Analysis Of Atlassian’s Percept.AI Acquisition

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Recently Atlassian (Nasdaq: TEAM) reported its second-quarter results that continued to surpass estimates. The company is focusing on building its AI capabilities through acquisitions and partnerships with other smaller ventures.

Atlassian’s Financials

For the second quarter, revenue grew 37% to $688.53 million, ahead of the market’s forecast of $62.484 million. Net loss was $77.5 million, compared with a net loss of $621.5 million a year ago. Adjusted EPS was $0.50, better than the market’s forecast of $0.39.

By segment, Subscription revenues grew 64% to $509 million and maintenance revenues fell 3.21% to $127.06 million. Other revenues fell 11.66% to $52.48 million.

During the quarter, Atlassian’s customer base grew 29% over the year to over 11,745. The company also saw a significant uptick in cloud sales from channel partners. Cloud growth from channel partners grew 131% over the year.

Atlassian’s PaaS statistics also look impressive. For its marketplace business, cloud apps account for more than 50% of its overall marketplace listings. Lifetime marketplace revenue has surpassed $2 billion with Atlassian paying out $1.5 billion of this to its network of app developers.

For the third quarter, Atlassian expects revenues of $690-$705 million with an adjusted loss per share between $0.33 and $0.31. The market was looking for revenues of $655.32 million and an EPS of $0.39 for the third quarter. Analysts expect Atlassian to end the year with revenues of $2.59 billion and an EPS of $1.58.

Atlassian’s Percept.AI Acquisition

Recently, Atlassian announced the acquisition of Percept.AI. Founded in 2016 by Zhou Sha, Percept.AI uses a proprietary AI engine for natural language understanding. The platform helps teams with automating tier-1 support interactions through multiple channels like a portal, chat, email, and web. The acquisition will allow teams to set up and tweak Percept.AI’s service with a no-code tool. Percept.AI is able to analyze the content in a support query, in addition to intent and sentiment, to combine with the user profile and create a personalized response. Once the virtual agent has reached its limits, the interaction will be automatically transferred to a human. Atlassian will natively integrate Percept.AI’s technology into Jira Service Management, to help expand its AI capabilities. Terms of the acquisition were not disclosed. Prior to the acquisition, Percept.AI was privately funded. It did not disclose its financials.

Additionally, Atlassian continued to expand its partnerships. It deepened its partnership with Miro, a visual collaboration company, by?investing in its Series C funding round. Miro’s virtual whiteboarding product integrates with Jira and Confluence to drive customer innovation. Atlassian also invested in Clockwise, a scheduling optimization app provider. Clockwise’s focus on team productivity complements Atlassian’s objective of improving team potential. These investments will help Atlassian drive customer value and expand the economy around its own market segment.

Atlassian’s stock is trading at $313.46 with a market capitalization of $79.46 billion. It touched a 52-week high of $483.13 in October last year. It hit a 52-week low of $198.80 in March last year. Now is a terrific entry point into this exceptional company.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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