Yahoo Finance Here's How Atlassian (TEAM) is Poised Ahead of Q3 Earnings
Atlassian Corporation TEAM, a leading provider of collaboration and productivity software, is set to report third-quarter fiscal 2024 results on Apr 25.
Atlassian has a history of delivering solid financial performance and consistent revenue growth. The company's focus on providing innovative solutions has driven its success. With a proven track record of execution, TEAM has earned the trust of its customers.
Factors at Play
Atlassian has exhibited impressive growth momentum, driven by robust demand for its suite of software tools that facilitate team collaboration, project management and software development. The company's cloud offerings, including Jira, Confluence and Trello, have gained traction among businesses of all sizes seeking to enhance productivity and efficiency in remote work environments.
Atlassian Corporation PLC Price and EPS Surprise
Atlassian Corporation PLC price-eps-surprise | Atlassian Corporation PLC Quote
The ongoing transition to cloud-based solutions presents a significant growth opportunity for Atlassian. As organizations increasingly embrace cloud technologies for scalability, flexibility and cost-efficiency, the company stands to benefit from the shift. The company's focus on expanding its cloud subscriber base and driving adoption of its cloud products is expected to have boosted its revenue growth in the to-be-reported quarter.
An improvement in product quality and performance, multiple product launches, transparent pricing and a unique sales strategy are upsides. The expansion of its product portfolio through acquisitions is expected to fuel its growth momentum. Its focus on adding generative AI features to some of its collaboration software is likely to drive the company’s top line.
However, the decelerating customer growth rate makes us slightly cautious about the company’s near-term prospects. In fourth -quarter fiscal 2023, despite a surge in customer migration to Atlassian's Cloud and Data Center offerings before the loyalty discount program ended, the company only gained 2,562 net new customers, its lowest in 12 quarters. In the second quarter of fiscal 2024, it added 37,000 net new customers, of which 33,000 reflect customer gain through the acquisition of the Loom business.
Additionally, the year-over-year growth rate of total customers has slowed over the past nine quarters. Our model estimate indicates that its customer base is projected to witness a CAGR of 13% during fiscal 2024-2026 compared with a CAGR of 18.1% recorded during 2021-2023.
Though the long-term prospect remains strong for this collaboration and productivity enterprise software provider, its decelerating customer growth is expected to hinder this Zacks Rank #4 (Sell) company’s revenue growth in the near term.
Third-Quarter Estimates
The Zacks Consensus Estimate for Atlassian’s third-quarter earnings has moved up a penny to 61 cents per share over the past 60 days, indicating an improvement of 13% from the year-ago quarter’s level of 54 cents. The consensus mark for revenues is pegged at $1.1 billion, implying a 19.7% increase from the year-ago quarter's reported actuals.
Atlassian’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 34.2%.
Q2 Highlights
In the second quarter, TEAM’s non-GAAP earnings of 73 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Revenues of $1.06 billion also surpassed the consensus mark of $1.02 billion. Moreover, the top and bottom lines witnessed a year-over-year increase of 21.5% and 62.2%, respectively.
Stocks to Consider
Some better-ranked stocks in the broader technology sector that are going to report their quarterly results this week are Vertiv Holdings VRT, Meta Platforms META and CACI International CACI. VRT currently sports a Zacks Rank #1 (Strong Buy), while META and CACI carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vertiv’s first-quarter 2024 earnings has moved up a penny to 37 cents per share over the past 30 days, indicating an improvement of 54.2% from the year-ago quarter’s level of 24 cents. The consensus mark for revenues is pegged at $1.64 billion, implying a 7.6% increase from the year-ago quarter's reported numbers.
The Zacks Consensus Estimate for Meta Platforms’ first-quarter 2024 earnings has moved up a penny to $4.32 per share over the past seven days, indicating an improvement of 63.6% from the year-ago quarter’s level of $2.64. The consensus mark for revenues is pinned at $36.25 billion, implying a 26.6% increase from the year-ago quarter's reported actuals.
The Zacks Consensus Estimate for CACI’s third-quarter fiscal 2024 earnings has moved downward 2 cents to $5.53 per share over the past 30 days, indicating an improvement of 12.4% from the year-ago quarter’s figure of $4.92. The consensus mark for revenues is pegged at $1.86 billion, implying a 6.7% increase from the year-ago quarter's figure.
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