Atlassian (TEAM) reports Q4 & FY25 earnings

Stock closed Friday at $168.06, down $2.94 (−1.72%) on heavy volume; −30.95% YTD

“We closed out fiscal 2025 with strong growth in our cloud business, record free cash flow, and continued innovation in AI,” said Co-CEO Mike Cannon-Brookes. “Our FY26 outlook reflects confidence in sustaining double-digit growth while investing in the next generation of collaboration tools.”

Co-CEO Scott Farquhar added, “The demand for Atlassian’s solutions remains resilient, but we’re mindful of macro conditions and the need to execute through a leadership transition later this year.”

Quarter Highlights – Q4 FY25 (Ended June 30, 2025)

• Revenue: $1.38B, +22% YoY (Q4 FY24: $1.13B)
• Cloud Revenue: $928M, +26% YoY
• Subscription Revenue: $1.31B, +23% YoY
• Operating Loss (GAAP): ($28.5M), improved from ($67.0M) YoY
• Net Loss (GAAP): ($23.9M) vs. ($196.9M) prior year; Diluted EPS: ($0.09)
• Non-GAAP Operating Income: $335.9M, margin 24% (up from 20%)
• Non-GAAP Net Income: $259.1M; Non-GAAP EPS: $0.98 (Q4 FY24: $0.66)
• Free Cash Flow: $360M; Gross Margin: 83% GAAP (85% non-GAAP)

Full Year FY25

• Revenue: $5.22B, +20% YoY
• GAAP Operating Loss: ($130.4M), unchanged margin (−3%)
• GAAP Net Loss: ($256.7M), Diluted EPS: ($0.98)
• Non-GAAP EPS: $3.68, up from $2.93
• Free Cash Flow: $1.42B (27% margin)

FY26 Guidance

• Q1 FY26 Revenue: $1.395B–$1.403B (+~1%–2% QoQ)
• FY26 Revenue Growth: 18% YoY ($6.16B)
• Cloud Revenue Growth: ~21% YoY
• Data Center Growth: ~12.5% YoY
• Non-GAAP Gross Margin: ~85.5%; Operating Margin: ~24%

Business & Strategic Updates

• Ended Q4 with 51,978 high-value cloud customers (+13% YoY).
• Expanded partnership with Google Cloud for multi-cloud and AI integration.
• Product launches: Atlassian Talent and Rovo Dev Agent in CLI for AI-assisted development workflows.
• Named a Leader in Forrester Wave Q2 2025 for Value Stream Management & DevOps Platforms.
• Leadership change: President Anu Bharadwaj to depart Dec. 31, 2025.

Stock & Market Reaction

• Shares slid ahead of earnings and closed Friday at $168.06, down −30.95% YTD.
• Heavy selling volume reflects investor caution over:
  • Leadership transition risk
  • Slower FY26 growth outlook (18% vs. 20% in FY25)
  • Widening GAAP losses despite strong non-GAAP performance and record free cash flow.

Observation:
Atlassian delivered strong top-line growth and robust free cash flow in FY25, meeting FY26 revenue targets. However, GAAP losses widened sharply, and leadership uncertainty is weighing on sentiment. With shares trading well below key moving averages, investor confidence may hinge on execution in cloud growth and AI product monetization over the next 12 months.