Practitioners Insights Valuing Tech IPOs

Valuing Tech IPOs / SPACs
September 2021
Private and Confidential

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Table ofTech
Valuing Contents
IPOs / SPACs
Section Title
1. IPO Trends & Emergence of SPACs
2. Analysis of Tech Index/ Recent Tech IPOs
3. Decoding returns from Tech IPOs
4. Valuation Matrix for New age companies
Table of Contents a) Unit Economics
b) Market Potential
c) Relative Analysis
5. IPO Disclosures & Storytelling

1.
IPO Trends &
Emergence of
SPACs
US IPOs: Highlights (1/2)
Number of IPOs & Proceeds raised (USD Bn)

110 300
282 275
100
90 250
80 225
214
70
200
177 175
60 160 157
151 150
50
125
40 113 107 100
30 85
68 75
20 50
10 25
42.7 54.9 85.3 30.0 18.8 35.5 46.9 46.3 78.2 100.5
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD
Proceeds raised Number of IPOs
• The graph above represents the total funds raised by companies through IPO and number of companies listed (excluding SPAC) in last
10 Years
• 2021 has been the blockbuster year with highest number of IPO deals and highest gross proceeds raised from IPO
Source: S&P Capital IQ, Renaissancecapital

Private and Confidential September 23, 2021
US IPOs: Highlights (2/2)
Funds Raised (last 12 Months) Number of IPOs (last 12 Months)
Technology, Media & Health Care - 42.6%

Telecommunication - 27.3% 1.0%
0.2%
1.5% Health Care - 25.1% 2.3% Telecommunication, Media &
Communication - 22.4%
Consumer Discretionary & 5.8% Consumer Discretionary &

9.5%
Staples - 24.9% Staples - 18.9%
Industrials - 11.1% 6.3% Financials - 6.3%

27.3%
11.1%
Financials - 9.5% Industrials - 5.8%
42.6%
18.9% Materials - 2.3%

Materials - 1.5%
Real Estate - 1.0%

24.9% Real Estate - 0.4%
25.1% Energy - 0.5%

Energy - 0.2%
22.4% Utilities - 0.3%

Utilities - 0.0%
• In the last 12 months, Technology, Media and Telecommunication (TMT) sector witnessed deals with highest funds raised
• In the last 12 months, Healthcare sector has seen a lot traction in respect of number of IPOs considering the global impact of the
pandemic, COVID-19. However, followed by healthcare, TMT has witnessed the greatest number of IPOs issued.
Note: The IPOs count and value are exclusive of SPAC transactions
Source: S&P Capital IQ, Renaissancecapital
Top 10 US IPOs (2020-YTD)
Across All Sectors
Top 10 IPOs based on Funds Raised Financial Services

(USD Bn) (2020-YTD)
Consumer Discretionary
$6.0 Bn & Staples
Coupang, Inc. , $4.6 Bn TMT

DiDi Global Inc. , $4.4 Bn
Pershing Square Real Estate
Tontine Holdings, Ltd.
$5.0 Bn , $4.0 Bn
Healthcare
Airbnb, Inc. , $3.5 Bn
Snowflake Inc. , $3.4 Bn

$4.0 Bn
Royalty Pharma DoorDash, Inc. , $3.4 Bn

$3.0 Bn
plc , $2.2 Bn
$2.0 Bn
Lufax Holding Ltd , $2.4 Bn

KE Holdings Inc. , $2.1 Bn Bumble Inc. , $2.2 Bn
$1.0 Bn
$.0 Bn
Mar/20 Apr/20 Jun/20 Aug/20 Sep/20 Nov/20 Jan/21 Feb/21 Apr/21 Jun/21 Jul/21
Note: The above data may include SPAC vehicles

Source: S&P Capital IQ
SPACs: Highlights (1/2)
Gross Proceeds & SPAC IPO Count

500 140,000
434
120,000
400
100,000
300 248
80,000
200 60,000
40,000
100 59
34 46 20,000
7 15 9 10 12 20 13
1
- -
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD
Gross Proceeds (USD Mn) IPO Count
• Special purpose acquisition companies (SPACs) have been around since the 1990s. Yet, 2020 saw more SPAC IPOs than all
previous years combined and was the first year where SPAC IPOs exceeded traditional IPOs.
• The first two quarters of 2021 saw a continued expansion in the number of SPACs formed. In a statement on April 8, 2021, the U.S.
Securities and Exchange Commission (SEC) said: “Over the past six months, the U.S. securities markets have seen an
unprecedented surge in the use and popularity of special purpose acquisition companies.”
• The graphs shows the number of SPACs that got listed in each calendar year with gross proceeds received through IPOs.
Source: SPACInsider
SPACs: Highlights (2/2)
Number of SPACs in last 12 Months
0.8%
Technology, Media &
1.1% 0.3% Telecommunication - 27.0%
Healthcare - 20.7%
6.3%
Consumer Discretionary & Staples -
9.4% 18.2%
27.0%
Industrial - 16.3%
Materials - 9.4%
16.3%
Financials - 6.3%
20.7% Real Estate - 1.1%
18.2% Utilities - 0.8%
Energy - 0.3%
• Despite certain challenges faced by SPACs in the second quarter of 2021,

including a more competitive PIPE financing environment and heightened SEC
scrutiny, the SPAC market remains active with more than 39 IPOs completed
through the second quarter of 2021 and over US$ 81 Bn of gross proceeds
raised.
Source: D&P SPAC Market Report, S&P Capital IQ, SPAC Insider
Top 10 US de-SPACs (2020-YTD)
Across All Sectors
$45 Bn Top 10 de-SPACs based on Transaction value Healthcare

(USD Bn) (2020-YTD)
Finance
$40 Bn Consumer Discretionary

& Staples
TMT
$35 Bn
Industrials
$30 Bn
Grab Holdings Inc., $36 Bn
MSP Recovery, LLC, $32 Bn

$25 Bn
$20 Bn
Blue Owl Capital Inc. , $12 Bn Lucid Group, Inc. , $12 Bn

$15 Bn
UWM Holdings Corporation , $18

Bn
Ginkgo Bioworks, Inc., $17 Bn
$10 Bn
SoFi Technologies,
Joby Aviation, Inc. , $7 Bn
Inc. , $8 Bn
Aurora Innovation, Inc., $11 Bn
$5 Bn
CCC Intelligent Solutions Holdings
Inc. , $8 Bn
$ Bn
Jun/20 Aug/20 Sep/20 Nov/20 Jan/21 Feb/21 Apr/21 Jun/21 Jul/21 Sep/21

Key Drivers: Low Interest (1/2)
Sub-zero ECB Interest rates
Source: Trading Economics

Source: Bloomberg
Low rates amounts to low opportunity cost:
• Rates in the US and the Eurozone are at an all time low (almost zero), and are expected to remain so in the short term till 2022 – 2023
• Near-zero risk free rates translates to lower cost of capital, with reduced return requirements and higher present value of asset cash
flows. This makes the high-risk-high return investments (Early stage and Emerging Markets) much more attractive
Source: Bloomberg
Key Drivers: High Liquidity/ Money Supply (2/2)
Source: Bloomberg Source: Bloomberg
Glut of cash creates investment power:
• Liquidity is at its peak in both, the US and the Eurozone, thanks to the welfare and social security expenditure triggered by the Covid-
19 Pandemic. 40% of US dollars in existence were printed in the last 12 months alone.
• Higher money supply has put ‘excess’ money in the hands of people, sitting on unprecedented volume of savings. These savings are
driving the asset prices given zero (to negative) interest rates if kept in a bank.
Source: Bloomberg, TechStartup

2.
Analysis of Tech
Index / Recent
Tech IPOs
Tech Index Analysis (1/2)
TOTAL RETURN (5- YEAR)

450
394.5
400
350
372.7
300
250
200 230.8
150
100
Tech Index Analysis

50
0
Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21
S&P 500 (TR) Dow Jones U.S. Technology Total Return Index S&P North American Technology Sector Index (TR)
• Comparative Analysis shows that total return for the trailing 5 years for Dow Jones and S&P’s Technology Sector Index is approximately
1.5 times as compared to S&P 500.
• The recent volatility in the market due to COVID and the disruption in business activity has further increased the spread between the
technology sector indices and broader market index.
The returns have been normalized by taking base year return as 100
Source: S&P Capital IQ, CNBC
Tech Index Analysis (2/2)
5-Year Annualized Returns

STOCK INDEX RETURN
S&P North American Technology Sector Index 29.9%
US Dow Jones Technology Index 31.5%
NASDAQ-100 Technology Index 31.4%
S&P 500 18.2%
Dow Jones Industrial Average TR 16.3%
S&P 500 Financials (Sector) (TR) 16.1%
Dow Jones Utility Average TR 10.4%
S&P 500 Industrials (Sector) (TR) 13.5%
S&P 500 Health Care (Sector) (TR) 15.4%
• The table above depicts 5-year annualized returns of all the major indices in the US. Tech Sector Indices have outperformed
all other indices including S&P 500 by a wide margin of 12%-13%. This implies a continuous strong growth in the constituent
companies of these indices.
• Further, in 2021 tech sector is experiencing all-time highs inducing a sudden surge in new issues/ public offerings as the
investors do not fear the impact of COVID on tech companies.
• Given the way technology is positively influencing the world and making companies more efficient, this trend is more than
likely to continue going forward.
Source: S&P Capital IQ, S&P Publication

