Atlassian Corp Shares Dip Despite Strong Quarterly Results: 4 Analysts Weigh In On Earnings, Challenges

Shares of Atlassian Corp TEAM tanked in early trading on Friday, despite the company reporting upbeat quarterly results.

Here are some key analyst takeaways from the earnings release.

Truist Securities On Atlassian

Analyst Joel Fishbein reiterated a Hold rating and price target of $150.

“Atlassian delivered another quarter with upside to revenue and margin expectations while they continue to wrestle a cloud transition through macro uncertainty,” Fishbein wrote in a note.

“Data center continues to be an upside driver on the subscription line, while cloud growth is guided to fall below 30% in Q4 inclusive of a 10% tailwind from transitions,” he added. “At the same time, the company's cost savings measures are driving meaningful margin upside,” the analyst further stated.

JMP Securities On Atlassian

Analyst Patrick Walravens maintained a Market Perform rating on the stock.

Management’s fourth-quarter guidance was “slightly disappointing,” Walravens said.

“While Atlassian continues to run an impressive $3.6B run-rate business with mid-20% top-line growth and mid-teens operating margins and it has significant growth opportunities in cloud migration and in ITSM, the business has been negatively impacted by macroeconomic conditions, as reflected by paid seat expansions from existing customers, free-to-paid conversions, and some seat count reductions in customers that have announced layoffs – all of which may continue to take some time to work through,” he added.

Check out other analyst stock ratings.

Oppenheimer On Atlassian

Analyst Ittai Kidron reaffirmed an Outperform rating and price target of $200.

Although Atlassian’s quarterly results were “solid,” they reflected “worsening macro conditions that are impacting free-to-paid customer conversion rates and the pace of seat expansion at existing customers,” Kidron said.

“This is weighing modestly on 4QFY23 guidance and is contributing to further deceleration in Cloud revenues, which are now expected to grow a relatively tepid +27% YoY (at midpoint) next quarter,” he added. “While customer engagement remains high, we expect the moderating Cloud growth to weigh on investor sentiment and the shares near term,” the analyst further wrote.

Raymond James On Atlassian

Analyst Adam Tindle reiterated a Market Perform rating on the stock.

“Profitability was significantly higher than expected, but this is unlikely to be capitalized by investors as it was largely related to restructuring savings that are anticipated to be reinvested in FY24,” Tindle wrote in a note.

“The combination of stalling growth alongside peak near-term margins does not bode well for the tactical performance in the stock,” he added.

TEAM Price Action: Shares of Atlassian had declined by 11.21% to $133.23 at the time of publishing Friday.

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