Atlassian


TEAM

delivered better-than-expected first-quarter fiscal 2022 results. The company’s non-IFRS earnings per share of 46 cents beat the Zacks Consensus Estimate of 39 cents. The figure improved 53.3% from the year-ago quarter’s non-IFRS earnings of 30 cents per share.

Atlassian’s fiscal first-quarter revenues surged 34% to $614 million and surpassed the consensus mark of $583.3 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. The company added 6,912 employees during the quarter.

In the first quarter of fiscal 2022, Atlassian has modified its revenue reporting style. Reporting on the basis of Deployment options, it has reported revenue under four segments: cloud, data center, server, and marketplace and services. Also, it has started to exclude Trello single-user accounts while updating its active customer count from this season onward.

Quarterly Details

During the first quarter of fiscal 2022, Atlasssian added 11,746 net new customers bringing the total count to 216,500 customers on an active subscription or maintenance agreement basis. Over 99% of customers opted for cloud offerings amid the ongoing cloud migration. Such new additions and increased pricing on certain products bolstered the company’s quarterly revenues.

Segment wise, Subscription revenues surged 57% year over year to $435 million. Sales from the Maintenance business increased 2.3% year on year to $130.6 million, while Other revenues (which included perpetual license revenues) declined 10.6% year over year to $48.1 million.

During the quarter under review, cloud revenues were $317.9 million, indicating 53% year-over-year growth. Meanwhile, revenues from the data center grew 68% to $111.2 million. Marketplace and services revenues were $45.4 million, reflecting a 26% year-over-year improvement. Revenues from Server declined 7% to $139.5 million.

The company’s non-IFRS gross profit climbed 33.6% year over year to $529.5 million. Nonetheless, non-IFRS gross margin contracted 10 basis points (bps) to 86.2% during the quarter.

Atlassian’s non-IFRS operating income increased 58.2% year on year to $166.7 million, while margin expanded 400 bps to 27%.

Balance Sheet

The company ended the first quarter of fiscal 2022 with cash and cash equivalents, and short-term investments of $1.6 billion, up from the $1.2 billion at the end of the fourth quarter of fiscal 2021.

During the first quarter, Atlassian generated operating and free cash flow of $78.4 million and $59.3 million, respectively.

Outlook

For second-quarter fiscal 2022, the company anticipates revenues between $630 million and $645 million. Atlassian’s fiscal second-quarter revenue guidance is higher than the Zacks Consensus Estimate of $619.3 million.

Non-IFRS gross margin is estimated to be approximately 85%. Non-IFRS operating margin is projected between 22% and 23%. The company expects to report non-IFRS earnings per share between 35 cents and 38 cents. The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 42 cents.

Zacks Rank & Other Key Picks

Atlassian currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader computer and technology sector are

Salesforce


CRM

,

HP Inc.


HPQ

and

Kyocera Corporation


KYOCY

, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see


the complete list of today’s Zacks #1 Rank stocks here


.

The long-term earnings growth rates for Salesforce, HP and Infineon are currently pegged at 16.8%, 12.7% and 11.5%, respectively.

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