Photo Credit: mohamed Hassan from Pixabay

Enterprise collaboration solutions provider Atlassian (Nasdaq: TEAM) recently announced its first-quarter results. While the past quarter was a mixed report card, its significantly weak outlook sent its stock falling. In the after-hours trading session, the company lost $13 billion of its valuation.

Atlassian’s Financials

For the first quarter, revenues grew 31% to $807.4 million, marginally ahead of the market’s forecast of $806.4 million. Adjusted EPS of $0.36 fell short of the market’s forecast of $0.38.

By segment, Subscription revenues grew 50% to $651 million and maintenance revenues fell 13% to $113.6 million. Other revenues fell 11% to $42.8 million.

During the quarter, Atlassian added 6,550 customers, ending the quarter with 249,173 customers. Analysts were looking for a customer base of 250,700 at the end of the quarter.

For the second quarter, Atlassian expects revenues of $835-$855 million, falling significantly short of the Street’s expected revenues of $879.2 million. Atlassian did not provide an outlook for the year.

Atlassian’s Product Upgrades

During the quarter, Atlassian announced a new, single subscription to Atlassian Together, its work management products. Atlassian Together integrates Atlassian’s tools including Trello, Confluence, Atlas, and Jira Work Management and also includes Access, an enterprise-grade identity and access management solution that connects Atlassian products to third-party identity providers. Atlassian Together will provide organizations with access to a complete tool set that helps teams choose a tool that best works for their task at hand.

It announced the launch of Atlas, a new teamwork directory that has been customized to help organizations provide alignment across teams, apps, and work, regardless of what tools their teams use. Atlas will help teams communicate the context and progress of their work with other teams.

It continued to expand its partner network. It recently extended its partnership with Accenture. As part of the expanded partnership, Atlassian and Accenture will work on building agile ways of working. Accenture’s global team will help provide enterprise-wide agile consulting and implementation services to help customers realize faster time to value from their investments in Atlassian products, including Jira Align, Jira Software, and Jira Service.

Atlassian’s Slow Cloud Growth

Atlassian’s revenues for the quarter may have met market expectations, but the growth of its Cloud revenues slowed down to below 50%. For the year, it expects the slowdown to continue and forecasts a growth of 40%-45% in the segment. Till recently, Atlassian was targeting growth rates of more than 50% in the segment for the next two years. The weakness in cloud revenue was driven by the lower conversion of free user to paid users and a slower seat expansion within existing customers due to global macro conditions.

It is addressing the impact on revenue by managing its cost, especially the pace of hiring. Despite the economic concerns, the company maintains that it has line of sight to $10 billion in annual revenue and believes that it will come out of this environment in a much stronger market position.

Atlassian’s stock is trading at $140.85 with a market capitalization of $36 billion. It touched a 52-week high of $451.50 a year ago. It hit a 52-week low of $114.11 earlier this month.

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