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@russabbott
Russ Abbott
1 following4 followers
Where are my posts?
I just submitted two posts on Atlassian, but neither of them is visible. What does it take?

Hi Russ! I am seeing your posts about Atlassian in the main feed and on your profile page 😃
+ 6 comments
Atlassian
There are a number of reasons to be suspicious of TEAM as an investment.
  • Although the company has been in business for quite a while and has revenue approaching $ 1 billion, they still don't have a net income. Although they have positive Free Cash Flow, their stock-based compensation is about equal to their Free Cash Flow. In other words, if they paid their employees in cash, that would eat up their free cash flow.
  • For a while, they had significantly more cash than debt. Currently, including capital leases, it's close to equal.
  • EBITDA. not income, EPS has not made any progress over the past few years.
  • Shares outstanding have grown about 25% over the past 5 years.
  • Although revenue has been growing nicely, so have expenses, which have been increasing at about the same rate as revenue. That's not what you'd expect from a software company. It shouldn't $1 more in expenses to increase revenue by $1.

Comments on Atlassian
I'm suspicious of Atlassian as a investment for a number of reasons.

  1. Even though they're a software company, none of their products are especially high tech. The products are not difficult to reproduce, and as you said, the company has a number of high-powered competitors.
  2. Even though Atlassian has been public for half a decade, and even though its revenue is closing in on $1billion, it's suspicious that they are still not profitable. That they have positive free cash flow doesn't mitigate this problem. Paying employees with stock instead of cash is simply a way of hiding expenses. They seems to be making virtually no progress in EBITA, net income. or EPS.
  3. Although a few years ago, TEAM had far more cash than debt, the ratio of deteriorated significantly.
  4. Over the past 5 years, shares outstanding has grown by about 20%. Even though that's a total over 5 years, it's still a lot of shareholder dilution.
  5. For the past year, stock-based compensation has been about equal to free cash flow. In other words, if there were no stock-based-compensation, there would be no free cash flow either.
  6. Expenses are growing at about the same rate as revenue. That shouldn't be the case for a software company. One of the presumed benefits of selling software is that the cost of reproduction is minimal. Yet, that doesn't seem to be the case for Atlassian.

WRT the Brians' analysis of ZM: You said there was lots of competition, but you didn't discuss why that competition isn't bridging Zoom's moat. I understand that MSFT Teams is a serious alternative. yet you didn't mention it at all.

$SEMR's tiny TAM
This is a comment on the Semrush video by the Brians. If the TAM Is only $16B, that puts a very tight cap on possible growth. Is $16B an accurate TAM estimate?

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