2023-11-02 16:56:56 ET
Shares of Atlassian ( NASDAQ: TEAM ) on Thursday slumped as much as 17.3% in extended trading, after the Australian business software firm issued disappointing fiscal year 2024 cloud revenue growth guidance.
TEAM stock was last down 11.5% to $160.50 after hours.
Sydney-based Atlassian ( TEAM ) provides cloud services through products such as its Jira software development tools, business team workspace Confluence and developer experience platform Compass. The company's quarterly results come three weeks after it said it would shell out nearly $1B to buy video messaging platform Loom.
TEAM reported FQ1 2024 adjusted earnings per share of $0.65, which beat estimates by 11 cents. Revenue rose more than 21% Y/Y to $977.78M, also beating expectations by $12.44M.
The company's quarterly subscription revenue rose 31% Y/Y to $852M. Meanwhile, revenue from its cloud services - which is its biggest driver of sales - increased 27.3% Y/Y to $604.6M.
"Cloud momentum remains high, with the number of users migrated over the past year up nearly 50%. Customers are adopting Premium and Enterprise editions of our cloud products at a high rate," TEAM co-CEOs Scott Farquhar and Mike Cannon-Brookes and CFO Joe Binz wrote in a letter to shareholders .
"More companies like Domino's ( DPZ ), Breville, and the NRMA are switching from legacy ITSM solutions to Jira Service Management," the executives added.
However, TEAM's FQ1 total revenue growth and cloud revenue growth decelerated from FQ3 2023.
Moreover, Atlassian guided for Y/Y cloud revenue growth of 25% to 30% for fiscal year 2024. The top end of that range was below TEAM's 37.6% cloud revenue growth in fiscal year 2023, with sales coming in at $2.09B.
"Our guidance assumes that macroeconomic headwinds continue to negatively impact growth in paid seat expansion at existing customers and free-to-paid conversion rates, and that the trends we’ve seen in these areas throughout the last year persist in FY24," the TEAM executives said in the shareholder letter.
"Our guidance continues to assume that Server customer migration rates to Cloud and Data Center are consistent with historical trends and that some proportion of our Server customers will not migrate in FY24," they added.
Additionally, Atlassian ( TEAM ) guided for FQ2 2024 total revenue of $1.01B to $1.03B, with the mid-point of that range coming in-line with the consensus revenue estimate of $1.02B.
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Atlassian slumps after hours on weak fiscal year 2024 cloud revenue growth guidance