September 2020

Consumer
Subscription
Software
Insights
Important disclosures appear at the back of this report
GP Bullhound LLP is authorized and regulated by the Financial Conduct Authority
GP Bullhound Inc is a member of FINRA 1
Agenda

1 2020 consumer subscription software (“CSS”) insights

2 Key CSS metrics & criteria for investors

3 Building blocks of CSS companies

4 CSS CEO commentary

5 Investor interest in CSS continues to grow

6 GP Bullhound’s consumer subscription software practice

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Section 1

2020 consumer subscription software (“CSS”)

insights

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GP Bullhound’s consumer subscription software practice

 GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to category leaders with a robust
focus on Enterprise & Consumer Software globally.
 We publish this Consumer Subscription Software (“CSS”) market report to provide qualitative insights into company business models, technology
and customer trends. In this report, we also feature several of the leading CSS companies & CEOs across interesting sub-sectors as well as detail
interesting trends in the sector.

 Our research and report focus on software business models and content and do not include physical products or goods due to different margin
and cash flow profiles.

GP Bullhound continues to be a leader in the CSS sector from both an advisory and an investment perspective:

Current Current
Client Client

STREAMING ONLINE EDUCATION ACQUIRED BY INVESTMENT BY INVESTMENT BY

ENTERTAINMENT PROVIDER

Capital Raise Sell-side Fund III

Current Current
Client Cient

JOB SEARCH FITNESS INVESTMENT BY INVESTMENT BY INVESTMENT BY INVESTMENT BY

SERVICE SUBSCRIPTION

Sell-side Sell-side Fund IV Fund IV Fund III

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2020 consumer subscription software perspectives
The impact of COVID and the subsequent global lockdown has allowed CSS businesses to Mental wellness apps
flourish as consumers look for new ways to access content and services sessions up 66% y-o-y in May
 Vooks, a digital reading tool to encourage children to read, has seen tremendous growth as parents look for
ways to entertain and educate their children at home. User growth accelerated from January levels and the
company now has over 1 million teachers on the platform.
 Mental wellness apps saw an explosion of growth, according to Apptopia, as COVID caused stress while also
restricting access to in-person therapy.
 With gyms closed, consumers quickly reached for new workout routines. Digital workout apps like Fiton saw
paying users climb to over 100k, while demand for Peloton’s workout app and accompanying bike led to the
stock doubling from February 2020.

Pressure on the Apple Store and resulting Apple tax intensifies

 Most consumers download and pay for CSS services through the two dominant App stores – Apple and Google.
Apple and Google ensure that those apps are clear of malware and illegal content as well as provide distribution
to billions of consumers, giving clear benefits to companies.
 However, in exchange for those services, Apple takes 30% of a first subscription and 15% of any renewals.
Consequently, monopolistic complaints have been increasing and regulators are taking notice – specifically in
Europe.
 The end result of any legal situation is uncertain – however, any changes to the pricing levels would be an
immediate boost to CSS services, increasing profitability and generating billions of dollars to funnel into product
development and consumer acquisition – fuelling growth.
 Apple’s recent legal battle with Epic games highlights the building tensions between the former partners.

Education subscription services are rapidly gaining traction to improve the student experience
 Given the impact of COVID on in-person learning and classroom education, digital tools are flourishing after years
of being an after thought for the majority of US schools.
 Monetization has remained a challenge given school budgets and IT restrictions (blocking YouTube).
 Recent deals have shown how CSS business models are breaking through that barrier, by selling to parents or IPO
students directly:
Capital Raised: $30m EV: $100m
‒ Chegg acquired Mathway, a math learning subscription tool, for $100m+ or 9x 2019 revenue Deal Date: 5/2020 Deal Date: 6/2020
‒ Quizlet raised $30m from General Atlantic at a $1bn valuation

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Source: CapitalIQ, Pitchbook, GP Insights
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INVESTORS REVIEW EACH CSS OPPORTUNITY WITH A FOCUS ON THESE KEY ATTRIBUTES

CSS flywheel attributes to drive valuation

 A key valuation driver for investors is the concept of winner take all in CSS apps. If the company has the potential to dominate a niche or a
broader market through network effects – investors will pay up.
 It is important for entrepreneurs to understand their competitive positioning and be able to define their market niche.

Recurring
 Churn of consumer subscriptions
will be higher than traditional Revenue  Intuitive UI paired with high quality
content
enterprise SaaS models  Design and UX is crucial to
LTV/CAC is a KPI to watch convincing the consumer of a
Churn / Premium

premium product
Retention Content  Verticals are expanding as
consumers become increasingly
comfortable paying for apps
CSS
 Monopoly in a small market Flywheel  User data is retained and
can be lucrative Result of strong utilized within the app
 Large TAM apps needs to Niche User Base performance Proprietary  Network effects from existing
prove differentiation and vs. Large TAM in all the attributes Data user base, reinforcing
moats (e.g. Fitness Apps) proprietary content and/or
monetized data

Monetization & User

Pricing Strategy Acquisition
 Creating a compelling benefit to  Efficient user acquisition and conversion with
convert users from free to paid a viral element
 Free to paid conversion rates are  Targeted ads, call to action, SEO, and
critical KPIs sharing content has been proven successful