FAANG - Stock Price Analysis
COVID-19 declared as
pandemic by WHO on Total Price Return
Return on FAANG and S&P 500
March 11, 2020 (Jan-20 to Sep-21)
250.0 10
200.0 8 82.1%
7
150.0 6 83.3%
5
100.0 4
103.1%
3
50.0 2
1 76.5%
- 0
Jan/20 May/20 Sep/20 Jan/21 May/21 Sep/21
Facebook Amazon Apple 112.2%
Netflix Google S&P 500
S&P 500 Information Technology
• Facebook, Amazon, Apple, Netflix and Alphabet (FAANG) have outperformed the broader markets over the past month, retaking leadership of
the S&P 500 with a combined market capitalization was over $7 trillion as of September 2021.
• FAANG combined has returned a 45.4 percent annualized total return from January 1, 2020, to September 15, 2021, as compared to 20.4 per
cent for the S&P 500 and 34.8 per cent for the S&P 500 Information Technology Index.
• Why do people chase FAANG: Probability of default of Market Leader is low, irrespective of how the companies are valued, they will emerge
as leaders, therefore people invest aggressively in the top tier companies.
Source: S&P Capital IQ, CNBC

Top Tech US IPOs analysis (last 3 years) (1/2)
IPO Multiples Trading Multiples

Current
Pricing Funding Mcap EV/ EV/
Name Date Brief Description (USD Mn) (USD Mn) Revenue EV/EBITDA Revenue EV/EBITDA
1 Uber May-19 Develops and operates proprietary technology applications 8,100.0 76,542.2 7.7x NMF 6.5x NMF
Technologies, Inc.
2 Coupang, Inc. Mar-21 Owns and operates in e-commerce business through its mobile 4,550.0 54,306.5 5.4x NMF 3.3x NMF
applications and Internet websites
3 DiDi Global Inc. Jun-21 A mobility technology platform, provides ride hailing and other services. 4,435.2 44,373.8 3.7x NMF 2.8x NMF
4 Airbnb, Inc. Dec-20 Operates a platform for stays and experiences to guests worldwide. 3,490.0 96,998.5 11.7x NMF 20.8x NMF
5 DoorDash, Inc. Dec-20 Operates a logistics platform that connects merchants, consumers, and 3,366.0 64,816.2 15.4x NMF 14.5x NMF
dashers
6 Snowflake Inc. Sep-20 Provides cloud-based data platform 3,360.0 89,140.4 85.0x NMF 100.1x NMF
7 Lyft, Inc. Mar-19 Operates a peer-to-peer marketplace for on-demand ridesharing 2,555.7 16,217.2 8.6x NMF 6.1x NMF
8 Bumble Inc. Feb-21 Provides online dating and social networking platforms 2,472.5 6,623.7 14.3x 66.7x 11.7x 61.6x
9 AppLovin Apr-21 Engages in building a software-based platform for mobile app developers 2,000.0 27,665.6 17.0x 95.8x 13.1x 68.1x
Corporation to enhance the marketing and monetization of their apps worldwide.
10 Playtika Holding Jan-21 Develops mobile games 1,876.5 11,056.0 5.5x 23.7x 5.0x 16.4x
Corp.
11 Qualtrics Jan-21 Provides an experience management platform for organizations to design, 1,783.5 23,543.9 19.9x NMF 26.4x NMF
International Inc. manage, and improve customer, employee, product, and brand
experiences of businesses.
12 Pinterest, Inc. Apr-19 Provides visual discovery engine 1,638.8 36,737.4 13.4x NMF 15.5x 125.7x
13 Full Truck Jun-21 Operates a digital freight platform that connects shippers with truckers to 1,567.5 19,490.9 48.5x NMF 27.8x NMF
Alliance Co. Ltd. facilitate shipments across distance ranges, cargo weights, and types
14 Affirm Holdings, Jan-21 Operates a platform for digital and mobile-first commerce 1,386.2 25,576.2 20.5x NMF 29.9x NMF
Inc.
15 UiPath Inc. Apr-21 Provides an end-to-end automation platform that offers a range of robotic 1,337.9 31,567.9 49.1x NMF 40.3x NMF
process automation (RPA) solutions
16 GoodRx Holdings, Sep-20 Provides information and tools that enable consumers to compare prices 1,313.7 15,022.5 29.7x 79.9x 23.5x NMF
Inc. and save on their prescription drug purchases
17 Unity Software Sep-20 Operates a real-time 3D development platform. 1,300.0 35,738.6 22.0x NMF 36.9x NMF
Inc.
18 SentinelOne, Inc. Jun-21 Operates as a cybersecurity provider in the United States. 1,225.0 17,596.6 82.5x NMF 130.1x NMF
Mean 38,500.8 25.5x - 28.6x -

We have filtered IPOs based on companies whose funding size was more than USD 1 Billion
Median 29,616.7 16.2x - 18.1x -
*The trading multiples are as of September 01, 2021
Top Tech US IPOs analysis (last 3 years) (2/2)
Issue Price Current Share Price

Name Pricing Date (USD) (USD) Total Change %
1 Uber Technologies, Inc. May-19 45.0 40.6 -9.7%
2 Coupang, Inc. Mar-21 35.0 31.3 -10.6%
3 DiDi Global Inc. Jun-21 14.0 9.2 -34.3%
4 Airbnb, Inc. Dec-20 68.0 156.6 130.3%
5 DoorDash, Inc. Dec-20 102.0 191.8 88.0%
6 Snowflake Inc. Sep-20 120.0 301.0 150.9%
7 Lyft, Inc. Mar-19 72.0 48.4 -32.8%
8 Bumble Inc. Feb-21 43.0 55.3 28.6%
9 AppLovin Corporation Apr-21 80.0 74.3 -7.1%
10 Playtika Holding Corp. Jan-21 27.0 27.0 0.0%
11 Qualtrics International Inc. Jan-21 30.0 45.8 52.5%
12 Pinterest, Inc. Apr-19 19.0 57.0 199.9%
13 Full Truck Alliance Co. Ltd. Jun-21 19.0 18.0 -5.5%
14 Affirm Holdings, Inc. Jan-21 49.0 96.5 96.9%
15 UiPath Inc. Apr-21 56.0 62.0 10.8%
16 GoodRx Holdings, Inc. Sep-20 33.0 38.0 15.1%
17 Unity Software Inc. Sep-20 52.0 126.5 143.3%
18 SentinelOne, Inc. Jun-21 35.0 67.3 92.2%
Mean 50.5%
Median 21.8%
Top Gainer: Pinterest, Inc. Top Loser: DiDi Global Inc.

Return: 199.9% Return: -34.3%
Possible Reasons: Possible Reasons:
- Revenue has approximately doubled - Geopolitical factors affecting business
from last Dec-19 to Jun-21 in China
- EBITDA margin: -119% to 12% (Dec-19
to Jun-21)
*The Current share price are as of September 01, 2021
Source: S&P Capital IQ, News Articles
The Great Chinese crackdown
Impact of crackdown on MCap of Chinese tech giants (USD Bn) Impact of crackdown:
800 -45% 1. $ 1.5 Tn in Market Cap lost in less than a year
-41.4%
700 -40%
600 -35% 2. Alibaba and Tencent together lost over $700 Bn in MCap.
-32.2%
-30%
500 3. The Chinese government-initiated cybersecurity reviews of
-25%
400 Didi and a number of other China-based companies. As a
-19.9% -20% result of that development, DiDi reportedly isn’t allowed to
300 -17.6%
-15% register new users
200 -10%
100 -5% Three sectors that are important for the middle class:
- 0%
Alibaba Tencent Meituan Didi • Education
Before After Change in market Cap
• Healthcare
• Housing - Affordable
Wealth of Billionaire's (US$ Tn)
3.6
1.8x
1.7
1.3 11.1x Aims of the Chinese authorities:
0.14 1. Common Prosperity – Managing the rich & poor gap
USA China 2. Stability of power – By keeping the middle class happy

2009 2020
3. Strategic industries – Semiconductors, AI&ML, 5G, Cloud etc.
Source: S&P Capital IQ; From Jan 2021- YTD, Forbes

Top Tech de-SPACs analysis (last 12 months)
• The largest de-SPAC deal in the TMT sector in last 12 months was of Aurora Innovation Inc., a California-based self-driving software company. The
transaction valued the company at $10.8 billion. Some of the notable TMT transactions in last 12 months are as follows:
Transaction Multiple Trading Multiple

