Atlassian Stock Soars as Aussie Software Firm Posts an Earnings ‘Ripper’

 Atlassian Stock Soars as Aussie Software Firm Posts an Earnings ‘Ripper’

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Office space at Atlassian.


Courtesy Atlassian


Atlassian

shares are soaring after the provider of collaboration software like Jira and Trello posted better than expected results. The company had stumbled in recent quarters as it shifts to a cloud-based software model, but seems to have solved its issues.

For its fiscal fourth quarter, ended June 30, the Sydney-based company posted revenue of $560 million, up 30% from a year ago, and well ahead of the Wall Street consensus of $524 million. On an adjusted basis, profits were 24 cents a share, above the consensus of 18 cents.

For its full fiscal year, the company had revenue of $2.1 billion, up 29%. Under international financial reporting standards, the global equivalent of GAAP, the company lost $213 million, or 85 cents a share.

The company said it added a net total of more than 23,000 customers in the quarter, boosting its client base to more than 200,000.

For the September quarter, Atlassian (ticker: TEAM) projects revenue of $575 million to $590 million. That is comfortably above the previous consensus forecast of $541 million. Adjusted profits are expected to be 38 to 39 cents a share, ahead of the Street’s call for 31 cents.

“Q4 was a great quarter – a ripper as we Aussies say,” co-CEOs Scott Farquhar and Mike Cannon-Brookes said in a letter to shareholders. “We entered fiscal 2021 staring down uncertainty and bracing against headwinds. We exit it in a stronger position than ever. Over the past year, we took swift, bold action to continue our evolution into a cloud-first company and further our mission of unleashing the potential of every team. And it’s paying off.”

The Street seems to agree with him.

In a research note, Citi analyst Tyler Radke pointed out that the company saw year-over-year growth in subscription revenue reaccelerate to 50%, the best level in six quarters, “driven by inflecting cloud strength and continued data center momentum.” He said that the company’s cloud growth jumped to 47%, from 35% one quarter earlier, with 70% growth in customers with more than 1,000 users.

“The cloud transition at Atlassian appears to be at an inflection point, and looks to be happening sooner than investors expect, which we think will continue to take shares higher,” Radke wrote. He repeated his Buy rating on Atlassian shares, and lifted his price target to $400, from $322.

Atlassian shares jumped 24%, to $331.31.

Canaccord Genuity analyst David Hynes was similarly impressed, repeating his Buy rating, while raising his target to $325, from $275. “We have a lot of confidence in Atlassian, but the truth is we expected the cloud transition to be a bit choppier than it’s been to date,” he said in a research note. “Perhaps the upside surprise has been a master class in expectations management, but more likely it’s that the firm has built cloud products that customers want.”

Write to Eric J. Savitz at eric.savitz@barrons.com

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