Atlassian Corp Q2 FY2025 earnings call

• Scaled past $5 billion in annual run rate revenue with subscription revenue growing 30% year-over-year. • Investments in serving enterprise customers, AI innovation, and system of work driving momentum. • Over 1 million monthly active users utilizing Atlassian Intelligence features with AI interactions up over 25x year-over-year. • Record number of deals greater than $1 million in annual contract value signed in Q2. • Rovo adoption early but receiving positive feedback, with Atlassian Intelligence passing 1 million users as a milestone. • Strong execution in enterprise segment, with Jira and other products showing expansion potential. • Loom performing well, with revenue in Q2 in line to slightly better than expectations.

No specific detailed breakdown of product segments' financial performance with absolute terms and revenue contribution % provided in the transcript.

• Q3 data center revenue guidance is approximately 7% year-over-year growth, factoring in pricing, seat expansion, cross-sell, macro uncertainty, and migrations to cloud. • Operating margins in H2 expected to be slightly lower than H1 due to timing of Q2 spending and increased sales/marketing and R&D investments in enterprise. • Full-year non-GAAP operating margin expected to be roughly flat year-over-year at 23.5%, with >25% non-GAAP operating margin expected in FY ’27.

• Macro environment uncertainty impacting paid seat expansion and enterprise go-to-market motion execution. • Competition in the agentic computing space and potential challenges in differentiating Atlassian's agents. • Risks related to execution of enterprise go-to-market motion evolution.

Q: Keith Bachman asked about increasing penetration of large enterprise accounts and product areas for opportunity.

A: Mike discussed enterprise segment execution, Jira's expansion, and go-to-market motion evolution.

Q: Ryan MacWilliams asked about Rovo adoption and progress.

A: Mike talked about early days of Rovo, positive customer feedback, and heavy R&D investment in AI.

Q: Ryan MacWilliams followed up on Rovo and AutoDev.

A: Mike elaborated on R&D investment in AI, Rovo's unique features, and AutoDev progress.

Q: Michael Turrin asked about risk-adjusted framing and second half guide.

A: Mike discussed Q2 trends, stable SMB segment, and conservative guidance approach for H2.

Q: Keith Weiss asked about agents in the crowded field.

A: Mike explained Atlassian's pure approach to agents, R&D investment, multi-model strategy, data access, and interfaces.

Q: Fatima Boolani asked about Loom monetization and cloud performance.

A: Joe Binz and Mike discussed Loom's revenue in line with expectations and FY ’25 cloud revenue growth impact.

Q: DJ Hynes asked about data center growth assumptions.

A: Joe Binz discussed Q3 data center revenue guidance, pricing changes, and migration to cloud impact.

Q: Brent Thill asked about margin guidance and investments.

A: Joe Binz talked about H2 operating margin expectations, increased investments in enterprise, and long-term margin targets.

Q: Kash Rangan asked about consumption models and price increases.

A: Mike discussed price increase rationale based on R&D investment and value delivery, and familiarity with consumption-based pricing.

Q: Rob Owens asked about gross margin sustainability.

A: Joe Binz explained Q2 gross margin performance, cloud COGS optimization, and long-term gross margin guidance.

Q: Adam Tindle asked about paid seat expansion and AI cannibalization.

A: Joe Binz talked about stable paid seat expansion in SMB, and Mike discussed AI's productivity benefits without cannibalization fears.

Q: Gregg Moskowitz asked about reaching C-level executives.

A: Mike discussed ease of reaching C-levels, customer-led migration journeys, and progress in becoming strategic partners.

Q: Jason Celino asked about data center migration.

A: Mike and Joe discussed hybrid ELAs, customer-led migration flexibility, and strong interest in hybrid deals.