VMEO
Vimeo, Inc.
$7.85
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Undervalued
Trading 26.6% below fair value
You pay
$7.85
Bear
$7.08
Fair
$10.69
Bull
$14.28
Bear
$7.08
-9.9%
8% rev growth, 17% terminal margin
Fair
$10.69
+36.2%
13% rev growth, 23% terminal margin
Bull
$14.28
+82.0%
17% rev growth, 26% terminal margin
Adjust Assumptions
13.0%
23.0%
12.0%
Key Value Driver
Revenue growth (13%) × margin expansion to 23%
Terminal Value % of EV
56%
Implied Market Multiple
2.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$12.28
Divergence from AlphaVal
13%
Summary
Projecting 13% revenue growth with FCF margins expanding from 14% to 23% over 10 years, discounted at 12%, the base-case value is $10.69 per share.
Warnings
Gross margin of 78% 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