Re:Intrinsic Value of a SaaS Business: A 20 Year DCF
by stcredzero on Tuesday January 15, 2019 @04:57PM
(#18915845)
Turns out, low churn and high margin companies are worth a ton! Especially with low interest rates and a public equities market that shouldn't return more than 4% real over the next few decades. Not a lot of other places to put your capital.
What margins qualify as "high?" I have a SaaS offering I'm working on, and I was going to charge as a multiple of my compute and network costs. Is 85.7% "high" for SaaS? Or is that meh?
Re:Intrinsic Value of a SaaS Business: A 20 Year DCF
by pstrazzulla on Wednesday January 16, 2019 @08:47AM
(#18920757)
85.7% is very high, that'd be a great gross margin (revenues - variable costs, such as compute/network costs).
Re:Intrinsic Value of a SaaS Business: A 20 Year DCF
by ttul on Tuesday January 15, 2019 @05:29PM
(#18916190)
The script is so straightforward. Literally just loop 100,000 times and each time through a loop of 50 years, select a random sample of customer revenue amounts to delete. Sum up the revenue from each run and then use numpy.histogram....
So essentially it's taking the average churn for a given customer, and running a monte carlo simulation to see what the expected scenario is?
Turns out, low churn and high margin companies are worth a ton! Especially with low interest rates and a public equities market that shouldn't return more than 4% real over the next few decades. Not a lot of other places to put your capital.