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Atlassian Q2 Earnings: What To Expect

With the Australian-based collaborative software developer set to report Q2 earnings later this week, what should investors expect?

Atlassian (NASDAQ: TEAM) is a company that often flies under the radar despite its project management and collaborative software tools such as Jira, Trello, Confluence, and more becoming increasingly important to organizations, particularly in a remote work environment. Atlassian has also been recognized as a visionary in their Magic Quadrant for IT service management tools along with the company being recognized as one of the 25 best places to work in 2021. 

Its stock price has delivered market-beating returns of upwards of 900% over the last five years and is perhaps one of the best software as a service (SaaS) stock picks. However, its stock has dropped roughly 20% year-to-date, and investors will be keen to know what to expect when the company reports Q2 earnings later this week. 

When is Atlassian’s earnings date?

Atlassian reports earnings for the second quarter of 2021 on Thursday, 27th of January, 2022, at 5:00 pm Eastern Time. 

How can I listen to Atlassian’s earnings call? 

To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Atlassian’s investor relations page.

What to expect from Atlassian’s Q2 earnings 

Despite being founded 20 years ago, Atlassian remains in growth mode and average analysts estimate for revenue of $641.32 million, which would represent a growth of 28% year-over-year (YoY) in Q2. The majority of this revenue is also subscription-based making it highly predictable. It is noteworthy that analysts’ average estimates are on the higher end of Atlassian management’s $630-$645 million revenue guidance provided in the last quarter. 

Atlassian has beaten its consensus earnings per share (EPS) estimates over the last few quarters, and investors will be keen to see if the company can continue this trend. The average EPS estimate is $0.39 cents per share for the current quarter. However, the company also expects to be unprofitable for Q2, with net loss per diluted share forecast to be between $0.41-$0.39. 

The company has re-defined a “customer” primarily to exclude single-user customers and focus on teams. It ended Q1 of fiscal 2022 with 216,500 customers, and continued customer growth is vital going forward. Atlassian is also migrating customers to the cloud, and its services will be cloud-only by 2024. Despite a few years left on this journey, investors should pay attention to the number of customers migrating and cloud revenue growth, which is forecast to accelerate compared to fiscal 2021. Its gross margins are also expected to face headwinds in Q2 and come in at 82% with this pressure remaining for fiscal 2022 due to the business mix shift from server to cloud. However, over the long term, this shift should help to improve its gross margins further.   

Atlassian’s stock remains richly valued at roughly 41X price to sales despite the recent sell-off, and if the company misses analyst expectations, it would likely send the stock price tumbling.

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