Atlassian Jumps Nearly 10% on Solid Q1 Results


Australia-based software firm Atlassian Corp. (TEAM) has reported solid financial results for the fiscal first quarter ended September 30. Shares of the company surged 9.8% on Friday to close at $458.13.

Atlassian develops products for project managers and software developers, and its portfolio includes JIRA, Confluence, Trello, Bitbucket, Jira Service Deak, Jira Align, Atlassian Access, Crowd, Crucible, Fisheye, Jira Portfolio, Sourcetree, Bamboo, Opsgenie and Statuspage.

The company reported adjusted earnings of $0.46 per share, higher than the year-ago figure of $0.30 per share and the Street’s estimate of $0.40 per share.

Total revenues grew 34% year-over-year to $614 million, beating analysts’ expectations of $582.32 million. (See Insiders’ Hot Stocks on TipRanks)

Subscription revenues increased 57% year-over-year to $435 million; Maintenance revenues rose to $130.6 million from $127.7 million last year. Other revenues, however, declined to $48.1 million from $53.8 million in the year-ago quarter.

The Co-CEO of Atlassian, Scott Farquhar, said, “We continue to deliver value to our customers and innovate across all three of our core markets.”

Outlook

Notably, for fiscal second quarter, the company expects to report revenues in the range of $630 million to $645 million and gross margin of nearly 82%. Further, it anticipates adjusted earnings per share (EPS) to lie in the range of $0.35 to $0.38.

Analyst Comments

Following the release of the first-quarter results, BMO Capital analyst Keith Bachman reiterated a Hold rating on the stock and raised the price target to $515 from $345 (12.4% upside potential).

Bachman said, “The company again demonstrated the ability to successfully navigate its cloud transition, meet user needs, and manage investor expectations.”

Additionally, Canaccord Genuity analyst David Hynes maintained a Buy rating on the stock and increased the price target from $325 to $500 (9.1% upside potential).

Hynes said, “The firm once again raised expectations for near-term subscription growth, which is a positive sign that things are moving in the right direction.”

Overall, the stock has a Moderate Buy consensus rating based on 10 Buys and 4 Holds. The average Atlassian price target of $493.08 implies 7.6% upside potential. Shares have gained 148.6% over the past year.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, Atlassian is at risk mainly from one factor: Finance & Corporate, which accounts for 42% of the total 65 risks identified for the stock. Under this risk category, the company has 27 risks, details of which can be found on the TipRanks website.

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