Model N, Inc. (MODN) DCF Valuation & Fundamental Primer
Model N, Inc. (MODN) currently trades at $30.00 with an enterprise value of $785.1M. Our proprietary institutional model rates Model N, Inc. at 83/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 31.8% vs. historical growth of 21.9% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Model N, Inc. (MODN) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Model N, Inc. (MODN) 3-Scenario DCF Valuation Range
Stress-test MODN's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
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: $30.00).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $23.61 -21% | $25.04 -17% | $26.71 -11% | $28.68 -4% | $31.05 +3% |
| 9.3% | $21.29 -29% | $22.41 -25% | $23.71 -21% | $25.21 -16% | $26.97 -10% |
| 10.0% | $19.38 -35% | $20.29 -32% | $21.31 -29% | $22.49 -25% | $23.84 -21% |
| 10.8% | $17.79 -41% | $18.53 -38% | $19.36 -35% | $20.30 -32% | $21.36 -29% |
| 11.5% | $16.44 -45% | $17.05 -43% | $17.73 -41% | $18.49 -38% | $19.35 -35% |
Institutional Software Quality Scorecard (83/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
High-quality software margins with healthy balanced growth and profitability
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 239% of EBIT driven by upfront annual collections
- Healthy unit economics: 71.7% gross margin
- Net cash positive: $55.1M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into MODN?
The current share price demands 31.8% 5-year CAGR (46.0% net of SBC & dilution)—a +9.9% acceleration over historical run-rate (21.9%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (11.0% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 46.0% 5-year revenue CAGR to justify $30.00/sh on a true per-share economic cash flow basis.
Model N, Inc. (MODN) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $153.6M | $153.6M | $187.2M | $228.2M | $278.2M | $339.2M | $413.4M |
| Gross Profit | $110.1M | $110.1M | $134.2M | $163.6M | $199.5M | $243.2M | $296.4M |
| Operating Income (EBIT) | $11.1M | $11.1M | $13.5M | $16.4M | $20.0M | $24.4M | $29.8M |
| Stock-Based Compensation (SBC) | $16.9M | $16.9M | $20.6M | $25.1M | $30.6M | $37.3M | $45.5M |
| Unlevered Free Cash Flow (FCF) | $26.4M | $26.4M | $32.2M | $39.3M | $47.9M | $58.3M | $71.1M |
| SBC-Adjusted True Cash Flow | $9.5M | $9.5M | $11.6M | $14.2M | $17.2M | $21.0M | $25.6M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -21.0 + 0.65 × (Rule of 40) · R² = 73%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 |
|---|---|---|---|---|---|---|---|---|
| Model N, Inc. | MODN | $1.18B | $153.6M | 71.7% | 17.2% | 39.1% | 11.0% | 7.3× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 7.3× | $1.13B | $1.18B | $30.00 | 0.0% |
| -20% Multiple Compression | 5.9× | $902.0M | $957.2M | $24.28 | -20.0% |
| -35% Multiple Compression | 4.8× | $732.9M | $788.0M | $19.99 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $768.0M | $823.1M | $20.88 | -31.9% |
Frequently Asked Questions: Model N, Inc. (MODN) Valuation
What is Model N, Inc. (MODN)'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, Model N, Inc. (MODN) has a Base Case implied value of $21.31 per share (with a Bear Case of $9.71 and a Bull Case of $37.81), compared to its current price of $30.00. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Model N, Inc. (MODN)'s Rule of 40 score and Free Cash Flow margin?
Model N, Inc. achieves a Rule of 40 score of 39.1%, combining a 21.9% revenue growth run-rate with a 17.2% TTM free cash flow margin on $153.6M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into MODN stock according to Reverse-DCF analysis?
At $30.00 per share (Enterprise Value of $1.13B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 31.8%, compared to Model N, Inc.'s historical CAGR of 21.9%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Model N, Inc. compare to Software & Cloud Services software peers?
Model N, Inc. (MODN) earns an institutional Software Quality Score of 83/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Model N, Inc. (MODN)'s valuation?
Model N, Inc. recorded $16.9M in TTM stock-based compensation (11.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Model N, Inc.'s SBC-adjusted free cash flow yield is 0.8%, scoring 16/25 on our Shareholder Dilution Friction pillar.