Follow Atlassian to never miss an important update.
After Atlassian reported its November results, we updated our fair value. We lowered our quality score to 4.3 and cut our ratings for how the business is protected from competitors and the profit it makes on invested money. We moved our recommendation to Watch as we reset our revenue growth expectation for the full year to 14%. We added the earlier entry into the high security government cloud market and the new pricing model for autonomous software agents to what we track.
Atlassian started its fiscal year with $1.77 billion in revenue, beating the $1.71 billion analysts expected. Profits also came in higher than forecast at $1.65 per share. The core of the business continues to shift toward the cloud, which now accounts for $1.3 billion of total sales.
Management highlighted a 44 percent jump in remaining performance obligations, which is the total value of contracts signed but not yet billed. This suggests that large companies are committing to the platform for the long term. The company is also seeing early success selling its AI features, which it believes will help justify higher prices as it moves more customers into its enterprise-tier plans.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Gene Liu is stepping down as Chief Accounting Officer on November 13 after 12 years with the company. The filing notes his departure is not due to any disagreement over accounting or financial practices.
Eli Berkovitch will take over the position on November 16. He joins from the cloud software firm Box, where he served as Chief Accounting Officer since 2021. While a change in the accounting lead is worth noting for accuracy, it is an orderly transition and does not change the company's broader strategy.
Source: 8-K filing
Atlassian is scheduled to release its quarterly numbers later today. Analysts are looking for revenue of about 1.71 billion dollars and earnings of 1.39 dollars per share. Beyond the headline numbers, the focus remains on how well the company is selling its new AI features and whether large corporate clients are continuing to consolidate their software tools onto Atlassian's platform. These two factors are the main drivers for the company's long-term growth and profit margins.
BTIG raised its price target for the software maker to $260, up from $230. This move puts their target well above the average analyst target of $208 and the current stock price of about $189. While a target change on its own is routine, it shows the firm is becoming more confident in Atlassian's ability to grow as it moves more customers to its cloud platform. This shift is a key part of the company's plan to earn more from each customer over time.
Source: BTIG
Management has cleared their own profit targets for eight straight quarters. The business is consistently outrunning forecasts as it moves more customers to its cloud software.
| Expectation | |
|---|---|
| EPS | $1.26 |
| Revenue | $1.82B |