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Public investors’ excitement for CSS continues to grow
GP Bullhound has created the first consumer subscription software index to track how public CSS investments are valued
 The inaugural index includes Spotify, Match / IAC, Chegg, Intuit, Sirius XM, Shutterstock, Peloton, Gluu mobile, Netflix and DropBox. We expect to
add additional companies to the index over the next 12 months (Bumble, etc).
 A few notes:
− Two companies were added in early 2018 – Dropbox (March 2018), which debuted at 10.4x TEV / LTM Revenue, and Spotify (April 2018), which
debuted at 5.4x
− Netflix raised membership fees from $9.99 to $10.99 in Oct 2017, but still saw record-high subscribed users, beating Q4 2017 analyst estimates
and boosting its share price

GP Bullhound Consumer Subscription Software Index

Source: Capital IQ, Pitchbook, company filings and publicly available data
Note: Given the large market caps and high valuations of some of the businesses, the average of the EV / Rev multiples
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were used 7
Free+advertising vs. paid subscription – the ultimate test

Historically, investors have been conditioned to believe that consumers will always prefer a
free option supported by ads vs. paying
Paid vs. free
That was true in the early ages of the internet, but consumers are waking up to the pitfalls of ‘free’, including
content battles

intrusive ads, the sale of personal data and poor product quality.

 Pandora vs. Spotify is a great example of consumers preferring to pay for quality. Both started as free apps,
using ads to generate revenue.

 However, that is where the story diverged. Spotify focused on the user experience and added features such vs.
as downloading songs and playing music offline behind a subscription paywall.

 Consequently, Spotify’s amount of paid users quickly accelerated and revenue surged. Meanwhile, Pandora
focused only on ads, was late to the subscription game and was ultimately sold off to Sirius.
108
vs.
96 $10,855

71 vs.
$7,591

48 $5,858
Spotify Paid
Subscription
vs.
$4,556
launched 28
15 $3,288
8
$2,156 6 7 7 6
$995
$1,409 $1,164
4
$1,385 $1,467 $1,517 $1,607 $1,600 vs.
$921
$425 $573 $655

2012 2013 2014 2015 2016 2017 2018 2019 2020

vs.
Pandora-Revenue ($bn) Spotify-Revenue ($bn) Pandora-Paid Users (m) Spotify-Paid Users (m)

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Source: Capital IQ, Pitchbook, 2020 estimates from CapIQ 8
The importance of the paywall
Success in the CSS space is heavily dependent on the placement of the paywall within the customer’s experience
 Gaining users through a ‘freemium’ offering is critical to encouraging people to try a product; however, to effectively monetize them, they need to
be converted into paying customers.

 That means correctly placing the paywall at the correct point to provide the maximum value to paying subscribers but enough functionality to
explore the service before paying.

Free experiences Paid experiences

 One video story  Riding leaderboards

 One free class  Download maps

 Three free books  Meditation classes

 7-day free trial  Wearables integration

Goals Goals

1. Gain the customer contact 1. Monetize and increase customer

information, download app and engagement and provide unique
enter credit card details value
2. Entice interest in the product 2. Encourage sharing and create
User Generated Content (“UGC”)
3. Highlight features that are
included in the paid version 3. Continuously improve product to
attract adjacent users

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Overcoming churn to build the ‘Cohort Revenue Layer Cake’
 As entrepreneurs build out their companies, they can typically invest in growth marketing or product innovation to drive retention.
Which one should garner the larger share of the investment dollars?

CHEETAH Thoroughbred
 Growth: Adding 10k users a month leveraging targeted marketing through
 Growth: Adding 30k users a month with celebrity promoters and heavy partnerships with limited social media marketing
Instagram presence
 Users are leveraging the data to manage their personal health information
 Usage: Limited customization of the service and a priority on notifications to and have synched its data input into their fitness tracker
consume content
 Cohort Churn: Retains 68% of customers by month 6 and 50+% by month 12
 Cohort Churn: Retains 40% of customers by month 6 and only 10% by month 12 (effectively having the cohort become flat)
Throughbred
Cheetah

New user
200,000
200,000

105k users marketing is cut 180,000

by month 6
180,000

160,000
160,000

Long-term valuable customers

140,000
140,000

120,000
47k users by
120,000

month 6
100,000
100,000

80,000
80,000

60,000
60,000

40,000
40,000

20,000
20,000

0
0

Cohort 1/1/2020 2/29/2020 3/31/2020 4/30/2020 5/31/2020 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/31/2020 11/30/2020 12/31/2020 1/31/2021 2/28/2021 3/31/2021 4/30/2021 5/31/2021 6/30/2021
Cohort 1/1/2020 2/29/2020 3/31/2020 4/30/2020 5/31/2020 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/31/2020 11/30/2020 12/31/2020 1/31/2021 2/28/2021 3/31/2021 4/30/2021 5/31/2021 6/30/2021
7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021 1/31/2022 2/28/2022 3/31/2022 4/30/2022 5/31/2022 6/30/2022 7/31/2022 8/31/2022 9/30/2022 10/31/2022 11/30/2022 12/31/2022
7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021 1/31/2022 2/28/2022 3/31/2022 4/30/2022 5/31/2022 6/30/2022 7/31/2022 8/31/2022 9/30/2022 10/31/2022 11/30/2022 12/31/2022

