Llama 4 Maverick
Investment Committee Memo: LedgerLift (LLLT)
1. Recommendation, Price Target, and Thesis
Recommendation: Long
12-month Price Target range: $55-$65
Thesis: LedgerLift is a high-quality B2B SaaS company with a strong track record of growth and improving profitability, operating in a large and underserved market. The current share price underestimates the company's potential for continued growth and margin expansion.
2. Business and Competitive Advantage
LedgerLift provides B2B spend management and AP automation SaaS solutions to mid-market enterprises. The company's platform helps customers streamline their financial operations, reduce costs, and improve visibility into their spend. LedgerLift's competitive advantage lies in its comprehensive solution, ease of implementation, and strong customer support, which have enabled the company to achieve high customer retention and net revenue retention (NRR) rates. The mid-market enterprise segment is large and underserved, providing LedgerLift with a significant opportunity for growth.
3. KPI Quality Check
- NRR: 123% indicates strong upsell and cross-sell motions
- Logo churn: 6%/yr is relatively low, indicating high customer satisfaction
- CAC payback: 18 months is reasonable, given the high ARPA (~$132k)
- Concentration: top 10 customers = 16% of revenue, top 1 = 3%, indicating a relatively diversified customer base
Potential concerns:
- Services revenue mix (8%) may be a drag on gross margin, although the company is working to reduce this proportion
- S&M as % of revenue (34% in FY2025) is relatively high, although this is expected to decrease as the company scales
4. Base/Bull/Bear Model
| 2026 | 2027 | 2028 | 2029 | 2030 | |
|---|---|---|---|---|---|
| Base Case | |||||
| Revenue | $992m | $1,171m | $1,347m | $1,522m | $1,704m |
| EBIT | $198m | $257m | $323m | $381m | $443m |
| Unlevered FCF | $173m | $224m | $283m | $336m | $392m |
| Bull Case | |||||
| Revenue | $1,030m | $1,246m | $1,471m | $1,692m | $1,912m |
| EBIT | $216m | $299m | $382m | $474m | $554m |
| Unlevered FCF | $190m | $264m | $339m | $424m | $498m |
| Bear Case | |||||
| Revenue | $951m | $1,075m | $1,193m | $1,312m | $1,430m |
| EBIT | $162m | $194m | $227m | $262m | $300m |
| Unlevered FCF | $140m | $168m | $198m | $230m | $265m |
DCF valuation:
- Base Case: EV = $6.3B, Equity Value = $7.7B, Implied Value per Share = $40.53
- Bull Case: EV = $8.1B, Equity Value = $9.5B, Implied Value per Share = $50.00
- Bear Case: EV = $4.4B, Equity Value = $5.8B, Implied Value per Share = $30.53
5. Comps Cross-Check
Median multiples: EV/NTM Revenue = 9.0x, EV/NTM EBIT = 35x
Implied EV: $6.1B - $7.4B (using NTM Revenue and EBIT estimates)
Implied Value per Share: $32.11 - $38.95
6. Catalysts, Risks, and "What Would Change My Mind"
Catalysts:
- Continued strong revenue growth
- Margin expansion driven by scale and operational efficiency
- Positive operating leverage and FCF generation
Risks:
- Competition from larger players or new entrants
- Economic downturn impacting mid-market enterprises
- Failure to innovate or expand product offerings
- Higher-than-expected S&M expenses
- Regulatory changes impacting the B2B SaaS industry
"What Would Change My Mind":
- Revenue growth slows to <15% YoY for two consecutive quarters
- Operating margin expansion stalls or reverses
- NRR falls below 115% for two consecutive quarters
7. Diligence Questions for Management
- Can you elaborate on the company's strategy for reducing services revenue mix and improving gross margin?
- How do you plan to address potential competition from larger players or new entrants?
- What are the key drivers of margin expansion, and how do you plan to sustain this trend?
- Can you provide more information on the company's customer acquisition strategy and CAC payback dynamics?
- How does the company manage and mitigate concentration risk?
- What are the company's plans for expanding its product offerings and innovating its platform?
- Can you discuss the company's approach to managing S&M expenses and achieving positive operating leverage?
- How does the company assess and respond to regulatory changes impacting the B2B SaaS industry?
- Can you provide more information on the company's net working capital management and cash flow generation?
- What are the company's plans for utilizing its net cash position, and how will it impact shareholder value?