Shares of Atlassian Corporation PLC (TEAM) plunged 16.66% in after-hours trading on Thursday 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.

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.

Mike Cannon-Brookes, co-founder and CEO of Atlassian, emphasized the company's long-term investments in its cloud platform, stating, "Our vision for the future of human-AI collaboration is resonating deeply with customers." However, the market's reaction suggests concerns about Atlassian's ability to maintain its growth trajectory in an increasingly competitive market for enterprise software solutions.

The company's shift towards cloud-based products has been successful, with the number of cloud customers with annual recurring revenue greater than $10,000 increasing 14% year-over-year to 50,715. However, the projected deceleration in cloud revenue growth has sparked worries among investors about potential challenges in customer acquisition or retention.

As the market digests this information, analysts will likely be closely monitoring Atlassian's performance in the coming months to determine whether this is a temporary setback or indicative of a longer-term trend. The company's ability to accelerate cloud adoption and drive revenue growth will be critical factors in regaining investor confidence and potentially reversing the stock's downward movement.