Atlassian stock tumbled Friday as the software maker reported March-quarter earnings that topped estimates, but it noted cloud computing growth slowed. The company's revenue outlook also fell short of expectations.
Atlassian stock plunged 9.5% to close at 135.73 on the stock market today.
After the market close on Thursday, Atlassian said it earned 54 cents a share, up 25% from a year earlier. Analysts predicted adjusted profit of 36 cents for the period, Atlassian's third fiscal quarter.
Atlassian said revenue rose 24% to $915.5 million, topping views for $850 million.
For the June quarter, Atlassian said it expects total revenue of $910 million at the midpoint of its outlook. That's below estimates of $916 million. Revenue growth from cloud computing-based services is expected to slow to 27% in the fiscal fourth quarter. In the March period, that growth came in at 34%.
Atlassian Stock: Profits Vs. Sales Growth
"Profitability was significantly higher than expected, but this is unlikely to be capitalized by investors as it was largely related to restructuring savings that are anticipated to be reinvested in 2024," Raymond James analyst Adam Tindle in a note to clients.
He added: "The combination of stalling growth alongside peak near-term margins does not bode well for the tactical performance in the stock."
Further, Atlassian stock had gained more than 16% thus far in 2023 heading into the earnings report.
Founded in Sydney in 2002, Atlassian sells project management and collaborative software for software developers and information technology engineering teams.
The software maker is transitioning to a cloud-computing business model. In addition, Atlassian is phasing out sales of on-premise software used in the data centers of corporate customers.
Meanwhile, Atlassian stock holds a Relative Strength Rating of 22 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
