Project management and collaboration software developer Atlassian has beaten revenue estimates for its third quarter but indicated that it is facing slowing growth for its next reporting period.
“We delivered a solid quarter of financial results exceeding our expectations with quarterly revenue of US$915 million, up 24 per cent year-over-year, driven by subscription revenue growth of 37 per cent year-over-year,” said Scott Farquhar, Atlassian’s co-founder and co-CEO.
Atlassian's operating loss for Q3 was US$161.6 million, up from $32.9 million for the same period in 2022.
The increased loss was said to include "restructuring charges associated with rebalancing resources and consolidating leases of US$97.8 million which negatively impacted operating margin by 11 per cent," the software vendor said.
Atlassian also reported a net loss of US$209 million for the quarter, compared to net income of US$4.7 million for its third quarter 2022.
The net loss included restructuring and income tax charges of $139.5 million in total.
In March this year, Atlassian said it would make around 500 staff redundant, amounting to roughly five per cent of its workforce, with severance and other termination benefits paid out to reach US$26 million in the fourth quarter.
Investors were spooked by the prospect of slowing of growth in Atlassian's cloud based services, forecast to reach 26 to 28 per cent for the fourth quarter as opposed to 34 per cent in Q3, and shares in the company fell sharply.
Atlassian acknowledged what it was "the moderating growth rate of cloud revenue" which is due to "worsening macroeconomic headwinds on paid seat expansion from existing customers, free-to-paid conversions, and modest seat count reductions in some customers that have announced layoffs."
For the fourth quarter, Atlassian is forecasting revenue of US$900 million to US$920 million, with the guidance assuming macroeconomic trends seen to date continuing to worsen in the next reporting period.
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