Focusing on engagement and mitigating churn

will result in a better long-term business than high growth and flashy advertising
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Source: GP Bullhound proprietary analysis 10
Consumer subscription landscape

Entertainment

Fitness / Outdoors

EdTech Online Tools

Personal Finance Family

Others
Health / Mindfulness FLighty
(Travel, Religion, etc.) Daily Bible

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Usage frequency / value received vs. pricing matrix

High $160

$144 $140

$120 $120 $120

Annual subscription price

$100
$100
$100 $100

$99

$90 $96

$80 $80
$70
$60
$60 $60

$47
$45
$36

$40
$30 $24
Low $10

<Monthly Usage frequency Daily

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Source: Public data and GP Bullhound research 12
CSS TAM EXCLUDES GAMING PURCHASES AS WELL AS ONE-TIME APP PURCHASES

The CSS TAM is expected to top $150bn by 2022

CSS TAM Analysis (1)

Increases in CSS app spend per
person from <$10 currently to
$100+ in the US and $35 globally
$150bn in CSS
Spend Annually
by 2022 (3)

270m US
Smartphones
by 2022

3.5bn Global
Smartphones
by 2022 (2) Proliferation of
consumer subscription
models in daily life

Sources: Statista, App Annie, GPB Research.

(1)CSS TAM Analysis excludes mobile gaming spend (2)Global Smart phone users excludes US smart phones (3)$150bn in
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2022 CSS spend equates to an average $100 annual spend per US smart phone user and $35 per global smart phone user 13
Section 2

Key CSS metrics & criteria for investors

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WHILE THE METRICS MEASURED MAY BE SIMILAR, CSS BUSINESSES WILL HAVE A DIFFERENT DEFINITION OF SUCCESS

Enterprise SaaS vs. consumer subscription

Investors will look at many of the same investment metrics as SaaS Companies, but key nuances are important to recognize
 Higher early user churn is typically the biggest hurdle for traditional investors to overcome, but entrepreneurs can highlight low CAC and long-term
retention to illustrate the staying potential of their CSS business.

Enterprise SaaS Consumer Subscription

Average Revenue Per User (ARPU) Higher

Churn Higher

Expansion Revenue Higher

Mass Market Potential Higher

Acquisition Costs Higher

Word of Mouth (WOM) Distribution Higher

Content Sharing Higher

Implementation Difficulty Higher

Enterprise SaaS Consumer Subscription

Source: CSS vs. Enterprise SaaS Framework developed in conjunction with Nicolas Wittenborn, who has written about the
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CSS market on Medium 15
CSS investor benchmarking criteria
CSS investors will evaluate each business based on its own unique attributes as well as sub-industry nuances, but there are industry
standard metrics that help investors differentiate good businesses from great businesses

Annual User Growth Rate Gross Margins LTV / CAC

<50% 100%+ <60%+ 90% <3x 6x

1st Pay Period Free to Paid Sales Efficiency

Churn Rates Conversion Rate % Ratio

>50% 20% <2% 10%+ <0.5x 2.0x

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KEY CSS METRICS

Investors dig into key CSS metrics and KPIs

Investors will look at many of the same investment metrics as SaaS Companies, but key nuances are important to recognize

 Investors will look closely at users – including the free users, active users (MAU’s) and most importantly the paid users
Top-line Growth Metrics –  CSS top-line revenue can be measured in several ways:
User Growth & Bookings – Cash Bookings: Amounts received each month in upfront subscription payments
MRR / ARR – Monthly Recurring Revenues (MRR), Annual Recurring Revenue (ARR), and GAAP revenue
 Important to show continued efficient growth in top-line metrics

 Customer Lifetime Value = Number of months or years the average customer stays with the company multiplied by the ARPU times the
gross profit margin %.
 CSS businesses have the unique attribute in that they typically have high churn after the first pay period or trial period ends. Companies
typically see churn of first time users anywhere between 20–70% of total signups.
− Consequently investors are looking for retention of users AFTER the first pay period - typically the 3rd, 6th or 12th month. High retention
in those periods, indicate that users are discovering value in the service and are likely to be retained long term, building the ‘CSS
LTV to CAC Ratio cohort layer cake’
− Great CSS businesses renew 50%+ of each annual cohort and 40% of Year 2

 Customer Acquisition Cost (CAC) payback period is typically stated in months. Represents the time taken to fully pay back sales and
marketing investment to acquire a single customer
 CAC Payback of <1 month is critical to counter the high churn of initial users
 50%+ of users coming through organic channels is considered great

 Free users: Number of users who are using the platform or business. Typicaly measured monthly or MAU’s
Free to Paid Conversion  Paid users: Number of users who are paying for a subscription (typically monthly or annually)
Rates  Free to Paid Conversion rate: The ratio of users who start as free users and convert to paying users. This number varies by industry and type
of business as well as how the benefits behind the paywall are structured and accessed

