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Atlassian (TEAM - Free Report) reported better-than-expected second-quarter fiscal 2021 results. The company’s non-IFRS earnings per share of 37 cents beat the Zacks Consensus Estimate of 31 cents. However, on a year-over-year basis, the bottom line remained flat as benefits of higher revenues were offset by elevated expenses.
Quarter in Detail
The company reported fiscal second-quarter revenues of $501.4 million, which surpassed the Zacks Consensus Estimate of $469.9 million. Moreover, quarterly revenues climbed 23% year on year, mainly on new client additions and increased pricing on certain products. During the reported quarter, Atlassian added a record 11,617 net new clients, bringing the total customer count to 194,334.
Segment wise, Subscription revenues jumped 35.8% year over year to $310.7 million. Sales from the Maintenance business increased 12.3% to $131.3 million, while Perpetual License business revenues declined 23.8% to $22.1 million. Other revenues climbed 9.3% year on year to $37.3 million.
The company’s non-IFRS gross profit increased 21.7% year over year to $434.1 million. Nonetheless, non-IFRS gross margin contracted 60 basis points (bps) to 86.6% during the fiscal second quarter.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian’s non-IFRS operating income was up 14.2% year over year to $143.2 million, while margin shrunk 210 bps to 28.6%.
The company ended the fiscal second quarter with cash and cash equivalents, and short-term investments of $1.79 billion, down from the $2.18 billion recorded at the end of fiscal first quarter. During the reported quarter, the company generated operating and free cash flow of $200.5 million and $179.8 million, respectively. In the first half of fiscal 2021, it generated operating and free cash flow of $279.9 million and $240.3 million, respectively.
Outlook
For third-quarter fiscal 2021, the company anticipates revenues between $475 million $490 million (mid-point $482.5 million), suggesting year-over-year growth of 15-19%. Atlassian’s fiscal third-quarter revenue guidance is higher than the Zacks Consensus Estimate of $470.1 million.
Non-IFRS gross margin is anticipated to be approximately 84%. Non-IFRS operating margin is projected to be around 16%. The company expects to report non-IFRS earnings per share in the 20-21 cents band. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 24 cents.
Zacks Rank and Stocks to Consider
Atlassian currently carries a Zacks Rank #3 (Hold).
The long-term earnings growth rate for Shopify, Micron and NetApp is currently pegged at 32.5%, 12.7% and 11.9%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Atlassian (TEAM) Tops Q2 Earnings & Revenue Estimates
Atlassian (TEAM - Free Report) reported better-than-expected second-quarter fiscal 2021 results. The company’s non-IFRS earnings per share of 37 cents beat the Zacks Consensus Estimate of 31 cents. However, on a year-over-year basis, the bottom line remained flat as benefits of higher revenues were offset by elevated expenses.
Quarter in Detail
The company reported fiscal second-quarter revenues of $501.4 million, which surpassed the Zacks Consensus Estimate of $469.9 million. Moreover, quarterly revenues climbed 23% year on year, mainly on new client additions and increased pricing on certain products. During the reported quarter, Atlassian added a record 11,617 net new clients, bringing the total customer count to 194,334.
Segment wise, Subscription revenues jumped 35.8% year over year to $310.7 million. Sales from the Maintenance business increased 12.3% to $131.3 million, while Perpetual License business revenues declined 23.8% to $22.1 million. Other revenues climbed 9.3% year on year to $37.3 million.
The company’s non-IFRS gross profit increased 21.7% year over year to $434.1 million. Nonetheless, non-IFRS gross margin contracted 60 basis points (bps) to 86.6% during the fiscal second quarter.
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 was up 14.2% year over year to $143.2 million, while margin shrunk 210 bps to 28.6%.
The company ended the fiscal second quarter with cash and cash equivalents, and short-term investments of $1.79 billion, down from the $2.18 billion recorded at the end of fiscal first quarter. During the reported quarter, the company generated operating and free cash flow of $200.5 million and $179.8 million, respectively. In the first half of fiscal 2021, it generated operating and free cash flow of $279.9 million and $240.3 million, respectively.
Outlook
For third-quarter fiscal 2021, the company anticipates revenues between $475 million $490 million (mid-point $482.5 million), suggesting year-over-year growth of 15-19%. Atlassian’s fiscal third-quarter revenue guidance is higher than the Zacks Consensus Estimate of $470.1 million.
Non-IFRS gross margin is anticipated to be approximately 84%. Non-IFRS operating margin is projected to be around 16%. The company expects to report non-IFRS earnings per share in the 20-21 cents band. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 24 cents.
Zacks Rank and Stocks to Consider
Atlassian currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Shopify (SHOP - Free Report) , Micron (MU - Free Report) and NetApp (NTAP - Free Report) , all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Shopify, Micron and NetApp is currently pegged at 32.5%, 12.7% and 11.9%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>