Atlassian (TEAM) Q4 2024 earnings summary

Executive summary

• FY 2024 delivered AUD 4.4 billion in revenue, over AUD 1.4 billion in free cash flow, and surpassed 300,000 customers, including the first-ever $1 billion revenue quarter.

• Major product launches included Atlassian Intelligence, Compass, Virtual Agents for Jira Service Management, and the acquisition of Loom, adding async video capabilities and 33,000 customers.

• Successfully completed the multi-year wind-down of Server, migrating millions to Cloud and Data Center.

• Over 500 customers now spend more than AUD 1 million annually, up 48% year-over-year.

• Recognized as a Leader in Forrester Wave for Enterprise Service Management, with continued innovation across the product portfolio.

Financial highlights

• Cloud revenue grew 31% year-over-year in Q4, slightly below the guided 32% due to timing of enterprise deals and lower-than-expected Data Center migrations.

• Q2 FY24 revenue grew 21% year-over-year to $1,060 million, driven by Cloud and Data Center growth.

• FY 2024 free cash flow exceeded AUD 1.4 billion; Q2 free cash flow reached $284 million, up 94% year-over-year.

• FY 2025 revenue guidance is 16% growth, reflecting a more conservative and risk-adjusted approach.

• Loom is expected to contribute 1.5-2 points to FY 2025 Cloud revenue growth and be slightly dilutive to operating margins.

Outlook and guidance

• FY 2025 guidance incorporates macroeconomic uncertainty and execution risks from evolving enterprise go-to-market motions.

• Cloud revenue growth is expected to decelerate in FY 2025 due to reduced Server migration contributions, with acceleration anticipated in FY 2026 as these headwinds subside.

• FY24 Cloud revenue growth expected at 28.5%-30.5%, with migrations contributing ~10 points and Loom ~1.5 points.

• Data Center revenue growth forecast at ~36% for FY24, with deceleration in H2.

• Management remains confident in achieving a 20%+ compounded annual revenue growth rate over the next three years.