Atlassian Corp. rallied 19% after delivering a forecast for the new year that quelled investor anxieties over a slowdown in internet technology spending.
(Bloomberg) — Atlassian Corp. rallied 19% after delivering a forecast for the new year that quelled investor anxieties over a slowdown in internet technology spending.
Cloud revenue will grow in the fiscal year ending June 2024 by 25% to 30%, the collaboration software company said Thursday in a statement. That’s in line with an average of estimates compiled by Bloomberg.
“We closed out a challenging year with strong momentum in cloud migrations,” Co-Chief Executive Officer Scott Farquhar said in the statement.
Analysts had expressed caution about the durability of Atlassian’s cloud growth in the lead up to earnings. Atlassian faced “a wall of worry about the macro, the guidance, the margin, basically everything,” wrote Alex Zukin, an analyst at Wolfe Research. After strong results, “the script has been completely flipped,” he said.
The stock jump Friday morning was the largest intraday increase in two years. Through Thursday’s close, the stock had gained 32%, which is short of the 37% rally in the iShares Expanded Tech-Software Sector ETF. Like many peers, Atlassian has introduced new artificial intelligence features into its line of products this year, which includes Jira and Confluence.
In the fiscal fourth quarter, revenue increased 24% to $939 million, slightly exceeding analyst estimates. Profit, excluding some items, was 57 cents a share. Analysts, on average, projected 45 cents. “The strong execution on costs should be viewed positively,” wrote Bloomberg Intelligence analyst Sunil Rajgopal.
There are still indicators that software spending is under pressure. New customer additions came in significantly under expectations at 2,562, less than half of what analysts expected. The cloud revenue guidance assumes macroeconomic headwinds persist into the new fiscal year, said Chief Financial Officer Joe Binz during the earnings call Thursday.
Still, the sale of new licenses appeared to pick back up again toward the end of the quarter, “offering some hope that we may be close to a bottom in terms of macro headwinds,” wrote William Blair analyst Arjun Bhatia.
(Updates with shares and additional reporting starting in the first paragraph.)
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