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!
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.
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!