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Atlassian (TEAM) Jumps 23% on Q4 Earnings Beat, Strong Guidance
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Atlassian (TEAM - Free Report) shares soared 23.5% during Thursday’s extended trading session after the company reported stronger-than-expected fourth-quarter fiscal 2023 results. Also, a solid forecast for the first quarter and fiscal 2024 subdued investors’ concerns over a slowdown in IT spending, helping the shares of the team collaboration software maker soar in the after-hours trade yesterday.
Atlassian reported fourth-quarter fiscal 2023 non-GAAP earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 43 cents. The figure increased a whopping 111% from the year-ago quarter’s non-GAAP earnings of 27 cents per share, mainly driven by higher revenues along with the benefits of disciplined hiring and cost management.
Atlassian’s fiscal fourth-quarter revenues jumped 24% to $939 million and surpassed the consensus mark of $911.2 million. The top line was primarily driven by strong growth in Subscription revenues, partially offset by the weak performance of the Maintenance offering.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Segment-wise, Subscription revenues jumped 34% year over year to $799.7 million. Subscription revenues primarily benefited from higher enterprise sales, mainly driven by better sales executions and the end of its loyalty discount program that accelerated migrations to the company’s Cloud and Data Center offerings. Also, the cloud migration momentum continued for larger clients. Our estimate for Subscription revenues was pegged at $764.5 million.
Sales from the Maintenance business decreased 27% year over year to $85.9 million. The decline was primarily due to the company’s planned end of providing maintenance and support for its Server offerings, beginning in February 2024. Our estimate for Maintenance revenues was pegged at $84.9 million.
Atlassian’s Other revenues (including perpetual license revenues) soared 18% year over year to $53.5 million. Our estimate for Other revenues was pegged at $60.6 million.
During the fiscal fourth quarter, Cloud revenues were $563.2 million, indicating 30% year-over-year growth. Meanwhile, revenues from the Data Center rose 46% to $232.2 million. Marketplace and services revenues were $57.5 million, reflecting a 17% year-over-year surge. However, revenues from Server declined 27% to $86.1 million.
Our revenue estimates for the Cloud, Data Center, Marketplace and Services and Server businesses were pegged at $554.3 million, $219.5 million, $64.7 million and $71.5 million.
Atlassian added 2,562 net new customers, bringing the total count to 262,337 customers on an active subscription or maintenance agreement basis in the reported quarter. 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.
The company’s non-GAAP gross profit climbed 23% year over year to $792.2 million. The non-GAAP gross margin contracted 100 basis points (bps) to 84% during the quarter.
Atlassian’s non-GAAP operating income increased 88.4% year over year to $202.6 million, while its non-GAAP operating margin increased to 22% from 14% in the year-ago quarter. The robust improvement in the operating income and margin was primarily due to lower non-GAAP operating expenses as a percentage of revenues. Operating expenses benefited from payroll savings from a lower headcount and greater-than-expected savings in discretionary spending.
Balance Sheet
The company ended the fourth quarter of fiscal 2023 with cash and cash equivalents and short-term investments of $2.11 billion, up from $1.98 billion at the end of the fiscal third quarter of 2023.
In the fiscal fourth quarter, TEAM generated operating and free cash flows of $272.8 million and $270.4 million, respectively. In fiscal 2023, the company generated operating and free cash flows of $868.1 million and $842.5 million, respectively.
First-Quarter and Fiscal 2024 Guidance
The company initiated guidance for the first quarter and the full-fiscal 2024. For the first quarter of fiscal 2024, the company anticipates revenues between $950 million and $970 million. The Zacks Consensus Estimate is pegged at $945.1 million. The non-GAAP gross margin is estimated to be approximately 83.5%. The non-GAAP operating margin is projected to be approximately 19.5%.
For fiscal 2024, Atlassian anticipates the non-GAAP gross margin and the operating margin to be approximately 83.5% and 18.5%, respectively.
Zacks Rank & Stocks to Consider
Currently, Atlassian carries a Zacks Rank #5 (Strong Sell). Shares of TEAM have increased 31.8% year to date (YTD).