 The type of service or content being provided can vary between CSS industries. For example, exercise apps develop fitness classes at a
high cost while a hiking app may be leveraging User Generated Content or UGC to enhance its offering.
Gross Margins  Typically companies leveraging UGC have higher gross margins and a sustainable competitive advantage as their product and service is
influenced and improved by the content and data users are generating
 Investors have been proven willing to pay up for CSS businesses leveraging UGC to provide a unique service

Free cash flow /  Growth is of paramount importance, with excess cash being used to fuel growth
Burn rate  Important, therefore, to understand the cash burn in the business and planning for capital efficient hyper-growth

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DEFINITIONS & CALCULATIONS

Key CSS definitions & formulas

Metric Definition Calculation

 Normalized measurement of recurring revenue, most frequently

MRR measured with a constant value in each month of the MRR = # of paying customers ∗ ARPA/month
subscription period

 All S&M expenses for new customers. Sometimes excludes

Customer Acquisition Cost personnel management S&M costs S&M
CAC =
(CAC)  Typically measured over a month or quarter # of new customers
 Includes users acquired through free and paid channels

Customer Lifetime Value  Amount of gross profit a customer is calculated to deliver to the ARPU ∗ GM
CLV =
(CLV) company over the lifetime of the customer Churn rate

The number of months a company requires to pay back its cost CAC
Payback period

Payback Period =
of customer acquisition ARPA ∗ GM

customers lost over time period

 Gross Churn is the number of customers lost in a given period or Gross Churn =
customers at beginning of time peirod
cohort regardless of account expansion or growth
Churn (Gross & Net)  Net Churn is the number of customers gained or lost in a given (customers lost
over time period − customers gained
period or cohort after taking into consideration new, reactivated,
over time period)
or expanded accounts Net Churn = customers at
beginning of time period

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Section 3

Building blocks of CSS companies

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PROVIDING THE SHOVELS AND PICKAXES TO THE CSS BUILDERS

The essential building blocks of subscription development

Companies are quickly building the ‘pick-axes and blue jeans’ companies of the CSS gold rush. B2B2C Tools are becoming market
ready to allow niche consumer subscription companies to launch quickly

Subscription Marketing Messaging Payment Reporting &

management management infrastructure processing Analytics

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PROVIDING CRUCIAL SERVICES TO THE CSS ENTREPRENEURS

RevenueCat

|Q&A WITH THE CEO

1. Why did you start RevenueCat?
I was previously an engineer at Elevate, a brain training
application. We decided to launch a subscription offering
and had to develop and build all the subscription tools
from scratch. I knew there had to be a better solution, but
nothing existed in the market.

2. Why would an entrepreneur choose to deploy

RevenueCat over other offerings?
RevenueCat is laser focused on being a best of breed
provider for the CSS Ecosystem. We have built out tools to
enable businesses to monitor and improve every aspect of
their subscription offering including customer details,
Miguel Carranza analytics like churn and LTV, engagement levels, in
CTO addition to receiving payments. We are not a payment
provider, but an entire vertical platform for CSS businesses.

Jacob Eiting 3. What does the future look like for RevenueCat?
CEO Revenue Cat recently announced a $15m Series A round
led by Index ventures and plans to grow from 17
employees to 40 employees shortly. In addition, the team
is focused on expanding the number of CSS businesses
above the 3,000 currently using the RevenueCat platform

| MISSION | LONG-TERM VISION | SCALE

To make it easy to build with in-app RevenueCat will enable the next generation of CSS businesses RevenueCat manages over $400m in subscription spend
purchases, analyze your users, and to quickly scale and launch their companies by providing the through its platform and has over 3,000 apps leveraging
grow your CSS business – no server tools and expertise to manage all aspects of their subscriber its platform today
code required lifecycle

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Section 4

CSS CEO commentary

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STORYBOOKS BROUGHT TO LIFE

Vooks

|Q&A WITH THE CEO

1. Why did Vooks use a Subscription Model vs. Free with
Advertising?
Vooks chose to implement the CSS business model over
advertising as our research showed that people are very
particular in what they purchase. Once you offer the services
for free to someone – those people view that content as a
commodity and it’s expected for free. That is different versus
positioning it as a premium product worthy of purchase.

