Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
Investing.com -- Atlassian Corp (NASDAQ:TEAM) reported better-than-expected third-quarter earnings and revenue on Wednesday, but shares tanked nearly 16% in premarket trading Friday as the company’s fourth-quarter revenue guidance fell short of analyst expectations.
The team collaboration software provider posted adjusted earnings per share of $0.97, surpassing the analyst estimate of $0.78. Revenue for the quarter came in at $1.36 billion, beating the consensus estimate of $1.29 billion and representing a 14% YoY increase.
However, Atlassian’s fourth-quarter revenue guidance of $1.349 billion to $1.359 billion disappointed investors, falling below analyst expectations of $1.6 billion. This weak outlook overshadowed the company’s strong Q3 performance, driving the sharp stock decline.
"We delivered total revenue of $1.4 billion in the quarter, driven by Cloud revenue growth of 25% year-over-year," said Joe Binz, Atlassian’s CFO. "We remain committed to balancing operational discipline with continued focused investment in key strategic areas like enterprise, AI, and the Atlassian System of Work to drive future growth."
The company reported that its Cloud annualized recurring revenue (Cloud ARR) customer base grew 14% YoY to 50,715 customers with greater than $10,000 in Cloud ARR.
Atlassian’s GAAP operating margin for Q3 was -1%, compared to 1% in the same quarter last year. Non-GAAP operating margin was 26%, down slightly from 27% in Q3 2024.
"Compared to recent blow-out quarters, Atlassian delivered a mediocre quarter, with very strong free cash flow (FCF), disappointing March Q billings, modestly higher reported revs, and roughly in-line rev guidance," BMO Capital Markets analysts commented.
The brokerage lowered its estimates for the full-year 2026, citing "lingering questions on new Collections."
Despite the market’s negative reaction, CEO Mike Cannon-Brookes expressed optimism about the company’s AI initiatives and recent product announcements at the Team ’25 event.
Luke Juricic contributed to this report.