Run the Numbers
00:21:44 · CJ Gustafson
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00:22:41 · CJ Gustafson
[00:22:41] S0: Does this playbook actually work? I'm so glad you CJ. Well, here's the question I most wanted answered in the s one. On a like for like basis, once a business has been inside Bending Spoons for a year or two, is it actually any better? Or does it just look better because they keep buying new toys? Well, Evernote is the cleanest evidence that the Playbook is legit. They acquired it in January 2023. They cut the team from 341 people to 60, an 82% reduction in force. They flattened management from four layers to two. They tore the monolithic code base into micro services and moved it to an event driven model, which dropped IT infra expense as a percentage of revenue by 47% in 2025 versus 2022. Not bad. Grew product releases 50% in 2023, then doubled them in 2024 with a smaller team. Grew revenue, improved profitability, and now post the highest net revenue retention in the portfolio at 99%. So, yeah, that worked. And then you got Rimini. It's the growth proof point. They were acquired in 2021 and rebuilt from scratch. And by 2025, it served more than five x the monthly active users of its pre acquisition self. It generated more than nine x the revenue and grew average revenue per user 50% even as the user base grew fivefold. Oh, and they hit six viral spikes as the team engineered on purpose using their own marketing screening tools. Oh, AI. Forgot about AI. The engine under all of this is AI and it cuts in three directions at once. So first, it's their sharpest tool for operating leverage because inside their own engineering org, the share of pull requests authored or co authored by AI went from 10% in q one of twenty twenty five to over 90% a year later, with roughly 70% written by AI alone. And revenue per Spooner more than doubled from 1,120,000 to 2,570,000 in two years. So that's how 286 new hires run a portfolio of serving 8,000,000,000 people. Second, it decides whether the things they buy survive. Some of the portfolio gets supercharged by AI. Rimini is an AI app, and photo and video editing get more and more valuable as the models improve. But some of it sits directly in the blast radius. So note taking now competes with ChatGPT Notion, tough comp set there. File transfer is a feature rather than a product. Third, and this is the clever part. AI is also their deal pipeline.
00:24:52 · CJ Gustafson
Their pitch is that is more owners watch AI threaten their business and realize they can't keep up. More of them sell, valuations come down, and the targets get cheaper. So the same force that threatens the assets they already own also kinda refills the shopping cart, which is funny. And that works as long as Bending Spoons is always the buyer and never the bot. If you never have to sell, you never have to catalyze a final price. In the meantime, the market will weigh you daily. So the playbook seems very real. I was underwhelmed by the revenue growth, but pleasantly surprised by the cost savings. And the open question isn't whether they can fix a business, it's whether the business they can buy will still exist in their current form in five years. Let's talk about the debt engine they've got. It's pretty large. So operating cash flow doesn't fund the acquisitions, debt and equity do. In 2025, Bending Spoons threw off 291,000,000 of operating cash and spent 1,850,000,000 on investing, almost entirely acquisition. The 1,500,000,000 gap got plugged with 1,940,000,000 of financing. In q one of twenty twenty six, they deployed another 1,650,000,000 and raised 1,740,000,000 to do so. Across 2023 through q one twenty twenty six, they put roughly 4,600,000,000 to work buying companies against a few 100,000,000 a year of internally generated cash. The fuel is this stack of term loans. They tap the term loan a market repeatedly. They added a 710,000,000 facility in 2024, 925 and 350 in 2025, two more, and I think these are euros, $476,000,000 tranches, then a fresh 950,000,000 and 300,000,000 in January. I'm not even gonna read the rest. These folks got a lot of debt, but they have a lot of capacity. Right? They have undrawn revolvers, which sounds like a weapon. So there's dry powder for the next deal. The cost of all that leverage is now compounding faster than the business. So I mentioned interest expense grew 337% in 2025. They paid a 143,000,000, just interest expense, and 382 percent year over year if you look at q one of twenty twenty They paid 93,000,000 in interest expense in the first quarter, and that was against revenue growth of 95% and a 132. So 2025 interest ate 51% of operating income. Q one of twenty twenty six ate 78% of operating income.
