tiprankstipranks
Atlassian Should Continue to Thrive in Long-Term
Stock Analysis & Ideas

Atlassian Should Continue to Thrive in Long-Term

Atlassian Corporation (TEAM) is the software company for software developers. The company designs, develops, and markets software primarily used by small teams of in software development or information technology departments. TEAM stock went public in December of 2015.

I am bullish on TEAM stock. (See Analysts’ Top Stocks on TipRanks)

TEAM Stock Price

Atlassian has been an extremely successful stock since its IPO. It has returned 1,500% since IPO, over 460% over the last three years, and over 122% during the trailing twelve months. Investors are clearly enthused by the direction of the company, as they should be. There are many encouraging metrics associated with TEAM.

Note that Atlassian runs on a June 30 fiscal year end. When discussing Fiscal Year 2021, the period referred to is July 1, 2020 to June 30, 2021.

As a software-as-a-service (SaaS) company, revenues are typically on a recurring basis. This means that the number of customers is perhaps the best indication of future success. The company finished FY21 with 236,118 customers. This is up significantly from 174,097 to finish Fiscal 2020. This amounts to a 36% increase in just a single year.

Not all customers are created equally. Many of these customers do not provide substantial revenues. However, Atlassian also breaks down the larger customers; those providing more than $50,000, $500,000, and $1 million in annual revenues. These customers increased at an even faster rate than total customers. The customers providing over $50,000 rose 40%, while customers providing revenues over $500,000 and $1M rose 54% and 71%, respectively. This is highly encouraging for future results.

Atlassian Revenue Trends

Atlassian passed the $1 billion annual revenue mark in Fiscal 2019. The company has passed the $2 billion mark over the trailing twelve months ended September 30, 2021.

Over that time, revenues have risen over 86% as more customers come on board and existing customers increase their spend with TEAM. Revenues are forecast to pass the $3 billion mark easily in the Fiscal Year ending June 30, 2023.

As the company scales, it is now beginning to generate meaningful operating income and EBITDA. After generating just $14 million in operating income in Fiscal 2020, Atlassian generated $110 million in Fiscal 2021, and over $137 million over the trailing twelve months.

The same is true for EBITDA, where the company’s results rose from $47M in Fiscal 2020, to $144M in Fiscal 2021, to over $170M over the last twelve months.

Investors are betting big on this future growth potential. TEAM stock has historically not been a cheap stock and this is no different now. The stock has a price-to-sales ratio of over 49x. This is quite high. However, this drops to 34x on a forward one-year basis. For this reason, TEAM stock is one for long-term investors and likely not the best bet for short-term traders.

Wall Street’s Take

Over on Wall Street, Atlassian has a Moderate Buy consensus rating. 10 analysts have Buy ratings, while five have Hold ratings. There are no sell ratings. Analysts have a wide spread of price targets all the way from $380 on the low end to a high of $525.

The average Atlassian price target of $493.08 implies 12% upside from the current price.

Summary on Atlassian

Atlassian fills a definite need in the business world. With over 236,000 customers, it has established itself as an integral cog. Work-from-home trends will only accelerate this need.

Atlassian also has a company culture that is award winning. The company has grown revenues at a steady clip and this is expected to continue for the foreseeable future. The scale of the company is now hitting the bottom line as well, with operating incomes increasing substantially. The stock is quite expensive and recommended for long-term investors who wish to buy and hold.

Disclosure: At the time of publication, Bradley Guichard did not have a position in securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles