ESTC
Elastic N.V.
$97.55
High-Growth Software
80%
Revenue × Terminal Margin DCF
Mild
·
Conviction
Overvalued
Trading 6.5% above fair value
You pay
$97.55
Bear
$53.05
Fair
$91.62
Bull
$133.47
Bear
$53.05
-45.6%
11% rev growth, 17% terminal margin
Fair
$91.62
-6.1%
18% rev growth, 23% terminal margin
Bull
$133.47
+36.8%
24% rev growth, 26% terminal margin
Adjust Assumptions
18.0%
23.0%
12.0%
Key Value Driver
Revenue growth (18%) × margin expansion to 23%
Terminal Value % of EV
55%
Implied Market Multiple
5.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$79.50
Divergence from AlphaVal
15%
Summary
Projecting 18% revenue growth with FCF margins expanding from 20% to 23% over 10 years, discounted at 12%, the base-case value is $91.62 per share.
Warnings
Gross margin of 76% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep