FOCUS Carrier-Focused Telecom Technology Quarterly: Summer 2021 Report
Public Markets
The FOCUS Carrier-Focused Telecom Technology Index (CFTTI) enjoyed yet another strong reporting period with a three-month gain of 13.1%. Not only was this gain impressive in absolute terms, but it handily outperformed both the 10.3% gain in the S&P 500 and the 4.2% gain in the NASDAQ over the same time period.The CFTTI still lags the broader indices for the full year period as its 18.6% gain in the last 12-months compares unfavorably to both the 38.1% gain in the S&P 500 and the 44.9% gain in the NASDAQ. Sector multiples ended the period at 2.6x revenue and 12.8x EBITDA. Both of these are higher than year-ago multiples of 2.4x revenue and 11.7x EBITDA.
Salesforce Market Insights
The M&A market for companies in the Salesforce Partners program is reaching a critical inflection point. Competition is growing more intense, as the number of available firms shrinks, raising already-high valuations for those that remain independent. At the same time, proposed capital gains tax hikes make it imperative for potential sellers to consider doing deals as soon as possible.
FOCUS Enterprise-Focused Telecom Technology Quarterly – Spring 2021
Public Markets
The FOCUS Enterprise-Focused Telecom Technology Index (EFTTI) cooled off significantly this past three months but still managed to turn in a positive return of 2.2%. This lagged both the 12.6% gain in the S&P 500 and the 6.8% gain in the NASDAQ by fairly wide margins.The sector is still up a hefty 48.4% over the past year, which puts its performance roughly in the middle of the 43.6% gain in the S&P 500 and the 57.1% gain in the NASDAQ over the corresponding time frame. Sector multiples are also significantly higher than they were a year ago. The sector revenue multiple jumped from 4.0x to 6.3x, while the sector EBITDA multiple increased from 16.0x to 24.6x.
FOCUS U.S. Communications Service Provider Quarterly: Spring 2021 Report
Public Markets
The FOCUS Communications Service Provider Index (CSPI) had a fourth straight reporting period with a positive return. However, this period’s gain of 1.3% was relatively modest and under-performed both the 5.8% gain in the S&P 500 and the 2.8% gain in the NASDAQ over the corresponding time frame. The CSPI is also up 27.6% for the full year. However, even with this substantial increase the sector still lags the S&P 500 (up 53.7%) and the NASDAQ (up 72.0%) by a wide margin. Sector multiples are significantly higher than they were at this time last year. The sector revenue multiple increased from 2.5x to 3.0x, and the sector EBITDA multiple jumped from 7.2x to 8.5xFOCUS Telecom Business Services Quarterly: Spring 2021 Report
Public Markets
The FOCUS Telecom Business Services Index (TBSI) had a fourth straight reporting period with a positive return, marking a full year of positive returns since the outbreak of the pandemic. This past three months was particularly strong as the sector’s gain of 20.1% handily outperformed both the 5.8% gain in the S&P 500 and the 2.8% gain in the NASDAQ. For the full year, the TBSI is up a very impressive 63.0%. While this gain was good enough to give it a comfortable lead over the 53.7% year-over-year increase in the S&P 500, it still lagged the 72.0% gain in the NASDAQ, Sub sector multiples are also meaningfully higher than they were at this time last year.The sub sector revenue multiple jumped from 0.5x to 0.7x, while the EBITDA multiple spiked from 6.6x to 9.3x.
ServiceNow Market Insights
In the short 10 months since ServiceNow announced the expansion of its partner program and industry-aligned solutions in May 2020, Partners have benefited from rapid growth in the ServiceNow category. Furthermore, as most IT projects move to a virtual environment in the post-COVID-19 era, ServiceNow has emerged as the preferred IT service management (ITSM) platform for enterprise IT departments.
