It's been nearly four years since Atlassian (NASDAQ:TEAM) first burst on the scene, and investors that have been able to stomach the gut-churning volatility of its shares have been handsomely rewarded. The stock is currently worth more than five times its IPO price, and it's up more than 45% in 2019 alone.

With those gains as a backdrop, the company will have a lot to prove when it reports the financial results of its recently completed fiscal 2020 first quarter after the market closes on Thursday. Let's recap the company's fourth-quarter performance and look at three things investors should be watching for when Atlassian reports earnings. 

People at a row of desks working in an office

Image source: Getty Images.

1. Continued strong revenue growth

The productivity software company, which supplies businesses with applications like Trello and Jira, did all it set out to do last quarter and more. For fiscal Q4 (which ended June 30), Atlassian reported revenue of $335 million, up more than 35% year over year and easily surpassing the high end of management's guidance, which topped out at $331 million. Even more importantly, subscription revenue grew to $181 million, up more than 50% year over year.

For the fiscal first quarter (which ended Sept. 30), Atlassian is targeting revenue of between $349 million and $353 million, which would represent year-over-year growth of 31% at the midpoint. The company is anticipating non-IFRS (International Financial Reporting Standards) gross margin of 86%. Atlassian is also expecting continued increases in subscription revenue, guiding for growth of 40% compared to the prior-year quarter.

2. Increasing adjusted profits

For the fourth quarter, Atlassian reported adjusted net income of $51.2 million, up 39% year over year, resulting in adjusted earnings per share (EPS) of $0.20, a 43% increase compared to the prior-year quarter.

Atlassian is expecting its profit growth to continue, though at a somewhat more moderate pace. The company is guiding for adjusted EPS of about $0.24, an increase of about 20% year over year. Management is also forecasting adjusted operating margin will edge down to 21% from 23% in the year-ago period.

3. Greater customer adoption

Atlassian added 8,689 net new customers during the quarter, bringing the total to 152,727. Even more importantly, the company saw larger clients join in greater numbers. It said 4,091 customers were spending more than $50,000 annually on its products, jumping more than 52% from the prior-year quarter. Customers spending more than $500,000 annually grew to 171, up 38%.

While Atlassian doesn't provide specific guidance for client growth, it has taken significant steps to ensure that great customer adoption will continue. Earlier this year, the company announced that it was increasing the user limit for its Jira Software and Confluence Cloud products from 5,000 users per instance to 10,000. Additionally, Atlassian introduced feature-rich premium versions of the programs that provide advanced end-user functionality, as well as increased platform capabilities for larger and more sophisticated customers. Both measures should act as catalysts to continue to fuel the company's user growth. 

A word on valuation

As with many high-flying tech stocks, Atlassian isn't for the faint of heart. On a trailing-12-month basis, the company sports a price-to-sales ratio of more than 25. To put that into perspective, a ratio between 1 and 2 is considered good, while a number below 1 is considered excellent. This indicates a very frothy valuation.

As a result, Atlassian shares will continue to be volatile. There have been numerous times over the years that the stock has lost 25% or more of its value, only to come roaring back. Investors should expect the company's growth to continue in fits and starts, but all indications are that Atlassian still has a long runway for growth. We'll learn more about where that runway leads when the company reports earnings on Thursday.