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Atlassian (TEAM) Jumps 23% on Q4 Earnings Beat, Strong Guidance
Atlassian (TEAM - Free Report) shares soared 23.5% during Thursday’s extended trading session after the company reported stronger-than-expected fourth-quarter fiscal 2023 results. Also, a solid forecast for the first quarter and fiscal 2024 subdued investors’ concerns over a slowdown in IT spending, helping the shares of the team collaboration software maker soar in the after-hours trade yesterday.
Atlassian reported fourth-quarter fiscal 2023 non-GAAP earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 43 cents. The figure increased a whopping 111% from the year-ago quarter’s non-GAAP earnings of 27 cents per share, mainly driven by higher revenues along with the benefits of disciplined hiring and cost management.
Atlassian’s fiscal fourth-quarter revenues jumped 24% to $939 million and surpassed the consensus mark of $911.2 million. The top line was primarily driven by strong growth in Subscription revenues, partially offset by the weak performance of the Maintenance offering.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote
Quarterly Details
Segment-wise, Subscription revenues jumped 34% year over year to $799.7 million. Subscription revenues primarily benefited from higher enterprise sales, mainly driven by better sales executions and the end of its loyalty discount program that accelerated migrations to the company’s Cloud and Data Center offerings. Also, the cloud migration momentum continued for larger clients. Our estimate for Subscription revenues was pegged at $764.5 million.
Sales from the Maintenance business decreased 27% year over year to $85.9 million. The decline was primarily due to the company’s planned end of providing maintenance and support for its Server offerings, beginning in February 2024. Our estimate for Maintenance revenues was pegged at $84.9 million.
Atlassian’s Other revenues (including perpetual license revenues) soared 18% year over year to $53.5 million. Our estimate for Other revenues was pegged at $60.6 million.
During the fiscal fourth quarter, Cloud revenues were $563.2 million, indicating 30% year-over-year growth. Meanwhile, revenues from the Data Center rose 46% to $232.2 million. Marketplace and services revenues were $57.5 million, reflecting a 17% year-over-year surge. However, revenues from Server declined 27% to $86.1 million.
Our revenue estimates for the Cloud, Data Center, Marketplace and Services and Server businesses were pegged at $554.3 million, $219.5 million, $64.7 million and $71.5 million.
Atlassian added 2,562 net new customers, bringing the total count to 262,337 customers on an active subscription or maintenance agreement basis in the reported quarter. 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.
The company’s non-GAAP gross profit climbed 23% year over year to $792.2 million. The non-GAAP gross margin contracted 100 basis points (bps) to 84% during the quarter.
Atlassian’s non-GAAP operating income increased 88.4% year over year to $202.6 million, while its non-GAAP operating margin increased to 22% from 14% in the year-ago quarter. The robust improvement in the operating income and margin was primarily due to lower non-GAAP operating expenses as a percentage of revenues. Operating expenses benefited from payroll savings from a lower headcount and greater-than-expected savings in discretionary spending.
Balance Sheet
The company ended the fourth quarter of fiscal 2023 with cash and cash equivalents and short-term investments of $2.11 billion, up from $1.98 billion at the end of the fiscal third quarter of 2023.
In the fiscal fourth quarter, TEAM generated operating and free cash flows of $272.8 million and $270.4 million, respectively. In fiscal 2023, the company generated operating and free cash flows of $868.1 million and $842.5 million, respectively.
First-Quarter and Fiscal 2024 Guidance
The company initiated guidance for the first quarter and the full-fiscal 2024. For the first quarter of fiscal 2024, the company anticipates revenues between $950 million and $970 million. The Zacks Consensus Estimate is pegged at $945.1 million. The non-GAAP gross margin is estimated to be approximately 83.5%. The non-GAAP operating margin is projected to be approximately 19.5%.
For fiscal 2024, Atlassian anticipates the non-GAAP gross margin and the operating margin to be approximately 83.5% and 18.5%, respectively.
Zacks Rank & Stocks to Consider
Currently, Atlassian carries a Zacks Rank #5 (Strong Sell). Shares of TEAM have increased 31.8% year to date (YTD).
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NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 204.6% YTD.
The Zacks Consensus Estimate for Fortinet’s third-quarter 2023 earnings has remained unchanged at 36 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17.1%. Shares of FTNT have rallied 54.9% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by a couple of cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 63.2% YTD.