Shares of software company Atlassian (TEAM 49.78, +9.53 +23.7%) sky to all-time highs this afternoon in light of the company’s better than expected Q1 earnings, Q2 and FY18 guidance.
Based in Sydney, Australia TEAM is best known for its JIRA and Confluence products, which in FY17 garnered two-thirds of the company’s total revenues. The company’s software is used to track projects, create and share content, and support applications. Other software under TEAM includes FishEye, Clover, Crowd, Crucible, Bamboo and SourceTree.
Getting to the results, TEAM reported revenue growth of 41.7% this quarter to $193.8 million. The company saw earnings per share beat expectations at $0.12 on operating margins of 19%.
The company ended Q1 with a total customer count on an active subscription or maintenance agreement basis of 107,746. The company added 4,246 net new customers during the quarter, and benefited from a one-time increase of 14,263 customers due primarily to Bitbucket Cloud pricing changes it made in May 2017, which was due to the movement from a tiered pricing model to per-user pricing. As a result, certain organizations using Bitbucket Cloud who had not previously met our definition of a “customer,” now qualify as customers.
As for the guidance, both the broader market and investors were impressed. Q2 earnings are expected at $0.12 on an adjusted basis with revenues between $203-205 million. Gross margins for Q2 are expected to be about 79% on an IFRS basis and about 84% on a non-IFRS basis. Operating margins in Q2 should come in around (12%) on an IFRS basis and about 19% on a non-IFRS basis.
For the full year, TEAM bumps up both earnings and revenue guidance. To that end, FY18 EPS is now expected in the range of $0.46-0.47 from $0.42-0.44 with revenues between $841-847 million, up from $826-834 million. Additionally, gross margins for FY18 are expected to be about 79% on an IFRS basis and roughly 84% on a non-IFRS basis. Operating margins for FY18 are expected to be near (13%) on an IFRS basis and about 19% on a non-IFRS basis.
As subscriptions revenues handily beat, it’s no surprise that TEAM’s stock is reacting the way it has this morning. Following last month’s Investor Meeting, September 13, which was chock full of bullish commentary, it’s again no surprise that the company’s modest beat and raise period has seen the stock advance. With no signs of a slowdown in the data center and continuing strength in adoption rates, TEAM’s stock, too, shows no signs of slowing down.