Shares in Atlassian Corp. fell nearly 18% in after-hours trading today after the Australian collaboration software company posted a wider net loss and its slowest revenue growth in years despite solid performance in its cloud business.

For its fiscal third quarter that ended on March 31, Atlassian reported adjusted earnings of 97 cents per share, up from 89 cents per share in the same quarter of the previous fiscal year, on revenue of $1.36 billion, up 14% year-over-year. Both figures were ahead of the 78 cents per share and revenue of $1.29 billion expected by analysts. However, the revenue growth of 14% was notably below the growth figures of 20% or more seen in previous quarters.

Atlassian’s subscription revenue for the quarter totaled $1.27 billion, up 19% year-over-year. The company’s cloud revenue was also up by 25%.

The positive headlines figures were counted by some of the particular numbers in the earnings report, with Atlassian reporting a non-adjusted loss of $70.8 million or 27 cents per share, compared with net income of $12.8 million in the same quarter of last year.

Recent business highlights include the expansion of Atlassian’s AI-powered platform, Rovo, which is now integrated into all Premium and Enterprise editions of Jira, Confluence and Jira Service Management. Rovo offers advanced enterprise search, contextual chat and over 20 prebuilt artificial intelligence agents to assist teams with tasks like ticket triage, documentation and project updates.

Additionally, Rovo Studio now allows users to create custom agents using low-code or no-code tools, facilitating automation across Atlassian and third-party applications such as Google Workspace, Slack and GitHub.

Atlassian also introduced enhancements to its enterprise solutions during the quarter, including the launch of Atlassian Focus, a strategic planning hub designed to help organizations align goals, funding, and execution across teams. Another product, Atlassian Guard Premium, was updated to include data classification capabilities, allowing organizations to label and manage sensitive information within Confluence, Jira and Jira Service Management.

“We delivered total revenue of $1.4 billion in the quarter, driven by Cloud revenue growth of 25% year-over-year,” Joe Binz, chief financial officer at Atlassian, said in the company’s earnings release. “We remain committed to balancing operational discipline with continued focused investment in key strategic areas like enterprise, AI and the Atlassian System of Work to drive future growth.”

For its fiscal fourth quarter, Atlassian expects revenue of $1.349 billion to $1.359 billion, representing an implied full-year growth of approximately 19%. The figure came in slightly below an expected $1.357 billion at the midpoint. The company also anticipates cloud revenue growth of around 23% year-over-year, with Data Center growth expected at 16.5% and Marketplace and other revenue forecast to remain flat.

Atlassian stated in a letter to shareholders that “our guidance contemplates potential risks associated with the current macroeconomic environment that may negatively impact key revenue growth drivers, such as paid seat expansion, Data Center to Cloud migrations, cross-sell, upsell and customer retention.” The letter added, “Second, our outlook allows for execution risk and potential business disruption in the ongoing evolution of our enterprise go-to-market motion.”

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