Shares in Atlassian Corp. fell nearly 10% in after-hours trading today after the Australian collaboration software company reported a widening loss in its latest quarter.

For its fiscal second quarter that ended Dec. 31, Atlassian reported a net loss of $84.5 million, down from $205 million in the same quarter last year but worse than the $31.9 million loss reported in the company’s previous quarter.

The adjusted figures, however, were better, with Atlassian reporting earnings per share of 73 cents in its fiscal second quarter, up from 45 cents a year prior, on revenue of $1.06 billion, up 21.47% year-over-year. Analysts had been expecting adjusted earnings of 63 cents per share on revenue of $1.02 billion.

Operating income in the quarter was $250.6 million, up from $174.8 million in the same quarter of last year, and Atlassian’s operating margin was 24%, up from 20% a year prior. Free cash flow in the quarter was $284.3 million in the quarter and Atlassian was sitting on $1.6 billion in cash and equivalents as of the end of December.

Business highlights in the quarter included Atlassian delivering generative artificial intelligence agents and services to its Jira and Confluence products in December. The support for AI allows users to generate customer responses quickly and can also be used to assist in onboarding new users. Features of the AI include the ability to respond with conversational language, with users able to query the AI with ongoing questions to drill down further into the task at hand.

Atlassian also announced the launch of natural language prompts for Jira Query Language, allowing users to dig deeper into Jira issues. It combines the ease of basic search with allowing users to build complex queries with JQL to discover issues in the system quickly. With natural language searches, nontechnical teams can access insights and ask questions through Atlassian Analytics to explore insights and visualize important business metrics.

“Q2 was full of incredible milestones as we recorded our first-ever $1 billion revenue quarter, Jira Software crossed $1 billion in Cloud ARR and we surpassed 300,000 customers,” Scott Farquhar, Atlassian’s co-founder and co-chief executive officer, said in the company’s earnings release. “We continued to execute well with quarterly revenue up 21% year-over-year, driven by subscription revenue growth of 31% year-over-year.

For its fiscal third quarter, Atlassian said it expects total revenue of $1.085 billion to $1.105 billion. Atlassian did not give a revenue outlook for its full fiscal year, saying only that it expects cloud revenue growth of 28.5% to 30% year-over-year and data center growth of about 36% — both forecasts up from its outlook in the previous quarter.

Photo: Atlassian