Atlassian surges as analysts see 'strong execution' after strong Q4 results
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Atlassian (NASDAQ:TEAM) shares surged nearly 20% in pre-market trading on Friday after the collaboration software maker reported fourth-quarter results and guidance that resulted in praise from Wall Street.
William Blair analyst Arjun Bhatia, who has an outperform rating on Atlassian (TEAM) shares, said the results were aided by "strong demand" in the enterprise and "robust" migration to the cloud and data center. 
Bhatia added that while Atlassian (TEAM) is not out of the "macro woods" just yet, there are green-shoots emerging, including the rate of deceleration slowing and seat compression appearing to peak in the second or third quarter. 
"We see the strong execution and the optimistic tone on headwinds stabilizing as positives coming out of this quarter," Bhatia wrote in an investor note.
For its fiscal fourth-quarter, Atlassian (TEAM) lost 23 cents per share as revenue rose 23.6% year-over-year to $939M. Analysts were expecting a loss of 42 cents per share on $906.05M in revenue. Included in that was a 34% year-over-year rise in subscription revenue to $800M.
Looking ahead, Atlassian (TEAM), expects fiscal first-quarter revenue to be between $950M and $970M, above the $950.96M estimate, with cloud revenue growth between 25% and 27% year-over-year.
For fiscal 2024, the company expects cloud revenues to grow between 25% and 30% year-over-year, with gross margins approximately 81%.
BMO Capital analyst Keith Bachman raised his price target to $220 from $180, noting that the results and guidance were better-than-expected and given the negative sentiment, the guidance should "cause near-term support for the shares."
Morgan Stanley analyst Keith Weiss, who has an overweight rating and $185 price target on Atlassian (TEAM), said it looks like the company may be back on track. 
"While macro headwinds remained present in Q4, several aspects of the quarter reminded us of why Atlassian had become one of the most desired assets in software over the last several years," Weiss wrote. 
Additionally, Weiss said the earnings call helped provide clarity on a few issues, including cloud revenue guidance.
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