Struggling with valuation even at these new SP levels
Some simple back of the envelope maths:
Last twelve months (LTM) cash EBITDA = $33m (1H25 plus FY24 less 1H24). Note: I think cash EBITDA is the correct valuation metric as capitalised R&D is an annual cash cost for a software development company. Underlying EBITDA doesn't really mean anything if you don't get the cash.
Net debt Cash - $(30.7)m Deferred revenue - $51.6m Deferred consideration - $3.0m Total net debt - $26.3m Note: Not everyone will agree but I view both deferred liabilities as debt. Deferred revenue is cash I have already received for services that I haven't provided yet, so when I book this revenue in the future it doesn't convert to cash. Deferred consideration is future cash I have to pay for acquisitions.
Market cap at $2.56 = $847m Enterprise value = $871m
EV / LTM cash EBITDA = 26.4x
Just my view, but the growth prospects for this stock don't seem to warrant the inflated valuation multiple.
I'll probably hold, hoping for some irrational exuberance if they beat forecasts for the full year, but hard to add to my position given the above
NXL Price at posting:
$2.57 Sentiment: Hold Disclosure: Held
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