Shares in Atlassian Corp. fell in after-hours trading today despite the Australian software company reporting better-than-expected earnings results.

For its fiscal second quarter ended Dec. 31, Atlassian reported a net income of $114.7 million, or 45 cents per diluted share, up from $110.4 million ,or 43 cents per share, in the same quarter of last year. Revenue rose 27%, to $872.7 million. Analysts had expected a 31-cent-per-share profit on revenue of $851.32 million.

Atlassian reported an operating loss in the quarter of $99.2 million, down from an operating income of $23 million in the second quarter of last year. The company’s operating margin was negative 11% versus 3% the year prior. Cash, cash equivalents and short-term investments as of the end of December were sitting at $1.7 billion.

As with the previous quarter, Atlassian once again reported strong customer growth, adding 4,004 net new customers, taking its total customer base to 253,177. Other highlights in the quarter included the launch of Automation for Confluence, a feature that is said to free up teams to focus on collaboration by managing system maintenance.

“We closed out 2022 with quarterly revenue of $873 million, up 27% year-over-year, driven by subscription revenue growth of 40% year-over-year,” said co-founder and co-Chief Executive Scott Farquhar. “We are proud of everything we have accomplished in yet another unpredictable year. 2023 will be all about helping our customers navigate these challenging times, absorbing the macro-driven impacts on our business and setting Atlassian up for long-term success.”

Along with its financials, Atlassian also announced that it has authorized a program to repurchase up to $1 billion of its stock. The share buyback program does not have a fixed expiration date, with Atlassian saying that it may repurchase shares from time to time through open market purchases.

Looking ahead, Atlassian is predicting fiscal third-quarter revenue of between $890 million and $910 million and an operating margin of 15% on an adjusted basis. The outlook was roughly in line with analysts, who had been expecting a figure of $900.92 million.

Despite the headline figures reported by Atlassian being either in line with or above analyst estimates, the company’s share price dropped by over 13% in late trading. One report suggests that the drop was the result of an outlook miss, but there’s no evidence of a miss. It could be a case, however, that investors were simply expecting a better outlook.

Photo: Atlassian