Found this great post on LinkedIn about evaluating Atlassian' earning report by Michael Huchen that's worth sharing: Last week was baffled when read that Atlassian had lost USD$614 million during FY22, yet had positive operating cash flow of USD$883 million. So dived into their financials to understand this enormous difference between earnings and cash flow... At first, assumed that the USD$883 million of positive cash flow was mis-reported as operating cash flow, and was in fact net change in cash held. This would make sense, as $1.5 billion of financing cash inflows wouldn't surprise me. But it wasn't mis-reported. And the reason for the difference confirmed what l'd read in other analysis of Atlassian's valuation: They're using shares to pay staff rather than cash. Interestingly, USD$707 million (~20%) of Atlassian's expenses were non-cash share-based payment expenses, which are added back in their indirect cash flow statement when calculating operating cash flow. To further muddy things, Atlassian marked to market some exchange derivative assets during FY22, resulting in a USD$424 million book (non-cash) loss on their P&L. So, if you're trying to get a realistic indication of the profitability and cash flow of Atlassian, you really need to assume that their share-based expenses are cash expenses, and ignore non-operating expenses including this USD$424 million MTM hit. This leaves a net loss for FY22 of ~USD$190 million and positive operating cash flow of ~USD$176 million, with the difference mainly due to working capital and deferred revenue. Atlassian was also required to repay almost USD$1.6 billion of debt during FY22, for which it borrowed a fresh $1 billion of term loans. Hence, last year Atlassian effectively used banks and its employees to raise USD$1.7 billion. This is smart stuff, but also something that must be taken into account when assessing Atlassian's value as a business, especially given the 20% fall in its share price over the past 12 months, which may affect its ability to use this approach going forward. More than anything, the reporting of Atlassian as 'strongly cash flow positive' is clearly misleading, as it completely ignores the funding being provided by their employees, which is only reliable if their share price continues to rise. It also explains why Atlassian's FY22 IFRS results report a loss of USD$614 while their non-IFRS results report a profit of USD$434 million. Just a casual ~$1 billion difference! In any case, at some stage Atlassian's profitability and cash flow will have to justify their USD$68 billion market cap. And with a current adjusted operating cash yield of only 0.26% of market cap - compared to the current Fed cash rate of 2.5%- they're still a long way off doing this... #atlassian #earnings
Awesome bro but I feel this might be true for most tech companies.
Tldr? Are Atlassian RSUs basically shit?
Guess so, if they keep decreasing
It’s up 60% in the last month
it’s an easy retention strategy for the org and cheap to do; all these companies cook the books/reports and do similar things 🍿 = when stonks keeps going down, like robinhood (who expects 400M in stonk comp next Q, from what I read)
Excellent analysis, but wait till he sees what Shopify did in 2021... basically sold off a bunch of shares when stock was at all time high and called it part of operating income 🤯
Atlassian went IPO with minimal dilution. The founders own over 50% of the company still. They are killing it
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Wish he can do this for most of the growth tech companies.