2. How does Vooks think about pricing?

We took a very methodical approach to pricing – we wanted
to price Vooks to be a premium impulse purchase – $4.99 is
what people pay for a coffee.
Marshall Bex
3. What is Vooks biggest challenge in acquiring
CEO customers?
Acquiring customers is always a challenge. Consumers can
now find and consume content anywhere. So our
partnerships with the schools have been very valuable as well
as our limited direct to consumer marketing.

| MISSION | LONG-TERM VISION | SCALE

Transform children’s books into Inspire a lifelong love of books, reading, and great stories in As the fastest growing company in its class, it has
immersive digital experiences that classrooms and among families users in 191,000 elementary schools in 175 countries
promote literacy, imagination, and fun
for kids of all ages

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JOURNALING TO HAPPINESS
Reflectly
Jakob
Brøgger-Mikkelsen
CEO & Co-Founder
Jacob Harboe Kristensen
Co-Founder
| MISSION
Reflectly is a beautiful journal and
mindfulness app driven by artificial
intelligence, with a goal to encourage
users to journal to improve mental
health and performance
|Q&A WITH THE CEO
1. Why did Reflectly use a Subscription Model vs. Free with
advertising?
The journaling experience is about entertaining daily thoughts
for a short period of time and Reflectly’s product is about
enabling that short burst of writing. Most users typically journal
for <10 minutes. Consequently, our focus is about enabling
that journaling experience, not supplying advertisements.
2. How does Reflectly think about what goes in front of the
paywall?
We want Reflectly users to feel part of a community or an
exclusive member versus just customers. Consequently, there
needs to be a lot of value behind the paywall. We focus on
product to generate that trust from our members in exchange
for a subscription.
3. What does the future look like for Reflectly?
Reflectly has an exciting path going forward. We are
planning to offer many new services, and integrating analytics
and data from wearables and other devices with the goal to
make the service more personable and helpful. We will also
be building up the community so we will not be reliant on paid
marketing for new users.
| LONG-TERM VISION | SCALE
Reflectly will be a portal through which users can manage and Reflectly is the fastest growing company journaling
track their overall health – with mental heath and happiness being app globally and has attracted hundreds of
just one use case thousands of paying subscribers
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TRANSFORMING ONLINE INTERACTIONS THROUGH SONIC IDENTITY

Voicemod

|Q&A WITH THE CEO

1. How did Voicemod acquire its user base initially?
Voicemod has been around for over 10 years, gaining users
organically through world of mouth and standard SEO
practices by being the premier voice modification platform
across multiple platforms. We recently began leveraging paid
channels with a focus on YouTube.

2. How did Voicemod get free users to convert to

Voicemod Pro (paid)?
We offered the Pro platform for free to select users initially. We
looked at users behaviour to determine what was important to
them and what they used. We quickly discovered that
Jaime Bosch people had certain sounds that became a part of their
persona and they wanted additional customization features.
Co-Founder Also,VoiceMod continues to add new content, both globally
and regionally, that keep our users engaged and gaining
Fernando Bosch value from their subscriptions.
Co-Founder 3. What does the future look like for Voicemod?
We will continue to develop content for our passionate user
Juan Bosch base, but we are excited about our expansion into mobile
gaming, especially in Asia. Individualism is especially popular
Co-Founder in Chinese gaming cultures and we are excited to bring our
tools to the mobile market in Asia.

| MISSION | LONG-TERM VISION | SCALE

Voicemod allows users to create a To allow users to evolve their online persona with the additional of Voicemod has millions of users (both free and paid)
sonic identity for all of their online a “sonic identity” to compliment visual avatars and online across the globe with users conversing across
communications including gaming communications multiple platforms including PC, Xbox/Playstation,
and video experiences Discord, Skype and Zoom

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Section 5

Investor interest in CSS continues to grow

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 Premier CSS financial investors
GP Bullhound is in constant contact with some of the worlds leading CSS financial investors and is helping shape the investment
conversation

Kingdom Holding
Company

Threshold
Ventures

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VENTURE CAPITAL FOR CSS BUSINESSES

Adjacent
|Q&A WITH Nico
1. Why did you decide to focus on CSS for a fund?
Adjacent's focus is on mobile-first companies, but as 90%+ of
top grossing apps today are subscription-based, this ends up
being mostly consumer subscription software. I got there from
SaaS investing with Point Nine Cap & Insight Partners, as SaaS
has a similar high margin, recurring revenue business model.

Today, Apple is the most valuable company on the planet

with around 40% of its profits driven by its services offering ––
primarily the AppStore. Subs only launched in 2011, and I think
we are still in the early innings and will see multiple $10bn+
companies built in this segment in the coming decade.

Nico Wittenborn
2. How do you pick long-term winners in CSS?
A few things have to come together: efficient distribution
Founder (both organic and paid), a really sticky product (over
months/years, not days), some kind of defensibility (unique
content, network effects, tech, etc.) – and all of this in an
'adjacent' category (benefitting from a new macro shift).

3. What are the key metrics you look at to determine

| MISSION
Adjacent invests up to $2m in Seed
and Series A deals across North
America and Europe.
4. What are the exit avenues you expect your
Adjacent LP’s include institutions as
well as the founders of CSS businesses
like Calm, Revolut and Runtastic.
valuation? | INVESTMENTS
The most important to me are: 1) growth of ARR and net new
subs; 2) engagement & retention data; and 3) a unique
positioning in the broader landscape with big potential.
investments to take? Who are the buyers?
There are a lot of natural acquirers like consumer companies
that are trying to shift most of their revenues from physical to
digital (e.g. Nike). Furthermore, I am sure that there will be
increasing PE activity in this sector as CSS businesses can be
very cashflow efficient. Most importantly, I am positive that we
will see the first few IPOs in this sector in the coming years.

