Since its IPO, Atlassian has acted more like a venture capital fund than a traditional software vendor, funnelling cash into acquiring and building technology without a clear path to profitability. While it is not uncommon for growing tech companies to report non generally accepted accounting principles (GAAP) losses, Atlassian’s sustained unprofitability, spanning over 20 years, is a concern.
A key factor is the firm’s consistently high research and development (R&D) costs, which are greater than 50 per cent of its operating expenses. For a company with an established product set, these costs would be expected to decrease over time. This is especially concerning when rivals, such as ServiceNow, are profitable with comparable products and a smaller customer base. ServiceNow has a mature economic model and a solid AI strategy that leverages the broader market, acting more like a vendor of technology, while Atlassian behaves more like an investment house.
This approach is risky. With a potential downturn in the tech market, partly due to global economic headwinds and a ‘come-to-Jesus moment’ around AI vendor losses, Atlassian could find itself in a difficult position against its profitable rivals. The full costs of AI are not yet being passed on to customers, and an imminent recalibration will impact all vendors’ profitability.
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