Atlassian shares soar and reach record highs when earnings are exceeded


    Business software provider Atlassian Corporation (NASDAQ: TEAM) reported fourth quarter results on Thursday evening, delivering better than expected results and offering a rosy outlook for the next quarter.

    The company’s cloud transition is progressing well, while Atlassian’s productivity and collaboration tools are critical to enabling remote working.

    By 12 noon EDT, Atlassian shares had soared 24%.

    The first $ 2 billion fiscal year

    Fiscal fourth quarter revenue increased 30% to $ 559.5 million, above the consensus estimate of $ 525.3 million in revenue. That revenue included $ 385.5 million in subscription revenue, an increase of 50%. Atlassian exceeded $ 2 billion in annual sales for the first time at the end of fiscal 2021.

    Atlassian added 23,000 new customers during the quarter, bringing the company’s total customer base to over 236,000. The number of major customers is also growing steadily.

    There are now 178 customers spending $ 1 million or more and 412 companies spending more than $ 500,000. Large customers (with over 1,000 users) are migrating to Atlassian’s cloud-based platform and increasing cloud revenue by 47%.

    “Building a first-class cloud platform and migrating our installed server customer base remains our main focus,” wrote Co-CEOs and co-founders Mike Cannon-Brookes and Scott Farquhar in a letter to shareholders.

    During the quarter, Atlassian launched its Forge cloud app development platform for general availability. Forge originally launched as a closed beta program in late 2019, but is now finally prime-time ready, so developers can easily build cloud apps for the Atlassian Marketplace.

    Adjusted net income for the fourth fiscal quarter was $ 62.2 million, or $ 0.24 per share. Wall Street was looking for just $ 0.18 per share in adjusted earnings.

    Broad momentum for the future

    Forecasts for the first fiscal quarter were also strong, with Atlassian forecasting revenue of $ 575 million to $ 590 million. The consensus estimate currently only sees revenue of $ 541.3 million in the next quarter.

    The gross margin should be around 85% on an adjusted basis and Atlassian expects an adjusted operating margin of 25%. That should all translate into adjusted earnings per share of $ 0.38 to $ 0.39, which is also better than the adjusted earnings of $ 0.31 per share that analysts model.

    Atlassian stopped selling server licenses about five months ago as part of the move to cloud-based subscription income. This shift will help drive subscription revenue growth in fiscal 2022, CFO James Beer said on the conference call with analysts.

    Cannon-Brookes also found Atlassian to be strong with all of its offerings. It’s not just an area that drives results, but rather a broad dynamic across the company.

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    Evan Niu, CFA owns shares of Atlassian. The Motley Fool owns shares of and recommends Atlassian shares. Millennial Money is part of The Motley Fool Network. Millennial Money has a disclosure policy.


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