Tech giant’s shares slide after ‘software-mageddon’
Atlassian’s founder says he is “building a very big business” as US market shares fall to seven-year lows amid mounting losses and a sell-off in the software sector.
The Sydney-based software company generated revenue of US$1.6 billion ($A2.3 billion) in the three months to December 31, up 23 per cent on the previous year and above expectations.
Its net loss for the quarter widened to US$42.6 million ($61 million), up from US$38.2 million ($54.7 million) a year earlier.
Atlassian creates a suite of cloud-based collaboration tools used for software development and project management, including Jira and Trello.
It has more than 350,000 customers, including 80 percent of the Fortune 500, it said Friday.
“We had a great second quarter. We’re building a great business,” Atlassian co-founder and CEO Mike Cannon-Brookes said in a letter to shareholders.
Still, Atlassian’s Nasdaq-listed shares fell 6.3 percent to $98.41 on Thursday; This is the lowest level since the beginning of 2019 and represents a loss of 69.3 percent over the last 12 months.
After Atlassian’s second quarter results were announced on Friday morning Australian time, TEAM shares fell further in US after-hours trading, falling 3.6 per cent to US$94.51.
There has been a massive sell-off in U.S. software stocks this week, partly because artificial intelligence company Anthropic released a plug-in that can automate high-level legal work.
This has led investors to fear that AI proxies could disrupt the business models of highly profitable software-as-a-service firms, darlings of the tech industry for their stable, subscription-based revenue models.
The US S&P500 software and services index fell 4.7 percent and fell 20.9 percent last month to its lowest level since April, amid a selloff dubbed “software-mageddon” and “Saasocalypse.”
Major names affected by the defeat include Microsoft, Salesforce and Thomson Reuters, as well as Xero, which is listed on the Australian stock exchange.
“I believe AI is great for Atlassian,” Mr. Cannon-Brookes said in his shareholder letter.
“Others think software is dead.”
Mr. Cannon-Brookes told analysts on a conference call that thousands of customers are using Atlassian’s AI code generation tools to increase productivity.
“As I said before, AI is the best thing that could happen to Atlassian,” he said.
He said corporate customers need a reliable, compliant and secure platform.
“In our space of helping teams collaborate and be better, AI allows us to do that better than we have ever done,” he said.
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