By Jaspreet Singh

(Reuters) – Atlassian raised its annual revenue growth forecast on Thursday, anticipating a surge in demand from enterprise clients for its cloud software, sending the company’s shares up about 17% in extended trading.

Businesses are moving their operations to the cloud, prompting new investments on products and services provided by companies such as Atlassian to support their efforts.

Clients are also racing to capitalize on artificial intelligence technology, triggering demand for cloud-based software.

“Atlassian put up a strong beat, highlighting its transformation to the cloud is now complete,” said Zeus Kerravala, principal analyst at ZK Research.

He said the strong cloud revenue growth bodes well for investors as the shift to cloud creates greater stability and predictability compared to the past results.

Atlassian derives a majority of its revenue from its collaboration tools such as Jira software for planning and project management, and Confluence for content creation.

The company has more than 300,000 customers, which include gaming platform Roblox, carmaker Mercedes-Benz, and social media platform Reddit.

The Sydney, Australia-based company now expects fiscal year 2025 revenue growth between 16.5% and 17.0%, compared with its earlier expectations of about 16%.

Revenue in the July-to-September period rose by 21% to $1.19 billion, beating analysts’ average estimate of $1.16 billion, according to data compiled by LSEG.

Cloud revenue grew about 31% to $792.3 million in the first quarter.

Adjusted profit per share for the first quarter came in at 77 cents per share, also beating estimates of 64 cents.

The company forecast second-quarter revenue to be between $1.23 billion and $1.24 billion, compared with estimates of $1.23 billion.

It also said Brian Duffy will join Atlassian as chief revenue officer, effective Jan. 1. He was till recently the CEO of SoftwareOne.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shailesh Kuber)