Model N, Inc. (MODN) | Investment Case

1. Company Snapshot

1.a. Company Description

Model N, Inc.provides cloud revenue management solutions for life sciences and high-tech companies.The company offers Global Pricing Management, which minimizes price erosion of products; Global Tender Management that enhances revenue by enabling segmentation and targeting, optimal bid pricing, and post-award tracking; Provider Management, which minimizes rebate overpayments; Payer Management that minimizes revenue leakage and noncompliance of complex contracts; Government Pricing, which optimizes revenue, and reduces the risk of fines and other penalties; and Medicaid that enhances compliance with regulatory requirements and payments of rebate claims timely, as well as at correct rates for government medicaid programs.

It also provides Deal Management, which increases deal conversion and pricing consistency; Deal Intelligence that controls price concessions and determines ideal prices; Channel Management, which provides manufacturers a view of inventory, as well as evaluate price protection and stock rotation, and matching available inventory to quotes; Market Development Fund Management that allows companies to streamline their MDF process and reduce revenue leakage; Rebates Management, which centralizes control of rebate programs; and Channel Data Management that automates the process of collection, cleansing, validation, and standardization of channel partner data, such as POS, inventory, and claims.In addition, the company offers implementation, managed, strategic, and customer support services.It primarily serves large and mid-sized organizations worldwide through its direct sales force.

The company was incorporated in 1999 and is headquartered in San Mateo, California.

Show Full description

1.b. Last Insights on MODN

Model N, Inc. experienced a 20.0% performance over the past 3 months, driven by a combination of factors. The company's acquisition by Vista Equity Partners for $1.25 billion and its strong top-line expansion, despite missing earnings estimates, contributed to the stock's growth. Additionally, the company's healthy demand for revenue management solutions across various industries and its positioning for sustained growth and market leadership in the years to come, further supported the stock's performance.

1.c. Company Highlights

Last Price	30
Change Percentage	0.10%
Open	29.98
Previous Close	29.97
Market Cap ( Millions)	1183
Volume	1508202
Year High	35.78
Year Low	20.9
M A 50	29.82
M A 200	26.62

FCF Yield	1.96%
Dividend Yield	0.00%
ROE	-27.13%
Debt / Equity	252.48%
Net Debt / EBIDTA	-74.27%
Price To Book	9.89
Price Earnings Ratio	-33.68
Price To FCF	51.09
Price To sales	4.74
EV / EBITDA	88.58

2. Transcript Summary

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3. NewsRoom

Model N Launches Data nSights: Real-Time Analytics to Drive Action and Optimize Net Revenue

Dec -02

Source: globenewswire.com

Where Will Tesla Stock Be in 5 Years?

Apr -25

Source: fool.com

Model N Celebrates 25 Years of Revenue Optimization and Compliance Leadership and Launches Registration for Rainmaker Industry Event

Jan -22

Source: globenewswire.com

Model N Appoints New Chief Executive Officer, Bret Connor

Jan -06

Source: globenewswire.com

Model N (MODN) Unveils Advanced Solutions for Pharma Industry

Jun -12

Source: zacks.com

Model N Introduces Two Cutting-Edge Data Solutions, Syndicated Customer Master and Formulary Compliance

Jun -11

Source: globenewswire.com

Model N Named one of Fortune Media and Great Place to Work ® 2024 Best Workplaces in the Bay Area

Jun -10

Source: globenewswire.com

PRESSING INVESTIGATION: The M&A Class Action Firm Investigates Merger and Imminent Vote on June 18, 2024, of HomeStreet, Inc. - HMST

Jun -05

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.00%)

6. Segments

Subscription

Expected Growth: 7%

Model N, Inc.'s subscription growth is driven by increasing adoption of cloud-based revenue management solutions, expansion into new industries, and growing demand for digital transformation in the high-tech and life sciences sectors. Additionally, the company's strategic partnerships, innovative product offerings, and strong sales execution are contributing to its rapid growth.

