Atlassian (NASDAQ:TEAM) Surprises With Q4 Sales, Stock Soars

Adam Hejl /
2022/08/04 4:20 pm EDT

IT project management software company, Atlassian (NASDAQ:TEAM) reported Q4 FY2022 results topping analyst expectations, with revenue up 35.7% year on year to $759.8 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $802.5 million at the midpoint, 3.78% above what analysts were expecting. Atlassian made a GAAP loss of $105.4 million, improving on its loss of $213 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) Q4 FY2022 Highlights:

  • Revenue: $759.8 million vs analyst estimates of $724.2 million (4.91% beat)
  • EPS (non-GAAP): $0.27 vs analyst estimates of $0.26 (2.62% beat)
  • Revenue guidance for Q1 2023 is $802.5 million at the midpoint, above analyst estimates of $773.2 million
  • Free cash flow of $194.6 million, down 37.6% from previous quarter
  • Customers: 242,623, up from 234,575 in previous quarter
  • Gross Margin (GAAP): 82.4%, in line with same quarter last year

“We capped off fiscal year 2022 with strong Q4 results, growing Cloud revenue 55 percent year-over-year,” said Mike Cannon-Brookes, 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.

The future of work requires teams to collaborate across departments and remote offices. Project management software is both driving this change and benefiting from it. While the trend of collaborative work management has been strong for a while, the Covid pandemic has definitively accelerated the demand for tools that allow work to be done remotely.

Sales Growth

As you can see below, Atlassian's revenue growth has been very strong over the last year, growing from quarterly revenue of $559.5 million, to $759.8 million.

Atlassian Total Revenue

And unsurprisingly, this was another great quarter for Atlassian with revenue up 35.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $19.3 million in Q4, compared to $51.9 million in Q3 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Atlassian is expecting revenue to grow 30.6% year on year to $802.5 million, in line with the 33.6% year-over-year increase in revenue the company had recorded in the same quarter last year.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that Atlassian reported 242,623 customers at the end of the quarter, an increase of 8,048 on last quarter. That's about the same customer growth as what we seen last quarter and quite a bit above what we have typically seen over the last year, confirming the company is sustaining a good pace of sales.

Atlassian Customers

Key Takeaways from Atlassian's Q4 Results

With a market capitalization of $57.3 billion, more than $1.45 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We enjoyed the positive outlook Atlassian provided for the next quarter’s revenue. And we were also excited to see the really strong revenue growth. On the other hand, there was a deterioration in gross margin. Overall, this quarter's results seemed positive and shareholders can feel optimistic. The company is up 9.13% on the results and currently trades at $251.45 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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