ESTC
Elastic N.V.
$91.74
High-Growth Software
80%
Revenue × Terminal Margin DCF
Mild
·
Conviction
Overvalued
Trading 4.7% above fair value
You pay
$91.74
Bear
$51.50
Fair
$87.61
Bull
$126.24
Bear
$51.50
-43.9%
10% rev growth, 17% terminal margin
Fair
$87.61
-4.5%
17% rev growth, 23% terminal margin
Bull
$126.24
+37.6%
23% rev growth, 26% terminal margin
Adjust Assumptions
17.0%
23.0%
12.0%
Key Value Driver
Revenue growth (17%) × margin expansion to 23%
Terminal Value % of EV
55%
Implied Market Multiple
5.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$83.18
Divergence from AlphaVal
5%
Summary
Projecting 17% revenue growth with FCF margins expanding from 20% to 23% over 10 years, discounted at 12%, the base-case value is $87.61 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