What happened
Shares of collaboration software specialist Atlassian (TEAM -9.56%) lifted its weight with authority on Friday. Following a robust fiscal fourth-quarter earnings report, Atlassian's stock rose as much as 24.8% at the market open. The gain cooled down to a still-impressive 19% by 12:30 p.m. ET.
So what
Atlassian's adjusted fourth-quarter earnings more than doubled year over year, rising from $0.27 to $0.57 per diluted share. Top-line sales jumped 23.5% higher, landing at $939 million.
The analyst consensus had called for earnings near $0.43 per share on revenue of roughly $911 million, sticking close to management's guidance figures. The company breezed past those projections with ease.
Looking ahead to fiscal year 2024, Atlassian expects revenue growth in the 30% range in the cloud and data center segments. The legacy server business is expected to decline throughout the year, adding zero dollars to next year's fourth-quarter revenue line. Atlassian's future lies in a hybrid cloud solution, where most customers rely on cloud-based services while others prefer software license and tech support bundles under the data center banner.
Now what
This is what Atlassian's business looks like in a difficult market with uncertain macroeconomic trends. I expect the Jira project tracker, Trello project management, and Confluence collaboration platforms to pick up speed as the kneeling world economy gets back on its feet again.
The stock isn't cheap, trading at 105 times trailing earnings today. Still, it's hard to argue with Atlassian's skyrocketing sales growth, even in a difficult economy. So if you don't mind paying a premium price for a high-octane growth stock, Atlassian could have a place in your portfolio after Friday's big jump. Otherwise, you might want to wait for another price drop -- like the one Atlassian experienced last November -- before hitting the "buy" button.
