Factors to Note Ahead of Atlassian's (TEAM) Q3 Earnings Release
Atlassian TEAM is scheduled to report third-quarter fiscal 2023 results on May 4.
Atlassian projects fiscal third-quarter revenues between $890 million and $910 million ($900 million at the midpoint). The Zacks Consensus Estimate for revenues is pegged at $898.7 million, suggesting growth of 21.4% from the year-ago reported figure.
For third-quarter earnings, the Zacks Consensus Estimate is pegged at 36 cents per share, suggesting a 23.4% decline from 47 cents reported in the year-ago period.
Atlassian surpassed the Zacks Consensus Estimate in three of the trailing four quarters, missing it once, the average surprise being 22.7%.
Atlassian Corporation PLC Price and EPS Surprise
Atlassian Corporation PLC price-eps-surprise | Atlassian Corporation PLC Quote
Factors at Play
The rising adoption of TEAM’s cloud-based solutions and the massive digitalization trend in organizations, along with the growing hybrid working trend, are likely to have favored the company’s fiscal third-quarter performance. Growing demand for the company’s cloud products from new and existing clients using on-premises products might have acted as a tailwind.
The increasing traction for core products like Jira Software and Confluence Cloud and the rising adoption of new products like Jira Service Management may have acted as key catalysts. An improvement in product quality and performance, multiple product launches and increased pricing are also likely to have boosted the firm’s performance.
Robust growth in subscription revenues, aided by the solid uptake of the company’s subscription-based offerings, is likely to be reflected in the to-be-reported quarter’s results. Atlassian expects a non-GAAP gross margin of approximately 84% and non-GAAP operating margin of around 15% in the third quarter of fiscal 2023.
However, increased investments in its systems and infrastructure, research & development and sales and marketing initiatives might have weighed on the bottom line in the third quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Atlassian this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here, as elaborated below.
TEAM has an Earnings ESP of 0.00% and carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Certara CERT, Garmin GRMN and PayPal PYPL have the right combination of elements to post an earnings beat in their upcoming releases.
Certara has an Earnings ESP of +5.41% and sports a Zacks Rank #1 at present. The company is set to report its first-quarter 2023 results on May 8. CERT’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missing twice and matching once, the average surprise being negative 3.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CERT’s first-quarter earnings is pegged at 12 cents per share, indicating a 9.1% surge from the year-ago quarter’s 11 cents. The consensus mark for revenues is pegged at $91.4 million, suggesting a year-over-year increase of 12%.
Currently, Garmin has an Earnings ESP of +0.80% and carries a Zacks Rank #3 at present. The company is scheduled to report its first-quarter 2023 results on May 3, before market open. GRMN’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, missing it once, delivering an average earnings surprise of 7.3%.
The Zacks Consensus Estimate for GRMN’s first-quarter earnings is $1 per share, indicating a year-over-year decline of 9.9%. The company is estimated to report revenues of $1.08 billion, which suggests a decline of 7.9% from the year-ago quarter.
PayPal has an Earnings ESP of +2.15% and carries a Zacks Rank #3 at present. The company is set to report first-quarter 2023 results on May 8. PYPL’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, matching once, the average surprise being 6.6%.
The Zacks Consensus Estimate for PayPal’s quarterly earnings is pegged at $1.09 per share, suggesting a year-over-year increase of 23.9%. Its quarterly revenues are estimated to increase 7.6% year over year to $6.98 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Garmin Ltd. (GRMN) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
Atlassian Corporation PLC (TEAM) : Free Stock Analysis Report
Certara, Inc. (CERT) : Free Stock Analysis Report
