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That still doesn't make sense. In this case, the "continuing revenue" is deliberately artificial and strictly worse than the upfront payment. To the extent that
by SilasX 4y ago
That still doesn't make sense. In this case, the "continuing revenue" is deliberately artificial and strictly worse than the upfront payment. To the extent that your valuation "likes" the latter in such a case, that valuation method is predictably, avoidably flawed, and will be outcompeted by non-goldfish-attention-span valuation methods.
- Closi 4y agoThe assumption is that the subscription will continue past the initial term for some % of users.
- parkingrift 4y agoRecurring revenue is worth 7-15x. One-time revenue is worth 1-3x. I could rant for hours on how absurd this is, but it’s better to just abuse it. You know mba and finance people are idiotically valuing revenue in this way. So game it.
- the_optimist 4y agoThey’re not.