Date Target Business Target Deal Value Enterprise Value
Announced Target Acquirer Industry Geography Target Business Description (USD Mn) (USD Mn) EV/ Revenue EV/ EBITDA EV/ Revenue EV/ EBITDA
Jul-21 Aurora Reinvent Technology Application United States Develops software and hardware products for self-driving 10,835.0 NA NA NA NA NA
Innovation, Partners Y Software vehicles. It serves mobility services, vehicle manufacturing,
Inc. and fleet management services sectors.
Jul-21 Circle Internet Concord Acquisition Data Processing Ireland Operates a crypto currency platform. 5,415.0 4,500.0 39.1x NMF NA NA
Financial Corp and Outsourced
Limited Services
Jul-21 Cvent, Inc. Dragoneer Growth Application Hosting United States Develops a cloud-based enterprise event management 4,481.4 4,436.4 8.9x 34.2x NA NA
Opportunities Corp. II Services platform for corporate events and meetings.
Jun-21 Dave, Inc. VPC Impact Application Hosting United States Develops a financial management mobile application to 3,951.0 3,563.0 29.2x 445.4x NA NA
Acquisition Holdings Services prevent bank overdrafts.
III, Inc.
May-21 PlusAI, Inc. Hennessy Capital Application United States Develops self- driving trucks to enable commercialization of 3,301.0 2,473.0 154.6x NMF NA NA
Investment Corp. Software autonomous transport.
Apr-21 Grab Holdings Altimeter Growth Application Singapore Operates a transportation and fintech platform in Southeast 39,600.0 30,360.0 19.0x 63.3x NA NA
Inc. Corp. Software Asia.
Feb-21 CCC Dragoneer Growth Application Hosting United States Provides SaaS platform for the property and casualty 7,533.0 2,210.2 3.5x 13.2x 12.8x 47.4x
Intelligent Opportunities Corp. Services insurance economy.
Solutions
Holdings Inc.
Jan-21 SoFi Social Capital Consumer Digital United States Operates an online platform that provides financial 7,962.7 12,164.7 21.5x NA NA NA
Technologies, Hedosophia Holdings Lending services.
Inc. Corp. V
Jan-21 Latch, Inc. TS Innovation Application United States Designs and develops application software. The Company 1,036.0 1,032.7 57.2x NMF NA NA
Acquisitions Corp. Software offers building automation system for residents, third
parties, guests, couriers, and services providers.
Dec-20 Katapult FinServ Acquisition Data Processing United States Provides lease-purchase platform, providing alternative 910.9 971.3 4.7x 20.0x NA NA
Holdings, Inc. Corp. and Outsourced solutions for retailers and consumers
Services
Oct-20 BTRS South Mountain Application United States Provides cloud-based software and integrated payment 1,349.1 1,382.7 13.1x NMF 12.1x NMF
Holdings Inc. Merger Corp. Software processing solutions.
Sep-20 Advantage Conyers Park II Media United States Operates as a marketing agency. 2,271.2 5,143.6 1.5x 10.5x 1.4x 11.3x
Solutions Inc. Acquisition Corp.
Sep-20 Skillz Inc. Flying Eagle Media United States Online mobile multiplayer video game competition platform 3,345.7 3,276.8 19.5x NMF 14.1x NMF
Acquisition Corp.
Mean 3,689.6 2,975.5 36.4x 127.5x 10.1x 29.3x
Median 3,323.4 3,276.8 19.5x 27.1x 12.5x 29.3x
Mean (Techonology) 3,909.9 2,622.7 43.8x 166.5x 12.5x NA
Median (Technology) 3,626.0 2,473.0 29.2x 34.2x 12.5x NA

Aurora Innovation Inc.: Case Study
Transaction Highlights:
Reinvent Technology Partners Y and Aurora Innovation Inc.
COMPANY OVERVIEW FUNDING ROUNDS

Pre-Money
Aurora Innovation, Inc. develops software and hardware products for self- Announced Deal Size
Buyer/Investors Round Type Valuation
Date ($mm)
driving vehicles. It serves mobility services, vehicle manufacturing, and fleet ($mm)
management services sectors. Jul-13-2021 AB Volvo; Baillie Gifford & Co.; and Growth 11,000.0 1,000.0
others
Dec-07-2020 Uber Technologies, Inc. Venture NA 400.0
Aurora Innovation, Inc. was founded in 2016 and is headquartered in Aug-26-2019 NA Series B NA 69.5
Mountain View, California. It has additional offices in Bay Area, California; Feb-06-2019 Amazon.com Inc., Investment Arm; Series B 1,754.5 721.4
Bozeman, Montana; Pittsburgh, Pennsylvania; and Dallas, Texas. Geodesic Capital; and others
Feb-28-2018 Greylock Partners; Index Ventures Series A 3,693.7 83.1
SA
Aurora Innovation, Inc. entered into an agreement to acquire Reinvent Mar-08-2017 NA Seed 418.5 3.1
Technology Partners Y in a reverse merger transaction for $10.6 billion on
July 14, 2021.
Transaction Summary: Aurora Innovation Inc.
The transaction has not closed, and Aurora is not currently trading. 14,000 1,400
Amount Raised (USD Mn)

11,000
Pre Money Valuation (USD Mn)

(USD Mn) (USD Mn) 12,000 1,200
Equity Value 13,039 10,000 1,000
Less: Cash 2,478 791 1,000
8,000 800
Enterprise Value 10,562
6,000 600
3,694 400
Historical Financials Snapshot 4,000 400
1,754
2,000 419 83 200
(USD Mn) CY19A CY20A 3
Revenue 19.6 - 0 0
Profit/(Loss) from operation (113.5) (218.1) Seed Series A Series B Venture Growth
Amount Raised (USD Mn) Aurora Valuation
Source: S&P Capital IQ, company filings; press releases

3.
Decoding returns
from Tech IPOs
Overview of Tech IPO Study (last 5 years)
• We have searched for IPOs that took place in the last five years on major US stock exchanges. We have filtered the companies based
on Market Cap of more than USD 1 Bn as on the date of first trading, and then prepared our analysis on the shortlisted 90 companies.
• Following are the top 3 IPOs from each year which we have considered in our analysis:
2020 2019 2018

Market Cap Market Cap Market Cap
Top 3 IPOs Top 3 IPOs Top 3 IPOs
(USD Bn) (USD Bn) (USD Bn)
$ 90.9 $ 113.8 $ 75.8
$82.9 $ 81.5 $ 59.7
$59.7 $ 59.5 $ 43.0
2017 2016
Market Cap Market Cap
Top 3 IPOs Top 3 IPOs
(USD Bn) (USD Bn)
$ 123.2 $ 66.6
$ 36.9 $ 38.9
$ 24.6 $ 15.7
*Market cap is as of the date of listing
Source: Our Analysis and S&P Capital IQ
Tech IPO Study: Key Trends (1/5)
A. Stock returns heatmap

Average M arket Cap return % M edian M arket Cap return %
IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year
Year Count +1 +2 +3 +4 +5 CAGR Year Count +1 +2 +3 +4 +5 CAGR
2016 7 18.8% 70.7% 66.2% 48.0% 50.6% 42.2% 2016 7 13.6% 96.8% 53.0% 57.3% 38.5% 44.1%
2017 10 36.7% 25.6% 37.9% 78.3% NA 32.9% 2017 10 1.3% 12.4% 37.6% 48.5% NA 22.8%
2018 21 21.3% 19.3% 46.6% NA NA 22.0% 2018 21 14.0% 16.6% 54.0% NA NA 20.2%
2019 18 54.2% 97.1% NA NA NA 57.8% 2019 18 46.5% 75.8% NA NA NA 48.6%
2020 34 42.3% NA NA NA NA NA 2020 34 5.7% NA NA NA NA NA
Average Stock Return M ultiple M edian Stock Return M ultiple

IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year
Year Count +1 +2 +3 +4 +5 Year Count +1 +2 +3 +4 +5
2016 7 1.0x 1.2x 2.0x 3.4x 5.0x 7.5x 2016 7 1.0x 1.1x 2.2x 3.4x 5.4x 7.5x
2017 10 1.0x 1.4x 1.7x 2.4x 4.2x NA 2017 10 1.0x 1.0x 1.1x 1.6x 2.3x NA
2018 21 1.0x 1.2x 1.4x 2.1x NA NA 2018 21 1.0x 1.1x 1.3x 2.0x NA NA
2019 18 1.0x 1.5x 3.0x NA NA NA 2019 18 1.0x 1.5x 2.6x NA NA NA
2020 34 1.0x 1.4x NA NA NA NA 2020 34 1.0x 1.1x NA NA NA NA
• There is a significant jump in the market cap in the last five years, and the Average/ Median Market Cap Returns have been amongst
the highest in 2021 for each of the IPO sets portraying that tech sector has significantly picked up in the ongoing COVID era.
• Average Stock Return Multiple has zoomed, increasing three-fold times in a span of last three years and almost doubled in the last
one year, indicating expectation of even higher earnings of the companies in future (or re-pricing).
• Pinterest which got listed in April 2019 has had a tremendous growth becoming 4x in these two years, jumping from USD 12 Bn to
USD 48 Bn. Further, Snap Inc, which got listed in March 2017, the market cap grew by ~370% in the last one year.

