Michmutters

Instead, the Bank of England’s announcements are being seen so far as refreshingly direct and honest. They are also acting as a catalyst for serious discussions and analysis and, as important, deeper consideration of what is being proposed by the two candidates for prime minister.

‘Trusted adviser’

The Bank of England is reminding the world what a politically independent central bank can and should do: act as a “trusted adviser”, willing to share analytically honest views that other more politically sensitive institutions are either unable or unwilling to do.

Of course, this is not a risk-free approach. Such honesty – rather than catalyzing appropriate responses from policymaking agencies that lead to better economic and social outcomes – can provoke household and corporate behaviors that accelerate the bad outcomes.

Yet the risks involved are worth taking, especially when the alternative is a central bank that loses institutional credibility, sees the effectiveness of its forward policy guidance erode and becomes even more vulnerable to political interference.

It should also be noted that the UK’s situation differs in some important way from those of other countries. The country’s economic challenges are complicated not only by the energy price catch-up but also by the political transition and the changing nature of the country’s relations with its trading partners.

This is not to say that the implications for other countries do not go beyond the importance of analytical directness and intellectual honesty. They do. Indeed, I can think of four others:

Illustrating the elusiveness of “first best” policy responses in a world in which central banks fell behind in responding to inflation. Acting as a reminder that, in such a world, the prospects of high inflation and recession can coexist.

Highlighting the need for central banks to act relatively aggressively despite the likelihood of inflation destroying demand. Stressing the need for governments and multilateral institutions to assist in efforts to contain inflation, promote productivity and growth, and protect the most vulnerable segments of the population.

I suspect that, in the next few days, the Bank of England will again discover that it is not easy to be the messenger of unpleasant news, no matter how honest and well-intended the approach is. Yet the example it sets for other central banks is an inspiring one, as is the possibility of acting as a catalyst for a more holistic response to the UK’s economic and social challenges.

Mohamed A. El-Erian is a former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management.

BloombergOpinion

The company ended the 2022 fiscal year with roughly the same amount of free cash flow as the previous year, of $US763.8 million.

In a shareholder letter, co-chief executives Scott Farquhar and Mike Cannon-Brookes said they had hired 634 new employees in the quarter, mostly in research and development roles and over 2,300 new staff members in the 2022 fiscal year.

“We firmly believe that Atlassian is uniquely positioned, having deep-seated momentum and a differentiated business model. This gives us the confidence to make incremental investments – despite the current environment,” the CEOs wrote.

“That will fuel even more durable growth over the long term and deepen our strategic advantages. We know this is an unconventional choice right now and want to be open with our investors about it.”

Atlassian’s bosses believe it is somewhat insulated from tightening economic conditions as its products are targeted at technology developers, who they say are typically the last roles businesses cut back when they are tightening their belts, especially with many companies working on digital transformation plans.

“While our products punch above their weight in terms of value, Atlassian is a relatively small line item in overall IT budgets and likely not where customers look to reduce costs,” the CEOs said.

New CFO

The company has flagged “line of sight” to $US10 billion in annual revenue and has a new executive in charge of marshalling the numbers in former Microsoft finance president Joe Binz, who will become chief financial officer in September.

Mr Farquhar had acted as an interim CFO for the current earnings period.

The company said Mr Binz was responsible for Microsoft’s financial planning and analysis, investor relations, acquisition integration, and procurement functions across a 20-year stint at the tech giant.

It is the second earnings call in a row where Atlassian has unveiled a new senior executive hire, having announced Rajeev Rajan as his chief technology officer – hired from Facebook parent Meta – in April.

In guidance for the next quarter, Atlassian forecast revenue in the range of $US795 million to $US810 million, and a widening loss per share of $US1.17 to $US1.16 – compared to a loss of $US0.41 in the fourth quarter.

“We believe our investments will propel us past this [$US10 billion revenue] milestone faster, while further strengthening our strategic position,” the CEOs said.

“History shows that turbulent economic environments offer a chance for companies to gain market share – to shake up the leaderboard. Atlassian intends to seize this moment.”

‘tech wreck’

With reference to the broader “tech wreck” that is seeing job losses and valuation mark-downs at tech companies around the globe, the co-founders reiterated remarks made by Scott Farquhar earlier this year about the current downturn and potential recession not being Atlassian’s “ first rodeo.”

“We seized opportunities during the economic turbulence of 2008-2009 to scoop up talent that wouldn’t have been available otherwise and broadened our customer base by offering $10 starter licenses for our products,” they wrote.

“Today we’re echoing that approach with free editions of our cloud products and ambitions to more than double our headcount over the next few years. Playing offense when others were throwing off their back foot worked for us then, and we’re confident it will work for us now.

From a commercial perspective, Atlassian said the ongoing transition of customers to its cloud-based products was continuing well, with a focus on driving a growth rate on sales of third-party cloud apps on its marketplace, greater than that of its own products.

It said it closed the financial year with over 200,000 cloud customers and cloud revenue growth in the fourth quarter of 55 per cent year-over-year.

Atlassian also confirmed that its parent holding company would shift from the United Kingdom to be domiciled in the United States, pending shareholder approval at two special shareholder meetings to be held on August 22. If shareholders agree the company will become based, as well as listed in the US from September 30.

“We believe moving our parent entity to the United States will increase our access to a broader set of investors, support inclusion in additional stock indices, improve financial reporting comparability with our industry peers, streamline our corporate structure, and provide more flexibility in accessing capital. ,” the co-CEOs wrote.