What happened
Shares of Atlassian (TEAM 2.66%) skyrocketed as much as 31% higher on Friday, following the release of impressive fourth-quarter results. By 12:50 p.m. EDT, the business software stock had calmed down somewhat to a gain of 22.6%.
So what
Atlassian's fourth-quarter sales rose 30% year over year, stopping at $560 million. Adjusted earnings fell from $0.25 to $0.24 per diluted share. Your average analyst would have settled for earnings of roughly $0.18 per share on revenue near $524 million. In other words, the collaboration software specialist beat the Street's targets by a wide margin. Furthermore, the company added 23,300 net new customers in the fourth quarter, boosting the customer count by 36% compared to the year-ago period.
Image source: Getty Images.
Now what
The stock has now gained 344% in three years to the steady drumbeat of strong earnings surprises. The transition from perpetual software licenses to subscription-style cloud services has been smooth so far, to put it mildly.
And Atlassian achieves these incredible results while reserving just 22% of its operating expenses for sales and marketing -- the quality of its products do the talking. By comparison, leading technology companies generally spend at least 40% of their operating budgets on sales and marketing. This strategy boosts Atlassian's bottom-line profits and also gives the company plenty of headroom to push its growth even harder by boosting its marketing efforts.
It's no surprise to see investors embracing Atlassian's fantastic report today.
Editor's note: This article has been corrrected to state that fourth-quarter revenue was $560 million.
