Atlassian Corporation Q4 FY2025 earnings call

• FY '25 had stellar execution from enterprise sales and partner teams, with over $5.2B revenue and over $1.4B free cash flow.
• Closed Q4 with a record number of deals >$1M ACV, up over 2x year-on-year. Teamwork Collection showed strong momentum, exceeding expectations.
• Partnered with Google Cloud to accelerate cloud transformation and deliver advanced AI solutions. Cloud net revenue retention rate was 120%.
• Anu decided to transition away from her role as Atlassian President at the end of December after nearly 12 years.
• Many enterprises consolidated onto the Atlassian Cloud platform, with core apps growing healthily.

In FY '25, Atlassian generated over $5.2 billion in revenue and over $1.4 billion in free cash flow. Core apps such as Jira, Confluence, Jira Service Management, and Loom saw continued revenue growth, with these apps growing in line or faster than total company revenue and having significant runway ahead. The cloud net revenue retention rate was 120%.

• FY '26 guidance is consistent with prior approach, taking a conservative and risk-adjusted approach due to macroeconomic uncertainty and enterprise go-to-market evolution risks.
• Remain confident in achieving 20% compounded annual growth from FY '24 through FY '27, with FY '25 laying a strong foundation.
• Teamwork Collection is a key growth vector, with examples of large customers adopting it for AI integration and other benefits.
• Expect cash flow to correlate to non-GAAP operating income trends, with non-GAAP operating margin expected to have about a 500 basis point difference over time from free cash flow margin.

• Macro-economic uncertainty which could impact enterprise go-to-market evolution.
• Complexity of Data Center to Cloud migrations, leading to variability in migration pace quarter-to-quarter.
• Timing differences between accounting and cash flow, such as employee bonus payout in Q1 affecting short-term cash flow.

Q: Keith Weiss asked about the impact of AI on Atlassian's business and how innovations affect the core business.

A: Michael Cannon-Brookes stated no impact on numbers, users still growing, and more people creating software expands Atlassian's opportunity with Jira remaining central.

Q: Unidentified Analyst inquired about free cash flow trajectory in 2026.

A: Joseph Binz said Q4 free cash flow was $360M, down 13% YoY, driven by prior year server and support collections, and cash flow reflects Q4 performance with short-term temporal headwinds from billing term transitions.

Q: Kash Rangan asked about potential inflection points in the business for fiscal '26 and '27.

A: Joseph Binz said no change to guidance approach, confident in 20% growth from FY '24-FY '27, and Mike Cannon-Brookes mentioned Teamwork Collection's strong momentum and multiple growth vectors like paid seat expansion, cross-sell, etc.

Q: Michael Turrin asked about the enterprise go-to-market framework in FY '26.

A: Joseph Binz said strong execution drove bookings and billings, RPO increased to $3.3B, Cloud revenue outperformed expectations with stable macro trends, Data Center revenue in line with guidance, and marketplace outperformance from third-party app sales.

Q: Arsenije Edward Matovic asked about AI capabilities in Teamwork Collection and migration contribution to Cloud guidance.

A: Michael Cannon-Brookes said AI is a tailwind, new capabilities will ship, and Joseph Binz explained migrations contributed mid-to-high single-digit to Cloud revenue growth in FY '25, with FY '26 guidance assuming mid-to-single-digit contribution due to migration complexity and macro risks.

Q: Arjun Bhatia asked about go-to-market and Enterprise acceleration in 2026.

A: Michael Cannon-Brookes said Enterprise business is strong, Brian brings experience, and there's a large addressable market within existing customer base with continued growth in Data Center to Cloud migrations and Teamwork Collection wins.

Q: Karl Emil Keirstead asked about Q1 Data Center growth guidance.

A: Joseph Binz said Q1 Data Center guidance is ~8% due to smaller expiration base in Q1, seasonally weaker quarter, and headwinds from 1-year deal terms and lapping migration benefits.

Q: Gregg Steven Moskowitz asked about convincing more Global 2000 organizations to equip nontechnical employees with Atlassian licenses.

A: Michael Cannon-Brookes said they are doing it daily, Teamwork Collection helps, investments in design and usability, Loom and Trello contribute, and Rovo strengthens momentum in connecting business workflows.

Q: David E. Hynes asked about bridge from MAU growth in Rovo to monetization.

A: Joseph Binz said Rovo's focus is on deployment, usage, engagement first, with nominal revenue in FY '26 guidance, and Mike Cannon-Brookes added Teamwork Collection's uplift is partially AI-driven, consumption-based pricing in various places, and strong uptake on premium/enterprise editions.

Q: Jason Vincent Celino asked about operating margin guidance and investment priorities.

A: Joseph Binz said operating expenses to grow consistently, invest in sales, marketing, R&D for strategic priorities, operating margin guide for FY '26 is 24% (slightly lower than FY '25) with confidence in FY '27 non-GAAP operating target >25%, and Michael Cannon-Brookes added sales hiring ahead of forecast shows strong talent pipeline and focus on meeting profitability commitments while investing in AI.