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Atlassian beats Q3 expectations

However, shares were down in after-hours trading as its Q4 profit expectations were low.

Video: Atlassian Q3 results beat market expectations

Atlassian reported its third quarter financial results on Thursday, beating market expectations. However, shares were down in after-hours trading as its Q4 profit expectations were low.

The collaboration and productivity software firm reported a non-IFRS net income of $24.6 million for the quarter, or 10 cents per share. By comparison, Q3 net income was $18.9 million a year prior. Quarterly revenue came to $223.7 million, up 40 percent year over year.

Wall Street was looking for earnings of 8 cents a share on revenue of $218.39 million.

"Atlassian had a strong quarter, adding more than 6,000 net new customers for the first time, and engaging with almost 3,000 users and partners around the world as part of our Team Tour," co-CEO Mike Cannon-Brooke said in a statement. "We were also excited to open our newest office in Bengaluru, India. This office will play an important role in expanding our global presence as we scale Atlassian to serve the Fortune 500,000."

The company also reported free cash flow of $86.4 million for the quarter, up 26 percent year over year. It ended the quarter with 119,158 customers on an active subscription or maintenance agreement basis.

For Q4 2018, Atlassian expects revenue in the range of $232 million to $234 million, bringing expectations for full year 2018 revenue to a range of $862 million to $864 million. Atlassian expects to its non-IFRS net income to be approximately 12 cents a share next quarter, which fell below market expectations of 14 cents a share.