Atlassian plummets more than 20% on weak earnings report and disappointing forecast

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

Martin Ollman | Getty Images

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

Here’s how the company did:

Earnings: 36 cents per share, adjusted, vs. 38 cents per share as expected, according to Refinitiv.
Revenue: $807.4 million, vs. $806.4 million as expected, according to Refinitiv.

Revenue increased 31% year over year in the quarter that ended Sept. 30, according to a statement. Net loss narrowed to $13.7 million from $411.2 million one year ago, thanks to a mark-to-market accounting adjustment on strategic investments.

For the fiscal second quarter, Atlassian sees $835 million to $855 million in revenue, below the Refinitiv consensus of $879.2 million. The guidance assumes that macroeconomic current conditions persist through the rest of the 2023 fiscal year.

Scott Farquhar, Atlassian’s co-founder and co-CEO, told analysts that the company has been feeling the impact of a volatile global economy. The rate at which free users of Atlassian’s software are converting to the paid offerings is cooling, as is the expansion of the number of paid users at existing customers, which are slowing the pace of hiring.