Atlassian shares tank after another quarterly loss

Share in US-listed Atlassian (Nasdaq: TEAM) are down around 10% over the past week, at one stage dipping below US$190 following a 17% plunge when the Australian workplace software company released its March quarter earnings with another loss alongside longer-than-expected fourth-quarter guidance.

Q3 revenue was up 14% on 12 months ago to US$1.4 billion, with subscription revenue rising 19% to US$1.3 billion.

But after posting a rare profit in the 2024 March quarter, of US$12.8 million, the net loss for the third quarter of FY2025 was US$70.8 million (A$111m)

2024’s March quarter operating income of US$17.8 million, turned into an operating loss was US$12.5 million for Q3 FY25.

Cash flow from operations sat at US$653 million with free cash flow of $638m.

Adding to market concerns, revenue guidance for the 4th quarter was below analyst expectations at US$1.349 billion (A$2.1bn) to US$1.359bn.

Atlassian shares fell as much as 17.5% on the news last Friday morning Australian time. The stock is down around 7.5% on six months ago when cofounder Scott Farquhar stepped down as co-CEO leaving Mike Cannon-Brookes in charge, wiping several billion dollars from the software company’s market capitalisation. They’re now bouncing along around the US$208 mark having been as high as $326 and as low as $135 in the last 12 months.

The CEO made Atlassian’s new AI assistant, Rovo, free for premium and enterprise customers last month at the Team ’25 conference and now more than 1.5 million customers are using it. Rovo also gives non-developers the ability to build custom AI agents.

“Our long-term investments in building a world-class Cloud platform have enabled us to advance the Atlassian System of Work and bring Rovo’s powerful AI capabilities to the centre,” Cannon-Brookes said.

“Our vision for the future of human-AI collaboration is resonating deeply with customers, and we are more excited than ever to execute on our mission of unleashing the potential of every team.”

The Sydney-based CEO said the move means the company will “forego some revenue opportunity in the near term, but this is a trade-off we’re willing to make in favour of the huge long-term upside we see” to improve the company’s ability to succeed in the AI win in the era.

Cannon-Brookes said investors often ask him about the company’s R&D investment and AI and Rovo are at its core.

“This next step in our evolution is the result of years of thoughtful investment in building a world-class platform. It’s allowed us to bring our System of Work vision to our customers and make AI a central experience for all,” he said.

“One big takeaway from every customer I spoke with at Team ’25, our flagship conference, was this: they are seeing the Atlassian Platform in a new light. They recognize our platform vision, and they are harnessing the ever-increasing capabilities and apps it powers.”