B. Revenue growth heatmap

Average Revenue Growth% M edian Revenue Growth%
IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year
Year Count -1 +1 +2 +3 +4 +5 CAGR Year Count -1 +1 +2 +3 +4 +5 CAGR
2016 7 72.1% 88.4% 43.2% 29.2% 27.2% 22.9% 24.5% 36.6% 2016 7 89.9% 86.6% 45.4% 36.6% 25.8% 21.4% 15.0% 33.9%
2017 10 36.0% 98.7% 38.0% 23.4% 32.8% 19.3% NA 36.0% 2017 10 45.2% 51.7% 36.8% 23.8% 37.9% 11.0% NA 32.1%
2018 21 36.6% 52.0% 25.8% 22.8% 18.8% NA NA 28.3% 2018 21 42.2% 35.9% 25.7% 23.8% 15.2% NA NA 22.7%
2019 18 95.2% 80.6% 47.1% 42.0% NA NA NA 51.9% 2019 18 106.3% 74.4% 44.0% 30.9% NA NA NA 48.9%
2020 34 43.0% 89.8% 25.0% NA NA NA NA 45.2% 2020 34 20.1% 34.4% 21.7% NA NA NA NA 27.9%
Average Revenue Growth M ultiple M edian Revenue Growth M ultiple

IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year IPO Year
Year Count +1 +2 +3 +4 +5 Year Count +1 +2 +3 +4 +5
2016 7 1.0x 1.4x 1.9x 2.4x 2.9x 3.6x 2016 7 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x
2017 10 1.0x 1.4x 1.7x 2.3x 2.7x NA 2017 10 1.0x 1.4x 1.7x 2.3x 2.6x NA
• Average/ Median Revenue Growth for all companies listed in the last five years were highest in and around the IPO year, and
thereafter have been declining in the successive years. However, the overall revenue CAGR continue to be robust between 30%-40%
• Average Revenue Growth Multiple for all companies have increased substantially post IPO, resulting in 2x – 3x revenues
• Revenue Growth for the companies IPO’d in 2019 is significantly higher due to high performing companies like Zoom (CAGR of
159%), Crowdstrike (CAGR of 103%), and Pinterest (CAGR of 60%).

C. Stock return vs. Revenue growth

Average Stock Return Multiple/ Revenue Growth Multiple Median Stock Return Mutiple/ Revenue Growth Multiple
IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO
Year Count Year Year +1 Year +2 Year +3 Year +4 Year +5 Year Count Year Year +1 Year +2 Year +3 Year +4 Year +5
2016 7 1.0x 0.8x 1.1x 1.4x 1.7x 2.0x 2016 7 1.0x 0.8x 1.1x 1.4x 1.8x 2.1x
2017 10 1.0x 1.0x 1.0x 1.0x 1.5x NA 2017 10 1.0x 0.7x 0.7x 0.7x 0.9x NA
Average EV/ Revenue Median EV/ Revenue

2016 7 8.8x 6.3x 8.9x 12.4x 16.9x 17.3x 2016 7 10.5x 7.9x 10.1x 9.3x 15.0x 18.4x
2017 10 15.1x 8.9x 8.8x 10.0x 15.9x NA 2017 10 9.4x 6.3x 6.6x 5.5x 8.0x NA
• A ratio of Average Stock Return Multiple / Average Revenue Growth Return Multiple indicates if the stocks have usually grown
in-line with the underlying revenue; 1x ratio indicates par level returns and growth
• The said ratio appears to have got overheated in the last one year, going much beyond 1x; indicating either a stock over-run or
an increased expectation of higher revenue growth in the near future, or a combination of both. This trend is further highlighted
in the expanding EV/ Revenue multiples specially in the last one year.
• Average EV/ Revenue multiple for 2019, has been driven by Bill.com Holdings’ multiple of 118x in 2021. Further, companies
listed in 2020 like Snowflake traded at a revenue multiple of 177x.
D. Profitability heatmap
Average EBITDA Margin% Median EBITDA Margin %
2016 7 -9.6% -7.1% -3.5% -7.1% -9.4% -6.2% 2016 7 -15.8% -9.5% -5.9% -4.7% -1.7% -1.9%
2017 10 -20.3% -12.7% -15.1% -10.2% -3.4% NA 2017 10 -17.6% 8.8% -12.7% -11.8% -2.7% NA
2018 21 0.9% -7.5% -2.5% -2.6% NA NA 2018 21 -0.5% -8.4% -7.8% -2.5% NA NA
2019 18 -17.7% -30.2% -15.2% NA NA NA 2019 18 -10.0% -22.0% -10.9% NA NA NA
2020 34 -8.2% -32.6% NA NA NA NA 2020 34 -2.5% -13.1% NA NA NA NA
Average FCFF % of Revenue Median FCFF % of Revenue

2016 7 -2.3% 4.7% 9.1% 9.2% 6.9% 17.7% 2016 7 -6.7% 6.7% 10.4% 7.0% 8.9% 14.0%
2017 10 -10.9% 18.4% 2.9% 14.7% 13.6% NA 2017 10 2.7% 14.3% 9.1% 12.9% 11.8% NA
2018 21 14.2% 2.5% 9.0% 15.8% NA NA 2018 21 15.7% 9.1% 9.7% 13.3% NA NA
2019 18 6.9% 8.4% 14.3% NA NA NA 2019 18 8.4% 9.5% 18.4% NA NA NA
2020 34 6.4% 10.2% NA NA NA NA 2020 34 6.4% 16.9% NA NA NA NA
• Average / Median EBITDA margins for all the companies listed in last 5 years continues to be negative. There is a general trend
of an improvement in operating margins over the years (though still negative) and the older listed companies are approaching
break-even point.
• Interestingly, while the margins continue to be negative, Average / Median FCFF (as a % of Revenues) are positive and
increasing for all companies. Infact, the FCFFs have seemed to zoomed to the highest levels in 2021!
• Should this explain the stock returns over-running the revenue growth?

E. Decoding the gaps..

Average NWC % of Revenue Median NWC % of Revenue
IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO
Year Count Year -1 Year Year +1 Year +2 Year +3 Year +4 Year +5 Year Count Year -1 Year Year +1 Year +2 Year +3 Year +4 Year +5
2016 7 -12.5% -10.6% -9.0% -9.3% -9.4% -6.2% -14.6% 2016 7 -16.3% -13.5% -8.6% -9.2% -17.6% -0.5% -28.8%
2017 10 -43.3% -21.6% -21.7% -12.5% -13.5% -11.4% NA 2017 10 -24.0% -20.6% -24.2% -9.6% -10.2% -12.2% NA
2018 21 -15.8% -11.8% -1.6% -2.8% -4.9% NA NA 2018 21 -23.7% -30.4% -26.8% -23.7% -26.2% NA NA
2019 18 -42.1% -1.2% -5.1% -12.2% NA NA NA 2019 18 -16.0% -16.1% -13.2% -13.9% NA NA NA
2020 34 -17.2% -16.9% -25.3% NA NA NA NA 2020 34 -8.7% -11.6% -17.2% NA NA NA NA
Average SBC as % of revenue Median SBC as %of revenue

IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO IPO
Year Count Year -1 Year Year +1 Year +2 Year +3 Year +4 Year +5 Year Count Year -1 Year Year +1 Year +2 Year +3 Year +4 Year +5
2016 7 4.6% 3.0% 9.4% 9.7% 12.9% 14.5% 16.5% 2016 7 4.7% 4.0% 9.3% 8.3% 11.4% 13.3% 15.7%
2017 10 8.8% 6.5% 15.4% 13.8% 15.1% 14.6% NA 2017 10 2.6% 7.9% 7.7% 11.0% 14.5% 15.1% NA
2018 21 6.5% 5.3% 13.7% 9.7% 12.0% NA NA 2018 21 3.9% 4.6% 6.4% 8.4% 9.3% NA NA
2019 18 4.7% 6.1% 21.4% 13.1% NA NA NA 2019 18 2.5% 2.8% 13.5% 13.9% NA NA NA
2020 34 7.0% 8.8% 23.7% NA NA NA NA 2020 34 1.6% 1.8% 11.5% NA NA NA NA
• There is a continued trend of negative net working capital (NWC) for all the companies. Further, the trend appears mixed wherein it
has increased for certain IPO sets (like 2020), it appears to have remained similar or decreased for others.
• Stock-based compensation (SBC) seems to have reached very significant levels over the years for all companies. Since it is a non-
cash expense it is contributing to positive FCFF despite negative EBITDA margins through the years. Average SBC (as a % of
revenue) appears to be more prevalent in the newly listed companies with about 15%-20% of revenues being expensed in stock
compensation.
• If the said compensation were to be given in cash, there may not be any free cash flows!
4.
Valuation Matrix
for New age
companies
a. Unit Economics
Should we rely on Gross Metrics or Unit Economics?
Gross Metrics Unit Metrics
1. Monthly Website Traffic: The more people hear 1. Customer Acquisition Cost: is the cost
about your product, the more likely they are to check associated in convincing per customer to buy a
out your web page. product/ service.
2. Customer Retention Rate: The portion of

2. Take Rate: The take rate, or more commonly consumers who remain customers for an entire
referred to as ‘rake’, is the number of users or site reporting period.
visitors that take action on an offer. An attractive offer
will have a higher take rate as more customers will 3. Life Time Value : is the present value of the
want to sign up. future net profit from the customer over the
duration of the relationship. It helps determine
the long term value of the customer and how
3. Gross Merchandise Value: GMV is a term used in
much net value you generate per customer
online retailing to indicate a total sales dollar value
after accounting for customer acquisition costs.
for merchandise sold through a particular
marketplace over a certain time frame.
4. Contribution Margin: is a measure of your per
unit profit, by subtracting the variable cost per
4. Total Revenue: is recognized as the total receipts a unit from the sale price of the product or
seller can obtain from selling goods and services to service.
buyers.

