Intrinsic value of LivePerson, Inc. - LPSN

Previous Close

$26.91

  Intrinsic Value

$0.24

stock screener

  Rating & Target

str. sell

-99%

Previous close

$26.91

 
Intrinsic value

$0.24

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of LPSN 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 0001), $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 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.50
  13.55
  12.70
  11.93
  11.23
  10.61
  10.05
  9.54
  9.09
  8.68
  8.31
  7.98
  7.68
  7.41
  7.17
  6.96
  6.76
  6.58
  6.43
  6.28
  6.15
  6.04
  5.94
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
Revenue, $m
  286
  325
  366
  410
  456
  504
  555
  608
  663
  721
  781
  843
  908
  975
  1,045
  1,118
  1,194
  1,272
  1,354
  1,439
  1,528
  1,620
  1,716
  1,816
  1,921
  2,030
  2,144
  2,263
  2,387
  2,517
Variable operating expenses, $m
  308
  348
  391
  436
  484
  534
  586
  641
  698
  758
  809
  874
  941
  1,011
  1,083
  1,159
  1,237
  1,318
  1,403
  1,491
  1,583
  1,679
  1,778
  1,882
  1,991
  2,104
  2,222
  2,345
  2,474
  2,609
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
  308
  348
  391
  436
  484
  534
  586
  641
  698
  758
  809
  874
  941
  1,011
  1,083
  1,159
  1,237
  1,318
  1,403
  1,491
  1,583
  1,679
  1,778
  1,882
  1,991
  2,104
  2,222
  2,345
  2,474
  2,609
Operating income, $m
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -28
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -56
  -59
  -62
  -66
  -70
  -74
  -78
  -82
  -87
  -92
EBITDA, $m
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  5
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
Earnings before tax, $m
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -41
  -44
  -48
  -52
  -57
  -61
  -66
  -71
  -76
  -81
  -86
  -92
  -98
  -104
  -110
  -117
  -124
  -131
  -139
  -147
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
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -41
  -44
  -48
  -52
  -57
  -61
  -66
  -71
  -76
  -81
  -86
  -92
  -98
  -104
  -110
  -117
  -124
  -131
  -139
  -147

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
  332
  377
  425
  476
  529
  585
  644
  705
  770
  836
  906
  978
  1,053
  1,131
  1,213
  1,297
  1,385
  1,476
  1,571
  1,669
  1,772
  1,879
  1,991
  2,107
  2,228
  2,355
  2,487
  2,625
  2,769
  2,920
Adjusted assets (=assets-cash), $m
  332
  377
  425
  476
  529
  585
  644
  705
  770
  836
  906
  978
  1,053
  1,131
  1,213
  1,297
  1,385
  1,476
  1,571
  1,669
  1,772
  1,879
  1,991
  2,107
  2,228
  2,355
  2,487
  2,625
  2,769
  2,920
Revenue / Adjusted assets
  0.861
  0.862
  0.861
  0.861
  0.862
  0.862
  0.862
  0.862
  0.861
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
Average production assets, $m
  103
  117
  132
  147
  164
  181
  199
  218
  238
  259
  280
  303
  326
  350
  375
  401
  428
  457
  486
  517
  548
  581
  616
  652
  690
  729
  770
  812
  857
  904
Working capital, $m
  -52
  -59
  -66
  -74
  -83
  -91
  -100
  -110
  -120
  -130
  -141
  -153
  -164
  -177
  -189
  -202
  -216
  -230
  -245
  -260
  -276
  -293
  -311
  -329
  -348
  -367
  -388
  -410
  -432
  -456
Total debt, $m
  17
  36
  55
  76
  98
  121
  145
  171
  197
  224
  253
  283
  314
  346
  379
  414
  450
  487
  526
  567
  609
  653
  699
  747
  796
  848
  903
  960
  1,019
  1,081
Total liabilities, $m
  136
  155
  175
  195
  217
  241
  265
  290
  316
  344
  372
  402
  433
  465
  498
  533
  569
  607
  646
  686
  728
  772
  818
  866
  916
  968
  1,022
  1,079
  1,138
  1,200
Total equity, $m
  196
  222
  250
  280
  312
  345
  379
  416
  453
  493
  534
  576
  620
  666
  714
  764
  816
  869
  925
  983
  1,044
  1,107
  1,172
  1,241
  1,312
  1,387
  1,465
  1,546
  1,631
  1,720
Total liabilities and equity, $m
  332
  377
  425
  475
  529
  586
  644
  706
  769
  837
  906
  978
  1,053
  1,131
  1,212
  1,297
  1,385
  1,476
  1,571
  1,669
  1,772
  1,879
  1,990
  2,107
  2,228
  2,355
  2,487
  2,625
  2,769
  2,920
Debt-to-equity ratio
  0.090
  0.160
  0.220
  0.270
  0.310
  0.350
  0.380
  0.410
  0.430
  0.460
  0.470
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.620
  0.630
Adjusted equity ratio
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -41
  -44
  -48
  -52
  -57
  -61
  -66
  -71
  -76
  -81
  -86
  -92
  -98
  -104
  -110
  -117
  -124
  -131
  -139
  -147
Depreciation, amort., depletion, $m
  23
  25
  27
  29
  31
  33
  35
  38
  40
  42
  34
  37
  40
  43
  46
  49
  52
  56
  59
  63
  67
  71
  75
  80
  84
  89
  94
  99
  105
  110
Funds from operations, $m
  2
  1
  1
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
Change in working capital, $m
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Cash from operations, $m
  9
  8
  8
  8
  8
  7
  7
  6
  6
  5
  4
  4
  3
  2
  2
  1
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -13
Maintenance CAPEX, $m
  -11
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -71
  -75
  -80
  -84
  -89
  -94
  -99
  -105
New CAPEX, $m
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
Cash from investing activities, $m
  -24
  -27
  -29
  -32
  -35
  -37
  -40
  -43
  -47
  -50
  -54
  -56
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -90
  -95
  -100
  -106
  -111
  -118
  -123
  -130
  -137
  -144
  -152
Free cash flow, $m
  -15
  -18
  -21
  -24
  -27
  -30
  -34
  -37
  -41
  -45
  -49
  -53
  -57
  -61
  -66
  -71
  -76
  -81
  -87
  -92
  -98
  -104
  -111
  -117
  -124
  -132
  -139
  -147
  -155
  -164
Issuance/(repayment) of debt, $m
  17
  18
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  32
  33
  35
  36
  37
  39
  41
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
Issuance/(repurchase) of shares, $m
  46
  50
  54
  59
  63
  68
  72
  77
  82
  87
  81
  87
  93
  98
  105
  111
  117
  124
  131
  139
  147
  155
  163
  172
  182
  191
  202
  212
  224
  236
Cash from financing (excl. dividends), $m  
  63
  68
  74
  80
  85
  91
  96
  102
  108
  114
  110
  117
  124
  130
  138
  146
  153
  161
  170
  180
  189
  199
  209
  220
  232
  243
  256
  269
  283
  298
Total cash flow (excl. dividends), $m
  48
  51
  53
  56
  58
  61
  63
  65
  68
  70
  61
  64
  66
  69
  72
  75
  78
  81
  84
  87
  91
  95
  99
  103
  107
  112
  117
  122
  128
  133
Retained Cash Flow (-), $m
  -46
  -50
  -54
  -59
  -63
  -68
  -72
  -77
  -82
  -87
  -81
  -87
  -93
  -98
  -105
  -111
  -117
  -124
  -131
  -139
  -147
  -155
  -163
  -172
  -182
  -191
  -202
  -212
  -224
  -236
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
  2
  1
  -1
  -3
  -5
  -7
  -9
  -12
  -14
  -17
  -20
  -23
  -26
  -29
  -33
  -36
  -40
  -44
  -48
  -52
  -56
  -60
  -65
  -70
  -74
  -80
  -85
  -90
  -96
  -102
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
  2
  0
  -1
  -2
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -8
  -7
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
  -1
Current shareholders' claim on cash, %
  97.4
  94.9
  92.7
  90.5
  88.5
  86.7
  84.9
  83.2
  81.6
  80.0
  78.7
  77.5
  76.3
  75.1
  73.9
  72.8
  71.7
  70.6
  69.5
  68.5
  67.5
  66.5
  65.6
  64.6
  63.7
  62.8
  61.9
  61.0
  60.1
  59.3

