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At this point, the business seems to have born out its ability to churn out $20-30m in earning power (cash).  Revenue is basically recurring, client retention is above 90%, revenue retention is well over 100% with add-on services.  Gross margins are in the 70% and looking out past COVID, for every dollar of sales growth (which they will almost certainly see in the mid-single digits) drops something like $0.45 to the bottom line.  So a business like this trades at 10-12x.  And it's growing.  And SBC is not crazy and there's essentially no debt.

 

What am I missing?  I mean GAAP doesn't show the progress in the business because of amortization charges and deferred revenue, but beyond that?

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for every dollar of sales growth (which they will almost certainly see in the mid-single digits)

 

Why will they grow mid-single digits?

 

Up to this point, they've grown their subscription offering at well over 20% p.a.  That should continue at a good clip.  Offsetting this is a natural fall-off of their existing live-training business.  But to track future sales growth, it's combination of deferred revenue combined with the rate at which they are adding "client partners" (sales people) and the productivity rate of those client partners.  Both metrics the company provides freely.  I think mid-single digits is conservative.  Of course, normalized.  I have no idea what the next year looks like.

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