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Notable subscription software M&A deals & private financings
Selected M&A and private placement transactions Selected M&A and private placement transactions
Announce Implied Announce Implied
Date Target Buyer Deal Type Category Value ($m) Enterprise Value Date Target Buyer Deal Type Category Value ($m) Enterprise Value

Aug 12, 2020 M&A Online Tools Undisclosed Undisclosed May 20, 2020 PP EdTech 100.0 900.0

Health /
Aug 11, 2020 PP Online Tools 15.0 60.0 Apr 29, 2020 PP Undisclosed Undisclosed
Mindfulness

Aug 11, 2020 M&A Online Tools Undisclosed Undisclosed April 20, 2020 M&A Entertainment Undisclosed Undisclosed

Personal
Aug 10, 2020 PP EdTech 66.0 Undisclosed Mar 6, 2020 PP 20,3 120.3
Finance

Personal
Jul 29, 2020 PP EdTech 46.6 Undisclosed Mar 5, 2020 PP 700,0 6,000,0
Finance

Personal Fitness /
Jul 24, 2020 PP 500.0 5,500.0 Mar 2, 2020 M&A Undisclosed Undisclosed
Finance Outdoors

Health /
Jul 24, 2020 Undisclosed PP 10.4 Undisclosed Mar 1, 2020 PP Dating Undisclosed Undisclosed
Mindfulness

Personal
Jul 17, 2020 PP EdTech 130.0 2,570.0 Feb 24, 2020 M&A 7,200.0 7,200.0
Finance

Jul 16, 2020 PP Entertainment 63.2 Undisclosed Feb 19, 2020 PP EdTech 50.0 2,050.0

Health /
Jul 13, 2020 M&A Entertainment 325.0 325.0 Feb 1, 2020 PP Undisclosed Undisclosed
Mindfulness

Jul 2, 2020 PP Entertainment 40.0 1,400.0 Jan 14, 2020 PP Entertainment 55.0 530.0

Personal Fitness /
Jun 29, 2020 M&A 1,000.0 1,000.0 Jan 8, 2020 PP 285.0 1,035.0
Finance Outdoors

Jun 22, 2020 PP Online Tools 60.0 5,850.0 Nov 25, 2019 M&A Online Tools Undisclosed Undisclosed

Health / Fitness /
Jun 10, 2020 PP 47.7 Undisclosed Nov 12, 2019 PP 55.0 237.4
Mindfulness Outdoors

Personal Health /
June 9, 2020 PP 33.0 Undisclosed Sep 16, 2019 M&A Undisclosed Undisclosed
Finance Mindfulness

Confidential
Source: Capital IQ, Pitchbook 29
Notable subscription software M&A deals & private financings
Selected M&A and private placement transactions Selected M&A and private placement transactions
Announce Implied Announce Implied
Date Target Buyer Deal Type Category Value ($m) Enterprise Value Date Target Buyer Deal Type Category Value ($m) Enterprise Value

Jul 31, 2019 PP Online Tools 135.0 1000.0 Jan 29, 2019 PP EdTech 30.0 Undisclosed

Personal Personal
Jun 19, 2019 PP 50.0 285.0 Jan 28, 2019 PP 105.0 860.0
Finance Finance

Health /
Jun 18, 2019 PP 3.0 Undisclosed Dec 31, 2018 M&A Dating Undisclosed Undisclosed
Mindfulness

May 30, 2019 PP Online Tools 110.0 Dec 7, 2018 PP Online Tools 11.5 61.5
505.0

Health /
May 29, 2019 PP 50.0 310.0 Oct 30, 2018 PP Entertainment 40.0 200.0
Mindfulness

Health /
May 7, 2019 PP 2.4 Undisclosed Oct 29, 2018 M&A Dating 85.0 85.0
Mindfulness

Fashion /
Apr 30, 2019 PP Online Tools 6.0 Undisclosed Oct 18, 2018 PP 59.8 Undisclosed
Clothing

Health/Mindf Fitness /
Apr 17, 2019 PP 5.2 30.0 Oct 11, 2018 M&A 85.0 80.0
ulness Outdoors

Health /
Apr 15, 2019 M&A Online Tools Undisclosed 200.0 Aug 24, 2018 PP 25.0 125.0
Mindfulness
Other /
Health /
Apr 9, 2019 PP Productivity 2.5 14.5 Aug 22, 2018 PP 350.0 1,500.0
Mindfulness
tools
RENT THE Fashion /
Mar 21, 2019 RUNWAY
PP 125.0 1,000.0 Aug 3, 2018 PP Entertainment 23.0 Undisclosed
Clothing

Fitness /
Mar 6, 2019 M&A Undisclosed Undisclosed Aug 2, 2018 PP Entertainment 179.8 1,150.0
Outdoors

Health / Personal
Feb 6, 2019 PP 88.0 1,000.0 Jul 26, 2018 Undisclosed PP 3.8 21.8
Mindfulness Finance

Personal Fitness /
Feb 4, 2019 PP 50.0 950.0 Jul 25, 2018 PP 85.0 610.0
Finance Outdoors

Feb 1, 2019 M&A Entertainment 3,874.6 3,500.0 Jun 20, 2018 PP EdTech 18.8 160.0

Confidential
Source: Capital IQ, Pitchbook 30
Section 6

GP Bullhound’s consumer subscription software

practice

Confidential
31
CONSUMER SUBSCRIPTION MARKET INSIGHTS

Consumer subscription is a focus sector for GP Bullhound

GP Bullhound research “Consumer Subscription Software Insights” – August 2019 GP Bullhound in the media

Consumer Subscription Software

Insights

“We believe that the CSS business

model enables companies to
rapidly scale with attractive
margins while also providing a
compelling consumer value
proposition. We are excited to help
guide CSS companies through the
next chapter of their evolution.”

