Mostly Growth The End of Revenue Multiples (And What Matters Now)
Mar 27, 2026
They debate why revenue multiples are losing relevance and why EBITDA and DCF matter more now. They walk through how interest rates, gross margins, and AI-driven uncertainty reshape valuations. They explore valuation methods, the shift toward profitability, and the trade-offs companies face when adopting AI.
AI Snips
Chapters
Transcript
Episode notes
Terminal Value Is Where The Magic Used To Hide
- DCF valuations concentrate most value in a terminal value bucket, so investors now doubt that many growth companies will reach the profitable terminal assumed pre-AI.
- CJ warns AI threatens those long-range cash flows, collapsing the terminal value many revenue-multiple stories relied on.
Gross Margin Determines If Revenue Means Anything
- Gross margin materially changes whether revenue is a valid proxy for future cash flow; low gross-margin AI businesses may never hit the high EBITDA margins revenue multiples imply.
- CJ contrasts 50% gross margin AI-inference-heavy businesses with classic 80–85% software gross margins.
Run A Credible DCF On Your Own Company
- Do a credible DCF for your own company to see how much value sits in terminal assumptions and whether investors will buy your moat story.
- CJ suggests this internal exercise reveals levers you can pull to improve valuation or pivot story to EBITDA.