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Atlassian (TEAM) Q4 Earnings and Revenues Top Estimates, Up Y/Y

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Atlassian TEAM delivered better-than-expected fourth-quarter fiscal 2021 results. The company’s non-IFRS earnings per share of 24 cents beat the Zacks Consensus Estimate of 18 cents. However, the figure came in a penny lower than the year-ago quarter’s non-IFRS earnings of 25 cents per share.

The year-over-year decline underlines higher operating costs, mainly due to increased sales and marketing expenses and heavy investments in cloud research and developments. Addition of more than 1,500 new employees in the last 12 months also hurt the bottom line.

Quarter in Detail

Atlassian’s fiscal fourth-quarter revenues jumped 30% to $559.5 million and surpassed the consensus mark of $521.6 million. The company witnessed solid demand for its cloud-based products, primarily led by smaller customers, while the cloud migration momentum continued for larger clients.

New client additions and increased pricing on certain products also boosted revenues during the quarter. The company added more than 23,311 net new customers during the reported quarter, bringing the total count to more than 236,118 customers.

Atlassian Corporation PLC Price, Consensus and EPS Surprise

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

Segment wise, Subscription revenues surged 50%, year over year, to $385.5 million. Sales from the Maintenance business increased 7% to $131.1 million, while Other revenues jumped 13% year on year to $33.7 million. However, Perpetual License business revenues plunged 55% to $9.2 million.

The company’s non-IFRS gross profit climbed 27.8% year over year to $473.8 million. Nonetheless, non-IFRS gross margin contracted 140 basis points (bps) to 84.7% during the fiscal fourth quarter.

Atlassian’s non-IFRS operating income increased 15.1% year on year to $94.9 million, but margin shrunk 220 bps to 17%.

Fiscal 2021 Highlights

Atlassian’s fiscal 2021 revenues grew 29.4%, year over year, to $2.09 billion and surpassed the Zacks Consensus Estimate of $2.05 billion. The company reported non-IFRS earnings of $1.40 per share for the fiscal, which came in higher than the consensus mark of $1.33 per share as well as the year-ago quarter’s earnings of $1.15 per share.

Balance Sheet

The company ended the fiscal fourth quarter with cash and cash equivalents, and short-term investments of $1.2 billion, down from the $1.6 billion recorded at the end of the fiscal third quarter. During the reported quarter, the company generated operating and free cash flow of $184.4 million and $164.2 million, respectively.

In fiscal 2021, it generated operating cash flow of $841.3 million.

Outlook

For first-quarter fiscal 2022, the company anticipates revenues between $575 million $590 million (mid-point $582.5 million), suggesting year-over-year growth of 25-28%. Atlassian’s fiscal first-quarter revenue guidance is higher than the Zacks Consensus Estimate of $536.3 million.

Non-IFRS gross margin is estimated to be approximately 85%. Non-IFRS operating margin is projected to be around 25%. The company expects to report non-IFRS earnings per share between 38 cents and 39 cents. The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 29 cents.

Zacks Rank and Stocks to Consider

Atlassian currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Digital Turbine APPS, Zoom Video Communications ZM and Salesforce CRM. While Digital Turbine and Zoom sport a Zacks Rank #1 (Strong Buy), Salesforce carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Digital Turbine, Zoom and Salesforce is currently pegged at 50%, 16.6% and 18.4%, respectively.


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