Financial analysis of some of the most disruptive Tech companies in the world. This document aims to provide you with some major insights concerning the financial markets and the most disruptive innovations for the second quarter of the financial year 2019.

1. - Q2 2019 -
GafanomicsThe Quarterly by
- Q2 2019 -
1

2. - Q2 2019 -
Foreword
Jean-Christophe Liaubet
Partner
at Fabernovel
abernovel is pleased to release the second edition of « Gafanomics - The Quarterly », our new publication
which offers you every quarter a transversal review of the earnings releases and strategic announcements of
the disruptive Tech giants.
The sun has continued to shine on the Street for the Tech segment, the second best performing sector in
the US in the last three months after Healthcare. In still supportive financial markets soothed by low interest
rates but sensitive to Donald Trump's tweets on the Trade War, Tech giants benefited from a good Q2
earning season: c.60% of the firms of our sample of 20 companies beat or came in line with consensus
expectations (vs c.50% for the S&P 500).
The releases also confirmed three key patterns in the Tech value strategies. First, the priority of topline
growth at the expense of profitability. The companies of our sample recorded on average a 22% sales growth
in Q2 but a 4% EBIT decline. Second, the robust performance of the digital advertising model. Beyond the
strong come back of Snapchat, Alphabet and Facebook's operating performances have not yet been
substantially affected by trustability issues. Third, the dynamic diversification strategies. Facebook made the
most striking announcement, being the first giant to get out of the wood with the Libra.
Still convinced that Tech Giants are moving towards new territories, we focus this quarter on one of their
likely next playground: healthcare. A large market and critical industry for the future of humanity, that is, in
our view, ripe for disruption due to the technological revolution and the cultural and strategic challenges
faced by many incumbents, which lag behind in terms of patient centricity and data driven management.
Another step towards a dangerous hegemony of the GAFAM? Maybe not. What if this playground could be
the first where the Tech for Good materialises due to new standards in terms of patient experience,
prevention and information...
A summer night dream...
F
2

3. - Q2 2019 -
What is this document?
A document published each quarter, two weeks after the financial quarterly publications of some of the
largest tech companies in the world.
Who should read it?
Despite being based on some complex financial analysis, this document is designed to be understood by
anyone with some sort of interest for business in general. Moreover, we think that it should be of particular
interest for anyone having a managerial role (CEO, CFO, CDO, Project manager...) or being connected to the
financial markets (investors, analysts, IR,...).
What can you expect to learn from it?
Our goal is to help people understand how today’s Disruptive Tech Giants (more than $10bn of market
Capitalization and disruptive according to Fabernovel) are performing quarter after quarter and what lies
behind this performance. Based on this analysis, we hope to give you the keys to follow their successful path
- from the small quick-win communication best practice to the large business model revolution.
Who is writing it?
Financial analysts, strategists, technologists and designers from Fabernovel are combining their expertise
to make this document as smart and thought-provoking as possible, so as to offer you the best
reading experience and inspire you for your own future.
1.
Strikin
g facts
Gafanomics - The Quarterly
3

4. - Q2 2019 -
1
The last 3 months
through our glasses.
4

5. - Q2 2019 -Analysis period: 30/04/2019 - 31/07/2019
US Market capitalization change
+$72bn
GAFAM contributIon to the increase
83%
Average share price change
+3%
Increase/decrease of Tech Giants market cap over 3 months
In $Bn (on the left) and in % relative (on the right) to their own market cap
USA
Asia
Europe
1.Strikingfacts Share price performance of disruptive tech companies
5

6. - Q2 2019 -
20% 40% 60% 80%
1.Strikingfacts Operational performance of disruptive Tech companies
Q2 2019
Delivery
S&P 500
Tech cos.
Sales EBIT EPS
Beat In line Miss
20% 40% 60% 80% 20% 40% 60% 80%
Average 2019e financial revisions
Sales
EBIT
Sales
EBIT
+22%
-4%
FCF +32%
While Tech companies saw their revenues significantly grow, their EBIT margin
mostly decreased due to punctual events and investments in future growth.
Overall, companies, and more specifically GAFAM, manage to generate more cash.
On July 31st, Alphabet became the company with the most cash and took over the
historical leader, Apple.
+0.5%
-3%
Q2 2019 Median operational growth YoY
While companies deliver mostly in line with expectations on the top line, the
investment strategy often impacts the operating margin of some of the biggest
tech companies.
Analysis period: 31/04/2019 - 31/07/2019
6

