[scarface74]

Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins.

Why is a -33% net margin “reasonable” instead of just being “less unreasonable”?

[beambot]

Worth looking at the 40% rule for SaaS: https://www.feld.com/archives/2015/02/rule-40-healthy-saas-c...

The rule states that a "sane" target for annual growth rate + profit margin is 40%. At a 100% YoY growth rate and -33% profit margins, Elastic is sitting at 70% -- making it pretty solid!

[sonnyblarney]

What is the 40% based on? Because there isn't a hint of justification in that post.

If customer acquisition costs are really high, then they're throwing good money after bad.

All of this talk of 'solid financials' while a company is losing money every quarter and whereupon there's no evidence of profit at the unit level ... is scary, it feels like one of those reddit ico pump-it-up chats.

It's all very highly speculative, is what it is. So let's hope it's a great company, with a solid offer and they manage the growth effectively.

[silversmith]

You could say that.

You could also say that they are losing money today, and expecting to lose twice as much money next year.

[greglindahl]

Right. It's the first group who's buying the stock in the IPO, not the second.

[airstrike]

Because it's expected for early stage companies: low CFO, high CFI, low CFF.

As they mature, CFO grows, CFI normalizes and CFF grows to profitability.