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

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Atlassian Corporation PLC (NASDAQ: TEAM) stock fell over 10.32% on 18th October, 2019 (as of 12:11 pm GMT-4; Source: Google finance) after the company improved its second-quarter outlook and reported better-than-expected earnings for the first quarter 2020. The company has generated more than $62.4 million of free cash flow. The company have also added over 7,000 net new customers during the first, and currently have more than 159,000 customers in aggregate. During the first quarter, the company had introduced two important new additions of the cloud offerings, Free and Premium. Cash flow from operations was $76.2 million and free cash flow was $62.4 million for the first quarter of fiscal 2020. The company generated cash and cash equivalents, and short-term investments at the end of the first quarter of fiscal 2020 totaled $1.8 billion.

TEAM in the first quarter of FY 20 has reported the adjusted earnings per share of 28 cents, beating the analysts’ estimates for the adjusted earnings per share of 24 cents. The company had reported the adjusted revenue growth of 36 percent to $363 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $2.47 billion.

The company projects revenue in the second quarter 2020 to be between $386 million and $390 million and adjusted earnings of approximately 27 cents per share, compared to Wall Street’s forecast of $382 million in revenue and earnings of 26 cents per share, according to Refinitiv consensus estimates.

For the second quarter 2020, the company expects Gross margin to be about 83% on an IFRS basis and about 86% on a non-IFRS basis.  Operating margin is projected to be approximately (1%) on an IFRS basis and about 22% on a non-IFRS basis.

For fiscal 2020, the company expects total revenue to be in the range of $1,560 million to $1,574 million. 2020 Gross margin is anticipated to be in the range of 82% to 83% on an IFRS basis and in the range of 85% to 86% on a non-IFRS basis. Operating margin for FY 20 is expected to be approximately (3%) on an IFRS basis and approximately 20% on a non-IFRS basis. Net income per diluted share for FY 20 is anticipated to be approximately $0.01 on an IFRS basis and approximately $1.00 on a non-IFRS basis. Cash flow from operations for fiscal 2020 is expected to be in the range of $525 million to $535 million and 2020 free cash flow is expected to be in the range of $465 million to $475 million.

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