AMTD Digital Inc. (HKD) DCF Valuation & Fundamental Primer
AMTD Digital Inc. (HKD) trades at $3.96 with a market enterprise value of $620.6M and generated $136.1M in TTM revenue and $14.3M in free cash flow (filed 2026-02-27 (period ended 2025-10-31)). Our 5-year DCF model estimates an implied intrinsic value of $7.39 per diluted share ($1.04B DCF enterprise value, Grade: B+ · 70/100 · Quality Software Operator).
SEC 10-K/10-Q DCF teardown of AMTD Digital Inc. (HKD): $136.1M TTM revenue (47.7% growth), 13.5% GAAP gross margin, 10.5% FCF margin, 0.1% SBC/revenue, and Rule of 40 score of 58.3%.
AMTD Digital Inc. (HKD) earns a "Buy" rating and an institutional Quality Score of 70/100 (Grade B+). On $136.1M in baseline revenue (47.7% growth, 13.5% gross margin, 10.5% FCF margin), our 5-year DCF yields an Enterprise Value of $1.04B ($7.39/share vs. $3.96 market price). On the R&D Return Benchmark, HKD ranks #1 of 174 (Harvesters · Grade AAA, 8778508.09× return).
Gross Margin & Unit Economics: AMTD Digital Inc. operates at a 13.5% gross margin on $136.1M revenue (59.2 pts below the Software - Application median of 72.7%).
R&D Productivity (Harvesters · Grade AAA): Investing 0.0% of revenue in R&D ($0) generates $8778508.09 of incremental gross profit per R&D dollar (Rank #1 of 174).
Rule of 40 & Cash Conversion: Combining 47.7% top-line growth with 10.5% FCF margin yields a 58.3% Rule of 40 score (vs. 47.2% cohort median) and $1.04B DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (13.5% Gross Margin · 47.7% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $136.1M | $201.1M | $297.0M |
| Cost of Revenue (COGS) | ($117.7M) | ($172.9M) | ($253.9M) |
| Gross Profit & Margin | $18.4M (13.5%) | $28.2M (14.0%) | $43.1M (14.5%) |
| Research & Development (R&D) | $0 | $9.7M | $13.7M |
| Sales & Marketing (S&M) | $12.4M | $17.6M | $25.0M |
| General & Administrative (G&A) | $4.8M | $6.9M | $9.7M |
| Operating EBIT | $1.1M (0.8%) | -$6.0M (-3.0%) | -$5.2M (-1.8%) |
| Adjusted EBITDA | $4.5M (3.3%) | -$941K (-0.5%) | $2.2M (0.7%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 13.5% to 18.5%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $2.7M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $309.2M.
AMTD Digital Inc. (HKD) 3-Scenario DCF Valuation Range
Stress-test HKD's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands HKD's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $3.96).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $8.37 +111% | $9.01 +128% | $9.77 +147% | $10.65 +169% | $11.72 +196% |
| 9.3% | $7.34 +85% | $7.84 +98% | $8.42 +113% | $9.10 +130% | $9.89 +150% |
| 10.0% | $6.49 +64% | $6.89 +74% | $7.36 +86% | $7.88 +99% | $8.49 +114% |
| 10.8% | $5.78 +46% | $6.11 +54% | $6.48 +64% | $6.91 +74% | $7.39 +87% |
| 11.5% | $5.18 +31% | $5.45 +38% | $5.76 +45% | $6.10 +54% | $6.49 +64% |
Institutional Software Quality Scorecard (70/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 1277% of EBIT driven by upfront annual collections
- Low dilution friction: SBC is only 0.1% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (13.5%), indicating higher hosting or service delivery drag
Compare AMTD Digital Inc. (HKD) against the software universe on the 2x2 R&D Return vs. R&D Intensity matrix.
Reverse-DCF Solver: What Growth is Priced Into HKD?
The current share price only requires 32.2% 5-year CAGR (54.3% dilution-adjusted), well below historical growth of 47.7%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (0.1% of revenue) and annual share dilution (18.6%/yr). Accounting for both requires 54.3% 5-year revenue CAGR to justify $3.96/sh on a true per-share economic cash flow basis.
