Back to top

Can Solid Product Portfolio Aid Atlassian (TEAM) Q2 Earnings?

Read MoreHide Full Article

Atlassian Corporation Plc (TEAM - Free Report) is scheduled to report second-quarter fiscal 2019 results on Jan 17.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four reported quarters, the average being 11.73%.

In the last reported quarter, the company’s earnings as well as revenues beat the Zacks Consensus Estimate and the guided range. Also, the top and the bottom lines recorded a year-over-year improvement.

For the fiscal second quarter, Atlassian anticipates revenues of $287-$289 million. The Zacks Consensus Estimate is pegged at $288.2 million, reflecting 35.6% higher than the year-ago quarterly figure.

On a non-IFRS basis, the company expects earnings per share to be 21 cents, indicating a year-over-year surge of 61.5%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Atlassian is benefiting from its go-to market strategy focused on product innovation. The company’s strong pricing power is a tailwind. Notably, it is enjoying solid customer additions on the back of a diverse product portfolio.

Healthy demand for its core products like Jira and Confluence coupled with the growing adoption of new products like Trello, Jira Ops and OpsGenie is a key driver.

The company added more than 5,800 net customers during the last reported quarter, which took the total customer count to 131,000.

Growing traction of the company’s cloud service offerings or data center offerings is evident from its robust subscription revenues, which soared 55% year over year in the last reported quarter.

However, surging expenses persist to be a drag on its margins and the bottom line. The company’s increasing investments in research and development and its go-to-market sales strategy might hurt margins in the near term.

What Our Model Says

Our proven Zacks model clearly shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has significant chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Atlassian currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases:

Cloudera, Inc. (CLDR - Free Report) has an Earnings ESP of +30.00% and is a Zacks #1 Ranked stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Verint Systems Inc. (VRNT - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank of 1.

Grubhub Inc. (GRUB - Free Report) has an Earnings ESP of +21.07% and a Zacks Rank #2.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like

Published in