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Cloud Stocks: Atlassian Crosses the Billion Dollar Revenue Milestone

Posted on Thursday, Aug 1st 2019

Productivity software provider Atlassian (Nasdaq: TEAM) recently announced its fourth quarter results that surpassed all expectations. This was the first year that Atlassian crossed the $1 billion revenue milestone while generating more than $400 million in free cash flow.

Atlassian’s Financials

For the quarter, its revenues grew 36% over the year to $334.6 million, ahead of the market’s forecast of $330.6 million. Net loss was $237.5 million, compared with $21.9 million a year ago. The quarter included a charge of $156.3 million recorded to mark to fair value the exchange feature of Atlassian’s exchangeable senior notes and the related capped calls. Adjusted EPS was $0.20, better than the market’s forecast of $0.16.

By segment, Subscription revenues grew 50% to $180.9 million and maintenance revenues grew 21% to $105.8 million. Perpetual license revenue grew 5% to $22.8 million and other revenues increased 48% to $25.1 million.

Atlassian remains focused on growth through the Cloud. It has been investing in migrating customers to cloud to adopt its subscription-based offerings instead of the license-based ones. During the quarter, 82% of its customer base was on cloud, compared with 78% reported two quarters ago.

It ended the quarter with 152,727 customers on an active subscription or maintenance agreement, adding almost 8,690 net new customers during the quarter.

Atlassian ended the year with revenues growing 37% to $1.21 billion and an EPS of $0.51.

For the current quarter, Atlassian expects revenues of $349-$353 million with an adjusted EPS of $0.24. It expects to end the current year with revenues of $1.54-$1.56 billion and an EPS of $1. The Street was looking for revenues of $349.6 million with an EPS of $0.21 for the quarter and revenues of $1.55 billion with an EPS of $1 for the year.

Atlassian’s Platform Focus

Atlassian has added significant new features to its platform in the recent quarter. Earlier last month, it announced a set of new Jira Cloud workflow APIs that expand the ways that developers can interact with the company’s issue tracking platform. The new APIs provide users with the ability to create new custom workflow rules, retrieve workflows, and find workflows associated with a set of projects. Prior to the upgrade, developers could only provide custom workflow post functions. With the upgrade, they will now be able to provide other types of workflow rules such as conditions, validators, and post-functions.

It has also provided a new REST API for managing workflow rule configurations that will allow developers to retrieve and update all workflow rules at runtime. Atlassian has also provided a new workflow search API, that will allow developers to retrieve any Jira workflow and their transitions and get access to workflow statuses and status properties.

Atlassian’s investments on its platform have stood it well so far. It has built a thriving marketplace that offers more than 1,500 Jira apps and nearly 850 Confluence apps. The third party developed apps help organizations with services ranging from IT Service Management, Project Management, Customer Support to providing Visualization Capabilities. Earlier this year, it had acquired Good Software, a developer focused on its Confluence Platform. Atlassian will need more acquisitions to grow to the next billion and the developers on its platform will offer a valuable pool for potential acquisitions.

Atlassian’s stock is trading at $140.02 with a market capitalization of $33.8 billion. It touched a year high of $149.80 earlier this month. It has been climbing from the 52-week low of $65.17 that it had fallen to in October last year.

This segment is a part in the series : Cloud Stocks


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