Intrinsic value of Xactly - XTLY

Previous Close

$15.65

  Intrinsic Value

$3.48

stock screener

  Rating & Target

str. sell

-78%

  Value-price divergence*

0%

Previous close

$15.65

 
Intrinsic value

$3.48

 
Up/down potential

-78%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of XTLY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  25.00
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  95
  109
  123
  139
  155
  172
  190
  209
  229
  249
  271
  293
  316
  340
  366
  392
  419
  447
  476
  506
  538
  571
  606
  641
  679
  718
  758
  801
  845
  892
  940
Variable operating expenses, $m
 
  80
  91
  102
  114
  126
  139
  153
  168
  183
  198
  214
  231
  249
  267
  286
  306
  326
  348
  370
  393
  417
  442
  469
  496
  524
  554
  585
  618
  651
  687
Fixed operating expenses, $m
 
  44
  45
  46
  47
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
  69
  70
  72
  74
  76
  78
  80
  82
  84
  86
  88
  90
Total operating expenses, $m
  112
  124
  136
  148
  161
  175
  189
  204
  220
  237
  253
  270
  289
  308
  328
  348
  370
  391
  415
  439
  463
  489
  516
  545
  574
  604
  636
  669
  704
  739
  777
Operating income, $m
  -16
  -15
  -13
  -10
  -6
  -3
  1
  5
  9
  13
  17
  23
  27
  32
  38
  43
  49
  55
  61
  68
  74
  82
  89
  97
  105
  114
  123
  132
  142
  152
  163
EBITDA, $m
  -12
  -14
  -11
  -8
  -4
  -1
  3
  7
  11
  16
  20
  25
  30
  36
  41
  47
  53
  59
  66
  72
  80
  87
  95
  103
  111
  120
  130
  140
  150
  161
  172
Interest expense (income), $m
  0
  0
  1
  1
  2
  2
  2
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
Earnings before tax, $m
  -17
  -16
  -13
  -11
  -8
  -5
  -2
  2
  5
  9
  13
  17
  21
  26
  30
  35
  40
  45
  51
  56
  62
  69
  75
  82
  89
  97
  104
  113
  121
  130
  140
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  38
Net income, $m
  -17
  -16
  -13
  -11
  -8
  -5
  -2
  1
  4
  6
  9
  13
  16
  19
  22
  26
  29
  33
  37
  41
  46
  50
  55
  60
  65
  71
  76
  82
  89
  95
  102

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  42
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  88
  99
  112
  126
  141
  156
  173
  190
  208
  226
  246
  266
  287
  309
  332
  356
  380
  406
  432
  460
  489
  519
  550
  583
  616
  652
  689
  727
  768
  810
  854
Adjusted assets (=assets-cash), $m
  46
  99
  112
  126
  141
  156
  173
  190
  208
  226
  246
  266
  287
  309
  332
  356
  380
  406
  432
  460
  489
  519
  550
  583
  616
  652
  689
  727
  768
  810
  854
Revenue / Adjusted assets
  2.065
  1.101
  1.098
  1.103
  1.099
  1.103
  1.098
  1.100
  1.101
  1.102
  1.102
  1.102
  1.101
  1.100
  1.102
  1.101
  1.103
  1.101
  1.102
  1.100
  1.100
  1.100
  1.102
  1.099
  1.102
  1.101
  1.100
  1.102
  1.100
  1.101
  1.101
Average production assets, $m
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  58
  61
  64
  68
  72
  76
  80
  85
  89
Working capital, $m
  0
  -11
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -76
  -80
  -85
  -89
  -94
Total debt, $m
  13
  19
  31
  43
  57
  71
  85
  101
  117
  134
  151
  170
  189
  208
  229
  250
  272
  295
  319
  344
  370
  397
  425
  454
  485
  517
  550
  585
  621
  659
  698
Total liabilities, $m
  83
  89
  101
  113
  127
  141
  155
  171
  187
  204
  221
  240
  259
  278
  299
  320
  342
  365
  389
  414
  440
  467
  495
  524
  555
  587
  620
  655
  691
  729
  768
Total equity, $m
  5
  10
  11
  13
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
Total liabilities and equity, $m
  88
  99
  112
  126
  141
  157
  172
  190
  208
  227
  246
  267
  288
  309
  332
  356
  380
  406
  432
  460
  489
  519
  550
  582
  617
  652
  689
  728
  768
  810
  853
Debt-to-equity ratio
  2.600
  1.900
  2.740
  3.440
  4.020
  4.520
  4.950
  5.310
  5.630
  5.910
  6.150
  6.370
  6.560
  6.740
  6.890
  7.030
  7.160
  7.270
  7.380
  7.480
  7.570
  7.650
  7.730
  7.800
  7.860
  7.930
  7.980
  8.040
  8.090
  8.140
  8.180
Adjusted equity ratio
  -0.804
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -17
  -16
  -13
  -11
  -8
  -5
  -2
  1
  4
  6
  9
  13
  16
  19
  22
  26
  29
  33
  37
  41
  46
  50
  55
  60
  65
  71
  76
  82
  89
  95
  102
Depreciation, amort., depletion, $m
  4
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
Funds from operations, $m
  -2
  -14
  -12
  -9
  -6
  -3
  1
  4
  6
  9
  12
  15
  19
  22
  26
  29
  33
  37
  42
  46
  51
  56
  61
  66
  72
  77
  83
  90
  97
  104
  111
Change in working capital, $m
  1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from operations, $m
  -3
  -13
  -10
  -7
  -4
  -1
  2
  6
  8
  11
  15
  18
  21
  24
  28
  32
  36
  40
  45
  49
  54
  59
  64
  70
  75
  81
  88
  94
  101
  108
  116
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
New CAPEX, $m
  -4
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
Cash from investing activities, $m
  -31
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
Free cash flow, $m
  -34
  -15
  -12
  -10
  -7
  -4
  -1
  2
  5
  7
  10
  13
  16
  19
  23
  26
  30
  34
  38
  42
  46
  51
  55
  60
  66
  71
  77
  83
  89
  96
  103
Issuance/(repayment) of debt, $m
  -3
  8
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
Issuance/(repurchase) of shares, $m
  5
  21
  15
  12
  9
  6
  3
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1
  29
  27
  25
  22
  20
  18
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
Total cash flow (excl. dividends), $m
  -33
  13
  14
  15
  16
  16
  17
  18
  21
  24
  28
  31
  35
  39
  43
  47
  52
  57
  61
  67
  72
  78
  83
  90
  96
  103
  110
  118
  125
  134
  142
Retained Cash Flow (-), $m
  5
  -21
  -15
  -12
  -9
  -6
  -3
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -8
  -1
  3
  6
  10
  14
  16
  19
  22
  26
  29
  33
  37
  41
  45
  49
  54
  59
  64
  69
  75
  80
  86
  93
  99
  106
  114
  121
  130
  138
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -7
  -1
  2
  5
  8
  10
  11
  12
  13
  13
  14
  14
  14
  14
  13
  13
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  70.7
  61.6
  55.6
  51.8
  49.5
  48.4
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3
  48.3

