Q4 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$173.24Last close (Aug 1, 2024)
Post-Earnings Price$152.67Open (Aug 2, 2024)
Price Change
$-20.57(-11.87%)
- Atlassian remains confident in achieving over 20% compounded annual revenue growth rate over the next three years, driven by a $67 billion addressable market opportunity, including $14 billion within their existing enterprise customer base alone. The company plans to propel growth through data center migrations to cloud, paid seat expansion within existing customers, cross-selling additional products like Jira Service Management and Rovo, and upselling to premium and enterprise editions. Over 500 customers are spending more than $1 million annually, up 48% year-over-year, highlighting strong momentum in the enterprise segment.
- Significant investments in AI and achieving FedRAMP in-process designation position Atlassian to unlock substantial new market opportunities, particularly within the U.S. public sector. The company's unique and differentiated position with data graphs around high-value roles, combined with AI capabilities, offers a long-term growth driver. FedRAMP compliance paves the way for serving federal customers on Atlassian Cloud, expanding their market reach.
- Successful product innovation and expansion, including the integration of Loom and introduction of new products like Jira Service Management, are expected to contribute positively to revenue growth. Loom is anticipated to have about 1.5 to 2 percentage points impact on FY'25 cloud revenue growth, indicating effective cross-selling traction. The continued focus on evolving the go-to-market strategy is poised to enhance enterprise sales and drive growth.
- Atlassian's FY '25 revenue growth guidance has been reduced from 20% to 16%, which is disappointing to investors and raises concerns about the company's ability to achieve its long-term growth targets. The reduction reflects uncertainties in the macroeconomic environment and execution risks in their go-to-market transformation.
- The company expects continued pressure in paid seat expansion in FY '25, indicating challenges in expanding user adoption and potentially limiting revenue growth from existing customers.
- Leadership transitions, including the departure of co-CEO Scott Farquhar and the ongoing search for a new Chief Revenue Officer, introduce execution risks that may affect the company's ability to effectively implement its enterprise sales transformation and achieve growth objectives.