US-based Australian tech giant Atlassian saw revenue rise nearly a third (31%) to US$807 million in the first quarter (Q1) of fiscal 2023, but the 20-year-old company continues to post losses as growth begins to pick up. to slow down.

Quarterly subscription revenues were up 50% from 12 months ago to US$651 million, but the company posted an operating loss of US$34 million for Q1 FY23, compared to operating income of $56.5 million. Net loss was $13.7 million, compared to $411.2 million for the September quarter last year.

The total number of customers, based on active subscriptions or maintenance agreements, came to 249,173, resulting in a net new customer addition of 6,550 in the quarter.

Operating margin was (4)% for the quarter, compared to 9% for the same period in FY22.

Quarterly cash flow from operating activities was $92 million with free cash flow of $76 million. Cash and cash equivalents, plus short-term investments at the end of the first quarter totaled $1.5 billion.

Atlassian’s results for the first quarter of FY2023. Source: Atlassian

Atlassian relocated its parent company from London to the US in September and now no longer reports financial information under International Financial Reporting Standards (IFRS), but uses GAAP (Generally Accepted Accounting Principles).

Scott Farquhar, co-founder and co-CEO of Atlassian, said he was proud of the first quarter results, but the company will lower its FY23 revenue forecast based on global economic headwinds.

“Despite the turbulent macroeconomic environment we find ourselves in, we are convinced of the incredible long-term opportunities ahead and our ability to capitalize on them,” he said.

“We have the right products, the right leaders and the right strategies to come out of this downturn in a much stronger market position.”

in their letter to shareholders, Farquhar and co-founder Mike Cannon-Brookes said the issues they identified last quarter continued into this quarter, including a decline in the number of free copies converting to paid subscriptions.

“That trend became more pronounced in the first quarter,” they wrote, adding that “this quarter, we started to see a slowdown in the growth in the number of paid users from existing customers.”

The co-CEOs said they see no changes in the company’s competitive position or in the inherent demand for its products.

“The two trends above are the result of companies tightening their belts and slowing the pace of their hiring. In other words, Atlassian is not immune to broader macro effects. Our outlook assumes these trends will continue, but we will monitor, respond and keep you informed accordingly,” they said.

“Turbulent markets offer the opportunity to shake up the leaderboards, and we are poised to be offensive in this environment. Buoyed by the secular tailwind of digital and cultural transformation, Atlassian is incredibly well positioned to capture additional market share in each of our three massive markets – agile/DevOps, IT service management and work management – ​​and we are working to do just that.

The duo said they see “huge opportunities” in cloud migrations, enterprise services and IT service management.

The company added a net 989 new employees, including approximately 200 new graduates, to close the quarter with a total headcount of 9,802.

Total revenue is expected to be in the range of US$835 million to $855 million in the second quarter with operating margin expected to deteriorate to approximately (20%) on a GAAP basis.

Gross margin is expected to “decrease modestly” in FY23 as a result of the continued business mix shift to the cloud and investments to support cloud migrations.

Operating margin will be in mid-teens in FY23, but free cash flow is expected to be impacted on a comparative basis by the lower operating margin in FY23 compared to FY22.

More about the results here.

READ NOW: The $3 Billion Tech Central Tower Plan Next To Atlassian’s Sydney Headquarters Just Approved