Atlassian (TEAM) Q1 2023

Scott Farquhar, co-founder and co-CEO of software company Atlassian, speaks during a jobs and skills summit at Parliament House September 1, 2022 in Canberra, Australia. The Australian Government is bringing together political, business, union and community leaders at Parliament House to address issues facing the Australian economy and workforce as inflation and interest rates continue to rise.

Martin Olmann | Getty Images

Atlasian Shares fell as much as 22% on Thursday after the collaboration software maker reported lower earnings than analysts had expected and issued a disappointing outlook.

Here’s how the company did it:

  • Merits: 36 cents per share, adjusted, versus 38 cents per share as expected, according to Refinitiv.
  • Revenue: $807.4 million versus $806.4 million as expected, according to Refinitiv.

According to a statement, revenue rose 31% year over year for the quarter ended Sept. 30. Net loss narrowed to $13.7 million from $411.2 million a year ago thanks to a mark-to-market accounting adjustment for strategic investments.

For the fiscal second quarter, Atlassian is expecting revenue of $835 million to $855 million, below the Refinitiv consensus of $879.2 million. The forecast assumes current macroeconomic conditions will persist for the remainder of fiscal 2023.

Atlassian co-founder and co-CEO Scott Farquhar told analysts the company is feeling the effects of a volatile global economy. The rate at which free users of Atlassian software are switching to the paid offerings is declining, as is the increase in the number of paying users among existing customers, which is slowing the pace of hiring.

Atlassian added 6,550 customers, bringing the total to 249,173. Analysts polled by StreetAccount had expected 250,700.

Farquhar said Atlassian will slow growth in its own headcount going forward.

The company’s competitive position against peers has not changed, said Cameron Deatsch, Atlassian’s chief revenue officer.

Before the after-hours slump, Atlassian’s shares were down 54% for the year, compared to a 20% decline in the S&P 500.

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