Report on the German Cloud and Hosting Sector Trends, Valuations and M&A Environment H1 2017
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GERMAN CLOUD AND HOSTING SECTOR TRENDS, VALUATIONS AND M&A-ENVIRONMENT June 2017 Strictly private & confidential 1 CONTENTS § PRESENTATION SUMMARY § OVERVIEW ICT MARKET IN GERMANY AND TOP TRENDS § CLOUD AND HOSTING MARKET AT A GLANCE § MARKET STUDIES ABOUT CLOUD COMPUTING § INTRODUCTION TO CLAIRFIELD INTERNATIONAL § GERMAN SENIOR TEAM AND TRANSACTIONS § M&A ACTIVITY IN TECHNOLOGY SECTORS AND PEER GROUP VALUATION § CONTACT 2 PRESENTATION SUMMARY ClouD solution marKet Tech trenDs in M&A § The size of the global ClouD ComPuting marKet is about 203.9bn€ in § Technology, MeDia & Telecommunication (TMT) comPleteD 3,021 deals 2016 anD accounts for 22.7% of the IT Service marKet. However, the worlDwiDe worth 698.2bn USD in 2016, rePresenting a decrease of global Webhosting marKet has a volume of about 69.0bn€, rePresenting 4.5% in value anD 5.7% in deal count comPareD to a record 2015 (3,203 a share of 7.7% of the global IT Service marKet. deals, 730.8bn USD), while deal count remaineD consistent. § The EuroPean Webhosting marKet is the seconD biggest in the global § Tech anD non-tech comPanies being disrupteD by innovative digital comParison. Furthermore, the EuroPean Webhosting marKet shows a technologies turneD to M&A in numbers that maDe 2016 another continuous growth over the last years. Especially German anD the blocKbuster year for global technology M&A value. British marKet are fast growing marKets with an average annual growth § A slowDown in the M&A marKet in 2017 is more likely in the seconD rate of about 10.0%. part of the year as a result of the election in SePtember anD relateD to § We exPect the ClouD ComPuting marKet to keeP growing as the number high levels of uncertainty, accorDing to Mergermarket intelligence. of ClouD ComPuting users will grow by an average annual growth rate of 9.0% from 2016 to 2018. In 2018 about 3.3 billion people will use ClairfielD is the right Partner ClouD ComPuting services. § ClairfielD is one of the leading global M&A firms tyPically executing miD- § The same trenD is shown regarding the Webhosting marKet. The marKet sizeD transactions up to an enterPrise value of 500.0m€ . size’s average annual growth rate from 2012 to 2016 was about 18.0%. § With partner offices in 50.0% of all OECD countries, ClairfielD § The two marKets are high comPetitive because there are only a few big International covers 75.0% of Germany’s most significant traDe players who serve almost the whole marKet. partners. § Special about the Web Hosting marKet is also the local nature. For § The longstanDing exPeriences with more than 600 successful examPle 9 out of 10 American Web Hosting users choose a provider transaction over the last five years of our partners in diverse inDustries located in its country.1 in combination with outstanDingly connecteD inDustry exPerts are § AccorDing to a stuDy, Google is the most imPortant hosting anD clouD enabling our clients to open up new strategic possibilities. provider for businesses worlDwiDe. About 32.0% of the comPanies § Senior involvement throughout all phases of a transaction is the single inDicate Google as their hosting anD clouD provider, followeD by most imPortant hallmarK of our execution style anD commitment to Microsoft with 23.0% anD Amazon with 17.0%. The same trenD is quality anD prudent advice. shown regarding the EuroPean ranKing.2 1+2Statista 2016 Strictly private & confidential 3 OVERVIEW ICT MARKET IN GERMANY AND TOP TRENDS 4 GENERAL OVERVIEW ICT MARKET GERMANY Revenue ICT sector Germany 2010-2018 (bn€) Revenue-split 2016 Germany by major IT sectors 88.4 90.5 84.5 87.4 79.2 81.9 74.5 77.5 68.0 Software 24.6% Services 45.4% Hardware 30.0% 2010 2011 2012 2013 2014 2015 2016 2017e 2018e Revenue-split 2016 Germany by selected IT service sectors IT revenues 2012-2016 by quarter Germany (bn€) Q1 Q2 Q3 Q4 Consulting 9.9 21.0 19.2% 7.3 13.2 11.5 23.9 5.6 Others 21.8 44.5% Services 18.9 21.3 17.0% 14.9 38.2 27.7 Hosting 13.9 17.0 15.1% 12.2 17.7 DeveloPment 6.1 8.5 7.4 4.1% 2012 2013 2014 2015 2016 Key Fact: Continuous increase of ICT marKet revenues in Germany anD growing imPortance of IT services. Strictly private & confidential 5 SUBSECTOR OVERVIEW ICT GERMANY Market volume anD growth rate (bn€ anD %) SpenDing in IT in Germany by segment1 Market Volume Growth Rate 2013 2014 2015 2016 14/ 13 15/ 14 16/ 15 Software IT-Hardware IT-Services Information Technology 74.7 77.8 81.1 84.0 4.2% 4.2% 3.6% IT-HarDware 21.2 22.5 23.6 24.3 6.4% 4.7% 2.8% 20.4 21.6 17.3 18.1 19.1 IT-Software 18.1 19.1 20.4 21.6 5.4% 6.6% 6.2% 23.6 24.4 IT-Services 35.4 36.2 37.2 38.2 2.3% 2.6% 2.7% 21.0 21.2 22.5 Telecommunication 65.6 65.2 67.1 66.9 -0.5% 3.0% -0.4% TC- Terminal 9.3 9.3 11.3 11.1 -0.2% 