Intrinsic value of Callidus Software - CALD

Previous Close

$35.95

  Intrinsic Value

$0.43

stock screener

  Rating & Target

str. sell

-99%

Previous close

$35.95

 
Intrinsic value

$0.43

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of CALD 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 2.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  22.40
  20.66
  19.09
  17.68
  16.42
  15.27
  14.25
  13.32
  12.49
  11.74
  11.07
  10.46
  9.91
  9.42
  8.98
  8.58
  8.22
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
Revenue, $m
  310
  374
  445
  524
  610
  703
  803
  910
  1,024
  1,144
  1,270
  1,403
  1,542
  1,688
  1,839
  1,997
  2,161
  2,332
  2,509
  2,694
  2,886
  3,085
  3,292
  3,507
  3,731
  3,965
  4,207
  4,460
  4,724
  4,999
Variable operating expenses, $m
  332
  398
  472
  553
  642
  737
  841
  951
  1,068
  1,192
  1,309
  1,446
  1,589
  1,739
  1,895
  2,058
  2,227
  2,403
  2,586
  2,776
  2,973
  3,179
  3,392
  3,614
  3,845
  4,085
  4,335
  4,596
  4,868
  5,151
Fixed operating expenses, $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
Total operating expenses, $m
  332
  398
  472
  553
  642
  737
  841
  951
  1,068
  1,192
  1,309
  1,446
  1,589
  1,739
  1,895
  2,058
  2,227
  2,403
  2,586
  2,776
  2,973
  3,179
  3,392
  3,614
  3,845
  4,085
  4,335
  4,596
  4,868
  5,151
Operating income, $m
  -23
  -25
  -27
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -39
  -43
  -47
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -88
  -94
  -100
  -107
  -114
  -121
  -128
  -136
  -144
  -152
EBITDA, $m
  10
  12
  14
  16
  19
  22
  25
  28
  32
  35
  39
  43
  48
  52
  57
  62
  67
  72
  78
  83
  89
  96
  102
  109
  116
  123
  130
  138
  146
  155
Interest expense (income), $m
  0
  0
  2
  5
  8
  12
  15
  19
  24
  28
  33
  38
  44
  50
  56
  62
  69
  75
  82
  90
  98
  105
  114
  122
  131
  141
  150
  160
  171
  182
  193
Earnings before tax, $m
  -23
  -27
  -32
  -38
  -44
  -50
  -57
  -65
  -73
  -81
  -77
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -180
  -193
  -208
  -223
  -238
  -254
  -271
  -288
  -307
  -326
  -345
Tax expense, $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
Net income, $m
  -23
  -27
  -32
  -38
  -44
  -50
  -57
  -65
  -73
  -81
  -77
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -180
  -193
  -208
  -223
  -238
  -254
  -271
  -288
  -307
  -326
  -345

