GPT-5.2
1) Recommendation, 12-month PT range, 2-sentence thesis
Recommendation: SHORT LLLT
12-month PT range: $25–$42 (central $30)
Thesis (2 sentences): LLLT is a high-quality mid-market spend/AP SaaS business, but the stock embeds a valuation that requires durable >20% growth and sustained margin expansion well beyond our base-case cash flow trajectory. On our DCF work, intrinsic value clusters materially below the current price ($46), leaving asymmetric downside if NRR normalizes, growth decelerates, or operating leverage arrives slower than expected.
2) Business overview + why it wins / why now
What it does: LedgerLift sells B2B spend management and AP automation software to mid-market enterprises. Revenue is 92% subscription / 8% services, with subscription gross margin around 82% (services GM ~25%).
Why it wins (likely):
- Sticky workflow + compliance adjacency: AP/spend sits in a “system-of-record” lane; switching costs are real once policies, approvals, and integrations are embedded.
- Proven land-and-expand motion: NRR 123% with 94% gross retention implies meaningful expansion (modules/seats/volume) even after churn.
- Unit economics that scale: 18-month CAC payback and 78% FY25 gross margin suggest attractive LTV/CAC if retention holds.
Why now: The setup is valuation-driven. At $46, LLLT’s market pricing appears to discount a continuation of premium SaaS metrics (NRR, margin expansion) despite decelerating growth implied by our 2026–2030 assumptions and the natural maturing of a 6,200-customer base.
3) KPI quality check (and what could be wrong)
NRR (123%) / Gross retention (94%): Strong—supports expansion-led growth.
What could be wrong: NRR can be flattered by (i) price increases, (ii) payment volume-driven modules that are cyclical, or (iii) expansions concentrated in a subset of larger customers; if cohorts mature, NRR can step down quickly.
Logo churn (6%/yr): Reasonable for mid-market; not “best-in-class” for core finance workflows.
What could be wrong: Churn may be understated if downsells are classified as contraction rather than churn; macro pressure in mid-market can raise churn faster than management expects.
CAC payback (18 months) & S&M (34% of rev in FY25): Healthy but not ultra-efficient.
What could be wrong: Payback can deteriorate if growth relies more on new logos vs. expansion; also, payback looks best during periods of strong pipeline conversion.
Customer concentration: Top 10 = 16% of revenue; top 1 = 3% (not alarming).
What could be wrong: Even without headline concentration, expansions may be concentrated—i.e., NRR driven by a narrow slice of the base.
4) Base/Bull/Bear model (2026–2030) + DCF outputs
Model mechanics (all cases):
Unlevered FCF = EBIT(1–tax) + D&A – Capex – ΔNWC
- Tax: 23% cash tax rate
- D&A: 2.5% of revenue
- Capex: 3.0% of revenue
- NWC investment: 1.0% of incremental revenue
DCF: PV of 2026–2030 FCF + PV of terminal value (TV = FCF_2030×(1+g)/(WACC–g)).
Forecasts and cash flows ($m)
Base case (WACC 10%, g 3%)
| $m | 2026 | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|---|
| Revenue | 992 | 1,171 | 1,346 | 1,521 | 1,704 |
| EBIT | 198 | 258 | 323 | 380 | 443 |
| Unlevered FCF | 146 | 191 | 240 | 284 | 331 |
Bull case (WACC 9%, g 4%)
| $m | 2026 | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|---|
| Revenue |