Atlassian Corporation PLC (TEAM) shares fell more than 7% during Thursday's session after the company reported third quarter financial results. Revenue rose 37.9% to $309.3 million, beating consensus estimates by $4.62 million, while non-GAAP earnings per share reached 21 cents, beating consensus estimates by three cents per share.

Despite the better-than-expected financial results, shares moved lower thanks to disappointing fourth quarter guidance. Management projects higher revenue than analysts had expected, with guidance at $329 to $331 million compared to a $327.58 million consensus, but earnings are projected to come in at just 16 cents per share, which was lower than the 19 cents that analysts were expecting to see for the quarter.

Full-year guidance is roughly on par with what analysts were expecting, while non-IFRS operating margins improved two percentage points year over year from 17% to 19%. The company also added 5,803 net new customers during the third quarter for its product suite targeting software development teams.

Technical chart showing the share price performance of Atlassian Corporation PLC (TEAM)
StockCharts.com 

From a technical standpoint, the stock broke down from trendline support in early March before breaking down again from trendline, 50-day moving average and S1 support levels during Thursday's session. The relative strength index (RSI) fell near oversold levels with a reading of 35.70, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could consolidate in the near term before resuming its downward trend.

Traders should watch for some consolidation surrounding S1 support at $102.81 over the coming sessions. If the stock rebounds higher, traders could see a move back toward the 50-day moving average at $108.78. If the stock breaks down lower, traders could see support near S2 levels at $93.24 or the 200-day moving average at $88.61.

The author holds no position in the stock(s) mentioned except through passively managed index funds.