Developer and collaboration software company Atlassian Corp. Plc. is flying high today after delivering third-quarter financial results that sailed past Wall Street’s expectations.

The company reported a profit before certain costs such as stock compensation of 48 cents per share on revenue of $569 million, up 38% from a year ago. Wall Street analysts had modeled earnings of just 29 cents per share on revenue of $534 million.

Atlassian co-founder and co-Chief Executive Scott Farquhar (pictured) said the company drove “strong growth and financial results” in the quarter. Atlassian’s stock rose more than 5% in after-hours trading.

Atlassian is the developer of the popular Jira family of work management tools, which are used by teams in areas such as software development to coordinate their activities. The company also sells Trello, another bestselling project management application, and a selection of other software products.

The company has had a busy few months since the start of the year. In January it announced that it’s looking to evolve its business model by ending server license sales to push its customers to cloud subscriptions. To that end, in February the company launched a new Cloud Enterprise offering that allows large organizations to use its software with more flexible licensing terms, also providing access to more advanced administration features.

The initial effort seems to be paying off, as Atlassian said today its subscription revenue was up 43% year-over-year to $350 million.

Still, the most likely reason for Atlassian’s strong performance was the ongoing COVID-19 pandemic, said Constellation Research Inc. analyst Holger Mueller. He explained that even while people are working from home, software still needs to be built, and in order for that to happen teams need a way to collaborate, and that makes Atlassian’s software very appealing.

“Investors were likely pleased to see Atlassian turning back to a profit again this quarter, and it’s good to see the company renew its focus on its products,” Mueller said. “The company spent more on research and development than it did on sales, marketing and general expenses. That’s a great practice that usually delivers real product innovation. Now, all eyes are on how Atlassian closes its current financial year, when we will see if it is still losing money overall or has finally turned the corner.”

Atlassian’s spending on R&D bore fruit in the quarter with the company announcing a major refresh of Trello that introduces newer ways for users to organize their projects and tasks, and deeper integration with third-party services such as Dropbox.

The company also made a big acquisition, snapping up the business intelligence firm Chartio Inc. for an undisclosed price. Atlassian said it’s planning to merge Chartio’s data visualization capabilities with its Jira product family, but didn’t elaborate any further.

Looking ahead, Atlassian said it expects to see first-quarter earnings of 17 cents per share on revenue between $513 million and $528 million. Wall Street is currently modeling earnings of 23 cents per share on lower revenue of $505 million.

Photo: Atlassian/Facebook