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

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Atlassian TEAM reported fourth-quarter fiscal 2022 non-IFRS earnings per share (EPS) of 27 cents beating the Zacks Consensus Estimate of 26 cents. The figure increased 12.5% from the year-ago quarter’s non-IFRS earnings of 24 cents per share.

Atlassian’s fiscal fourth-quarter revenues surged 36% to $760 million and surpassed the consensus mark of $717.8 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 and EPS Surprise

Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote

Quarterly Details

During the fourth quarter of fiscal 2022, Atlassian added 8,048 net new customers, bringing the total count to 242,623 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 55% year over year to $597.3 million. Sales from the Maintenance business decreased 11% year over year to $117.1 million, while Other revenues (which included perpetual license revenues) jumped 6% year over year to $45.4 million.

During the quarter under review, cloud revenues were $434 million, indicating 55% year-over-year growth. Meanwhile, revenues from the data center surged 60% to $158.9 million. Marketplace and services revenues were $49.3 million, reflecting a 24% year-over-year downfall. Revenues from Server declined 16% to $117.6 million.

The company’s non-IFRS gross profit climbed 35.9% year over year to $644 million. Non-IFRS gross margin contracted 10 basis points (bps) to 84.8% during the quarter.

Atlassian’s non-IFRS operating income increased 14.8% year over year to $108.9 million, while its operating margin contracted 300 bps to 14%.

Fiscal 2022 Highlights

Atlassian’s fiscal 2022 revenues grew 34% year over year to $2.8 billion and surpassed the Zacks Consensus Estimate of $2.76 billion. The company reported non-IFRS earnings of $1.69 per share for the fiscal, which matched the Zacks Consensus Estimate but outpaced the year-ago quarter’s earnings of $1.40 per share.

Balance Sheet

The company ended the fourth quarter of fiscal 2022 with cash and cash equivalents and short-term investments of $1.46 billion, up from $1.28 billion at the end of the third quarter.

During the fourth quarter, TEAM generated operating and free cash flow of $230 million and $194.7 million, respectively. In fiscal 2022, the company generated operating and free cash flow of $883.5 million and $763.8 million, respectively.

Outlook

For the first quarter of fiscal 2023, the company anticipates revenues between $795 million and $810 million. Atlassian’s fiscal first-quarter revenue guidance is higher than the Zacks Consensus Estimate of $761.9 million.

Non-IFRS gross margin is estimated to be 84-85%. Non-IFRS operating margin is projected to be approximately 18%. The company anticipates reporting non-IFRS EPS of 37 to 38 cents approximately. The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 33 cents per share.

Zacks Rank & Key Picks

Atlassian currently carries a Zacks Rank #5 (Strong Sell). Shares of TEAM have climbed 13.9% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Taiwan Semiconductor TSM, Clearfield CLFD and Silicon Laboratories SLAB, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised 10 cents northward to $1.70 per share over the past 30 days. For 2022, earnings estimates have moved 37 cents north to $6.30 per share in the past 30 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 27.4% in the past year.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past seven days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past seven days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 141.9% in the past year.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past seven days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past seven days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 3.5% in the past year.


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