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Atlassian (TEAM) Q4 Earnings & Revenues Top Estimates, Up Y/Y

Zacks Equity Research
·3-min read

Atlassian TEAM reported stellar fourth-quarter fiscal 2020 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate as well as marked significant year-over-year improvements. The company’s non-IFRS earnings per share of 25 cents beat the consensus mark by 25% and jumped 25% year on year. Robust revenue growth and better cost management chiefly boosted Atlassian’s quarterly earnings.

Quarter in Detail

The company reported fiscal fourth-quarter revenues of $430.5 million, which surpassed the Zacks Consensus Estimate of $409 million. Moreover, quarterly revenues climbed 29% year on year, mainly on new client additions and increased pricing on certain products. During the reported quarter, Atlassian added 3,046 net new-clients, bringing the total customer count to 174,097.

Segment wise, Subscription revenues jumped 42% year over year to $257.5 million. Sales from the Maintenance business increased 16% to $122.8 million, while Perpetual License business revenues declined 11% to $20.4 million. Other revenues climbed 19% year over year to $29.8 million.

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The company’s non-IFRS gross profit increased 29% year over year to $370.7 million. Non-IFRS gross margin expanded 20 basis points (bps) to 86.1% in the fiscal fourth quarter.

Atlassian Corporation PLC Price, Consensus and EPS Surprise

Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian Corporation PLC Price, Consensus and EPS Surprise

Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote

Atlassian’s non-IFRS operating income climbed 47.5% year over year to $82.5 million, while margin advanced 200 bps to 19%.

During the reported quarter, the company generated operating and free cash flow of $123.3 million and $95.7 million, respectively.

Fiscal 2020 Highlights

Atlassian’s fiscal 2020 total revenues increased 33% year over year to $1.61 billion and surpassed the Zacks Consensus Estimate of $1.59 billion. The company’s non-IFRS earnings per share of $1.15 beat the consensus mark by 5.5% and jumped 33.7% year over year.

The company ended the fiscal year with cash and cash equivalents, and short-term investments of $2.16 billion. During the fiscal, the company generated operating and free cash flow of $574.2 million and $500.4 million, respectively.

Outlook

For first-quarter fiscal 2021, the company anticipates revenues between $430 million $445 million (mid-point $437.5 million), suggesting year-over-year growth of 18-22%. Atlassian’s fiscal first-quarter revenue guidance at the mid-point is also ahead of the Zacks Consensus Estimate of $435.8 million.

Non-IFRS gross margin is anticipated to be approximately 86%. Non-IFRS operating margin is projected to be around 21%. The company expects to report non-IFRS earnings per share in the 26-27 cents band. The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 27 cents.

Zacks Rank and Key Picks

Currently, Atlassian carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Dropbox DBX, Zoom Video Communications ZM and Analog Devices ADI. While Dropbox and Zoom sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Dropbox, Zoom and Analog Devices is currently pegged at 32.5%, 25%, and 13.3%, respectively.

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