What happened
Shares of Atlassian (TEAM -0.22%) jumped on Friday following the release of the software company's fiscal fourth-quarter report. Atlassian beat analyst estimates for the both revenue and earnings, and it provided guidance that was above expectations. As of 11:30 a.m. EDT, the stock was up about 9.8%.
So what
Atlassian reported fourth-quarter revenue of $243.8 million, up 40% year over year and about $10 million higher than the average analyst estimate. The company added 6,638 customers during the quarter, bringing its total customer count to 125,796.
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Non-IFRS earnings per share came in at $0.13, up from $0.09 in the prior-year period and $0.01 better than analysts were expecting. Free cash flow was $64.4 million, up 45% year over year.
Along with its fourth-quarter results, Atlassian announced a partnership with workplace messaging company Slack. Slack has acquired the intellectual property for Stride and Hipchat, Atlassian's two communications offerings, with plans to shut both down. Slack and Atlassian will work to transition customers over to Slack's platform. As part of the agreement, Atlassian has made an equity investment in Slack. Further details will be announced in the future.
Now what
Atlassian expects to produce first-quarter revenue between $258 million and $260 million, along with non-IFRS earnings of $0.19 per share. Analysts were expecting revenue guidance of $252.5 million and EPS guidance of $0.15.
For fiscal 2019, Atlassian sees revenue between $1.146 billion and $1.154 billion and non-IFRS EPS of $0.77. Both are above analyst estimates of $1.11 billion and $0.66, respectively.
The partnership with Slack is being viewed as a positive by investors, even though Atlassian will be losing some of its products. With guidance well above expectations, the company's exit from the communications market doesn't look like it will put a dent in Atlassian's growth.
