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Atlassian (TEAM) Q4 earnings report 2023

TechnologyAtlassian (TEAM) Q4 earnings report 2023


Scott Farquhar, co-founder and co-chief executive officer of Atlassian Corp., walks the grounds during the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 12, 2023.

David Paul Morris | Bloomberg | Getty Images

Atlassian shares jumped as much as 24% in extended trading on Thursday after the collaboration software maker announced stronger-than-expected fiscal fourth-quarter results and promised wider margins in the future.

Here’s how the company did:

  • Earnings: 57 cents per share, adjusted, vs. 45 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $939.1 million, vs. $914.6 million as expected by analysts, according to Refinitiv.

Atlassian’s revenue grew 24% year over year in the quarter, which ended on June 30, according to a statement. The company’s net loss of $59 million or 23 cents per share, narrowed from $90.6 million, or 36 cents per share, in the year-ago quarter.

At the end of the quarter, Atlassian counted 262,337 customers, according to a letter to shareholders. That’s below the 264,780 consensus among analysts surveyed by StreetAccount.

But the company’s quarterly revenue guidance surpassed expectations. Executives see revenue between $950 million and $970 million, implying about 19% growth in the middle of the range. Analysts polled by Refinitiv had been looking for $954.6 million in revenue.

Management called for a -8% operating margin for the 2024 fiscal year, compared with -10% for the 2023 and 3% in 2022. And co-CEOs Scott Farquhar and Mike Cannon-Brookes said in a letter to shareholders that there’s more improvement ahead.

“Starting in FY25, we expect operating margins to expand from the FY24 guidance we’re providing today and begin trending towards the historical margins Atlassian is known for, driven by durable revenue growth combined with moderating investment in areas we’ve accelerated over the past two years, like cloud migrations,” they wrote.

See also  Salesforce (CRM) earnings report Q2 2024

The company also said that Cameron Deatsch, who has worked as chief revenue officer for the past three and a half years, will leave in December.

Cloud services carry a lower gross margin than on-premises software because of hosting fees. In 2020 cloud represented less than half of Atlassian’s revenue, and as the company saw advantages to having more of its clients move to the cloud, it offered them financial incentives. Millions of users moved to Atlassian’s cloud services in the 2023 fiscal year, with 250,000 customers using them, Farquhar and Cannon-Brookes said in their investor letter.

During the fiscal fourth quarter, Atlassian showed how it would bolster its applications with generative artificial intelligence to handle support requests and receive automated answers to questions about corporate documents. Earlier this year competitors such as Microsoft and Salesforce also unveiled plans for the technology, which can produce human-like text after a person types in information.

Atlassian shares were up about 32% year to date when excluding their after-hours move, compared with a 17% climb for the S&P 500 index.

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