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Atlassian Analysts Boost Forecasts After Strong Earnings

Marcus LeeFriday, Jan 31, 2025 9:39 am ET

3min read

TEAM --

Atlassian Corporation (TEAM) reported better-than-expected financial results for the fiscal second quarter, driving analysts to increase their price targets and expectations for the company's future growth. The software company's shares popped 19% after the earnings announcement, trading near a fresh 52-week high.

Atlassian reported adjusted earnings of 96 cents per share and $1.29 billion in revenues, surpassing analyst estimates of 76 cents per share and $1.24 billion, respectively. The company's strong performance was fueled by robust cloud and data center growth, as well as strategic investments in AI integration.

Atlassian's cloud revenue grew by 29.7% year-over-year, driven by effective sales strategies and heightened customer adoption. The company's strategic investment in AI integration contributed to a 30% subscription revenue growth over the prior year. Atlassian's AI-driven product enhancements, such as upgrades in Jira and Confluence, and the introduction of new offerings like Rovo, have improved large-scale team collaboration and driven customer adoption.

Following Atlassian's strong fiscal second-quarter earnings report, several analysts raised their price targets, indicating their confidence in the company's prospects. Mizuho analyst Gregg Moskowitz maintained Atlassian with an "Outperform" rating and raised the price target from $285 to $355. Morgan Stanley analyst Keith Weiss maintained Atlassian with an "Overweight" rating and raised the price target from $315 to $370.

Atlassian's guidance for the third quarter and fiscal year 2025 further supports the analysts' expectations. The company anticipates third-quarter revenue between $1.345 billion and $1.353 billion, with cloud revenue expected to grow 23.5% and data center revenue expected to grow 7%. For the full year, Atlassian expects revenue growth of 18.5% to 19.0% and cloud revenue growth of 26.5%.

Atlassian's strong earnings report, strategic investments in AI and the System of Work, and positive guidance have analysts bullish on the company's future growth and performance. The company's shares are up nearly 10% since the start of the year, and with the recent earnings beat, Atlassian is well-positioned to continue its momentum in upcoming quarters.

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