7. - Q2 2019 -
Amazon
Amazon reached a new record during its Amazon Prime Day 2019 with over 175 million items purchased. That’s more than
its Black Friday and Silver Monday business combined. The company also doubled the number of paid members in India.
Uber
Uber Eats is offering a new option in some cities in the US, the Dine-In. It enables users to order food ahead of time and go
to the restaurant when the food is ready. An opportunity for Uber to benefit from more food transactions, to avoid paying
drivers and to offer hailing services to the restaurants.
Salesforce
Salesforce announced that it is acquiring Tableau, specialized in data visualization, for $15.7 billion (+50% premium
compared to its latest share price, close to an EV/Sales 2019e of 10x) in an all-stock deal.
This move is part of the company’s strategy to diversify beyond its CRM solutions: offering more solutions and added value
to its current customers while targeting new markets.
1.Strikingfacts Striking facts among Tech leaders
Facebook revealed some details about the launch of its stablecoin, Libra. The plan is to launch a full payment network with
almost no fees per transactions. The public introduction is expected for H1 2020.
Facebook
Apple announced that Jony Ive, its Chief Design Officer, will resign from the company later this year to start his own design
company with Apple as one of its primary clients. It also announced many acquisitions such as Drive.ai (a startup specialized
in self-driving software systems valued at $200 million in 2017) or a semiconductors company.
AppleNeuralink
Neuralink, the company launched by Elon Musk to develop interfaces to connect human brains and computers, unveiled its
first technologies to the public. It consists in a computer chip that is meant to be embedded in a human brain by a surgical
robot. The goal is to collect electric signals sent out by the brain and interpret them as actions.
7

8. - Q2 2019 -
1.Strikingfacts Quarterly quotes
Microsoft
Microsoft during the earnings call with analysts:
"Our Commercial Cloud business is the largest in the world, surpassing $38 billion in revenue for the year, with gross margin
expanding to 63%"
- Satya Nadella
Name
Tesla about what Elon Musk has to do next, after the Model S has been awarded the Ultimate Car of the Year:
“We've got to scale up our production, get to making millions of cars per year. And keep improving the price of the car (...) so
that people can afford them, while still having a car that people love and is great in every way”
- Elon Musk
Netflix on ad revenue in a letter to investors:
“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead
entirely focusing on competing for viewer satisfaction.”
- Reed Hastings
Amazon about the investments in one-day shipping:
"Customers are responding to Prime's move to one-day delivery — we've received a lot of positive feedback and seen
accelerating sales growth"
- Jeff Bezos
Facebook in front of the Senate Committee on Banking, Housing and Urban Affairs:
“The Libra Association has no intention of competing with any sovereign currencies or entering the monetary policy arena”
- David Marcus, Head of Calibra and Co-Creator of Libra
FacebookTeslaAmazonNetflix
8

9. - Q2 2019 -
1.Strikingfacts Libra, a first step towards the SuperApp model
9
Last June, Facebook announced its long-awaited blockchain-based project:
the launch of a global digital currency, the Libra, starting in 2020. The currency
will be stable and secure (backed by a basket of solid currencies & U.S. Treasury
securities) and governed by a non-profit Swiss-based association of 28 partners
- a number that should rise to 100 by the time of launch.
Libra's mission is to enable a simple global currency and financial
infrastructure that empowers billions of people.”
— The Libra Association
Officially, Facebook intends to capitalize on the wide use of its applications
worldwide to serve the 1,7bn people that remain unbanked. To us though, this
new initiative might well be Facebook’s first move towards the Super-App
model, that companies like WeChat are popularizing. With this move,
Facebook is not only trying to reinforce its current digital advertising
business and generate additional revenues from financial products, it is
most importantly trying to catch up with the ones that have truly started to
shape “The Internet of Money”: Chinese Tech Giants Tencent (WeChat) and
Alibaba (Alipay).
Yet, the future of Libra remains uncertain for now with key challenges ahead:
● Scalability (relies on network effect & must handle billions of potential users).
● Reliability (must gain users’ trust regarding the security of their personal
& financial data).
● Compliance (is tied to still evolving regulations).
Libra’s current partners
A path to the $1trn threshold?
The Tencent SuperApp model is valued at
an EV/user ratio of 333$. Were this ratio
applied to the 2.5bn users expected for
Facebook in 2019, Facebook market cap
would reach $823bn, above Alphabet’s
current valuation.