Xactly Corporation provides cloud-based incentive compensation solutions for employee and sales performance management in the United States and the United Kingdom. The company offers Xactly Incent Enterprise, which helps large enterprise and mid-market companies manage the critical elements of incentive compensation; Xactly Incent Express, an incentive compensation solution for companies with fewer than 350 employees; and Xactly Objectives, a solution for sales and non-sales personnel, allowing managers and employees to collaboratively track and achieve individual and shared goals. It also provides Xactly Territories, which helps companies to manage sales team alignment by assigning individual sales representatives to specific territories of sales operations using metrics, such as geography, customer size, vertical market, or a set of product offerings; Xactly Insights, a solution that helps its customers to motivate employees and drive business performance using its set of aggregated and anonymized data; and modules that augment Xactly Incent Enterprise, such as analytics, modeling, automated workflows, quotas and approvals, and credit assignment. In addition, the company offers Xactly Incent Views that brings visibility and understanding to the incentive compensation information trapped inside a customer’s spreadsheet, homegrown, or third-party compensation system. It serves customers through its direct sales force in business and financial services, communications, high-tech manufacturing, life sciences, media and Internet, and Software-as-a-Service and traditional software. Xactly Corporation was founded in 2005 and is headquartered in San Jose, California.

FINANCIAL RATIOS  of  Xactly (XTLY)

Valuation Ratios
P/E Ratio -29
Price to Sales 5.2
Price to Book 98.7
Price to Tangible Book
Price to Cash Flow -164.4
Price to Free Cash Flow -70.5
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 80%
Total Debt to Equity 260%
Interest Coverage 0
Management Effectiveness
Return On Assets -19.4%
Ret/ On Assets - 3 Yr. Avg. -31%
Return On Total Capital -77.3%
Ret/ On T. Cap. - 3 Yr. Avg. -215.5%
Return On Equity -226.7%
Return On Equity - 3 Yr. Avg. 65.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 61.1%
Gross Margin - 3 Yr. Avg. 59.8%
EBITDA Margin -13.7%
EBITDA Margin - 3 Yr. Avg. -21.1%
Operating Margin -17.9%
Oper. Margin - 3 Yr. Avg. -24.4%
Pre-Tax Margin -17.9%
Pre-Tax Margin - 3 Yr. Avg. -26.3%
Net Profit Margin -17.9%
Net Profit Margin - 3 Yr. Avg. -27.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -3.2%
Payout Ratio 0%

XTLY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XTLY stock intrinsic value calculation we used $95 million for the last fiscal year's total revenue generated by Xactly. The default revenue input number comes from 2017 income statement of Xactly. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our XTLY stock valuation model: a) initial revenue growth rate of 14.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for XTLY is calculated based on our internal credit rating of Xactly, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Xactly.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of XTLY stock the variable cost ratio is equal to 73.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43 million in the base year in the intrinsic value calculation for XTLY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Xactly.

Corporate tax rate of 27% is the nominal tax rate for Xactly. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the XTLY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for XTLY are equal to 9.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Xactly operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for XTLY is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5 million for Xactly - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 31.586 million for Xactly is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Xactly at the current share price and the inputted number of shares is $0.5 billion.

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Stock chart of XTLY Financial statements of XTLY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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