Real Estate Technology Sector Summary Q Review

Transcription

1 Real Estate Technology Sector Summary Q Review 1

2 DEAL DASHBOARD Real Estate Technology Sector Summary Quarterly Financing Activity (2)(3) ($MM) Number of Deals Deal Value ($MM) Date Select Q Financing Transactions Company Selected Investor(s) Amt. Invested Funding to Date Latest Reported Valuation 6/13 $64 $97 $ $212 $284 $351 $582 $478 (1) $ $ $497 (4) 6/06 $65 $133 $800 5/11 $29 $30 $99 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Avg. Deal $4.4 $4.7 $5.1 $7.8 $8.1 $17.2 $13.7 $8.4 Value: 4/21 $130 $214 $1,000 Quarterly M&A Activity (2)(3) Select Q M&A Transactions ($MM) Buyer Target Date Value /03 $1,438 6/19 $70 6/06 NA 6/01 NA Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 5/23 NA 4/27 NA Source: Pitchbook. (1) Includes LendingHome $250MM bridge financing. (2) Represents data across CRE / Investment, Residential Real Estate and Mortgage Technology. (3) Excludes Airbnb financing rounds. (4) Excludes Houzz financing rounds. 2

3 GCA OVERVIEW Real Estate Technology Team San Francisco New York One Maritime Plaza, 25 th Fl. San Francisco, CA United States Phone: (415) Fifth Avenue, 10 th Fl. New York, NY United States Phone: (212) Chris Gough Managing Director Paul DiNardo Managing Director Sean Minnihan Managing Director Rob Freiman Director Phone: (415) Mobile: (415) Phone: (212) Mobile: (650) Phone: (212) Mobile: (917) Phone: (212) Mobile: (973)

4 90% 70% 50% 30% 10% (10%) REAL ESTATE TECHNOLOGY SECTOR SUMMARY PUBLIC COMPANY LANDSCAPE LTM Share Price Performance AppFolio: 124% RealPage: 62% Agilysys: (2%) 68% 50% 37% 25% 24% 20% 9% (30%) Jul-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Mortgage / Data Technology Credit / Mortgage Marketing Traditional Mortgage / Title Property Management Software Traditional Brokerage Real Estate Media / Portals Real Estate Sharing Economy / Travel Public Real Estate Technology Ecosystem Mortgage / Data Technology Credit / Mortgage Marketing Traditional Mortgage / Title Property Management Software Traditional Brokerage Real Estate Media / Portals Real Estate Sharing Economy / Travel (1) 9% 50% 24% 68% 25% 20% 37% LTM Share Price Performance Source: Capital IQ. (1) Red Ventures on 7/03/17. 4

5 REAL ESTATE TECHNOLOGY SECTOR SUMMARY PUBLIC COMPANY VALUATION Enterprise Value / NTM Revenue Enterprise Value / NTM Revenue 12.0x 9.0x 11.2x 9.3x 8.7x 8.9x 10.0x 8.0x 8.9x 7.6x 6.0x 3.0x 0.0x 5.3x 4.9x 5.4x5.0x 4.5x 4.5x 3.9x 3.8x 4.3x 3.6x 3.3x 3.0x 3.1x 3.3x 3.1x 3.2x 3.0x 2.8x 2.5x 2.6x 1.5x 1.7x 1.6x 1.6x 1.8x 1.4x 1.5x 1.3x 1.1x 1.2x (YTD) 6.0x 4.0x 2.0x 0.0x Jul-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun x 5.0x 3.3x 3.2x 1.8x 1.2x Mortgage / Data Technology Credit / Mortgage Marketing Traditional Mortgage / Title Property Management Software Traditional Brokerage Real Estate Media / Portals Real Estate Sharing Economy / Travel Public Real Estate Technology Ecosystem Mortgage / Data Technology Credit / Mortgage Marketing Traditional Mortgage / Title Property Management Software Traditional Brokerage Real Estate Media / Portals Real Estate Sharing Economy / Travel (1) 3.3x 3.2x 1.8x 5.4x 1.2x 8.9x 5.0x NTM Revenue Multiple Source: Capital IQ. (1) Red Ventures on 7/03/17. 5

