Please ensure Javascript is enabled for purposes of website accessibility

Why Atlassian Stock Fell Sharply on Friday

By Daniel Sparks – Updated Oct 30, 2020 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fiscal first-quarter revenue growth may have been above expectations. But the productivity software provider missed the mark on this key metric.

What happened

Shares of productivity software provider Atlassian (TEAM -7.19%) took a hit early Friday, declining as much as 11.1%. As of 12:15 p.m. EDT, however, the stock had recovered and was down about 8%.

The decline is likely due to both a bearish day in the market for tech stocks overall, as well as the tech company's fiscal first-quarter earnings report, which was released on Wednesday afternoon.

A chalkboard sketch showing a stock price falling

Image source: Getty Images.

So what

Atlassian reported strong fiscal first-quarter results, with revenue rising 26% year over year to $459.5 million. Growth was fueled by the addition of over 8,600 net new customers during the quarter.

While Atlassian easily beat analysts' average forecast for revenue of $440 million, the company missed the market when it came to guidance. Management guided for fiscal second-quarter revenue between $460 million and $475 million, below analysts' average forecast for $479.7 million.

Highlighting how tech stocks were hammered on Friday, the tech-heavy Nasdaq Composite was down more than 2% as of this writing. This likely worsened Atlassian's sell-off today.

Now what

Though some Atlassian investors were spooked on Friday, management is optimistic.

"We are laser focused on delivering the best experience to customers in the cloud by building powerful new editions like Cloud Premium and Cloud Enterprise," co-CEO Mike Cannon-Brookes said, "scaling products like Atlassian Access, and cementing partnerships with best-of-breed [software as a service] providers such as Slack."

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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.