Should we rely on Gross Metrics or Unit Economics?
Gross Metrics Unit Economics

• Total value of merchandise sold over a given • Direct revenues and costs associated with a
period of time through a customer-to-customer particular business model, and are specifically
exchange site. expressed on a per unit basis.
• Measure of long-term profit potential

• Measure of the growth of the business
• Net measure of profitability/cash generation
• Gross measure (calculated prior to the deduction
of any fees or expenses)
GMV and Revenue/ Loss (USD Bn)

18 2.00
1.6
13 1.50 Amazon (GMV)
Flipkart (GMV)
8 1.00
0.7 0.9
Amazon Revenue
0.3 0.3 0.4
3 0.50
2.4 3.7 7.5 6.2 11.5 15.0 Flipkart Revenue
2016 2018 2020

-2 - Amazon (Loss)
(0.3) (0.3)
(0.2)
(0.5)
Flipkart (Loss)
-7 (0.50)
(0.8)
(0.9)
-12 (1.00)
-17 (1.50)
Source: Private Circle, Economic Times, Barclays

Unit Economics: Zomato (1/2)
Anatomy of an online food delivery order
1. Net Cost of Food (Adjusted for Restaurant/Zomato Funded

Discounts) =
01 (a) Zomato’s commission less discounts +
01 (aa) Zomato’s commission -
01 (ab) Zomato funded discount
01 (b) Restaurant’s revenue share
2. Delivery Charges Paid by Users ( Pass–through to Delivery
Partners)
3. Packing Charges (Pass-through to Restaurants Partners)
4. Tips (if any) (Pass-through to Delivery Partners)
5. Additional Fee (Zomato’s outsourced service cost)
6. Advertisement Revenue (from Restaurants to Zomato)
Source: Zomato DRHP

Unit Economics: Zomato (2/2)
FY 2020 Unit Economics (INR) Key Operating metrics

Parameter 2018 2019 2020 9M 2020
Active Restaurants (Mn) 33,192 94,286 1,43,089 1,32,769
Average MAU (Mn) 14 29 42 30
Average MTU (Mn) 1 6 11 6
Orders (Mn) 31 191 403 155
GOV (INR Mn) 13,314 53,870 1,12,209 61,699
AOV (INR) 435 282 278 398
Key Points:
9M FY 2021 Unit Economics (INR) 1. The biggest contributors to the positive unit economics were:
• Higher commission per order
• Lower delivery expense per order
• Lower discounting per order
2. Higher AOV and commission per order were result of changes bought
on by the pandemic, like combined ordering and more orders from
organised players
01 (aa) 2 2+5 01 (ab) * 01 (a) - 5 3. These changes might reverse back after the pandemic induced
restrictions are gone, making the sustainability of this positive unit
economics uncertain.
* - comprises payment gateway charges, support cost, restaurant partner refunds, delivery partner onboarding,
delivery partner insurance, SMS, cash on delivery handling and call masking, among others
Source: Zomato DRHP
Customer Lifetime Value (1/3)
Customer Lifetime Value
• What is Customer Lifetime Value (“CLV”)?

‒ The present value of the future cash flows attributed to the customer during his/her entire relationship with the
company.
• What are key determinants of CLV?

‒ CLV is primarily driven by:
✓ Customer Retention Rate
✓ Customer Lifetime Cashflow
• Why CLV?
‒ Generally, startups deploy funds to acquire a customer base. The average acquisition costs and customer retention
rate would be comparable in a like-to-like business model.
‒ Further, CLV along with Revenue/ Cost ratio can be quite useful in comparison of profitability per customer across
business models.

Example of Customer Lifetime Value (contd.)
• Step 1: Customer Retention Rate: • Step 2: Customer Lifetime Revenue:

• Computed by plotting the Annual Retention Rate and • Total commission revenue from a customer is
aggregating them to compute total surviving determined by taking into account average no. of
customers through their life orders and average commission per order
• The implied curve of these surviving customers will • Customer Lifetime Revenue is then determined by
constitute Lifetime Retention Rate adjusting its revenues with the lifetime retention rate
Customer Retention Rate (%)

For the year ending 2019 2020 2021 2022 2023
100.0% (INR)
75.0% 75.0% 80.0%
70.0% Average no. of orders 2.0 3.0 4.0 5.0 5.0
80.0% 78.5% (Q)
Gross Order Value 53.5 54.5 56.0 57.5 59.5

60.0% (GOV)
40.0% 62.8% Commission per order 10.7 10.9 11.2 11.5 11.9
(P)
47.1%
20.0% 37.7% A: Total Commission 21.3 32.6 44.8 57.7 59.4
33.9% Revenue (P*Q)
0.0% Customer Retention 78.5% 62.8% 47.1% 37.7% 33.9%
2019 2020 2021 2022 2023 Rate
B: Customer Lifetime 100.2
Annual Retention Rate Revenue
Lifetime Retention Rate

Example of Customer Lifetime Value (contd.) Customer Lifetime Value: Zomato
• Step 3: Customer Lifetime Value: • GOV Retention by Cohort:

• Finally, Customer Lifetime Value is computed by • The chart below shows indexed growth in annual
adjusting its lifetime revenue with the costs GOV by customer cohort (surviving).
associated with a customer i.e. customer lifetime • Indicates how customers have increased their spend
service cost and customer acquisition cost over a period of time
• Revenue / Cost Ratio = Customer Lifetime Revenue • However, the below chart does not indicate the
/ (Customer Acquisition cost + Customer lifetime attrition curve / retention rate of such cohorts
service cost) = 3.2x
• Ideally, monthly average churn rates could have been
provided for gauging attrition-adjusted lifetime
Customer Lifetime Value (INR) revenue of existing customer base of Zomato
120.0
100.0
80.0 INR 9.4
60.0 INR 22.2

INR 100.2
40.0
INR 68.6
20.0
0.0
Customer Customer Customer Customer
lifetime revenue lifetime Service acquisition cost lifetime value
cost
Source: Zomato DRHP

b. Market Potential
The India Advantage
Size:
• Currently, the number of internet users
in India (~0.6bn) is 2x the size of US
population, giving the tech companies a
much bigger playground to play on
Growth potential:
• With internet penetration in India still
below that of US and China, Indian
market are expected to grow rapidly,
along with a bigger consumer funnel
Internet Users
Consumer Funnel
• Further, combining the under penetrated
1400 1000
1.66x 1.36x 1225 900 ~70% restaurant food market (as a % of
1200 900 800
growth growth overall food) and online food delivery
975 800 720
1000 900 700 585
635 users (as a % of internet users), we are
600 ~23%
800 695
500
looking at 5x size in the next 5 years
585 415
600 400
320 300 235
400
200 135
200 100 “When clubbed together, these size and
0 0 growth potential provides a potential for
India China India China
hefty returns on investment, even to the late
2015 2019 2025P A B C D
stage investor.”
A – Access to Internet B – Active Internet
Users
- Bob van Dijk, CEO Prosus (HoldCo of
C – Online Services Users D – Online Shoppers Naspers) on acquisition of BillDesk by PayU
Source: Zomato DRHP, Economic Times

Digging deep into Zomato’s market potential (1/5)
From a restaurant listing app to a food delivery public company, Zomato has traversed a long was in a new industry
and, along with its key competitors like Swiggy, UberEats (acquired), FoodPanda (acquired) and such, has invested a
lot in creating and expanding the market.
Lets discover the key variables for determining market potential:
1. Total Addressable Market (TAM):

✓ New customer segments: Tier 2 and 3 cities’ continued expansion
✓ No longer a food delivery app: Entered into B2B Hyperpure and grocery delivery (just exited)
✓ Investment in Grofers, as the grocery delivery arm
✓ Going international: Zomato now operates in 24 countries in total, including India
✓ However, 91% of revenues for FY 2021 was from India, hence the primary market continues to be India
X New GST regulations that can impact small restaurants with annual turnover of less than Rs. 20 Lakhs
Market Size 2020 India US China UK Europe
Online Food Delivery

