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What's in the Cards for Atlassian (TEAM) in Q1 Earnings?

Atlassian's (TEAM) Q1 results are likely to reflect growing demand for cloud products, particularly Premium & Enterprise editions, amid the accelerated digital transformation.

This story originally appeared on Zacks

Atlassian TEAM is slated to report first-quarter fiscal 2022 results on Oct 28.

- Zacks

Atlassian projects fiscal first-quarter revenues to lie between $575 million and $590 million (mid-point $582.5 million). The Zacks Consensus Estimate for revenues is pegged at $583.3 million, suggesting growth of 26.9% from the year-ago reported figure.

The company estimates non-IFRS earnings between 38 cents and 39 cents per share for the fiscal first quarter. The Zacks Consensus Estimate is pegged at 40 cents per share, suggesting an increase of 33.3% from 30 cents in the year-ago period.

The company’s earnings beat earnings estimates in three of the trailing four quarters and missed once. It has a trailing four-quarter earnings surprise of 3.5%, on average.

Atlassian Corporation PLC Price and EPS Surprise Atlassian Corporation PLC Price and EPS Surprise

Atlassian Corporation PLC price-eps-surprise | Atlassian Corporation PLC Quote

Factors to Note

The rising adoption of Atlassian’s cloud-based solutions and massive digitalization of work in organizations, big or small, is likely to have benefited the fiscal first-quarter’s performance. Increasing demand for the company’s cloud products from new customers and existing clients using on-premises products might have acted as a tailwind.

With more and more customers migrating to cloud amid the coronavirus-induced work-from-home and online learning wave, Atlassian has been witnessing strong demand for its premium and Enterprise edition of cloud offerings. This is likely to get reflected in the fiscal first-quarter’s results.

The fiscal first-quarter performance is likely to reflect gains from the rising demand for remote-working tools amid the COVID-19 pandemic-induced work-from-home trend.

Healthy demand for core products like Jira and Confluence, and the rising adoption of new products like Jira Service Desk, Jira Ops and Bitbucket may have acted as key catalysts in the quarter to be reported. Improvement in product quality and performance, multiple product launches and increased pricing are likely to have boosted the firm’s fiscal first-quarter performance.

Robust growth in subscription revenues, aided by the solid uptake of the company’s cloud-service offerings, is likely to get reflected in the to-be-reported quarter’s results.

Nonetheless, increased investments in its systems and infrastructure, research & development, sales and marketing initiatives might have weighed on the bottom line in the quarter under review.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Atlassian this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Atlassian currently has a Zacks Rank #2 and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which per our model have the right combination of elements to post an earnings beat in their upcoming release:

Avis Budget Group CAR has an Earnings ESP of +18.16% and a Zacks Rank #1 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Golden Entertainment, Inc. GDEN has an Earnings ESP of +51.95% and a Zacks Rank #1 currently.

Accel Entertainment ACEL has an Earnings ESP of +20.00% and a Zacks Rank #2 currently.

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