Atlassian shares jump as revenues beat expectations

Amid broader challenges in the tech sector, the Mike Cannon-Brookes and Scott Farquhar-led company has posted better than forecast sales figures.

Mike Cannon-Brookes and fellow founder of Atlassian Scott Farquhar pictured together in their Sydney HQ

Atlassian shares surged on Friday after the Australian software firm posted better than expected results – including a $US200.3m ($287.9m) jump in revenues for the fourth quarter – and recruited a senior Microsoft executive.

Total revenues rose to $US759.8m for the quarter, 36 per cent higher than the $US559.5m recorded for the period in 2021.

The result saw Atlassian beat revenue expectations, with analysts forecasting $US723.3m in revenue in the fourth quarter.

The latest figures helped Atlassian post a $US2.8bn full year revenue result, up 34 per cent on Atlassian’s $US2.1bn revenue result in the 2021 financial year.

Atlassian co-chief executive Mike Cannon-Brookes said the business was performing well.

“We believe that Atlassian is uniquely positioned, with great momentum and a differentiated business model,” he said.

“This gives us the confidence to make incremental investments, despite the current environment, that will fuel even more durable growth over the long term and deepen our strategic advantages.”

Atlassian has set its sights on reaching its $US10bn in annual revenue targets based on its “core products and core markets”.

The company noted cloud revenues have been rising quickly, recording 55 per cent growth year-over-year, with expectations it would climb 50 per cent in the 2023 and 2024 financial years.

Atlassian’s cloud platform drove $US433.9m of revenues for the business in the quarter. It pulled in $US1.5bn in revenues for the year. That’s compared to $US967m in revenue last year.

Data centre revenue hit $US158.9m in the fourth quarter, up 60 per cent from the same time last year. Data centres accounted for $US560.3m in revenues for the full year. Revenue growth from data centres is expected to maintain a high rate in the first quarter of the new financial year before moderating.

Atlassian recognises a portion of its data centre revenues upfront, while recording the remainder over the life of the contract.

But Atlassian said it expected revenues from maintenance and other forms of revenue to contract in the years ahead. Maintenance revenues are expected to decline to circa $US75m from their current $US117m levels recorded in the fourth quarter.

Mr Cannon-Brookes and co-chief executive Scott Farquhar acknowledged the increasing economic headwinds in their letter to shareholders but noted the business would “march forward with a long-term mindset”.

“We will remain vigilant in this environment, and while we are not insulated from broader macroeconomic pressures, there are three dynamics particular to Atlassian’s business informing our decision to press forward,” the letter read. “Again, we’ll continue to scan the horizon for warning signs and be candid with investors as we have throughout our six+ years as a public company.”

Operating losses edged over $US63.3m in the fourth quarter. This was compared with Atlassian’s $US7.5m loss over the same period in 2021.

This saw Atlassian record a $US106.4m loss for the full year.

This comes as the broader start-up sector is challenged by increasingly wary investors in the face of retreating capital markets.

Profitability only rated one mention in the company’s letter to shareholders, with Atlassian simply noting it would keep investing to drive “long-term durable growth”.

The company said it would not be cowed by the period of economic volatility, noting its approach during the global financial crisis, to hire out of work tech teams was paying dividends.

“Playing offence when others were throwing off their back foot worked for us then, and we’re confident it will work for us now,” the founders wrote.

Atlassian has been on a hiring spree in recent months, growing its headcount by 634 mostly in its research and development arm.

It ends the quarter with a total customer count, on an active subscription or maintenance agreement basis, of 242,623 customers, adding 8,048 net new customers during the quarter.

Shares in the Nasdaq-listed Atlassian were up more than 10 per cent in after-hours trading. This comes after a broader cooling for Atlassian, with shares down 1.8 per cent in three months.

Atlassian revealed its new chief financial officer, Joe Binz, who would be joining from Microsoft. Mr Binz will take the job from Mr Farquhar who has been acting as interim CFO at Atlassian.