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Atlassian (TEAM) Q3 Earnings & Revenues Surpass Estimates

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Atlassian (TEAM - Free Report) reported third-quarter fiscal 2022 non-IFRS earnings per share (EPS) of 47 cents beating the Zacks Consensus Estimate of 32 cents. The figure decreased 2.1% from the year-ago quarter’s non-IFRS earnings of 48 cents per share.

Atlassian’s fiscal third-quarter revenues surged 30% to $740.5 million and surpassed the consensus mark of $696.3 million. The company witnessed solid demand for its cloud-based products, primarily led by smaller customers. Meanwhile, the cloud migration momentum continued for larger clients.

Since first-quarter fiscal 2022, Atlassian modified its revenue reporting style. Based on deployment options, the company started reporting revenues under four segments: cloud, data center, server, and marketplace and services. Also, it started excluding Trello single-user accounts while updating its active customer count from the first quarter of fiscal 2022 onward.

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

Quarterly Details

During the third quarter of fiscal 2022, Atlassian added 8,054 net new customers, bringing the total count to 234,575 customers on an active subscription or maintenance agreement basis. A large number of customers are opting for cloud offerings amid the ongoing cloud migration. Such new additions and increased pricing on certain products contributed to the company’s quarterly revenues.

Segment-wise, Subscription revenues surged 59% year over year to $555 million. Sales from the Maintenance business decreased 9.5% year over year to $120.3 million, while Other revenues (which included perpetual license revenues) slumped 24.3% year over year to $65 million.

During the quarter under review, cloud revenues were $399.5 million, indicating 59.9% year-over-year growth. Meanwhile, revenues from the data center surged 59.5% to $151.1 million. Marketplace and services revenues were $57.6 million, reflecting a 3.8% year-over-year downfall. Revenues from Server declined 19.4% to $132.3 million.

The company’s non-IFRS gross profit climbed 2.9% year over year to $638.6 million. Non-IFRS gross margin contracted 100 basis points (bps) to 86.2% during the quarter.

Atlassian’s non-IFRS operating income increased 2% year over year to $179.2 million, while operating margin contracted 700 bps to 24%.

Balance Sheet

The company ended the third quarter of fiscal 2022 with cash and cash equivalents and short-term investments of $1.28 billion, up from $986 million at the end of the second quarter.

During the third quarter, TEAM generated operating and free cash flow of $353 million and $312.3 million, respectively. In the first nine months of fiscal 2022, the company generated operating and free cash flow of $653.1 million and $569.1 million, respectively.

Fourth-Quarter Outlook

For the fourth quarter of fiscal 2022, the company anticipates revenues between $710 million and $725 million. Atlassian’s fiscal fourth-quarter revenue guidance is higher than the Zacks Consensus Estimate of $677.1 million.

Non-IFRS gross margin is estimated in the range of 84-85%. Non-IFRS operating margin is projected to be approximately 15%. The company anticipates reporting non-IFRS EPS of 24 cents approximately. The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 30 cents per share.

Zacks Rank & Key Picks

Atlassian currently carries a Zacks Rank #3 (Hold). Shares of TEAM have climbed 13.9% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Yelp (YELP - Free Report) and Gogo (GOGO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), Analog Devices (ADI - Free Report) carrying a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Yelp's first-quarter 2022 loss has been revised a couple of cents southward to 11 cents per share over the past 60 days. For 2022, earnings estimates have moved north by 53.6% to $1.06 per share in the past 60 days.

Yelp's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 632.9%. Shares of YELP have fallen 15.9% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 83.2% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have increased 1.5% in the past year.


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