4.35 26.5 51.5 5.9 18.9
(US$ Bn)
Projected 5 year CAGR

35% 10% 14% 10% 9%
(2020-25)
Online Food Delivery

50 110 450 25 150
Users (Mn)
Per User Order Value

85 240 115 235 125
(US$) (rounded)
Source: Zomato DRHP, Statista, Bain, BusinessofApps

2. Market share and revenue sharing:

✓ Zomato, along with Swiggy, leads the online food delivery market in India.
✓ Zomato currently holds a market share of around 44% (based on GoV) and expected to maintain in near future
✓ Some of the smaller competitors have been acquired – UberEats (by Zomato) and FoodPanda (by Ola); Dunzo in talks with
Swiggy
✓ US and China: DoorDash (57%) and Meituan (65%), have grown their market shares recently over UberEats (23%) and Ele.me
(27%), respectively
✓ Entry barrier: Consumer loyalty programs, deep pocketed incumbents, high cash burn in the initial years
✓ Access to cheaper cost of capital (Mcap US$ 15 Bn) as compared to Swiggy (Last round US$ 5.5 Bn)
US market China market
Postmates, Others, 8%
Others, 1%
3%
Ele.me,
Grubhub, 27%
16%
DoorDash,
57%
Uber Eats, Meituan,
23% 65%
Source: Zomato DRHP, Statista, Bloomberg Second Measure

Private and Confidential Source: Bloomberg Second Measure
2. Market share and revenue sharing (contd.):

X Potential competition from the likes of Amazon and Ola
X Amazon, with over 100 Mn users in India, last year launched food delivery service in Bangalore
X Ola, with a customer base of 200 Mn, recently launched Ola Foods
X Risk of competitors banding together (Swiggy - Dunzo)
X Swiggy and Dunzo, combined has over 50% of the market share, are in talks for the latter's acquisition
X Risk of investors betting on Zomato’s competitors
X Swiggy raising US$ 1.25 Bn from SoftBank and Prosus
X Dunzo raising US$ 40 Mn from Google
X Commission/take rate of around 22% might undergo a change
X Global players like DoorDash and UberEats offer lower commission rate options, ranging from 15% to 30% in slabs;
Meituan offering a take rate of 18%
X Restaurants have started working with SaaS platforms like DotPe and Thrive to create ordering systems, who may
not charge commissions at all, rather earn through other streams
• Key Questions:
• Can/will a duopoly exist between Zomato and Swiggy, and will they maintain equivalent market share?
• As a public company, how long can Zomato continue the cash burn to acquire new customers?
• Can Zomato maintain customer loyalty through Pro/Gold like programs without deep discounting?
• What other business verticals can Zomato enter (Grocery, Payments, etc.) to build stickiness?
Source: Zomato DRHP, various news articles

3. Operating margins:
✓ Contribution per order has become positive to INR 23
If we adjust FY21 Advertisement and Sales promotion expense per order of around INR 22, the contribution per order
becomes nil
✓ Lower advertisement costs and employee costs boosts the operating margin, which is 33% for DoorDash and about 25% for
Zomato, down from 67% and 49% respectively.
✓ Newer technologies like drone and automatic vehicle delivery has the potential to lower the delivery cost significantly
If we adjust the un-recovered part of delivery expense per order of around INR 18, the contribution per order jumps by 80%
X Government regulation/ labour laws for gig workers might increase “outsourced service cost”, as certain employee benefits
may have to be provided
X Intense competition might jack-up the discounting or sales promotion expenses, leading to a continued cash burn
Key Questions:
• What will be the long term take rates for the company?
• Is the current structure of positive unit economics sustainable?
• Accordingly, what can be the long term operating margins for the company, can it reach global levels?
EBITDA margins 2021A 2022E 2023E 2024E 2025E 2026E

Zomato (Mar ending) -24.9% -26.2% -14.9% -1.2% -4.3% 2.0%
DoorDash (Dec ending) -10.8% 6.1% 7.8% 12.4% 7.6% 11.5%
Meituan (Dec ending) 0.8% -52.1% 2.1% 7.5% 14.0% 19.0%
Source: S&P Capital IQ estimates, various news articles

Exit Exit
India Food Delivery Multiple - Multiple -
Operating
(US$ Mn) FY 2022 2023 2024 2025 2026 2027 2028 2029 2030 Low High margins:
Market Size 5,873 7,928 10,703 14,449 19,506 26,332 35,549 47,991 64,788 • Moving long
Growth YoY 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% term margins to
15% / 25%
Market Share 44% 44% 44% 44% 44% 44% 44% 44% 44%
GOV 2,584 3,488 4,709 6,357 8,582 11,586 15,641 21,116 28,507
changes the
contribution per
Take Rate 22% 22% 22% 22% 22% 22% 22% 22% 22% share to INR 60
Revenue (food delivery) 568 767 1,036 1,399 1,888 2,549 3,441 4,646 6,271 / 97
Operating Margin -26% -15% -1% -4% 2% 5% 10% 15% 20% 15x 25x
Operating Income (149) (115) (13) (60) 38 127 344 697 1,254 18,814 31,357
Discount rate:
Depreciation 2% 9 12 16 21 28 38 52 70 94
• Moving
Taxes 25% (37) (29) (3) (15) 9 32 86 174 314
After Tax Operating Income (112) (86) (10) (45) 28 96 258 523 941
discounting to
18% / 12%
Depreciation 9 12 16 21 28 38 52 70 94 discounting
Capex 2% 9 12 16 21 28 38 52 70 94 changes the
WC change -10% (57) (20) (27) (36) (49) (66) (89) (120) (163)
contribution per
FCFF (55) (66) 17 (9) 77 162 347 643 1,103
share to INR 63
Time Period 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 / 98
PV factor 15% 0.93 0.81 0.71 0.61 0.53 0.46 0.40 0.35 0.30 0.30
PV of FCFF (51) (54) 12 (5) 41 75 140 225 336 7,647
Total PV of cash flows (USD Mn) 8,367

Number of shares (Mn) 7,850
Implied Contribution Per Share (INR) ₹ 78
The above analysis does not indicate fair value price of Zomato’s share as the Company has other businesses / investments and operates in 24 countries, not
captured herein. Further, other non-operating assets and liabilities including cash/ net debt have not been adjusted in the above contribution per share.
Source: Our Analysis, S&P Capital IQ estimates
c. Relative Analysis
Guideline Public Comparatives (1/2)
Where is my CLV…?
Using the Guideline Public Company Method involves three main phases and numerous steps.
Search & Select Adjust & Compute Apply & Conclude
1. Understand your 4. Adjust data on 7. Apply concluded

subject company guideline companies multiples to subject
as necessary company
2. Search for and select
comparable 5. Compute selected 8. Adjust implied value
companies multiples of subject for
appropriate
3. Select appropriate 6. Conclude on point
premiums/discounts
value measures estimates and/or
(revenue, EBITDA, ranges for multiples 9. Conclude on value
etc.)

Guideline Public Comparatives (2/2)
Where is my CLV…?
• As the guideline comparable company approach is only as accurate as inputs, selecting the correct
guideline companies is paramount to the concluded value
“Do the underlying economic forces driving this guideline company match those that drive our
subject company?”
• Possible factors to consider when determining comparability:

– Business lines – Types of customers
– Markets served – Size of business
– Earnings – Sales volume
– Capital structure – Product mix / diversification
– Credit status – Opportunity set
– Management – Territory of operations
– Nature of competition – Financial ratios
– Maturity of business – Book value
– Industry position – Investment risk (rate of return)
• Which factors to look at very much depends on the industry that the subject company operates within

Relative analysis: Zomato
Particulars Zomato DoorDash Meituan Key Points to consider:

Primary market India US China
• Market size and expected
Population 1.36 Bn 0.33 Bn 1.43 Bn growth is quite varied
Market size US$ 4.3 Bn US$ 26.5 Bn US$ 51.5 Bn across the three
geographies
Market share 44% 57% 65%
• DoorDash and Meituan are

Latest Enterprise Value US$ 14.7 Bn US$ 70.5 Bn US$ 178.9 Bn already operating as distant
market leaders (monopoly),
EV / Market size (current) 3.29x 2.64x 3.48x
while Zomato is competing
with Swiggy (Duopoly)
LTM Revenue US$ 0.35 Bn US$ 4.2 Bn US$ 23.7 Bn
EV / LTM Revenue (current) 42.1x 16.9x 7.6x
• While Zomato appears to
be priced quite rich
relatively, it also expects to
Projected 5-year Revenue CAGR (FY26) ~40% ~28% ~29% grow faster than the comps
Growth-adjusted EV/ Revenue multiple 1.05x 0.61x 0.26x
• Finally, the growth-adjusted
multiple needs to be further
Projected EBITDA margins (FY26) ~2% ~11% ~19% reviewed in terms of
relative profitability and risk
Projected Cash burn US$ 0.32 Bn - US$ 1.8 Bn
Source: Our Analysis, S&P Capital IQ estimates