Alec Dafferner

Selected consumer subscription credentials

Is Consumer Subscription the next

software boom market?

“CSS will quickly rival enterprise

SaaS as the most exciting growth
opportunity in software. We are
SALE OF AN EQUITY currently in the early innings of the
ACQUIRED BY ACQUIRED BY ACQUIRED BY ACQUIRED BY INVESTMENT BY
STAKE CSS boom as consumers,
entrepreneurs, investors and
Fund III companies are all waking up to the
benefits and potential of the CSS
business model.”

Eric Crowley

Confidential
32
 Report authors

Alec Dafferner Eric Crowley Brandon Overmyer

PARTNER DIRECTOR VICE PRESIDENT
Alec.Dafferner@gpbullhound.com Eric.Crowley@gpbullhound.com Brandon.Overmyer@gpbullhound.com

Daniel Roberts Minya Shidhaye Olivia Hornstein Matthew Young

ANALYST ANALYST RESEARCH ANALYST
Daniel.Roberts@gpbullhound.com Minya.Shidhaye@gpbullhound.com Olivia.Hornstein@gpbullhound.com Matthew.Young@gpbullhound.com

Confidential
33
We partner with global tech
leaders to build the future

34
ABOUT GP BULLHOUND

A leading technology advisory and investment firm

Mergers & Acquisitions Investments
We are the no. 1 global advisor (1) to leading technology Through our investment team, we provide investors with access to
companies in competitive international sale and acquisition category leading technology companies.
processes. Our five closed-end funds have a total value of more than €280m
The firm has completed 420 successful M&A transactions to date, and our limited partners include institutions, family offices and
worldwide, with a total value of over $18bn. entrepreneurs.
BALTIC CLASSIFIEDS
ESSENCE FILTER FALCON.IO JELLYFISH SPOTIFY SLACK MARIADB REVOLUT GLOVO
GROUP

GP BULLHOUND GP BULLHOUND GP BULLHOUND GP BULLHOUND GP BULLHOUND

FUND III FUND IV FUND V FUND IV FUND IV

Capital Transactions Insights & Events

We are a leading global advisor to companies and their owners Our events and speaking activities bring together thousands of
on capital related transactions including venture capital, growth leading digital entrepreneurs and technology investors
capital, acquisition funding, secondary block trades and initial throughout the year.
public offerings. Our thought-leading research is read by thousands of decision-
The firm has completed 120 rounds of financing for technology makers globally and is regularly cited in leading newspapers and
companies to date, with a total value of $2bn. publications.
TECHNOLOGY TITANS SUMMIT NORTHERN INVESTOR
INNOGAMES DELIVERY HERO ECOVADIS SIGNAVIO PRODIGY FINANCE
PREDICTIONS OF TECH MARBELLA TECH AWARDS ALLSTARS

(1) League table data represents selected transaction advisors. Time period is 2016-Q4 2019. Global M&A transactions Confidential
between $10m and $300m 35
Our focus sectors

SOFTWARE DIGITAL MARKETPLACES FINTECH DIGITAL

MEDIA SERVICES

Confidential
36
36
 Joy Abiola Robert Ahldin Johannes Akermark Seth Alpert Claudio Alvarez Erik Andershed
VICE PRESIDENT PARTNER DIRECTOR SENIOR ADVISOR PARTNER DATA SCIENTIST

Susanna Andersson Reda Ben Larbi Adam Birnbaum Karl Blomsterwall Elena Bocharova Bev Boettcher
OFFICE MANAGER ANALYST DIRECTOR ASSOCIATE ASSOCIATE OFFICE MANAGER

Guillaume Bonneton Caoimhe Bradley Felix Bratell Joyce Byrne Hugh Campbell Jon Cantwell Charlotte Carew-Gibbs
PARTNER OFFICE MANAGER VICE PRESIDENT OFFICE MANAGER MANAGING PARTNER PARTNER HR MANAGER

Ian Carroll Alessandro Casartelli Gioia Cerbelli Jack Chan Gaia Cibrario Iman Crisby Eric Crowley Jack Curran Alec Dafferner Joakim Dal Natalie Dean Carlos de la Esperanza Joaquin del Rio Briones Freddie Dodge Carolin Drewes
DIRECTOR FINANCE EXECUTIVE ASSOCIATE DIRECTOR ANALYST EXECUTIVE DIRECTOR ASSOCIATE PARTNER PARTNER VP FINANCE ANALYST ANALYST ANALYST ASSOCIATE
DIRECTOR DIRECTOR MARKETING

