Why Atlassian Corporation PLC (NASDAQ: TEAM) stock is falling

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Atlassian Corporation PLC (NASDAQ: TEAM) stock fell 5.8% in the pre market session on October 19th, 2019 after reporting a huge, unexpected loss. Net loss was $242.4 million for the first quarter of fiscal 2019, compared with $11.5 million for the first quarter of fiscal 2018. Net loss for the first quarter of fiscal 2019 included a non-cash charge to other non-operating expense and finance costs totaling $244.7 million, primarily as a result of marking to fair value the exchange feature on Atlassian’s exchangeable senior notes and the related capped calls. Cash and cash equivalents, and short-term investments at the end of the first quarter of fiscal 2019 totaled $1.8 billion. Cash flow from operations for the first quarter of fiscal 2019 was $84.9 million, while capital expenditures totaled $10.7 million, resulting in free cash flow of $74.2 million, an increase of 18% year-over-year.

Why Atlassian Corporation PLC (NASDAQ: TEAM) stock is falling

TEAM in the first quarter of FY 19 has reported the adjusted earnings per share of 20 cents, beating the analysts’ estimates for the adjusted earnings per share of 19 cents. The company had reported the adjusted revenue growth of 37 percent to $267.29 million in the first quarter of FY 19, beating the analysts’ estimates for revenue of $260 million. The company has also added over 5,800 net new customers during the quarter and now have more than 131,000 customers in total. Operating income was $62.5 million for the first quarter of fiscal 2019, compared with $38.2 million for the first quarter of fiscal 2018. Operating margin was 23% for the first quarter of fiscal 2019, compared with 20% for the first quarter of fiscal 2018.

Meanwhile, TEAM has completed the acquisition of OpsGenie, Inc., whose technology enables companies to better plan for and respond to IT service disruptions. When outages occur, OpsGenie’s technology quickly routes alerts to the appropriate IT teams, speeding diagnosis and resolution, and reducing downtime. Further, the company has launched the newest product, Jira Ops, which is a centralized hub for IT teams to coordinate their work during an incident. Together with the other products, OpsGenie and Jira Ops help IT operations teams resolve outages faster and incur fewer incidents over time.

For FY 19, total revenue is expected to be in the range of $1,175 million to $1,183 million. Net loss per diluted share is expected to be approximately ($1.30) on an IFRS basis, and net income per diluted share is expected to be approximately $0.78 on a non-IFRS basis.

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