10. - Q2 2019 -
1.Strikingfacts Macro trends: the GAFAM under pressure from regulators
10
While Libra seems a promising opportunity for
Facebook, it might never be effective knowing the
various challenges the company has been through.
The new currency is raising concerns from regulators
that fear Facebook could become a bank at a time
when the size of Facebook and the use of our
personal data is already worrying.
These worries regarding unfair competition and
monopolistic positions from GAFA are being fought
against by regulators:
From the inside with one of Facebook’s
co-founder Chris Hughes for example.
In the US with Elizabeth Warren for example
or the Federal Trade Commission (FTC) which
is investigating whether Facebook’s acquisitions
improperly squelched competition for
the company.
In Europe with the recent GAFA tax
(approved on July 11th
).

11. - Q2 2019 -
What happened this quarter?
1.Strikingfacts Our TOP - Alphabet, a rebound from Q1
Performance
Q2 2019
Vs. Analysts
expectation
Growth
YoY
Revenue
$38,8B
Operating income
$9,1B
Earnings per share (diluted)
$14,21
1
Strong financial results.
After a disappointing Q1, Alphabet
announced a Q2 financial
performance that beat analysts’
expectations, with lower traffic
acquisition costs (TAC is what
Alphabet pays so that companies
choose to run Google ads or
services) per advertising revenues
YoY. This contrasts with an
increasing trend in TAC per
advertising revenues in 2018.
3
Threats from regulators
across the globe.
The French parliament has already
passed a new law that will tax by 3%
digital giants on the revenues they
generate inside the country.
The U.S. Department of Justice
also announced the opening of an
antitrust review of Tech leaders and
especially the practices of online
platforms including internet
browsers.
2
Solid contribution from
Google other revenues.
Google other revenues totalled
$6,2bn in Q2 (+40% YoY),
contributing to 28% of Alphabet’s
total revenue growth. It was fueled
by Google’s cloud offerings, with an
ongoing strong contribution from
Google Play, and boosted by the
launch of the Pixel 3a smartphone.
Earnings per share (diluted)
+213%
Operating income
+6%
Operating income
+14%
Revenue
+19%
Revenue
+2%
Earnings per share (diluted)
+28%
Traffic acquisition costs (TAC) as % of ad revenue
11

12. - Q2 2019 -
What happened this quarter?
1.Strikingfacts Our FLOP - Amazon does not beat expectations this quarter
1
A lower profit and
a lighter guidance.
Amazon accustomed its investors
with an excellent delivery each
quarter, but this time its profit
was way below Wall Street’s
expectations. The company’s costs
showed that the one-day shipping
services impacted Amazon’s
margin in Q2 and the company
guided an even lower profit for
Q3 2019.
3
A threatening response to
the French GAFA tax.
After the release of the new French
GAFA tax, Amazon announced it won’t
be able to absorb it (mainly due to its
low margin) and will thus have to pass
the cost onto French marketplace
sellers. While details remain unclear,
this move may have a serious impact
for French sellers (especially SMEs),
which may ultimately pass the cost
onto French consumers.
2
A slowing AWS growth.
Amazon also reported the slowest
revenue growth in the cloud
computing unit in 5 years.
While AWS is growing slower than
analysts expected, it is still growing
fast. With +37% YoY in revenues, the
company is performing well
compared to Microsoft’s +15%YoY
growth on the same segment (even
if Microsoft has a larger user base).
Operating profit
-$50M
Revenue
$63,4B
Net profit
$2,6B
Net profit
+4%
Revenue
+1%
Revenue
+20%
Operating profit
-
12
Net profit
-7%
Operating profit
-15%
Performance
Q2 2019
Vs. Analysts
expectation
Growth
YoY
Operating profit
$3,2B
Operating profit
+3%
AWS net sales and net sales growth YoY