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  547
  660
  786
  925
  1,077
  1,242
  1,419
  1,608
  1,808
  2,021
  2,244
  2,479
  2,725
  2,982
  3,249
  3,528
  3,818
  4,120
  4,434
  4,760
  5,098
  5,450
  5,816
  6,197
  6,593
  7,004
  7,433
  7,880
  8,346
  8,832
Adjusted assets (=assets-cash), $m
  547
  660
  786
  925
  1,077
  1,242
  1,419
  1,608
  1,808
  2,021
  2,244
  2,479
  2,725
  2,982
  3,249
  3,528
  3,818
  4,120
  4,434
  4,760
  5,098
  5,450
  5,816
  6,197
  6,593
  7,004
  7,433
  7,880
  8,346
  8,832
Revenue / Adjusted assets
  0.567
  0.567
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
  0.566
Average production assets, $m
  190
  229
  273
  322
  374
  432
  493
  559
  628
  702
  780
  862
  947
  1,036
  1,129
  1,226
  1,327
  1,432
  1,541
  1,654
  1,772
  1,894
  2,021
  2,153
  2,291
  2,434
  2,583
  2,739
  2,900
  3,069
Working capital, $m
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -16
  -18
  -20
  -22
  -25
  -27
  -29
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -53
  -56
  -60
  -63
  -67
  -71
  -76
  -80
Total debt, $m
  45
  97
  154
  217
  285
  360
  440
  526
  617
  713
  814
  921
  1,032
  1,148
  1,270
  1,396
  1,527
  1,664
  1,806
  1,954
  2,107
  2,267
  2,432
  2,605
  2,784
  2,971
  3,165
  3,367
  3,578
  3,798
Total liabilities, $m
  248
  299
  356
  419
  488
  562
  643
  728
  819
  915
  1,017
  1,123
  1,234
  1,351
  1,472
  1,598
  1,730
  1,866
  2,008
  2,156
  2,310
  2,469
  2,635
  2,807
  2,986
  3,173
  3,367
  3,570
  3,781
  4,001
Total equity, $m
  299
  361
  430
  506
  589
  679
  776
  879
  989
  1,105
  1,228
  1,356
  1,490
  1,631
  1,777
  1,930
  2,089
  2,254
  2,425
  2,604
  2,789
  2,981
  3,181
  3,390
  3,606
  3,831
  4,066
  4,311
  4,565
  4,831
Total liabilities and equity, $m
  547
  660
  786
  925
  1,077
  1,241
  1,419
  1,607
  1,808
  2,020
  2,245
  2,479
  2,724
  2,982
  3,249
  3,528
  3,819
  4,120
  4,433
  4,760
  5,099
  5,450
  5,816
  6,197
  6,592
  7,004
  7,433
  7,881
  8,346
  8,832
Debt-to-equity ratio
  0.150
  0.270
  0.360
  0.430
  0.480
  0.530
  0.570
  0.600
  0.620
  0.640
  0.660
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.740
  0.750
  0.760
  0.760
  0.760
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.790
Adjusted equity ratio
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -23
  -27
  -32
  -38
  -44
  -50
  -57
  -65
  -73
  -81
  -77
  -87
  -97
  -107
  -118
  -129
  -141
  -153
  -166
  -180
  -193
  -208
  -223
  -238
  -254
  -271
  -288
  -307
  -326
  -345
Depreciation, amort., depletion, $m
  32
  36
  41
  45
  51
  56
  63
  69
  76
  84
  78
  86
  95
  104
  113
  123
  133
  143
  154
  165
  177
  189
  202
  215
  229
  243
  258
  274
  290
  307
Funds from operations, $m
  10
  9
  9
  8
  7
  6
  5
  4
  3
  2
  1
  -1
  -2
  -3
  -5
  -7
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -25
  -28
  -30
  -33
  -36
  -38
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
Cash from operations, $m
  10
  10
  10
  9
  9
  8
  7
  6
  5
  4
  3
  2
  0
  -1
  -3
  -4
  -6
  -8
  -9
  -11
  -13
  -15
  -17
  -19
  -22
  -24
  -26
  -29
  -31
  -34
Maintenance CAPEX, $m
  -16
  -19
  -23
  -27
  -32
  -37
  -43
  -49
  -56
  -63
  -70
  -78
  -86
  -95
  -104
  -113
  -123
  -133
  -143
  -154
  -165
  -177
  -189
  -202
  -215
  -229
  -243
  -258
  -274
  -290
New CAPEX, $m
  -35
  -39
  -44
  -48
  -53
  -57
  -61
  -66
  -70
  -74
  -78
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -122
  -127
  -132
  -138
  -143
  -149
  -155
  -162
  -169
Cash from investing activities, $m
  -51
  -58
  -67
  -75
  -85
  -94
  -104
  -115
  -126
  -137
  -148
  -160
  -171
  -184
  -197
  -210
  -224
  -238
  -252
  -267
  -283
  -299
  -316
  -334
  -353
  -372
  -392
  -413
  -436
  -459
Free cash flow, $m
  -40
  -48
  -57
  -66
  -76
  -87
  -98
  -109
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -229
  -245
  -261
  -278
  -296
  -315
  -334
  -354
  -374
  -396
  -419
  -442
  -467
  -493
Issuance/(repayment) of debt, $m
  45
  51
  57
  63
  69
  75
  80
  86
  91
  96
  101
  106
  111
  116
  121
  126
  131
  137
  142
  148
  153
  159
  166
  172
  179
  187
  194
  202
  211
  220
Issuance/(repurchase) of shares, $m
  77
  89
  101
  114
  127
  140
  154
  168
  183
  198
  199
  215
  231
  248
  264
  282
  300
  318
  338
  358
  379
  400
  423
  446
  471
  496
  523
  551
  580
  611
Cash from financing (excl. dividends), $m  
  122
  140
  158
  177
  196
  215
  234
  254
  274
  294
  300
  321
  342
  364
  385
  408
  431
  455
  480
  506
  532
  559
  589
  618
  650
  683
  717
  753
  791
  831
Total cash flow (excl. dividends), $m
  83
  92
  101
  110
  119
  128
  136
  145
  153
  161
  156
  163
  171
  179
  186
  194
  202
  210
  218
  227
  236
  245
  255
  265
  276
  287
  299
  311
  324
  338
Retained Cash Flow (-), $m
  -77
  -89
  -101
  -114
  -127
  -140
  -154
  -168
  -183
  -198
  -199
  -215
  -231
  -248
  -264
  -282
  -300
  -318
  -338
  -358
  -379
  -400
  -423
  -446
  -471
  -496
  -523
  -551
  -580
  -611
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
  33
  41
  49
  59
  69
  80
  93
  106
  120
  135
  151
  168
  185
  204
  223
  243
  264
  285
  308
  331
  356
  381
  407
  435
  463
  493
  523
  555
  589
  624
Cash available for distribution, $m
  6
  3
  0
  -3
  -8
  -12
  -17
  -23
  -30
  -36
  -44
  -52
  -60
  -69
  -78
  -88
  -98
  -108
  -119
  -131
  -143
  -155
  -168
  -181
  -195
  -209
  -224
  -240
  -256
  -273
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
  5
  3
  0
  -3
  -6
  -9
  -12
  -15
  -17
  -19
  -21
  -22
  -23
  -23
  -23
  -22
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  96.8
  93.9
  91.2
  88.8
  86.5
  84.4
  82.4
  80.6
  78.9
  77.3
  75.8
  74.5
  73.1
  71.9
  70.7
  69.5
  68.4
  67.3
  66.3
  65.3
  64.3
  63.4
  62.4
  61.5
  60.6
  59.8
  58.9
  58.1
  57.3
  56.5