6 REAL ESTATE TECHNOLOGY SECTOR SUMMARY PRIVATE COMPANY FUNDING LEADERS CRE / Facilities Technology Residential Real Estate Technology (3) Mortgage / Investment Technology Company Founded Amt. Raised/ Invested Company Founded Amt. Raised/ Invested Company Founded Amt. Raised/ Invested 1995 $ $ $109 (2) 2015 $ $ $ $ $ $ $ $ $ $ $ $55 / 2011 $110 (1) 2008 $ $ $ $ $ $ $ $ $ $ $ $ $ $20 Deal completed in Q Filed S1 on June 30, 2017 (2) Does not include $250MM bridge financing. Source: Capital IQ and Pitchbook. (3) Excludes Airbnb and Houzz financing rounds. (1) Reflects combined funding after VTS/Hightower merger. VTS and Hightower individually raised $88mm and $22mm, respectively. 6

7 REDFIN (NASDAQ:RDFN) S-1 REVIEW Offering Overview On June 20, 2017, Redfin Corp. filed its S-1 for IPO registration Listing its common stock on the Nasdaq under the ticker symbol RDFN Expected to raise up to ~$100MM (may change as IPO pricing date nears) Leading underwriters: Goldman Sachs and Allen & Co. Founded: 2002 HQ: Seattle, WA Company Overview Business Description: A technology-powered real estate broker and provider of a map-based real estate platform designed to offer search and brokerage services. The company's platform offers brokerage services through agents who serve as advocates in the deals and earn customer-satisfaction bonuses while also listing homes for sale, enabling property owners to buy or sell a home without paying a commission. Pre-IPO Funding: $167MM Select Pre-IPO Investors: Brokerage Transactions Revenue from commissions received from representing home buyers and sellers. Redfin s sell-side commissions are typically 1% to 1.5% of a home s sale price vs. typical traditional brokerage sell-side commissions of 2.5% to 3% Approximately 73% of 2016 Total Real Estate Transactions Business Model Partner Transactions Customer referrals to partner agents when Redfin agents are unavailable. Paid a fee by partner agent (portion of the commission agents receive) Approximately 27% of 2016 Total Real Estate Transactions Annual Real Estate Transactions 0 10,000 20,000 30,000 Business at a Glance Source: SEC filings, press releases, news articles and Capital IQ. Net Revenue & Adjusted EBITDA $ % 26.1% $187 $267 ($25) ($30) ($23) CY2014 CY2015 CY % Revenue Net Income Gross Margin (%) Key Milestones Helped customers buy or sell over 75,000 homes worth over $40BN since inception Gained market share in 81/84 markets from 2015 to 2016 Drew over 20MM monthly average visitors to website and mobile app in Q1 2017, 44% more than Q1 2016, (fastest-growing top-10 real estate website) Net Promoter Score of 50 7

8 REDFIN (NASDAQ:RDFN) S-1 REVIEW (CONT D) Source: SEC filings, press releases, news articles and Capital IQ. Key Business Metrics Year Ended December 31, Three Months Ended March 31, Monthly average visitors (in thousands) 8,720 11,705 16,215 13,987 20,162 Real estate transactions: Brokerage 12,688 18,586 25,868 4,005 5,692 Partner 6,144 8,906 9,482 1,936 2,041 Total Transactions 18,832 27,492 35,350 5,941 7,733 % Growth 46% 29% 30% Real estate revenue per real estate transaction: Brokerage $9,119 $9,215 $9,436 $6,485 $9,570 Partner 993 1,142 1,719 1,224 1,911 Aggregate 6,468 6,600 7,366 6,793 7,548 Aggregate home value of real estate transactions (in MM): 8,412 12,296 16,199 2,599 3,470 U.S. market share by value 0.33% 0.44% 0.54% 0.48% 0.58% Revenue from top-10 Redfin markets as a % of real estate revenue 80% 76% 72% 71% 68% Average number of lead agents % Growth 40% 29% 26% Title Forward Redfin Mortgage & Title Forward Title and settlement services business offered in 8 states in % of Redfin homebuyers in these states chose Redfin title and settlement service Redfin Mortgage Launched in Q1 2017, Redfin offers origination and underwriting mortgage loan services Redfin Mortgage intends to sell every loan to third-party investors pursuant to one of three existing correspondent relationships. Redfin Mortgage does not intend to retain or service any loans New Business Initiatives Redfin Now Launched in Q1 2017, Redfin Now buys homes directly from home sellers, intending to resell those homes. Customers who sell through Redfin Now typically get less money for their home than they would listing their home with a real estate agent, but receive that money faster with less risk and fuss Currently offered to limited number of customers in two markets No revenue to date; purchased $1.8MM worth of homes in Q Believe its ability to reach more than 20MM monthly average visitors through website and mobile application, coupled with our network of Redfin buyers and proprietary valuation algorithm, will help effectively resell the homes Redin purchases through Redfin Now. 8

