XNDU
Xanadu Quantum Technologies Limited Class B Subordinate Voting Shares
$10.75
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 592.6% above fair value
You pay
$10.75
Bear
$0.61
Fair
$1.55
Bull
$2.31
Bear
$0.61
-94.3%
18% rev growth, 21% terminal margin
Fair
$1.55
-85.6%
30% rev growth, 28% terminal margin
Bull
$2.31
-78.5%
35% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (30%) × margin expansion to 28%
Terminal Value % of EV
69%
Implied Market Multiple
74.2x
Summary
Projecting 30% revenue growth with FCF margins expanding from 0% to 28% over 10 years, discounted at 12%, the base-case value is $1.55 per share.
Warnings
Our estimate assumes profit margins grow from 0% to 28% over 10 years. If that improvement stalls, the company is worth considerably less.
Gross margin of 92% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Financial statements were converted from CAD into USD using USDCAD at 0.7094 USD per CAD.
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