Productivity software provider Atlassian (TEAM 1.67%) reported its fiscal fourth-quarter results after the market closed on Thursday. Just as they did in the third quarter, non-cash charges hit its bottom line. But for the period, which ended June 30, both revenue and adjusted earnings grew at strong double-digit percentage rates. Here's what investors need to know.
Atlassian's results: The raw numbers
|
Metric |
Q4 2019 |
Q4 2018 |
Change |
|---|---|---|---|
|
Revenue |
$334.6 million |
$246.6 million |
35.7% |
|
IFRS net income |
($237.5 million) |
($21.9 million) |
N/A |
|
Non-IFRS net income |
$51.2 million |
$36.9 million |
38.8% |
|
Non-IFRS earnings per share |
$0.20 |
$0.14 |
42.9% |
IFRS = International Financial Reporting Standards, an accounting standard similar to the generally accepted accounting principles (GAAP). Data source: Atlassian.
What happened this quarter?
- Atlassian's net income on an IFRS basis was diminished by a $156.3 million non-cash charge resulting from marking to fair value the exchange feature of the company's exchangeable senior notes and the related capped calls. An additional non-cash charge of $54.7 million was due to the writedown of Atlassian's deferred tax assets.
- The company ended the quarter with 152,727 customers on either an active subscription or a maintenance agreement. The company added 8,689 net new customers during the quarter.
- Subscription revenue was $180.9 million, up 50.4% year over year.
- Maintenance revenue was $105.8 million, up 20.8% year over year.
- Perpetual license revenue was $22.8 million, up 5.2% year over year.
- Other revenue was $25.1 million, up 47.5% year over year.
- Atlassian had cash, cash equivalents, and short-term investments of $1.7 billion at the end of the quarter.
- Operating cash flow was $117.7 million, and free cash flow was $98.2 million. Free cash flow was up 52% year over year.
Image source: Atlassian.
What management had to say
During the fiscal fourth-quarter earnings call, Co-CEO Michael Cannon-Brookes gave an update on Trello:
As we've said, look, our primary goal with Trello is still to continue to establish Trello as a brand, Trello as a product, and continue to grow the momentum that it has as a standalone business. We are doing more and more integration over time, but that's a long-term journey.
The company laid out some numbers on its larger customers in its letter to shareholders :
With regard to larger customers, at the end of fiscal 2019, we had 4,091 customers spending $50,000 or more annually -- up from 2,678 at the end of fiscal 2018. And we had 171 customers spending more than $500,000 annually at the end of fiscal 2019, up from 124 customers at the end of fiscal 2018.
Looking ahead
Atlassian provided the following guidance for the first quarter of fiscal 2020:
- Revenue between $349 million and $353 million, up 31.3% year over year at the midpoint.
- Non-IFRS gross margin of 86%, and non-IFRS operating margin of 21%.
- Non-IFRS earnings per share of $0.24, compared with $0.20 in the prior-year period.
For the full year, Atlassian expects:
- Revenue between $1.540 billion and $1.556 billion, up 27.9% from fiscal 2019 at the midpoint.
- Non-IFRS gross margin between 85% and 86%, and non-IFRS operating margin of 20%.
- Non-IFRS earnings per share of $1.00, compared with $0.86 in fiscal 2019.
With Atlassian expecting to surpass $1.5 billion of revenue in fiscal 2020, it's inevitable that the company's growth rate will slow. But there are still plenty of opportunities for it to win new customers and to move existing customers to the cloud.
