2024-06-10 05:31:32 ET
Summary
- Atlassian reported strong Q3 FY24 earnings, with revenue and earnings growing 30% and 60% YoY respectively, driven by strength in its Cloud and Data Center segments.
- The company successfully migrated its Server customers to the Cloud with less than expected churn, while it sees deepening adoption of its solution as it progresses upmarket and unlocks profitability.
- While uncertainties remain with weakness in the SMB sector and declining investor sentiment in the software industry, Atlassian’s stock is fairly valued, making it a “buy”.
Introduction & Investment Thesis
Atlassian ( TEAM ) is a team collaboration and productivity software that reported its Q3 FY24 earnings in late April, where revenue and earnings grew 30% and 60% YoY, respectively, beating estimates. I had initiated a “Hold” rating on the stock on April 3 and my thesis was predicated on my belief that despite the management driving robust product innovation by launching targeted solutions to boost business productivity, while gaining market share in the Enterprise segment and growing profitability, the valuation looked capped; given the set of uncertainties pertaining to the risk of customer churn from Server migration and weakness in the SMB sector. Since then, the stock has declined 17%, underperforming the S&P 500....
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For further details see:
Atlassian: Time To Initiate A Position, As Management Continues To Exceed Expectations