Atlassian Stock On Track For Worst Day In 9 Months On Slowing Q3 Growth, Cautious Guidance: Retail Moves To Sidelines

Atlassian Corp. (TEAM) stock plummeted early premarket Friday after the collaboration software and services provider announced a quarterly revenue growth slowdown and issued cautious guidance, citing macro and execution risks. 

The San Francisco, California-based company reported adjusted earnings per share (EPS) of $0.97 for the third quarter of the fiscal year 2025. The result exceeded the $0.89 reported a year ago and the Finchat-compiled consensus of $0.93,

Revenue climbed 14% year over year (YoY) to $1.36 billion, compared to the $1.35 billion consensus estimate. The company attributed the growth to a 25% jump in Cloud revenue to $880.4 million.

Subscription revenue (94% of the total) climbed 19%.

The topline growth, however, slowed from the 21% reported for the second quarter.

Atlassian said its artificial intelligence (AI) monthly active users (MAU) surpassed 1.5 million. 

The adjusted gross margin expanded two percentage points to 84%, thanks to a higher Cloud margin.

Atlassian guided fourth-quarter revenue in the range of $1.349 billion to $1.359 billion, implying 19% full-year revenue growth. The consensus estimates call for revenue of $1.357 billion for the fourth quarter and $5.18 billion for the year, marking nearly 19% YoY growth.

In a letter to shareholders, the company said the guidance reflects potential risks associated with the current macroeconomic environment that may negatively impact key revenue growth drivers such as paid seat expansion, Data Center to Cloud migrations, cross-sell, upsell, and customer retention.

The guidance also factors in execution risk and potential business disruption in the ongoing evolution of the company’s enterprise go-to-market motion.

On Stocktwits, retail sentiment toward Atlassian stock was ‘neutral’ (52/100) early Friday, but the message volume was ‘extremely high.’

One bullish watcher pointed to the stock performance not keeping pace with revenue, which doubled since 2021.

However, another user said Atlassian is an “overpriced” software play and added that they would get in if it drops below $140. The stock is trading at an elevated forward price-earnings (P/E) multiple of 57.2 times.

Atlassian stock fell 16.18% to $192 in Friday’s early premarket session. If the declines are sustained through the session, the stock is on track to record its biggest one-day drop in nine months, according to Koyfin.

The year-to-date performance of the stock shows a 6% decline.

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