Atlassian Stock Jumps As Earnings Beat, Outlook Tops Views Amid Cloud Transition
Atlassian stock catapulted higher in early trading Friday after the software maker reported adjusted earnings that topped estimates and forecast higher-than-expected subscription revenue in fiscal 2022. Shares added more than a fifth to their value shortly after the open.
Atlassian (TEAM) reported fiscal fourth quarter earnings after the market close on Thursday. The results come as the company is in the midst of transitioning to a cloud-computing business model.
“TEAM delivered a monster beat in the midst of a cloud transition,” Jefferies analyst Brent Thill said in a note to clients. “We are fundamental fans of the TEAM story, but valuation remains rich.”
Atlassian stock soared 21.8%, closing at 325.12 on the stock market today.
The software maker said it earned 24 cents a share, down a penny from a year earlier but topping estimates of 18-cent profit. Atlassian said June quarter revenue rose 30% to $560 million, ahead of views for $525 million.
In addition, billings rose 30% to $583 million, topping estimates of $524 million.
For the September quarter, Atlassian said it expects total revenue in a range of $575 million to $590 million versus estimates of $537.4 million.
Also, Atlassian’s outlook for subscription revenue growth in full-year fiscal 2022 also topped views.
In a letter to shareholders, Atlassian said: “We expect subscription revenue growth year over year to be in the low-to-mid 40s percent range for fiscal 2022. Subscription revenue will continue to be the primary driver of revenue growth.”
Analysts had projected subscription revenue growth of 34%.
Atlassian Stock: Cloud Transition Picks Up Momentum
The software stock had been consolidating for several weeks after clearing a prior base in mid-June. Investors could buy TEAM stock as a breakout or earnings gap up from a shelf-like pattern.
Atlassian is phasing out sales of on-premise software used in the data centers of corporate customers. In fiscal 2022, Atlassian’s “gross margins will decrease due to mix shift to cloud, while op margin will decline as server revenue contracts and cloud R&D investments increase,” noted Cowen analyst J. Derrick Wood in a report.
Founded in Sydney in 2002, Atlassian sells project management and collaborative software for software developers and information technology engineering teams. Atlassian has been shifting to cloud computing-based services.
With cloud services, Atlassian aims to grow subscription revenue and rely less on licensing fees. The company’s project management and bug-tracking tools make it easier for software developers to build, test and release software faster.
IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists, find companies nearing a buy point such as Atlassian stock, or develop custom screens at IBD MarketSmith.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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