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Atlassian stock drops 23% after earnings, potentially wiping away more than $10 billion in valuation


Atlassian Corp. shares dropped in the extended session Thursday after the business-collaboration software company’s earnings and revenue outlook fell short of Wall Street expectations as executives saw signs of economic weakness taking hold.


shares plummeted 23% after hours, following a 1% rise in the regular session to close at $174.17.

The company reported a fiscal first-quarter loss of $13.7 million, or 5 cents a share, compared with a loss of $411.2 million, or $1.63 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 36 cents a share, compared with 37 cents a share in the year-ago period.

Revenue rose to $807.4 million from $614 million in the year-ago quarter. Analysts surveyed by FactSet had forecast 40 cents a share on revenue of $806.3 million.

Atlassian forecast revenue of $835 million to $855 million for the second quarter, while analysts expected $879.3 million on average, according to FactSet. Executives also decreased their revenue guidance for the full year, without providing a specific figure for overall annual revenue; instead, they gave color in a letter to shareholders about the different revenue segments within the company.

In that letter to shareholders, Atlassian’s co-chief executives and co-founders, Mike Cannon-Brooks and Scoot Farquhar, said that the company tracked slower conversions from free to paid subscriptions for its freemium software, and slower growth from its paying customers in the quarter.

“The above two trends are the result of companies tightening their belts and slowing their pace of hiring. In other words, Atlassian is not immune to broader macroeconomic impacts,” they wrote. “Our outlook assumes these trends will persist, but we’ll monitor, respond and keep you updated accordingly.”

“We will focus our investments on strengthening our market position and scooping up top-tier talent in this environment. But we will balance these investments with the growth of our business and be responsive to the macroeconomic conditions,” they continued. “So while we’re lowering our revenue outlook for FY23 based on macroeconomic headwinds, we are maintaining our mid-teens % operating margin outlook for the year.”

Atlassian was worth roughly $44 billion at its closing price, suggesting a loss of more than $11 billion in market capitalization if the after-hours losses hold through Friday’s regular trading session. Atlassian shares have already declined 54.3% so far this year, as the S&P 500 index

is down 21.1%.


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