Early on in the Q4 earnings season, the tech sector has mostly produced a lot of disappointments, with merely good (but not great) earnings unable to sustain the sharp rallies that tech stocks have seen over the past year. Atlassian (With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contribu ...

Atlassian Corp TEAM reported better-than-expected financial results for the fiscal second quarter after the market close on Thursday.Atlassian reported second-quarter revenue of $1.29 billion, beating analyst estimates of $1.24 billion, according to Benzinga Pro. The company reported second-quarter adjusted earnings of 96 cents per share, beating analyst estimates of 76 cents per share."The Atlassian System of Work is resonating with enterprises all over the globe, as business leaders increasingly turn to t ...

Group 1 - Atlassian shares increased by 20% in premarket trading after exceeding Wall Street's fiscal second-quarter earnings and guidance expectations [1] - Adjusted earnings were reported at 96 cents per share, surpassing the analyst projection of 76 cents per share [1] - Revenues for the quarter reached $1.29 billion, compared to the estimated $1.24 billion [1] Group 2 - For the third quarter, Atlassian anticipates revenues of $1.35 billion, exceeding the LSEG estimate of $1.31 billion [1] - The company experienced robust cloud and data center growth, driven by increased customer adoption of artificial intelligence solutions [2] - Subscription revenue grew by 30% year-over-year, with expectations of 26.5% cloud growth and 21.5% data center growth for the fiscal year [2]

Atlassian (NASDAQ: TEAM ) was trading sharply higher after releasing second-quarter results that apparently stunned investors. It is possible that Wall Street was fearful that generative AI would restrict headcount growth and thus slow down top-line growth rates. TEAM hasJulian is the leader of the investing group Best Of Breed Growth Stocks where he only shares positions in stocks which have a large probability of delivering large alpha relative to the S&P 500. He also combines growth-oriented principles w ...

Atlassian surpassed expectations in its most recent earnings report, fueled by strong cloud revenue growth.Team collaboration and productivity software specialist Atlassian (TEAM -1.61%) reported fiscal year 2025 second-quarter results on Thursday, Jan. 30, that topped analysts' consensus estimates. Q2 revenue of $1.29 billion surpassed the estimated $1.24 billion mark while adjusted earnings per share came in at $0.96, outshining the anticipated $0.75. This robust performance was fueled by a remarkable 30% ...

Key TakeawaysAtlassian shares jumped 20% in extended trading Thursday after the software company issued an upbeat revenue outlook amid robust demand for its AI-powered cloud offerings.The price sits poised to stage a breakout above a pennant in Friday’s trading session, signaling a continuation of the stock's strong uptrend.Investors should watch key overhead areas on Atlassian's chart around $335, $400, and $460, while also eyeing an important support level near $288. Atlassian (TEAM) shares surged in exte ...

