Atlassian's profit streak, and rapid growth, continues.
On Friday morning, the Sydney-based, London-domiciled and US-listed software company released its first quarterly earnings report since its record IPO on the Nasdaq exchange late last year.
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Why Atlassian is a dividend free zone
It might be Australia's next great company, just don't expect it to pay you a dividend.
It booked a US$5.1 million ($7 million) profit for the December quarter, ahead of analyst forecasts for a loss of $US7.9 million. In a way that's not too surprising. Newly listed companies don't tend to fall short of expectations when they first report, otherwise that would call into question the integrity of the entire IPO process.
Still, Atlassian's maiden result looks pretty strong across the board.
Revenue was $US109.7 million, up 45 per cent on the same period last year, and beating Bloomberg consensus estimates for $US102.5 million. The company also provided a bullish forecast for the full financial year ending in June, saying it expects revenue to be between $US443 million and $US447 million, higher than consensus forecasts of $US425 million.
So, naturally, Atlassian's shares fell by about 4 per cent in after-hours trading. Wall Street can be a fickle beast!
Watermark Funds Management analyst Nick Cameron cautioned against reading too much into the after-hours share decline. "I think it was a great result. It's an impressive company. The business has got a lot of momentum, and I think, just generally, in this market, there has been a lot of expectation for these types of stocks going into their results" he said.
It is increasingly clear that Atlassian timed its IPO last December to perfection. Since then, broader market conditions have been shaky. There has only been one single IPO in the US so far this year. Many internet stocks have given up some of the sizeable gains they achieved in 2015. Atlassian shares have underperformed the broader US market , falling by about 14 per cent since their IPO. But the stock has fared slightly better than its peers in the enterprise SaaS (software as a service) sector.
The company is forecasting a modest loss of between US11¢ to US10¢ per share, or about $US5 million for the full financial year, or a modest profit of $US30¢ to $US31¢ per share, or $US16 million, once certain items were stripped out.
It is clear the company remains focused on growth above profits, which shouldn't be a surprise to anyone who payed attention during the IPO process.
Where is that growth going to come from? Co-CEO and co-founder Scott Farquhar was pretty coy about any potential product additions to the existing line-up, which includes JIRA, the task tracking tool for IT departments; Confluence, its documentation collaboration product. He also wouldn't elaborate on where there will be any push to sell these products beyond Atlassian's traditional customer base of IT departments.
That's not to say it is not being planned, just that the company is not willing to discuss it.
Farquhar did say the company was pleased with progress of HipChat, its office messaging service. Goldman Sachs estimates that the messaging product only accounts for 5 per cent of the company's revenue, but it gets a lot of attention because it pits Altassian against one of the hottest startups in Silicon Valley: namely, Slack.
"We think we are at the early stages of a very big wave [in messaging]," Farquhar said on the earnings call with investors. "We think we are putting up great numbers and that HipChat is doing really well."
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