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Atlassian (TEAM) Q3 Earnings & Revenues Top Estimates, Up Y/Y
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Atlassian (TEAM - Free Report) reported stellar third-quarter fiscal 2020 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate as well as marked significant year-over-year improvements. The company’s non-IFRS earnings per share of 25 cents beat the consensus mark by 25% and jumped 19% year over year. Robust revenue growth and better cost management chiefly boosted Atlassian’s fiscal third-quarter earnings.
Quarter in Detail
The company reported fiscal third-quarter revenues of $411.6 million, which surpassed the Zacks Consensus Estimate of $396 million. Moreover, quarterly revenues surged 33% year on year, mainly driven by new client additions and increased pricing on certain products. During the reported quarter, Atlassian added 6,261 net new-clients, bringing the total customer count to 171,051.
Segment-wise, Subscription revenues jumped 47% year over year to $244.2 million. Sales from the Maintenance business increased 21% to $119.6 million, while Perpetual License business revenues declined 9% to $21 million. Other revenues climbed 29% year over year to $26.8 million.
The company’s non-IFRS gross profit increased 32% year over year to $353.1 million. However, non-IFRS gross margin contracted50 basis points (bps) to 85.8% in the fiscalthird quarter.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian’s non-IFRS operating income grew 33% year over year to $77.2 million, while margin remained flat at 18.8%.
The company ended the fiscal third quarter with cash and cash equivalents and short-term investments of $2.07 billion. During the quarter, the company generated operating and free cash flow of $156.3 million and $140.3 million, respectively.
Outlook
Atlassian stated that the coronavirus outbreak had negligible impact on its fiscal third-quarter results. However, the company cautioned that many of its customers, including small businesses as well as big organizations, are economically sensitive and have been adversely impacted by the pandemic and related setbacks. Therefore, Atlassian believes the impact of the pandemic could increase in its fiscal fourth-quarter performance. As a result, the company issued a wider-than-usual guidance range for the current quarter.
For the fiscal fourth quarter, the company anticipates revenues to be between $400 million $415 million, suggesting year-over-year growth of 19-24%. However, Atlassian’s fiscal fourth-quarter revenue guidance range fell short of the Zacks Consensus Estimate of $417.6 million.
Non-IFRS gross margin is anticipated to be approximately 85. Non-IFRS operating margin is projected to be in the range of 14-17%. The company expects to report non-IFRS earnings per share in the 17-22 cents band. The Zacks Consensus Estimate is pegged at 21 cents.
Additionally, Atlassian has updated its fiscal 2020 outlook. The company now projects revenues of $1.584-$1.599 billion compared with its previous forecast of $1.59-$1.60 billion. The Zacks Consensus Estimate is pegged at $1.58 billion.
Non-IFRS gross margin is now expected to be approximately 86% compared with the earlier projection of 85.5-86%. Non-IFRS operating margin is now projected at 21.5-22.5%, higher than the previous expectation of 21-22%.
The company also raised its fiscal non-IFRS earnings outlook to $1.06-$1.12 per share from the $1.03–$1.09 projected previously. The Zacks Consensus Estimate is pinnedat $1.06.
Operating and free cash flows are now anticipated in the range of $512-$542 million and $445-$475 million, respectively. Earlier, the company had projected an operating cash flow of $535-545 million and free cash flow of $475-$485 million.
Zacks Rank and Key Picks
Currently, Atlassian carries a Zacks Rank #3 (Hold).
The long-term earnings growth rate for Zoom, Pixelworks and InterDigital is currently pegged at 26.6%, 20%, and 15%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Atlassian (TEAM) Q3 Earnings & Revenues Top Estimates, Up Y/Y
Atlassian (TEAM - Free Report) reported stellar third-quarter fiscal 2020 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate as well as marked significant year-over-year improvements. The company’s non-IFRS earnings per share of 25 cents beat the consensus mark by 25% and jumped 19% year over year. Robust revenue growth and better cost management chiefly boosted Atlassian’s fiscal third-quarter earnings.
Quarter in Detail
The company reported fiscal third-quarter revenues of $411.6 million, which surpassed the Zacks Consensus Estimate of $396 million. Moreover, quarterly revenues surged 33% year on year, mainly driven by new client additions and increased pricing on certain products. During the reported quarter, Atlassian added 6,261 net new-clients, bringing the total customer count to 171,051.
Segment-wise, Subscription revenues jumped 47% year over year to $244.2 million. Sales from the Maintenance business increased 21% to $119.6 million, while Perpetual License business revenues declined 9% to $21 million. Other revenues climbed 29% year over year to $26.8 million.
The company’s non-IFRS gross profit increased 32% year over year to $353.1 million. However, non-IFRS gross margin contracted50 basis points (bps) to 85.8% in the fiscalthird 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 grew 33% year over year to $77.2 million, while margin remained flat at 18.8%.
The company ended the fiscal third quarter with cash and cash equivalents and short-term investments of $2.07 billion. During the quarter, the company generated operating and free cash flow of $156.3 million and $140.3 million, respectively.
Outlook
Atlassian stated that the coronavirus outbreak had negligible impact on its fiscal third-quarter results. However, the company cautioned that many of its customers, including small businesses as well as big organizations, are economically sensitive and have been adversely impacted by the pandemic and related setbacks. Therefore, Atlassian believes the impact of the pandemic could increase in its fiscal fourth-quarter performance. As a result, the company issued a wider-than-usual guidance range for the current quarter.
For the fiscal fourth quarter, the company anticipates revenues to be between $400 million $415 million, suggesting year-over-year growth of 19-24%. However, Atlassian’s fiscal fourth-quarter revenue guidance range fell short of the Zacks Consensus Estimate of $417.6 million.
Non-IFRS gross margin is anticipated to be approximately 85. Non-IFRS operating margin is projected to be in the range of 14-17%. The company expects to report non-IFRS earnings per share in the 17-22 cents band. The Zacks Consensus Estimate is pegged at 21 cents.
Additionally, Atlassian has updated its fiscal 2020 outlook. The company now projects revenues of $1.584-$1.599 billion compared with its previous forecast of $1.59-$1.60 billion. The Zacks Consensus Estimate is pegged at $1.58 billion.
Non-IFRS gross margin is now expected to be approximately 86% compared with the earlier projection of 85.5-86%. Non-IFRS operating margin is now projected at 21.5-22.5%, higher than the previous expectation of 21-22%.
The company also raised its fiscal non-IFRS earnings outlook to $1.06-$1.12 per share from the $1.03–$1.09 projected previously. The Zacks Consensus Estimate is pinnedat $1.06.
Operating and free cash flows are now anticipated in the range of $512-$542 million and $445-$475 million, respectively. Earlier, the company had projected an operating cash flow of $535-545 million and free cash flow of $475-$485 million.
Zacks Rank and Key Picks
Currently, Atlassian carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Zoom Video Communications, Inc. (ZM - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and InterDigital, Inc. (IDCC - Free Report) , each 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 Zoom, Pixelworks and InterDigital is currently pegged at 26.6%, 20%, and 15%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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