Atlassian (TEAM) is down 7% after the company missed billings estimates and offered mixed guidance for the fourth quarter.
The company has exceeded estimates for adjusted EPS and revenue every quarter since its IPO in December of 2015. This quarter was no different as third quarter results came in above guidance last night.
Results were strong overall. Adjusted EPS grew 133% to $0.21 while revenue grew 38% to $309 mln.
However, deferred revenue disappointed as billings grew just 31% to $325.5 mln, missing estimates. Management noted that price increases implemented earlier this year pulled forward some demand. That effect will continue but diminish in the coming quarters.
Atlassian raised its outlook for fiscal 2019 revenue, adjusted operating margin, EPS and cash flow, but guidance for the fourth quarter was mixed. Atlassian guided quarterly revenue above consensus for the fourth consecutive quarter, but EPS guidance was a little light, reflecting mix shifts, higher investments and recent acquisitions.
A stock trading at 19x revenue, 100x EPS and 60x FCF doesn't have much margin for error, so the stock is down 7%, trading below its 50-day moving average for the first time since November. That said, analysts are generally defending the stock this morning as they continue to see robust growth north of 30%.
Atlassian stands out among peers because of its profitability. Its self-service model avoids high sales and marketing costs.
Peer Smartsheet (SMAR) -2%trades at a similar (mid/high-teens) sales multiple while another enterprise collaboration software company Slack is expected to do a high-profile direct listing this summer.
Atlassian stock bounced off its 20-week moving averages near $100/share this morning.
Underwhelming reports from Atlassian and Check Point Software (CHKP) -10% are pressuring software stocks this morning despite high-profile technology IPOs from Zoom (ZM) and Pinterest (PINS).