Large deferred revenue balance negatively impacting DCF analysis

Have a question. Working on a model where the company has a one time large deferred revenue balance on their books at the end of the latest fiscal year. It's about 3x what it normally is. If I project their deferred revenue going back to normal levels, it creates a one time negative cash flow in the first year of the model, large enough that the company has a negative valuation overall. This makes no sense to me. If the customer would've chosen to not make that large pre-payment, then suddenly the company has a positive DCF valuation?

Should I make a one time adjustment to the first year of cash flow, i.e. add the deferred revenue balance back into the cash flows to bring the valuation back to a "normal" level?


 

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