We feel now is a pretty good time to analyse Atlassian Corporation Plc's (NASDAQ:TEAM) business as it appears the company may be on the cusp of a considerable accomplishment. Atlassian Corporation Plc, through its subsidiaries, designs, develops, licenses, and maintains various software products worldwide. The US$60b market-cap company posted a loss in its most recent financial year of US$351m and a latest trailing-twelve-month loss of US$868m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Atlassian's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Atlassian is bordering on breakeven, according to the 20 American Software analysts. They expect the company to post a final loss in 2022, before turning a profit of US$55m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Atlassian given that this is a high-level summary, though, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Atlassian currently has a debt-to-equity ratio of 131%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of Atlassian to cover in one brief article, but the key fundamentals for the company can all be found in one place – Atlassian's company page on Simply Wall St. We've also put together a list of essential factors you should further research:
Valuation: What is Atlassian worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Atlassian is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Atlassian’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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