632TSEJPYJapan5,6501,288.0 30.0 10.8 36.0%1.2x- NAGungHo Online Entertainment, Inc.12/31/20083765OSEJPYJapan139,000.00162.7 114.9 20.5 17.8%0.3x7.6x 3,200HanbitSoft, Inc.12/31/2008A047080KOSEKRWSouth Korea4,77077.9 51.8 (14.6)-28.2%-- NAIAC/InterActiveCorp.12/31/2008IACINasdaqGSUSDUnited States15.922,243.9 1,445.1 64.6 4.5%-- NAIAS Energy, Inc.1/31/2009IASC.AOTCBBUSDCanada017.5 0.0 (0.8)NM2.1x- NAIdeaEdge, Inc.12/31/2008OTCBB:IDAEOTCBBUSDUnited States0.4418.8 0.0 (4.6)NM0.9x2.5x 72iseemedia Inc.12/31/2008IEETSXVCADCanada04.2 1.2 (4.8)NM2.6x- 237Jumbuck Entertainment Pty Ltd.12/31/2008ASX:JMBASXAUDAustralia0.4716.4 12.7 4.7 37.2%1.1x11.2x NAJumpTV Inc.12/31/2008TSX:JTVTSXCADCanada151.0 13.4 (8.4)-62.6%3.7x9.5x 2,271Kaboose Inc.12/31/2008TSX:KABTSXCADCanada0.5967.4 66.8 6.6 9.9%3.1x- NAKingsoft Co. Ltd.12/31/20083888SEHKHKDChina4515.9 120.2 46.3 38.5%0.2x- NALingo Media Corporation9/30/2008TSXV:LMTSXVCADCanada0.909.5 3.3 (1.4)-42.5%-- 90LiveWorld Inc.12/31/2008LVWDOTCPKUSDUnited States03.1 11.8 (0.5)-4.3%-- 13LookSmart, Ltd.12/31/2008LOOKNasdaqGMUSDUnited States1.3623.1 65.0 (2.0)-3.1%5.4x14.3x NAMagnitude Information Systems Inc.9/30/2008MAGYOTCBBUSDUnited States06.5 0.1 (3.2)NM1.4x8.5x 2,969Mixi, Inc.12/31/20082121TSEJPYJapan483,000.00757.4 119.8 45.6 38.0%-- 3Modern Times Group Mtg AB12/31/2008MTG BOMSEKSweden2121,668.7 1,572.8 253.7 16.1%3.3x- NAMoggle, Inc12/31/2008MMOGOTCBBUSDUnited States2.3083.5 NM (1.1)NM3.0x11.3x NAMOKO.mobi Limited12/31/2008MKBASXAUDAustralia04.4 1.0 (2.1)NM1.9x4.2x 2,426NEOWIZ Games Corporation12/31/2007A095660KOSEKRWSouth Korea58,400.00418.5 134.3 36.1 26.9%-- NANetDragon WebSoft, Inc.12/31/2008777SEHKHKDChina5313.1 87.3 39.9 45.7%-- 19Netease.com Inc.12/31/2008NTESNasdaqGSUSDChina30.253,722.3 451.8 293.7 65.0%-- NANeXplore Corporation9/30/2007NXPCOTCPKUSDUnited States141.8 NM (4.9)NM0.2x1.3x 286Ngi Group Inc.12/31/20082497TSEJPYJapan36,300.0045.8 100.4 30.9 30.8%2.4x9.6x 3,400Northgate Technologies Limited12/31/2008590057BSEINRIndia4631.9 135.1 23.8 17.6%0.1x- 627Open Text Corp.12/31/2008OTEXNasdaqGSUSDCanada33.541,740.7 769.3 195.0 25.3%-- NAOpenwave Systems Inc.12/31/2008OPWVNasdaqGSUSDUnited States199.1 199.6 (10.2)-5.1%2.6x- NAPerfect World Co., Ltd.12/31/2008PWRDNasdaqGSUSDChina16.78885.3 210.5 113.9 54.1%-- 74PhotoChannel Networks Inc.12/31/2008TSXV:PNTSXVCADCanada243.3 16.2 (0.8)-4.9%0.0x0.2x NAQuepasa Corp.12/31/2008QPSANasdaqCMUSDUnited States0.8711.1 0.1 (11.4)NM0.1x0.3x NAOAO RBC Information Systems12/31/2007RBCIRTSUSDRussia1105.7 141.0 18.4 13.1%0.8x5.9x 514Shanda Interactive Entertainment Ltd.12/31/2008SNDANasdaqGSUSDChina47.303,281.8 522.7 240.2 46.0%2.0x21.1x NAShutterfly, Inc.12/31/2008SFLYNasdaqGSUSDUnited States10255.1 213.5 28.4 13.3%1.8x5.8x 11SK Communications Co., Ltd.12/31/2007A066270KOSEKRWSouth Korea10,000.00306.4 154.5 14.5 9.4%1.1x- 33SNAP Interactive, Inc.12/31/2008STVIOTCBBUSDUnited States17.0 3.0 0.9 31.4%0.0x- NASNM Global Holdings9/30/2008SNMNOTCPKUSDUnited States0.010.0 2.0 (0.7)-34.8%3.8x9.0x 3,197Social Media Venures, Inc.12/31/2008SMVIOTCPKUSDUnited States00.0 0.1 (0.1)-60.5%-- 15Sohu.com Inc.12/31/2008SOHUNasdaqGSUSDChina50.531,926.0 429.1 180.5 42.1%0.8x3.8x 183Sitesearch Corporation1/31/2009STPCOTCBBUSDUnited States328.2 NM (1.1)NM-- 7Spark Networks, Inc.12/31/2008LOVAMEXUSDUnited