Callidus Software Inc. (Callidus) is a provider of cloud-based sales, marketing, learning and customer experience solutions. The Company's CallidusCloud enables its customers to manage their Lead to Money process with a suite of solutions that identify leads, implement territory and quota plans, enable sales forces, automate bid configuration pricing and quoting, manage contracts, streamline sales compensation and capture customer feedback, among others. Lead to Money is a process designed to help companies respond to the changing role of sales and marketing in the redefined buying cycle. The company's Lead to Money suite and technology solutions include Lead, Planning, Enablement, Quotes and Proposals, Contracts, Incentives, Customer Experience and Technology. The Company provides a range of services to its customers, which include professional services, business process outsourcing services, maintenance and technical support services, and education services.

FINANCIAL RATIOS  of  Callidus Software (CALD)

Valuation Ratios
P/E Ratio -120.5
Price to Sales 11.1
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 76.3
Price to Free Cash Flow 176.1
Growth Rates
Sales Growth Rate 19.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 21.4%
Cap. Spend. - 3 Yr. Gr. Rate 53.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -6%
Ret/ On Assets - 3 Yr. Avg. -6.7%
Return On Total Capital -10.4%
Ret/ On T. Cap. - 3 Yr. Avg. -14.1%
Return On Equity -10.4%
Return On Equity - 3 Yr. Avg. -16.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 62.3%
Gross Margin - 3 Yr. Avg. 61.1%
EBITDA Margin -1.9%
EBITDA Margin - 3 Yr. Avg. -0.6%
Operating Margin -8.2%
Oper. Margin - 3 Yr. Avg. -8.2%
Pre-Tax Margin -8.7%
Pre-Tax Margin - 3 Yr. Avg. -7.9%
Net Profit Margin -9.2%
Net Profit Margin - 3 Yr. Avg. -8.5%
Effective Tax Rate -5.6%
Eff/ Tax Rate - 3 Yr. Avg. -7.7%
Payout Ratio 0%

CALD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CALD stock intrinsic value calculation we used $253 million for the last fiscal year's total revenue generated by Callidus Software. The default revenue input number comes from 2017 income statement of Callidus Software. 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 CALD stock valuation model: a) initial revenue growth rate of 22.4% 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 CALD is calculated based on our internal credit rating of Callidus Software, 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 Callidus Software.
    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 CALD stock the variable cost ratio is equal to 108.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CALD 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 5.4% for Callidus Software.

Corporate tax rate of 27% is the nominal tax rate for Callidus Software. 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 CALD stock is equal to 13.2%.

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 CALD are equal to 61.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Callidus Software 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 CALD is equal to -1.6%. 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 - $245 million for Callidus Software - 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 65 million for Callidus Software 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 Callidus Software at the current share price and the inputted number of shares is $2.3 billion.

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