Atlassian tops Q2 expectations on strong subscription revenue growth

Atlassian's subscription revenue climbed 50% to $228.6 million.

Atlassian reported better-than-expected second quarter financial results on Thursday bolstered by strong growth in subscription revenue. 

The collaboration and productivity software company reported a net income of $124 million, or 51 cents per share. Non-GAAP earnings were 49 cents per share on revenue of $408.7 million, up 37% from a year ago.

Wall Street was expecting the company to report earnings of 27 cents per share on revenue of $388.9 million.

Atlassian's subscription revenue climbed to $228.6 million, up from $152.5 million the year prior. The company reported a free cash flow of $218 million. Elsewhere, Atlassian said it grew its customer count on a net basis by 5,003 for the quarter. It ended Q2 with a total customer count on an active subscription or maintenance agreement basis of 159,787.

"Subscription revenue grew 50% year-over-year, underscoring the progress we continue to make in our cloud-first strategy," said Scott Farquhar, Atlassian's co-founder and co-CEO. "This is just another small step on our long-term journey to build an enduring company."

In terms of guidance, Atlassian is expecting third quarter revenue in the range of $395 million to $399 million, with EPS of 20 cents. Analysts expect the company to report second quarter earnings of 22 cents per share on revenue of $397.1 million. 

For the full fiscal year 2020, the company is expecting revenue in the range of $1.59 billion to $1.60 billion with earnings of $1.03 to $1.09 per share. For the year analysts expect earnings of $1.01 a share on revenue of $1.57 billion. Shares of Atlassian were up over 11% after hours.