Atlassian (NASDAQ:TEAM) Posts Better-Than-Expected Sales In Q1, Stock Soars

Radek Strnad /
2021/10/28 4:24 pm EDT
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IT project management software company, Atlassian (NASDAQ:TEAM) reported Q1 FY2022 results that beat analyst expectations, with revenue up 33.6% year on year to $614 million. Guidance was also strong with next quarter revenues guided to $637.5 million, or 2.66% above analyst estimates. Atlassian made a GAAP loss of $400.1 million, down on its loss of $21.5 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) Q1 FY2022 Highlights:

  • Revenue: $614 million vs analyst estimates of $585.6 million (4.84% beat)
  • EPS (non-GAAP): $0.46 vs analyst estimates of $0.40 (15.7% beat)
  • Revenue guidance for Q2 2022 is $637.5 million at the midpoint, above analyst estimates of $620.9 million
  • Free cash flow of $59.3 million, down 63.8% from previous quarter
  • Customers: 216,500, down from 236,118 in previous quarter due to a change in methodology
  • Gross Margin (GAAP): 84%, in line with same quarter last year

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.

If software is eating the world, as Marc Andreessen says, then companies like Atlassian might be very well positioned to benefit, since they provide the software that software developers use to do their jobs.

Sales Growth

As you can see below, Atlassian's revenue growth has been very strong over the last year, growing from quarterly revenue of $459.5 million, to $614 million.

Atlassian Total Revenue

And unsurprisingly, this was another great quarter for Atlassian with revenue up an absolutely stunning 33.6% year on year. On top of that, revenue increased $54.4 million quarter on quarter, a strong improvement on the $9.18 million decrease in Q4 2021, and a sign of acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 18.4% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Atlassian. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Atlassian reported 216,500 customers at the end of the quarter, a decrease due to a change in methodology.

Atlassian Customers

Key Takeaways from Atlassian's Q1 Results

Sporting a market capitalization of $104 billion, more than $1.6 billion 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.

It was good to see Atlassian outperform Wall St’s revenue expectations this quarter. And we were also excited to see the really strong revenue growth. Gross margins remained high at 84%. Zooming out, we think this was still a very strong quarter, showing the company is staying on target. The company is up 7.26% on the results and currently trades at $447.5 per share.

Should you invest in Atlassian right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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