Atlassian comes ahead of Street estimates in Q1 but shares tumble

Shares of Atlassian (NASDAQ:) tumbled over 6% in after-hours trading Thursday even though the company’s financial results for the fiscal Q3 beat analyst estimates.

Atlassian reported third-quarter earnings per share (EPS) of $0.89, outperforming consensus estimates of $0.59. The company's revenue for the quarter reached $1.19 billion, surpassing the projected $1.06 billion.

Looking ahead, Atlassian has provided guidance for the fourth quarter of 2024, projecting revenues between $1.12 billion and $1.135 billion, which exceeds the consensus forecast of $1.105 billion.

The company also anticipates a 32% year-over-year growth in cloud revenue and expects data center revenue to increase by 40% to 42%.

Moreover, Atlassian expects a gross margin of approximately 81.0% on a GAAP basis and about 83.5% on a non-GAAP basis.

The operating margin is projected to be around (7.0%) on a GAAP basis and approximately 18.5% on a non-GAAP basis.

“It’s been a milestone quarter for Atlassian,” said Mike Cannon-Brookes, co-founder and co-CEO.

“Today, Atlassian is a cloud-majority company. We have over 300,000 customers using our Cloud products and have seen a 3x increase in paid seats in Cloud since we announced end-of-support for Server three and a half years ago.”

Atlassian also announced that Scott Farquhar has decided to step down as co-CEO of the company. His tenure will conclude on August 31, 2024.

Following his departure from the role, Farquhar will remain involved with the company as a member of the Board of Directors and will also serve as a special advisor.

Meanwhile, Cannon-Brookes will continue in his capacity as the sole CEO of Atlassian.