Atlas announced its third-quarter financial results, showing robust revenue growth in its cloud and data center segments. The overall performance significantly exceeded market expectations.
Previously, the stock had suffered heavy losses, impacted by this year's "SaaS industry downturn" and disruptions to business models from artificial intelligence.
Atlas CEO Mike Cannon-Brooks told CNBC that market concerns affecting the entire software industry may have been overstated.
The software company reported third-quarter results that beat Wall Street forecasts, with notable growth in cloud and data center revenue. Shares rose more than 20% on Friday.
Below is a comparison of the company's actual results against Refinitiv analyst estimates:
Adjusted earnings per share: $1.75, compared to expectations of $1.32 Revenue: $1.79 billion, compared to expectations of $1.69 billion
This year, Atlas has been one of the hardest-hit stocks during the SaaS industry slump, with its share price declining more than 45% year-to-date.
The so-called "SaaS industry downturn" refers to a broad sell-off of SaaS stocks in the technology sector, triggered by the launch of AI-powered software products from companies like OpenAI and Anthropic. However, several software executives have responded by stating that their core operating metrics have not deteriorated.
In March, Atlas laid off approximately 10% of its workforce, totaling around 1,600 positions. The company stated that the restructuring would allow it to self-fund increased investment in artificial intelligence and enterprise sales, while also improving its financial position.
In a CNBC interview on Thursday, Atlas CEO Mike Cannon-Brooks said the company's business showed "strong resilience" this quarter and that the widespread pessimism across the software industry may be exaggerated.
He said on CNBC's "Closing Bell Overtime": "In the business areas where the market has expressed concern, our order volume and job demand have remained strong. I believe these fears may not materialize. Atlas's earnings report demonstrates that customers continue to view us as a strategic partner and are expanding their use of our software."
For the quarter ended March 31, Atlas revenue increased 32% year-over-year.
Cloud revenue was the standout performer, surging 29% year-over-year to $1.13 billion, beating FactSet analyst expectations of $1.08 billion.
Data center revenue reached $561 million, significantly exceeding market expectations of $515 million.
The company raised its full-year growth guidance for cloud and data center revenue, now forecasting increases of 26.5% and 21.5%, respectively.
In a research note issued Friday, analysts at BTIG pointed out that Atlas's team collaboration suite has become a major growth driver, with customers upgrading their plans to gain more AI usage allowances. BTIG maintained its Buy rating on the stock.
The note stated: "While it will take more time and continued performance to fully confirm that AI disruption risks have subsided, this earnings report demonstrates that Atlas is leveraging its unique team collaboration graph ecosystem to turn the AI threat into a distinct competitive advantage. We remain optimistic about the company's fundamental momentum and believe there is further upside even after the 25% after-hours surge."
The earnings report also showed that Atlas posted a net loss of $98.39 million for the quarter, or a loss of $0.38 per share. That compares to a net loss of $70.81 million, or $0.27 per share, in the same period last year, representing a year-over-year widening of losses.
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