We apply a growth-adjusted EV/S ratio to our forecasts to yield our price target given TEAM’s ~20%+ top-line growth levels and, more importantly, 20s-30%+ Cloud growth levels that we think are sustainable via multiple vectors through CY28. We adjust this ratio vs. current levels to account for qualitative factors such as quality / consistency of sales execution, competitive positioning, and profitability expansion (“Rule of 40” benchmark). Our $355 target price is based on ~0.5x EV/S/G ratio on our CY25-CY28E revenue CAGR of 22%, which implies a ~12x exit multiple. We apply this ~12x target multiple on our CY28E, and discount back to CY25E at 10% to yield this 12-month target price. Our target ratio is ~in-line with the current CY23-26E based EV/S/G ratio, reflecting our balanced views on estimate upside, with more caution in the near-term as TEAM navigates migration dynamics, but more confidence in the medium- to long-term given the robust cloud adoption trends we believe TEAM is well positioned to capitalize on. This also considers investor focus on Cloud/subs growth specifically, which is outgrowing total reported revenue by ~5-10pts, on account of total revenue optics pressured by the impacts of the on-premise product sunset. Finally, this also reflects TEAM’s ability to maintain >40% “Rule of 40” standing (growth + FCF margin) as we expect FCF margins to sustain ~25%+ levels.

Downside risks to our target price include: 
1) Pricing hike fatigue – TEAM has benefitted from consistent ~5-20% pricing increases across its core suite of products (~23-24% for Data Center in Jan’25) over the past several years, which have favorably impacted revenue growth, and which could see customer pushback in tighter macro / IT spending conditions. 
2) Collaboration end-market becoming more crowded – TEAM’s foray into “general purpose” collaboration amongst knowledge workers (Trello) could see pricing and GTM competition from platforms catering specifically to business users for whom a simpler UX/UI is key. 
3) Tools fragmentation in DevOps slows wallet/mind share consolidation – TEAM’s core developer-focused markets for software development solutions continue to see the onslaught of new commercial and emerging OSS tools, which could hamper its pace of monetization and potentially require more S&M investments and risking margins.