Collaboration software company Atlassian (NASDAQ:TEAM) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 23.3% year on year to $1.59 billion. Guidance for next quarter’s revenue was optimistic at $1.69 billion at the midpoint, 2.9% above analysts’ estimates. Its non-GAAP profit of $1.22 per share was 6.6% above analysts’ consensus estimates.
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Atlassian (TEAM) Q4 CY2025 Highlights:
- Revenue: $1.59 billion vs analyst estimates of $1.54 billion (23.3% year-on-year growth, 2.8% beat)
- Adjusted EPS: $1.22 vs analyst estimates of $1.14 (6.6% beat)
- Adjusted Operating Income: $430.2 million vs analyst estimates of $379.7 million (27.1% margin, 13.3% beat)
- Revenue Guidance for Q1 CY2026 is $1.69 billion at the midpoint, above analyst estimates of $1.64 billion
- Operating Margin: -3%, up from -4.5% in the same quarter last year
- Billings: $1.74 billion at quarter end, up 18.1% year on year
- Market Capitalization: $25.89 billion
StockStory’s Take
Atlassian’s fourth quarter was marked by strong year-over-year growth and a revenue performance that exceeded Wall Street’s expectations. Despite these results, the market reacted negatively, with shares trading down after the announcement. Management attributed the robust quarter to accelerated adoption of its AI-powered Teamwork Collection, record numbers of large enterprise deals, and broader seat expansion across both technology and business teams. CEO Michael Cannon-Brookes emphasized that AI features were a primary reason customers upgraded to cloud offerings, noting, "AI is the best thing to happen to Atlassian, and the results we are seeing today are no accident."
Looking ahead, Atlassian’s guidance reflects confidence in continued momentum from enterprise customers and increasing integration of AI capabilities. Management expects further growth from ongoing cloud migrations, expansion into non-technology business teams, and strong uptake of the Teamwork Collection platform. CFO Joe Binz highlighted the company’s commitment to delivering value through a combination of predictable seat-based pricing and hybrid models. He noted, "We remain confident in our ability to deliver healthy and accelerating cloud revenue growth as we expand operating margin over time," while also maintaining a cautious, risk-adjusted approach to short-term guidance.
Key Insights from Management’s Remarks
Management attributed the quarter’s outperformance to enterprise customer expansion, rapid AI adoption, and broad-based seat growth across multiple segments.
- AI-driven product upgrades: Customers cited Atlassian’s AI capabilities as a key factor for upgrading to the Teamwork Collection, with over 1 million seats sold in less than nine months and more than 5 million monthly active users engaging with AI features.
- Enterprise deal momentum: The company closed a record number of deals exceeding $1 million in annual contract value, nearly doubling large enterprise wins year over year as organizations standardized on Atlassian platforms for critical workflows.
- Expansion beyond tech users: Seat growth was broad-based, with significant adoption among non-technology business teams such as HR, finance, and operations, driven in part by new service management features tailored for these functions.
- Cloud migration impact: Healthy migration activity from data center to cloud platforms contributed a mid- to high single-digit boost to cloud revenue growth, with management expecting this trend to persist into the next year.
- Pricing strategy and value delivery: The company maintained its focus on seat-based pricing as the preferred and most predictable model for customers, while also offering hybrid options for AI and other consumption-based add-ons, aiming to maximize customer value and manage AI-related costs internally.
Drivers of Future Performance
Management’s outlook for the next quarter and beyond centers on sustained enterprise demand, ongoing cloud migrations, and further AI integration as key drivers.
- Sustained enterprise adoption: Leadership expects continued growth from large organizations standardizing on Atlassian’s platforms, with multi-year commitments and broader use of AI-powered features driving higher long-term revenue visibility.
- Cloud migration and seat expansion: Ongoing transitions from data center to cloud environments are projected to contribute meaningfully to revenue, supported by stable expansion rates among both technology and non-technology users.
- Pricing model resilience and risks: The seat-based pricing model remains central, but management acknowledged potential headwinds from evolving customer preferences and competitive pressures, particularly as AI costs and hybrid pricing options become more prominent.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will monitor (1) the pace of enterprise adoption and large deal closures, (2) sustained growth in seat expansion among non-technology business users, and (3) the impact of ongoing cloud migrations on overall revenue growth. Additionally, we will pay close attention to the evolution of Atlassian’s pricing strategies and continued integration of AI capabilities, as these factors will be critical for maintaining competitive differentiation and long-term profitability.
Atlassian currently trades at $96.61, down from $99.50 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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