22.1% -2.1% 34.8 25.4 36.2 37.2 38.2 TC-Infrastructure 6.1 6.3 6.5 6.6 3.8% 2.5% 2.1% TC-Services 50.2 49.6 49.3 49.2 -1.3% -0.5% -0.3% 2012 2013 2014 2015 2016 Revenue by ICT sectors Germany (bn€) SpenDing in IT services worldwide by segment (bnUS$)2 Telecommunication Information Technology Consumer Electronics 9.5 Software 10.2 9.6 10.9 services 13.2% 74.7 77.8 81.1 84.0 Communication services IT services 52.0% 34.8% 65.6 65.2 67.1 66.9 2013 2014 2015 2016 Key Fact: IT sector exPanDs its marKet position whereas telecommunication can only remain it. BITKOM, 1,2 Statista 2017 Strictly private & confidential 6 IT CONSULTING IS THE MOST PROFITABLE SUB-SECTOR Revenue of IT consultancies worlDwiDe (bnUS$)1 Revenue of IT consultancies Germany (bnUS$)2 312.3 296.9 29.3 282.2 27.9 28.3 27.6 28.3 268.3 255.0 2015 2016 2017e 2018e 2019e 2015 2016 2017e 2018e 2019e Revenue in IT by subsector3 Market sPecifics Hosting 3.2% Webdesign § The most profitable sub-sector in the fielD of IT services is IT consulting. 4.1% Data § The marKet for IT consulting services consists of six main disciplines: IT Processing Advisory, ERP Services, Data Analytics, Software Management, Systems 11.6% Integration anD EnterPrise Architecture. Development § Since 2011, the technology consulting has globally seen year-on-year Other 42.5% 17.5% growth, with a ComPounDeD Annual Growth Rate (CAGR) of apPro. arounD 2.5%. Consulting § In the coming years, the IT consulting marKet is forecasteD to face 20.5% significant higher demand, accelerating growth, on the bacK of large technological mega trenDs, incluDing digitisation, analytics, clouD, robotics, anD the Internet of Things (IoT).4 Key Fact: The marKet for technology anD IT consulting services rePresents roughly 20% of the total global consulting marKet. 1searchitchannel.techtarget.com/ Clairfield; 2,3Statista 2017; 4www.consultancy.uK Strictly private & confidential 7 TOP TRENDS 2017: AI, INTELLIGENT APPS AND THINGS AND VR Artificial Intelligence & aDvanceD machine learning Intelligent aPPs Artificial Intelligence (AI) anD machine learning (ML), which incluDe Intelligent apPs, which incluDe technologies like virtual personal assistants technologies such as deeP learning, neural networKs anD natural-language (VPAs), have the potential to transform the worKPlace by maKing everyDay processing, can also cover more advanced systems that understand, learn, tasKs easier anD its users more effective. Every existing software category predict, adapt anD potentially operate autonomously. from security tooling to enterPrise apPlications such as marKeting or ERP Organizations seeKing to drive digital innovation with this trenD shoulD will be infused with AI enabled caPabilities. evaluate a number of business scenarios in which AI anD machine learning Using AI, technology providers will focus on three areas: advanced coulD drive clear anD specific business value anD consiDer exPerimenting analytics, AI-powereD anD increasingly autonomous business processes with one or two high-imPact scenarios anD AI-powereD immersive, conversational anD continuous interfaces. Intelligent things Virtual & augmenteD reality New intelligent things generally fall into three categories: robots, drones Virtual reality (VR) anD augmented reality (AR) transform the way anD autonomous vehicles. Each of these areas will evolve to imPact a inDividuals interact with each other anD with software systems creating an larger segment of the marKet anD suPPort a new phase of digital . immersive environment. For examPle, VR can be useD for training As intelligent things evolve, they will shift from a stanD-alone to a scenarios anD remote exPeriences. AR, which enables a blending of the collaborative moDel in which intelligent things communicate with one real anD virtual worlDs, means businesses can overlay graPhics onto real- another anD act in concert to accomPlish tasKs. However, nontechnical worlD objects, such as hidden wires on the image of a wall. issues such as liability anD privacy, along with the comPlexity of creating Immersive exPeriences with AR anD VR are reaching tiPPing points in terms highly specializeD assistants, will slow embedDed intelligence in some of price anD caPability but will not rePlace other interface moDels. Over scenarios. time AR anD VR exPanD beyond visual immersion to incluDe all human senses. EnterPrises shoulD looK for targeteD apPlications of VR anD AR through 2020. Gartner Strictly private & confidential 8 TOP TRENDS 2017: DIGITAL, SECURITY AND SERVICE ARCHITECTURE Conversational systems Mesh aPP anD service architecture Conversational systems can range from simPle informal, bidirectional text The intelligent digital mesh will require changes to the architecture, or voice conversations such as an answer to “What time is it?” to more technology anD tools useD to develoP solutions.