There Are No L’s In $TEAM

When TEAM came public a few year’s ago, I was excited to buy it for clients. I wasn’t interested in trading the stock and hopefully some of my clients still own it, although I am doubtful since their new money managers probably sold it all out.

When I was studying ways to expand the Exodus platform, I came across this Australian company who prided themselves on having ZERO sales people. Everything they do is online. Fascinating, isn’t it? Like CRM, but without all of the heavy expenses associated with keeping a large payroll. While I’ve found it difficult to expand in such a bare boned model, those crazy bastards from down under have perfected it.

Here’s a research note published in early January of 2016, by Canaccord Genuity.

“We believe Atlassian is one of those rare, long-tail opportunity companies you come across once or twice a decade. The firm has flipped the traditional software income statement by investing about 40% in R&D and 15-20% in S&M. With the software value priced, the low-friction, self-service sales model becomes a growth flywheel sustained by rapid innovation cycles. And best of all, the firm has done this while making a profit for 10 consecutive years. This is not a cheap stock by any metric, but we believe Atlassian is very likely to become a substantial, multi-billion-dollar company over the next decade. If so, we expect this stock to almost certainly deliver very good returns.”

It took awhile for the valuation to catch up with the stock. Judging by the 12% lift in the after hours this evening, following a blow out quarters, I think it’s fair to say TEAM is in the zone and will be talked about plenty in the not-too-distant future.

Reports Q1 (Sep) earnings of $0.12 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.09; revenues rose 41.7% year/year to $193.8 mln vs the $185.78 mln Capital IQ Consensus.

Co issues upside guidance for Q2, sees EPS of $0.12, excluding non-recurring items, vs. $0.10 Capital IQ Consensus Estimate; sees Q2 revs of $203-205 mln vs. $200.23 mln Capital IQ Consensus Estimate.

Co issues raised guidance for FY18, sees EPS of $0.46-0.47 from $0.42-0.44, excluding non-recurring items, vs. $0.44 Capital IQ Consensus Estimate; raises FY18 revs to $841-847 mln from $826-834 mln vs. $831.02 mln Capital IQ Consensus Estimate.

Atlassian ended the first quarter of fiscal 2018 with a total customer count on an active subscription or maintenance agreement basis of 107,746. Atlassian added 4,246 net new customers during the quarter.

Q2 Guidance: Gross margin is expected to be approximately 79% on an IFRS basis and approximately 84% on a non-IFRS basis. FY18 Guidance: Gross margin is expected to be approximately 79% on an IFRS basis and approximately 84% on a non-IFRS basis.

Here is an archive for their conference calls. I highly recommend listening to a few in order to get a better handle on what they’re doing.