Investors clubbed software stocks Atlassian (CREW), Twilio (TWLO) and Cloudy (NET) on Friday for issuing weak forecasts.
TEAM stock plunged nearly 30% to 121.96 in morning trading on the stock market today. TWLO stock fell 34.8% to 42.60. Meanwhile, Cloudflare stock fell 17.2% to 41.70.
Atlassian reported first-quarter profit of 36 cents, down 3% from a year earlier, missing Wall Street estimates for a profit of 38 cents. Revenue rose 31% to $807.4 million, topping views of $806.4 million.
Billings, a measure of sales growth, was $798 million, up 27%. But that missed the forecast by $830 million.
The Australia-based company said it expects revenue of $845 million for the December quarter in the middle of its outlook, below guidance of $879 million.
“We are surprised by the extent of the slowdown in consolidated growth and cloud growth specifically,” BMO Capital Markets analyst Keith Bachman said in a note to clients.
Transition from Software Inventories to the Cloud
“Management lowered the FY2023 cloud revenue forecast from 50% year-over-year to a 40%-45% range, due to a steeper drop in the rate of free conversions paid worms,” Bachman continued. “(They also cited) a slowing rate of growth of paying users from existing customers as customers slow hiring.”
Atlassian said it expects revenue of $845 million for the December quarter amid its outlook. That’s up 23%, but below analyst estimates of $879 million.
Founded in Sydney in 2002, Atlassian sells project management and collaboration software for software developers and IT engineering teams.
The software maker is transitioning to a cloud computing business model. Atlassian is phasing out sales of on-premises software used in enterprise customer data centers.
TWLO Stock: Crypto, Consumer Weakness
Meanwhile, San Francisco-based Twilio reported a lower-than-expected loss of 27 cents per share compared to estimates of a loss of 36 cents. Revenue rose 33% to $983 million, beating estimates of $972 million.
But Twilio forecast revenue for the December quarter in the range of $995 million to $1 billion, up 18.5% in the middle of the forecast, missing the forecast by $1.07 billion.
“Macro continues to worsen and is the primary driver of the pullback. Weakness persists in crypto, on-demand consumption, social media and more recently has spread to e-commerce and retail. detail,” Jefferies analyst Samad Samana said in a note.
Twilio’s communication tools allow application developers to integrate voice, text messaging and video into their products. In addition, Twilio’s software facilitates the communication of cloud-based applications.
Headwind Software Stocks
Additionally, Cloudflare posted a profit of 6 cents, beating estimates of zero profit. Revenue rose 47% to $253.9 million, beating estimates of $250.6 million.
San Francisco-based Cloudflare said it expects revenue of $274 million for the December quarter, up 42%, in the middle of its outlook, just above forecasts. of $273.7 million.
“Third-quarter growth was the most modest pace from the prior quarter,” Cowen analyst Shaul Eyal said in a note. “The fourth quarter outlook reflects potential headwinds, including macroeconomic deceleration, lengthening sales cycles and exchange rate headwinds.”
Cloudflare Stock: New Chief Revenue Officer
Cloudflare has announced that Chris Meritt, the company’s chief revenue officer, will step down. Additionally, he will be replaced by former Twilio executive Marc Boroditsky.
“Management recognized that weak macroeconomic conditions were starting to impact revenue,” Wells Fargo analyst Andrew Nowinski said in a note. “(He) noted that sell cycles take longer to close at the high end of the market than nearly every other company in the industry reports. However, given the valuation, expectations are certainly higher. high for Cloudflare.”
Launched in 2009, Cloudflare accelerates and secures web applications routed through its intelligent global network. In addition, the company competes in the business and consumer markets.
September quarter earnings reports for the three software stocks arrived after the market closed on Thursday.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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