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Atlassian Corp (TEAM)·Q4 2025 Earnings Summary

Executive Summary

  • Atlassian delivered Q4 FY25 revenue of $1.384B (+22% YoY) and non-GAAP EPS of $0.98, both beating consensus; Cloud revenue rose 26% YoY, and non-GAAP operating margin was 24% .
  • Strong enterprise execution: record number of >$1M ACV deals, RPO reached $3.3B (+38% YoY), and data center-to-cloud migrations accelerated; management cited stable seat expansion and cross-sell momentum .
  • Guidance introduced for Q1 FY26 and FY26: total revenue growth ~18% for FY26; Q1 FY26 revenue $1.395–$1.403B; non-GAAP operating margin ~20.5% in Q1 and ~24.0% for FY26 .
  • AI is a core tailwind: AI MAUs reached 2.3M (up ~50% QoQ), Teamwork Collection adoption exceeded expectations, and Google Cloud partnership enhances multi-cloud strategy; management emphasized usage-first monetization .
  • Catalysts: enterprise “wall-to-wall” consolidations, AI-driven product uptake (Rovo), and FY26 margin discipline; leadership transition (President Anu Bharadwaj) noted but framed as orderly with strong bench .

What Went Well and What Went Wrong

  • What Went Well

    • Enterprise momentum: record >$1M ACV deals in Q4; migrations up 60% YoY; RPO at $3.3B with 74% to be recognized in next 12 months .
    • AI traction: AI MAUs 2.3M; token usage up ~5x QoQ; Confluence users using AI create 15% more pages and make 33% more edits; premium/enterprise editions up ~40% YoY .
    • Cloud revenue growth +26% YoY to $927.7M; non-GAAP gross margin 85%; non-GAAP operating margin 24% with disciplined cost management .

  • What Went Wrong

    • GAAP profitability remains negative: GAAP operating margin -2% and GAAP diluted EPS -$0.09 due to stock-based compensation and amortization .
    • Free cash flow down 13% YoY in Q4 to $360M, driven by prior-year collection dynamics and timing effects from billing terms and linearity .
    • Q1 FY26 Data Center growth guide (~8%) steps down from Q4, reflecting seasonally smaller expiration base, one-year term changes, and lapping server-related purchasing .

Financial Results

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($USD Millions)1,131.590 1,286.463 1,356.716 1,384.344
GAAP Diluted EPS ($)-0.76 -0.15 -0.27 -0.09
Non-GAAP Diluted EPS ($)0.66 0.96 0.97 0.98
GAAP Gross Margin (%)81% 83% 84% 83%
Non-GAAP Gross Margin (%)83% 85% 86% 85%
Non-GAAP Operating Margin (%)20% 26% 26% 24%
Free Cash Flow ($USD Millions)413.164 342.569 638.315 360.318

Segment revenue breakdown

Segment ($USD Millions)Q4 2024Q3 2025Q4 2025
Cloud738.006 880.429 927.730
Data Center326.663 388.516 380.776
Server— 29.720 —
Marketplace & Other66.921 87.771 75.838

KPIs

KPIQ2 2025Q3 2025Q4 2025
Customers with >$10K Cloud ARR (count)49,449 50,715 51,978
Cloud Net Revenue Retention (%)——~120%
AI Monthly Active Users (MAUs) (millions)~1.0 >1.5 2.3
RPO ($USD Billions)——3.3

Actual vs Consensus (Q4 FY25)

MetricConsensusActualSurprise
Revenue ($USD Millions)1,356.608*1,384.344 +27.736*
Non-GAAP EPS ($)0.8550*0.98 +0.1250*

Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)Q4 2025$1,349–$1,359 Actual $1,384 Beat
Cloud Revenue YoY Growth (%)Q4 2025~23.0% Actual +26% Raised vs. delivered
Data Center Revenue YoY Growth (%)Q4 2025~16.5% Actual +17% Slight beat
GAAP Gross Margin (%)Q4 2025~82.5% 83% actual Beat
Non-GAAP Operating Margin (%)Q4 2025~22.0% 24% actual Beat
Total Revenue ($USD Millions)Q1 2026—$1,395–$1,403 New
Cloud YoY Growth (%)Q1 2026—~22.5% New
Data Center YoY Growth (%)Q1 2026—~8.0% New (step down vs Q4)
GAAP/Non-GAAP Gross Margin (%)Q1 2026—~82.5% / ~84.5% New
GAAP/Non-GAAP Operating Margin (%)Q1 2026—~(5.5)% / ~20.5% New
FY26 Total Revenue YoY Growth (%)FY26—~18.0% New
FY26 Cloud/DC/Marketplace YoY Growth (%)FY26—~21% / ~12.5% / ~10% New
FY26 GAAP/Non-GAAP Operating Margin (%)FY26—~(2.5)% / ~24.0% New
FY26 Diluted Share Count Growth (%)FY26—<2% New

