Atlassian (NASDAQ: TEAM) reported Q3 EPS of $0.25, $0.04 better than the analyst estimate of $0.21. Revenue for the quarter came in at $411.6 million versus the consensus estimate of $395.14 million.

• Quarterly revenue of $411.6 million, up 33% year-over-year
• Quarterly IFRS operating margin of (5)% and non-IFRS operating margin of 19%
• Quarterly cash flow from operations of $156.3 million and free cash flow of $140.3 million
• Operating Income and Operating Margin: Operating income was $77.2 million for the third quarter of fiscal 2020, compared with operating income of $58.0 million for the third quarter of fiscal 2019. Operating margin was 19% for the third quarter of fiscal 2020, compared with 19% for the third quarter of fiscal 2019.
• Net Income and Net Income Per Diluted Share: Net income was $61.9 million for the third quarter of fiscal 2020, compared with net income of $52.4 million for the third quarter of fiscal 2019. Net income per diluted share was $0.25 for the third quarter of fiscal 2020, compared with net income per diluted share of $0.21 for the third quarter of fiscal 2019.
• Free Cash Flow: Cash flow from operations was $156.3 million and free cash flow was $140.3 million for the third quarter of fiscal 2020. Free cash flow margin for the third quarter of fiscal 2020 was 34%.

“These are unprecedented times,” said Scott Farquhar, Atlassian’s co-founder and co-CEO. “The COVID-19 pandemic has caused a public health crisis and rapid economic change. As workers respond in a remote-work world, we’ve never been more committed to delivering on our mission to unleash the potential of every team and support our customers and community.”

“We’ve built Atlassian to be an enduring company focused on driving long-term results,” said Mike Cannon-Brookes, Atlassian’s co-founder and co-CEO. “Through efforts like launching free cloud editions of our core products, we will support our customers through challenging times, and position ourselves to drive durable growth.”

GUIDANCE:

Atlassian sees Q4 2020 EPS of $0.17-$0.22, versus the consensus of $0.23. Atlassian sees Q4 2020 revenue of $400-415 million, versus the consensus of $417.74 million.

Atlassian sees FY2020 EPS of $1.06-$1.12, versus the consensus of $1.08. Atlassian sees FY2020 revenue of $1.584-1.599 billion, versus the consensus of $1.58 billion.

Financial Targets:

Atlassian is providing its financial targets for the fourth quarter and full fiscal year 2020. The company’s financial targets are as follows:

Fourth Quarter Fiscal Year 2020:

• Total revenue is expected to be in the range of $400 million to $415 million.
• Gross margin is expected to be approximately 83% on an IFRS basis and approximately 85% on a non-IFRS basis.
• Operating margin is expected to be in the range of (9%) to (6%) on an IFRS basis and in the range of 14% to 17% on a non-IFRS basis.
• Net loss per diluted share is expected to be in the range of ($0.21) to ($0.16) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.17 to $0.22 on a non-IFRS basis.
• Weighted average share count is expected to be in the range of 246 million to 247 million shares when calculating diluted IFRS net loss per share and in the range of 252 million to 253 million shares when calculating diluted non-IFRS net income per share.

Fiscal Year 2020:

• Total revenue is expected to be in the range of $1,584 million to $1,599 million.
• Gross margin is expected to be approximately 83% on an IFRS basis and approximately 86% on a non-IFRS basis.
• Operating margin is expected to be in the range of (1.5%) to (0.5%) on an IFRS basis and in the range of 21.5% to 22.5% on a non-IFRS basis.
• Net income per diluted share is expected to be in the range of ($0.08) to ($0.02) on an IFRS basis and in the range of $1.06 to $1.12 on a non-IFRS basis.
• Weighted average share count is expected to be in the range of 244 million to 245 million shares when calculating diluted IFRS net loss per share and in the range of 251 million to 252 million when calculating diluted non-IFRS net income per share.
• Cash flow from operations is expected to be in the range of $512 million to $542 million and free cash flow is expected to be in the range of $445 million to $475 million.

With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of IFRS to non-IFRS gross margin, operating margin, net income (loss) per diluted share, and free cash flow has been provided in the financial statement tables included in this press release.

For earnings history and earnings-related data on Atlassian (TEAM) click here.