Bending Spoons is a debt-funded serial acquirer that went public in July. Its name is a nod to psychic powers, but the real hocus-pocus is in the company's numbers.

The Milan-based company has been hoovering up fading digital-subscription and software companies for years, including AOL, Evernote and Vimeo. Its shares are up 37% since the initial public offering, and its stock-market value is about $28 billion. That is almost 14 times its revenue over the last four quarters and more than 100 times earnings.

While that earnings multiple reflects official results, management also directs investors to nonstandard versions that make earnings look bigger and the valuation appear lower. Among the biggest add-backs is amortization. This is the book expense to gradually write down the value of its customer base and other acquired intangible assets.

If ever a company illustrated the pitfalls of ignoring amortization, Bending Spoons is it. Many of its holdings fit the definition of a melting ice cube. Ignoring amortization is akin to pretending the ice cube hasn't gotten smaller. Revenue growth mainly comes from new acquisitions or price hikes. The latter can produce a quick cash-flow boost, but may not be sustainable.

Evernote, a note-taking app acquired in 2023, was among the holdings Bending Spoons profiled in its IPO prospectus. Evernote's revenue was 30% higher in 2025 than in 2022, and during that time average revenue per monthly active user rose 150%. What the prospectus didn't say: Those figures meant the number of users fell 48%. Revenue rose through price increases as the customer base shrank.

Investors in serial acquirers have seen this before. A decade ago, pharmaceutical roll-ups like Valeant convinced analysts to exclude amortization from their alternative earnings metrics, even on newly bought drug patents near expiration. That ignored the cost to buy declining assets and replace the earnings stream after it was gone.

For 2025, Bending Spoons reported a net loss of under $1 million, while its adjusted net income was about $402 million. The add-backs included $151 million for amortization and impairment of acquired intangibles, plus an additional $151 million for "other items not indicative of core or ongoing operating performance."

For the second quarter of 2026, net income was $177 million. Adjusted net income was about $293 million. It added back $82 million of amortization and impairment expense, plus $51 million of "reorganization-related expense," such as severance payments to employees Bending Spoons fired after acquiring their companies.

The clearest sign that Bending Spoons' holdings are melting is a metric in its IPO prospectus called net revenue retention. Broadly speaking, anything less than 100% means a chunk of the subscription revenue from the previous year went away.

For 2025, using the company's definition, the figure was 95%, compared with 91% a year earlier and 93% in 2023. For the first quarter of 2026, it was 94%. Bending Spoons stopped disclosing the figure after the IPO and didn't give one for the second quarter of 2026.

Chief Executive Luca Ferrari in an email said the company limited its key performance metrics to those it believes "are most useful for evaluating the company's performance over time." He said net revenue retention has improved and "is now in the high 90s," without being more specific. That would mean existing subscriber revenue continues to shrink year-over-year.

In its prospectus, Bending Spoons said its definition isn't meant to be "a measure of continuous revenue generation from a customer cohort." But normally that is the point of retention metrics. Such figures typically start with a fixed group of paying customers from 12 months prior and calculate the subsequent change in revenue from that same group.

Notably, Bending Spoons included customers who were nonpaying during the year-earlier base period. This helps the numerator by adding newly converted revenue. To get annual figures, Bending Spoons said it averaged four quarterly percentages, a method that can smooth out big swings in churn, rather than dividing one full-year revenue number by another.

While second-quarter revenue grew 126% from a year earlier, Bending Spoons said organic revenue growth was 3%. Even that modest figure comes with a twist. Companies often measure organic growth using only businesses owned for at least 12 months. Bending Spoons includes companies it has owned for less time. This means steep price hikes implemented shortly after an acquisition are counted as organic growth.

Bending Spoons will need to borrow more to keep growing by acquisition, and without rapid growth its lofty earnings multiple is prone to contracting. On Thursday the company said it agreed to buy software maker Miro in a deal that values the equity at $1.8 billion, a small fraction of its peak valuation.

Bending Spoons' debt was $4.9 billion as of June 30. That was almost four times its equity, and more than five times where its debt stood at the end of 2024. A $1.8 billion loan from 2025 carries a steep 9.4% interest rate. In July, it borrowed 500 million euros (about $570 million) under a new term loan, without disclosing the rate.

The main concern for investors at this point should be about valuation and growth prospects if funding for acquisitions gets harder to come by. The trajectory for market interest rates is higher, not lower. The higher they go, the more pressure Bending Spoons will face to hit pause on its roll-up play. That's when the magic stops.