Earnings Call Themes & Trends

TopicQ2 2025 (prior)Q3 2025 (prior)Q4 2025 (current)Trend
AI adoption & monetization1M AI MAUs; 25x interactions YoY; premium/enterprise +40% YoY driven by AI Rovo included in premium/enterprise; >1.5M AI MAUs; adoption-first strategy 2.3M AI MAUs; token usage +5x QoQ; usage-first; premiums growing ~40% YoY Accelerating usage; revenue impact gradual
Enterprise GTM evolutionNew CRO; enterprise focus; record large deals Collections launched; later-than-expected enterprise deal timing in Q3 Record >$1M ACV deals; strong partner execution; continued GTM evolution risks considered Improving execution with cautious outlook
Cloud migrationsFedRAMP progress; 150K-user Confluence scale DC→Cloud migrations ongoing; seat expansion stable DC→Cloud migrations up 60% YoY; mid-to-high single-digit Cloud growth contribution in FY25; mid-single-digit assumed for FY26 Durable, with variability
Data Center dynamics+32% YoY in Q2; multi-year deals aided +7% YoY; one-year term policy dampened multi-year apps; marketplace -5% Q4 in line; Q1 guide ~8% due to smaller expirations and lapping server EoS Volatile; expected slowdown Q1
Free cash flow timing+21% YoY in Q2 to $343M +15% YoY in Q3 to $638M Q4 FCF $360M (-13% YoY); timing/billing mix headwinds Seasonal/timing variability

Management Commentary

  • “We closed out FY25 delivering over $5.2 billion of revenue, generating over $1.4 billion in free cash flow, and reaching 2.3 million AI monthly active users.” — Mike Cannon‑Brookes, CEO .
  • “We’re not seeing any impact [from code generation AI tools]…expansion rates, growth rates, adoption rates of our technical products…remain healthy.” — Mike Cannon‑Brookes .
  • “RPO balance increasing to $3.3 billion, up 38% year over year; ~74% recognized in revenue in the next twelve months.” — Joe Binz, CFO .
  • “Free cash flow in the quarter was $360M…driven primarily by strong collections in the prior year related to server and support dynamics…we expect FCF margin to track ~500 bps above non‑GAAP operating margin over time.” — Joe Binz .
  • “Expanded strategic partnership with Google Cloud…a milestone in multi‑cloud strategy to accelerate cloud transformation and deliver advanced AI solutions.” — Company release .

Q&A Highlights

  • AI impact on developer seats: Management reiterated no negative impact; sees broader creation beyond developers and Jira as “center of gravity” for workflows .
  • Migrations contribution: FY25 mid-to-high single-digit contribution to Cloud growth; FY26 conservatively mid-single-digit given complexity and hybrid approaches .
  • Data Center growth step-down in Q1: seasonally smaller expiration base, one-year term changes, and lapping server EoS benefits .
  • Monetization path for Rovo/AI: consumption-based elements exist but guidance assumes nominal near-term; expect monetization via seat expansion and upgrades (premium/enterprise) .
  • Margin framework: FY26 non-GAAP operating margin guide 24% with disciplined investment in Enterprise, AI, and System of Work; pathway to >25% by FY27 reaffirmed .

Estimates Context

  • Q4 FY25 beats: Revenue $1.384B vs $1.357B consensus; Non-GAAP EPS $0.98 vs $0.855 consensus — both above Wall Street estimates*.
  • Estimate breadth: 25 revenue estimates and 28 EPS estimates for Q4 FY25*.
  • Implication: Upward bias to near-term Cloud/Marketplace assumptions and non-GAAP margin trajectory, while Data Center outlook should reflect Q1 guide moderation and seasonality .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Clear beat on both revenue and EPS with stronger Cloud (+26% YoY) and healthy non-GAAP margins, reinforcing execution against enterprise and AI priorities .
  • Enterprise catalysts (record large deals, RPO strength) and AI usage metrics (2.3M MAUs, 5x token usage QoQ) support durable growth vectors into FY26 .
  • Near-term watch points: Q1 FY26 DC growth (~8%) and FCF seasonality/timing effects; expect quarter-to-quarter volatility as GTM evolves .
  • Guidance framework remains conservative; FY26 non-GAAP operating margin ~24% with reiterated path to >25% by FY27 suggests ongoing cost discipline amid AI investments .
  • Collections (Teamwork/Strategy) and multi-cloud partnerships (Google Cloud) are expanding “wall-to-wall” deployments and cross‑sell/upsell opportunities across technical and business users .
  • Upgrade mix to premium/enterprise editions and DC→Cloud migrations should continue to provide ARPU uplift and seat expansion, underpinning mid-20s Cloud growth guide .
  • Leadership transition is planned; strong bench and momentum reduce execution risk, but monitor communication around enterprise GTM and AI monetization milestones .