Why Atlassian (TEAM) Shares Are Falling Today
What Happened:
Shares of IT project management software company, Atlassian (NASDAQ:TEAM) fell 14.3% in the morning session after The company reported first quarter results with revenue guidance for next quarter falling below analysts' expectations. Management expects ongoing macroeconomic uncertainties to hurt growth in paid seat expansion and free-to-paid conversion rates, assuming that the trends observed in the past year persist into FY24. Additionally, they anticipate varying Cloud and Data Center revenue growth rates as customers migrate to the new platform following the end-of-support for the Server offering, assuming that migration rates will follow historical trends and some Server customers may not migrate in FY24. On the other hand, Atlassian narrowly topped analysts' revenue expectations during the quarter. For the full year, cloud revenue growth was reaffirmed, and operating margin guidance was raised. However, next quarter's soft revenue outlook seems to be weighing on shares. Overall, the results could have been better.
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What is the market telling us:
Atlassian's shares are very volatile and over the last year have had 41 moves greater than 5%. But moves this big are very rare even for Atlassian and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 11.4% on the news that the company reported fourth-quarter results that beat analysts' revenue, billings, operating profits and earnings per share estimates. It was good to see that next quarter's revenue guidance exceeded Wall Street's expectations. The company also gave fiscal 2024 guidance, calling for solid cloud revenue growth and slightly higher-than-expected operating margins. Overall, the results were solid, especially compared to choppier results in the last three quarters. This quarter demonstrated the value of the company's products and solid execution.
Atlassian is up 36.9% since the beginning of the year, but at $173.01 per share it is still trading 19.2% below its 52-week high of $214.03 from September 2023. Investors who bought $1,000 worth of Atlassian's shares 5 years ago would now be looking at an investment worth $2,320.
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