Aussie tech giant Atlassian takes a stock hit after reporting a $47.3 million write-off thanks to Trump’s tax plan

Atlassian cofounders Mike Cannon-Brookes, left, and Scott Farquhar

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Atlassian cofounders Mike Cannon-Brookes, left, and Scott Farquhar
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Atlassian

  • Australian software giant Atlassian took a $47 million hit to its bottom line thanks to changes in tax rates brought under the new tax law.
  • The company’s stock fell nearly 5% on the news.
  • The charge and stock drop marred an otherwise strong quarterly report.

The new tax law was designed to help corporations. But Atlassian’s bottom line and stock price took hits on Thursday because of it.

The Australian software giant, which makes Jira and HipChat, announced a $65 million loss for its most recent quarter thanks in part to a one-time charge related to the tax rate changes in the new law. The loss amounted to 28 cents a share, compared to a penny a share loss in the same period a year earlier.

The company’s stock was down nearly 5% in afterhours trading on the news.

The charge relates to how companies can use their past losses to offset future profits when calculating their taxes. When a company posts a loss, it basically get to store that loss as a kind of a credit that can nullify future profits and reduce the taxes they might otherwise have to pay.

With the corporate tax rate going from 35% to 21% under the new tax plan, the value of those stored credits in terms of the amount of taxes they could wipe out is lowered. Atlassian wrote off that difference in value. Although it’s a one-time charge, in practice the move means that Atlassian won’t save as much on future taxes as it would have under the old tax law.

The charge put a damper on an otherwise strong quarterly report. Atlassian posted revenue of $212.6 million for the last three months of 2017, up about 43% from the same period a year earlier. Excluding the tax charge and certain other expenses, it would have earned $31 million, or 13 cents a share, in the just-finished quarter, up from about $22 million, or 10 cents a share, in the holiday quarter of 2016.

Generally speaking, Atlassian is having a good run, with a market cap of over $12 billion and a stock price that’s roughly doubled since January 2017.

Atlassian is not the only company having to adjust its bottom line to account for the changes in the tax law. IBM posted a $5.5 billion charge in its own quarterly earnings for reasons also related to the new tax plan, indicating that even the largest tech companies are going to see some short-term fallout from the big changes.