13. - Q2 2019 -
1.Strikingfacts Our SURPRISE - Netflix, a 10% share price drop with strong financials
What happened this quarter?
1
A decrease of the
subscriber growth
number.
Netflix announced it managed
to add 2.7 million users to its service
in Q2, vs 5 million expected. In the US
notably, it reported a loss of 126,000
subscribers. Price hikes in some
regions and a content that created
weaker adhesion hurted viewers’
enrollment.
3
An increasing competition.
Subscribers enrollment will get
tougher in the future, as competitive
streaming services are about to be
launched: Disney, WarnerMedia,
NBCUniversal. Netflix will lose the
licence from some of its most famous
shows, such as Friends or The Office,
but asserts that it will give great value
to its viewers by investing even more
in its own original programs.
2
Results in line
with the guidance.
Netflix announced results that
exceeded its own guidance with
earnings per share of 60 cents and
revenues of $4.9 billion for Q2, up
by 26% YoY. Despite a deceleration in
subscriber growth, Netflix managed
to reach its financial targets. Yet, it
did not stop the stock to drop by 10%
after the results announcement.
Operating income
$706M
Number of subscribers
151,6M
Number of subscribers
+22%
Operating income
+14%
Operating income
+53%
Revenue
+26%
Revenue
0%
Number of subscribers
-3%
13
Performance
Q2 2019
Vs. Analysts
expectation
Growth
YoY
Revenue
$4,9B
Operating income Operating income Operating income
Netflix subscriber growth

14. - Q2 2019 -
On July 11, 2019, just 3 weeks after Slack’s
IPO, Microsoft released a graph
comparing Teams and Slack DAUs (Daily
Active Users) - an indicator that the
company had refused to disclose
before...
The graph highlights the fast user
growth of Microsoft Teams compared to
Slack’s, and its superior absolute
number
of users.
If you wish to know more about Slack
and its model, Fabernovel released
a study on the subject which you
can find here.
Alongside Daphni, Fabernovel hosted its first S1 Reading Club with a
presentation and a debate on Slack, which was going public in the following
days. The audience (French VC, Asset Managers, Equity analysts, IROs and
CDOs...) were overall skeptical on Slack’s return on investment as the company
required a customer lifetime of tens of months to make a profit.
14
The Clash - Financial communication as a weapon1.Strikingfacts
vs

15. - Q2 2019 -
2 The sun still shines on Tech.
15

16. - Q2 2019 -
What are our main takeaways?
● The top 5 companies in the world are Tech
companies.
● GAFAM have the 5 biggest market caps,
representing more than $4Tn cumulated.
How does it compare with 10 years
ago?
● Only 2 of the 10 biggest market caps
worldwide were tech companies (Microsoft
and Google).
● Apple was in the top 20, Amazon was not in
the top 50 and Facebook was still privately
owned.
● The biggest market caps at the time were
Exxon and General Electric, which no longer
appear in the top 10.
Tech companies now have the biggest market capitalizations in the world,
ahead of financial services or healthcare companies. And their market
valuation has more than doubled compared with 10 years ago. Microsoft,
Amazon and Apple and soon Alphabet valuations are flirting again with
the one trillion dollars threshold.
*as of July 31st 2019
Talent CompanyTech company Other
2.AhighlyvaluedTechsector Tech companies at the top of market capitalizations
16

