Atlassian ‘s share price is up more than 26% in the first month of 2025, with the software company’s December quarter results thrilling investors as subscription revenue beat forecasts, growing by 30% in 12 months.
Cofounder and CEO Mike Cannon-Brookes has effectively seen his personal wealth double in just six months as the tech stock’s (Nasdaq: TEAM) share price rose from below US$140 in early August 2024 to above US$300 following the Q2 results on Friday morning.
Total revenue hit US$1.29 billion in the quarter to December 31, 2024, up 21% year-on-year. Subscription revenue rose 30% to US$1.21bn.
On a GAAP (generally accepted accounting principles) basis, Atlassian reported operating loss of US$57.5 million for Q2 of fiscal year 2025, compared to operating loss of $49.1 million 12 months ago. Operating margin was (4%) for the second quarter of fiscal year 2025, compared with (5%) for Q2 FY24.
Atlassian reported 49,449 customers with greater than $10,000 in Cloud ARR, a 15% year-on-year rise.
The balance sheet sits at US$2.5bn in cash and marketable securities.
The Q3 forecasts include revenue between US$1.345-1.353 bn, with Cloud revenue growth of 23.5%. Data Centre revenue is expected to grow by 7%.
Operating margin is expected to be approximately (3%) on a GAAP basis and 23.5% on a non-GAAP basis.
In his shareholder letter, Cannon-Brookes said the business now serves more than 300,000 customers, with an annual revenue run rate of more than US$5 billion (A$8.2bn) , and multiple enterprise deals worth US$1 million+ signed, with AI central to the company’s growth. Among the corporates signing on are DHL, Cisco and Reddit.
“The Atlassian System of Work is resonating with enterprises all over the globe, as business leaders increasingly turn to the Atlassian platform to help teams across their organisation collaborate on the opportunities and challenges they face,” he said.
“By infusing AI throughout our world-class cloud platform, we’re empowering all teams to accelerate collaboration and unlock organisational knowledge, further enabling them to unleash their full potential.”
Canoon-Brookes, wearing a jacket over his grey hoodie, talked their focus on enterprise saying: “We want to make every customer happy. Colloquially, we call this targeting the Fortune 500,000.”
Atlassian is now used in more than 200 countries and 85% of Fortune 500 companies use its products.
“And within that group, there’s more than a US$14 billion revenue opportunity with the existing products and prices alone,” he said.
“Currently, we have more than 500 customers spending over a million dollars a year. So we have a scaled enterprise business, but we think we can do a lot more. So we’re continuing to evolve and change to grow and better serve this cohort.”
Chief financial officer Joe Binz said cost savings in cloud infrastructure and customer support helped deliver an 85% gross margin for the quarter.
“Strong enterprise sales execution drove better-than-expected revenue across both our Cloud and Data Center offerings, as we delivered 30% year-over-year growth in subscription revenue in the second quarter,” he said.
“The momentum we’re seeing across the business reinforces our conviction around investments we are making in our key strategic priorities of serving enterprise customers, AI, and the System of Work to deliver durable, long-term growth.”
Updated FY25 guidance forecasts total revenue growth of 18.5-19%, with Cloud revenue up 26.5% and Data Center revenue growth rising 21.5% on 12 months ago.
Atlassian’s share price popped more than 17% on news of the Q2 results, giving the business a market capitalisation of more than A$130 billion – three times the value of private held Canva.
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