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Atlassian (TEAM) Q3 Earnings Trump Estimates, Increase Y/Y

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Atlassian (TEAM - Free Report) reported better-than-expected third-quarter fiscal 2021 bottom-line results. The company’s non-IFRS earnings per share of 48 cents beat the Zacks Consensus Estimate of 29 cents. Moreover, the figure surged 92%, year on year, mainly driven by higher revenues.

Quarter in Detail

The company’s fiscal third-quarter revenues jumped 38% to $568.7 million on the elevated short-term demand for its on-premises products, as customers rushed to purchase ahead of both the planned price changes and the discontinuation of new server license sales. New client additions and increased pricing on certain products also boosted revenues during the quarter. However, the top line missed the Zacks Consensus Estimate of $569.2 million.

Segment wise, Subscription revenues jumped 43% year over year to $349.9 million. Sales from the Maintenance business increased 11% to $132.9 million, while Perpetual License business revenues grew 49% to $31.3 million. Other revenues surged 104% year on year to $54.6 million.

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

The company’s non-IFRS gross profit climbed 40.4% year over year to $495.9 million. Moreover, non-IFRS gross margin expanded 140 basis points (bps) to 87.2% during the fiscal third quarter.

Atlassian’s non-IFRS operating income jumped a whopping 127.6% year on year to $175.7 million, while margin improved 12.1 percentage points to 30.9%.

The company ended the fiscal third quarter with cash and cash equivalents, and short-term investments of $1.6 billion, down from the $1.79 billion recorded at the end of the fiscal second quarter. During the reported quarter, the company generated operating and free cash flow of $377 million and $360.4 million, respectively. In the first nine months of fiscal 2021, it generated operating and free cash flow of $657 million and $600.7 million, respectively.

Outlook

For fourth-quarter fiscal 2021, the company anticipates revenues between $513 million $528 million (mid-point $520.5 million), suggesting year-over-year growth of 19-23%. Atlassian’s fiscal fourth-quarter revenue guidance is higher than the Zacks Consensus Estimate of $498.9 million.

Non-IFRS gross margin is anticipated to lie between 84% and 85%. Non-IFRS operating margin is projected to be around 13%. The company expects to report non-IFRS earnings per share of approximately 17 cents. The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 22 cents.

Zacks Rank and Other Stocks to Consider

Atlassian currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Micron (MU - Free Report) and NVIDIA (NVDA - Free Report) . While Lam Research and Micron sport a Zacks Rank #1 (Strong Buy), NVIDIA carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Lam Research, Micron, and NVIDIA is currently pegged at 32.8%, 15.7% and 15.1%, respectively.

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