States2.2546.3 57.3 12.3 21.5%15.9x32.5x 6,194SpectrumDNA, Inc.12/31/2008SPXAOTCBBUSDUnited States09.7 0.1 (2.5)NM0.2x- 347 Tencent Holdings Ltd.12/31/2008700SEHKHKDChina65.9515,325.4 1,047.9 512.5 48.9%-- NA The Parent Company8/2/2008KIDS.QOTCPKUSDUnited States00.3 112.0 (13.5)-12.0%-- 310 The9 Limited12/31/2008NCTYNasdaqGSUSDChina9.21247.0 250.2 84.3 33.7%4.6x- 16 TheStreet.com, Inc.12/31/2008TSCMNasdaqGMUSDUnited States271.9 71.9 7.0 9.7%0.3x- 700 Total Sport Online AS3/31/2006TOSOOTCNONOKNorway0.030.1 2.0 (1.0)-50.6%0.1x29.5x NA Tree.Com, Inc.12/31/2008TREENasdaqGMUSDUnited States658.3 228.6 (23.9)-10.4%1.0x4.5x 1,469Uniserve Communications Corp.11/30/2008TSXV:USSTSXVCADCanada0.040.8 24.4 0.1 0.4%8.6x- NAUnited Online Inc.12/31/2008UNTDNasdaqGSUSDUnited States5390.2 669.4 153.9 23.0%1.1x6.3x 1,189UOMO Media, Inc1/31/2009UOMOOTCBBUSDCanada0.065.1 0.6 (0.5)-78.2%-- 4ValueClick Inc.12/31/2008VCLKNasdaqGSUSDUnited States10840.6 625.8 113.6 18.2%-- NAVOIS, Inc.12/31/2008VOISOTCBBUSDUnited States0.302.5 0.0 (1.3)NM4.3x- 110Webzen Inc.12/31/2008WZENNasdaqGMUSDSouth Korea333.0 21.2 (4.2)-19.8%-- NAWizzard Software Corporation12/31/2008WZEAMEXUSDUnited States0.5525.9 6.1 (6.0)-98.2%-- 1WoozyFly, Inc.12/31/2008WZYFOTCBBUSDUnited States02.6 NM NM NM-- NAWorlds.com Inc.9/30/2008WDDDOTCBBUSDUnited States0.178.9 0.1 NM NM3.1x9.8x 174Wyndstorm CorporationNAWYNDOTCBBUSDUnited States01.6 NA NM NM2.2x9.8x NAXING AG12/31/2008O1BC XTRAEURGermany29.77199.0 45.6 14.6 32.0%0.6x- NAYedangOnline Corp.12/31/2007A052770KOSEKRWSouth Korea9,670112.7 51.1 11.4 22.4%0.6x- NAYnk Korea Inc.12/31/2007A023770KOSEKRWSouth Korea4,700.008.6 14.5 (1.1)-7.6% - - -ZipLocal Inc.12/31/2008TSXV:ZIPTSXVCADCanada00.3 2.6 (2.8)NM40.8x32.5x 20,164High15,325.41,572.8512.565.0%40.8x32.5x20,164Low0.00.0-23.9-98.9% - - 0
Average451.8145.732.06.9%4.7x9.1x1,122
Median45.851.81.217.6%1.3x7.6x183
 
Figure 1. Web 2.0 Universe Summary Source. Capital IQ 
 
 Page 3
CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)
Marginal activity - April financing will likely be below March:
Last week closed with 16 financings (month-to-date April)totalling $102.3 million. The month of April (so far) has registered four deals greater than or equal to $10 million and twodeals greater than $15 million. The month of March registered 22 financings (total $130.7 million, average $5.9 million)compared to 25 financings announced in February, totalling $185.5 million, or $7.4 million on average (Figure 2). Theaverage value for February was above the $6.8 million average for January, with four financings over $15 million inFebruary (Twitter, Synthasite, Tremor Media, and Offerpal Media) vs. no deals over $15 million in January.
Financing Activity Last Three Months
0.020.040.060.080.0100.0120.0140.0160.0180.0200.0Feb-09Mar-09Apr-09
   (   U   S   $  m   )
0.01.02.03.04.05.06.07.08.0
   (   U   S   $  m   )
TotalAverage
 Figure 2. Financings, Last Three Months Source. Company reports 
Collective Media largest deal in April:
Four weeks into April and Collective Media tops the list with a $20 million raise,followed by Goom Radio and The Rubicon Project with $16 million and $13 million, respectively (Figure 3). For additionaldetails, see Figures 23 and 24 (at end of note).
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...