U.S. Markets closed

Why Atlassian Stock Fell Thursday

Daniel Sparks, The Motley Fool

What happened

Shares of productivity software company Atlassian (NASDAQ: TEAM) took a hit on Thursday, falling as much as 9.6%. As of 10:08 a.m. EDT, the stock was down 7.2%.

The stock's decline follows the release of Atlassian's fiscal third-quarter earnings after market close on Wednesday. The quarterly report's worse-than-expected guidance for fiscal fourth-quarter non-IFRS earnings per share may have disappointed some investors.

A chalkboard sketch of a chart showing a stock price falling.

Image source: Getty Images.

So what

Atlassian's fiscal third-quarter results featured strong growth. Revenue increased 38% year over year to $309.3 million as the company added 5,803 net new customers. Non-IFRS earnings per share climbed from $0.09 in the year-ago quarter to $0.21. Free cash flow also notably soared, rising 47% year over year to $127 million.

Guidance for non-IFRS earnings per share of $0.16 in fiscal Q4, however, was below a consensus analyst estimate for $0.19.

Now what

While Atlassian's guidance for Q4 non-IFRS earnings per share fell short of what analysts were looking for, the company's overall guidance suggests management is optimistic about the company's growth potential. Atlassian guided for fiscal fourth-quarter revenue between $329 million and $331 million -- up from $244 million in the fourth quarter of fiscal 2018. Even Atlassian's guidance for $0.16 in non-IFRS fiscal fourth-quarter earnings per share represents 23% year-over-year growth.

More From The Motley Fool

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atlassian. The Motley Fool has a disclosure policy.