Atlassian Stock Tumbles As Slowing Cloud Growth Trumps An Earnings Beat

Atlassian shares fell Friday after the software maker announced March-quarter earnings which exceeded estimates but noted that cloud computing growth had slowed. The company's forecast for revenue also missed expectations.

The stock of Atlassian fell 11% in the morning trade on the stock exchange today.

Atlassian (TEAM), after the close of Thursday's market, announced that it had earned 54 cents per share, a 25% increase from the previous year. Analysts had predicted a profit adjusted of 36 cents, Atlassian's 3rd fiscal quarter.

Atlassian reported revenue growth of 24%, to $915.50 million. This is a significant increase over the $850 million in views.

Atlassian expects to achieve a total revenue of $910 millions at the mid-point of its forecast for the June quarter. This is below the estimated $916 million. In the fourth fiscal quarter, revenue growth from cloud computing services is expected slow down to 27%. This growth was 34% in the period of March.

Atlassian Stock: Sales Growth vs. Sales Growth

In a client note, Raymond James analyst Adam Tindle said: "Profitability exceeded expectations but it is unlikely that investors will capitalize on this as the majority of savings from restructuring are expected to be reinvested by 2024."

He said: "The combination between stalling near-term growth and peak margins do not bode well" for the performance of the stock.

Atlassian's stock price had risen by more than 16 percent in 2023, and this was before the earnings report.

Atlassian, founded in Sydney in 2002 sells software that helps software developers collaborate and manage projects.

The software company is moving to a cloud computing business model. Atlassian will also phase out the sale of software installed in corporate data centers.

According to IBD Stock Checkup, Atlassian's stock has a Relative strength rating of 22 out of 99.