1. Valuation of Verecloud (VCLD)
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2. Content
• Verecloud’s Financial Projections 2011-2015
• Free Cash Flow Valuation 2011-2015
– Assumptions
• Valuation Presentation
– Present Values of FCF
– Terminal Value calculation (EBITDA multiple)
– Analysis on Terminal Growth Rates
– Valuation per Share
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3. Free Cash Flow Valuation
Assumptions
• CAPEX was added in the FCF model
• Depreciation was added in the FCF model
• Change of working capital were updated based on
the Verecloud financials
• Debt was updated in the FCF Analysis
• Model is discounted back to March 31st, 2011
• Number of outstanding shares were updated to
110mio
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4. Valuation Presentation
Valuation per Share
Discount
# of shares Valuation per share
Rate
(in millions) w/o Terminal Value
14% 110.5 $ 0.93
15% 110.5 $ 0.90
16% 110.5 $ 0.86
17% 110.5 $ 0.83
18% 110.5 $ 0.80
Discount Rate TV as % of total Equity Value # of shares Valuation per share incl. TV
(in millions)
4x 5x 6x 4x 5x 6x
14% 82.02% 85.08% 87.25% 110.5 $ 5.07 $ 6.11 $ 7.15
15% 81.99% 85.05% 87.22% 110.5 $ 4.87 $ 5.87 $ 6.86
16% 81.95% 85.02% 87.20% 110.5 $ 4.67 $ 5.63 $ 6.59
17% 81.92% 84.99% 87.17% 110.5 $ 4.49 $ 5.41 $ 6.33
18% 81.89% 84.97% 87.15% 110.5 $ 4.31 $ 5.20 $ 6.08
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5. Valuation Presentation
Present and Terminal Value calculations
Implied Perpetual Growth Rate of
Discount Rate PVs of FCF PV of TV (multiple of 2015 EBITDA)
TV
(2011-2015) 4x 5x 6x 4x 5x 6x
14% $ 103 $ 460 $ 575 $ 690 0.09% 2.60% 4.34%
15% $ 99 $ 441 $ 551 $ 662 0.97% 3.50% 5.25%
16% $ 95 $ 423 $ 529 $ 635 1.85% 4.40% 6.17%
17% $ 92 $ 406 $ 508 $ 610 2.73% 5.30% 7.08%
18% $ 89 $ 390 $ 488 $ 586 3.61% 6.20% 8.00%
Discount Rate Net Debt Firm Value Equity Value
4x 5x 6x 4x 5x 6x
14% $ 2.26 $ 563 $ 678 $ 793 $ 561 $ 676 $ 791
15% $ 2.26 $ 540 $ 651 $ 761 $ 538 $ 648 $ 759
16% $ 2.26 $ 519 $ 625 $ 731 $ 517 $ 622 $ 728
17% $ 2.26 $ 498 $ 600 $ 702 $ 496 $ 598 $ 699
18% $ 2.26 $ 479 $ 577 $ 674 $ 477 $ 574 $ 672
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6. Free Cash Flow Valuation
2011-2015
2011 2012 2013 2014 2015
Total Revenues $ 4,463,593 $ 2,794,963 $ 48,283,209 $ 127,288,753 $ 257,123,282
Growth in % -37% 1628% 164% 102%
Total Costs of Goods Sold $ 2,099,166 $ 284,999 $ 4,828,321 $ 10,183,100 $ 17,998,630
Gross Profit $ 2,364,427 $ 2,509,964 $ 43,454,888 $ 117,105,653 $ 239,124,652
Gross Profit in %
Operating Income (EBIT) $ (827,529) $ (2,645,094) $ 32,665,615 $ 101,122,925 $ 214,156,230
Less: Taxes $ - $ - $ (10,365,705) $ (38,923,390) $ (82,433,513)
Net Operating Income After Taxes (NOPAT) $ (827,529) $ (2,645,094) $ 22,299,910 $ 62,199,535 $ 131,722,717
Plus: Dep $ 38,941 $ 47,492 $ 63,159 $ 36,750 $ 56,750
Less: CAPEX $ 1,242,180 $ 2,402,434 $ 2,253,734 $ 2,342,684 $ 2,413,888
Less: Change in non-cash Working Capital $ (630,410) $ 528,403 $ 3,752,795 $ 5,218,145 $ 10,359,158
Free Cash Flow $ (1,400,358) $ (5,528,438) $ 16,356,540 $ 54,675,456 $ 119,006,421
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7. Verecloud’s Financial Projections
2011-2015
2011 2012 2013 2014 2015
Total Revenues $ 4,463,593 $ 2,794,963 $ 48,283,209 $ 127,288,753 $ 257,123,282
Growth in % -37% 1628% 164% 102%
Total Costs of Goods Sold $ 2,099,166 $ 284,999 $ 4,828,321 $ 10,183,100 $ 17,998,630
Gross Profit $ 2,364,427 $ 2,509,964 $ 43,454,888 $ 117,105,653 $ 239,124,652
Gross Profit in % 53% 90% 90% 92% 93%
Total Operating Expenses $ 3,191,955 $ 5,155,058 $ 10,789,273 $ 15,982,728 $ 24,968,422
Total SG&A as % of total revenue 72% 184% 22% 13% 10%
Operating Income (EBIT) $ (827,529) $ (2,645,094) $ 32,665,615 $ 101,122,925 $ 214,156,230
Operating Profit in % -19% -95% 68% 79% 83%
Other Expense $ (239,427) $ (291,126) $ (63,159) $ (36,750) $ (56,750)
Tax Expense $ - $ - $ 10,365,705 $ 38,923,390 $ 82,433,513
Net Income $ (1,066,955) $ (2,936,219) $ 22,236,751 $ 62,162,785 $ 131,665,967
% of revenues -24% -105% 46% 49% 51%
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8. Company’s Financial Projections
Additional Information 2011-2015
2011 2012 2013 2014 2015
Balance Sheet Information
Total Assets $ 1,523,835 $ 5,540,943 $ 41,126,384 $ 132,978,971 $ 328,588,415
Total Liabilities $ 2,883,216 $ 1,592,958 $ 5,138,964 $ 4,414,524 $ 7,002,957
Total Owner's Equity $ (1,359,381) $ 3,947,985 $ 35,987,419 $ 128,564,447 $ 321,585,458
CAPEX $ 1,242,180 $ 2,402,434 $ 2,253,734 $ 2,342,684 $ 2,413,888
Depreciation $ 38,941 $ 47,492 $ 63,159 $ 36,750 $ 56,750
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9. NBT EQUITY GROUP
• Founders
– Tobin Smith, Founder & CEO
– Amanda Besemer, Founder & President
• Established April 2010
• Website: http://www.nbtequitiesresearch.com
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