Atlassian (TEAM) Q1 2025 earnings summary

Executive summary

• Fiscal year 2025 began strongly, with revenue reaching $1.19 billion, up 21% year-over-year, driven by 33% subscription growth and strong cloud adoption.

• Strategic focus remains on serving Enterprise customers, advancing AI innovation, and driving Cloud adoption, highlighted by the launch of Rovo and Atlassian Focus.

• Net loss widened to $123.8 million, mainly due to higher R&D and marketing expenses, while non-GAAP net income was $199.7 million.

• Ended the quarter with over 300,000 customers and $2.2 billion in cash and equivalents.

• Announced a new $1.5 billion share repurchase program and appointed Brian Duffy as Chief Revenue Officer effective January 2025.

Financial highlights

• Cloud revenue grew 31% year-over-year to $792.3 million, outperforming initial guidance.

• Subscription revenue rose 33% year-over-year to $1.13 billion; Data Center revenue up 38% to $335.6 million.

• Gross margin remained stable at 82% GAAP and 84% non-GAAP; non-GAAP operating margin was 23%.

• Free cash flow was $74.3 million, with a margin of 6% of revenue.

• Non-GAAP net income per diluted share was $0.77, up from $0.65 year-over-year.

Outlook and guidance

• Guidance remains conservative and risk-adjusted due to ongoing macro uncertainty and execution risks in Enterprise go-to-market transformation.

• Q2 FY2025 revenue expected between $1,233 million and $1,241 million; cloud revenue growth projected at 25.5% year-over-year.

• FY2025 total revenue growth expected in the range of 16.5% to 17.0% year-over-year.

• FY2025 non-GAAP operating margin expected between 22.0% and 22.5%; GAAP operating margin between (5.5)% and (5.0)%.

• Rovo is expected to contribute modestly to FY 2025 revenue, with gradual growth anticipated.