Claude Opus 4.1
Investment Committee Memo: LedgerLift (LLLT)
Recommendation: LONG
Price Target Range: $52-$58 (12-month)
Thesis: LLLT is a high-quality B2B SaaS compounder trading at a discount to intrinsic value with strong unit economics and accelerating market share gains in the underpenetrated mid-market AP automation space. Multiple expansion catalysts exist as the company approaches Rule of 40 territory while maintaining 120%+ NRR.
Business Overview & Competitive Position
LedgerLift provides spend management and AP automation software to mid-market enterprises, addressing a $15B+ TAM growing at 15%+ annually. The company wins through:
- Product superiority: 82% subscription gross margins indicate strong product-market fit and limited customization needs
- Mid-market focus: Sweet spot between SMB churn and enterprise sales cycles, evidenced by $132k ARPA
- Network effects: Integration ecosystem creates switching costs, driving 94% gross retention
Why now: Digital transformation acceleration post-COVID, CFO budget ownership shifting to software, and increasing regulatory complexity around spend compliance create a multi-year tailwind.
KPI Quality Assessment
Strengths:
- NRR of 123% indicates strong land-and-expand motion
- 18-month CAC payback with 34% S&M spend suggests efficient go-to-market
- 6% logo churn best-in-class for mid-market
Concerns:
- Customer concentration moderate (top 10 = 16%) but manageable
- Services revenue at 8% with 25% GM creates ~400bps gross margin headwind
- Logo count growth implied at ~15% suggests potential market saturation or increased competition
Financial Model & Valuation
Scenario Analysis (2026-2030)
Base Case:
| Year | 2026E | 2027E | 2028E | 2029E | 2030E |
|---|---|---|---|---|---|
| Revenue ($M) | 992 | 1,171 | 1,346 | 1,521 | 1,703 |
| Growth % | 21% | 18% | 15% | 13% | 12% |
| EBIT ($M) | 198 | 258 | 323 | 380 | 443 |
| EBIT Margin | 20% | 22% | 24% | 25% | 26% |
| UFCF ($M) | 173 | 224 | 279 | 328 | 381 |
DCF Calculation (Base):
- PV of 2026-2030 UFCF @ 10% WACC: $1,053M
- Terminal Value (2030 UFCF × (1+3%)/(10%-3%)): $5,614M
- PV of Terminal Value: $3,480M
- Enterprise Value: $4,533M
- Plus: Net Cash: $1,400M
- Equity Value: $5,933M
- Value per Share: $31.23
Bull Case:
| Year | 2026E | 2027E | 2028E | 2029E | 2030E |
|---|---|---|---|---|---|
| Revenue ($M) | 1,025 | 1,240 | 1,464 | 1,683 | 1,930 |
| EBIT ($M) | 215 | 298 | 380 | 471 | 560 |
| UFCF ($M) | 188 | 259 | 329 | 406 | 481 |
Bull DCF: EV = $6,842M → Equity = $8,242M → $43.38/share
Bear Case:
| Year | 2026E | 2027E | 2028E | 2029E | 2030E |
|---|---|---|---|---|---|
| Revenue ($M) | 951 | 1,075 | 1,193 | 1,312 | 1,430 |
| EBIT ($M) | 162 | 194 | 227 | 262 | 300 |
| UFCF ($M) | 142 | 169 | 197 | 227 | 259 |
Bear DCF: EV = $2,583M → Equity = $3,983M → $20.96/share
Comps Valuation
Median multiples: 9.0x EV/NTM Revenue, 35x EV/NTM EBIT
Current EV: $46 × 190M - $1,400M = $7,340M
- On 2026E Revenue: 7.4x (18% discount to peers)
- On 2026E EBIT: 37.1x (6% premium to peers)
Justified premium factors: Superior NRR (123% vs peer avg ~110%), better gross margins, accelerating growth Target multiple: 10x 2026E revenue = $9,920M EV → $11,320M equity → $59.58/share
Catalysts (Next 12 Months)
- Q1 2025 earnings showing NRR re-acceleration above 125%
- Strategic partnership announcement with major ERP vendor
- Operating leverage inflection - reaching Rule of 40 (growth + EBIT margin)
Key Risks
- Competition from vertical solutions - industry-specific AP tools gaining traction
- Enterprise upmarket pressure - SAP/Oracle bundling spend management
- Macro sensitivity - 30% of customers in cyclical industries
- Platform risk - 25% of revenue flows through partner channels
- Execution risk - Sales productivity declining as company scales
What Would Change My Mind
- NRR drops below 115% for two consecutive quarters
- Logo churn exceeds 8% annually
- CAC payback extends beyond 24 months despite stable ARPA
Management Diligence Questions
- What's driving the gap between logo growth (~15%) and revenue growth (21%)?
- How sustainable is 123% NRR given increased competition?
- Why hasn't services revenue declined as a percentage of total?
- What's the path to reducing customer concentration?
- How are win rates trending vs. peers in competitive deals?
- What percentage of customers use 3+ modules?
- What's the international expansion strategy and timeline?
- How much pricing power remains given current inflation?
- What's driving S&M efficiency improvements assumed in the model?
- Are there any large customer contracts up for renewal in the next 12 months?
Conclusion
LLLT presents an asymmetric risk/reward with 13-26% upside to our base case PT range. Strong fundamentals, improving unit economics, and multiple expansion potential outweigh near-term risks.