Atlassian Q4 2024 Earnings Analysis
Dive into $TEAM Atlassian’s Q4 2024 earnings with review of financial performance, key metrics, operating expenses, dilution, customer growth, future outlook
Financial Results:
↗️$1,286M rev (+21.3% YoY, +21.5% LQ) beat est by 3.9%
↗️GM* (85.2%, +1.1 PPs YoY)
↗️Operating Margin* (26.0%, +2.4 PPs YoY)
↘️FCF Margin (26.6%, -0.2 PPs YoY)🟡
↗️EPS* $0.96 beat est by 29.7%🟢
*non-GAAP
Revenue By Type
↗️Subscription $1,213M rev (+30.2% YoY)
↗️Other $73M rev (+24.4% YoY)🟢
Revenue By Deployment
↗️Cloud $847M rev (+29.7% YoY)
↗️Data Center $362M rev (+31.9% YoY)
↗️Marketplace and services $77M rev (+22.6% YoY)🟢
Customers
➡️49,449 $10k+ customers (+15.4% YoY, +2605)
Operating expenses
↗️S&M*/Revenue 17.8% (+0.8 PPs YoY)
↘️R&D*/Revenue 32.7% (-0.3 PPs YoY)
↘️G&A*/Revenue 9.1% (-1.6 PPs YoY)
Quarterly Performance Highlights
↗️Net New ARR $325M (+1.4% YoY)
↗️CAC* Payback Period 9.3 Months (+2.3 YoY)🟡
↗️R&D* Index (RDI) 0.63 (+0.02 YoY)🟢
Dilution
↗️SBC/rev 29%, +5.4 PPs QoQ
↘️Basic shares up 1.0% YoY, -0.0 PPs QoQ🟢
↗️Diluted shares up 1.0% YoY, +0.3 PPs QoQ🟢
Headcount
➡️12,750 Total Headcount (+11.6% YoY, +249 added)
Guidance
↗️$1,345.0 - $1,353.0M guide (+13.4% YoY) beat est by 2.8%
Key points from Atlassian’s Fourth Quarter 2024 Earnings Call:
Financial Performance
Atlassian reported $5 billion in annual run rate revenue for Q2 FY25. Subscription revenue grew 30% YoY, driven by higher-value SKUs, which expanded 40% YoY. Gross margin reached 85%, exceeding guidance due to improved cloud cost efficiencies. Data Center revenue is projected to grow 7% YoY, supported by pricing adjustments and cloud migrations. The company maintained its 23.5% full-year non-GAAP operating margin target.
Product Innovations
Atlassian Intelligence adoption surged, reaching 1 million monthly active users with 25x YoY growth. AI-driven features, including Robo AI assistant and Auto Dev, improved workflows. Loom processed 38 million AI-enhanced videos, enhancing collaboration.
Cloud Expansion
Cloud adoption accelerated, contributing to 30% YoY subscription revenue growth. Enterprise-tier sales expanded 40% YoY, fueled by AI-powered automation. Hybrid Enterprise License Agreements (ELAs) enabled flexible cloud migration. Paid seat expansion stabilized in SMBs.
Data Center
Large deals surged, particularly through multiyear hybrid ELAs. Revenue is projected to grow 7% YoY, supported by seat expansion, cross-selling, and pricing adjustments. Data Center remains a key bridge for regulated industries with complex IT environments.
Jira Growth & Expansion
Jira adoption expanded beyond software development into enterprise collaboration. Merging Jira Software and Jira Work Management accelerated enterprise adoption. Jira Service Management emerged as a key driver, integrating IT and business operations. 500+ enterprise customers now spend over $1 million annually on Jira.
AI Agents and Automation
Atlassian Intelligence improved search, automation, and analytics. AI-driven premium feature sales grew 40% YoY, improving team efficiency in Jira and Confluence.
Emerging Tools and Features
Loom AI and enterprise search functionalities enabled deeper integrations. Forge, Atlassian’s cloud development platform, gained traction among developers building custom solutions.
Security Enhancements
Investments in enterprise search security, AI-driven compliance, and encryption strengthened platform resilience. Teams adopted Atlassian tools for secure collaboration.
Market Expansion and Go-To-Market Strategy
A newly expanded direct sales team engaged more deeply with C-level executives, driving larger, more complex deals. The enterprise go-to-market motion evolved to support this expansion.
Customer Growth and Expansion
Atlassian secured a record number of $1 million+ ACV deals. Large enterprises account for 10% of total revenue, though 85% of Fortune 500 companies use Atlassian products.
Large Enterprise Customer Wins
Cisco, DHL, and Reddit adopted Atlassian’s platform to enhance collaboration and scale agile development. A major financial institution signed a cloud deal leveraging Atlassian Intelligence. 500+ customers now spend over $1 million annually.
Customer Success Stories
AI adoption grew 25x YoY, reaching 1 million monthly active users. Loom AI processed 38 million videos, improving knowledge sharing. Hybrid ELAs enabled flexible cloud transitions.
Challenges in Enterprise Adoption
Large enterprises require multi-year transitions from Data Center to cloud, increasing complexity. Atlassian expanded its sales team to navigate procurement cycles and accelerate migration.