00:27:02 · CJ Gustafson
Annualize that q one interest run rate, and you're looking at roughly 370,000,000 of interest a year, a number that grows every time they sign another term loan to fund another acquisition. Right? Double edged sword. On the equity side, the capital came from a tight cap table actually. The largest outside holder is Galileo Quartrucci, a Luxembourg vehicle alongside Bailey Gifford. I've heard of them. And a long tail of co founders and early backers. So Goldman led the 710,000,000 raise at 11,700,000,000 last October. That put some cash in the balance sheet. Let's talk about some red flags here. So they told the SEC their accounting controls have material weaknesses, multiple material weaknesses. The filing cites an absence of clearly defined structures and accountability, limited SEC reporting experience, insufficient socks and gap expertise, lack of segregation of duties, and weak controls over journal entries across all financial statements. By the way, they explicitly say the acquisition driven strategy and constant integration of new businesses increased the complexity and contributed to the weaknesses. So their unaudited q one statements were filed as, quote, restated. So for, like, a company whose entire model is buying, consolidating other companies in their books, they're saying we can't reliably consolidate the books. That isn't a small disclosure. So safe to say they won't be acquiring any accounting software soon. Maybe they should. Maybe they should. Next potential red flag. The pro form a combined numbers come with a confession. So to show you what the portfolio looks like with AOL, Eventbrite, Vimeo fully baked in, they built unaudited pro form a combined financials. And they wrote out loud that this information does not reflect our actual results of operations or financial condition and is not representative of our future results. What? Number three, app store dependency. A meaningful slice of distribution marketing and payment collection runs through Apple and Google who take that 15 to 30% vague and can change his rules whenever they like. Number four, no long term customer contracts. They generally don't have them. This is a subscription business that mostly bills month to month and consumer to consumer. The eight year average subscriber tenure is reassuring, but there's no contractual lock in holding it there.
00:29:16 · CJ Gustafson
Loyalty here is habit and brand affinity. It is not paper. It is not a contract. Number five, foreign private issuer status. So Bending Spoons will report as an FPI, which means less frequent and less extensive disclosure than a domestic US company, plus the ability to follow Italian home country governance instead of certain Nasdaq standards. For all our governance fans, if you take a step back, you're buying a foreign issuer with lighter reporting obligations and a founder control board. Oh, number six, they've never sold anything. I've said that before, but the model assumes permanent ownership of every asset, which is like elegant when the assets keep compounding, but it's also terrifying if a few of them turn out to be melting ice cubes that AI accelerates. So there's no exit value in the strategy, which means impairments, not divestitures, or how a bad deal eventually, like, catalyzes. Is this a compounding machine or a spaceship of tech debt? The honest answer is you won't know for a few years and neither will they. Let's talk about their cap table. Who owns what? Well, the four cofounders keep control through that dual class structure. Class a shares carry five votes each and are held by CEO Luca Ferrari, Matteo Donnelli, Francesco Patronello, and Luca Quarela. Ordinary shares what you would get, get one vote. So same setup as most founder led tech IPOs. Public investors get the economics, but the founders keep the wheel. The board has a name that should matter to its audience. There's someone named Robert j Mylaw junior who sits on it. He's actually the chairman of Booking Holdings and its former CFO. We like that. If you wanna signal that someone who has actually run public company finance and scale looked at this thing and was willing to put his name on the cover, there it is. The rest of the board includes coalition CEO Joshua Moda and a mix of operators and academics. The syndicate here is 14 banks deep. It's led by Goldman lead left, then they got JPMorgan and stop with European houses like UniCredit, Intesa Sanpaolo, and BNP Paribas. A roll up with a continental bench. Right on brand. How much is this thing worth? Valuing bending spoons is hard for the reason that every conglomerate is hard to value. It's it's a sum of the parts. You'd value Evernote like a sticky productivity SaaS business.
00:31:29 · CJ Gustafson
You'd value AOL like a melting but cash generating portal. Rimini like a volatile consumer app, and the whole thing like a leverage compounder. But nobody values Burke here by slapping one multiple on it. Nobody should value this on one multiple either. But the parts you'd normally guess at are unusually visible here. We know the revenue is 84% subscription. We know blended NRR is 94%. We know organic growth is 13%. We know the adjusted operating margin is 47% climbing. So the sum of the parts is hard, but it's like not completely a black box. And the reported target is roughly 20,000,000,000. So against 4,360,000,000 of debt and 741,000,000 of cash, that is about 23,600,000,000 of enterprise value. So on that basis, if you took their 2025 revenue of 1.31, that would be 18 x for revenue. If you took their TTM revenue of 1.6, it would be 15 x. If you wanna look at this on an adjusted EBITDA basis, maybe we should have been doing that all along, the CEO's guided to 1,400,000,000 of adjusted EBITDA in 2026, up from a reported 700,000,000 in 2025, which pencils to roughly 14 to 17 x EBITDA. Here's where you have to decide what you're buying. At 14 to 17 x forward adjusted, I said adjusted EBITDA, you're paying a premium roll up multiple. Constellation Software is the gold standard of software acquires and the only true comparable public name, and it trades richer than that. So the bulls will tell you that Bending Spoons is actually cheap relative to the best in show competitor. The bears would tell you that Constellation earns its multiple on decades and decades of never overpaying and never blowing up the balance sheet. And Bending Spoons is 13% organic growth, a 100% effective tax rate last year. 4,400,000,000 of fast growing debt, material weaknesses in its controls, and a habit of adding back the cost of its own business model to get that EBITDA figure. Okay. So what you're actually pricing at 20,000,000,000 is a bet that the operating machine is real. Evernote says, yeah. That AI keeps widening the productivity edge. The pull request data said maybe, and that the next 50 acquisitions are as good as the first 50 before the interest expense catches the earnings. Right? That... That's the cat and mouse game here. And it's also bet on Luca Ferrari being Henry Singleton, and Singleton was a real outlier.