Atlassian stock took a hit in after-hours trading after the software firm announced weaker earnings than analysts expected.

Atlassian announced a net income of $92.5 million for the fiscal quarter that ended September 30. The results are down from $94.4 million in the same quarter last year. Revenue increased by 31 percent to $807.4 million, exceeding analyst expectations of $806.4 million.

Atlassian attracted 6,550 new customers throughout the quarter, marking the company’s tenth quarter of client growth and bringing its overall customer closer to 250,000. Despite the growth, Atlassian failed to acquire the 250,700 clients expected by analysts.

Slowing growth

Atlassian’s shareholder letter focused on slowing growth, with co-CEOs Mike Cannon-Brookes and Scott Farquhar stressing that Atlassian is not impervious to macroeconomic circumstances.

Both stated that Atlassian has continued to witness a slower rate of free software conversion to paid plans and a reduced growth rate in paid capacity from current customers as enterprises limit their recruiting pace.

Despite missing overall expectations, the launch of Atlassian Together — a new unified subscription to its work management products Confluence, Trello, Atlas and Jira Work Management — was successful.

Atlassian has to deal with new rules

Furthermore, Atlassian developed and launched Atlas, a new teamwork directory that helps enterprises provide harmony across teams, applications, and workloads regardless of the technologies used. A new collaboration with Accenture PLC is touted to benefit firms adopting agile working practices.

While still based in Australia, Atlassian shifted its corporate residence from the United Kingdom to the United States during the quarter, resulting in the company’s transition to new accounting rules. The measure is intended to broaden investor and capital access.

Atlassian anticipates sales of $835 million to $855 million for the second fiscal quarter ending on December 31, 2023. Analysts predicted $879.2 million.