share price, page-174

Karl replies to Alan Koeler re cash raise

Whenever I see a start-up share price react badly to achange in CFO, I think it must be some issues or some concerns around cash,which is really usually what it's about. Can we just focus a bit on yourcash situation at the moment, because I mean one of the things that strikes meabout your business is that it's quite expensive to run. You've got a lotof staff, you're burning $7.5 million, well you did in the March quarter andyou'd made a raise in February. I think it only got you $15 million, sowhat's your projections? What's your sense of where you're going withcash? Do you think you're going to have to make another raise later thisyear?

Yeah,certainly we're not in a position that we need to make a raise, which is greatfor the company and you’ll see if you look at the last three or four quarters,in fact the last continuing quarters, I think for about five quarters our cashburn is actually reducing significantly and very, very rapidly. Which isimportant from our perspective. We're pretty much at the point where wecan see a cash breakeven scenario, which is pretty extraordinary given in thelast three and a half years we've grown over 200 per cent. In fact, 208per cent year on year.

Asan example, on our last result we mentioned, $34.5 million of annualisedrecurring revenue. And I suppose the key thing is with the ARR and thisis what I think a lot of people don't understand why Atlassian today is a $40billion company, even though they're not printing huge profits. Everydollar of ARR, especially in an enterprise context has a large lifetime value,has a six plus year lifetime value. Importantly, it is almost a 100 percent gross margin. We're in a luxurious situation, the only reasonthat we're really spending money is on two things. To either further developR&D and the stuff we're doing in artificial intelligence. Now we’rerecognise by Microsoft as one of their top partners, if not the top partner inthe world by Microsoft is the artificial intelligence. Which is a hugegrowth area that we think is a huge upside for us. That's the firstthing.

Andthen the second thing is on sales and marketing. The great thing aboutsales and marketing, yes if we wanted to at any point in time, and you've seenthis just even the likes of Xero. You know Xero's gone through this intheir lifespan, they've been listed on the New Zealand and Australian disalloweds since birth like we have. I'd encourage anyone to go and lookat how fast Atlassian and Xero grew in their first three years, but yeah,you're going to constantly get this. From our perspective, we're in alucky position. We've got plenty of cash, we certainly can see cash flowneutral area and the purpose of Matt was to actually help us accelerate up tothe next level to where we need to go to