Why Atlassian (TEAM) Stock Surged 17% Today

Atlassian Corporation (NASDAQ:TEAM) is up 17% after it reported very strong Q2 FY2025 earnings report. It also revised its guidance upwards. Could this cause the stock to surge back to its 2021 valuations? Here’s what you need to know:

Atlassian’s Blockbuster Q2 Earnings Report

Atlassian posted $1.29 billion in revenue, up 21% year-over-year. Subscription revenue came in at $1.21 billion and grew 30% year-over-year. This was due to solid enterprise adoption and cloud migration.

Profitability has also surged. The company’s non-GAAP EPS reached $0.96 cents, which came in much higher than analyst estimates of $0.62 to $0.75. Free cash flow surged to $343 million and did so with a 26% non-GAAP operating margin.

Atlassian now holds $2.5 billion in cash.

The cloud dominance is especially bullish. Atlassian’s cloud revenue grew 30% year-over-year, and it now has 49,449 cloud customers who spend over $10,000 annually. A record-breaking number of $1 million+ deals were signed in Q2. This included major contracts with a bank, a telecom giant, and a U.S. automotive leader. Over 85% of Fortune 500 companies use Atlassian’s tools.

Atlassian Boosted Its FY2025 Guidance

Atlassian upped its guidance for this fiscal year and lifted revenue growth guidance to 18.5-19%. This is up from 16.5-17%. Q3 revenue is projected at $1.34 billion to $1.35 billion vs. the $1.31 billion consensus by analysts.

Atlassian sees $18 billion in annual revenue, and this includes $14 billion from its enterprise customers.

What Wall Street Analysts Now See

Analysts definitely see the Q2 FY2025 positively. Scotiabank upped its price target from $250 to $330, and even before the earnings report, Morgan Stanley picked the company as a Top Pick for 2025. It boosted the price target to $315.

The highest price target on the stock is at $400, so analysts think TEAM stock could still deliver gains from here.

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