Strategisk analyse og værdiansættelse af Pleo

Abstract

This master thesis aims to estimate the fair value of the Danish fintech-company Pleo, a fast-growing software-as-a-service (SaaS) provider specializing in automated expense management. The valuation is carried out through a dual-method approach combining a fundamental DCF-model with a relative valuation based on EV/revenue-multiple. To establish a robust foundation, the valuation is based on a strategic analysis to address the external factors and an in-depth financial analysis focusing on SaaS-metrics, which has been used to forecast the 10-year explicit period for Pleo. Due to the technological development the software expense management industry is expected to reach a 13 % CAGR. However, competition is high with several international companies, and the potential threat of market entry from the major software firms such as SAP. The fintech-industry is a part of the financial sector, which is one of the most regulated industries in the world, and being compliant with legislation is imperative. EU is attempting to support this operational hurdle through its Digital Finance Strategy, which aims to align regulations across the EU. Lastly, the strategic analysis identifies Pleo's value drivers as focus on including AI, focus on data security and regulatory compliance, integration with financial systems, increased use of cloud-based solutions and real-time reporting. The profitability analysis shows that Pleo has experienced massive growth since 2018. NOPAT have been negative due to the rapid expansion. However, Pleo has always demonstrated profitable growth with high ARR and NRR growth and a CAC payback period of 12-18 months. Growth is expected to continue for several years, after which the focus will shift toward higher EBITDA margins and lower invested capital. The DCF-model is used as the primary model to estimate the fair value of Pleo. Since Pleo and its closest competitors are unlisted companies with limited data availability, estimating WACC - and in particular beta - is a challenging task with many assumptions. The fair value of Pleo is determined at 11.025 billion DKK with 72,5 % of the value coming from the terminal period. The sensibility analysis finds that the model is very highly sensitive to changes in WACC and terminal growth and because of that combined with the many assumptions, the results should be viewed with caution. The EV/revenue-multiple is the only applicable multiple due to negative earnings. Since there are no truly comparable listed companies on the public market, industry averages from SaaS companies are used as peer-group. This led to a 10,9x multiple and a value of 10.404 billion DKK. Even though the selected peers do not fully meet the fundamental principle that two identical assets should be valued at the same price, the conclusion is to rely on using multiples when valuing SaaS-based growth companies like Pleo in practice, as they serve as a more realistic and valuable alternative.