What’s happening in late stage AdTech? A look at public markets, VC and M&A

by Nima Wedlake on June 12, 2017

We’ve just published an update to our report on late stage advertising technology companies. Our full report is available on Slideshare & we have included some highlights below:

Public markets: Criteo and The Trade Desk have thrived as public companies — both have consistently met or beat investor expectations, sustaining growth and profitability over several quarters. The Trade Desk went public in September of last year and has performed exceptionally well in 2017; its stock price has more than doubled this year (see our deep dive on The Trade Desk for more information). However, with the exception of these two companies, advertising technology vendors have struggled in the public markets. For instance, Rocket Fuel’s stock price has dropped nearly 95% since its IPO in 2013.

The chart below shows the performance of Facebook, Google and an index of several adtech companies (Criteo, Rocket Fuel, Rubicon Project, The Trade Desk, Tremor Video & YuMe). While companies have rebounded slightly in 2017, public market investors have generally soured on the sector and multiples have dropped to less than 1x 2017 net revenue (not including Criteo and The Trade Desk, which are trading at 3.1x and 7.8x 2017 revenue, respectively).

Public Market Performance

Late stage financings: Investment in late stage advertising technology companies (defined by Pitchbook as “usually Series B to Series Z+ rounds”) peaked in 2014, both in terms of number of deals and total dollars raised. While we saw a drop in the number of companies raising capital in 2015 (41 vs. 64), the total amount of capital raised dropped only slightly (down 12% YoY to $753M). However, we saw further declines in both deal count and aggregate capital invested in 2016.

Late Stage AdTech Financings

M&A: While late stage venture capital has softened, we’ve seen many healthy exits for advertising technology companies over the last 18 months. There were 79 acquisitions in 2016, in line with deal count in 2015. We count 20 acquisitions of $100M or more since 2016, including Oracle’s $850M acquisition of Moat, Amobee’s $310M acquisition of Turn and Salesforce’s $700M Krux acquisition. Additionally, Chinese companies have emerged as eager buyers of adtech — notable deals include Orient Hontai Capital’s $1.4B acquisition of AppLovin and Miteno Communication’s $900M acquisition of Media.net (see our research report on the Chinese advertising ecosystem for more detail)

AdTech Acquisitons

We’ve embedded our complete findings below, and you can download the report directly from Slideshare.

Late Stage AdTech Market Update (Thomvest Ventures) from Thomvest Ventures