Atlassian Corporation PLC (TEAM) shares plunged 16.21% in pre-market trading on Friday following the release of the company's fiscal third-quarter results and fourth-quarter outlook. The sharp decline comes as the cloud-based software provider projected lower-than-expected revenue growth for the upcoming quarter, overshadowing better-than-anticipated Q3 performance.

For the third quarter ended March 31, Atlassian reported revenue of $1.36 billion, up 14% year-over-year and slightly above analyst estimates of $1.35 billion. Adjusted earnings per share came in at $0.97, beating expectations of $0.93. However, investors' focus quickly shifted to the company's forward-looking statements.

Atlassian's management guided for fourth-quarter revenue in the range of $1.35 billion to $1.36 billion, falling short of analyst expectations of $1.42 billion. The company also projected cloud revenue growth of approximately 23% year-over-year for the fourth quarter, indicating a slowdown from the 25% growth reported in the third quarter. This tepid growth projection for cloud revenue, a key metric for software-as-a-service (SaaS) companies, appears to have disappointed Wall Street and triggered the significant sell-off.

Despite the positive tone from management, including co-founder and CEO Mike Cannon-Brookes highlighting the company's long-term investments in its cloud platform and AI capabilities, the market reaction suggests investors are concerned about Atlassian's ability to maintain its growth trajectory in an increasingly competitive market for enterprise software solutions. The company's ability to accelerate cloud adoption and drive revenue growth will be critical factors in regaining investor confidence in the coming quarters.