Shares of Atlassian Corporation PLC (TEAM) plummeted 16.66% in after-hours trading on Thursday following the company's fiscal third-quarter earnings report and disappointing fourth-quarter outlook. The sharp decline comes as the cloud-based software provider projected lower-than-expected revenue growth for the upcoming quarter.

For the third quarter ended March 31, Atlassian reported better-than-expected results, with 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 Wall Street expectations of $0.90.

However, investors focused on the company's weak fourth-quarter guidance. Atlassian forecasts revenue for the current quarter to be between $1.35 billion and $1.36 billion, below the consensus estimate of $1.42 billion. More concerning to investors was the projected slowdown in cloud revenue growth, a key metric for software-as-a-service companies. The company expects cloud revenue to grow approximately 23% year-over-year in Q4, down from the 25% growth seen in Q3.

"Our long-term investments in building a world-class Cloud platform have enabled us to advance the Atlassian System of Work and bring Rovo's powerful AI capabilities to the center," said Mike Cannon-Brookes, co-founder and CEO of Atlassian. "Our vision for the future of human-AI collaboration is resonating deeply with customers, and we are more excited than ever to execute on our mission of unleashing the potential of every team."

Despite the positive tone from management, 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.