Atlassian's fiscal results for the first quarter of its fiscal year exceeded analysts' expectations.
The company's performance was in line with expectations.
Stock dropped during extended trading.
Shares of the software company fell 9% on extended trading Thursday, despite earnings and revenues that were better than expected and a forecast which met Wall Street expectations.
Here is how the company performed compared to the consensus of analysts surveyed by LSEG (formerly Refinitiv):
Earnings per share:
Shares of 65 cents adjusted, compared to 54 cents expected
$977.8 million vs. $966.1 million expected
According to A, revenue in the third quarter ended Sept. 30 was up 21% from $807.4 millions a year ago.
The growth rate slowed down for the fifth quarter in a row.
Atlassian's loss increased to $31.9m, or 12c per share. It was $13.7m, or 5c per share a year ago. The company's adjusted operating margin increased to 23%, up from 22% the previous quarter.
At the end of the third quarter, the company reported that it had over 265,000 customers. This is up from 260,000.
Atlassian forecast revenue in the range of $1,01 billion to $1.03 billion for the second fiscal quarter. This is in line with the LSEG consensus estimate of $1.02 Billion.
The deferred revenue was $1.5 billion, the same as in the previous quarter. StreetAccount's analysts polled expected $1.5 billion.
Atlassian's adjusted operating margin guidance for the full fiscal year was raised to 20%, up from 18.5%, but it reiterated its forecast that cloud revenue would grow by 25% to 30%.
The company stated that "our guidance assumes macroeconomic headwinds will continue to negatively affect growth in paid seats expansion for existing customers, as well as free-to-paid convert rates. We also assume that the trends that we have seen in these areas over the past year will persist in FY24."
Letter to Shareholders
Atlassian is ending support for its Server product in February 2024. The company wants to shift clients to Cloud or Data Center products. This change "will likely lead to greater variability in the Cloud and Data Center growth rates, depending on how and when Server customers migrate," according to the letter.
Cameron Deatsch said, Atlassian’s chief revenue executive, that many organizations wait until the last moment to migrate. Deatsch is leaving the company at year's end.
Atlassian announced in October that it would purchase video messaging startup Loom for approximately $975 million. This guidance does not include the impact of Loom which will become part Atlassian's third fiscal quarter.
Atlassian's stock has risen by 41% in 2023 excluding the after-hours movement, which is higher than the S&P 500's 12% increase.
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