17. - Q2 2019 -
Amazon reported mixed results in Q2, beating revenue
estimates but missing operational estimates due to its one-day
shipping investments. Amazon’s operational guidance was also
lower than anticipated for Q3.
Amazon
This quarter has seen mixed results in terms of share
price performance. Among the best performing sectors
are Healthcare and Tech, which is why we decided to
focus the last part of our study on Tech in Healthcare.
3 months performance of all sectors*
*Source: S&P1200 Global, as of 31 July 2019.
Why did Tech performed well this quarter?
2.AhighlyvaluedTechsector Healthcare and Tech stocks have outperformed the other sectors
Many companies have been able to deliver strong growth
results, some above analysts' expectations, and have
confirmed their growth dynamic through their guidance.
However, share price reaction this quarter (+3%) was not as
good as it was in Q1 (+8%), as companies did not entirely
meet the high investor expectations regarding margins.
17
Apple
Apple saw a positive YoY revenue growth this quarter, a
reversing trend compared to the last 2 quarters. The company is
switching its business model towards a service-oriented
company, which seems to please investors.
Microsoft reported strong results this quarter, beating estimates
on the top and bottom lines. Azure’s revenue growth reaches
64% YoY and Microsoft’s next quarter revenue guidance is also
higher than expected.
Microsoft

18. - Q2 2019 -
2.AhighlyvaluedTechsector The Fabernovel valuation analysis
Valuation represents the
total value of the assets
of a company, or the sum
of its market capitalization
and its net debt.
Sales expectations are
anticipated by financial
analysts according to
market outlook and
growth perspectives.
The EV / Sales multiple
reflects the level of
confidence investors have
in a company’s ability
to create future value.
To assess the stock performance of a company, we usually refer to the evolution of its valuation.
The valuation of a company during the quarter and after the publication of its results is driven by two distinct factors:
1. The evolution of its sales or earnings expectations.
2. The expansion of its multiples.
The equation below uses Sales as a breakdown of valuation and details the meaning of each item.
Valuation Sales EV / Sales
18

19. - Q2 2019 -
We decided not to disclose Snap
on this graph as its latest
performance in terms of Sales
expectations and business
development are way higher this
quarter than other players (+10%
Sales 2020e revision and +40%
EV/Sales 2020 expansion).
Alongside with promising results,
the company showed potential for
diversification and more business
development in the years to come.
SnapNetflix
Sales 2020e revision
(30/04/2019-31/07/2019)
Share price increase
Share price decrease
2.AhighlyvaluedTechsector How did they manage to overperform?
EV/Sales 2020e expansion (30/04/2019 - 31/07/2019) Good results
As explained before, while Netflix
managed to reached its financial
targets, the company showed signs
of slowdown in terms of subscriber
growth. Investors still believe in
Netflix’s ability to deliver strong
financials, but fear the company
won’t expand as much as planned,
due to the arrival of new
competitors in 2019 and the price
sensitivity of its offers.
Mixed results
Examples
19

20. - Q2 2019 -
EV/Sales
Multiple
2019e at IPO
Share price
performance
Since
Opening day
Opening
price
vs IPO price
IPO Valuation
-7%
-30%
+18%
+46%
-13%
-6%
+8%
+26%
+83%
+48%
$82.4Bn
$24.3Bn
$12.7Bn
$9.2Bn
$16Bn
6.5x
6.6x
10.8x
15.5x
17x
Despite very promising starts, the latest Tech IPOs
showed mixed results since their opening day.
As said in our previous Gafanomics, The Quarterly:
Uber and Lyft failed to give any guidance on their
profitability, letting investors with their doubts on their
potential to ever make earnings. The same statement also
goes for Slack, which is still in a growth phase and does
not make any profit at the moment.
As a consequence, those companies get devalued
regarding previous expectations.
Logically, the best-performing companies are the closest
to profitability such as Zoom (already profitable), Pinterest
(made a profit in December).
The only exception remains Crowdstrike, for which losses
are offset by fast revenue growth (+80% expected next
year).
Source: Yahoo Finance, as of 22 July 2019
2.AhighlyvaluedTechsector What about the new kids on the block?
20
-14%+83%$9.2Bn 15.5x
-2%+24%$600M 12x
+40%+87%$6.6Bn 28x

21. - Q2 2019 -
2.AhighlyvaluedTechsector More new kids on the block arrived in Q2 2019
Slack (WORK)
June 20th
NYSE
IPO Price: $38,50 / share
Amount raised: $0Bn
Software as a Service
Valuation at IPO $16Bn
EV/Sales 2019e at IPO
17x
Valuation at IPO $6,6Bn
CrowdStrike (CRWD)
June 12th
NASDAQ
IPO Price: $34 / share
Amount raised: $612M
Cybersecurity EV/Sales 2019e at IPO
28x
Valuation at IPO $600M
Fiverr (FVRR)
June 13th
NYSE
IPO Price: $21 / share
Amount raised: $111M
Marketplace EV/Sales 2019e at IPO
12x
21
In Q2 2019, many more Tech IPOs occurred. One of the most important ones were Slack, raising $4,6bn
through a Direct Listing. Fabernovel studied this phenomenon with its study: Slack, the future workplace.
via a direct listing