9 REAL MATTERS (TSX:REAL) IPO CASE STUDY Offering Overview On May 11, 2017, Real Matters Inc. issued common shares at a $10.94 Offering Price ($13.00 CAD) for total gross proceeds of ~$114MM on the Toronto Stock Exchange ~$92MM to Real Matters balance sheet and ~$23MM to selling shareholders Largest Canadian Tech IPO since Shopify (2015) Market Cap: $723MM; Post-IPO performance: (24%) (1) EV / F2016A F2017E (2) Gross Revenue 2.9x 2.4x Net Revenue 10.6x 7.7x EBITDA 56.3x NM Founded: 2004 HQ: Ontario, Canada Business at a Glance Company Overview Business Description: Provider of property information services to residential and commercial properties. The company operates a cloud-based real estate technology platform and provides its customers with subject matter expertise gathered through partnerships with more than 26,000 field agents, comprised of independent appraisers and insurance inspectors. Pre-IPO Funding: $194MM Select Pre-IPO Investors: Service Type (% of F2016 segment revenue) Clients Business Model United States Appraisal Services (83%) Mortgage Lender Title & Closing Services (17%) Mortgage Lender 60/100 top mortgage lenders Deal History Appraisal Services (88%) Mortgage Lender 3/5 top banks Canada Insurance Inspection Services (12%) Insurer 9/15 top insurance carriers in Canada Gross Revenue Composition 19.3% $ % $170.5 $18.6 $41.0 $114.6 $248.5 $65.5 $15.0 $ % F2014 F2015 F2016 FX Base Organic Growth Acquisition Growth Gross Profit Margin Net Revenue & Adjusted EBITDA $22.1 $2.2 $33.7 $5.3 Source: SEDAR filings, press releases, news articles and Capital IQ. All currency listed in USD. (1) Market data as of 7/07/17. (2) Multiples in excess of 70.0x considered NM. $68.3 $12.8 F2014 F2015 F2016 Net Revenue Adjusted EBITDA Target December 2012 May 2015 April 2016 Description Kirchmeyer & Associates U.S. mortgage appraisals Southwest Financial Services U.S. home equity valuations Linear Title & Closing U.S. title and closing services Strategic Rationale & Outcomes Acquired several large Tier 2 clients Increased market share with Tier 2 clients from 5% to 25% Home equity valuation products ported to the Real Matters Platform Established beachhead in title and closing market National U.S. footprint and licensing Currently building out Next Generation Closing strategy 9

