Quarterly Updates for TEAM, SWAV, GLBE

Continuing to try and "clear the backlog" of quarterly updates on our Watch List and portfolio stocks. In this article, we will take a brief look at 3 more reports, from Atlassian, Shockwave Medical, and Global-e.

Atlassian (TEAM)

Enterprise project and IT management software firm Atlassian reported good results for Q2. Quarterly revenue was up 24% to $939 million. Remember, Atlassian is still undergoing a transition to a full SaaS model (it still gets a meaningful amount of revenue from on-site licensing), so it was encouraging to see subscription revenues outpace overall revenues, growing 34%. One of the things we liked about the company - its large, sticky customer base - continues to be a strength, with customers spending over $1 million growing 52% year-over-year. A solid quarter overall.

Some small tweaks to the model to account for slightly lower revenue and cash flow margin than anticipated lead to a minor cut in the fair value estimate, down to $184 from a previous $188. Atlassian looks about fairly valued at this point in time, but it has been a strong performer for us, up 62% since being recommended 9 months ago.

Shockwave Medical (SWAV)

Shockwave's stock has fallen quite a bit in the last few months, but this looks more due to an out-of-whack valuation than it does to business results. Q2 results and guidance continue to impress. Increased sales of its IVL catheters led to a 49% revenue increase over the previous year. The company also raised its full year guidance to a range of +48-49%. At the same time, we continue to see strong free cash generation (trailing 12 month margin is 24.9%, well above the 23.0% figure for 2022).

Shockwave closed its first big acquisition in the quarter, that of angina treatment device maker Neovasc, which we discussed some in the initial write-up. I'll be interested to see what impact this has on results going forward.

Overall, I was pleased with the quarter. Incorporating guidance into the model leads to a small fair value bump to $199 (from a previous $195). Even after a pretty steep recent decline, the stock still looks modestly overvalued at present. We will keep it "on watch".

Global-e (GLBE)

International e-commerce facilitator Global-e is off to a fantastic start, rising over 41% since being recommended only a little over 3 months ago. While the stock cooled off after Q2 results, they still looked quite good to me. Revenue grew 53% year-over-year off gross merchandise volume (GMV) growth of 54%. I do want to keep an eye on cash conversion, free cash margin was just 13.1% this quarter versus over 36% in Q2 of last year. There is some lumpiness in cash conversion here, but overall we want to see margins around the 20% mark, and the company is tracking well behind that so far into 2023. If it continues, we will need to re-consider a key piece of the fair value model.

Operationally, though, the firm is executing well. Several new brand partnerships were introduced this quarter, and the strategic partnership with Shopify is on track for general U.S. availability by the end of this year. Management also raised its revenue guidance range for '23. The fair value price gets a bump from $37 up to $39. Global-e stock looks fairly valued right now.