The past three months have been a tumultuous time for investors in Atlassian (NASDAQ:TEAM). Even though the work-productivity software specialist delivered a better-than-expected earnings report, investors bid the stock down more than 12% in the days that followed. After taking some time to digest the results, however, shareholders saw the glass as half full and drove the stock up more than 26%. That helped Atlassian shares gain nearly 46% over the past year.

The company will have another chance to make its case with investors when Atlassian reports the financial results of its recently completed fiscal 2020 second quarter after the market closes on Thursday, Jan. 23. Let's recap its previous quarterly performance and look at three things investors should be watching closely when Atlassian reports earnings.

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1. Continued strong revenue growth is key

One of the hallmarks of Atlassian's success has been its ability to continue its strong revenue growth, and investors will be expecting more of the same. In its fiscal Q1 (which ended Sept. 30), the company reported revenue of $363 million, up 36% year over year, while making easy work of management's guidance range, which topped out at $353 million. Even more importantly, subscription revenue continued its relentless climb, up 50% year over year, to $201 million. 

Atlassian's management is forecasting another strong quarterly performance, expecting revenue in a range of $386 million and $390 million, which would represent 30% growth at the midpoint of its guidance. The company is likely being conservative with its forecast, especially considering its practice of exceeding its own guidance, only to raise its outlook for the full year -- exactly what it did last quarter. 

2. Growing adjusted profits

For the first quarter, Atlassian delivered adjusted net income of $70 million, up 42% year over year, resulting in adjusted earnings per share (EPS) of $0.28, a 40% increase compared to the prior-year quarter.

While its profits are still expected to climb, management is signaling slower growth for the current quarter. The company is guiding for adjusted EPS of about $0.27, an increase of about 8% year over year. Management is also forecasting its adjusted operating margin will edge down to 22% from 25% in the year-ago period.

3. Customers are the key

The biggest contributor to Atlassian's success thus far has been its ability to continually attract new business combined with increased spending by existing customers. The company added 7,060 new customers during the quarter, up about 20% year over year, bringing the total to 159,787.

While Atlassian doesn't provide specific quarterly guidance for its customer growth, the company is targeting 40% year-over-year growth in its subscription revenue, which provides some directional guidance. There are a number of factors that could cause its customer growth rate to accelerate.

Last quarter, the company announced two new additions to its cloud offerings, Free and Premium, both of which could drive greater customer gains. Additionally, Atlassian announced that it acquired Code Barrel, which created Automation for Jira -- which helps automate recurring tasks on the platform. Each of these could result in greater customer adoption in the months and years to come.

A word on valuation

As is the case with many high-flying software-as-a-service stocks, Atlassian is volatile. On a trailing-12-month basis, the company sports a price-to-sales ratio of more than 25 -- consistent with its level going into last-quarter's report. To give that number context, a ratio between 1 and 2 is considered good, while a number below 1 is considered excellent. This shows that the stock has a somewhat frothy valuation and is prone to continued volatility.

As a result, Atlassian shares are not for the faint of heart. There have been numerous times over the years that the stock has plummeted -- giving up a significant chunk of its value -- only to come roaring back, just as we saw in the previous quarter.

Investors should expect the company's growth trajectory to continue up and to the right, but there will be plenty of peaks and valleys along the way. We'll get a better idea of the path ahead when the company reports earnings next Thursday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.