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Atlassian Corporation fights to stay above 2022 lows

Atlassian Corporation reported better-than-expected earnings for its fourth quarter of fiscal 2022, and the company's revenue came in above expectations.

A $50 billion company Atlassian offers a range of cloud-based software products that assist businesses in team collaboration and workforce management, enhancing teamwork and communication.

On Monday, the stock was seen jumping more than 1% despite a broad sell-off in US equity indices, but volatility has been subdued recently.

Focus on company’s earnings

The fourth-quarter fiscal 2022 non-IFRS earnings per share (EPS) published by Atlassian came in at 27 cents, above the consensus expectation of 26 cents. Non-IFRS earnings of 24 cents per share from the previous quarter grew by 12.5% to the current number.

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Revenues for Atlassian’s fiscal fourth quarter rose 36% to $760 million, above the average estimate of $717.8 million. The business saw strong demand for its cloud-based solutions, driven mostly by smaller clients. For larger clients, the cloud migration trend persisted in the period.

According to the Zacks Equity Research team. the cloud revenue for the reviewed quarter, which ended in early August, was $434 million, up 55% from the same period last year. The data center’s earnings, meanwhile, increased by 60% to $158.9 million. Revenues from the marketplace and services were $49.3 million, a 24% decrease from the prior year. Server’s earnings fell 16% to $117.6 million.

Non-IFRS gross profit for the corporation increased by 35.9% to $644 million over the previous year. During the quarter, the non-IFRS gross margin decreased by 10 basis points (bps), reaching 84.8%.

While Atlassian’s operating margin decreased 300 basis points to 14%, its non-IFRS operating income climbed 14.8% year over year to $108.9 million.

Late in October, Mizuho analyst Gregg Moskowitz maintained a Buy rating on the shares while cutting the firm’s price target for Atlassian from $360 to $320. High inflation, increasing rates, supply chain issues, currency headwinds, and the current Russia-Ukraine war “remain besieged” of software equities, the analyst warned investors in a research report.

Bearish trend prevails

The technical situation is not optimistic – the price remains stuck below the bearish trend line from August highs, limiting the upside potential. The price must jump above 215 USD to ignite some bullish momentum.

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Moreover, the stock price has held the medium-term uptrend from June’s lows, which could be an indication of a possible leg higher. For now, the price is trapped in the land of nowhere, with investors likely returning if we see an upside break above 215 USD or a bearish breakdown below 190 USD.

TEAM daily chart, Source: Author´s analysis, tradingview.com

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