Core Insights - Atlassian reported $1.29 billion in revenue for the quarter ended December 2024, marking a year-over-year increase of 21.4% [1] - The earnings per share (EPS) for the same period was $0.96, compared to $0.73 a year ago, reflecting a significant increase [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.24 billion by 4.12%, while the EPS surprise was 31.51% over the consensus estimate of $0.73 [1] Financial Performance Metrics - The company has 300,000 customers, slightly below the two-analyst average estimate of 302,104 [4] - Subscription revenues reached $1.21 billion, surpassing the eight-analyst average estimate of $1.17 billion, with a year-over-year change of 30.2% [4] - Other revenues amounted to $73.22 million, exceeding the average estimate of $63.66 million, representing a year-over-year increase of 24.5% [4] - Cloud revenues were reported at $846.96 million, above the seven-analyst average estimate of $818.55 million, with a year-over-year change of 29.7% [4] - Data Center revenues reached $362.28 million, surpassing the six-analyst average estimate of $349.76 million, reflecting a year-over-year increase of 31.9% [4] - Marketplace and other revenues were $77.22 million, exceeding the average estimate of $67.16 million, with a year-over-year change of 22.6% [4] Stock Performance - Atlassian shares have returned +11.5% over the past month, significantly outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1 - Atlassian reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.73 per share, and showing an increase from $0.73 per share a year ago, resulting in an earnings surprise of 31.51% [1] - The company achieved revenues of $1.29 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.12%, compared to $1.06 billion in the same quarter last year [2] - Atlassian has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Group 2 - The stock has gained approximately 11.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.7% [3] - The future performance of Atlassian's stock will largely depend on management's commentary during the earnings call and the subsequent revisions of earnings estimates [3][4] - Current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $1.32 billion, and for the current fiscal year, it is $3.19 on revenues of $5.09 billion [7] Group 3 - The Internet - Software industry, to which Atlassian belongs, is currently ranked in the top 19% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for Q2 FY 2025 was $1,286 million, representing a 21% increase year-over-year[1] - Subscription revenue reached $1,213 million, up 30% year-over-year[1] - Operating income for Q2 FY 2025 was $335.1 million, compared to $250.6 million in Q2 FY 2024[3] - Total revenues for the three months ended December 31, 2024, were $1,286,463, representing a 21.3% increase from $1,060,110 in the same period of 2023[23] - Subscription revenues for the six months ended December 31, 2024, reached $2,345,196, up 31.5% from $1,784,163 in the prior year[23] - Cloud revenue for the three months ended December 31, 2024, was $846,962 thousand, up 29.7% from $653,210 thousand in the prior year[29] - GAAP net loss for the three months ended December 31, 2024, was $(38,208) thousand, compared to a net loss of $(84,469) thousand for the same period in 2023, representing a 54.8% improvement[32] - Non-GAAP net income for the three months ended December 31, 2024, was $255,627 thousand, an increase of 35% from $189,506 thousand in the same period of 2023[32] Cash Flow and Margins - Cash flow from operations was $352 million, with free cash flow of $343 million[1] - Free cash flow for the three months ended December 31, 2024, was $342,569 thousand, compared to $284,261 thousand for the same period in 2023, reflecting a 20.5% increase[32] - The company reported a net cash provided by operating activities of $351,905 thousand for the three months ended December 31, 2024, compared to $289,594 thousand in the same period of 2023, a 21.5% increase[32] - Cash and cash equivalents as of December 31, 2024, were $2,217,604, an increase from $2,176,930 as of June 30, 2024[25] - Cash, cash equivalents, and restricted cash at the end of the period totaled $2,218,639 thousand, up from $1,461,763 thousand at the end of the same period in 2023[27] Customer Growth - Atlassian ended Q2 FY 2025 with 49,449 customers generating over $10,000 in Cloud annualized recurring revenue, a 15% increase year-over-year[4] - The number of customers with Cloud ARR greater than $10,000 is defined as organizations with unique domains having an active Cloud subscription for two or more seats[19] Future Projections - The company expects total revenue for Q3 FY 2025 to be in the range of $1,345 million to $1,353 million[11] - Cloud revenue growth year-over-year is projected to be approximately 23.5% for Q3 FY 2025[11] - Fiscal Year Ending June 30, 2025, GAAP gross margin is projected to be between 81.5% and 82.0%[35] - Fiscal Year Ending June 30, 2025, Non-GAAP gross margin is projected to be between 84.0% and 84.5%[35] - GAAP operating margin for the fiscal year is projected to be (4.0%) [35] - Non-GAAP operating margin for the fiscal year is expected to remain at 23.5%[35] Strategic Initiatives - Atlassian announced a strategic partnership with Amazon Web Services to enhance cloud services and AI capabilities[4] - The company was recognized as a leader in multiple industry reports, including The Forrester Wave and Gartner Magic Quadrant[4] Operational Metrics - GAAP operating margin was (4%) while non-GAAP operating margin was 26%[3] - Gross profit for the three months ended December 31, 2024, was $1,063,336, compared to $865,574 for the same period in 2023, indicating a gross margin improvement[23] - Non-GAAP gross margin improved to 85% for the three months ended December 31, 2024, compared to 84% in the same period of 2023[32] - GAAP gross margin for the three months ending March 31, 2025, is 82.0%[35] - Non-GAAP gross margin for the same period is 84.5%[35] Losses and Expenses - Operating loss for the three months ended December 31, 2024, was $(57,479), slightly higher than $(49,062) in the same period of 2023[23] - Net loss for the six months ended December 31, 2024, was $(161,977), compared to $(116,352) for the same period in 2023, reflecting increased operational costs[23] - Stock-based compensation for the three months ending March 31, 2025, is 1.5 million[35] - Amortization of acquired intangible assets for the same period is 1.0 million[35]

Core Viewpoint - Atlassian is expected to report strong fiscal second-quarter results driven by robust cloud adoption and digital transformation trends, despite challenges from a soft IT spending environment [4][8]. Revenue and Earnings Estimates - Atlassian projects fiscal second-quarter revenues between $1.233 billion and $1.241 billion, with a Zacks Consensus Estimate of $1.24 billion, indicating a year-over-year growth of 16.6% [2]. - The consensus estimate for earnings per share remains at 73 cents, consistent with the previous year’s non-GAAP earnings [2]. Performance History - Atlassian has consistently surpassed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 24.4% [3]. Growth Drivers - The strong adoption of Atlassian's cloud-based offerings and the shift towards hybrid work models are expected to positively impact the company's performance [4]. - Revenue from Cloud deployment is estimated at $811.6 million, reflecting a 24.2% increase year-over-year, while Data Center deployment revenues are anticipated to grow by 26.2% to $346.6 million [5]. - Demand for key products like Jira Software and Confluence Cloud, along with advanced solutions such as Jira Product Discovery Premium, is expected to contribute to growth [6]. Technological Integration - Atlassian's focus on integrating AI features into its software is likely to enhance its revenue, supported by a partnership with Amazon Web Services aimed at accelerating cloud transformation [7]. Market Challenges - The company's performance may be impacted by a challenging IT spending environment, high interest rates, and inflation, leading to postponed IT investments by businesses [8]. Earnings Prediction Model - Current analysis indicates that Atlassian does not have a strong likelihood of beating earnings estimates, with an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell) [9][10].