This is a great quarter to look at if you’re trying to learn how to read financial statements.
This quarter is a good example of why looking at cash flows can be incredibly misleading. Financial statements lesson: Don’t expect cash flows to be smooth, because they involve accounting fluctuations like Accounts Receivable and Accounts Payable that have nothing to do with the quarterly performance. They had record cashflows last Q, and so cash flow was basically flat this Q. Doesn’t matter – this has more to do with accounting than company performance / progress.
Jun18: +41.5m (huh?)
Ignore this. What we need to examine is apples to apples, and that’s the income statement (and state of the balance sheet). But the most important numbers to me are the Operating Profits and Costs.
Financial statements lesson: Look at how progress in Revenue and Gross Profit compares to increase in Operating Expenses (OpEx)? In other words, what is it costing them to grow?
Sep17: 84.7m (up 33.5% YoY)
Sep18: 114.9m (up 35.7% YoY)
Sep17: 69.0m (up 33.5% YoY)
Sep18: 96.4m (up 39.8% YoY)
Sep17: 83.9m (up 27.1% YoY)
Sep18: 102.0m (up 21.7% YoY)
I love to see revenue and gross profit growing so much faster than OpEx.
Stock Based Compensation(SBC) is around 12% of revenue. I’m fine with that. Closer to 20% is more problematic. 10-12% is normal for SaaS companies.
Accounts over $100k (another key metric)
Sep17: 586 (up 37.2% YoY)
Sep18: 786 (up 34.1% YoY) – still growing nicely. very encouraging.
There’s plenty more to glean from the quarter. But everything I see across the board adds up to NEWR growing surely and steadily. It may not be the sexiest, but things are primed for a larger and much more valuable company 1, 2, and 3 years down the road.