AMTD Digital Inc. (HKD) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $136.1M | $136.1M | $201.1M | $297.0M | $438.8M | $648.2M | $957.6M |
| Gross Profit | $18.4M | $18.4M | $27.2M | $40.1M | $59.3M | $87.6M | $129.4M |
| Operating Income (EBIT) | $1.1M | $1.1M | $1.6M | $2.4M | $3.6M | $5.3M | $7.9M |
| Stock-Based Compensation (SBC) | $86.0K | $81.7K | $120.6K | $178.2K | $263.3K | $388.9K | $574.6K |
| Unlevered Free Cash Flow (FCF) | $14.3M | $14.3M | $21.2M | $31.3M | $46.2M | $68.3M | $100.8M |
| SBC-Adjusted True Cash Flow | $14.2M | $14.2M | $21.1M | $31.1M | $45.9M | $67.9M | $100.3M |
Software - Application Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 6.7 + 0.05 × (Rule of 40) · R² = 12%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| AMTD Digital Inc. | HKD | $490.1M | $136.1M | 13.5% | 10.5% | 58.3% | 0.1% | 4.6× |
| Grab Holdings Limited | GRAB | $20.18B | $2.80B | 42.0% | 27.7% | 84.0% | 10.0% | 6.3× |
| Figma, Inc. | FIG | $18.07B | $749.0M | 88.3% | -9.2% | 39.1% | 126.5% | 23.5× |
| Full Truck Alliance Co. Ltd. | YMM | $71.73B | $11.24B | 86.6% | 25.8% | 70.2% | 4.4% | 5.9× |
| ServiceTitan, Inc. | TTAN | $9.97B | $771.9M | 64.9% | 2.0% | 30.5% | 21.2% | 12.5× |
| InterDigital, Inc. | IDCC | $8.65B | $868.5M | 80.5% | 30.6% | 55.3% | 5.3% | 9.9× |
| OPEN TEXT CORP | OTEX | $8.11B | $5.30B | 63.5% | 13.0% | 23.8% | 2.0% | 2.6× |
| Peer Cohort Median Benchmark (N=6) | 72.7% | 19.4% | 47.2% | 7.6% | 8.1× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 4.6× | $620.6M | $490.1M | $3.96 | 0.0% |
| -20% Multiple Compression | 3.6× | $496.5M | $366.0M | $2.96 | -20.0% |
| -35% Multiple Compression | 3.0× | $403.4M | $272.9M | $2.21 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $680.5M | $550.0M | $4.44 | +9.7% |
Frequently Asked Questions: AMTD Digital Inc. (HKD) Valuation
What is AMTD Digital Inc. (HKD)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, AMTD Digital Inc. (HKD) has a Base Case implied value of $7.39 per share (with a Bear Case of $1.28 and a Bull Case of $18.60), compared to its current price of $3.96. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is AMTD Digital Inc. (HKD)'s Rule of 40 score and Free Cash Flow margin?
AMTD Digital Inc. achieves a Rule of 40 score of 58.3%, combining a 47.7% revenue growth run-rate with a 10.5% TTM free cash flow margin on $136.1M in trailing twelve-month revenue. In the Software - Application peer cohort, the median Rule of 40 benchmark is 47.2%.
What revenue growth rate is priced into HKD stock according to Reverse-DCF analysis?
At $3.96 per share (Enterprise Value of $620.6M), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 32.2%, compared to AMTD Digital Inc.'s historical CAGR of 47.7%. Overall market expectations are rated as "Substantial Margin of Safety".
What is AMTD Digital Inc. (HKD)'s R&D Return Score and innovation productivity?
AMTD Digital Inc. (HKD) recorded N/A in FY R&D expense (tracked from SEC filings) and N/A in FY gross profit. It is currently unranked on the letter-grade leaderboard (pending full multi-year XBRL R&D history).
How does AMTD Digital Inc. compare to Software - Application peers?
AMTD Digital Inc. (HKD) earns an institutional Software Quality Score of 70/100 (Grade B+ — Quality Software Operator). Across its Software - Application peer group (GRAB, FIG, YMM, TTAN, IDCC), the cohort trades at a median EV/TTM Revenue multiple of 8.1× and a median gross margin of 72.7%.
How does Stock-Based Compensation (SBC) impact AMTD Digital Inc. (HKD)'s valuation?
AMTD Digital Inc. recorded $86000 in TTM stock-based compensation (0.1% of revenue). When treating SBC as a cash-equivalent compensation expense, AMTD Digital Inc.'s SBC-adjusted free cash flow yield is 2.9%, scoring 25/25 on our Shareholder Dilution Friction pillar.