22. - Q2 2019 -
2.AhighlyvaluedTechsector
22
Kaufman Micha 7%
Main investors
Kolber Jonathan 13%
IPO Price
$21 / share
Amount raised
$111M
Fiverr (FVRR)
June 13th
NYSE
EV/Sales
2019e at IPO
Fiverr is a marketplace connecting companies with freelancers providing services in:
Valuation at IPO $600M
Fiverr’s IPO went well on the first days going from an IPO price of $21 per share to an opening price
of $26, until the share price reached $39.90 after 2 days on the NYSE (almost twice the IPO price).
The company compared itself to Amazon 20 years ago highlighting its strong potential:
This is like 1995 for e-commerce” — Micha Kaufman, Founder & CEO
Nevertheless, the excitement has since then slowed down due to skepticism regarding the profits of
the company. This led the share price to drop back to $25.
Valuation, as of 31 July $670M
+$70M
12x
Fiverr - A hectic IPO
Venture capitalists 39%
Logo design Voice over IllustrationSocial media Translation

23. - Q2 2019 -
2.AhighlyvaluedTechsector More new kids on the block expected for 2019
WeWork
H2 2019
Latest private valuation $47Bn
Main investors Softbank
Funds raised so far $12.8Bn
AirBnb
H2 2019
Via a Direct Listing
Latest private valuation $38Bn
Main investors Sequoïa Capital, Andreessen Horowitz
Funds raised so far $4.4Bn
Palantir
H2 2019
Latest private valuation $41Bn
Main investors Founders Fund
Funds raised so far $2Bn
23
In 2019, we still expect more IPOs of highly valued Tech companies, making 2019 a record year in terms of
IPOs.

24. - Q2 2019 -
3 Tech Giants are invading
the Health Ecosystem.
24

25. - Q2 2019 -
3.TechinHealthcare
25
*Source: Deloitte, Global Healthcare outlook 2019
The Healthcare industry, the new eldorado for Tech companies
Global Healthcare expenditures is projected to reach $10T by 2022 thanks to a 5,4% CAGR (compound
annual growth rate or average growth rate per year) between 2017 and 2022*.
The Healthcare market is heterogeneous.
It comprises pharmaceutical laboratories,
Medtech companies, diagnosis, image treatment,
pills, elderly care, insurance...
This sector also includes new fields such as:
● DNA modification
● Enhanced pills
● 3D printing
● Cancer treatment
● Patient journey

26. - Q2 2019 -
3.TechinHealthcare
26
On the Healthcare side, growth is slowing down
Over the past 3 years, top Pharma groups
(J&J, Roche, Pfizer…) have not seen any
significant increase in share price and
have underperformed S&P 500
by 16% contrary to Medtech and Tech
companies, respectively outperforming
S&P 500 by 16% and 32%.
Sales growth has also significantly slowed
down in Healthcare (negative YoY growth
for Pfizer, J&J and Amgen last quarter)
which is why Healthcare companies need
to find new levers of growth.
-16%
+32%
+16%
-1% 18%
2018 - 2020e Sales CAGR
Mediane
6% -28% 42%
2018 - 2020e EBIT CAGR
Mediane
7% 8% 41%
2018 EBIT Margin
Mediane
21%