Circle: Case Study (1/6)
• Circle help internet businesses accept payments and send payouts globally in one unified platform. It can move digital money
Where is my CLV…?
leveraging traditional payment rails or do business in a more global, scalable, and efficient way through blockchain infrastructure.
• It operates a crypto currency platform and is a peer-to-peer payments technology company. It uses Bitcoin, Bitcoin cash, Ethereum,
Ethereum classic, Litecoin, Zcash, and Monero in their platform.
• The company was incorporated in 2013 and is based in Dublin, Ireland. It will go public through SPAC with a deal size of USD 4.5 Bn.
Source: Circle Investor Presentation

• Since the solutions / services provided by Circle are varied in nature, and finding a perfect comparable would be very difficult
•
Where is my CLV…?
Accordingly, the management chose different companies for different segments:
Source: Circle Investor Presentation

Payment Network
High growth payment &

EV and Trading Multiples Financials Software
Digital Asset Focused
Enterprise Value (EV) (USD Bn) Current EV/ Revenue
Average: USD 148.3 Bn Average: 33.9x

Median: USD 93.1 Bn Median: 38.0x
79.9x
494.3
54.7x
351.6
39.1x 40.0x
38.0x
185.5
20.6x
18.7x
123.9
93.1
7.9x
53.6 6.5x
26.2
4.5 2.1
Circle Mastercard Visa Adyen Bill.com Shopify Square Bakkt Coinbase Circle Mastercard Visa Adyen Bill.com Shopify Square Bakkt Coinbase
Source: Our Analysis, Circle Investor Presentation, S&P Capital IQ

Payment Network

A. Growth adjustment Financials Software
Revenue CAGR (FY 21E-23E) Growth Adjusted EV/ Revenue (FY 21-23E)
Average: 55.6% Average: 1.5x

6.2x
Median: 32.6% Median: 1.2x
177.6%
154.8%
2.1x
46.9% 1.2x 1.2x

1.2x
37.9% 1.0x
32.6%
18.1% 16.8% 0.5x
13.9%
0.2x 0.2x
1.3%

Payment Network

B. Margin adjustment Financials Software
EBITDA Margin FY23E Growth & Margin Adjusted EV/ Revenue FY23E
Average: 35.9% 1.8x

Average: 0.5x
Median: 28.3%
Median: 0.3x
71.5%
62.2% 63.2%
0.8x
34.5%
0.6x
22.1%
15.5% 0.3x
10.0% 0.2x
7.8% 0.2x 0.2x
0.1x
NMF NMF

Payment Network

C. Risk adjustment (Alpha) Financials Software
Relative Upside Ratio Relative Upside Ratio

(Using Growth & Margin Adjusted EV/ Revenue FY23E) (Using Growth & Long term Margin* Adjusted EV/ Revenue
FY23E) 28.3x
8.1x
Relative Upside Ratio: Average: 2.4x Relative Upside Ratio: Average: 8.0x
Median: 1.3x Median: 4.0x
Risk Adjusted Ratio: Average: 1.9x 6.1x Risk Adjusted Ratio: Average: 5.1x
16.0x
12.5x
3.6x
9.5x
2.7x 2.7x
2.0x 7.1x
1.5x 5.3x 5.4x

0.6x 0.6x 1.1x 0.4x
2.6x 2.7x 3.0x
0.8x 0.8x
0.5x 1.5x 1.5x 1.8x
1.0x
NMF NMF
Incremental Risk Adjustment (10% Alpha) Incremental Risk Adjustment (10% Alpha)
The Relative Upside Ratio has been computed between Revenue and Margin/ Long term adjusted Multiple of Circle vis-à-vis the comparable companies
*The expected long-term margin as provided by Management is 35% for Circle. For comparable companies, the margin used is based on the last forecasted data available.
5.
IPO Disclosures
& Storytelling
IPO Disclosures
▪ The number of companies raising funds via IPOs are increasing y-o-y with large number of IPOs lined up for the
coming months, 2021 is a record year for IPOs in India.
▪ The most important document filed by an Indian company to SEBI when it intends to raise money from public is the
Draft Red Herring Prospectus (DRHP). Similarly, in USA Form S-1 must be filed with SEC for raising funds via IPO .
▪ The readability of these disclosures is decreasing given the increasing size of these documents, however, certain
key disclosures one should review apart from financial statements are presented below:
KEY DISCLOSURES IN PROSPECTUS

1. Business Description
2. Industry Analysis
3. Risk factors
4. Management and BoD
5. Utilization of Proceeds
6. Management Discussion and Analysis (MDA)

IPO Disclosure: 1. Business Description (1/2)
▪ This section explains the brief description of the company and insights about the operations. As an investor, one
must understand the core services / solutions of the subject business in order to analyze how the company with
perform in said industry/ market.
Business Description
of Zomato
Business Description
of Doordash
Source: Zomato DRHP, DoorDash S-1

IPO Disclosure: 1. Business Description (2/2)
▪ We should also have a close look at the emerging organic growth trends, as well as inorganic growth strategy to
understand future business growth opportunities and also capex/ acquisition costs.
Growth Strategy
of Zomato
Opportunities for
Doordash

IPO Disclosure: 2. Industry Analysis (1/2)
▪ This section talks about the industry size, historical and projected growth, how the company stands amongst its
competitors and its share in the market. The maturity of the industry and the company’s relative competitive
position is critical to understand how it may evolve in the future.
Industry Section
of Zomato

IPO Disclosure: 2. Industry Analysis (2/2)
Industry Section
of Zomato

IPO Disclosure: 3. Risk factors (1/2)
▪ In this section, a company mentions all possible risks that could impact its operations. Most factors could be
general and routine in nature, but certain risks could be specific to the company which need to be analyzed:
a. External risks: All uncontrollable factors like natural disasters, pandemic, epidemic, economic conditions, change in
regulations, political changes, financial instability, etc. with how they impact the business
b. Internal risks: Specific risks related to the business and industry
c. Risks specific to the offer: Risks related to that IPO like non-payment of dividend, possibility of alternative funding, price and
volume fluctuations of shares
Generic Risks /
External Risks

IPO Disclosure: 3. Risk factors (2/2)
Company Specific
Risk for Zomato
Company Specific Risk

for Doordash

IPO Disclosure: 4. Management
▪ This section has details such as names, qualifications, designations about directors, promoters and key
management personnel. It may also have information about any criminal cases or that of financial delinquency or
pending litigations against these people.
Management of
Zomato
Management of
Doordash

IPO Disclosure: 5. Utilization of Proceeds
• Companies announce IPOs for various reasons. Investor should identify what the company intends to do with
the capital it raises through the IPO. Does the company plan to reduce its debt, purchase new assets/
businesses or meet its working capital needs? Are the utilization of proceeds well aimed and defined, or has no
specific objective?
Use of funds by
Zomato

IPO Disclosure: 6. MDA
▪ This is one of the most important sections which provides an opinion of the senior executives on the company’s
performance including emerging trends, competition and certain forecast about future performance.
▪ It may also have additional insights on the business model, revenue and cost drivers, Unit Economics etc.
MDA of Zomato
MDA of Door Dash

Storytelling: Beware of Implausible Stories..
• As the IPO and SPAC euphoria continues, New Age companies have also become quite adventurous in
the ‘Storytelling’…
• Most of these stories have a strong outline (TAM, Downloads, Active Users, Subscriber growth, Unit
Economics etc.), however, certain critical aspects are usually missing (User acquisition cost, User Attrition/
Renewal rates, Cohort etc.)
• Further, in order to fill the gaps and simplify the forecasting process, companies have started sharing
financial projections deep into the future, some even forecasting their next ten years performance!
• This has led potential investors blindly running relative/ comparable analysis using the financial projections
provided in the documents, without applying their own analysis and judgement
• Hence, the key question:

“Is the projected story plausible?”
Source: Aswath Damodaran

Storytelling:
Aurora Innovation Inc.: Case Study Recap
Transaction Highlights:
Reinvent Technology Partners Y and Aurora Innovation Inc.
COMPANY OVERVIEW FUNDING ROUNDS

Pre-Money
Aurora Innovation, Inc. develops software and hardware products for self- Announced Deal Size
Buyer/Investors Round Type Valuation
Date ($mm)
driving vehicles. It serves mobility services, vehicle manufacturing, and fleet ($mm)
management services sectors. Jul-13-2021 AB Volvo; Baillie Gifford & Co.; and Growth 11,000.0 1,000.0
others
Dec-07-2020 Uber Technologies, Inc. Venture NA 400.0
Aurora Innovation, Inc. was founded in 2016 and is headquartered in Aug-26-2019 NA Series B NA 69.5
Mountain View, California. It has additional offices in Bay Area, California; Feb-06-2019 Amazon.com Inc., Investment Arm; Series B 1,754.5 721.4
Bozeman, Montana; Pittsburgh, Pennsylvania; and Dallas, Texas. Geodesic Capital; and others
Feb-28-2018 Greylock Partners; Index Ventures Series A 3,693.7 83.1
SA
Aurora Innovation, Inc. entered into an agreement to acquire Reinvent Mar-08-2017 NA Seed 418.5 3.1
Technology Partners Y in a reverse merger transaction for $10.6 billion on
July 14, 2021.
Transaction Summary: Aurora Innovation Inc.
The transaction has not closed, and Aurora is not currently trading. 14,000 1,400
Amount Raised (USD Mn)