Future Outlook
Enterprise demand, record large deals, and AI adoption position Atlassian for continued growth. Deeper engagement with Fortune 500 companies, premium product expansion, and AI monetization will drive progress toward $10 billion in annual revenue. Stable macro conditions, SMB seat expansion, and AI-driven automation will support long-term growth.
Management comments on the earnings call.
Product Innovations
Scott Farquhar, Co-Founder & Co-CEO
"We continue to push the boundaries of AI and automation, integrating Atlassian Intelligence across our platform. With over 1 million monthly active users and 25x YoY growth, AI-driven features like Robo AI and Auto Dev are transforming how teams collaborate and innovate."
AI
Mike Cannon-Brookes, Co-Founder & Co-CEO
"AI is becoming a core driver of efficiency across our products. Features like AI-powered search and automation are helping customers reduce manual tasks and improve decision-making, accelerating their ability to ship high-quality software faster."
Cameron Deatsch, Chief Revenue Officer
"Atlassian Intelligence is already making a significant impact, with over 1 million active users leveraging AI-powered insights, automation, and collaboration enhancements to work smarter and faster."
Cloud Expansion
Anu Bharadwaj, President
"Cloud adoption continues to accelerate, with 30% YoY subscription revenue growth. Enterprise customers are choosing our premium and enterprise offerings, which grew 40% YoY, demonstrating the increasing value of our cloud solutions."
Scott Farquhar, Co-Founder & Co-CEO
"Our hybrid Enterprise License Agreements are proving instrumental in cloud migration, giving large enterprises the flexibility to transition at their own pace while unlocking the benefits of cloud scalability and automation."
Data Center
Cameron Deatsch, Chief Revenue Officer
"Data Center remains an essential bridge for many of our largest customers, particularly those in regulated industries. Hybrid ELAs are helping enterprises maintain on-premise infrastructure while preparing for the inevitable shift to cloud."
Jira
Mike Cannon-Brookes, Co-Founder & Co-CEO
"Jira continues to expand beyond software development into broader enterprise collaboration. With the unification of Jira Software and Jira Work Management, we’re making it easier for business and technology teams to work together efficiently."
Anu Bharadwaj, President
"Jira Service Management is emerging as one of our strongest growth drivers, with enterprises integrating IT and business operations into a unified platform to accelerate service delivery and operational efficiency."
AI Agents
Scott Farquhar, Co-Founder & Co-CEO
"AI-driven automation is no longer a luxury but a necessity. Our AI-powered premium features have driven 40% YoY growth in enterprise-tier sales, showing the increasing demand for intelligent workflow solutions."
Security
Anu Bharadwaj, President
"Security remains a top priority as enterprises adopt cloud solutions. Investments in AI-driven compliance, enterprise search security, and data encryption are strengthening our platform, giving customers confidence in our ability to protect their data."
Market Expansion
Cameron Deatsch, Chief Revenue Officer
"Expanding our enterprise sales team has allowed us to engage directly with CIOs and IT leaders, driving larger and more complex deals. We are shifting from a primarily self-service model to a hybrid approach that better supports our largest customers."
Challenges
Mike Cannon-Brookes, Co-Founder & Co-CEO
"Enterprise cloud migrations are complex and take time. Large customers often require multi-year transitions, and our job is to provide the right mix of support, flexibility, and incentives to help them make that journey successfully."
Future Outlook
Scott Farquhar, Co-Founder & Co-CEO
"With strong enterprise demand, record-breaking large deals, and increasing AI adoption, we are well-positioned for continued growth. Our focus on bridging technology and business teams, automating workflows, and expanding hybrid cloud solutions will drive us toward $10 billion in annual revenue."
Anu Bharadwaj, President
"AI-powered automation, enterprise expansion, and cloud migration are the key levers for our next phase of growth. As macro conditions stabilize, we expect continued adoption of our premium and cloud-based offerings, reinforcing our long-term strategy."
Thoughts on Atlassian Earnings Report $TEAM:
🟢Positive
$1,286M revenue in Q4’24 (+21.3% YoY), beat estimates by 3.9%
Subscription revenue grew 30% YoY, premium/enterprise SKUs expanded 40% YoY
Gross margin* 85.2% (+1.1 points YoY)
Operating margin* 26.0% (+2.4 points YoY)
EPS* $0.96, beat estimates by 29.7%
Data Center revenue projected to grow 7% YoY
Cloud revenue up 29.7% YoY, Data Center up 31.9% YoY
Enterprise-tier sales +40% YoY
CAC* payback 9.3 months (+2.3 YoY)
500+ customers spend over $1 million annually
Hybrid ELAs fueling flexible cloud migration
🟡Neutral
FCF margin 26.6% (-0.2 points YoY)
Paid seat expansion stabilized in SMBs
Headcount rose 11.6% YoY to 12,750
Macro conditions remain stable, but large enterprises need multi-year transitions
🔴Negative
SBC/rev 29% (+5.4 points QoQ)
Execution risk persists as enterprise go-to-market evolves
Seat-based pricing concerns with rising AI automation
Data Center growth pressured by ongoing cloud migrations
(*non-GAAP)