2 Comments
User's avatar
High Water's avatar

The backlog cover dropping from nine quarters to 6.6 is the number I keep coming back to, because revenue can stay hot for a while even as the refil slows. The RPO being flat at $4.9 billion for the first time since early 2023 makes that harder to wave away. At $430 billion, do you think the market is simply betting the TCV slowdown is a one quarter air pocket, or has it just stopped pricing the leading indicators at all?

MoatPeak Investing's avatar

Probably neither, exactly. At 88 times this year's free cash flow guidance, the stock is pricing in roughly four to five years of 30% to 40% growth on our math, so one quarter of bookings barely moves it. The market tends to wait for revenue to show a slowdown, and with 6.6 quarters of backlog, revenue can stay strong well into next year. That's why February matters. If US commercial TCV comes in near $1.5bn again, it gets hard to call it an air pocket.