11,000
Pre Money Valuation (USD Mn)

(USD Mn) (USD Mn) 12,000 1,200
Equity Value 13,039 10,000 1,000
Less: Cash 2,478 791 1,000
8,000 800
Enterprise Value 10,562
6,000 600
3,694 400
Historical Financials Snapshot 4,000 400
1,754
2,000 419 83 200
(USD Mn) CY19A CY20A 3
Revenue 19.6 - 0 0
Profit/(Loss) from operation (113.5) (218.1) Seed Series A Series B Venture Growth
Amount Raised (USD Mn) Aurora Valuation
Source: S&P Capital IQ, company filings; press releases

Storytelling:
Aurora Innovation Inc.: Case Study (contd.) (1/5)
The company is not

expected to make any
significant revenue until
CY24
The EBITDA margin is

turning positive only in
CY27
The company is expected
to burn USD 4 Bn in the
next 7 years
Other revenue includes partner development fees & pre-commercialization (manned) fleet operations
Source: Aurora Investor Presentation

Storytelling:
Aurora Innovation Inc.: Case Study (2/5)

Storytelling:
Aurora Innovation Inc. : Case Study (3/5)
Name Industry Business Description
Segment
Snowflake Cloud-based Snowflake Inc. provides cloud-based data platform internationally. The company’s platform offers Data Cloud, an ecosystem that enables customers to consolidate data
Data Platform into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. Its platform is used by various organizations of various
sizes in a range of industries.
Shopify E-Commerce Shopify Inc., provides a commerce platform and services internationally. The company’s platform provides merchants to run their business in various sales channels,
platform including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables
to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage
analytics and reporting, and access financing. It also sells custom themes and apps, and registration of domain names.
Data Dog SaaS – Datadog, Inc. provides monitoring and analytics platform for developers, information technology operations teams, and business users internationally. The company’s
Analytics SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, and security monitoring to provide real-time
services observability of customers technology stack.
Twilio Inc Cloud-based Twilio Inc., together with its subsidiaries, provides a cloud communications platform that enables developers to build, scale, and operate customer engagement within
communicatio software applications internationally. Its customer engagement platform provides a set of application programming interfaces that handle the higher-level communication
n platform logic needed for nearly every type of customer engagement, as well as enable developers to embed voice, messaging, video, and email capabilities into their
applications..
Nvidia Visual NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, Graphics and Compute & Networking. The Graphics segment
Computing offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA
and Gaming RTX GPUs for enterprise design; GRID software for cloud-based visual and virtual computing; and automotive platforms for infotainment systems.
Tesla Electric Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and
Vehicles and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as
Energy sells automotive regulatory credits. The Energy Generation and Storage segment engages in the design, manufacture, installation, sale, and leasing of solar energy
generation and energy storage products, and related services to residential, commercial, and industrial customers and utilities through its website, stores, etc.
Luminar Autonomy Luminar Technologies, Inc. operates as a vehicle sensor and software company for passenger cars and commercial trucks. The company operates in two segments,
Technologies Solutions and Autonomy Solutions and Other Component Sales. The Autonomy Solutions segment designs, manufactures, and sells lidar sensors, and related perception and
Components autonomy software solutions for original equipment manufacturers in the automobile, commercial vehicle, robo-taxi, and other related industries. The Other Component
Sales segment engages in the designing, testing, and consulting of non-standard integrated circuits for government agencies and defense contractors.
TuSimple Autonomous TuSimple Holdings Inc., an autonomous technology company, develops autonomous technology specifically designed for semi-trucks in the United States and
Holdings Technology internationally. It intends to produce a line of purpose-built (Level 4) L4 autonomous semi-trucks for the North American market.
Quantum Designing Quantum Scope Ltd provides planning and designing services for computer systems which integrate computer hardware, software, and communication technologies.
Scope services Quantum Scope Ltd.
Lucid Group EV Lucid Group, Inc. a technology and automotive company, develops electric vehicle (EV) technologies. The company designs, engineers, and builds electric vehicles, EV
Technology powertrains, and battery systems.

Storytelling:

Storytelling:
Adjusted Multiples and Relative Upside Ratio

Growth & Margin Adjusted EV/ Revenue FY25E Relative Upside Ratio
(Using Growth & Margin Adjusted EV/ Revenue FY25E)
3.1x
Average: 1.1x Relative Upside Ratio: Average: 0.6x
1.9x
1.9x
1.6x 1.2x
1.1x
0.8x 0.8x 0.7x
0.5x 0.5x
0.4x 0.3x 0.3x 0.3x 0.2x 0.2x 0.2x 0.2x
Aurora Snowflake Shopify Datadog Twilio NVIDIA Tesla Luminar TuSimple Lucid Snowflake Shopify Datadog Twilio NVIDIA Tesla Luminar TuSimple Lucid
Tech Tech
“Is the projected valuation story still plausible?”
The Relative Upside Ratio has been computed between Revenue and Margin/ Long term adjusted Multiple of Aurora vis-à-vis the comparable companies
*The expected margin in 2027 s 9.5% for Aurora. For comparable companies, the margin used is based on the last forecasted data available (2023 for Snowflake, Datadog and Twilio, 2025 for others).
Source: Our Analysis, Aurora Investor Presentation, S&P Capital IQ
Thank you
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1. Aviral Jain, Managing Director, Duff & Phelps, a Kroll business
Aviral Jain, CFA
2. Aayushi Gupta, Consultant, Duff & Phelps, a Kroll business
Managing Director
3. Tanvi Thareja, Trainee, Duff & Phelps, a Kroll business
M +91 99100 21127
4. Keshav Jha, Student at FMS
Aviral.Jain@duffandphelps.com
Disclaimer
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whatsoever.
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Practitioners Insights Valuing Tech IPOs

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Practitioners Insights Valuing Tech IPOs

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Valuing Tech IPOs / SPACs

Private and Confidential

Private and Confidential

1. IPO Trends & Emergence of SPACs

2. Analysis of Tech Index/ Recent Tech IPOs

3. Decoding returns from Tech IPOs

4. Valuation Matrix for New age companies

Table of Contents a) Unit Economics

5. IPO Disclosures & Storytelling

Private and Confidential

Number of IPOs & Proceeds raised (USD Bn)

Proceeds raised Number of IPOs

Source: S&P Capital IQ, Renaissancecapital

Funds Raised (last 12 Months) Number of IPOs (last 12 Months)

Technology, Media & Health Care - 42.6%

Consumer Discretionary & 5.8% Consumer Discretionary &

Industrials - 11.1% 6.3% Financials - 6.3%

18.9% Materials - 2.3%

Real Estate - 1.0%

25.1% Energy - 0.5%

22.4% Utilities - 0.3%

Top 10 IPOs based on Funds Raised Financial Services

Coupang, Inc. , $4.6 Bn TMT

Airbnb, Inc. , $3.5 Bn

Snowflake Inc. , $3.4 Bn

Royalty Pharma DoorDash, Inc. , $3.4 Bn

Lufax Holding Ltd , $2.4 Bn

Note: The above data may include SPAC vehicles

Gross Proceeds & SPAC IPO Count

Gross Proceeds (USD Mn) IPO Count

Number of SPACs in last 12 Months

20.7% Real Estate - 1.1%

18.2% Utilities - 0.8%

• Despite certain challenges faced by SPACs in the second quarter of 2021,

$45 Bn Top 10 de-SPACs based on Transaction value Healthcare

$40 Bn Consumer Discretionary

MSP Recovery, LLC, $32 Bn

Blue Owl Capital Inc. , $12 Bn Lucid Group, Inc. , $12 Bn

UWM Holdings Corporation , $18

Source: S&P Capital IQ

Sub-zero ECB Interest rates

Source: Trading Economics

Low rates amounts to low opportunity cost:

Source: Bloomberg Source: Bloomberg

Glut of cash creates investment power:

Source: Bloomberg, TechStartup

TOTAL RETURN (5- YEAR)

Tech Index Analysis

5-Year Annualized Returns

Source: S&P Capital IQ, S&P Publication

Source: S&P Capital IQ, CNBC

IPO Multiples Trading Multiples

Mean 38,500.8 25.5x - 28.6x -

Issue Price Current Share Price

Top Gainer: Pinterest, Inc. Top Loser: DiDi Global Inc.

USA China 2. Stability of power – By keeping the middle class happy

Source: S&P Capital IQ; From Jan 2021- YTD, Forbes

Transaction Multiple Trading Multiple

Source: S&P Capital IQ

COMPANY OVERVIEW FUNDING ROUNDS

Amount Raised (USD Mn)

Pre Money Valuation (USD Mn)

Source: S&P Capital IQ, company filings; press releases