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Atlassian Corporation PLC A TEAM

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Morningstar’s Analysis

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Strong Start to Year for Atlassian; FVE up to $405

Dan Romanoff, CPA Senior Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

We are raising our fair value estimate to $405 per share from $303 for narrow-moat Atlassian based on strong first-quarter results and guidance causing us to raise our growth expectations and margin expansion trajectory for the longer term. With shares up 8% after hours, we view shares as skewing expensive, but we think continued quarterly strength would provide valuation support. Atlassian kicked off fiscal 2022 in style, including substantial upside to the high end of guidance for both revenue and non-IFRS EPS in the first quarter. Management also provided similarly strong guidance for revenue, while non-IFRS EPS was slightly below Factset consensus for the December quarter. In addition, the firm's cloud migration is gaining steam and ahead of the pace we had previously modeled. While the more rapid model transition is pressuring margins near-term, we remain bullish on Atlassian's ability to deliver strong financial results while increasing its business at an impressive pace. We view robust first-quarter results as reinforcing our view that Atlassian offers a broad set of easy to purchase, deploy, and use IT tools that can help customers innovate and cut costs.  

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Company Profile

Business Description

Atlassian produces software that helps teams work together more efficiently and effectively. The company provides project planning and management software, collaboration tools, and IT help desk solutions. The company operates in four segments: subscriptions (term licenses and cloud agreements), maintenance (annual maintenance contracts that provide support and periodic updates and are generally attached to perpetual license sales), perpetual license (upfront sale for indefinite usage of the software), and other (training, strategic consulting, and revenue from the Atlassian Marketplace app store). Atlassian was founded in 2002 and is headquartered in Sydney, Australia.

341 George Street, Level 6
Sydney, NSW, 2000, Australia
T +61 292621443
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2021
Fiscal Year End Jun 30, 2022
Stock Type
Employees 6,912