Geneshe Edelman Jennifer Eller Fraenze Gade Ravi Ghedia Hampus Hellermark Olivia Hornstein Elsa Hu Javed Huq Okan Inaltay Staffan Ingeborn Miguel Kindelán Alon Kuperman Maria Lazareva Pierce Lewis-Oakes Andrea López
OFFICE MANAGER RESEARCH EDITOR VP EVENTS DIRECTOR ASSOCIATE OFFICE MANAGER EXECUTIVE DIRECTOR ASSOCIATE NON-EXECUTIVE EXECUTIVE EXECUTIVE PERSONAL ASSOCIATE DESIGN COORDINATOR
DIRECTOR DIRECTOR DIRECTOR DIRECTOR ASSISTANT

Felix Lutjen Ashleigh MacDonald Manish Madhvani Marvin Maerz Alexis Majos Bulat Mardanov Victoria Martin Jaime Moreno Candice Mostisser Praveena Muthukumar Simon Nicholls Dave Nish Sandra Núñez Brandon Overmyer Adam Page
ANALYST FINANCE MANAGER MANAGING PARTNER VICE PRESIDENT ANALYST ASSOCIATE PERSONAL DIRECTOR STRATEGY ANALYST VP FINANCE PARTNER VP TECHNOLOGY GRAPHIC DESIGNER VICE PRESIDENT VICE PRESIDENT
ASSISTANT

Victoria Palma Ehrichs Dipam Patel Ben Prade Ed Prior Sven Raeymaekers Joel-Oskar Raisanen Julian Riedlbauer Daniel Roberts Manon Rodier Per Roman Cecilia Roman Johan Roslund Jesper Rothe Oliver Schweitzer Alexis Scorer
PERSONAL VICE PRESIDENT EXECUTIVE ASSOCIATE PARTNER ANALYST PARTNER ANALYST ANALYST MANAGING PARTNER SENIOR ADVISOR VICE PRESIDENT ANALYST EXECUTIVE EXECUTIVE
ASSISTANT DIRECTOR DIRECTOR DIRECTOR

Jaime Sendagorta Minya Shidhaye Kevin Siagam Joy Sioufi Sir Martin Smith Greg Smith Maria Sosna Joe Tabberer David Travis Vincent Wei Carl Wessberg Nikolas Westphal Jade Williams Evgeny Yakovlev Matthew Young
VICE PRESIDENT ANALYST ASSOCIATE EXECUTIVE CHAIRMAN PARTNER OFFICE MANAGER VICE PRESIDENT GENERAL COUNSEL ASSOCIATE PARTNER EXECUTIVE PERSONAL ANALYST ANALYST
DIRECTOR DIRECTOR ASSISTANT

Confidential
37
Global marquee transactions
Baltic Classifieds Group GP Bullhound Fund III EcoVadis GP Bullhound Fund III Innogames
ACQUIRED BY INVESTED IN INVESTMENT BY INVESTED IN INVESTMENT BY
Apax Partners Spotify CVC Growth Partners Klarna Modern Times Group

UNDISCLOSED REALISED $200M ACTIVE €260M VALUATION

(DIRECT LISTING)

GP Bullhound Fund IV Jellyfish GP Bullhound Fund I Filter 13th Lab

INVESTED IN INVESTMENT BY INVESTED IN ACQUIRED BY ACQUIRED BY
Slack Fimalac Group Avito Merkle Facebook

REALISED £500M REALISED UNDISCLOSED UNDISCLOSED

(DIRECT LISTING) (ACQUIRED BY NASPERS)
Confidential
38
OUR CREDENTIALS

Consumer Internet and digital content transactions

DIGITAL CONTENT

Busuu Challengermode Innogames Gamer Network Fnatic

INVESTMENT BY INVESTMENT BY INVESTMENT BY ACQUIRED BY INVESTMENT BY

GP Bullhound Fund IV GP Bullhound Fund IV Modern Times Group RELX Group LVL1 Group, Beringea

UNDISCLOSED UNDISCLOSED €260M VALUATION UNDISCLOSED $19M

CONSUMER INTERNET
Alltrails Spotify Magix AutoTrader Hitta.se
ACQUIRED BY INVESTMENT BY ACQUIRED BY ACQUIRED BY ACQUIRED BY
Spectrum Equity GP Bullhound Fund III Capiton Naspers Sprints Capital

UNDISCLOSED REALISED UNDISCLOSED UNDISCLOSED UNDISCLOSED

(DIRECT LISTING)
Confidential
39
GP BULLHOUND INSIGHTS & EVENTS

Thought-leading independent technology research –

connecting people in the tech industry
Titans of Tech Technology Software Digital Services Fintech
PANDEMIC PROOF? PREDICTIONS GLOBAL MARKET GLOBAL MARKET GLOBAL MARKET
PERSPECTIVES PERSPECTIVES PERSPECTIVES

Summit Northen Tech Investor Conference Market Update

MARBELLA AWARDS ALLSTARS RECEPTIONS WEBINARS

Confidential
40
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