LivePerson, Inc. (Liveperson) is a provider of mobile and online business messaging technologies that power digital communication between brands and consumers. The Company's segments include Business and Consumer. The Business segment enables brands to leverage its cloud-based LiveEngage's intelligence engine. The Consumer segment facilitates online transactions between independent service providers (Experts) and individual consumers (Users) seeking information and knowledge for a fee through mobile and online messaging. The Company's platform, LiveEngage, enables businesses to create a meaningful connection with consumers by offering messaging as a preferred channel of communication. The Company's products and services include LiveEngage, Professional Services and Consumer Offering. As a cloud computing or software-as-a-service (SaaS) provider, LivePerson provides solutions on a hosted basis. LiveEngage enables the combination of real time on-site data and off-site behavioral data.

FINANCIAL RATIOS  of  LivePerson, Inc. (LPSN)

Valuation Ratios
P/E Ratio -60.3
Price to Sales 7
Price to Book 11.4
Price to Tangible Book
Price to Cash Flow 62.7
Price to Free Cash Flow 120.6
Growth Rates
Sales Growth Rate -6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.7%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
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 -11.7%
Ret/ On Assets - 3 Yr. Avg. -8.7%
Return On Total Capital -17.2%
Ret/ On T. Cap. - 3 Yr. Avg. -12.1%
Return On Equity -17.2%
Return On Equity - 3 Yr. Avg. -12.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 71.7%
Gross Margin - 3 Yr. Avg. 72.4%
EBITDA Margin -0.4%
EBITDA Margin - 3 Yr. Avg. 2.5%
Operating Margin -8.5%
Oper. Margin - 3 Yr. Avg. -5%
Pre-Tax Margin -9%
Pre-Tax Margin - 3 Yr. Avg. -5.3%
Net Profit Margin -11.7%
Net Profit Margin - 3 Yr. Avg. -8.6%
Effective Tax Rate -30%
Eff/ Tax Rate - 3 Yr. Avg. -68.8%
Payout Ratio 0%

LPSN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LPSN stock intrinsic value calculation we used $250 million for the last fiscal year's total revenue generated by LivePerson, Inc.. The default revenue input number comes from 0001 income statement of LivePerson, Inc.. 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 LPSN stock valuation model: a) initial revenue growth rate of 14.5% 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 LPSN is calculated based on our internal credit rating of LivePerson, Inc., 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 LivePerson, Inc..
    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 LPSN stock the variable cost ratio is equal to 108%.

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 LPSN 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 LivePerson, Inc..

Corporate tax rate of 27% is the nominal tax rate for LivePerson, Inc.. 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 LPSN 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 LPSN are equal to 35.9%.

Life of production assets of 8.2 years is the average useful life of capital assets used in LivePerson, Inc. 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 LPSN is equal to -18.1%. 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 - $170.729 million for LivePerson, Inc. - 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 63.837 million for LivePerson, Inc. 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 LivePerson, Inc. at the current share price and the inputted number of shares is $1.7 billion.

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