The shares of Atlassian, the collaboration software maker, surged by up to 24% in after-hours trading on Thursday. This came after the company reported better-than-expected results for its fiscal fourth quarter and promised higher profit margins in the future.
Here are the details of the company’s performance:
- Earnings: Adjusted earnings per share were 57 cents, surpassing analysts’ estimate of 45 cents, according to Refinitiv.
- Revenue: The company generated $939.1 million in revenue, exceeding analysts’ expectation of $914.6 million, according to Refinitiv.
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In the fiscal fourth quarter, Atlassian’s revenue grew by 24% compared to the previous year, reaching $939.1 million. The company also reduced its net loss to $59 million or 23 cents per share, down from $90.6 million or 36 cents per share in the same quarter last year.
However, Atlassian fell slightly short of analysts’ expectations in terms of customer count. The company reported having 262,337 customers at the end of the quarter, below the consensus estimate of 264,780.
On the bright side, Atlassian provided strong quarterly revenue guidance, forecasting a range of $950 million to $970 million. This implies a middle-range growth rate of approximately 19%. Analysts had anticipated revenue of $954.6 million.
Looking ahead, Atlassian’s management anticipates an operating margin of -8% for the 2024 fiscal year, an improvement from -10% in 2023 and 3% in 2022. In a letter to shareholders, co-CEOs Scott Farquhar and Mike Cannon-Brookes expressed confidence in further margin expansion starting in FY25.
The company also announced the departure of chief revenue officer Cameron Deatsch in December.
Atlassian experienced a shift towards cloud services, which have lower gross margins compared to on-premises software. To encourage more clients to use its cloud services, Atlassian offered financial incentives. In the 2023 fiscal year, millions of users migrated to the company’s cloud services, and it gained 250,000 new customers in this segment.
During the fiscal fourth quarter, Atlassian showcased its plan to enhance its applications with generative artificial intelligence, allowing for automated answers to support requests and inquiries about corporate documents. Competitors such as Microsoft and Salesforce have also ventured into this technology.
Year to date, Atlassian shares have risen by approximately 32% excluding the after-hours surge, while the S&P 500 index has climbed 17%.
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