Our 1-yr $346 TP uses a ‘discounted EV’ exercise to calculate intrinsic value based on our forecasted operating profile of the business 4-5 years from now. The calculated EV implies an EV/FCF multiple of ~31.3x FY28E FCFE of ~$2.71B discounted to a year forward at an 10% discount. The framework that informs our valuation is based off a regression analysis of trading multiples and free cash flow margins of companies across the software universe.

Downside risks that could push the stock below our target price:
1. Macro (Inflation & Supply Chain Issues) to persist longer and more severe than expected;
2. Transition to annual contract and M&A transactions fail to drive double-digit FCF CAGR into FY26; and
3. The contribution from conversion of Non-Compliant user base is prolonged and not achieving the expected contribution to growth.