Atlassian Earnings: Strong Quarter Despite Persistent Pressure on Customer Adds and Conversions

Atlassian closed out its fiscal 2024 with a bang, punctuated by meaningful upside to our expectations on both the top and bottom lines. Guidance was similarly strong for the first quarter. Despite these bullish signs, macro conditions continue to have a negative impact on paid seat expansions at existing customers and conversions from free to paid users, similar to the past few quarters. Given strength in results and guidance, we are more optimistic about our long-term growth and profitability assumptions and as a result are raising our fair value estimate to $215 per share, from $165 previously. Despite the 20%-plus spike in price after hours, we see shares as fairly valued.