VMEO
Vimeo, Inc.
$7.85
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Undervalued
Trading 28.7% below fair value
You pay
$7.85
Bear
$7.29
Fair
$11.01
Bull
$14.70
Bear
$7.29
-7.1%
8% rev growth, 17% terminal margin
Fair
$11.01
+40.2%
13% rev growth, 23% terminal margin
Bull
$14.70
+87.3%
17% rev growth, 26% terminal margin
Key Value Driver
Revenue growth (13%) × margin expansion to 23%
Terminal Value % of EV
56%
Implied Market Multiple
2.4x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $12.28 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $11.01 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