Atlassian says customers unlikely to reduce spending as the software maker surpasses revenue expectations

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Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar

Atlassian shares rose as much as 12% after the collaboration software maker disclosed more quarterly revenue than analysts had expected, while meeting consensus on earnings.

Here’s how the company did:

  • Earnings: 27 cents per share, adjusted, vs. 27 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $760 million, vs. $724 million as expected by analysts, according to Refinitiv.

Revenue rose 36% year over year in the quarter, which ended on June 30, according to a statement. The company reported a $105.5 million net loss, narrowing from a $213.1 million loss in the year-ago quarter. A 14-day outage in April bumped up operating expenses, the company said.

Atlassian said it had 242,623 customers at the end of the quarter, more than the 242,300 consensus among analysts polled by StreetAccount.

Scott Farquhar and Mike Cannon-Brookes, Atlassian’s dual CEOs, gave upbeat commentary on the company’s prospects in the current economy in a letter to investors.

“We’ve observed over the years that developers tend to be the last roles companies scale back on,” they wrote. “We believe this will continue to prove true, especially for the overwhelming number of organizations undergoing digital transformation. Second, whilst our products punch above their weight in terms of value, Atlassian is a relatively small line item in overall IT budgets and likely not where customers look to reduce costs.”

They said customers wouldn’t save money by switching because Atlassian’s products are already cost less than those that competitors offer. The CEOs reiterated their previous guidance of 50% cloud revenue growth in the 2023 and 2024 fiscal years.

Atlassian’s quarterly forecast calls for more revenue than analysts had projected. Management called for adjusted net earnings of 37 cents to 38 cents per share on $795 million to $810 million in revenue in the fiscal first quarter. Analysts polled by Refinitiv had expected 37 cents in adjusted earnings per share and $773.5 million in revenue.

The company said it has tapped Joe Binz, a former corporate vice president at Microsoft, to be its new finance chief. Farquhar has served as interim finance chief following the departure of James Beer, who retired in June after holding the post for four years.

Atlassian benefited after hiring people during the recession in 2008 and 2009, and it’s taking a similar approach now, Cannon Brookes said on a conference call with analysts. “We believe we have massive opportunities in front of us in all three of our markets,” he said. The statement said Atlassian will “continue to play offense” on talent in the 2023 fiscal year.

Notwithstanding the after-hours move, Atlassian shares have fallen about 40% so far this year, trailing the S&P 500 U.S. stock index, which has declined by 13% over the same period.

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