Cloud Stocks: Atlassian Expands Beyond IT Teams To Enterprise-Wide Offerings

According to a Mordor Intelligence report, the enterprise collaboration market was estimated at $36.24 billion in 2020. It is expected to grow at over 10% CAGR over the next few years accelerated by the adoption of cloud-based technologies as a result of the work-from-home conditions propelled by the current pandemic. Atlassian (Nasdaq: TEAM) is looking to expand in this market through product release and acquisitions.

Atlassian’s Financials

For the third quarter, revenue grew 38% to $568.7 million, ahead of the market’s forecast of $531.92 million. Net income was $159.8 million, compared with net loss of $158.8 million a year ago. Adjusted EPS was $0.48, better than the market’s forecast of $0.29.

By segment, Subscription revenues grew 43% to $350 million and maintenance revenues grew 11.1% to $132.9 million. License revenue grew 49% to $31.3 million and other revenues increased 103.7% to $54.6 million.

During the quarter, Atlassian added a record number of 12,815 net new customers, up 105%. The significant growth in customer metrics is indicative of the positive impact the Cloud-first focus and free tier have had on its market expansion. Its total customer base increased 19% to 204,290. Including the single-use Trello customers, it has almost 213,000 customers, up 24%.

For the fourth quarter, Atlassian expects revenues of $513-$528 million with an adjusted loss per share of $0.08. The market was looking for revenues of $498.86 million for the quarter with an EPS of $0.22. It expects Atlassian to end the year with revenues of $2.01 billion and an EPS of $1.19.

Atlassian has not shared details on its marketplace revenues, but the above forecast reflects the impact of the lower take rates from its developer platform. Last year, Atlassian reduced the rates on app sales from 15% to 5% to promote more development for the cloud portfolio. The 95% revenue share split is among the most generous in the industry and is inspired by Atlassian’s belief in the platform ecosystem. 

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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