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Shares have fallen by 17 per cent for Sydney-based software giant Atlassian (NASDAQ: TEAM), wiping US$15 billion from the company’s market value following a disappointing third quarter result from the tech firm, which remains bullish on its AI-powered tool Rovo.
The company posted a US$70.8 million ($110.5 million) loss for the third quarter, a stark difference from the net income of US$12.8 million reported in the same period last year.
Revenue jumped by 14 per cent to US$1.36 billion ($2.13 billion), fuelled by a 25 per cent boost in the software giant’s cloud business.
The result comes as the company focuses on promoting its artificial intelligence (AI) product Rovo, with Atlassian co-founder and CEO Mike Cannon-Brookes noting the tech giant is “working extremely hard” to roll it out “at scale to all customers”.
“Our long-term investments in building a world-class Cloud platform have enabled us to advance the Atlassian System of Work and bring Rovo’s powerful AI capabilities to the centre,” Cannon-Brookes added.
“Our vision for the future of human-AI collaboration is resonating deeply with customers, and we are more excited than ever to execute on our mission of unleashing the potential of every team.”
Launched in April 2024, Rovo is an assistant now available for free to all premium and enterprise subscription customers, allowing companies to build their own AI-powered “agents” that help organise tickets, messages, meetings, as well as handle time-consuming tasks, complete projects or solve complex issues.
Rovo was initially launched for a US$20 monthly fee per user to compete with Microsoft’s AI chatbot Copilot.
In a letter to shareholders, Cannon-Brookes noted that making Rovo free would “forgo some revenue opportunity in the near term,” but that it was a tradeoff the company was willing to make “in favour of the huge long-term upside we see.”
“Turbulent weather and rough markets shake up leader boards. We believe relative to others, we are in one of the best positions to play offense and capitalise on this massive technology shift,” Cannon-Brookes added.
“It’s why we are working extremely hard to roll Rovo out at scale to all customers. So we’ve included Rovo across Jira, Confluence, and Jira Service Management apps starting at the Premium and Enterprise level, with Standard next.
“While this move does have a cost and revenue opportunity impact, it’s a move we’re making from a position of strength.”
According to Cannon-Brookes, the company has surpassed more than 1.5 million customers using Rovo each month. He added that he expected the move to make Rovo free would persuade customers to transition to a more expensive, cloud-based version of the tool.
Looking ahead, Atlassian is forecasting revenue to land in the range of US$1.34 billion to $1.35 billion, with cloud revenue growth year-on-year to rise by 23 per cent.
Data centre revenue growth is also expected to rise by 16.5 per cent, while marketplace and other revenue growth is anticipated to be flat.
“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,” Atlassian CFO Joe Binz said.
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