share price, next week - geo v xero

For Hi-growth Cloud-SaaS techco, VCs adopt the 20x-70x ‘xfactor’, and not P/E which is adopted for for low-growth, well-established companies)


xFacor = Rev/sp,
for Cloud/ SaaS high-companies, ranges from 20 x to 70x, depend on various factors.


Xero - 135,000 customers,
(priority is customer acquisition and global expansion; loss-making expected and planned for next 2-3 years)

Annualised Monthly revenue (ACMR) for Y 2012/3 = $70m

Sp = NZ$39.5

MCap
= 128m shares x $39.5
= $5 Billion.

xFactor = MCap/Revenue
= 5000m/70m
= 71.5


Say
ACMR for Y2013/4
= 70m +80%
= $126m

xFactor
= 5000m/126m
= 40


You can say
Xero is trading between 40x to 72x Revenue

Say 56x , average

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GeoOp - 4500 customers,
(priority is customer acquisition and global expansion; loss-making expected and planned for next 3-5 years)

Apply the same xFactor, 40x to 72x to Geoop, 27m shares

ACMR = $125,000 ,

x 40 , = 50m , = $ 1.85

x 56 = 70 m = $ 2.60

x 72 , 90m = $ 3.34 per share



Dec13 quarterly report is due early next week, around 15 Jan 14.

Say Geo’s ACMR is approx $170,000 for easy calculations;
(estimate only, may be more, or less)

Then you can estimate Geo’s Mcap, and sp.

175,000 x 40 = $70m, sp = $2.60

175,000 x 56 = $98m, sp = $3.63

175,000 x 72 = $126m, sp = $4.67


Geo’s f/c customers’ numbers, revenue for next 6-12 months, expansion plans, global alliances, Telstra and Apple appnetwork, success in execution
- all will play a key factor in how market(investors and fund managers) respond .


Dyor