Shares in Atlassian Corp. fell sharply in after-hours trading today after the Australian software company reported a miss on revenue and increasing costs in its latest earnings report.

For its fiscal third quarter that ended March 31, Atlassian reported net income before costs such as stock compensation of $138 million, or 54 cents per share, up from $110.2 million, or 43 cents per share, in the same quarter of last year. Revenue rose 24% from a year ago, to $915.5 million. Analysts had expected earnings per share of 42 cents on revenue of $938.75 million.

Although Atlassian’s headline figures were reasonably solid, the fine print reveals a shift in fortunes, with the company reporting a net operating loss of $161.57 million, compared with an operating profit of $32.9 million in the same quarter of last year. The company’s net loss was higher yet — $209 million, or 81 cents per share, versus net income of $4.7 million, or two cents a share, a year prior.

The blowout in costs was in part attributed to restructuring charges, or in the words of Atlassian, “charges associated with rebalancing our resources to accelerate progress against our highest priorities and consolidating leases to optimize our real estate footprint consistent with our Team Anywhere strategy.”

Restructuring charges in the quarter came in at $97.8 million, including $25.8 million in severance and other termination benefits. Atlassian announced in March that it was cutting its headcount by 5% and would pay 15 weeks of severance to employees affected by the layoffs plus one additional week for every year worked at the company. Atlassian is also providing healthcare benefits for six months to laid-off employees, paid out unused paid time off and accelerated stock vesting.

Highlights in the quarter included Atlassian’s debut in February of Jira Product Discovery. The new service is a project management application designed to help companies develop new products and features more efficiently.

Atlassian also saw its marketplace surpass $3 billion in lifetime sales. The Atlassian Marketplace features more than 1,700 partners delivering additional services to thousands of customers that use the company’s app.

“We delivered a solid quarter of financial results exceeding our expectations with quarterly revenue of $915 million, up 24% year-over-year, driven by subscription revenue growth of 37% year-over-year,” Scott Farquhar, Atlassian’s co-founder and co-chief executive officer, said in the company’s earnings release. “We’ve made tough calls and now, looking ahead, we’re laser-focused on executing to drive faster at our largest growth opportunities and strategic initiatives.”

For its fiscal fourth quarter, Atlassian said it expected revenue of $900 million to $920 million and cloud revenue growth of 26% to 28% year-over-year.

Investors neither liked the revenue miss nor the blowout in costs, even allowing for the cost of restructuring. Atlassian shares plunged nearly 13% in late trading.

Photo: Atlassian