The Synopsis Dialogue. CoStar and Evolution 1Q25 Update, Negative EU Growth, S&M at 50% of Revenues
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May 1, 2025 The discussion kicks off with a deep dive into reverse discounted cash flow analysis and the intricate assumptions that affect financial modeling. A seasoned investor shares unique philosophies on tech investing and the psychological dynamics of decision-making. CoStar's earnings reveal contrasting marketing strategies and the challenges of sustainable growth. Board changes and their influence on corporate governance take center stage, alongside an intriguing look at marketing strategies comparing them to military tactics. Lastly, regulatory impacts in the gaming industry are explored, emphasizing the balance between growth and compliance.
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Understanding Reverse DCF Models
- Reverse DCF models require only a few key assumptions like margin and revenue growth to be effective.
- They help understand market pricing without fully relying on precise valuation.
Champagne Glass Tower Analogy
- William DeGale used a champagne glass tower analogy for tech investing.
- He pioneered focusing on 'picks and shovels' long before AI hype emerged.
CoStar’s Sales & Marketing Debate
- CoStar’s 50% sales and marketing spend yields only moderate 12% growth, raising margin sustainability doubts.
- Clarifying what portion fuels growth vs. maintenance spending is crucial for valuation.