Professional Services

Expected Growth: 7%

Model N's Professional Services segment growth is driven by increasing adoption of cloud-based revenue management solutions, expansion into new industries, and growing demand for digital transformation services. Additionally, strategic partnerships, cross-selling, and upselling opportunities with existing customers contribute to the 7% growth rate.

7. Detailed Products

Revenue Cloud

A cloud-based revenue management platform that helps companies manage their revenue lifecycle, from pricing and quoting to contracting and billing.

Channel Data Management

A solution that helps companies manage their channel data, including partner relationships, pricing, and inventory.

Pricing and Quoting

A solution that enables companies to manage their pricing and quoting processes, including price optimization and discount management.

Contract and Compliance

A solution that helps companies manage their contracts and compliance requirements, including contract lifecycle management and revenue recognition.

Analytics and Insights

A solution that provides analytics and insights to help companies optimize their revenue management processes, including data visualization and predictive analytics.

8. Model N, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Model N, Inc. operates in a niche market, providing revenue management and quoting solutions to companies. While there are some substitutes available, they are not as comprehensive as Model N's offerings, reducing the threat of substitutes.

Bargaining Power Of Customers

Model N, Inc.'s customers are primarily large enterprises, which reduces their bargaining power. Additionally, the company's solutions are often customized to meet the specific needs of its customers, making it difficult for them to switch to alternative providers.

Bargaining Power Of Suppliers

Model N, Inc. is not heavily dependent on a few key suppliers, reducing the bargaining power of its suppliers. The company's solutions are primarily based on its own intellectual property, further reducing its reliance on external suppliers.

Threat Of New Entrants

The revenue management and quoting solutions market is highly specialized, requiring significant expertise and resources to enter. This creates a barrier to entry for new entrants, reducing the threat of new competition.

Intensity Of Rivalry

While there are some competitors in the revenue management and quoting solutions market, Model N, Inc. has established a strong presence and has a loyal customer base. However, the company still faces competition from other established players, maintaining a moderate level of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	71.63%
Debt Cost	3.95%
Equity Weight	28.37%
Equity Cost	7.34%
WACC	4.91%
Leverage	252.48%

11. Quality Control: Model N, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

SmartRent

A-Score: 3.9/10

Value: 8.6

Growth: 5.2

Quality: 4.0

Yield: 0.0

Momentum: 3.5

Volatility: 2.0

1-Year Total Return ->

8x8

A-Score: 3.8/10

Value: 7.1

Growth: 5.6

Quality: 3.1

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

1-Year Total Return ->

Waldencast

A-Score: 3.5/10

Value: 7.4

Growth: 2.7

Quality: 3.9

Yield: 0.0

Momentum: 5.5

Volatility: 1.7

1-Year Total Return ->

MeridianLink

A-Score: 3.4/10

Value: 3.9

Growth: 4.6

Quality: 3.5

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

1-Year Total Return ->

Future FinTech

A-Score: 3.4/10

Value: 9.8

Growth: 2.7

Quality: 7.0

Yield: 0.0

Momentum: 1.0

Volatility: 0.0

1-Year Total Return ->

Model N

A-Score: 3.2/10

Value: 2.4

Growth: 4.8

Quality: 4.0

Yield: 0.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.67%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.91%

Model N, Inc. - US6075251024

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on MODN

1.c. Company Highlights

Expensive

Stable Momentum

Medium Volatility

Earnings Miss

Revenues Beats

Average Quality

Less Volatile

Fairly Valued

Average Yield

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.00%)

6. Segments

Subscription

Expected Growth: 7%

Professional Services

Expected Growth: 7%

7. Detailed Products

Revenue Cloud

Channel Data Management

Pricing and Quoting

Contract and Compliance

Analytics and Insights

8. Model N, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Model N, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

30.0$

Current Price

30$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA