Atlassian shares rocket on upgraded revenue outlook
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The news: Atlassian shares surged over 27% after hours after the company beat Wall Street estimates and raised its full-year revenue growth forecast, just six weeks after cutting 10% of its workforce to fund its AI push.
The numbers: Third-quarter revenue rose 32% year-on-year to USD1.79 billion, well ahead of analyst estimates compiled by LSEG of USD1.69 billion, driven by accelerating cloud growth and a surge in data centre revenue.
The company said that AI adoption is deepening across its customer base, with users of its Rovo AI tool growing their recurring revenue at twice the rate of non-Rovo customers, and AI credit usage growing more than 20% month-on-month.
Atlassian guided fourth-quarter revenue of USD1.653 billion to USD1.661 billion, implying full-year growth of approximately 24%. That compared with a previous growth outlook of 22%, Reuters noted.
Shares rose to as much as USD87.32 in after hours trading, before settling around USD84.90 at about 5:55pm New York time (7:55am AEST).
Its Service Collection product, which bundles IT, HR and customer service management tools, crossed USD1 billion in annual recurring revenue, growing more than 30% year-on-year, with enterprise customers resolving issues 13% faster using AI than without it.
The quarter’s GAAP net loss widened to USD98.4 million from USD70.8 million a year earlier, weighed down by USD223.8 million in restructuring charges. Those charges stemmed from the March workforce reduction in which Cannon-Brookes announced about 1,600 jobs cuts, 30% of them in Australia. In a company blog post at the time, he framed the decision as necessary to “self-fund further investment in AI and enterprise sales.”
The shareholder letter said restructuring savings were being ploughed back into AI and enterprise sales, with margins reflecting that. Non-GAAP operating margin expanded to 34% from 26% a year earlier, it said.
What they said: Co-founder and CEO Mike Cannon-Brookes said in a statement that customers were “signing bigger, longer-term commitments” and that the company’s remaining performance obligations grew 37% year-on-year to USD4 billion, signalling strong forward revenue visibility.
“We had an awesome quarter at Atlassian,” he said in a video posted on the company’s website.
“The one thing that really stood out this quarter: our customers have more choices than ever before, and they’re voting with their wallets. They’re not just sticking with Atlassian, they are signing bigger and longer deals and standardising more of their work on the Atlassian platform. Our job is to keep leaning into that,” he added.
“So, incredibly proud our progress this quarter, even more excited about what comes next. TEAM 26 is just around the corner, we have an incredible amount of amazing things to share next week.”
