Probably Australia's best tech company in US$34 billion (A$48.9b) giant Atlassian just reported an adjusted or non-GAAP profit of US$55.9 million on revenue of US$334.6 million for the quarter ending June 30, 2019. The software-as-a-service giant also reported free cash flow of US$98.2 million over the quarter, up 52% on the prior corresponding quarter.
However, on a GAAP reporting standard (i.e. not backing out certain one offs, or costs) the group reported a net operating loss of US$32.4 million and when you include non-cash impairments on the value of tax assets and adjustments to the value of convertible notes the group booked a whopping US$237.5 million loss.
For financial year 2020 the group is forecasting another GAAP loss around 22 cents per share, or on an adjusted basis a profit around a $1 per share on revenue forecast to come in between US$1,540 million to US$1,556 million. A $1 per share adjusted profit would total around US$244 million given it expects to have around 244 million shares on issue.
It also shows us that the company is trading on around 134x its own guidance for forward earnings based on a US$134 share price.
The company finished the quarter with cash in hand or cash equivalents worth US$1.7 billion.
It also boasted it now has more than 152,000 customers using its online software products and expects subscription revenue will grow over 40% in FY 2020.
Atlassian is a textbook example of the rampant growth of cloud-based software-as-a-service businesses in the US and Australia over the last 12 months. Others that have been rocketing in value include Splunk, Okta and Shopify in the US, with the ASX boasting the likes of Xero Limited (ASX: XRO) and Wisetech Global Ltd (ASX: WTC).
Some professional money managers argue their valuations are in 'bubble' territory, while others argue their underlying economics and compound growth potential justifies the valuation. The truth could be somewhere in the middle!