10 REAL ESTATE TECHNOLOGY SECTOR SUMMARY SELECTED M&A ACTIVITY ($MM) Date Enterprise EV / Revenue EV / EBITDA Announced Acquirer Target Value LTM NTM LTM NTM Target Description 7/3/2017 $1, x 2.8x 15.0x 11.1x Provider of financial publishing services in the United States. 6/19/ x NA NA NA Provider of utility management and energy services. 6/13/ NA NA NA NA Provider of an online real estate agent platform, offering agents maximum property exposure and a host of services. 6/6/2017 NA NA NA NA NA Provider of an appraisal management platform that uses desktop and cloud-based valuation supply chain technology that connects all of the parties involved in the appraisal process. 6/1/2017 NA NA NA NA NA Developer of web-based CRM software intended for the real estate industry. 5/23/2017 NA NA NA NA NA Provider of a real estate software platform coupled with an open and connected ecosystem for real estate businesses. 4/27/2017 NA NA NA NA NA Provider of a web-based land and rural property marketplace, facilitating buying, renting and selling of properties. 3/13/2017 4, x 2.7x 14.6x 9.7x Developer of lending and payments software products created to deliver financial technology to banks worldwide. 2/27/ x NA 30.0x NA Advanced forecasting mobile app and optimization software used to price real estate units in North America. 2/15/ NA NA NA NA Operator of an online rental marketplace intended to rent high-end properties. The company's rental platform provides a marketplace for luxury and high-end villas to rent. 1/24/ NA NA NA NA Provider of data intelligence services designed to offer apartment market data. (1) 11/29/ NA NA NA NA Provider of real-time analytics that enable mortgage lenders to monitor and manage operations across their enterprise. 9/21/2016 NA NA NA NA NA RedVision Systems, Inc. provides title reporting and property research solutions. 7/26/2016 NA NA NA NA NA Developer and provider of an an end-to-end software as a service customer relationship management, lead generation and lead management software platform 6/22/ NA NA NA NA Provider of real-time analytics that enable mortgage lenders to monitor and manage operations across their enterprise. 6/16/2016 NA NA NA NA NA Provides mortgage pricing and eligibility, mortgage sales, mortgage rate quoting and marketing automation software for banks, mortgage lenders and loan officers. 6/7/2016 NA NA NA NA NA Provides cloud-based document and data management platforms. 6/3/2016 NA NA NA NA NA 5/18/2016 NA NA NA NA NA Provides SaaS based real estate investment management and reporting software and services for the affordable housing, private equity, and government markets. Provides real estate and facilities management software solutions to Fortune 500 companies that automates location lifecycle to improve the performance of locations. 5/16/ x NA 23.0x NA Provides secure EDI document distribution and collaboration SaaS for the financial services industry. 2/23/ x NA 11.7x NA Provides utility management, energy management, electronic payment, sub metering and back office solutions. Source: Capital IQ and Pitchbook. (1) Represents a merger of equals between VTS and Hightower. 10

11 2015 REAL ESTATE TECHNOLOGY SECTOR SUMMARY SELECTED M&A ACTIVITY (CONT D) ($MM) Date Enterprise EV / Revenue EV / EBITDA Announced Acquirer Target Value LTM NTM LTM NTM Target Description 2/2/2016 NA NA NA NA NA Provides commercial property management software for real estate companies in Germany. 1/28/2016 NA NA NA NA NA Provides Web-based property management solutions to support multiple properties, units, and users. 12/17/2015 $475 NA NA NA 13.5x Provides property appraisal and real estate collateral management software. 11/4/2015 3, x 7.2x 63.5x 28.4x Provider of an online vacation rental property marketplace that enables property owners / managers to market properties for rental to travelers. 11/4/ NA NA NA NA Provider of hospitality management software systems for hotels, resorts, and spas worldwide. 10/14/ NA NA NA NA Provides a Web-based relationship management solution for mortgage professionals to improve customer retention. 7/22/ NA NA NA NA Provider of an online collaborative transaction environment for the real estate industry. 6/3/2015 NA NA NA NA NA Provider of real estate enterprise software applications and hosted solutions for the property management industry. 6/2/ NA NA NA NA Provides a suite of cloud-based, smart answer automation and routing. 4/29/ x NA 7.0x NA Provider of an online apartment listing service. 4/8/2015 NA NA NA NA NA Provider of an online apartment advertising service for property managers and owners. Mean 4.2x 2.7x 19.9x 10.4x Median 2.9x 2.7x 15.0x 10.4x Source: Capital IQ and Pitchbook. 11

