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Why Atlassian Stock Fell Thursday

By Daniel Sparks – Apr 18, 2019 at 11:05AM

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Despite better-than-expected fiscal third-quarter results, shares are down.

What happened

Shares of productivity software company Atlassian (TEAM -0.37%) took a hit on Thursday, falling as much as 9.6%. As of 10:08 a.m. EDT, the stock was down 7.2%.

The stock's decline follows the release of Atlassian's fiscal third-quarter earnings after market close on Wednesday. The quarterly report's worse-than-expected guidance for fiscal fourth-quarter non-IFRS earnings per share may have disappointed some investors.

A chalkboard sketch of a chart showing a stock price falling.

Image source: Getty Images.

So what

Atlassian's fiscal third-quarter results featured strong growth. Revenue increased 38% year over year to $309.3 million as the company added 5,803 net new customers. Non-IFRS earnings per share climbed from $0.09 in the year-ago quarter to $0.21. Free cash flow also notably soared, rising 47% year over year to $127 million.

Guidance for non-IFRS earnings per share of $0.16 in fiscal Q4, however, was below a consensus analyst estimate for $0.19.

Now what

While Atlassian's guidance for Q4 non-IFRS earnings per share fell short of what analysts were looking for, the company's overall guidance suggests management is optimistic about the company's growth potential. Atlassian guided for fiscal fourth-quarter revenue between $329 million and $331 million -- up from $244 million in the fourth quarter of fiscal 2018. Even Atlassian's guidance for $0.16 in non-IFRS fiscal fourth-quarter earnings per share represents 23% year-over-year growth.

Daniel Sparks 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.

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