27. - Q2 2019 -
3.TechinHealthcare
27
How to sustain growth? M&A in traditional territories
In 2009, Roche acquired full ownership of Genentech, a
California-based biotech for $47bn. This happened to be
a pretty good deal for Roche considering the sales
expansion of Genentech’s 4 top drugs (growing from
$7bn in 2008 to $21bn in 2018), as well as its substantial
R&D contribution. But the sustainability of those
benefits is uncertain with the blockbuster drugs now
having or nearing the loss of market exclusivity.
Pfizer agreed at the end of July 2019 to combine its
off-patent drugs division with the pharmaceutical
company Mylan, creating a potential powerhouse in
the increasingly challenged business of generic
medicines. Pharmacies and wholesalers teaming up to
increase their ability to bargain for lower prices,
mergers can help generic drug makers to regain
leverage in the short term, but does not create
long-term differentiation.
Roche - Genentech Pfizer - Mylan
Roche share price evolution Pfizer share price evolution

28. - Q2 2019 -
3.TechinHealthcare
Source: CB Insights
Meanwhile, a vast majority of startups emerge in various fields
28
While large healthcare companies continue to
invest massively in the research and development
of new drugs, the number of startups emerging in
the sector keeps rising, spreading through the
whole industry value chain.

29. - Q2 2019 -
3.TechinHealthcare Investments in Healthtech and its new promised land are soaring
Not only are digital health deals increasing in number,
but they are also increasing in size (reaching $22M on
average in 2018) highlighting the appetite of Venture
Capitalists for the field.
*Source: Rock Health, CB Insights
$66B invested across 6,969 deals to AI startups (Q2’03 - Q2019)
This trend is confirmed by the investments carried out in
AI. The most promising sector remains Healthcare,
followed by Finance & Insurance.
29

30. - Q2 2019 -
3.TechinHealthcare Health vs HealthTech products do not face the same challenges
The return on investment (ROI) of a health
product and more especially drug
production is quite long and uncertain.
Until phase 2, it is very difficult to predict
whether a product will survive or not
(5 to 8 years).
Moreover, as the company won’t generate
any money during R&D and the different
study phases, this activity remains
cash-intensive.
This statement is less true for pure
HealthTech products that benefit from the
advantages of fast go-to-market and early
adoption of the Tech sector.
Why? Because health apps and other tech
products will not need many clinical
and non-clinical studies or even
government/official approval.
Reference: ”JPMA Guide”, Japan Pharmaceutical Manufacturers Association
30

31. - Q2 2019 -
3.TechinHealthcare Tech Giants are also engaging in the field...
AI and Machine Learning
allow a deep-dive analysis of disease
and risk factors for early detection.
Cloud
enables patient data to be transferred
efficiently and safely and to improve
the patient journey.
Blockchain
might increase security, privacy and
interoperability of health data, but also
optimise the drug supply chain and
traceability of products (reduction of
counterfeit, recalls of medicines,
monitoring of the cold chain integrity…).
Robotization
could decrease operating costs and
improve doctors’ efficiency.
Elon Musk’s Neuralink
promises to create a brain-machine
interface that would allow disabled
people to control computers thanks
to their brain.
Mark Zuckerberg on diseases:
“There are more global challenges that I
also feel the responsibility to help solve,
to create a better world for my
daughter and all future generations.
Things like helping to cure all disease
by the end of the century (...)”.
Google
has been the more active in the field,
partnering with Pharma companies
and launching several companies,
among which Calicolabs whose goal is
to find a way to solve death.
How?Who?
31

32. - Q2 2019 -
3.TechinHealthcare … and are changing our condition as human beings
Top Tech companies and other new disruptive
companies are improving our lifestyle through many
ways
● Body enhancement
(Exoskeleton, Augmented Reality, DNA modification).
● Wearables
(Watches with Apple, patches, ear support).
● Disease detection
(Machine Learning and AI for cancer detection with Google,
IBM..., Voice recognition for respiratory issues with Amazon).
But also
● Patient journey
(health data, patient transportation with Uber for example).
● Continuous improvement of practices
in hospitals for example.
32

33. - Q2 2019 -
3.TechinHealthcare
Tech Giants (GAFAM for example or Tencent in Asia) already have their own infrastructure that they can adapt in order
to answer some of healthcare’s most important problems.
Tech Giants can capitalize on their existing model ...
33
Amazon, is using for example its own delivery infrastructure to offer drugs delivery
quickly and efficiently.
Google, for example, is using its knowledge in AI to better understand health
mechanisms and better detect cancers.
+ =
Tencent is also using its user base and network thanks to which users can book a
room in a hospital through WeChat. This solution allows to relieve hospital
congestion and improve dramatically patient experience.
AmazonGoogleTencent
+ =