12 REAL ESTATE TECHNOLOGY SECTOR SUMMARY Real Estate Technology Success» GCA team members have advised on several high profile real estate technology / fintech transactions Series C Financing Acquired a majority stake in MBO backed by Investor Group led by Casin Group Advisor to the Special Committee Financial Advisor Financial Advisor June 2017 May 2017 Pending Pending December 2016 November 2016 Series B Financing Sale of Investment from to Financial Advisor October 2016 September 2016 September 2016 August 2016 July 2016 June 2016 Convertible Note Offering Sale of Acquisition of to Financial Advisor We advised the buyer June 2016 May 2016 April 2016 August 2015 August 2014 August 2013 ~$2,400,000,000 ~$108,000,000 ~$166,000,000 ~$355,000,000 12

13 APPENDIX 13

14 PUBLIC REAL ESTATE TECHNOLOGY ECOSYSTEM ($MM, except per share data) Stock Trading Metrics Operating Metrics Price Equity Net Enterprise Revenue EV / Revenue EV / EBITDA CY Rev. Growth EBITDA Margin Company 06/30/17 Value Debt Value CY16A CY17E CY16A CY17E CY16A CY17E 16A/15E 17E/16A CY16A CY17E Real Estate Media / Portals Zillow Group, Inc. $48.84 $8,977 ($187) $8,790 $843 $1, x 8.3x NM 38.4x 30.8% 26.3% 16.6% 21.5% CoStar Group, Inc. $ ,633 (268) 8, x 8.8x 32.6x 31.2x 17.6% 13.7% 30.6% 28.1% REA Group Limited $ , , x 12.3x 25.6x 20.9x 29.8% 8.3% 52.1% 58.9% Rightmove plc $ ,074 (22) 5, x 19.8x 28.6x 25.9x 11.0% 10.5% 76.4% 76.2% ZPG Plc $4.70 2, , x 7.9x NM 18.4x 16.1% 26.9% 0.0% 42.8% Lifull Co., Ltd. $8.77 1,041 (46) x 5.4x 22.7x 23.5x 43.4% (18.7%) 19.3% 22.9% Real Estate Media / Portals Mean 11.7x 10.4x 27.4x 26.4x 25% 11% 32% 42% Median 10.2x 8.5x 27.1x 24.7x 24% 12% 25% 35% Mortgage / Data Technology Ellie Mae, Inc. $ $3,745 ($393) $3,351 $354 $ x 7.6x 29.7x 23.1x 39.5% 23.9% 31.9% 33.0% CoreLogic, Inc. $ ,672 1,485 5,156 1,934 1, x 2.8x 10.3x 11.0x 26.6% (4.2%) 25.8% 25.2% Black Knight Financial Services, Inc. $ ,848 1,467 4,315 1,035 1, x 4.0x 9.3x 8.4x 11.2% 4.4% 44.9% 47.5% Real Matters Inc. $ (2) x 3.1x NM NM 45.8% 19.9% 5.2% 2.1% Altisource Portfolio Solutions S.A. $ x 0.8x 4.8x 5.9x (7.2%) (4.8%) 15.0% 12.7% Reis, Inc. $ (22) x 4.4x 15.9x 15.4x 8.6% 6.4% 29.6% 28.6% Mortgage / Data Technology Mean 4.2x 3.8x 14.0x 12.8x 21% 8% 25% 25% Median 3.9x 3.5x 10.3x 11.0x 19% 5% 28% 27% Property Management Software RealPage, Inc. $35.95 $2,972 $61 $3,034 $568 $ x 4.6x 24.2x 18.9x 21.3% 15.3% 22.0% 24.5% AppFolio, Inc. $ ,104 (27) 1, x 7.8x NM NM 39.8% 31.9% 2.8% 12.5% Agilysys, Inc. $ (49) x 1.4x NM 29.9x 11.4% 2.3% 3.4% 4.6% Property Management Software Mean 5.7x 4.6x 24.2x 24.4x 24% 17% 9% 14% Median 5.3x 4.6x 24.2x 24.4x 21% 15% 3% 13% Traditional Brokerage Jones Lang LaSalle Incorporated $ $5,661 $1,506 $7,167 $6,647 $7, x 0.9x 11.3x 10.6x 11.4% 14.0% 9.6% 8.9% Realogy Holdings Corp. $ ,478 3,578 8,056 5,778 6, x 1.3x 10.6x 10.5x 4.6% 4.8% 13.2% 12.6% Colliers International Group Inc. $ , ,497 1,930 2, x 1.2x 12.9x 10.8x 12.1% 9.2% 10.0% 11.0% Marcus & Millichap, Inc. $ ,004 (176) x 1.2x 6.9x 8.4x 13.0% (1.4%) 16.7% 14.0% RE/MAX Holdings, Inc. $ , x 5.9x 12.5x 11.1x (1.4%) 12.4% 53.2% 53.1% Traditional Brokerage Source: Capital IQ. Mean 2.3x 2.1x 10.8x 10.3x 8% 8% 21% 20% Median 1.3x 1.2x 11.3x 10.6x 11% 9% 13% 13% 14

