What happened

Shares of Atlassian Corporation (NASDAQ:TEAM) were down 13.7% as of 3:15 p.m. EDT Friday despite strong quarterly results from the enterprise software specialist.

Atlassian's quarterly revenue grew 37% year over year to $267.3 million. Based on international financial reporting standards (IFRS), that translated to a net loss of $242.4 million -- albeit primarily due to a non-cash charge of $244.7 million related to a revaluation of certain debt. On an adjusted (non-IFRS) basis, Atlassian's net income was $49.2 million, or $0.20 per diluted share, up from $0.13 per share in the same year-ago period. 

In any case, both the top and bottom lines were comfortably above the company's guidance provided in July, which called for revenue of $258 million to $260 million, and adjusted earnings of $0.19 per share.

Stock market data with a red arrow chart indicating losses

Image source: Getty Images.

So what

Atlassian also added 5,888 customers during the quarter, bringing its total to 131,684. As such, co-CEO Scott Farquhar called it a "great start" to the fiscal year. He highlighted the company's introduction of Jira Ops, an incident command-center solution for IT teams, as well as its acquisition of IT service technology specialist OpsGenie for $295 million in early September. 

Looking ahead to the current fiscal second quarter, Atlassian expects revenue ranging from $287 million to $289 million, and adjusted earnings of $0.21 per share. Here again, those figures are well above Wall Street's consensus prediction for adjusted earnings of $0.20 on revenue of $281.4 million.

Now what

If that wasn't enough, Atlassian also raised its full fiscal-year 2019 guidance to call for revenue of $1.175 billion to $1.183 billion (up from $1.146 billion to $1.154 billion before), with adjusted earnings of $0.78 per share (up from $0.77 previously).

So why the decline? For one, Atlassian shares had already more than doubled in the year leading up to this report, likely tempting some investors to take profits. To a lesser extent, the market might be disappointed that Atlassian didn't raise its full-year outlook even more in light of its relative outperformance this quarter -- though the company has made a habit of underpromising and overdelivering of late.

In the end, there was nothing not to like about this quarterly report from Atlassian, and I think its long-term story and actual business momentum remain firmly intact. So I wouldn't lose any sleep over the market's knee-jerk reaction today.

Steve Symington 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.