Tech Public Modeling
I’m preparing on the SM side and was curious how you approach revenue builds for companies with limited disclosures or atypical or complex business models.
For basic software companies like DOCU or Zoom, you can build an ARR waterfall. For some semis/AI names, you can use a % market share approach, while for consumer tech companies like SPOT, CART, it’s typically P*Q.
How would you approach companies that don’t fit those frameworks like SNOW or Nebius? I’ve defaulted to a simple P*Q build, but that doesn’t seem right.
Also, how many quarters do you typically model? Just enough to bridge to FY end or for the entire underwriting period?
It all depends on the key drivers that will move the stock. For different sub-sectors its all different. Internet you got Free->Paid user growth, MAUs, GMV, etc...Those are resulted from diff levers...For a business like snow that you mentioned its going to be split into Product rev and professional service rev tho what matters most is % breakdown...So for product rev it might be something like Beginning Product Revenue × NRR + Net New Logos × New-Customer Cohort Revenue. These metrics are all disclosed in company 10ks. What helped me was spamming building a rev build bc you get the hang of it... and then you just update priors once you have your framework.
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