Atlassian (TEAM) Q1 earnings report 2024

Atlassian shares plummeted 9% in extended trading Thursday despite better-than-expected earnings and revenue from the software maker and a forecast that met Wall Street’s expectations.

Here’s how the company did, compared with the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:

• Earnings: 65 cents per share, adjusted, vs. 54 cents per share expected
• Revenue: $977.8 million, vs. $966.1 million expected

Revenue in the quarter ended Sept. 30 increased 21% year over year from $807.4 million a year earlier, according to a statement. Growth slowed for the fifth consecutive quarter.

Atlassian’s net loss widened to $31.9 million, or 12 cents per share, from $13.7 million, or 5 cents per share, a year earlier. Its adjusted operating margin widened to 23% from 22% in the previous quarter.

The company said it had over 265,000 customers at the end of the quarter, up from over 260,000 in June.

For the fiscal second quarter, Atlassian called for revenue between $1.01 billion and $1.03 billion. That’s inline with the LSEG consensus of $1.02 billion.

Deferred revenue of $1.5 billion was unchanged from the previous quarter. Analysts polled by StreetAccount had expected $1.5 billion.

For the full fiscal year, Atlassian raised adjusted operating margin guidance to 20% from 18.5% but reiterated its forecast of 25% to 30% growth in cloud, which is the source of most of its revenue.

“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 company said in a letter to shareholders.

Atlassian will end support for its Server products in February 2024 and the company is trying to move clients to the Cloud or Data Center product tiers. That change is “expected to drive greater levels of variability in our Cloud and Data…