TEAM - Atlassian Q4 Earnings Preview: My Bearish Sentiment Could Change Soon
2024-07-16 14:42:35 ET
Summary
- Revenue growth remains strong, but operating leverage and efficiency metrics are still struggling.
- Q3 showed some improvement in profitability, but sustainability over multiple quarters is needed for a rating upgrade.
- Conservative Q4 guidance could be a positive, but I'd need to see consistent metrics improvements to change my bearish thesis.
As we come up on Atlassian Corporation’s ( TEAM ) Q4 and Annual Report 2024 on August 1, 2024, I think an update to my February 10 thesis is in order. At the time, I recommended a Sell rating based on the fact that the company had no operating leverage and that efficiency metrics such as ROE, ROTC, and ROA were all struggling to get above breakeven. What added fuel to the bearish fire was that the company was continually guiding for weak cloud revenues. Q3 2024 results were reported since then, and now that we’re on the verge of looking at full-year and Q4 results, we should take a look at how these metrics have played out and are expected to play out when earnings are announced next month....
Atlassian Q4 Earnings Preview: My Bearish Sentiment Could Change Soon