Atlassian (NASDAQ:TEAM) Delivers Strong Q2 Numbers, Stock Soars

Radek Strnad /
2022/01/27 4:17 pm EST

IT project management software company, Atlassian (NASDAQ:TEAM) announced better-than-expected results in the Q2 FY2022 quarter, with revenue up 37.3% year on year to $688.5 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $697.5 million at the midpoint, 4.95% above what analysts were expecting. Atlassian made a GAAP loss of $77.4 million, improving on its loss of $621.5 million, in the same quarter last year.

Is now the time to buy Atlassian? Access our full analysis of the earnings results here, it's free.

Atlassian (TEAM) Q2 FY2022 Highlights:

  • Revenue: $688.5 million vs analyst estimates of $642.4 million (7.16% beat)
  • EPS (non-GAAP): $0.50 vs analyst estimates of $0.39 (27.8% beat)
  • Revenue guidance for Q3 2022 is $697.5 million at the midpoint, above analyst estimates of $664.5 million
  • Free cash flow of $197.4 million, up from $59.3 million in previous quarter
  • Customers: 226,521, up from 216,500 in previous quarter
  • Gross Margin (GAAP): 83.2%, down from 84.1% same quarter last year

“Q2 was another strong quarter for Atlassian with over 10,000 net new customers this quarter, 98% of which were in the Cloud,” said Scott Farquhar, Atlassian’s co-founder and co-CEO.

Founded by Australian co-CEOs Mike Cannon-Brookes and Scott Farquhar in 2002, Atlassian (NASDAQ:TEAM) provides software as a service that makes it easier for large teams of software developers to manage projects, especially in software development.

Sales Growth

As you can see below, Atlassian's revenue growth has been very strong over the last year, growing from quarterly revenue of $501.3 million, to $688.5 million.

Atlassian Total Revenue

And unsurprisingly, this was another great quarter for Atlassian with revenue up 37.3% year on year. On top of that, revenue increased $74.5 million quarter on quarter, a very strong improvement on the $54.4 million increase in Q1 2022, and a sign of re-acceleration of growth.

Analysts covering the company are expecting the revenues to grow 17.8% over the next twelve months, although estimates are likely to change post earnings.

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Customer Growth

You can see below that Atlassian reported 226,521 customers at the end of the quarter, an increase of 10,021 on last quarter. That is a little better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well. As a side note, Atlassian changed their methodology for reporting customers last quarter, which explains the dip in the numbers.

Atlassian Customers

Key Takeaways from Atlassian's Q2 Results

Sporting a market capitalization of $74 billion, more than $986 million in cash and with positive free cash flow over the last twelve months, we're confident that Atlassian has the resources it needs to pursue a high growth business strategy.

We were very impressed by Atlassian’s very strong acceleration in customer growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 8.96% on the results and currently trades at $316.42 per share.

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The author has no position in any of the stocks mentioned.