4 ms·
Do we have any idea where the big expenses stem from? It's hard to form useful judgements on a single data point. > In relative numbers, operating expenses ch
by gen220 6y ago
Do we have any idea where the big expenses stem from?
It's hard to form useful judgements on a single data point.
> In relative numbers, operating expenses changed from 157% of revenues in the first half of 2019 to 107% of revenues in first half of 2020 [while revenue grew 49% yoy].
Seems to suggest that a lot of the expenses were elective, or non-elective but have a sub-linear correlation to revenue growth. Honestly, these numbers are not as bad as the opinions interspersing the numbers makes it out to be.
Sounds to me like a private company that's tightening the belt while leaning into being a public company and continuing to grow.
- teachrdan 6y agoSerious question: If they were "tightening the belt," wouldn't their expenses go down? Why would they lose over a billion dollars over two years before going public if they weren't showing hockey stick growth?
- gen220 6y agoNot necessarily. Expense is an important figure, but the ratio (operating expense : revenue) is more important, IMO. They need to demonstrate they can grow revenues without a proportional growth to operating expenses, and that they can sustain this trajectory until revenues > operating expenses. An operating expense:revenue ratio of 107% (i.e. you spend 1.07 for every 1.00, which is their H1 2020 numbers) is bad in isolation. But when it was 157% at the same time last year? The fact that they could move from 157% to 107% while significantly growing revenue is a very positive signal.