Hi @Dominator Its interesting that your average valuation is $2.19. Compares with $2.00 for my latest (range of $1.63 - $3.30 across a range of scenarios).
If I take one of my central scenarios, which is closest to you average, I have $2.16 and I'll respond to your assumptions referring to that case, for simplicity.
Cost per employee:
I break these out into Sales and Marketing and non-Sales and Marketing.
In Sales and Marketing there is a big dependency on where the sales is coming from. For example, USA, EU and ANY sales reps are typically $160k/FTE(fully-loaded), whereas in developing markets like India its much lower, so I've assumed $40k/FTE, but developing markets are likely to inflate more rapidly.
Non-Sales and Marketing Staff are skewed by high management costs and I have a starting point here of $269k/FTE.
I've triangulated the total wage bill off recent headcount and wages reports in the Annual Reports.
Although R&D will (and should grow) rapidly, overhead costs should scale more slowly than sales, so this is one source of operating leverage.
I can't tell you precisely how $/FTE scales in my model, because my approach is to scale G&A and R&D as absolute costs over time.
Historically, Gross Margins have been mid 90%. Its an incredibly capital-light product - almost unique in medical devices.
I have the starting point for %GM at 95%, falling to 91% when the new facilities come onstream.
I end up with %GM in 2030 at 92.5%, as by that time the new facilities are almost full. However, this is a weakness in my methodology. I do not explicitly allow for the impact of lower prices in emerging markets to feed into %GM. (To be corrected in my next update in March)
However, I am OK with this "error" because in my model, emerging market revenues only account for $47m of reveue vs $333m in developed markets.
So, your model assumes a significantly lower %GM than I think they can achieve. This is why we get similar valuations, even through your revenue growth is much stronger than mine (see below).
I agree with you. Growth will not accelerate from here. It I though it would, I would mortgage my house and go all in!
You are more agressive on revenue growth than I am.
Your Base annual revenue progression to FY24 and beyond is, with mine shown in the next line:
60%, 50%, 40%, 35%, 30%, 25%, 25% landing at $613m in 2030
54%, 31%, 27%, 25%, 23%, 21%, 20% landing at $380m in 2030
We have differnent approaches. I think they will spend a lot more to expand applications.
So I have then starting at $9.3m in FY24 and growing to $36m in FY30, although as a % of revenue I am going from 14% down to 9.5%.
My total FTE in 2030 is 665, so I've been adding just under your number. I expect I am adding more earlier on and fewer later, as headoffice and R&D reach scale.
On P/E ratios
Our approaches are different, as mine is a DCF. But when I backsolve my model, I get a P/E in 2030 of 24.
Hope that helps. Of course we can all get whatever numbers we like, but the great thing about modelling is that it builds understanding of what's important and risk-reward.