Arny Trezzi
Independent Investor, Former Equity Analyst, Asymmetric Opportunities
Bending Spoons' acquisition economics make its valuation look better than a rigid P/E cutoff suggests. It pays 2-3x revenue for targets and often earns back the investment in a couple of years, putting its effective P/E below 10x by this reckoning. At $33, the stock is about 12x estimated 2027 adjusted EBIT; the principle is buying below intrinsic value, not blindly rejecting anything above 10x earnings. x.com x.comÂ
Bending Spoons' value comes from the free cash flow per share it generates, and running acquired apps with 20 people instead of 400 on a shared platform proves its cost synergies. Tools like Minerva for user lifetime value and Janus for experimentation get more accurate with each acquisition's data, improving both future M&A and operations. Evernote and StreamYard growing at 20-30% of prior headcount show it can achieve organic growth at minimal cost; dropping NRR reporting matters less. x.com x.com x.comÂ
Bending Spoons is a unique model of buying cheap, forgotten software businesses and cutting costs that could scale past $20B of annual revenue, but it is hard to forecast. The biggest red flag is organic growth slowing from low double digits to low single digits, raising pressure on its debt-fueled acquisition strategy, since layoffs are one-time boosts with large severance costs. Strong net revenue retention may rely on price hikes; churn after two or three years is the key question. x.com … Show more
Procore Technologies looks cheap at 18x adjusted earnings and 3.5x revenue for what is probably a top-five private equity software target. Data center construction builds a mechanical case for revenue acceleration that starts flowing through in the next 12 months. x.com x.comÂ
Bending Spoons' equity is not a good investment at a double-digit revenue multiple. Its management may be good value investors, but paying that multiple is like buying Strategy at twice net asset value. x.com x.comÂ
Constellation Software and its spin-offs Lumine Group and Topicus.com are among the few software companies run for shareholders' benefit, which assures a good outcome if they are bought at modest valuations. Under 20 times earnings is reasonable, but no more. x.com x.comÂ
Bending Spoons' growth is bought on credit, while Constellation Software can deleverage quickly, and valuations should eventually reflect that. Both grow just 3-5% organically, and Bending Spoons' organic rate halved twice (13% to 6% to 3%). Yet Bending Spoons trades at 19x FY25 sales versus 3.8x, with net debt at 3.1x revenue versus 0.2-0.4x and interest at 11% of revenue versus 2.6%. Bending Spoons needs the next deal to pay for the previous one. x.comÂ
Bending Spoons looks expensive at 14x revenue for a digital tobacco business whose portfolio is a fast-melting ice cube. The model could work given the endless supply of failed VC-backed apps with deeply loyal customers to buy and raise prices on, and Bending Spoons may lever up to take out some very big names. Yet the market does not credit existing SaaS companies with the same ability to raise prices on locked-in customers. x.com x.comÂ
Bending Spoons is not compelling because so much of its strategy is M&A, at a magnitude far beyond the typical. It made roughly 17 acquisitions over the past five years versus 3 for Broadcom, a count that may be off but is directionally right. M&A is not bad in itself, and Bending Spoons beats Accenture and Constellation Software among acquisition-led names, but there are better opportunities. x.com x.comÂ
AI's ability to remove friction from cancellations is likely to be a big part of Bending Spoons' undoing. Its model buys expiring software and raises prices, depending on customers staying despite that. The damage will not play out in a day; the company needs later and larger acquisitions to keep the story going. x.comÂ
