NEW YORK, Sept. 07, 2023 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Atlassian Corporation Plc (NASDAQ: TEAM) on behalf of long-term stockholders following a class action complaint that was filed against Atlassian on February 3, 2023 with a Class Period from August 5, 2022 to November 3, 2022. Our investigation concerns whether the board of directors of Atlassian have breached their fiduciary duties to the company.
Atlassian develops and sells collaboration and project-management software that operates both on premises and in the cloud. The Company derives a majority of its revenue from its Jira Software and Confluence software products. The Company generates revenue primarily from license subscriptions both from free users who convert to paying customers when they exceed the cap on free licenses, and from existing paying users who expand their existing subscriptions. In 2020, Atlassian began to transition its clients to the cloud, which has accounted for a rapidly growing portion of the Company’s revenues.
In the spring and summer of 2022, as macroeconomic conditions deteriorated and Atlassian’s competitors lowered their revenue guidance, Defendants remained steadfast that these conditions were not having a material impact on the Company. Indeed, after markets closed on August 4, 2022, Defendant Co-Chief Executive Officer Scott Farquhar reiterated the Company’s guidance of 50% year-on-year cloud growth for fiscal years 2023 and 2024. In a call with analysts that day, more than a month into the Company’s fiscal first quarter of 2023, Defendant and Chief Revenue Officer Cameron Deatsch assured investors the Company was “being exceedingly vigilant watching all stages of our funnel” and that “we have yet to see any specific trend . . . that gives us pause or worry to date.” According to CRO Deatsch, the “demand for collaboration products continue[s] to be strong.”
Undisclosed to investors, throughout the Class Period, Atlassian overstated its financial guidance by concealing trends of slowing conversions from free users to paying customers and slowing growth in paying-user expansion. As a result, Defendants’ positive statements about the Company’s business, operations, and prospects during the Class Period were materially false and /or misleading.
Investors only learned the truth about the Company’s vulnerability to macroeconomic conditions and weakened outlook after the financial markets closed on November 3, 2022. That afternoon, Atlassian issued a letter to shareholders and held a conference call with analysts to discuss its financial results for the fiscal first quarter of 2023 ended September 30, 2022. In the letter to shareholders, filed as an Exhibit to a Current Report on Form 8-K, the Defendants revealed that “[b]ased on the macro headwinds,” the Company was “lowering our Cloud revenue growth outlook to a range of approximately 40% to 45% year-over-year” for fiscal year 2023. In describing the “macro impacts” on the Company, the letter to shareholders revealed that (1) the Company “saw a decrease in the rate of Free instances converting to paid plans,” calling it a “trend [that] became more pronounced” in the quarter and (2) the Company experienced “a slowing in the rate of paid user growth from existing customers.”
In response to these revelations, the price of Atlassian stock declined almost 29% the following trading day, from a closing price of $174.17 per share on November 3, 2022 to a closing price of $123.73 per share on November 4, 2022. More than $7 billion in shareholder value evaporated. Analysts reported being “surprised by the magnitude of the slowdown” as Defendants “delivered unusually disappointing” results.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in market value of the Company’s common stock when the truth was disclosed, Plaintiff and other Class members have suffered significant losses and damages.
If you are a long-term stockholder of Atlassian, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
