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IT project management software company, Atlassian (NASDAQ:TEAM) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 29.9% year on year to $1.19 billion. Guidance for next quarter's revenue was also optimistic at $1.13 billion at the midpoint, 2% above analysts' estimates. It made a non-GAAP profit of $0.89 per share, improving from its profit of $0.54 per share in the same quarter last year.
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Atlassian (TEAM) Q1 CY2024 Highlights:
- Revenue: $1.19 billion vs analyst estimates of $1.1 billion (8.1% beat)
- Operating profit: $316.5 million vs analyst estimates of $216.7 million (big beat)
- EPS (non-GAAP): $0.89 vs analyst estimates of $0.63 (41.9% beat)
- Revenue Guidance for Q2 CY2024 is $1.13 billion at the midpoint, above analyst estimates of $1.11 billion
- Gross Margin (GAAP): 82.1%, in line with the same quarter last year
- Free Cash Flow of $554.9 million, up 95.2% from the previous quarter
- Market Capitalization: $51.62 billion
Founded by Australian co-CEOs Mike Cannon-Brookes and Scott Farquhar in 2002, Atlassian (NASDAQ:TEAM) provides software as a service that makes it easier for large teams of software developers to manage projects, especially in software development.
Project Management SoftwareThe future of work requires teams to collaborate across departments and remote offices. Project management software is both driving this change and benefiting from it. While the trend of collaborative work management has been strong for a while, the Covid pandemic has definitively accelerated the demand for tools that allow work to be done remotely.
Sales GrowthAs you can see below, Atlassian's revenue growth has been strong over the last three years, growing from $568.7 million in Q3 2021 to $1.19 billion this quarter.
This quarter, Atlassian's quarterly revenue was once again up a very solid 29.9% year on year. On top of that, its revenue increased $129 million quarter on quarter, a very strong improvement from the $82.34 million increase in Q4 CY2023. This is a sign of re-acceleration of growth and great to see.
Next quarter's guidance suggests that Atlassian is expecting revenue to grow 20.1% year on year to $1.13 billion, slowing down from the 23.6% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 15.5% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Atlassian's free cash flow came in at $554.9 million in Q1, up 58.7% year on year.
Atlassian has generated $1.27 billion in free cash flow over the last 12 months, an eye-popping 30.6% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Atlassian's Q1 Results We were impressed by how strongly Atlassian blew past analysts' billings expectations this quarter. We were also excited its revenue and operating profit outperformed Wall Street's estimates. For the most part, guidance for next quarter was in line to slightly above expectations. There was big news not related to the financials, though. Co-CEO and co-founder "Scott Farquhar has made the decision to step down as co-CEO to spend more time with his young family, improve the world via philanthropy, and help further the technology industry globally." Co-founder Mike Cannon Brookes continuing to lead Atlassian as CEO. Zooming out, the quarter was very good, the guidance was fine, but the market could be reacting to the leadership change. Specifically, the stock is down 8.2% after reporting, trading at $182.25 per share.