15 PUBLIC REAL ESTATE TECHNOLOGY ECOSYSTEM (CONT.) ($MM, except per share data) Stock Trading Metrics Operating Metrics Price Equity Net Enterprise Revenue EV / Revenue EV / EBITDA CY Rev. Growth EBITDA Margin Company 06/30/17 Value Debt Value CY16A CY17E CY16A CY17E CY16A CY17E 16A/15E 17E/16A CY16A CY17E Traditional Mortgage / Title Fidelity National Financial, Inc. $44.83 $12,223 $1,473 $13,696 $8,115 $8, x 1.6x 9.7x 8.8x 39.4% 2.4% 17.5% 18.6% First American Financial Corporation $ ,940 (312) 4,628 5,475 5, x 0.8x 7.0x 6.5x 5.8% 2.4% 12.1% 12.8% Radian Group Inc. $ ,517 (563) 2,954 1,268 1, x 2.4x NM NM 9.8% (3.6%) NM NM Nationstar Mortgage Holdings Inc. $ ,749 15,337 17,086 1,924 2, x 8.5x NM 31.7x (3.3%) 4.0% 20.9% 26.9% Stewart Information Services Corporation $ ,076 (26) 1,050 1,972 2, x 0.5x 8.1x 6.2x (3.1%) 1.6% 6.6% 8.4% Ocwen Financial Corporation $ ,321 6,657 1,387 1, x 6.5x 26.7x 31.1x (20.3%) (26.5%) 18.0% 21.0% Traditional Mortgage / Title Mean 3.2x 3.4x 12.9x 16.9x 5% (3%) 15% 18% Median 2.0x 2.0x 8.9x 8.8x 1% 2% 17% 19% Credit / Mortgage Marketing Moneysupermarket.com Group PLC $4.59 $2,489 ($55) $2,434 $389 $ x 5.4x 16.2x 14.1x (6.3%) 14.9% 38.5% 38.5% LendingTree, Inc. $ ,057 (105) 1, x 3.6x 28.9x 19.8x 49.9% 42.5% 17.7% 18.2% Bankrate, Inc. $ , , x 2.5x 11.1x 10.0x 18.3% 14.7% 25.9% 24.9% QuinStreet, Inc. $ (42) x 0.5x 14.9x 7.5x 6.5% 0.1% 3.3% 6.5% Credit / Mortgage Marketing Mean 3.7x 3.0x 17.8x 12.9x 17% 18% 21% 22% Median 4.0x 3.0x 15.6x 12.1x 12% 15% 22% 22% Real Estate Sharing Economy / Travel The Priceline Group Inc. $1, $91,922 $2,914 $94,836 $10,722 $12, x 7.7x 23.2x 20.2x 16.2% 15.3% 38.1% 38.0% Expedia, Inc. $ ,484 (184) 22,300 $8,753 $10, x 2.2x 13.8x 12.1x 31.2% 15.6% 18.5% 18.3% TripAdvisor, Inc. $ ,395 (529) 4,866 $1,491 $1, x 3.0x 13.1x 14.8x (0.1%) 9.3% 24.8% 20.2% Real Estate Sharing Economy / Travel Mean 4.9x 4.3x 16.7x 15.7x 16% 13% 27% 25% Median 3.3x 3.0x 13.8x 14.8x 16% 15% 25% 20% Source: Capital IQ. 15