34. - Q2 2019 -
Amazon
3.TechinHealthcare … in order to deliver new solutions in healthcare
34
186 health related patents filed
by(1)
Google.
IBM Watson Care Manager
manages 147 000 patients’ caring
plans.
1,2 millions employees directly
insured by Amazon.
14 000 health partners in the world.
40 persons in the Facebook Health
team in New York.
60% of the main US hospitals
use Healthkit.
(1) Mostly on Deepmind artificial intelligence and Verily LifeSciences breakthroughs
Amazon, JP Morgan and Berkshire Hathaway formed a joint
health-care venture officially named Haven on March 6th
2019.
MicrosoftFacebook
AppleIBMWatsonGoogle

35. - Q2 2019 -
3.TechinHealthcare Still, Tech companies have a long way to go in healthcare
Tech companies already face challenges on data
privacy which degraded their image.
Knowing that health information is an even
greater concern for populations, companies such
as Facebook (which got a 5 billion dollars fine
for data privacy issues) do not seem legitimate
to gather this information.
Other concerns related to the diversification of Tech
companies arose.
For example
What if Apple decided to start insuring people?
Wouldn’t the company use medical data retrieved
through Apple Health?
35
FTC Settlement with Facebook
$5,000,000,000 Unprecedented penalty.
New privacy structure at Facebook.
New tools for FTC to monitor Facebook.

36. - Q2 2019 -
3.TechinHealthcare
While some Tech Giants need to find a way to penetrate the Healthcare sector, Healthcare Giants find it hard to deliver
disruptive innovation (non-disruptive innovation consists in improving existing technologies and procedures). A win-win
solution would thus be a partnership between Tech and Health, giving credibility to the Tech companies and disruptive
innovations for the Healthcare companies.
A solution for both Tech and Healthcare Giants is partnership
36
How can historical healthcare leaders adapt and grow?
Disruptive Partnerships Non-disruptive Initiatives
Sanofi
+ =
Sanofi
- Information website for general public (Diabetes,
thrombosis, arthrosis, antibiotics …)
- Mobile app Nutridial
Pfizer
+ =
Immuno-
oncology
drug
discovery
- Health apps to track demand in real-time
- Sensors, mobile devices and computer analysis to
provide clinicians and researchers with symptom
information
Pfizer
Novartis
- Mobile apps: for physical training for people
suffering from hypertension, multiple sclerosis ....
- Set of artificial intelligence platforms (Trial
Footprint Optimizer and Sense)
Novartis
+ =
Connected
lenses to
detect
sugar levels

37. - Q2 2019 -
3.TechinHealthcare Can Healthcare become the first materialisation of ‘Tech for Good’ ?
While share prices show that investors continue to
like the Tech Giants, we are still observing lots of
criticism: not effectively paying their taxes, not
spending enough in protecting our data, not
investing enough in the improvement of their social
and environmental impact.
But if these same Tech companies start to invest
more for our health, would we start being more
lenient? Can they progressively regain our trust?
“Tech for Good” is becoming an increasingly hot topic
(as highlighted by recent Tech events like SxSW or
Good in Tech) but a lot remains to be done.
For Tech Giants, this might well be an opportunity
to capitalise on their large user base to lead the
way towards a better future.

38. - Q2 2019 -
AuthorsCredits
Jérémy joined Fabernovel as a Financial analyst.
He is specialized in quantitative finance and data analysis,
especially for tech companies.
After graduating from CentraleSupélec, he followed his
interest in finance at ESCP Europe, and then worked for
Exane BNP Paribas in Equity Research.
He now works on several projects at Fabernovel, including
financial research, modelling and ecosystem valuation.
Jérémy Taïeb
Project Leader
Barbara Maillet
Value Analyst
38
Jean-Christophe Liaubet
Partner
Agathe Martin
Value Director

39. - Q2 2019 -
Thank you
39
CONTACT
Jean-Christophe LIAUBET
Partner
+33 6 08 86 24 88
jean-christophe.liaubet@fabernovel.com