Billions wiped from Atlassian’s valuation amid results miss
About $10bn was lost in 10 minutes as shares in the software company led by Mike Cannon-Brookes and Scott Farquhar slumped in after hours trading.
Shares in Australian software giant Atlassian slumped by more than 20 per cent in after hours trading on Friday, wiping billions from the company’s valuation and the net worth of its co-CEOs Mike Cannon-Brookes and Scott Farquhar in minutes, after the company swung to an annual operating loss and posted earnings and revenue that missed market expectations.
Atlassian shares, which are listed on the US Nasdaq, dropped by as much as 25 per cent after that market closed on Friday morning (AEDT), and were last 22.6 per cent to $US134.73, suggesting a loss of nearly $US10bn from the company’s valuation.
After-hours trading is generally based on smaller volumes and can exaggerate price swings.
Shares in Atlassian were already down more than 54 per cent in the year to date amid a broader downturn buffeting technology stocks.
Atlassian posted an operating loss on Friday of $US34m ($54m) for the first quarter of financial year 2023, compared with operating income of $US56.5m a year earlier, while total revenue was up 31 per cent to $US807.4m. It posted a net loss of $US13.7m, from a net loss of $US411.2m a year earlier.
The company’s co-CEOs blamed macroeconomic headwinds for dual trends of fewer “free” instances converting to paid plans, and shrinking paid user growth from existing customers. They decreased their revenue guidance for the full-year.
Two of Australia’s wealthiest people, Mike Cannon-Brookes and Scott Farquhar had each already seen more than $10bn wiped from their estimated wealth this year amid a torrid period for technology companies.
As of August the co-founders held about 43 per cent of Atlassian shares, but had planned to slowly sell a portion of those shares over the next 12 months.
Friday’s share price drop has cost the duo an estimated $5bn in combined wealth.
“Companies in nearly every industry are facing headwinds, and we’re beginning to see the impact on our business,” co-CEOs Mike Cannon-Brookes and Scott Farquhar wrote in a letter to shareholders.
“The two trends are the result of companies tightening their belts and slowing their pace of hiring. In other words, Atlassian is not immune to broader macroeconomic impacts. Our outlook assumes these trends will persist, but we’ll monitor, respond, and keep you updated accordingly.
“Turbulent markets provide an opportunity to shake up the leaderboards, and we are poised to play offence in this environment.
“We will focus our investments on strengthening our market position and scooping up top-tier talent in this environment. But we will balance these investments with the growth of our business and be responsive to the macroeconomic conditions. So while we’re lowering our revenue outlook for FY23 based on macroeconomic headwinds, we are maintaining our mid-teens percentage operating margin outlook for the year.”
Mr Cannon-Brookes, who this week received strong support in his bid to add high profile names to AGL Energy’s board, described the quarter as still ultimately a strong one for his company’s footprint.
“We announced a new subscription offering in Atlassian Together, launched Atlas into general availability, and held Work Life, our first large-scale customer event focused on a single market,” he said.
“We also continue to execute well towards our strategy of hiring and retaining the best talent around the world.”
A green activist, Mr Cannon-Brookes last year announced that he and his wife Annie would invest $1.5bn into climate projects by 2030, including $1bn in financial investments and $500m towards philanthropic endeavours.
Mr Farquhar added he was proud of the first-quarter results, including growing subscription revenue 50 per cent year-over-year, as the company heads towards $US10bn in annual revenue.
“Despite the turbulent macroeconomic environment we find ourselves in, we have conviction about the incredible long-term opportunities in front of us and our ability to capitalise on them. We have the right products, the right leaders, and the right strategies in place to come out of this downturn in a much stronger market position.”
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